MILLER ENERGY RESOURCES, INC. - FORM 8-K - EX-10.01 - EXHIBIT LOAN AGREEMENT

Attached files

file	filename
EX-99.1 - EXHIBIT PRESS RELEASE ACQ & LA - MILLER ENERGY RESOURCES, INC.	a2014-02x03exhibitpressrel.htm
EX-10.02 - EXHIBIT GCA - MILLER ENERGY RESOURCES, INC.	a2014-02x03exhibitgca.htm
8-K - 8-K - MILLER ENERGY RESOURCES, INC.	a2014-02x038xkloanagreement.htm

Execution Version

====================================================================

AMENDED AND RESTATED CREDIT AGREEMENT

dated as of February 3, 2014

among

MILLER ENERGY RESOURCES, INC.,

as Borrower,

APOLLO INVESTMENT CORPORATION,

as Arranger and Administrative Agent,

and

The Lenders Party Hereto

====================================================================

#4452571.13

TABLE OF CONTENTS

Page

ARTICLE I

DEFINITIONS AND ACCOUNTING MATTERS

Section 1.01. Terms Defined Above 1

Section 1.02. Certain Defined Terms 1

Section 1.03. Types of Loans 29

Section 1.04. Terms Generally; Rules of Construction 29

Section 1.05. Accounting Terms and Determinations; GAAP 30

ARTICLE II

THE CREDITS

Section 2.01. Commitments 30

Section 2.02. Loans 30

Section 2.03. Requests for Loans 31

Section 2.04. Interest Elections 32

Section 2.05. Funding of Loans 33

Section 2.06. Reserved 33

Section 2.07. Reserved 33

Section 2.08. Reserved 33

ARTICLE III

PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES

Section 3.01. Repayment of Loans 33

Section 3.02. Interest 33

Section 3.03. Alternate Rate of Interest 34

Section 3.04. Prepayments 35

Section 3.05. Make-Whole Premium & Prepayment Premium 36

Section 3.06. Fees 37

ARTICLE IV

Payments; Pro Rata Treatment; Sharing of Set-offs

Section 4.01. Payments Generally; Pro Rata Treatment; Sharing of Set-offs 37

Section 4.02. Presumption of Payment by the Borrower 38

Section 4.03. Certain Deductions by the Administrative Agent 38

Section 4.04. Disposition of Proceeds 39

ARTICLE V

INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES; ILLEGALITY

Section 5.01. Increased Costs 39

Section 5.02. Break Funding Payments 40

Section 5.03. Taxes 40

Section 5.04. Mitigation Obligations; Replacement of Lenders 45

Section 5.05. Illegality 46

ARTICLE VI

CONDITIONS PRECEDENT

Section 6.01. Effective Date 46

Section 6.02. Additional Conditions 51

ARTICLE VII

REPRESENTATIONS AND WARRANTIES

Section 7.01. Organization; Powers 52

Section 7.02. Authority; Enforceability 52

Section 7.03. Approvals; No Conflicts 52

Section 7.04. Financial Condition; No Material Adverse Change 53

Section 7.05. Litigation 53

Section 7.06. Environmental Matters 54

Section 7.07. Compliance with the Laws and Agreements; No Defaults 55

Section 7.08. Investment Company Act 55

Section 7.09. Taxes 55

Section 7.10. ERISA 56

Section 7.11. Disclosure; No Material Misstatements 56

Section 7.12. Insurance 57

Section 7.13. Restriction on Liens 57

Section 7.14. Subsidiaries 57

Section 7.15. Location of Business and Offices 57

Section 7.16. Properties; Titles, Etc. 58

Section 7.17. Maintenance of Properties 59

Section 7.18. Gas Imbalances, Prepayments 59

Section 7.19. Marketing of Production 60

Section 7.20. Swap Agreements 60

Section 7.21. Use of Loans 60

Section 7.22. Solvency 60

Section 7.23. Acquisition Documents 61

Section 7.24. Foreign Corrupt Practices 61

Section 7.25. Money Laundering 61

Section 7.26. OFAC 61

Section 7.27. Patriot Act 61

Section 7.28. Security Documents 61

Section 7.29. Labor Matters. 62

Section 7.30. Brokerage Fees 62

Section 7.31. Material Contracts 62

ARTICLE VIII

AFFIRMATIVE COVENANTS

Section 8.01. Financial Statements; Other Information 63

Section 8.02. Notices of Material Events 67

Section 8.03. Existence; Conduct of Business 67

Section 8.04. Payment of Obligations 67

Section 8.05. Performance of Obligations under Loan Documents and Material Contracts

Section 8.06. Operation and Maintenance of Properties 68

Section 8.07. Insurance 68

Section 8.08. Books and Records; Inspection Rights 69

Section 8.09. Compliance with Laws 69

Section 8.10. Environmental Matters 69

Section 8.11. Further Assurances 71

Section 8.12. Reserve Reports 71

Section 8.13. Title Information 72

Section 8.14. Additional Collateral; Additional Guarantors 72

Section 8.15. ERISA Compliance 73

Section 8.16. Post-Closing Covenants 74

Section 8.17. Hedging Maintenance. 75

Section 8.18. Board Observation Rights 75

Section 8.19. Appraisal 76

Section 8.20. Minimum Liquidity 76

ARTICLE IX

NEGATIVE COVENANTS

Section 9.01. Financial Covenants 76

Section 9.02. Debt 77

Section 9.03. Liens 78

Section 9.04. Dividends, Distributions and Redemptions 79

Section 9.05. Investments, Loans and Advances 80

iii

Section 9.06. Nature of Business; International Operations 81

Section 9.07. Limitation on Leases 82

Section 9.08. Proceeds of Loans 82

Section 9.09. ERISA Compliance 82

Section 9.10. Sale or Discount of Receivables; Alaska Oil & Gas Production Tax Credits 83

Section 9.11. Mergers, Etc. 83

Section 9.12. Dispositions of Properties 83

Section 9.13. Transactions with Affiliates 85

Section 9.14. Subsidiaries; Equity Interests 85

Section 9.15. Negative Pledge Agreements; Dividend Restrictions 85

Section 9.16. Gas Imbalances, Take-or-Pay or Other Prepayments 86

Section 9.17. Swap Agreements 86

Section 9.18. Acquisition Documents & Organizational Documents 86

Section 9.19. Fiscal Year 87

Section 9.20. Preferred Equity Interests 87

Section 9.21. Marketing Activities 87

Section 9.22. Press Release and Related Matters 87

Section 9.23. Consolidated G&A Expenses 88

ARTICLE X

EVENTS OF DEFAULT; REMEDIES

Section 10.01. Events of Default 88

Section 10.02. Remedies 90

ARTICLE XI

THE AGENTS

Section 11.01. Appointment; Powers 92

Section 11.02. Duties and Obligations of Administrative Agent 92

Section 11.03. Action by Administrative Agent 93

Section 11.04. Reliance by Administrative Agent 93

Section 11.05. Subagents 94

Section 11.06. Resignation of Administrative Agent 94

Section 11.07. Agents as Lenders 94

Section 11.08. No Reliance 94

Section 11.09. Administrative Agent May File Proofs of Claim 95

Section 11.10. Authority of Administrative Agent to Release Collateral and Liens 96

Section 11.11. The Arranger 96

ARTICLE XII

MISCELLANEOUS

Section 12.01. Notices 96

Section 12.02. Waivers; Amendments 97

Section 12.03. Expenses, Indemnity; Damage Waiver 99

Section 12.04. Successors and Assigns 101

Section 12.05. Survival; Revival; Reinstatement 105

Section 12.06. Counterparts; Integration; Effectiveness 106

Section 12.07. Severability 106

Section 12.08. Right of Setoff 106

Section 12.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS

107

Section 12.10. Headings 108

Section 12.11. Confidentiality 108

Section 12.12. Interest Rate Limitation 109

Section 12.13. EXCULPATION PROVISIONS 109

Section 12.14. Reserved 110

Section 12.15. No Third Party Beneficiaries 110

Section 12.16. USA Patriot Act Notice 110

Section 12.17. Alaska Statutes 110

Section 12.18. Intercreditor Agreement 110

Section 12.19. Amendment and Restatement 110

ANNEXES, EXHIBITS AND SCHEDULES

Annex I Commitments

Exhibit A Form of Note

Exhibit B Form of Borrowing Request

Exhibit C Form of Continuation Request

Exhibit D Form of Compliance Certificate

Exhibit E Form of Transfer Order Letters

Exhibit F Form of Assignment and Assumption

Exhibit G Form of Intercreditor Agreement

Schedule 7.05 Litigation

Schedule 7.06 Environmental Matters

Schedule 7.14 Subsidiaries and Partnerships

Schedule 7.18 Gas Imbalances

Schedule 7.19 Marketing Contracts

Schedule 7.20 Swap Agreements

Schedule 7.31 Material Contracts

Schedule 8.16 Post-Closing Items

Schedule 9.02 Existing Debt

Schedule 9.05 Existing Investments

Schedule 9.13 Transactions with Affiliates

THIS AMENDED AND RESTATED CREDIT AGREEMENT dated as of February 3, 2014, is among: MILLER ENERGY RESOURCES, INC., a corporation duly formed and existing under the laws of the State of Tennessee (the “Borrower”); each of the Lenders from time to time party hereto; and APOLLO INVESTMENT CORPORATION (in its individual capacity, “Apollo”), as administrative agent for the Lenders (in such capacity, together with its successors in such capacity, the “Administrative Agent”).

R E C I T A L S

A. The Borrower entered into a Loan Agreement dated as of June 29, 2012 with Apollo Investment Corporation, as arranger and administrative agent, and the other financial institutions party thereto (as amended to the date hereof, the “Existing Credit Agreement”).

B. The Borrower has requested, and the Lenders and the Administrative Agent have agreed, that the Existing Credit Agreement be amended and restated in its entirety as set forth herein.

C. Now, therefore, in consideration of the mutual covenants and agreements herein contained and of the loans and commitments hereinafter referred to, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING MATTERS

Section 1.01. Terms Defined Above. As used in this Agreement, each term defined above has the meaning indicated above.

Section 1.02. Certain Defined Terms. As used in this Agreement, the following terms have the meanings specified below:

“ABR”, when used in reference to any Loan, refers to whether such Loan is bearing interest at a rate determined by reference to the Alternate Base Rate.

“Acquired Equity” means the Equity Interests of Anchor Point Energy, LLC, to be acquired pursuant to the terms of the Acquisition Agreement.

“Acquisition” means the acquisition of certain oil, gas and mineral Properties pursuant to the terms and conditions of the Acquisition Documents.

“Acquisition Agreement” means the Purchase and Sale Agreement among Armstrong Cook Inlet, LLC, GMT Exploration Company, LLC, Dale Resources Alaska, LLC, Jonah Gas Company, LLC and Nerd Gas Company, LLC, collectively, as Seller, and CIE, as Buyer, dated November 22, 2013.

“Acquisition Closing Date” means the “Closing Date” as defined in the Acquisition Agreement.

“Acquisition Documents” means (a) the Acquisition Agreement, and (b) all bills of sale, assignments, agreements, instruments and documents executed and delivered in connection therewith, as amended in accordance with the terms hereof and thereof.

“Acquisition Properties” means the Oil and Gas Properties and other properties acquired by the Borrower or any Guarantor pursuant to the Acquisition Documents.

“Adjusted LIBO Rate” means, with respect to any Eurodollar Loan for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to the LIBO Rate for such Interest Period multiplied by the Statutory Reserve Rate; provided however, that at no time shall the Adjusted LIBO Rate be less than 2.00% per annum.

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

“Affected Loans” has the meaning assigned such term in Section 5.05.

“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

“Agents” means, collectively, the Administrative Agent and any sub-agent appointed by the Administrative Agent pursuant to Section 11.05; and “Agent” shall mean any of them individually, as the context requires.

“Aggregate Commitment” means, as of any date of determination, the sum of the Commitments of all of the Lenders as of such date. On the Effective Date, the Aggregate Commitment is $175,000,000.

“Agreement” means this Credit Agreement, as the same may from time to time be amended, modified, supplemented or restated.

“Aircraft” means that certain Hawker 400 aircraft owned by the Borrower as of the Effective Date, acquired pursuant to the Aircraft Purchase Agreement, dated November 17, 2010, among The Heavener Company Leasing, LLC, Bristol Capital Advisors, LLC, as seller, and the Borrower, as purchaser.

“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus ½ of 1% and (c) the Adjusted LIBO Rate for a three month Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1.0%, provided that, for the avoidance of doubt, the Adjusted LIBO Rate for any day shall be based on the rate appearing on the Reuters Screen LIBOR01 (or any successor or substitute page) at approximately 11:00 a.m., New York time, on such day (or the immediately preceding Business Day if such day is not a day on which banks are open for dealings in dollar deposits in the London interbank market). Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate shall be effective from and including the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate, respectively.

“Applicable Margin” means, for any day, with respect to (a) any ABR Loan, a rate per annum equal to 8.75%, and (b) any Eurodollar Loan, a rate per annum equal to 9.75%.

“Applicable Percentage” means, with respect to any Lender, (a) at any time prior to the termination of the Aggregate Commitment, the percentage of the Aggregate Commitment represented by such Lender’s Commitment, and (b) at any time after the termination of the Aggregate Commitment, the percentage of all outstanding Loans represented by the outstanding Loans made by such Lender. The Applicable Percentage of each Lender on the Effective Date is set forth on Annex I.

“Approved Counterparty” means (a) Cargill, Incorporated, (b) BP Corporation North America Inc., (c) any First Lien Lender or Affiliate thereof and (d) any other Person whose long term senior unsecured debt rating at the time of entering into the Swap Agreement is A/A2 by S&P or Moody’s (or their equivalent) or higher.

“Approved Petroleum Engineers” means (a) Netherland, Sewell & Associates, Inc., (b) Ryder Scott Company Petroleum Consultants, L.P., (c) DeGolyer & MacNaughton and (d) any other independent petroleum engineers reasonably acceptable to the Administrative Agent.

“Approved Senior Credit Agreement” means a credit agreement (as amended, restated, extended, replaced, supplemented, modified or refinanced as permitted by the Intercreditor Agreement) to be entered into on or before the date that is 45 days after the Effective Date, which credit agreement contains terms substantially in accordance with those set forth in the term sheet dated January 31, 2014 provided by the Borrower to the Administrative Agent on or before the date hereof (and certified by the Borrower as being a true and complete copy thereof), with the First Lien Administrative Agent as described in said term sheet, and other usual and customary terms and conditions approved by the Administrative Agent and the Majority Lenders (such approval not to be unreasonably withheld or delayed); provided, that, for the avoidance of doubt, such Approved Senior Credit Agreement may not contain any financial covenants that are more restrictive than those set forth in Section 9.01 hereof.

“Arranger” means Apollo, in its capacity as arranger hereunder.

“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 12.04(b)), and accepted by the Administrative Agent, in the form of Exhibit F or any other form approved by the Administrative Agent.

“Asset Coverage Test Date” means (a) the date of each Borrowing Base redetermination under the First Lien Credit Agreement, including all scheduled, interim and special redeterminations thereunder, (b) the last day of each fiscal quarter, commencing with the fiscal quarter ending April 30, 2014, (c) each other date on which the Loan Parties acquire or Dispose of (to the extent permitted hereby or otherwise consented to in accordance with the terms hereof) Oil and Gas Properties or any other Properties pursuant to Section 9.12(c) or Section 9.05(n) or otherwise with an aggregate NYMEX Value of total Proved Developed Reserves or fair market value, respectively, equal to $500,000 or more, and (d) the date on which any borrowing of First Lien Loans or any other credit extension is made under the First Lien Credit Agreement (including without limitation any issuance of a letter of credit thereunder).

“Board” means the Board of Governors of the Federal Reserve System of the United States of America or any successor Governmental Authority.

“Borrowing Base” has the meaning set forth in the Intercreditor Agreement.

“Borrowing Base Deficiency” means “Borrowing Base Deficiency” or any similar term as defined in the First Lien Credit Agreement.

“Borrowing Request” means a request by the Borrower for a borrowing of Loans in accordance with Section 2.03.

“BP Swap Agreement” means the ISDA 2002 Master Agreement dated as of December 6, 2010 between the Borrower and BP Corporation North America Inc., as amended by the Amendment dated as of December 8, 2010, together with all schedules and annexes thereto and transactions thereunder.

“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City or Houston, Texas are authorized or required by law to remain closed; and if such day relates to a borrowing or continuation of, a payment or prepayment of principal of or interest on, or a conversion of or into, or the Interest Period for, a Eurodollar Loan or a notice by the Borrower with respect

to any such Loan or continuation, payment, prepayment, conversion or Interest Period, any day which is also a day on which banks are open for dealings in dollar deposits in the London interbank market.

“Capital Leases” means, in respect of any Person, all leases that are or should be, in accordance with GAAP, recorded as capital leases on the balance sheet of the Person liable (whether contingent or otherwise) for the payment of rent thereunder. Any lease that was treated as an operating lease under GAAP at the time it was entered into that later becomes a capital lease as a result of a change in GAAP during the life of such lease, including any renewals, shall be treated as an operating lease for all purposes under this Agreement, and any lease that was treated as a capital lease under GAAP at the time it was entered into that later becomes an operating lease as a result of a change in GAAP during the life of such lease, including any renewals, shall be treated as a capital lease for all purposes under this Agreement.

“Cargill Swap Agreement” means the means the ISDA 1992 Master Agreement dated as of December 17, 2013 between the Borrower and Cargill, Incorporated, together with all schedules and annexes thereto and transactions thereunder.

“Cash Equivalents” means Investments described in Section 9.05(c), (d), (e) and (f).

“Cash Management Agreement” means any agreement to provide any one or more of the following types of services or facilities to a Loan Party: (a) ACH transactions, (b) treasury and/or cash management services, including, without limitation, controlled disbursement services, (c) foreign exchange facilities, (d) credit or debit cards, (e) deposit and other accounts and (f) merchant services (other than those constituting a line of credit).

“Casualty Event” means any loss, casualty or other damage to, or any nationalization, taking under power of eminent domain or by condemnation or similar proceeding of, any Oil and Gas Property of the Borrower or any of its Subsidiaries having an estimated dollar amount in excess of $5,000,000.

“Change in Control” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Exchange Act and Rule 13d-3 of the Securities and Exchange Commission thereunder as in effect on the Effective Date) of Equity Interests representing more than 30.0% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the Borrower; (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Borrower by Persons who were neither (i) nominated by the board of directors of the Borrower nor (ii) approved or appointed by directors so nominated; or (c) other than in a Permitted Disposition, any of Scott Boruff, David Hall, David Voyticky, or Deloy Miller sells or otherwise disposes of any of the Equity Interests of the Borrower owned by such Person on the Effective Date; provided, however, that each will be permitted to sell Equity Interests of the Borrower in an amount equal to the proceeds required for (i) the exercise of warrants or stock options with respect to the Borrower’s Equity Interests prior to their expiration and/or (ii) the payment of U.S. federal and state income Taxes recognized by such Person with respect to Equity Interests granted to such Person by the Borrower as compensation for employment and the provision of services to or for the Borrower. In connection with sales of Equity Interests permitted under clause (ii) of the prior sentence, the Person selling such Equity Interests shall provide the Administrative Agent with a detailed calculation of such Person’s taxable income derived from the receipt of Equity Interests from the Borrower as employment compensation and the proceeds generated from the sale of Equity Interests to pay the U.S. federal and state income Taxes owing with respect to such receipts within 60 days of the date of sale.

“Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation

or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States of America or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

“CIE” means Cook Inlet Energy LLC, an Alaska limited liability company and wholly owned subsidiary of the Borrower.

“CIE Pipeline Asset Disposition” means the sale by CIE to Tesoro Alaska Company or its Affiliates of approximately eight miles of 8” diameter onshore crude oil pipeline which connects CIE’s Kustatan production facility to the Trading Bay Production Facility, together with the related right-of-way in connection with the construction and operation of the planned Trans-Foreland Pipeline project under consideration by the Alaska Department of Natural Resources.

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

“Collections Account” means (a) Account Nos. 7238394311 and 7238394329 maintained by the Loan Parties with Fifth Third Bank and (b) any other DDA established by any Loan Party into which proceeds from the sales of Hydrocarbons are deposited.

“Commitment” means, with respect to each Lender at any time, the commitment of such Lender to make Loans in an aggregate principal amount not to exceed the dollar amount set forth opposite such Lender’s name on Annex I, as such commitment may be modified from time to time pursuant to assignments by or to such Lender pursuant to Section 12.04(b).

“Conforming RBL Agreement” means a credit agreement (as amended, restated, extended, replaced, supplemented, modified or refinanced as permitted by the Intercreditor Agreement) to be entered into on or before the date that is 365 days after the Effective Date among the Borrower, the First Lien Administrative Agent and the other lenders party thereto from time to time, that:

(a) provides for a combined all in rate (which includes all interest, fees, original issue discount, and any other similar payment obligations thereunder and under the other First Lien Loan Documents) not to exceed a rate based on the London Interbank Offered Rate (it being understood that there shall be no minimum floor for such rate) plus 4.75% per annum;

(b) provides for an initial Borrowing Base of not less than $50,000,000;

(c) provides only for one, three and six month interest periods in respect of the loans thereunder bearing interest a rate based on the London Interbank Offered Rate;

(d) does not contain any financial covenants that are more restrictive than those set forth in Section 9.01 hereof; and

(e) contains other usual and customary terms and conditions approved by the Administrative Agent and the Majority Lenders (such approval not to be unreasonably withheld or delayed).

“Consolidated G&A Expenses” means, for any period, the aggregate of all general and administrative expenses of the Borrower and its Subsidiaries paid in cash, determined on a consolidated basis in accordance with GAAP, excluding legal fees and other non-recurring items reasonably acceptable to the Administrative Agent. Annual performance bonuses acceptable to the Administrative Agent in its sole discretion shall also be excluded from “Consolidated G&A Expenses”.

“Consolidated Net Income” means with respect to the Borrower and the Consolidated Subsidiaries, for any period, the aggregate of the net income (or loss) of the Borrower and the Consolidated Subsidiaries after allowances for taxes (but for the avoidance of doubt, prior to preferred stock dividends and accretions) for such period determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded from such net income (or loss) (to the extent otherwise included therein) the following: (a) the net income (or loss) of any Person in which the Borrower or any Consolidated Subsidiary has an interest (which interest does not cause the net income of such other Person to be consolidated with the net income of the Borrower and the Consolidated Subsidiaries in accordance with GAAP), except to the extent of the amount of dividends or distributions actually paid in cash during such period by such other Person to the Borrower or to a Consolidated Subsidiary, as the case may be; (b) the net income (but not loss) during such period of any Consolidated Subsidiary to the extent that the declaration or payment of dividends or similar distributions or transfers or loans by that Consolidated Subsidiary is not at the time permitted by operation of the terms of its charter or any agreement, instrument or Governmental Requirement applicable to such Consolidated Subsidiary or is otherwise restricted or prohibited; (c) any extraordinary gains or losses during such period, (d) non-cash gains, losses or adjustments, including non-cash gains, losses or adjustments under authoritative guidance from the FASB as a result of changes in the fair market value of derivatives and any gains or losses attributable to writeups or writedowns of assets, including ceiling test writedowns and writedowns under authoritative guidance from the FASB as a result of accounting for oil and gas activities, goodwill and other intangible assets, and property, plant and equipment (for the avoidance of doubt, realized gains or losses will be counted in Consolidated Net Income in the quarter that cash is actually received or paid); (e) any non-cash employee based compensation; and (f) any gain or loss realized in connection with asset sales.

“Consolidated Subsidiaries” means each Subsidiary of the Borrower (whether now existing or hereafter created or acquired) the financial statements of which shall be (or should have been) consolidated with the financial statements of the Borrower in accordance with GAAP.

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. For the purposes of this definition, and without limiting the generality of the foregoing, any Person that owns directly or indirectly 10% or more of the Equity Interests having ordinary voting power for the election of the directors or other governing body of a Person (other than as a limited partner of such other Person) will be deemed to “control” such other Person. “Controlling” and “Controlled” have meanings correlative thereto.

“DDA” means any Deposit Account (as defined in the Uniform Commercial Code as in effect on the date hereof and from time to time in the State of New York) maintained by the Borrower or any Subsidiary.

“Debt” means, for any Person, the sum of the following (without duplication): (a) all obligations of such Person for borrowed money or evidenced by bonds, bankers’ acceptances, debentures, notes or other similar instruments; (b) all obligations of such Person (whether contingent or otherwise) in respect of letters of credit, surety or other bonds and similar instruments; (c) all accounts payable and all accrued expenses, liabilities or other obligations of such Person to pay the deferred purchase price of Property or services (including, without limitation, any earn-out obligations, contingent payment obligations, or other similar obligations associated with such purchase), but excluding trade accounts payable in the ordinary course of

business (including guarantees thereof or instruments evidencing such liabilities) that are either (i) not greater than 90 days past due or (ii) are being contested in good faith by appropriate proceedings and adequate reserves therefore have been established under GAAP; (d) the principal component of obligations under Capital Leases; (e) all obligations under Synthetic Leases; (f) all Debt (as defined in the other clauses of this definition) of others secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) a Lien on any Property of such Person, whether or not such Debt is assumed by such Person; (g) all Debt (as defined in the other clauses of this definition) of others guaranteed by such Person or in which such Person otherwise assures a creditor against loss of the Debt (howsoever such assurance shall be made) to the extent of the lesser of the amount of such Debt and the maximum stated amount of such guarantee or assurance against loss; (h) all obligations or undertakings of such Person to maintain or cause to be maintained the financial position or covenants of others or to purchase the Debt or Property of others; (i) obligations to deliver commodities, goods or services, including, without limitation, Hydrocarbons, in consideration of one or more advance payments, other than gas balancing agreements in the ordinary course of business; (j) obligations to pay for goods or services even if such goods or services are not actually received or utilized by such Person; (k) any Debt of a partnership for which such Person is liable either by agreement, by operation of law or by a Governmental Requirement but only to the extent of such liability; (l) Disqualified Capital Stock; (m) the undischarged balance of any production payment created by such Person or for the creation of which such Person directly or indirectly received payment; and (n) all obligations of such Person with respect to any arrangement, directly or indirectly, whereby such Person shall sell or transfer any material asset, and whereby such Person shall then or immediately thereafter rent or lease as lessee such asset or any part thereof. The Debt of any Person shall include all obligations of such Person of the character described above to the extent such Person remains legally liable in respect thereof notwithstanding that any such obligation is not included as a liability of such Person under GAAP.

For the avoidance of doubt, “Debt” does not include obligations in respect of Swap Agreements, indemnities incurred in the ordinary course of business or in connection with the disposition of assets, any employee or director compensation, any compensation paid to employees or directors pursuant to stock appreciation rights, or obligations under operating leases.

“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

“Deposit Account Control Agreement” means a deposit account control agreement to be executed and delivered among any Loan Party, the Administrative Agent and certain banks at which such Loan Party maintains Collection Accounts or other applicable DDAs, in each case, in form and substance as may be reasonably acceptable to the Administrative Agent, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Disbursement Letter” means the disbursement request executed and delivered by the Borrower to the Administrative Agent contemporaneous with the Effective Date regarding the Loans to be made on the Effective Date, the form and substance of which shall be satisfactory to the Administrative Agent.

“Dispose” means to sell, lease, assign, farm-out, convey, transfer, or otherwise dispose of any Property. “Disposition” has a correlative meaning thereto.

“Disqualified Capital Stock” means any Equity Interest that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event, matures or is mandatorily redeemable for any consideration other than other Equity Interests (which would not constitute Disqualified Capital Stock), pursuant to a sinking fund obligation or otherwise, or is convertible or exchangeable for Debt or redeemable for any consideration other than other Equity Interests (which would

not constitute Disqualified Capital Stock) at the option of the holder thereof, in whole or in part, on or prior to the date that is 91 days after the Termination Date.

“dollars” or “$” refers to lawful money of the United States of America.

“Domestic Subsidiary” means any Subsidiary that is organized under the laws of the United States of America or any state thereof or the District of Columbia.

“EBITDAX” means, for any period of four consecutive fiscal quarters, without duplication, (a) Consolidated Net Income for such period plus (b) the following expenses or charges to the extent deducted in calculating Consolidated Net Income for such period: Interest Expense, income Taxes, depreciation, depletion, amortization (including amortization of deferred financing costs), exploration expenses, accretion of asset retirement obligations, and other noncash charges reasonably acceptable to the Administrative Agent, plus (c) to the extent deducted in calculating Consolidated Net Income for such period, the payments to be paid to Apollo under and as defined in the Restructuring Agreement, minus (d) the following items, to the extent added in the determination of Consolidated Net Income: (i) all noncash income included in the calculation of Consolidated Net Income and (ii) any cash received outside the ordinary course of business from any foreign, United States, state or local tax credit or incentive program, including, without limitation, Alaska’s Oil & Gas Production Tax Credit program; provided, however, that if any such Person shall have consummated any acquisition or disposition during such period, EBITDAX shall be subject to pro forma adjustments for such acquisition or disposition (calculated in accordance with Regulation S-X under the Securities Exchange Act of 1934, as amended or as otherwise approved by the Administrative Agent), as if such acquisition or disposition had occurred on the first day of such period and shall also include adding back to Consolidated Net Income any non-recurring or one-time cash or non-cash charges or expenses associated with such acquisition or disposition that are reasonably acceptable to the Administrative Agent; provided further that (i) for the fiscal quarter ended April 30, 2014, EBITDAX shall be EBITDAX for such fiscal quarter multiplied by 4; (ii) for the fiscal quarter ended July 31, 2014, EBITDAX shall be EBITDAX for the two fiscal quarters then ended multiplied by 2; and (iii) for the fiscal quarter ended October 31, 2014, EBITDAX shall be EBITDAX for the three fiscal quarters then ended multiplied by 4/3.

“Effective Date” means the date on which the conditions specified in Article VI are satisfied (or waived in accordance with Section 12.02).

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

“Environmental Laws” means any and all Governmental Requirements pertaining in any way to health and safety (insofar as either may be affected by a Release of, or exposure to, Hazardous Materials) the environment, the preservation or reclamation of natural resources, or the management, Release or threatened Release of any Hazardous Materials, in effect in any and all jurisdictions in which the Borrower or any Subsidiary is conducting, or at any time has conducted, business, or where any Property of the Borrower or any Subsidiary is located, including, the Oil Pollution Act of 1990, as amended, the Clean Air Act, as amended, the Comprehensive Environmental, Response, Compensation, and Liability Act of 1980 (“CERCLA”), as amended, the Federal Water Pollution Control Act, as amended, the Occupational Safety and Health Act of 1970, as amended, the Resource Conservation and Recovery Act of 1976 (“RCRA”), as amended, the Safe Drinking Water Act, as amended, the Toxic Substances Control Act, as amended, the Superfund Amendments and Reauthorization Act of 1986, as amended, the Hazardous Materials

Transportation Act, as amended, the Natural Gas Pipeline Safety Act of 1968, as amended, the Hazardous Liquid Pipeline Safety Act of 1979, as amended, and other environmental conservation or protection Governmental Requirements.

“Environmental Permit” means any permit, registration, license, notice, approval, consent, exemption, variance, or other authorization required under or issued pursuant to applicable Environmental Laws.

“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such Equity Interest.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute.

“ERISA Affiliate” means each trade or business (whether or not incorporated) which together with the Borrower or a Subsidiary would be deemed to be a “single employer” within the meaning of section 4001(b)(1) of ERISA or subsections (b), (c), (m) or (o) of section 414 of the Code.

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

“Eurodollar”, when used in reference to any Loan, refers to whether such Loan is bearing interest at a rate determined by reference to the Adjusted LIBO Rate.

“Event of Default” has the meaning assigned to such term in Section 10.01.

“Excepted Liens” means: (a) Liens for Taxes, assessments or other governmental charges or levies which are not delinquent or which are being contested in good faith by appropriate action and for which adequate reserves have been maintained in accordance with GAAP; (b) Liens in connection with workers’ compensation, unemployment insurance or other social security, old age pension or public liability obligations which are not delinquent or which are being contested in good faith by appropriate action and for which adequate reserves have been maintained in accordance with GAAP; (c) landlord’s liens, operators’, vendors’, carriers’, warehousemen’s, repairmen’s, mechanics’, suppliers’, workers’, materialmen’s, construction or other like Liens arising by operation of law or otherwise in the ordinary course of business or incident to the exploration, development, operation and maintenance of Oil and Gas Properties each of which is in respect of obligations that are not delinquent or which are being contested in good faith by appropriate action and for which adequate reserves have been maintained in accordance with GAAP; (d) contractual Liens which arise in the ordinary course of business under operating agreements, joint venture agreements, oil and gas partnership agreements, oil and gas leases, farm-out or farm-in agreements, division orders, contracts for the sale, transportation or exchange of oil and natural gas, unitization and pooling declarations and agreements, area of mutual interest agreements, overriding royalty agreements, marketing agreements, processing

agreements, net profits agreements, development agreements, gas balancing or deferred production agreements, injection, repressuring and recycling agreements, salt water or other disposal agreements, seismic or other geophysical permits or agreements, and other agreements which are usual and customary in the oil and gas business and are for claims which are not delinquent or which are being contested in good faith by appropriate action and for which adequate reserves have been maintained in accordance with GAAP, provided that any such Lien referred to in this clause does not materially impair the use of the Property covered by such Lien for the purposes for which such Property is held by the Borrower or any Subsidiary or materially impair the value of such Property subject thereto; (e) Liens arising solely by virtue of any statutory or common law provision or any deposit account agreement or similar agreement relating to banker’s liens, rights of set-off or similar rights and remedies and burdening only deposit accounts or other funds maintained with a creditor depository institution, provided that no such deposit account is a dedicated cash collateral account or is subject to restrictions against access by the depositor in excess of those set forth by regulations promulgated by the Board and no such deposit account is intended by Borrower or any of its Subsidiaries to provide collateral to the depository institution; (f) easements, restrictions, servitudes, permits, conditions, covenants, exceptions or reservations in any Property of the Borrower or any Subsidiary for the purpose of roads, pipelines, transmission lines, transportation lines, distribution lines for the removal of gas, oil, coal or other minerals or timber, and other like purposes, or for the joint or common use of real estate, rights of way, facilities and equipment, that do not secure any monetary obligations and which in the aggregate do not materially impair the use of such Property for the purposes of which such Property is held by the Borrower or any Subsidiary or materially impair the value of such Property subject thereto; (g) Liens on cash or securities pledged to secure performance of tenders, surety and appeal bonds, government contracts, performance and return of money bonds, bids, trade contracts, leases, statutory obligations, regulatory obligations and other obligations of a like nature incurred in the ordinary course of business and not in connection with the borrowing of money, and (h) judgment and attachment Liens not giving rise to an Event of Default, provided that any appropriate legal proceedings which may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within which such proceeding may be initiated shall not have expired and no action to enforce such Lien has been commenced; provided, further that Liens described in clauses (a) through (e) shall remain “Excepted Liens” only for so long as no action to enforce such Lien has been commenced and no intention to subordinate the Lien granted in favor of the Secured Parties is to be hereby implied or expressed by the permitted existence of such Excepted Liens.

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

“Excluded Taxes” means, with respect to the Administrative Agent or any Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrower or any Guarantor hereunder or under any other Loan Document, (a) Taxes imposed on or measured by net income (however denominated), state franchise Taxes, and branch profits Taxes, in each case, (i) by the United States of America (or any political subdivision thereof) or such other jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrower under Section 5.04(b)) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 5.03, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to any such recipient’s failure to comply with Section 5.03(e), and (d) any United States federal withholding Tax that is imposed under FATCA.

“Existing Credit Agreement” has the meaning set forth in the Recitals.

“Extraordinary Proceeds” means any cash received by Borrower or any of its Subsidiaries (a) not in the ordinary course of business (and not consisting of proceeds described in Section 3.04(c)(i) or Section 3.04(c)(iii)), and/or (b) from or in respect of (ii) pension plan reversions, (iii) any insurance provider, (iv) judgments, proceeds of settlements or other consideration of any kind in connection with any cause of action, (v) condemnation awards (and payments in lieu thereof), and (vi) any purchase price adjustment received in connection with any purchase agreement; provided, however, that “Extraordinary Proceeds” shall not include any proceeds from (i) the issuance of any Equity Interests by the Borrower, or (ii) any foreign, United States, state or local tax credit or incentive program, including, without limitation, Alaska’s Oil & Gas Production Tax Credits program; provided, further that “Extraordinary Proceeds” shall be reduced by any amounts that are required to be and are applied to repay the First Lien Secured Obligations, unless, if required to be so applied, any one or more of the holders of the First Lien Secured Obligations entitled to receive such payments decline or waive their right to such payment, in each case, pursuant to and in accordance with the terms of the First Lien Credit Agreement (without giving effect to any amendments, supplements or modifications thereto unless approved by the Administrative Agent in its sole discretion).

“FATCA” means Sections 1471 through 1474 of the Code, as of the Effective Date (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b)(1) of the Code, any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to such intergovernmental agreement.

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

“Fee Letter” means that certain letter agreement dated as of the Effective Date between Borrower and Administrative Agent.

“Financial Officer” means, for any Person, the chief financial officer, principal accounting officer, treasurer or controller of such Person. Unless otherwise specified, all references herein to a Financial Officer means a Financial Officer of the Borrower.

“Financial Statements” means the financial statement or statements of the Borrower and its Consolidated Subsidiaries referred to in Section 7.04(a).

“First Lien Administrative Agent” means the “Senior Representative” as defined in the Intercreditor Agreement.

“First Lien Credit Agreement” means either (a) a Conforming RBL Agreement or (b) an Approved Senior Credit Agreement (but not both).

“First Lien Effective Date” means the date on which the First Lien Credit Agreement becomes effective in accordance with its terms.

“First Lien Lenders” means the “Senior Lenders” as defined in the Intercreditor Agreement.

“First Lien Loans” means the “Senior Loans” as defined in the Intercreditor Agreement.

“First Lien Loan Documents” means the “Senior Debt Documents” as defined in the Intercreditor Agreement.

“First Lien Secured Obligations” means the “Senior Obligations” as defined in the Intercreditor Agreement.

“fiscal quarter” means each fiscal quarter ending on the last day of each July, October, January and April.

“fiscal year” means each fiscal year of the Borrower and its Subsidiaries for accounting and tax purposes, ending on April 30 of each year.

“Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.

“GAAP” means generally accepted accounting principles in the United States of America as in effect from time to time subject to the terms and conditions set forth in Section 1.05.

“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

“Governmental Requirement” means any law, statute, code, ordinance, order, determination, rule, regulation, judgment, decree, injunction, franchise, permit, certificate, license, rules of common law, authorization or other directive or requirement, whether now or hereinafter in effect, of any Governmental Authority.

“Guarantee and Collateral Agreement” means the Amended and Restated Guarantee and Collateral Agreement dated as of the Effective Date executed by the Borrower and the Guarantors, as the same may be amended, modified or supplemented from time to time.

“Guarantors” means each Subsidiary of the Borrower and each other Person who may hereafter guarantee payment or performance of the whole or any part of the Secured Obligations pursuant to Section 8.14(b).

“Gunsight Acquisition” means the acquisition by the Borrower of approximately 2,207 acres of land owned by Gunsight Holdings LLC in Scott County, Tennessee, as set forth in the Gunsight Acquisition Agreement, for a total purchase price of $1,300,000, with $300,000 deposited by Borrower at signing of the agreement, $50,000 due at closing and the remainder payable over three years, plus interest on any unpaid portion of that purchase price, at a rate of 5%.

“Gunsight Acquisition Agreement” means the Contract for Sale of Real Estate between Gunsight Holdings LLC, as seller and the Borrower, as buyer, with an effective date of January 28, 2014.

“Hazardous Material” means any substance regulated or as to which liability might arise under any applicable Environmental Law including: (a) any chemical, compound, material, product, byproduct, substance or waste defined as or included in the definition or meaning of “hazardous substance,” “hazardous material,” “hazardous waste,” “solid waste,” “toxic waste,” “extremely hazardous substance,” “toxic substance,” “contaminant,” “pollutant,” or words of similar meaning or import found in any applicable Environmental Law; (b) Hydrocarbons, petroleum products, petroleum substances, natural gas, oil, oil and gas waste (including drilling fluids and any produced water), crude oil, and any components, fractions, or derivatives thereof; and (c) radioactive materials, explosives, asbestos or asbestos containing materials, polychlorinated biphenyls, radon, infectious materials or medical wastes.

“Highest Lawful Rate” means, with respect to each Lender, the maximum nonusurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the Notes or on other Secured Obligations under laws applicable to such Lender which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than applicable laws allow as of the date hereof.

“Hydrocarbon Interests” means all rights, titles, interests and estates now or hereafter acquired by the Borrower or any Guarantor in and to oil and gas leases, oil, gas and mineral leases, or other liquid or gaseous hydrocarbon leases, mineral fee interests, overriding royalty and royalty interests, net profit interests and production payment interests, including any reserved or residual interests of whatever nature.

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

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrower any Guarantor under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.

“Initial Reserve Report” means (a) the report of Ryder Scott Company Petroleum Consultants, L.P., dated as of December 10, 2013, with respect to certain Oil and Gas Properties being acquired by the Borrower under the Acquisition as of December 1, 2013; and (b) the report of Ryder Scott Company Petroleum Consultants, L.P., dated as of December 9, 2013, with respect to certain Oil and Gas Properties of the Borrower and its Subsidiaries as of December 1, 2013.

“Intercreditor Agreement” means that certain Intercreditor Agreement to be entered into among the Borrower, the Guarantors, the Administrative Agent and the First Lien Administrative Agent in substantially the form attached hereto as Exhibit G or such other form that is acceptable to the Administrative Agent in its sole discretion.

“Interest Expense” shall mean, for any period, the sum of (a) the interest expense (including imputed interest expense in respect of obligations under any Capital Lease or Synthetic Lease) of the Borrower and the Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP (excluding, for the avoidance of doubt, interest on preferred stock), plus (b) any interest accrued during such period in respect of Debt of the Borrower or any Subsidiary that is required to be capitalized rather than included in consolidated interest expense for such period in accordance with GAAP; provided that (i) for the fiscal quarter ended April 30, 2014, Interest Expense shall be Interest Expense for such fiscal quarter multiplied by 4; (ii)

for the fiscal quarter ended July 31, 2014, Interest Expense shall be Interest Expense for the two fiscal quarters then ended multiplied by 2; and (iii) for the fiscal quarter ended October 31, 2014, Interest Expense shall be Interest Expense for the three fiscal quarters then ended multiplied by 4/3. For purposes of the foregoing, interest expense shall be determined after giving effect to any net payments made or received by the Borrower or any Subsidiary with respect to interest rate Swap Agreements.

“Interest Payment Date” means, with respect to any Loan, the last day of each March, June, September and December.

“Interest Period” means with respect to any Eurodollar Loan, the period commencing on the date of such Loan and ending on the numerically corresponding day in the calendar month that is one, two, three or six months (or, with the consent of each Lender, twelve months) thereafter, as the Borrower may elect; provided that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (b) any Interest Period pertaining to a Eurodollar Loan that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a borrowing of Loans initially shall be the date on which such Loans are made and thereafter shall be the effective date of the most recent conversion or continuation of such Loans.

“Investment” means, for any Person: (a) the acquisition (whether for cash, Property, services or securities or otherwise) of Equity Interests of any other Person or of a business unit of such Person (including, without limitation, any “short sale” or any sale of any securities at a time when such securities are not owned by the Person entering into such short sale) or of any Oil and Gas Properties or activities related to Oil and Gas Properties (other than an acquisition by any Loan Party of such interests in any Oil and Gas Properties or activities related to Oil and Gas Properties of any other Loan Party, or transfer of such interests from one Loan Party to another, provided that (i) no Default or Event of Default has occurred and is continuing, (ii) such acquisition or transfer shall not adversely affect the security interests of the Administrative Agent or any Secured Party granted under any Loan Document and (iii) the Administrative Agent shall have given its prior written consent to such purchase or transfer (not to be unreasonably withheld, conditioned or delayed)); (b) the making of any deposit with, or advance, loan or capital contribution to, assumption of Debt of, purchase or other acquisition of any other Debt or equity participation or interest in, or other extension of credit to, any other Person (excluding any such advance, loan or extension of credit having a term not exceeding ninety (90) days representing the purchase price of inventory or supplies sold by such Person in the ordinary course of business); or (c) the entering into of any guarantee of, or other contingent obligation (including the deposit of any Equity Interests to be sold) with respect to, Debt or other liability of any other Person and (without duplication) any amount committed to be advanced, lent or extended to such Person. For purposes hereof a “business unit” means (i) with respect to any seller from whom a collection of business assets are being acquired, a relatively autonomous division of that seller that has been operated by the seller as an independent enterprise within the seller’s overall business or (ii) any collection of assets that would be reasonably expected to be operated as a relatively autonomous division of the Borrower or any Subsidiary thereof.

“Lenders” means the Persons listed on Annex I and any Person that shall have become a party hereto pursuant to an Assignment and Assumption, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.

“Leverage Ratio” means (a) for any date of determination on or prior to July 31, 2014, the ratio of (i) Net Debt as of such date to (ii) EBITDAX for the four fiscal quarters ending on or immediately prior to

such date and (b) for any date of determination after July 31, 2014, the ratio of (i) Total Debt as of such date to (ii) EBITDAX for the four fiscal quarters ending on or immediately prior to such date.

“LIBO Rate” means, with respect to any Eurodollar Loan for any Interest Period, the rate (rounded upwards, if necessary, to the next 1/100 of 1%) appearing on Reuters Reference Screen LIBOR01 Page (or on any successor or substitute screen of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such screen of such service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the “LIBO Rate” with respect to such Eurodollar Loan for such Interest Period shall be the rate (rounded upwards, if necessary, to the next 1/100 of 1%) at which dollar deposits of an amount comparable to such Eurodollar Loan and for a maturity comparable to such Interest Period are offered by the principal London office of J.P. Morgan Chase Bank, N.A. (or such other commercial bank reasonably selected by the Administrative Agent) in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period.

“Lien” means any interest in Property securing an obligation owed to, or a claim by, a Person other than the owner of the Property, whether such interest is based on the common law, statute or contract, and whether such obligation or claim is fixed or contingent, and including but not limited to (a) the lien or security interest arising from a mortgage, encumbrance, pledge, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes or (b) production payments and the like payable out of Oil and Gas Properties. The term “Lien” shall include easements, restrictions, servitudes, permits, conditions, covenants, exceptions or reservations. For the purposes of this Agreement, the Borrower and its Subsidiaries shall be deemed to be the owner of any Property which it has acquired or holds subject to a conditional sale agreement, or leases under a financing lease or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person in a transaction intended to create a financing.

“Liquidity” means at any time, the sum of (a) readily and immediately available unrestricted cash held in deposit accounts of any Loan Party and Cash Equivalents of the Loan Parties, in each case, which are free and clear of all Liens (other than Liens in favor of Administrative Agent securing the Secured Obligations and the First Lien Administrative Agent securing the First Lien Secured Obligations) and which are reflected on the Borrower’s balance sheet, and (b) the amount of the First Lien Loans that are then available for borrowing.

“Loan Documents” means this Agreement, the Notes, the Security Instruments, the Fee Letter, the Intercreditor Agreement, the Disbursement Letter and any other agreement entered into, now or in the future, in connection with this Agreement.

“Loan Party” means the Borrower and each Guarantor.

“Loans” means the loans made by the Lenders to the Borrower pursuant to this Agreement.

“Majority Lenders” means, at any time while no Loans are outstanding, Lenders having more than fifty percent (50.0%) of the Aggregate Commitment; and at any time while any Loans are outstanding, Lenders holding more than fifty percent (50.0%) of the outstanding aggregate principal amount of the Loans (without regard to any sale by a Lender of a participation in any Loan under Section 12.04(c)).

“Make-Whole Premium” means, with respect to a Loan on any Prepayment Date, the excess, if any, of (a) the present value on such Prepayment Date of (i) the principal amount of such Loan multiplied by the applicable Prepayment Percentage at the date immediately following the date that is the one-year anniversary of the Effective Date as set forth in Section 3.05 hereof, expressed in dollars, plus (ii) any required interest payments due on such Loan through the date immediately following the date that is the one-year anniversary of the Effective Date (except for accrued and unpaid interest to the Prepayment Date), computed using a discount rate equal to the Treasury Rate plus 50 basis points and applied quarterly, discounted to the Prepayment Date (assuming a 360-day year consisting of twelve 30-day months), over (b) the principal amount of such Loan on the Prepayment Date. For the avoidance of doubt, the Make-Whole Premium shall not be less than zero.

“Management Option Proceeds” means any cash proceeds received by the Borrower as consideration from the exercise by any director or officer of the Borrower of any option to purchase Equity Interests of the Borrower.

“Material Adverse Effect” means any event, development or circumstance that has had or could reasonably be expected to have a material adverse effect on (a) the business, operations, Property, assets, liabilities (actual or contingent), condition (financial or otherwise), prospects, or material agreements of the Borrower and its Subsidiaries taken as a whole, (b) the ability of the Borrower, any Subsidiary or any Guarantor to perform any of its obligations under the Loan Documents to which it is a party or (c) the validity or enforceability of any Loan Document or the rights or remedies of or benefits available to the Administrative Agent, any other Agent or the Lenders thereunder.

“Material Contract” means, as to any Person, any supply, purchase, service, employment, tax, indemnity, farm-in agreement, farm-out agreement, gas marketing, gas imbalance, operating, unitization, communitization, partnership, joint venture or other agreement of such Person or any of its Subsidiaries or by which such Person or any of its Subsidiaries or any of their respective properties are otherwise bound, if such agreement either (i) requires the expenditure of over $100,000 by such Person during any calendar year (other than contracts with respect to the routine acquisition of leasehold, the drilling of wells, the construction and operation of gathering, processing or treating facilities or equipment, or other similar contracts pursuant to which such Person routinely acquires, drills, develops and operates the Hydrocarbon Interests), or (ii) involves the sale of more than $1,000,000 in Hydrocarbons by such Person in any calendar year (except to the extent any such contract is cancelable by such Person on 60-days’ notice or less), or (iii) involves a liability of such Person in excess of $500,000, or (iv) results or could reasonably be expected to result in the loss of title to, or the transfer or creation of a Lien upon any Property (except to the extent otherwise permitted hereunder), as the same shall be amended, modified and supplemented and in effect from time to time.

“Material Indebtedness” means Debt (other than the Loans), or obligations in respect of one or more Swap Agreements, of any one or more of the Borrower and its Subsidiaries in an individual or aggregate principal amount exceeding $5,000,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of the Borrower or any Subsidiary in respect of any Swap Agreement at any time shall be the Swap Termination Value.

“Maturity Date” means the earlier of (a) the later of (i) February 3, 2018 and (ii) the date that is six months after the scheduled maturity date of the First Lien Credit Agreement and (b) February 3, 2019. For the avoidance of doubt, if no First Lien Credit Agreement is in effect, the Maturity Date shall be February 3, 2018.

“Miller 2009 Partnership” means Miller Energy Income 2009-A, LP, a Delaware limited partnership, and its successors and permitted assigns.

“Miller Drilling Fund” means a limited partnership or similar investment vehicle to which the Borrower or other Loan Party Disposes of any Oil and Gas Property on which no Proved Reserve is located in accordance with Section 9.12 for the purpose of financing the exploration and development of such contributed property.

“Money Laundering Law” means any law governing conduct or acts designed in whole or in part to conceal or disguise the nature, location, source, ownership or control of money (including currency or equivalents, e.g., checks, electronic transfers, etc.) to avoid a transaction reporting requirement under state or federal law or to disguise the fact that the money was acquired by illegal means.

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto that is a nationally recognized rating agency.

“Mortgage” means each of the mortgages or deeds of trust executed by any one or more Loan Party for the benefit of the Secured Parties as security for the Secured Obligations, together with any assumptions or assignments of the obligations thereunder by any Loan Party, and “Mortgages” shall mean all of such Mortgages collectively.

“Mortgaged Property” means any Property owned by the Borrower or any Guarantor which is subject to the Liens existing and to exist under the terms of the Mortgages.

“Multiemployer Plan” means a multiemployer plan, as defined in section 3(37) or 4001(a)(3) of ERISA, that is subject to Title IV of ERISA and to which the Borrower, a Subsidiary or an ERISA Affiliate is making or accruing an obligation to make contributions or was obligated to make contributions within the last six (6) years.

“Net Cash Proceeds” means, (A) with respect to any Disposition of any Properties by Borrower or any Subsidiary, the excess, if any, of (a) the sum of cash and cash equivalents received in connection with such Disposition, but only as and when so received, over (b) the sum of (i) the principal amount of any Debt that is secured by Liens on such asset senior to Liens securing the Secured Obligations and that is required to be repaid in connection with the Disposition thereof (other than the Loans), (ii) the out-of-pocket expenses incurred by the Borrower or any Subsidiary in connection with such Disposition, (iii) all legal, title and recording tax expense and all federal, state, provincial, foreign and local taxes required to be accrued as a liability under GAAP as a consequence of such Disposition, (iv) the deduction of appropriate amounts provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the property or other assets disposed of in such Disposition and retained by the Borrower or any Subsidiary after such Disposition, and (v) any portion of the purchase price from such Disposition placed in escrow, whether as a reserve for adjustment of the purchase price, for satisfaction of indemnities in respect of such Disposition or otherwise in connection with such Disposition; provided, however, that upon the termination of that escrow, Net Cash Proceeds will be increased by any portion of funds in the escrow that are released to the Borrower or any Subsidiary, and (B) with respect to any incurrence, issuance or refinancing of any Debt, the cash proceeds from such incurrence, issuance or refinancing net of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses; provided, however, that “Net Cash Proceeds” shall be reduced by any amounts that are required to be and are applied to repay the First Lien Secured Obligations, unless, if required to be so applied, any one or more of the holders of the First Lien Secured Obligations entitled to receive such payments decline or waive their right to such payment, in each case, pursuant to and in accordance with the terms of the First Lien Credit Agreement (without giving effect to any amendments, supplements or modifications thereto unless approved by the Administrative Agent in its sole discretion).

“Net Debt” means, on any date of determination, (a) Total Debt minus (b) the aggregate amount of readily and immediately available unrestricted cash held in deposit accounts of any Loan Party and Cash Equivalents of the Loan Parties, in each case, which are free and clear of all Liens (other than Liens in favor of Administrative Agent securing the Secured Obligations and the First Lien Administrative Agent securing the First Lien Secured Obligations) and which are reflected on the Borrower’s balance sheet as of such date.

“Notes” means the promissory notes of the Borrower described in Section 2.02(d) and being substantially in the form of Exhibit A, together with all amendments, modifications, replacements, extensions and rearrangements thereof.

“Notice of Assignment” has the meaning set forth in Section 12.04(b)(vi).

“NYMEX” has the meaning specified in the definition of “NYMEX Price”.

“NYMEX Price” means, as of the date of the determination thereof with respect to each of the appropriate crude oil or natural gas categories included in the then most recent Reserve Report provided by the Borrower to Administrative Agent pursuant to Section 8.12, the prices for the 36 succeeding monthly futures contract prices (the “3 Year Strip”) and held constant thereafter based on the price of the average of the contract prices for the last twelve (12) months of such 3-Year Strip period, commencing with the month during which the determination is to be made, as quoted on the New York Mercantile Exchange (the “NYMEX”) and published in a nationally recognized publication for such pricing as selected by the Administrative Agent, adjusted to account for the historical basis in a manner acceptable to the Administrative Agent, and held constant thereafter; provided, however, in the event that the NYMEX no longer provides futures contract price quotes for 36 month periods, the longest period of quotes of less than 36 months shall be used and held constant thereafter based on the average of the contract prices for the last twelve (12) months of such period, and, if the NYMEX no longer provides such futures contract quotes or has ceased to operate, the Administrative Agent shall designate another nationally recognized commodities exchange to replace the NYMEX for purposes of the references to the NYMEX herein.

“NYMEX Value” means, at any date of determination thereof as to the Proved Developed Producing Reserves or Proved Developed Non-Producing Reserves of the Loan Parties, the discounted present value (determined at a discount factor of 10%) of future net revenues (i.e., after deducting production and ad valorem taxes and less future capital costs and operating expenses) from Proved Developed Producing Reserves or Proved Developed Non-Producing Reserves, as the case may be, of the Loan Parties as of such date calculated for all volumes covered under Swap Agreements at the contract price under such Swap Agreements (taking into account any Swap Agreements covering basis differential) and for all volumes in excess of the volumes covered under Swap Agreements utilizing the NYMEX Price and assuming that production costs (which shall include a good faith estimate of net abandonment costs) thereafter remain constant on a per barrel of oil equivalent basis.

“Oil and Gas Properties” means (a) Hydrocarbon Interests; (b) the Properties now or hereafter pooled or unitized with Hydrocarbon Interests; (c) all presently existing or future unitization agreements, pooling agreements and declarations of pooled units and the units created thereby (including without limitation all units created under orders, regulations and rules of any Governmental Authority) which may affect all or any portion of the Hydrocarbon Interests; (d) all operating agreements, contracts and other agreements, including production sharing contracts and agreements, which relate to any of the Hydrocarbon Interests or the production, sale, transportation, purchase, exchange or processing of Hydrocarbons from or attributable to such Hydrocarbon Interests; (e) all Hydrocarbons in and under and which may be produced and saved or attributable to the Hydrocarbon Interests, including all oil in tanks, and all rents, issues, profits, proceeds, products, revenues and other incomes from or attributable to the Hydrocarbon Interests; (f) all tenements,

hereditaments, appurtenances and Properties in any manner appertaining, belonging, affixed or incidental to the Hydrocarbon Interests and (g) all Properties, rights, titles, interests and estates described or referred to above, including any and all Property, real or personal, now owned or hereinafter acquired and situated upon, used, held for use or useful in connection with the operating, working or development of any of such Hydrocarbon Interests or Property (excluding drilling rigs, automotive equipment, rental equipment or other personal Property which may be on such premises for the purpose of drilling a well or for other similar temporary uses) and including any and all oil wells, gas wells, injection wells or other wells, buildings, structures, fuel separators, liquid extraction plants, plant compressors, pumps, pumping units, field gathering systems, tanks and tank batteries, fixtures, valves, fittings, machinery and parts, engines, boilers, meters, apparatus, equipment, appliances, tools, implements, cables, wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements and servitudes together with all additions, substitutions, replacements, accessions and attachments to any and all of the foregoing.

“Other Connection Taxes” means, with respect to the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrower or any Guarantor hereunder or under any other Loan Document, Taxes imposed as a result of a present or former connection between such recipient and the jurisdiction imposing such Tax (other than connections arising from such recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 5.04).

“Participant” has the meaning assigned to such term in Section 12.04(c)(i).

“Participant Register” has the meaning assigned to such term in Section 12.04(c)(i).

“Patriot Act” has the meaning assigned to such term in Section 12.16.

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

“Pellissippi Pointe Entities” means the collective reference to Pellissippi Pointe, L.L.C., a Tennessee limited liability company and Pellissippi Pointe II, LLC, a Tennessee limited liability company.

“Permitted Disposition” means any transfer, contribution, sale or other disposition of Equity Interests of the Borrower by (a) Scott Boruff, David Voyticky, or David Hall, of 30% or less of the Equity Interests of the Borrower owned by such Person on the Effective Date or (b) Deloy Miller, of 50% or less of the Equity Interests of the Borrower owned by such Person on the Effective Date, in any case, so long as (i) the Borrower delivers all documents entered into in connection with such transfer, contribution, sale or disposition of Equity Interests to the Administrative Agent on or prior to the date of such transfer, contribution, sale or disposition of Equity Interests, which documents shall be in form and substance reasonably satisfactory to the Administrative Agent and (ii) the value of any such Equity Interests subject to such transfer, contribution, sale or other disposition shall be equal to or greater than $10 per share for the ten (10) consecutive Business Days preceding the date of such transfer, contribution, sale or disposition without giving effect to any splits or reverse splits of stock effective on or after the Effective Date.

“Permitted Refinancing Debt” means Debt (for purposes of this definition, “new Debt”) incurred in exchange for, or proceeds of which are used to refinance, all of any other Debt (the “Refinanced Debt”); provided that (a) such new Debt is in an aggregate principal amount not in excess of the sum of (i) the aggregate principal amount then outstanding of the Refinanced Debt (or, if the Refinanced Debt is exchanged or acquired for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration thereof, such lesser amount) and (ii) an amount necessary to pay any fees and expenses, including premiums, related to such exchange or refinancing; (b) such new Debt has a stated maturity no earlier than the stated maturity of the Refinanced Debt and a weighted average life no shorter than the weighted average life of the Refinanced Debt; (c) such new Debt does not have a stated interest rate in excess of the stated interest rate of the Refinanced Debt; (d) such new Debt does not contain any covenants which, taken as a whole, are more onerous to the Borrower and its Subsidiaries than those imposed by the Refinanced Debt and (e) if such Refinanced Debt was subordinated, such new Debt (and any guarantees thereof) is subordinated in right of payment to the Secured Obligations (or, if applicable, the Guarantee and Collateral Agreement) to at least the same extent as the Refinanced Debt and is otherwise subordinated on terms reasonably satisfactory to the Administrative Agent.

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“Plan” means any employee pension benefit plan, as defined in section 3(2) of ERISA but excluding any Multiemployer Plan, which (a) is currently or hereafter sponsored, maintained or contributed to by the Borrower, a Subsidiary or an ERISA Affiliate or (b) was at any time during the six calendar years preceding the date hereof, sponsored, maintained or contributed to by the Borrower or a Subsidiary or an ERISA Affiliate.

“Prepayment Date” means the date on which any Loan is (or is required to be) prepaid or repaid in whole or in part pursuant to this Agreement.

“Prepayment Percentage” shall have the meaning set forth in Section 3.05.

“Prepayment Premium” shall mean, on any date, (a)(i) the applicable Prepayment Percentage minus (ii) 100% multiplied by (b) the principal amount of the applicable Loans being prepaid or repaid (or that are required to be prepaid or repaid) on such date.

“Prime Rate” means the rate of interest per annum publicly announced from time to time by J.P. Morgan Chase Bank, N.A. (or such other commercial bank reasonably selected by the Administrative Agent) as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.

“Property” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, including, without limitation, cash, securities, accounts and contract rights.

“Proved Developed Non-Producing Reserves” has the meaning set forth in the definition of “Proved Reserves.”

“Proved Developed Producing Reserves” has the meaning set forth in the definition of “Proved Reserves.”

“Proved Developed Reserves” has the meaning set forth in the definition of “Proved Reserves.”

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

“Purchase Price” has the meaning set forth in Section 12.04(b)(vi).

“Redemption” means with respect to any Debt, the repurchase, redemption, prepayment, repayment, defeasance or any other acquisition or retirement for value (or the segregation of funds with respect to any of the foregoing) of such Debt. “Redeem” has the correlative meaning thereto.

“Refinanced Debt” has the meaning assigned such term in the definition of “Permitted Refinancing Debt”.

“Register” has the meaning assigned to such term in Section 12.04(b)(iv).

“Regulation D” means Regulation D of the Board, as the same may be amended, supplemented or replaced from time to time.

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

“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors (including attorneys, accountants and experts) of such Person and such Person’s Affiliates.

“Release” means any depositing, spilling, leaking, pumping, pouring, placing, emitting, discarding, abandoning, emptying, discharging, migrating, injecting, escaping, leaching, dumping, or disposing.

“Remedial Work” has the meaning assigned such to term in Section 8.10(a).

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

“Reserve Report” means a report, in form and substance reasonably satisfactory to the Administrative Agent, setting forth, as of each May 1st or November 1st (or such other date in the event of an interim redetermination of the Borrowing Base) the oil and gas reserves attributable to the Oil and Gas Properties of the Borrower and the Subsidiaries located in the United States of America, together with a projection of the rate of production and future net income, taxes, operating expenses and capital expenditures with respect thereto as of such date, based upon the economic assumptions consistent with the Administrative Agent’s lending requirements at the time.

“Responsible Officer” means, as to any Person, the Chief Executive Officer, the President, any Financial Officer or any Vice President of such Person. Unless otherwise specified, all references to a Responsible Officer herein shall mean a Responsible Officer of the Borrower.

“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other Property) with respect to any Equity Interests in the Borrower or any of its Subsidiaries, or any payment (whether in cash, securities or other Property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interests in the Borrower or any of its Subsidiaries or any option, warrant or other right to acquire any such Equity Interests in the Borrower or any of its Subsidiaries.

“Restructuring Agreement” means that certain letter agreement dated as of the Effective Date re: Prepayment Premiums under the Existing Credit Agreement among the Borrower and Apollo Investment Corporation, as administrative agent and lender under the Existing Credit Agreement.

“SEC” means the Securities and Exchange Commission or any successor Governmental Authority.

“Secured Obligations” means any and all amounts owing or to be owing by the Borrower, any Subsidiary or any Guarantor (whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising): (a) to the Administrative Agent or any other Secured Party under any Loan Document; (b) all accrued and unpaid interest, premium, if any, and fees owing to the Administrative Agent or any other Secured Party under any Loan Document (including the Make-Whole Premium or any Prepayment Premium and any interest accruing after the filing of a bankruptcy or insolvency proceeding, whether or not such interest would be an allowable claim in such proceeding); and (c) all renewals, extensions and/or rearrangements of any of the above.

“Secured Party” means, collectively, the Administrative Agent, each Lender and each sub-agent pursuant to Section 11.05 appointed by the Administrative Agent with respect to matters relating to the Loan Documents.

“Security Instruments” means, collectively, any and all of the security agreements (including the Guarantee and Collateral Agreement and each Deposit Account Control Agreement), pledges, Mortgages, deeds of trust, assignments, Transfer Order Letters, stock pledge agreements, assignments of partnership interests, assignments of member interests, and such other agreements, documents and instruments, in form and substance satisfactory to the Administrative Agent, which are, or are to be, executed by a Loan Party in favor of the Administrative Agent and/or the Secured Parties as may be required from time to time by the Administrative Agent to provide the Administrative Agent for the benefit of the Secured Parties with Liens upon all of the assets and properties of such Loan Party as security for the payment and performance in full of the Secured Obligations, in each case as the same may be amended, modified, restated, supplemented, increased, renewed, extended, substituted for or replaced from time to time.

“Series B Preferred Dividend” means a 12% semi-annual dividend, payable in cash on March 1 and September 1 of each year, on the Borrower’s Series B Preferred Stock.

“Series B Preferred Stock” means the class of equity of the Borrower to be designated “Series B Redeemable Preferred Stock”; provided that no more than 300,000 shares of such Series B Preferred Stock shall be authorized or outstanding at any time.

“Series C Preferred Dividend” means a 10.75% per annum quarterly dividend, payable in cash on March 1, June 1, September 1 and December 1 of each year, on the Borrower’s Series C Preferred Stock. For the avoidance of doubt, the Series C Preferred Dividend shall not include any dividend in excess of the amount specified in the foregoing sentence, including without limitation any dividends accruing at the “Penalty Rate” set forth in the Borrower’s articles of incorporation or otherwise.

“Series C Preferred Stock” means the class of equity of the Borrower to be designated “10.75% Series C Cumulative Redeemable Preferred Stock”; provided that no more than 3,250,000 shares of such Series C Preferred Stock shall be authorized or outstanding at any time.

“Series D Preferred Dividend” means a 10.5% per annum cash payment paid quarterly, subject to prior payment in full of accrued but unpaid dividends on any other senior securities, if any, that may be issued with dividend rights senior to the Series D Preferred Stock.

“Series D Preferred Stock” means the class of equity of the Borrower to be designated “10.5% Series D Cumulative Redeemable Preferred Stock”, provided that no more than 4,000,000 shares of such Series D Preferred Stock shall be authorized or outstanding at any time.

“S&P” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies, Inc., and any successor thereto that is a nationally recognized rating agency.

“Specified Liens” means, collectively, (a) Excepted Liens identified in clauses (a) to (d) and (f) of the definition thereof, but subject to the provisos at the end of such definition, and (b) Liens permitted by Section 9.03(e).

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board). Such reserve percentages shall include those imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

“Subject Interests” has the meaning set forth in Section 12.04(b)(vi).

“subsidiary” means, with respect to any Person (the “parent”) at any date, any other Person the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other Person (a) of which Equity Interests representing more than 50% of the equity or more than 50% of the ordinary voting power (irrespective of whether or not at the time Equity Interests of any other class or classes of such Person shall have or might have voting power by reason of the happening of any contingency) or, in the case of a partnership, any general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.

“Subsidiary” means any subsidiary of the Borrower; provided that, notwithstanding anything to the contrary contained herein, none of the Miller 2009 Partnership, any Miller Drilling Fund nor any of the Pellissippi Pointe Entities shall be deemed a Subsidiary of any Loan Party for purposes of this Agreement.

“Swap Agreement” means any agreement with respect to any swap, cap, collar, forward, future or derivative transaction or option or similar agreement, whether exchange traded, “over-the-counter” or otherwise, involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions.

“Swap Termination Value” means, in respect of any one or more Swap Agreements, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Agreements, (a) for any date on or after the date such Swap Agreements have been closed out and termination value(s) determined in accordance therewith, such termination value(s) and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Agreements, as determined by the counterparties to such Swap Agreements.

“Synthetic Leases” means, in respect of any Person, all leases which shall have been, or should have been, in accordance with GAAP, treated as operating leases on the financial statements of the Person liable (whether contingently or otherwise) for the payment of rent thereunder and which were properly treated as debt for borrowed money for purposes of U.S. federal income taxes, if the lessee in respect thereof is obligated to either purchase for an amount in excess of, or pay upon early termination an amount in excess of, 80% of the residual value of the Property subject to such operating lease upon expiration or early termination of such lease.

“Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority.

“Tennessee Oil and Gas Properties” means Oil and Gas Properties of the Loan Parties located in the State of Tennessee.

“Termination Date” means the date on which each of the following events shall have occurred: (a) the termination of the Aggregate Commitment, and (b) the payment in full in cash of all Secured Obligations (other than indemnity obligations and similar obligations that survive the termination of the Loan Documents for which no notice of a claim has been received by the Loan Parties).

“Total Debt” means, on any date of determination, all Debt of the Borrower and the Consolidated Subsidiaries as of such date.

“Transactions” means, with respect to (a) the Borrower, the execution, delivery and performance by the Borrower of this Agreement, each other Loan Document and Acquisition Document to which it is a party, the Acquisition, the borrowing of Loans, the use of the proceeds thereof and the grant of Liens by the Borrower on Mortgaged Properties and other Properties pursuant to the Security Instruments, and (b) each Guarantor, the execution, delivery and performance by such Guarantor of each Loan Document and Acquisition Document to which it is a party, the Acquisition, the guaranteeing of the Secured Obligations and the other obligations under the Guarantee and Collateral Agreement by such Guarantor and such Guarantor’s grant of the security interests and provision of collateral under the Security Instruments and the grant of Liens by such Guarantor on Mortgaged Properties and other Properties pursuant to the Security Instruments. From and after the First Lien Effective Date, “Transactions” shall also include the execution, delivery and performance by the Loan Parties of the First Lien Loan Documents, the borrowing of First Lien Loans and receipt of other credit extensions thereunder, the guaranteeing of the First Lien Secured Obligations by the Guarantors thereunder and the grant by the Loan Parties of the security interests and provision of collateral under the First Lien Loan Documents to secure the First Lien Secured Obligations, in accordance with the Intercreditor Agreement.

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

“Treasury Rate” means the yield to maturity at the time of computation of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical

Release H.15(519) which has become publicly available at least two Business Days prior to the Prepayment Date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the Prepayment Date to the date immediately following the date that is the one-year anniversary of the Effective Date; provided, however, that if such period is not equal to the constant maturity of a United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the period from the Prepayment Date to the date immediately following the date that is the one-year anniversary of the Effective Date is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used. Any calculation of the Treasury Rate and Make-Whole Premium by Administrative Agent in connection with any prepayment or repayment of the Loans shall be conclusive absent manifest error.

“Type”, when used in reference to any Loan, refers to whether the rate of interest on such Loan is determined by reference to the Alternate Base Rate or the Adjusted LIBO Rate.

“U.S. Person” means any Person that is a “United States person” as defined in Section 7701(a)(30) of the Code.

“VCOC Letters” means, the letters dated as of the Effective Date, executed by the Borrower in favor of Highbridge Principal Strategies - Specialty Loan Institutional Fund III-L, L.P. and Highbridge Principal Strategies - Specialty Loan Institutional Fund III, L.P. regarding certain management rights, in form and substance satisfactory to such Lenders.

“Wholly-Owned Subsidiary” means any Subsidiary of which all of the outstanding Equity Interests (other than any directors’ qualifying shares mandated by applicable law), on a fully-diluted basis, are owned by the Borrower or one or more of the Wholly-Owned Subsidiaries or are owned by the Borrower and one or more of the Wholly-Owned Subsidiaries.

Section 1.03. Types of Loans. For purposes of this Agreement, Loans may be classified and referred to by Type (e.g., a “Eurodollar Loan”).

Section 1.04. Terms Generally; Rules of Construction. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” as used in this Agreement shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth in the Loan Documents), (b) any reference herein to any law shall be construed as referring to such law as amended, modified, codified or reenacted, in whole or in part, and in effect from time to time, (c) any reference herein to any Person shall be construed to include such Person’s successors and assigns (subject to the restrictions contained in the Loan Documents), (d) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (e) with respect to the determination of any time period, the word “from” means “from and including” and the word “to” means “to but excluding” and (f) any reference herein to Articles, Sections, Annexes, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Annexes, Exhibits and Schedules to, this Agreement. No provision of this Agreement or any other

Loan Document shall be interpreted or construed against any Person solely because such Person or its legal representative drafted such provision.

Section 1.05. Accounting Terms and Determinations; GAAP. Unless otherwise specified herein, all financial statements and reports as to financial matters required to be furnished to the Administrative Agent or the Lenders hereunder shall be prepared in accordance with GAAP as in effect from time to time. All accounting terms used herein shall be interpreted, and all determinations with respect to accounting matters hereunder (including with respect to Section 9.01) shall be made in accordance with GAAP as in effect on the date hereof unless otherwise agreed to by the Borrower and the Majority Lenders. In the event of any change in GAAP or in the application thereof that would have an effect on the calculation of any financial provisions in this Agreement, the Borrower will furnish to the Administrative Agent and each Lender a certificate of a Financial Officer specifying such change and the effect of such change on such calculations.

ARTICLE II

THE CREDIT

Section 2.01. Commitments. Subject to the terms and conditions set forth herein, each Lender agrees to make a Loan to the Borrower on the Effective Date in an aggregate principal amount not to exceed such Lender’s Commitment, which Loans shall be funded net of the original issue discount described in the Fee Letter. After giving effect to the funding of the Loans on the Effective Date, the Commitments shall immediately terminate without further action. Amounts borrowed under this Section 2.01 and prepaid or repaid may not be reborrowed.

Section 2.02. Loans.

(a) Several Obligations. The failure of any Lender to make any Loan required to be made

by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments

are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.

(b) Type of Loans. Subject to Section 3.03 and Section 5.05, the Loans shall be comprised

entirely of Eurodollar Loans. Each Lender at its option may make any Eurodollar Loan by causing

any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any

exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance

with the terms of this Agreement.

Borrower shall not be entitled to (a) request, or to elect to continue any borrowing of Eurodollar

Loans if the Interest Period requested with respect thereto would end after the Maturity Date, or (b)

subject to Section 3.03 and Section 5.05, convert any Eurodollar Loan into an ABR Loan.

(d) Notes. If requested by any Lender, the Loans made by such Lender shall be evidenced

by a single promissory note of the Borrower in substantially the form of Exhibit A, dated, in the case

of (i) any Lender party hereto as of the date of this Agreement, as of the date of this Agreement or

(ii) any Lender that becomes a party hereto pursuant to an Assignment and Assumption, as of the

effective date of the Assignment and Assumption, payable to such Lender in a principal amount equal

to its Commitment as in effect on such date, and otherwise duly completed. In the event that any

such Lender’s Commitment increases or decreases for any reason (whether pursuant to Section 12.04

(b) or otherwise), the Borrower shall deliver or cause to be delivered on the effective date of such

increase or decrease, a new Note payable to such Lender in a principal amount equal to its Commitment

after giving effect to such increase or decrease, and otherwise duly completed. The date, amount,

Type, interest rate and, if applicable, Interest Period of each Loan made by such Lender, and all

payments made on account of the principal thereof, shall be recorded by such Lender on its books

for its Note, and, prior to any transfer, may be recorded by such Lender on a schedule attached to

such Note or any continuation thereof or on any separate record maintained by such Lender. Failure

to make any such notation or to attach a schedule shall not affect any Lender’s or the Borrower’s

rights or obligations in respect of such Loans or affect the validity of such transfer by any Lender of

its Note.

Section 2.03. Requests for Loans. To request a borrowing of Loans, the Borrower shall notify the Administrative Agent of such request by telephone not later than 12:00 noon, New York City time, ten Business Days before the Effective Date. Such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Borrowing Request in substantially the form of Exhibit B and signed by the Borrower. Such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02:

(i) the aggregate amount of the requested Loan;

(ii) the date of such Loan, which shall be a Business Day;

(iii) the initial Interest Period to be applicable thereto, which shall be a period

contemplated by the definition of the term “Interest Period”; and

(iv) the location and number of the Borrower’s account to which funds are to be

disbursed.

If no Interest Period is specified in the Borrowing Request, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.

Promptly following receipt of a Borrowing Request in accordance with this Section 2.03, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested borrowing.

Section 2.04. Interest Elections.

(a) Continuance of Eurodollar Loans. Each borrowing of Eurodollar Loans shall have

an initial Interest Period as specified in the Borrowing Request. Thereafter, the Borrower may elect

to continue such borrowing and may elect a new Interest Period therefor, as provided in this Section

2.04. All Loans made hereunder shall have the same Interest Period applicable thereto.

(b) Requests to Continue Eurodollar Loans. To make an election to continue Eurodollar

Loans pursuant to this Section 2.04, the Borrower shall notify the Administrative Agent of such

election by telephone not later than 12:00 noon, New York City time, three Business Days before the

effective date of such election. Each such telephonic Continuation Request shall be irrevocable and

shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written

Continuation Request in substantially the form of Exhibit C and signed by the Borrower.

Request shall specify the following information in compliance with Section 2.02:

(i) the effective date of the election made pursuant to such Continuation Request,

which shall be a Business Day; and

(ii) the Interest Period to be applicable thereto after giving effect to such election,

which shall be a period contemplated by the definition of the term “Interest Period”.

If any such Continuation Request does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.

(d) Notice to Lenders by the Administrative Agent. Promptly following receipt of a

Continuation Request, the Administrative Agent shall advise each Lender of the details thereof.

(e) Effect of Failure to Deliver Timely Continuation Request. If the Borrower fails to

deliver a timely Continuation Request for any Eurodollar Loans prior to the end of the Interest Period

applicable thereto, then, unless such Loans are repaid as provided herein, at the end of such Interest

Period, the Borrower shall be deemed to have selected a new Interest Period of one month’s duration

for such Loans.

Section 2.05. Funding of Loans.

(a) Funding by Lenders. Each Lender shall make each Loan to be made by it hereunder

on the proposed date thereof by wire transfer of immediately available funds by 1:00 p.m., New York

City time, to the account of the Administrative Agent most recently designated by it for such purpose

by notice to the Lenders. The Administrative Agent will make such Loans available to the Borrower

by promptly crediting the amounts so received, in like funds, to an account of the Borrower designated

by the Borrower in the Borrowing Request. Nothing herein shall be deemed to obligate any Lender

to obtain the funds for its Loan in any particular place or manner or to constitute a representation by

any Lender that it has obtained or will obtain the funds for its Loan in any particular place or manner.

(b) Presumption of Funding by the Lenders. Unless the Administrative Agent shall have

received notice from a Lender prior to the proposed date of any borrowing of Loans that such Lender

will not make available to the Administrative Agent such Lender’s share of such borrowing, the

Administrative Agent may assume that such Lender has made such share available on such date in

accordance with Section 2.05(a) and may, in reliance upon such assumption, make available to the

Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the

applicable borrowing available to the Administrative Agent, then the applicable Lender and the

Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding

amount with interest thereon, for each day from and including the date such amount is made available

to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case

of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the

Administrative Agent in accordance with banking industry rules on interbank compensation or (ii)

in the case of the Borrower, the interest rate applicable to ABR Loans. If such Lender pays such

amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included

in such borrowing.

Section 2.06. Reserved.

Section 2.07. Reserved.

Section 2.08. Reserved.

ARTICLE III

PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES

Section 3.01. Repayment of Loans. The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Loan on the Maturity Date.

Section 3.02. Interest.

(a) ABR Loans. ABR Loans shall bear interest at the Alternate Base Rate plus the

Applicable Margin, but in no event to exceed the Highest Lawful Rate.

(b) Eurodollar Loans. Eurodollar Loans shall bear interest at the Adjusted LIBO Rate for

the Interest Period in effect for such Loan plus the Applicable Margin, but in no event to exceed the

Highest Lawful Rate.

any Loan or any fee or other amount payable by the Borrower or any Guarantor hereunder or under

any other Loan Document is not paid when due, whether at stated maturity, upon acceleration or

otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per

annum equal to three and one-half percent (3.5%) plus the higher of the rate applicable to ABR Loans

as provided in Section 3.02(a) and the rate applicable to Eurodollar Loans as provided in Section

3.02(b) (in either case, including the Applicable Margin), but in no event to exceed the Highest Lawful

Rate. Notwithstanding the foregoing, (i) if an Event of Default or a Borrowing Base Deficiency has

occurred and is continuing, all Loans outstanding at such time shall bear interest, after as well as

before judgment, at the rate then applicable to such Loans (including the Applicable Margin) plus an

additional three and one-half percent (3.5%), but in no event to exceed the Highest Lawful Rate.

(d) Interest Payment Dates. Accrued interest on each Loan shall be payable in arrears on

each Interest Payment Date for such Loan and on the Maturity Date; provided that (i) interest accrued

pursuant to Section 3.02(c) shall be payable on demand, (ii) in the event of any repayment or

prepayment of any Loan, accrued interest on the principal amount repaid or prepaid shall be payable

on the date of such repayment or prepayment, and (iii) in the event of any conversion of any Eurodollar

Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be

payable on the effective date of such conversion.

(e) Interest Rate Computations. All interest hereunder shall be computed on the basis of

a year of 360 days, unless such computation would exceed the Highest Lawful Rate, in which case

interest shall be computed on the basis of a year of 365 days (or 366 days in a leap year), except that

interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is

based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap

year), and in each case shall be payable for the actual number of days elapsed (including the first day

but excluding the last day). The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate

shall be determined by the Administrative Agent, and such determination shall be conclusive absent

manifest error, and be binding upon the parties hereto.

Section 3.03. Alternate Rate of Interest. If prior to the commencement of any Interest Period for a borrowing of Eurodollar Loans:

(a) the Administrative Agent determines (which determination shall be conclusive absent

manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO

Rate or the LIBO Rate for such Interest Period; or

(b) the Administrative Agent is advised by the Majority Lenders that the Adjusted LIBO

Rate or LIBO Rate, as applicable, for such Interest Period will not adequately and fairly reflect the

cost to such Lenders of making or maintaining their Loans for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Continuation Request that requests the continuation of any Eurodollar Loans shall be ineffective (and such Loans shall be automatically converted into ABR Loans on the last day of the relevant Interest Period), and (ii) if any Borrowing Request requests a borrowing of Eurodollar Loans, such borrowing shall be made either as a borrowing of ABR Loans or at an alternate rate of interest determined by the Majority Lenders as their cost of funds.

Section 3.04. Prepayments.

(a) Optional Prepayments. The Borrower shall have the right at any time and from time

to time to prepay the Loans in whole or in part, subject to prior notice in accordance with Section

3.04(b).

(b) Notice and Terms of Optional Prepayment. The Borrower shall notify the

Administrative Agent by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the

case of prepayment of Eurodollar Loans, not later than 12:00 noon, New York City time, three Business

Days before the date of prepayment, or (ii) in the case of prepayment of ABR Loans, not later than

12:00 noon, New York City time, the date of prepayment. Each such notice shall be irrevocable and

shall specify the prepayment date and the principal amount of the Loans to be prepaid. Promptly

following receipt of any such notice, the Administrative Agent shall advise the Lenders of the contents

thereof. Each partial prepayment of any Loans shall be in minimum principal amounts of $100,000

or integral multiples of $100,000 thereof (unless the outstanding principal amount of all Loans is less

than $100,000, then such prepayments shall be equal to such outstanding principal amount). Each

prepayment shall be applied ratably to the Loans outstanding at such time in accordance with each

Lender’s Applicable Percentage thereof. Prepayments pursuant to this Section 3.04 shall be

accompanied by accrued interest to the extent required by Section 3.02 and the amounts required by

Section 3.05.

(i) Unless waived by the Administrative Agent in its sole discretion, immediately

upon any Disposition by the Borrower or any of its Subsidiaries of any Property in accordance

with Sections 9.12(c), (e) or (i)), the Borrower shall immediately prepay the outstanding Loans

in accordance with Section 3.04(c)(iv) in an amount equal to 100% of the Net Cash Proceeds

received by such Person in connection with such Disposition. Nothing contained in this

Section 3.04(c)(i) shall permit Borrower or any of its Subsidiaries to sell or otherwise Dispose

of any Property other than in accordance with this Agreement.

(ii) Unless waived by the Administrative Agent in its sole discretion, immediately

upon the receipt by the Borrower or any of its Subsidiaries of any Extraordinary Proceeds in

any one or series of related events, the Borrower shall immediately prepay the outstanding

Loans in accordance with Section 3.04(c)(iv) in an amount equal to 100% of such

Extraordinary Proceeds, net of any reasonable expenses incurred in collecting such

Extraordinary Proceeds.

(iii) Unless waived by Administrative Agent in its sole discretion, immediately

upon the issuance or incurrence by the Borrower or any of its Subsidiaries of any Debt other

than Debt permitted under Section 9.02, the Borrower shall immediately prepay the

outstanding Loans in accordance with Section 3.04(c)(iv) in an amount equal to 100% of the

Net Cash Proceeds received by such Person in connection with such issuance or incurrence.

Nothing contained in this Section 3.04(c)(iii) shall permit the Borrower or any of its

Subsidiaries to issue or incur any Debt other than in accordance with the terms and conditions

of this Agreement.

(iv) Unless waived by Administrative Agent in its sole discretion, if the Alaska

Department of Natural Resources affirmatively rejects the transfer of the Acquisition Properties (other

than the Acquired Equity) to CIE pursuant to the Acquisition Documents or fails to approve such

transfer on or before the date that is 120 days after the Effective Date, the Borrower shall prepay the

outstanding Loans in an amount equal to $59,557,303 within five (5) Business Days following such

rejection or such date, as the case may be.

(v) Each prepayment of Loans pursuant to this Section 3.04(c) shall be (A) applied

ratably to the outstating principal amount of the Loans in accordance with each Lender’s Applicable

Percentage thereof, and (B) accompanied by accrued interest to the extent required by Section 3.02

and all amounts required by Section 3.05.

Section 3.05. Make-Whole Premium & Prepayment Premium. Each prepayment or repayment of

Loans that is (or is required to be) made hereunder, including as a result of acceleration under Article

X or otherwise, but excluding any prepayment or repayment pursuant to Section 2.05(b), (A) on or

before the date that is the one-year anniversary of the Effective Date, shall be made together with the

Make-Whole Premium and (B) at any time thereafter, shall be made at the percentage (herein referred

to as the “Prepayment Percentage”) set forth in the following chart, of the principal amount so prepaid

or repaid, in each case, together with all unpaid interest on the amount so prepaid or repaid.



Date of Prepayment	Prepayment Percentage
1.From the date immediately following the date that is the one-year anniversary of the Effective Date through and including the date that is two-year anniversary of the Effective Date.	102%
2.From the date immediately following the date that is the two-year anniversary of the Effective Date through and including the date the Loans are paid in full.	101%

Section 3.06. Fees. The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times set forth in the Fee Letter or otherwise separately agreed upon between the Borrower and the Administrative Agent.

ARTICLE IV

PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS

Section 4.01. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

(a) Payments by the Borrower. The Borrower shall make each payment required to be

made by it hereunder (whether of principal, interest or fees, or of amounts payable under Section

5.01, Section 5.02, Section 5.03 or otherwise) prior to 12:00 noon, New York City time, on the date

when due, in immediately available funds, without defense, deduction, recoupment, set-off or

counterclaim. Fees, once paid, shall be fully earned and shall not be refundable under any

circumstances. Any amounts received after such time on any date may, in the discretion of the

Administrative Agent, be deemed to have been received on the next succeeding Business Day for

purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent

at its offices specified in Section 12.01, except that payments pursuant to Section 5.01, Section 5.02,

Section 5.03 and Section 12.03 shall be made directly to the Persons entitled thereto. The

Administrative Agent shall distribute any such payments received by it for the account of any other

Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder

shall be due on a day that is not a Business Day, the date for payment shall be extended to the next

succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be

payable for the period of such extension. All payments hereunder shall be made in dollars.

(b) Application of Insufficient Payments. If at any time insufficient funds are received

by and available to the Administrative Agent to pay fully all amounts of principal, interest, premiums

and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and

fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts

of interest and fees then due to such parties, (ii) second, towards payment of principal then due

hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal then

due to such parties, and third, towards payment of any Make-Whole Premium or Prepayment Premium

then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of such

Make-Whole Premium or Prepayment Premium due to such parties.

off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of

its Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount

of its Loans and accrued interest thereon than the proportion received by any other Lender, then the

Lender receiving such greater proportion shall purchase (for cash at face value) participations in the

Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared

by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest

on their respective Loans and; provided that (i) if any such participations are purchased and all or

any portion of the payment giving rise thereto is recovered, such participations shall be rescinded

and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions

of this Section 4.01(c) shall not be construed to apply to any payment made by the Borrower pursuant

to and in accordance with the express terms of this Agreement or any payment obtained by a Lender

as consideration for the assignment of or sale of a participation in any of its Loans to any assignee

or participant (including the Borrower to the extent made pursuant to and in accordance with Section

12.04(b)(vi), provided that the provisions of this Section 4.01(c) shall apply to any other such

assignment or sale to the Borrower or any Subsidiary or Affiliate thereof). The Borrower consents

to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any

Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the

Borrower rights of set-off and counterclaim with respect to such participation as fully as if such

Lender were a direct creditor of the Borrower in the amount of such participation.

Section 4.02. Presumption of Payment by the Borrower. Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

Section 4.03. Certain Deductions by the Administrative Agent. If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.05(a) or Section 4.02 then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid. After acceleration or maturity of the Loans, all principal will be paid ratably as provided in Section 10.02(c).

Section 4.04. Disposition of Proceeds. The Security Instruments contain an assignment by the Borrower and/or the Guarantors unto and in favor of the Administrative Agent for the benefit of the Secured Parties of all of the Borrower’s or each Guarantor’s interest in and to production and all proceeds attributable thereto which may be produced from or allocated to the Mortgaged Property. The Security Instruments further provide in general for the application of such proceeds to the satisfaction of the Secured Obligations and other obligations described therein and secured thereby. Notwithstanding the assignment contained in such Security Instruments, until the occurrence of an Event of Default, (a) the Administrative Agent and the Lenders agree that they will neither notify the purchaser or purchasers of such production nor take any other action to cause such proceeds to be remitted to the Administrative Agent or the Lenders, but the Lenders will instead permit such proceeds to be paid to the Borrower and its Subsidiaries and (b) the Lenders hereby authorize the Administrative Agent to take such actions as may be necessary to cause such proceeds to be paid to the Borrower and/or such Subsidiaries.

ARTICLE V

INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES; ILLEGALITY

Section 5.01. Increased Costs.

(a) Eurodollar Changes in Law. If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit or similar

requirement against assets of, deposits with or for the account of, or credit extended by, any

Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate); or

(ii) impose on any Lender or the London interbank market any other condition

affecting this Agreement or Eurodollar Loans made by such Lender;

and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to reduce the amount of any sum received or receivable by such Lender (whether of principal, interest or otherwise, but not including Excluded Taxes, Indemnified Taxes or Other Taxes), then the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered.

(b) Capital and Liquidity Requirements. If any Lender determines that any Change in

Law regarding capital or liquidity requirements has or would have the effect of reducing the rate of

return on such Lender’s capital or liquidity or on the capital or liquidity of such Lender’s holding

company, if any, as a consequence of this Agreement or the Loans made by such Lender, to a level

below that which such Lender or such Lender’s holding company could have achieved but for such

Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s

holding company with respect to capital adequacy or liquidity), then from time to time the Borrower

will pay to such Lender such additional amount or amounts as will compensate such Lender or such

Lender’s holding company for any such reduction suffered.

and a calculation of, the amount or amounts necessary to compensate such Lender or its holding

company, as the case may be, as specified in Section 5.01(a) or (b) shall be delivered to the Borrower

and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown

as due on any such certificate within 10 days after receipt thereof.

(d) Effect of Failure or Delay in Requesting Compensation. Failure or delay on the part

of any Lender to demand compensation pursuant to this Section 5.01 shall not constitute a waiver of

such Lender’s right to demand such compensation; provided that the Borrower shall not be required

to compensate a Lender pursuant to this Section 5.01 for any increased costs incurred or reductions

suffered more than 180 days prior to the date that such Lender notifies the Borrower of the Change

in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim

compensation therefor; provided further that, if the Change in Law giving rise to such increased costs

or reductions is retroactive, then the 180-day period referred to above shall be extended to include

the period of retroactive effect thereof.

Section 5.02. Break Funding Payments. In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan into an ABR Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Eurodollar Loan on the date specified in any notice delivered pursuant hereto, or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 5.04(a), then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event (exclusive of any lost profits or opportunity costs). In the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that

would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the eurodollar market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section 5.02 shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.

Section 5.03. Taxes.

(a) Payments Free of Taxes. Any and all payments by or on account of any obligation of

the Borrower or any Guarantor under any Loan Document shall be made free and clear of and without

deduction or withholding for any Taxes; provided that if the Borrower or any Guarantor shall be

required to deduct or withhold any Taxes from such payments, as determined in good faith by the

Borrower or the Administrative Agent, as applicable, then (i) if such Taxes are Indemnified Taxes,

the sum payable shall be increased as necessary so that after making all required deductions or

withholdings (including deductions or withholdings of Indemnified Taxes applicable to additional

sums payable under this Section 5.03(a)), the Administrative Agent or Lender receives an amount

equal to the sum it would have received had no such deductions or withholding been made, (ii) the

Borrower or such Guarantor shall make such deductions or withholding and (iii) the Borrower or

such Guarantor shall pay the full amount deducted or withheld to the relevant Governmental Authority

in accordance with applicable law.

(b) Payment of Other Taxes by the Borrower. The Borrower shall pay any Other Taxes

to the relevant Governmental Authority in accordance with applicable law, or at the option of the

Administrative Agent timely reimburse it for payment of such Other Taxes.

Agent and each Lender, within 10 days after written demand therefor, for the full amount of any

Indemnified Taxes paid by the Administrative Agent or such Lender, as the case may be, on or with

respect to any payment by or on account of any obligation of the Borrower hereunder (including

Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 5.03)

and any penalties, interest and reasonable out-of-pocket expenses arising therefrom or with respect

thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the

relevant Governmental Authority; provided that the Borrower shall not be required to indemnify the

Administrative Agent or any Lender for any amounts under this Section 5.03(c) to the extent that

such Person fails to notify the Borrower of its intent to make a claim for indemnification under this

Section 5.03(c) within 180 days after a claim is asserted against such Person by the relevant

Governmental Authority. A certificate of the Administrative Agent or a Lender as to the amount of

such payment or liability under this Section 5.03 shall be delivered to the Borrower and shall be

conclusive absent manifest error.

(d) Evidence of Payments. As soon as practicable after any payment of Indemnified Taxes

or Other Taxes by the Borrower or a Guarantor to a Governmental Authority, the Borrower shall

deliver to the Administrative Agent the original or a certified copy of a receipt issued by such

Governmental Authority evidencing such payment, a copy of the return reporting such payment or

other evidence of such payment reasonably satisfactory to the Administrative Agent.

(e) Status of Lenders.

(i) Any Lender that is entitled to an exemption from or reduction of withholding

Tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which

such jurisdiction is a party, with respect to payments under this Agreement or any other Loan

Document shall deliver to the Borrower (with a copy to the Administrative Agent), at the time

or times prescribed by applicable law, such properly completed and executed documentation

prescribed by applicable law or reasonably requested by the Borrower as will permit such

payments to be made without withholding or at a reduced rate. In addition, any Lender, if

reasonably requested by the Borrower or the Administrative Agent, shall deliver such other

documentation prescribed by applicable law or reasonably requested by the Borrower or the

Administrative Agent as will enable the Borrower or the Administrative Agent to determine

whether or not such Lender is subject to backup withholding or information reporting

requirements. Notwithstanding anything to the contrary in the preceding two sentences, the

completion, execution and submission of such documentation (other than such documentation

set forth in Section 5.03(e)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the

Lender’s reasonable judgment such completion, execution or submission would subject such

Lender to any material unreimbursed cost or expense or would materially prejudice the legal

or commercial position of such Lender.

(ii) Without limiting the generality of the foregoing, in the event that the Borrower

is a U.S. Person:

(A) any Lender that is a U.S. Person shall deliver to the Borrower and the

Administrative Agent on or prior to the date on which such Lender becomes a Lender

under this Agreement (and from time to time thereafter upon the reasonable request

of the Borrower or the Administrative Agent), executed originals of IRS Form W-9

certifying that such Lender is exempt from U.S. federal backup withholding tax;

(B) any Foreign Lender shall, to the extent it is legally entitled to do so,

deliver to the Borrower and the Administrative Agent (in such number of copies as

shall be requested by the recipient) on or prior to the date on which such Foreign

Lender becomes a Lender under this Agreement (and from time to time thereafter

upon the reasonable request of the Borrower or the Administrative Agent), whichever

of the following is applicable:

(1) in the case of a Foreign Lender claiming the benefits of an

income tax treaty to which the United States is a party (x) with respect to

payments of interest under any Loan Document, executed originals of IRS

Form W-8BEN establishing an exemption from, or reduction of, U.S. federal

withholding Tax pursuant to the “interest” article of such tax treaty and (y)

with respect to any other applicable payments under any Loan Document, IRS

Form W-8BEN establishing an exemption from, or reduction of, U.S. federal

withholding Tax pursuant to the “business profits” or “other income” article

of such tax treaty:

(2) executed originals of IRS Form W-8ECI;

(3) in the case of a Foreign Lender claiming the benefits of the

exemption for portfolio interest under Section 881(c) of the Code, (x) a

certificate substantially in the form of Exhibit G-1 to the effect that such Foreign

Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code,

a “10-percent shareholder” of the Borrower within the meaning of Section 881

(c)(3)(B) of the Code, or a “controlled foreign corporation” described in

Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and

(y) executed originals of IRS Form W-8BEN; or

(4) to the extent a Foreign Lender is not the beneficial owner,

executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI,

IRS Form W-8BEN, a U.S. Tax Compliance Certificate substantially in the

form of Exhibit G-2 or Exhibit G-3, IRS Form W-9, and/or other certification

documents from each beneficial owner, as applicable; provided that if the

Foreign Lender is a partnership and one or more direct or indirect partners of

such Foreign Lender are claiming the portfolio interest exemption, such

Foreign Lender may provide a U.S. Tax Compliance Certificate substantially

in the form of Exhibit G-4 on behalf of each such direct and indirect partner;

deliver to the Borrower and the Administrative Agent (in such number of copies as

shall be requested by the recipient) on or prior to the date on which such Foreign

Lender becomes a Lender under this Agreement (and from time to time thereafter

upon the reasonable request of the Borrower or the Administrative Agent), executed

originals of any other form prescribed by applicable law as a basis for claiming

exemption from or a reduction in U.S. federal withholding Tax, duly completed,

together with such supplementary documentation as may be prescribed by applicable

law to permit the Borrower or the Administrative Agent to determine the withholding

or deduction required to be made; and

(D) if a payment made to a Lender or the Administrative Agent under any

Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA

if such Lender or the Administrative Agent were to fail to comply with the applicable

reporting requirements of FATCA (including those contained in Section 1471(b) or

1472(b) of the Code, as applicable), such Lender or the Administrative Agent shall

deliver to the Borrower and the Administrative Agent at the time or times prescribed

by law and at such time or times reasonably requested by the Borrower or the

Administrative Agent such documentation prescribed by applicable law (including as

prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional

documentation reasonably requested by the Borrower or the Administrative Agent as

may be necessary for the Borrower and the Administrative Agent to comply with their

obligations under FATCA and to determine that such Lender or the Administrative

Agent has complied with its obligations under FATCA or to determine the amount to

deduct and withhold from such payment. Solely for purposes of this clause (D),

“FATCA” shall include any amendments made to FATCA after the date of this

Agreement.

(iii) Each Lender agrees that if any form or certification it previously delivered

expires or becomes obsolete or inaccurate in any respect, it shall update such form or

certification or promptly notify the Borrower and the Administrative Agent in writing of its

legal inability to do so.

(f) Indemnification by the Lenders. Each Lender shall severally indemnify the

Administrative Agent, within 30 days after demand therefor, for (i) any Taxes attributable to such

Lender (but only to the extent that the Borrower has not already indemnified the Administrative Agent

for such Taxes and without limiting the obligation of the Borrower to do so) and (ii) any Taxes

attributable to such Lender’s failure to comply with the provisions of Section 12.04(c) relating to the

maintenance of the register described in Section 12.04(c)(i)(D), in either case, that are payable or

paid by the Administrative Agent in connection with any Loan Document, and any reasonable

expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally

imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such

payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent

manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and

all amounts at any time owing to such Lender under any Loan Document or otherwise payable by

the Administrative Agent to the Lender from any other source against any amount due to the

Administrative Agent under this Section 5.03(f).

(g) Treatment of Certain Refunds. If any party determines, in its sole discretion exercised

in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant

to this Section 5.03 (including by the payment of additional amounts pursuant to this Section 5.03),

it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of

indemnity payments made under this Section with respect to the Taxes giving rise to such refund),

net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest

(other than any interest paid by the relevant Governmental Authority with respect to such refund).

Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified

party the amount paid over pursuant to this paragraph (g) (plus any penalties, interest or other charges

imposed by the relevant Governmental Authority) in the event that such indemnified party is required

to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in

this paragraph (g), in no event will the indemnified party be required to pay any amount to an

indemnifying party pursuant to this paragraph (g) the payment of which would place the indemnified

party in a less favorable net after-Tax position than the indemnified party would have been in if the

Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or

otherwise imposed and the indemnification payments or additional amounts with respect to such Tax

had never been paid. This paragraph shall not be construed to require any indemnified party to make

available its Tax returns (or any other information relating to its Taxes that it deems confidential) to

the indemnifying party or any other Person.

Section 5.04. Mitigation Obligations; Replacement of Lenders.

(a) Designation of Different Lending Office. If any Lender requests compensation under

Section 5.01, or if the Borrower is required to pay any additional amount to any Lender or any

Governmental Authority for the account of any Lender pursuant to Section 5.03, then such Lender

shall use reasonable efforts to designate a different lending office for funding or booking its Loans

hereunder or to assign its rights and obligations hereunder to another of its offices, branches or

affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or

reduce amounts payable pursuant to Section 5.01 or Section 5.03, as the case may be, in the future

and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise

be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and

expenses incurred by any Lender solely as a result of any such designation or assignment.

(b) Replacement of Lenders. If (i) any Lender requests compensation under Section 5.01,

or (ii) the Borrower is required to pay any additional amount to any Lender or any Governmental

Authority for the account of any Lender pursuant to Section 5.03, then the Borrower may, at its sole

expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender

to assign and delegate, without recourse (in accordance with and subject to the restrictions contained

in Section 12.04(b)), all its interests, rights and obligations under this Agreement to an assignee that

shall assume such obligations (which assignee may be another Lender, if a Lender accepts such

assignment); provided that (i) if such assignee is not a Lender the Borrower shall have received the

prior written consent of the Administrative Agent, which consent shall not unreasonably be withheld,

(ii) such Lender shall have received payment of an amount equal to the outstanding principal of its

Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the

assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower

(in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim

for compensation under Section 5.01 or payments required to be made pursuant to Section 5.03, such

assignment will result in a reduction in such compensation or payments. A Lender shall not be required

to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender

or otherwise, the circumstances entitling the Borrower to require such assignment and delegation

cease to apply.

Section 5.05. Illegality. Notwithstanding any other provision of this Agreement, in the event that it becomes unlawful for any Lender or its applicable lending office to honor its obligation to make or maintain Eurodollar Loans either generally or having a particular Interest Period hereunder, then (a) such Lender shall promptly notify the Borrower and the Administrative Agent thereof and such Lender’s obligation to make such Eurodollar Loans shall be suspended (the “Affected Loans”) until such time as such Lender may again make and maintain such Eurodollar Loans and (b) all Affected Loans which would otherwise be made by such Lender shall be made instead as ABR Loans (and, if such Lender so requests by notice to the Borrower and the Administrative Agent, all Affected Loans of such Lender then outstanding shall be automatically converted into ABR Loans on the date specified by such Lender in such notice) and, to the extent that Affected Loans are so made as (or converted into) ABR Loans, all payments of principal which would otherwise be applied to such Lender’s Affected Loans shall be applied instead to its ABR Loans.

ARTICLE I

ARTICLE VI

CONDITIONS PRECEDENT

Section 6.01. Effective Date. The obligations of the Lenders to make the Loans hereunder on the Effective Date shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 12.02):

(a) (i) The Administrative Agent shall have received counterparts of the Fee Letter duly

executed by the Borrower (in such number as may be requested by the Administrative Agent), and

(ii) the Administrative Agent, the Arranger and the Lenders shall have received all fees and amounts

specified therein or otherwise due and payable on or prior to the Effective Date, including, to the

extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed

or paid by the Borrower hereunder.

(b) The Administrative Agent shall have received a certificate of the Secretary or an

Assistant Secretary of the Borrower and each Guarantor setting forth (i) resolutions of its board of

directors (or equivalent governing body) with respect to the authorization of the Borrower or such

Guarantor to execute and deliver the Loan Documents to which it is a party and to enter into the

transactions contemplated in those documents, certified as being true and complete and in full force

and effect, (ii) the officers of the Borrower or such Guarantor (A) who are authorized to sign the Loan

Documents to which the Borrower or such Guarantor is a party and (B) who will, until replaced by

another officer or officers duly authorized for that purpose, act as its representative for the purposes

of signing documents and giving notices and other communications in connection with this Agreement

and the transactions contemplated hereby, (iii) specimen signatures of such authorized officers, and

(iv) the articles or certificate of incorporation and bylaws (or comparable governing documents) of

the Borrower and such Guarantor, certified as being true and complete. The Administrative Agent

and the Lenders may conclusively rely on such certificate until the Administrative Agent receives

notice in writing from the Borrower to the contrary.

date of the Effective Date, of the appropriate state agencies with respect to the existence, qualification

and good standing of the Borrower and each Guarantor in its jurisdiction of formation or organization

and each other jurisdiction in which its failure to be duly qualified or licensed could reasonably be

expected to have a Material Adverse Effect (which certificates shall indicate that such Loan Party is

in good standing in each of such jurisdictions).

(d) The Administrative Agent shall have received from each party hereto counterparts (in

such number as may be requested by the Administrative Agent) of this Agreement signed on behalf

of such party.

(e) The Administrative Agent shall have received from each party thereto counterparts

(in such number as may be requested by the Administrative Agent) of the VCOC Letters signed on

behalf of such party.

(f) The Administrative Agent shall have received duly executed Notes payable to each

Lender requesting a Note at least three Business Days prior to the Effective Date, in each case in a

principal amount equal to the Commitment of such Lender and dated as of the date hereof.

(g) The Administrative Agent shall have received from each party thereto duly executed

counterparts (in such number as may be requested by the Administrative Agent) of the Security

Instruments (other than the Deposit Account Control Agreements described in Section 8.16), including

the Guarantee and Collateral Agreement and Transfer Order Letters executed in blank to each

purchaser of production and disburser of proceeds of production from or attributable to the Oil and

Gas Properties. In connection with the execution and delivery of the Security Instruments, the

Administrative Agent shall:

(i) be reasonably satisfied that the Security Instruments create first priority,

perfected Liens (subject only to Specified Liens) on at least 80% of the total value of the Oil

and Gas Properties evaluated in the Initial Reserve Report;

(ii) have received Mortgages covering the real property located at (A) 3651 Baker

Highway, Huntsville, TN 37756 and (B) 9534 Morgan Co. Highway, Sunbright, TN 37872;

(iii) have received certificates, together with undated, blank stock powers for each

such certificate, representing all of the issued and outstanding Equity Interests of each of the

Guarantors; and

(iv) have received (i) all financing statements required by Administrative Agent,

and (ii) all other agreements, documents or instruments required by Administrative Agent in

its sole discretion to evidence that first-priority security interests (subject only to Specified

Liens) in all of the Loan Parties’ assets have been granted to Administrative Agent for the

benefit of the Secured Parties pursuant to the Loan Documents.

(h) The Administrative Agent shall have received the Disbursement Letter duly executed

by the Borrower.

(i) The Administrative Agent shall have received an opinion of (i) Vinson & Elkins LLP,

special counsel to the Borrower, in form and substance satisfactory to the Administrative Agent, and

(ii) local counsel in each of the following states: Alaska, Tennessee and any other jurisdictions

requested by the Administrative Agent, in form and substance satisfactory to the Administrative Agent.

(j) The Administrative Agent shall have received (i) a certificate of insurance coverage

of the Borrower evidencing that the Borrower is carrying insurance in accordance with Section 7.12,

and (ii) and with respect to any real property covered by a Mortgage on which a “building” or “mobile

home” (in each case, as such terms are defined for purposes of the National Flood Insurance Program)

is located, (A) a flood determination certificate or letter issued by the appropriate Governmental

Authority or third party indicating whether such property is designated as a “flood hazard area” and

(B) if such property is designated to be in a “flood hazard area”, evidence of flood insurance on such

property obtained by the applicable Loan Party in such total amount as required by Regulation H of

the Federal Reserve Board, and all official rulings and interpretations thereunder or thereof, and

otherwise in compliance with the National Flood Insurance Program as set forth in the Flood Disaster

Protection Act of 1973.

(k) The Administrative Agent shall have received title information as the Administrative

Agent may reasonably require satisfactory to the Administrative Agent setting forth the status of title

to at least 80% of the total value of the Oil and Gas Properties evaluated in the Initial Reserve Report.

(l) The Administrative Agent shall be reasonably satisfied with the environmental

condition of the Oil and Gas Properties of the Borrower and its Subsidiaries.

(m) The Administrative Agent shall have received a certificate of a Responsible Officer

of the Borrower certifying that (i) the Borrower has received all consents and approvals required by

Section 7.03, (ii) there is no litigation that involves any Loan Document, any Acquisition Document

or the Transactions or that could impair the consummation of the Acquisition or the acquisition of

the Acquired Equity at the time and in the manner contemplated by the Acquisition Documents and

(iii) as to the matters contained in Section 6.02(a), (b), and (c).

(n) The Administrative Agent shall have received the financial statements referred to in

Section 7.04(a) and the Initial Reserve Report accompanied by a certificate covering the matters

described in Section 8.01(i).

(o) The Administrative Agent shall have received appropriate UCC search certificates

reflecting no prior Liens encumbering the Properties of the Borrower and the Subsidiaries for each

of the following jurisdictions: Alaska, Tennessee, and any other jurisdiction requested by the

Administrative Agent; other than those being assigned or released on or prior to the Effective Date

or Liens permitted by Section 9.03.

(p) The Administrative shall be reasonably satisfied with the Swap Agreements listed on

Schedule 7.20.

(q) The Administrative Agent shall have received (i) a certificate of a Responsible Officer

of the Borrower certifying: (A) that the Borrower is concurrently consummating the Acquisition in

accordance with the terms of the Acquisition Documents (with all of the material conditions precedent

thereto having been satisfied in all material respects by the parties thereto) and acquiring substantially

all of the Acquisition Properties contemplated by the Acquisition Documents (other than the Acquired

Equity, which pursuant to the terms of Sections 8.2(a), 8.2(c) and 9.5 of the Acquisition Agreement

are to be transferred to CIE after the Acquisition Closing Date, immediately following the receipt of

approval from the Regulatory Commission of Alaska for the acquisitions of those Equity Interests

by CIE); (B) as to the purchase price for the Acquisition Properties after giving effect to all adjustments

as of the Acquisition Closing Date contemplated by the Acquisition Agreement and specifying, by

category, the amount of such adjustment; and (C) describing any casualty with respect to any

Acquisition Property for which the Buyer waived the condition under Section 7.1(d) of the Acquisition

Agreement or for which the proceeds of insurance were paid and have been applied or will be applied

to the repair and restoration of the Acquisition Property; (ii) a true and complete executed copy of

each of the Acquisition Documents; (iii) original counterparts or copies, certified as true and complete,

of the assignments, deeds and leases for all of the Acquisition Properties; and (iv) such other related

documents and information as the Administrative Agent shall have reasonably requested.

(r) The Administrative Agent shall have received evidence satisfactory to it that the Miller

2009 Loan Documents (as defined in the Existing Credit Agreement) are being simultaneously

terminated, paid in full and that all Liens securing such facility are being released or terminated and

that arrangements satisfactory to the Administrative Agent have been made for recording and filing

of such releases.

(s) The Administrative Agent and the Lenders shall have received from the Borrower, at

least 5 days prior to the Effective Date, all requested documentation and other information required

under applicable “know your customer” and anti-money laundering rules and regulations, including

the Patriot Act.

(t) The Lenders shall have received a satisfactory opening balance sheet of the Borrower

giving pro forma effect to the Acquisition and the Debt to be incurred on the Effective Date.

(u) The Administrative Agent shall have received a certificate of a Responsible Officer

of the Borrower certifying that, after giving effect to the Transactions, (a) the aggregate assets (after

giving effect to amounts that could reasonably be received by reason of indemnity, offset, insurance

or any similar arrangement), at a fair valuation, of the Borrower and the Guarantors, taken as a whole,

will exceed the aggregate Debt of the Borrower and the Guarantors on a consolidated basis, as the

Debt becomes absolute and matures, (b) each of the Borrower and the Guarantors will not have

incurred or intended to incur, and will not believe that it will incur, Debt beyond its ability to pay

such Debt (after taking into account the timing and amounts of cash to be received by each of the

Borrower and the Guarantors and the amounts to be payable on or in respect of its liabilities, and

giving effect to amounts that could reasonably be received by reason of indemnity, offset, insurance

or any similar arrangement) as such Debt becomes absolute and matures and (c) each of the Borrower

and the Guarantors will not have (and will have no reason to believe that it will have thereafter)

unreasonably small capital for the conduct of its business.

(v) The Administrative Agent shall have received and reviewed copies of all Material

Contracts in effect on the Effective Date, and such Material Contracts shall be in form and substance

satisfactory to Administrative Agent.

(w) The Administrative Agent shall have completed its business, legal, environmental and

collateral due diligence, including (i) a collateral audit and review of the Borrower’s and each of its

Subsidiaries’ books and records and verification of the Borrower’s and each of its Subsidiaries’

representations and warranties to the Administrative Agent, the results of which shall be satisfactory

to the Administrative Agent, (ii) an inspection of such locations of the Borrower and its Subsidiaries

as shall be required by the Administrative Agent, the results of which shall be satisfactory to the

Administrative Agent, and (iii) background and credit checks on each of the Loan Parties and certain

Financial Officers of the Loan Parties.

(x) The Borrower shall have delivered to Administrative Agent all environmental reports

in the possession or control of any Loan Party that was performed on any Oil and Gas Property that

is subject to the Lien created by the Security Instruments within the past two (2) years, and the matters

contained therein shall be reasonably acceptable to the Administrative Agent.

(y) The Administrative Agent shall have received such other documents as the

Administrative Agent or special counsel to the Administrative Agent may reasonably request.

The Administrative Agent shall notify the Borrower and the Lenders of the Effective Date, and such notice shall be conclusive and binding. Notwithstanding the foregoing, the obligations of the Lenders to make Loans hereunder shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 12.02) at or prior to 2:00 p.m., New York City time, on February 4, 2014 (and, in the event such conditions are not so satisfied or waived, the Commitments shall terminate at such time).

Section 6.02. Additional Conditions. The obligation of each Lender to make its Loan hereunder on the Effective Date is subject to the satisfaction of the following conditions:

(a) At the time of and immediately after giving effect to the funding of such Loans, no

Default shall have occurred and be continuing.

(b) At the time of and immediately after giving effect to the funding of such Loans, no

event, development or circumstance has occurred or shall then exist that has resulted in, or could

reasonably be expected to have, a Material Adverse Effect.

this Agreement and in the other Loan Documents shall be true and correct in all material respects

(unless such representation and warranty is already qualified by materiality, in which case such

representation or warranty shall simply be true and correct) on and as of the Effective Date, except

to the extent any such representations and warranties are expressly limited to an earlier date, in which

case, on and as of the Effective Date, such representations and warranties shall continue to be true .

and correct as aforesaid as of such specified earlier date.

(d) The receipt by the Administrative Agent of a Borrowing Request in accordance with

Section 2.03.

(e) Delivery of a Borrowing Request to the Administrative Agent shall be deemed to

constitute a representation and warranty by the Borrower on the date thereof as to the matters specified

in Section 6.02(a) through (d).

ARTICLE VII

REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to the Lenders that:

Section 7.01. Organization; Powers. Each of the Borrower and the Subsidiaries is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. Each of the Borrower and the Subsidiaries has all requisite power and authority, and has all material governmental licenses, authorizations, consents and approvals necessary, to own its assets and to carry on its business as now conducted, and is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required, except where failure to have such power, authority, licenses, authorizations, consents, approvals and qualifications could not reasonably be expected to have a Material Adverse Effect.

Section 7.02. Authority; Enforceability. The Transactions are within the Borrower’s and each Guarantor’s corporate, partnership or limited liability company, as applicable, powers and have been duly authorized by all necessary corporate, partnership, limited liability company and, if required, stockholder, partner or member action (including, without limitation, any action required to be taken by any class of directors of the Borrower or any other Person, whether interested or disinterested, in order to ensure the due authorization of the Transactions). Each Loan Document and Acquisition Document to which the Borrower and each Guarantor is a party has been duly executed and delivered by the Borrower and such Guarantor and constitutes a legal, valid and binding obligation of the Borrower and such Guarantor, as applicable, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, fraudulent transfer or conveyance, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

Section 7.03. Approvals; No Conflicts. The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority or any other third Person (including shareholders or any class of directors, whether interested or disinterested, of the Borrower or any other Person), nor is any such consent, approval, registration, filing or other action necessary for the validity or enforceability of any Loan Document or the consummation of the transactions contemplated thereby, except such as have been obtained or made and are in full force and effect other than (i) the recording or filing of the Security Instruments and related financing statements as required by this Agreement, (ii) those third party approvals or consents which, if not made or obtained, would not cause a Default hereunder, could not reasonably be expected to have a Material Adverse Effect and do not have an adverse effect on the enforceability of the Loan Documents, (iii) routine filings related to the Loan Parties and the operation of their respective businesses and (iv) filings as may be necessary in connection with the exercise of remedies, (b) will not violate any applicable material law or regulation or the charter, by-laws or other organizational documents of the Borrower or any Subsidiary or any order of any Governmental Authority, (c) will not violate or result in a default under any indenture, agreement or other instrument binding upon the Borrower or any Subsidiary or their respective Properties, or give rise to a right thereunder to require any payment to be made by the Borrower or such Subsidiary and (d) except as contemplated by this Agreement and the First Lien Loan Documents will not result in the creation or imposition of any Lien on any Property of the Borrower or any Subsidiary.

Section 7.04. Financial Condition; No Material Adverse Change.

(a) The Borrower has heretofore furnished to the Lenders its consolidated balance sheet

and statements of income, stockholders equity and cash flows (i) as of and for the fiscal year ended

April 30, 2013, reported on by KPMG, independent public accountants, and (ii) as of and for the

fiscal quarter and the portion of the fiscal year ended October 31, 2013, certified by its chief financial

officer. Such financial statements present fairly, in all material respects, the financial position and

results of operations and cash flows of the Borrower and its Consolidated Subsidiaries as of such

dates and for such periods in accordance with GAAP, subject to year-end audit adjustments and the

absence of footnotes in the case of the unaudited quarterly financial statements.

(b) Since April 30, 2013, (i) there has been no event, development or circumstance that

has had or could reasonably be expected to have a Material Adverse Effect and (ii) the business of

the Borrower and its Subsidiaries has been conducted only in the ordinary course consistent with past

business practices.

(including Disqualified Capital Stock) or any contingent liabilities, off-balance sheet liabilities or

partnerships, liabilities for taxes, unusual forward or long-term commitments or unrealized or

anticipated losses from any unfavorable commitments, except as referred to or reflected or provided

for in the Financial Statements.

Section 7.05. Litigation.

(a) Except as set forth on Schedule 7.05, there are no actions, suits, investigations or

proceedings by or before any arbitrator or Governmental Authority pending against or, to the

knowledge of the Borrower, threatened against or affecting the Borrower or any Subsidiary or

involving the Acquisition or the proposed acquisition of the Acquired Equity (i) as to which there is

a reasonable possibility of an adverse determination that, if adversely determined, could reasonably

be expected, individually or in the aggregate, to result in a Material Adverse Effect, (ii) that involve

any Loan Document, any Acquisition Document or the Transactions or (iii) that could impair the

consummation of the Acquisition or the acquisition of the Acquired Equity at the time and in the

manner contemplated by the Acquisition Documents.

(b) Since the date of this Agreement, there has been no change in the status of the matters

disclosed in Schedule 7.05 that, individually or in the aggregate, has resulted in, or materially increased

the likelihood of, a Material Adverse Effect.

Section 7.06. Environmental Matters. Except for such matters as set forth on Schedule 7.06 or that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect:

(a) the Borrower and the Subsidiaries and each of their respective Properties and

operations thereon are, and within all applicable statute of limitation periods have been, in compliance

with all applicable Environmental Laws.

(b) the Borrower and the Subsidiaries have obtained all Environmental Permits required

for their respective operations and each of their Properties and are in compliance with all

Environmental Permits, with all such Environmental Permits being currently in full force and effect,

and none of the Borrower or the Subsidiaries has received any written notice or otherwise has

knowledge that any such existing Environmental Permit will be revoked or that any application for

any new Environmental Permit or renewal of any existing Environmental Permit will be contested

in any proceeding before any Governmental Authority.

violation of, or any liability (including as a potentially responsible party) under, any applicable

Environmental Laws that is pending or, to the Borrower’s knowledge, threatened against the Borrower

or any Subsidiary or any of their respective Properties or as a result of any operations at such Properties.

(d) none of the Properties of the Borrower or any Subsidiary contain or have contained

any: (i) underground storage tanks; (ii) asbestos-containing materials in a damaged or friable

condition; (iii) landfills or dumps; (iv) hazardous waste management units as defined pursuant to

RCRA or any comparable state law; or (v) sites listed on, or nominated for listing on, the National

Priority List promulgated pursuant to CERCLA or any state remedial priority list promulgated or

published pursuant to any comparable state law.

(e) there has been no Release or, to the Borrower’s knowledge, threatened Release, of

Hazardous Materials at, on, under or from the Borrower’s or any Subsidiary’s Properties, there are

no investigations, remediations, abatements, removals, or monitorings of Hazardous Materials

required under applicable Environmental Laws at such Properties and, to the knowledge of the

Borrower, none of such Properties are adversely affected by any Release or threatened Release of a

Hazardous Material originating or emanating from any other real property.

(f) neither the Borrower nor any Subsidiary has received any written notice asserting an

alleged liability or obligation under any applicable Environmental Laws with respect to the

investigation, remediation, abatement, removal, or monitoring of any Hazardous Materials at, under,

or Released or threatened to be Released from any real properties offsite the Borrower’s or any

Subsidiary’s Properties and, to the Borrower’s knowledge, there are no conditions or circumstances

that could reasonably be expected to result in the receipt of such written notice.

(g) there has been no exposure of any Person or Property to any Hazardous Materials as

a result of or in connection with the operations and businesses of any of the Borrower’s or the

Subsidiaries’ Properties that could reasonably be expected to form the basis for a claim for damages

or compensation.

(h) The Borrower and the Subsidiaries have provided to the Lenders complete and correct

copies of all environmental site assessment reports, investigations, studies, analyses, and

correspondence on environmental matters (including matters relating to any alleged non-compliance

with or liability under Environmental Laws) that are in any of the Borrower’s or the Subsidiaries’

possession or control and relating to their respective Properties or operations thereon.

Section 7.07. Compliance with the Laws and Agreements; No Defaults.

(a) Each Loan Party is in compliance with all Governmental Requirements applicable to

it or its Property and all agreements and other instruments binding upon it or its Property, and possesses

all licenses, permits, franchises, exemptions, approvals and other governmental authorizations

necessary for the ownership of its Property and the conduct of its business, except where the failure

to do so, individually or in the aggregate, could not reasonably be expected to result in a Material

Adverse Effect.

(b) No Loan Party is in default nor has any event or circumstance occurred which, but for

the expiration of any applicable grace period or the giving of notice, or both, would constitute a

default or would require the such Loan Party to Redeem or make any offer to Redeem under any

indenture, note, credit agreement or instrument pursuant to which any Material Indebtedness is

outstanding or by which the Borrower or any Subsidiary or any of their Properties is bound where

such default could reasonably be expected to result in a Material Adverse Effect.

Section 7.08. Investment Company Act. Neither the Borrower nor any Subsidiary is an “investment company” within the meaning of, or subject to regulation under, the Investment Company Act of 1940, as amended.

Section 7.09. Taxes. Each of the Borrower and its Subsidiaries has timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which the Borrower or such Subsidiary, as applicable, has set aside on its books adequate reserves in accordance with GAAP or (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect. The charges, accruals and reserves on the books of the Borrower and its Subsidiaries in respect of Taxes and other governmental charges are, in the reasonable opinion of the Borrower, adequate. No Tax Lien (other than an Excepted Lien) has been filed and, to the knowledge of the Borrower, no claim is being asserted with respect to any such Tax or other such governmental charge.

Section 7.10. ERISA. Except as could not reasonably be expected to have a Material Adverse Effect:

(a) the Borrower, the Subsidiaries and each ERISA Affiliate have complied with ERISA

and, where applicable, the Code regarding each Plan.

(b) each Plan is, and has been, established and maintained in compliance with its terms,

ERISA and, where applicable, the Code.

Borrower, any Subsidiary or any ERISA Affiliate (whether directly or indirectly) of (i) either a civil

penalty assessed pursuant to subsections (c), (i), (l) or (m) of section 502 of ERISA or a tax imposed

pursuant to Chapter 43 of Subtitle D of the Code or (ii) breach of fiduciary duty liability damages

under section 409 of ERISA.

(d) full payment when due has been made of all amounts which the Borrower, the

Subsidiaries or any ERISA Affiliate is required under the terms of each Plan and Multiemployer Plan

or applicable law to have paid as contributions to such Plan or Multiemployer Plan as of the date

hereof.

(e) neither the Borrower, the Subsidiaries nor any ERISA Affiliate sponsors, maintains,

or contributes to an employee welfare benefit plan, as defined in section 3(1) of ERISA, including,

without limitation, any such plan maintained to provide benefits to former employees of such entities,

that may not be terminated by the Borrower, a Subsidiary or any ERISA Affiliate in its sole discretion

at any time without any liability.

(f) neither the Borrower, the Subsidiaries nor any ERISA Affiliate sponsors, maintains

or contributes to, or has at any time in the six-year period preceding the date hereof sponsored,

maintained or contributed to, any employee pension benefit plan, as defined in section 3(2) of ERISA,

that is subject to Title IV of ERISA, section 302 of ERISA or section 412 of the Code.

Section 7.11. Disclosure; No Material Misstatements. The Borrower has disclosed to the Administrative Agent and the Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. None of the reports, financial statements, certificates or other information furnished by or on behalf of the Borrower or any Subsidiary to the Administrative Agent or any Lender or any of their Affiliates in connection with the negotiation of this Agreement or any other Loan Document or delivered hereunder or under any other Loan Document (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time. There is no fact peculiar to the Borrower or any Subsidiary which could reasonably be expected to have a Material Adverse Effect or in the future is reasonably likely to have a Material Adverse Effect and which has not been set forth in this Agreement or the Loan Documents or the other documents, certificates and statements furnished to the Administrative Agent or the Lenders by or on behalf of the Borrower or any Subsidiary prior to, or on, the date hereof in connection with the transactions contemplated hereby. There are no statements or conclusions in any Reserve Report which are based upon or include materially misleading information or fail to take into account material information regarding the matters reported therein, it being understood that projections concerning volumes attributable to the Oil and Gas Properties of the Borrower and the Subsidiaries and production and cost estimates contained in each Reserve Report are necessarily based upon professional opinions, estimates and projections and that the Borrower and the Subsidiaries do not warrant that such opinions, estimates and projections will ultimately prove to have been accurate.

Section 7.12. Insurance. The Borrower has, and has caused all of its Subsidiaries to have, (a) all insurance policies sufficient for the compliance by each of them with all material Governmental Requirements and all material agreements and (b) insurance coverage in at least amounts and against such risk (including, without limitation, public liability) that are usually insured against by companies similarly situated and engaged in the same or a similar business for the assets and operations of the Borrower and its Subsidiaries. The Administrative Agent has been named as additional insured in respect of such liability insurance policies and the Administrative Agent has been named as loss payee with respect to Property loss insurance. Except as disclosed in writing to the Administrative Agent, no “building” or “mobile home” (in each case, as such terms are defined for purposes of the National Flood Insurance Program) exists on any real property covered by a Mortgage. The Loan Parties have obtained and provided evidence to the Administrative Agent of all flood insurance required to be obtained under Section 8.07.

Section 7.13. Restriction on Liens. Neither the Borrower nor any of the Subsidiaries is a party to any agreement or arrangement (other than the First Lien Loan Documents and Capital Leases creating Liens permitted by Section 9.03(c), but then only on the Property subject of such Capital Lease, any accessions thereto and proceeds thereof), or subject to any order, judgment, writ or decree, which either restricts or purports to restrict its ability to grant Liens to the Administrative Agent and the Lenders on or in respect of their Properties to secure the Secured Obligations and the Loan Documents.

Section 7.14. Subsidiaries; Foreign Operations. Except as set forth on Schedule 7.14 or as disclosed in writing to the Administrative Agent (which shall promptly furnish a copy to the Lenders), which shall be a supplement to Schedule 7.14, the Borrower has no Subsidiaries. Neither the Borrower nor any of its Subsidiaries own (i) any Foreign Subsidiaries or (ii) any Oil and Gas Properties not located within the geographic boundaries of the United States of America. Each Subsidiary on such schedule is a Wholly-Owned Subsidiary.

Section 7.15. Location of Business and Offices. The Borrower’s jurisdiction of organization is Tennessee; the name of the Borrower as listed in the public records of its jurisdiction of organization is Miller Energy Resources, Inc.; and the organizational identification number of the Borrower in its jurisdiction of organization is 000047469 (or, in each case, as set forth in a notice delivered to the Administrative Agent pursuant to Section 8.01(o) in accordance with Section 12.01). The Borrower’s principal place of business and chief executive offices are located at the address specified in Section 12.01 (or as set forth in a notice delivered pursuant to Section 8.01(o) and Section 12.01(c)). Each Subsidiary’s jurisdiction of organization, name as listed in the public records of its jurisdiction of organization, organizational identification number in its jurisdiction of organization, and the location of its principal place of business and chief executive office is stated on Schedule 7.14 (or as set forth in a notice delivered pursuant to Section 8.01(o)).

Section 7.16. Properties; Titles, Etc.

(a) The Borrower or a Subsidiary has good and defensible title to the Acquisition

Properties and the Oil and Gas Properties evaluated in the most recently delivered Reserve Report

(except any that have been sold or otherwise disposed of in accordance with Section 9.12 since the

date of such Reserve Report) and each of the Borrower and each Subsidiary have good title to all its

personal Properties that are necessary to permit the Borrower and the Subsidiaries to conduct their

business in all material respects in the same manner as its business has been conducted prior to the

date hereof, and in each case, free and clear of all Liens except Liens permitted by Section 9.03. After

giving full effect to the Excepted Liens, the Borrower or the Subsidiary specified as the owner owns

the net interests in production attributable to the Hydrocarbon Interests as reflected in the most recently

delivered Reserve Report (except any that have been sold or otherwise disposed of in accordance

with Section 9.12 since the date of such Reserve Report), and the ownership of such Properties shall

not obligate the Borrower or such Subsidiary to bear the costs and expenses relating to the

maintenance, development and operations of each such Property in an amount materially in excess

of the working interest of each Property set forth in the most recently delivered Reserve Report that is not offset by a corresponding proportionate increase in the Borrower’s or such Subsidiary’s net revenue interest in such Property; provided that the Borrower or any Subsidiary shall have the right to bear costs disproportionate to the Borrower's or such Subsidiary's working interest with respect to any Hydrocarbon Interest for a period of time in order to earn an interest in such Hydrocarbon Interest from a third party as evidenced by written agreement.

(b) All material leases and agreements evaluated in the most recently delivered Reserve

Report or that are necessary for the conduct of the business of the Borrower and the Subsidiaries are

valid and subsisting, in full force and effect, and there exists no default or event or circumstance

which with the giving of notice or the passage of time or both would give rise to a default under any

such lease or leases.

the Subsidiaries including, without limitation, all easements and rights of way, include all material

rights and Properties necessary to permit the Borrower and the Subsidiaries to conduct their business

in all material respects in the same manner as its business has been conducted prior to the date hereof.

(d) All of the Properties of the Borrower and the Subsidiaries which are reasonably

necessary for the operation of their businesses are in good working condition (normal wear and tear

excepted) and are maintained in accordance with prudent business standards.

(e) The Borrower and each Subsidiary owns, or is licensed to use, all trademarks,

tradenames, copyrights, patents and other intellectual Property material to its business, and the use

thereof by the Borrower and such Subsidiary does not infringe upon the rights of any other Person,

except for any such infringements that, individually or in the aggregate, could not reasonably be

expected to result in a Material Adverse Effect. The Borrower and its Subsidiaries either own or have

valid licenses or other rights to use all databases, geological data, geophysical data, engineering data,

seismic data, maps, interpretations and other technical information used in their businesses as

presently conducted, subject to the limitations contained in the agreements governing the use of the

same, which limitations are customary for companies engaged in the business of the exploration and

production of Hydrocarbons, with such exceptions as could not reasonably be expected to have a

Material Adverse Effect.

Section 7.17. Maintenance of Properties. Except for such acts or failures to act as could not be reasonably expected to have a Material Adverse Effect, the Oil and Gas Properties (and Properties unitized therewith) of the Borrower and its Subsidiaries have been maintained, operated and developed in a good and workmanlike manner and in conformity with all Governmental Requirements and in conformity with the provisions of all leases, subleases or other contracts comprising a part of the Hydrocarbon Interests and other contracts and agreements forming a part of the Oil and Gas Properties of the Borrower and its Subsidiaries. Specifically in connection with the foregoing, except for those as could not be reasonably expected to have a Material Adverse Effect, (i) no Oil and Gas Property of the Borrower or any Subsidiary is subject to having allowable production reduced below the full and regular allowable (including the maximum permissible tolerance) because of any overproduction (whether or not the same was permissible at the time) and (ii) none of the wells comprising a part of the Oil and Gas Properties (or Properties unitized therewith) of the Borrower or any Subsidiary is deviated from the vertical more than the maximum permitted by Governmental Requirements, and such wells are, in fact, bottomed under and are producing from, and the well bores are wholly within, the Oil and Gas Properties (or in the case of wells located on Properties unitized therewith, such unitized Properties) of the Borrower or such Subsidiary. All pipelines, wells, gas processing plants, platforms and other material improvements, fixtures and equipment owned in whole or in part by the Borrower or any of its Subsidiaries that are necessary to conduct normal operations are being maintained in a state adequate to conduct normal operations, and with respect to such of the foregoing which are operated by the Borrower or any of its Subsidiaries, in a manner consistent with the Borrower’s or its Subsidiaries’ past practices (other than those the failure of which to maintain in accordance with this Section 7.17 could not reasonably be expected to have a Material Adverse Effect).

Section 7.18. Gas Imbalances, Prepayments. Except as set forth on Schedule 7.18 or on the most recent certificate delivered pursuant to Section 8.01(i), on a net basis there are no gas imbalances, take or pay or other prepayments which would require the Borrower or any of its Subsidiaries to deliver Hydrocarbons produced from their Oil and Gas Properties at some future time without then or thereafter receiving full payment therefor exceeding $500,000 in the aggregate.

Section 7.19. Marketing of Production. Except for contracts listed and in effect on the date hereof on Schedule 7.19 (with respect to all of which contracts the Borrower represents that it or its Subsidiaries

are receiving a price for all production sold thereunder which is computed substantially in accordance with the terms of the relevant contract as in effect on the date of such disclosure and are not having deliveries curtailed substantially below the subject Property’s delivery capacity), no material agreements exist which are not cancelable on 120 days’ notice or less without penalty or detriment for the sale of production from the Borrower’s or its Subsidiaries’ Hydrocarbons (including, without limitation, calls on or other rights to purchase, production, whether or not the same are currently being exercised) that (a) pertain to the sale of production at a fixed price and (b) have a maturity or expiry date of longer than six (6) months from the date hereof.

Section 7.20. Swap Agreements. Schedule 7.20, as of the date hereof, and each report required to be delivered by the Borrower pursuant to Section 8.01(e), as of the date of such report, sets forth, a true and complete list of all Swap Agreements of the Borrower and each Subsidiary, the material terms thereof (including the type, term, effective date, termination date and notional amounts or volumes), the net mark to market value thereof, all credit support agreements relating thereto (including any margin required or supplied) and the counterparty to each such agreement.

Section 7.21. Use of Loans . The proceeds of the Loans shall be used solely (a) to refinance Debt under the Existing Credit Agreement in an amount not to exceed $75,000,000, (b) to fund cash consideration for the Acquisition in an amount not to exceed $60,000,000, (c) to pay costs, fees and expenses in connection with this Agreement and the other Loan Documents, and (d) for general corporate purposes. The Borrower and its Subsidiaries are not engaged principally, or as one of its or their important activities, in the business of extending credit for the purpose, whether immediate, incidental or ultimate, of buying or carrying margin stock (within the meaning of Regulation T, U or X of the Board). No part of the proceeds of any Loan will be used for any purpose which violates the provisions of Regulations T, U or X of the Board.

Section 7.22. Solvency. After giving effect to the transactions contemplated hereby, (a) the aggregate assets (after giving effect to amounts that could reasonably be received by reason of indemnity, offset, insurance or any similar arrangement), at a fair valuation, of the Borrower and the Guarantors, taken as a whole, will exceed the aggregate Debt of the Borrower and the Guarantors on a consolidated basis, as the Debt becomes absolute and matures, (b) each of the Borrower and the Guarantors will not have incurred or intended to incur, and will not believe that it will incur, Debt beyond its ability to pay such Debt (after taking into account the timing and amounts of cash to be received by each of the Borrower and the Guarantors and the amounts to be payable on or in respect of its liabilities, and giving effect to amounts that could reasonably be received by reason of indemnity, offset, insurance or any similar arrangement) as such Debt becomes absolute and matures and (c) each of the Borrower and the Guarantors will not have (and will have no reason to believe that it will have thereafter) unreasonably small capital for the conduct of its business.

Section 7.23. Acquisition Documents. The copies of the Acquisition Documents and Gunsight Acquisition Documents previously delivered by the Borrower to the Administrative Agent are true, accurate and complete and have not been amended or modified in any manner, other than pursuant to amendments or modifications previously delivered to the Administrative Agent. No party to any Acquisition Document or Gunsight Acquisition Document is in default in respect of any material term or obligation thereunder.

Section 7.24. Foreign Corrupt Practices. Neither the Borrower nor any of its Subsidiaries, nor any director, officer, agent, employee or Affiliate of the Borrower or any of its Subsidiaries is aware of or has taken any action, directly or indirectly, that would result in a material violation by such Persons of the Foreign Corrupt Practices Act (the “FCPA”), including without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the

giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA; and, the Borrower, its Subsidiaries and its and their Affiliates have conducted their business in material compliance with the FCPA and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.

Section 7.25. Money Laundering. The operations of the Borrower and its Subsidiaries are and have been conducted at all times in material compliance with applicable financial recordkeeping, reporting and other requirements of the Money Laundering Laws, and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Borrower or any of its Subsidiaries with respect to the Money Laundering Laws is pending or, to the best knowledge of the Borrower, threatened.

Section 7.26. OFAC. Neither the Borrower nor any of its Subsidiaries, nor any director, officer, agent, employee or Affiliate of the Borrower or any of its Subsidiaries is currently subject to any material U.S. sanctions administered by Office of Foreign Asset Control (“OFAC”), and the Borrower will not directly or indirectly use the proceeds from the Loans or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other Person, for the purpose of financing the activities of any Person currently subject to any U.S. sanctions administered by OFAC.

Section 7.27. Patriot Act. Each Loan Party is in compliance with all applicable statutes, regulations and orders of (including any laws relating to terrorism, money laundering, embargoed persons or the Patriot Act), and all applicable restrictions imposed by, all governmental bodies, domestic or foreign, in respect of the conduct of its business and the ownership of its property (including, without limitation, applicable statutes, regulations, orders and restrictions relating to environmental standards and controls).

Section 7.28. Security Documents.

(a) The Security Instruments, upon execution and delivery thereof by the parties thereto,

will create in favor of the Administrative Agent, for the ratable benefit of the Secured Parties, a legal,

valid and enforceable security interest in the collateral described therein and the proceeds thereof and

(i) to the extent that any Pledged Securities (as defined in the Guarantee and Collateral Agreement)

constitute “securities” under Article 8 of the New York UCC (as defined in the Guarantee and

Collateral Agreement), when such Pledged Securities are delivered to the Administrative Agent (or

to the First Lien Administrative Agent (as bailee for the Administrative Agent)), the Lien created

under the Guarantee and Collateral Agreement shall constitute a perfected Lien on, and security

interest in, all right, title and interest of the Loan Parties in such Pledged Securities, and (ii) when

financing statements in appropriate form are recorded in the offices specified on Schedule 3 of the

Guarantee and Collateral Agreement, the Lien created under the Security Instruments will constitute

a perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such

collateral to the extent that such Lien can be perfected by the filing of a financing statement, in each

case subject only to Specified Liens.

(b) The Mortgages are effective to create in favor of the Administrative Agent, for the

ratable benefit of the Secured Parties, a legal, valid and enforceable Lien on all of the Loan Parties’

right, title and interest in and to the Mortgaged Property (as defined therein) and the proceeds thereof,

and when the Mortgages are recorded in the appropriate filing offices, the Mortgages shall constitute

a perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such

Mortgaged Property and the proceeds thereof, in each case prior and superior in right to any other

Person, other than with respect to the rights of Persons pursuant to Specified Liens.

Section 7.29. Labor Matters. As of the Effective Date, there are no strikes, lockouts or slowdowns against the Borrower or its Subsidiaries pending or, to the knowledge of the Borrower or its Subsidiaries, threatened. The hours worked by and payments made to employees of the Borrower and its Subsidiaries have not been in material violation of the Fair Labor Standards Act or any other applicable Federal, state, local or foreign law dealing with such matters. All payments due from the Borrower and its Subsidiaries, or for which any claim may be made against the Borrower or any of its Subsidiaries, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as a liability on the books of the Borrower and its Subsidiaries.

Section 7.30. Brokerage Fees. No brokerage commission or finder’s fees has or shall be incurred or payable in connection with or as a result of the Borrower’s obtaining the financing contemplated hereby.

Section 7.31. Material Contracts. Set forth on Schedule 7.31 is a complete and correct list of all Material Contracts (other than the Loan Documents) in effect or to be in effect as of the Effective Date. The Borrower has delivered to Administrative Agent true and complete copies of each such Material Contract, as each may have been amended. The Material Contracts are in full force and effect in accordance with their respective terms, and except as set forth on Schedule 7.31, there exist no defaults in the performance of any obligation thereunder. Additionally, the Borrower is not aware of any event that with notice or lapse of time, or both, would constitute a default under any such Material Contracts.

ARTICLE VIII

AFFIRMATIVE COVENANTS

Until the Termination Date, the Borrower covenants and agrees with the Lenders that:

Section 8.01. Financial Statements; Other Information. The Borrower will furnish to the Administrative Agent:

(a) Annual Financial Statements. As soon as available, but in any event in accordance

with then applicable law and not later than 90 days after the end of each fiscal year of the Borrower,

its audited consolidated balance sheet and related statements of operations, stockholders’ equity and

cash flows as of the end of and for such year, setting forth in each case in comparative form the figures

for the previous fiscal year, all reported on by independent public accountants of recognized national

standing (without a “going concern” or like qualification or exception and without any qualification

or exception as to the scope of such audit) to the effect that such consolidated financial statements

present fairly in all material respects the financial condition and results of operations of the Borrower

and its Consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently

applied.

(b) Quarterly Financial Statements. As soon as available, but in any event in accordance

with then applicable law and not later than 45 days after the end of each of the first three fiscal quarters

of each fiscal year of the Borrower, its consolidated balance sheet and related statements of operations,

stockholders’ equity and cash flows as of the end of and for such fiscal quarter and the then elapsed

portion of the fiscal year, setting forth in each case in comparative form the figures for the

corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous

fiscal year, all certified by one of its Financial Officers as presenting fairly in all material respects

the financial condition and results of operations of the Borrower and its Consolidated Subsidiaries

on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end

audit adjustments and the absence of footnotes.

financial statement under Section 8.01(a) or Section 8.01(b), a certificate of a Financial Officer in

substantially the form of Exhibit D hereto (i) certifying as to whether a Default has occurred and, if

a Default has occurred, specifying the details thereof and any action taken or proposed to be taken

with respect thereto and (ii) setting forth reasonably detailed calculations demonstrating compliance

with Section 8.20 and Section 9.01.

(d) Certificate of Financial Officer -- Consolidating Information. If, at any time, all of

the Consolidated Subsidiaries of the Borrower are not Consolidated Subsidiaries, then concurrently

with any delivery of financial statements under Section 8.01(a) or Section 8.01(b), a certificate of a

Financial Officer setting forth consolidating spreadsheets that show all subsidiaries that are not

Consolidated Subsidiaries and the eliminating entries, in such form as would be presentable to the

auditors of the Borrower.

(e) Certificate of Financial Officer - Swap Agreements. Concurrently with the delivery

of each Reserve Report hereunder, a certificate of a Financial Officer, in form and substance

satisfactory to the Administrative Agent, setting forth as of a recent date, a true and complete list of

all Swap Agreements between the Borrower and each Subsidiary, the material terms thereof (including

the type, term, effective date, termination date and notional amounts or volumes), the net mark-to-

market value therefor, any new credit support agreements relating thereto not listed on Schedule 7.20,

any margin required or supplied under any credit support document, and the counterparty to each

such agreement.

(f) Certificate of Insurer -- Insurance Coverage. Concurrently with any delivery of

financial statements under Section 8.01(a), a certificate of insurance coverage from each insurer with

respect to the insurance required by Section 8.07, in form and substance reasonably satisfactory to

the Administrative Agent, and, if requested by the Administrative Agent, all copies of the applicable

policies.

(g) SEC and Other Filings; Reports to Shareholders. Promptly after the same become

publicly available, copies of all periodic and other reports, proxy statements and other materials (other

than filings under Section 16 of the Securities Exchange Act of 1934) filed by the Borrower or any

Subsidiary with the SEC, or with any national securities exchange, or distributed by the Borrower to

its shareholders generally, as the case may be.

(h) Notices Under Material Instruments. Promptly after the furnishing thereof, copies of

any financial statement, report or notice furnished to or by any Person pursuant to the terms of the

First Lien Loan Documents (including any borrowing notices and prepayment notices thereunder),

any preferred stock designation, indenture, loan or credit or other similar agreement, other than this

Agreement and not otherwise required to be furnished to the Lenders pursuant to any other provision

of this Section 8.01.

(i) Lists of Purchasers. Concurrently with the delivery of any Reserve Report to the

Administrative Agent pursuant to Section 8.12, (i) a list of all Persons purchasing Hydrocarbons from

the Borrower or any Subsidiary and (ii) a certificate from a Responsible Officer certifying that in all

material respects: (A) the information provided by the Borrower in connection with the Reserve

Report and any other information delivered in connection therewith is true and correct and any

projections based upon such information have been prepared in good faith based upon assumptions

believed by the Borrower to be reasonable, subject to uncertainties inherent in all projections, (B)

the Borrower or its Subsidiaries owns good and defensible title to the Oil and Gas Properties evaluated

in such Reserve Report (except for any Oil and Gas Properties described in the exhibit referred to in

clause (D) below) and such Properties are free of all Liens except for Liens permitted by Section

9.03, (C) except as set forth on an exhibit to the certificate, on a net basis there are no gas imbalances,

take or pay or other prepayments in excess of the volume specified in Section 7.18 with respect to

its Oil and Gas Properties evaluated in such Reserve Report which would require the Borrower or

any Subsidiary to deliver Hydrocarbons either generally or produced from such Oil and Gas Properties

at some future time without then or thereafter receiving full payment therefor, (D) none of their Oil

and Gas Properties have been sold since the date of the last Reserve Report except as set forth on an

exhibit to the certificate, which certificate shall list all of its Oil and Gas Properties sold and in such

detail as reasonably required by the Administrative Agent, (E) attached to the certificate is a list of

all marketing agreements entered into subsequent to the later of the date hereof or the most recently

delivered Reserve Report which the Borrower could reasonably be expected to have been obligated

to list on Schedule 7.19 had such agreement been in effect on the date hereof, and (F) except as

disclosed in such certificate, all of the Oil and Gas Properties evaluated by such Reserve Report are

Mortgaged Property.

(j) Notice of Sales of Oil and Gas Properties. In the event the Borrower or any Subsidiary

intends to Dispose of any Oil or Gas Properties or any Equity Interests in any Subsidiary in accordance

with Section 9.12, in either case having a fair market value or involving acquisition consideration

greater than $1,000,000 (whether in one transaction or a series of transactions), prior written notice

of such Disposition, the price thereof and the anticipated date of closing and any other details thereof

requested by the Administrative Agent or any Lender.

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

Business Days, of the occurrence of any Casualty Event or the commencement of any action or

proceeding that could reasonably be expected to result in a Casualty Event.

(l) Permitted Refinancing Debt. In the event the Borrower intends to refinance any Debt

under the First Lien Loan Documents in accordance with the Intercreditor Agreement, prompt written

notice (and in any event within ten (10) days prior thereto) of such intended refinancing, the amount

thereof and the anticipated date of closing and a copy of the preliminary offering memorandum (if

any) and the final offering memorandum (if any).

(m) Information Regarding the Borrower and Guarantors. Prompt written notice (and in

any event within ten (10) days prior thereto) of any change (i) in the Borrower or any Guarantor’s

corporate name, (ii) in the location of the Borrower or any Guarantor’s chief executive office or

principal place of business, (iii) in the Borrower or any Guarantor’s identity or corporate structure,

organization identification number, or in the jurisdiction in which such Person is incorporated or

formed, and (iv) in the Borrower or any Guarantor’s federal taxpayer identification number.

(n) Production Report and Lease Operating Statements. Within 60 days after the end of

each fiscal quarter, a report setting forth, for each calendar month during the then current fiscal year

to date, the volume of production and sales attributable to production (and the prices at which such

sales were made and the revenues derived from such sales) for each such calendar month from the

Oil and Gas Properties, and setting forth the related ad valorem, severance and production taxes and

lease operating expenses attributable thereto and incurred for each such calendar month.

(o) Notices of Certain Changes. Promptly, but in any event within five (5) Business Days

after the execution thereof, copies of any amendment, modification or supplement to the certificate

or articles of incorporation, by-laws, any preferred stock designation or any other organic document

of the Borrower or any Subsidiary.

(p) Annual Operating Forecast and Budget. As soon as practicable and in any event within

sixty (60) days after the end of each fiscal year, an operating forecast and budget of the Borrower

and its Subsidiaries, in form and substance reasonably satisfactory to the Administrative Agent, for

the ensuing four (4) fiscal quarters.

(q) Notices Relating to Acquisition. In the event that after the Effective Date: (i) the

Borrower is required or elects to purchase any of the Acquisition Properties which had been excluded

from, or return any of the Acquisition Properties which had been included in, the Acquisition Properties

in accordance with the terms of the Acquisition Documents, (ii) the Borrower is required to honor

any preferential purchase right in respect of any Acquisition Property which has not been waived,

(iii) any matter being disputed in accordance with the terms of the Acquisition Documents is resolved,

(iv) the Borrower and the seller(s) calculate and agree upon the “closing adjustment statement” or

“post-closing adjustment statement” as contemplated by the Acquisition Documents, or (v) there is

any material delay in the proposed acquisition of the Acquired Equity beyond July 31, 2014, then, in

each such case, the Borrower shall promptly give the Administrative Agent notice in reasonable detail

of such circumstances. The Borrower shall give the Administrative Agent prompt written notice

(but in any event within three (3) Business Days) of its receipt of confirmation that the Alaska

Department of Natural Resources has approved the transfer of the Acquisition Properties (other than

the Acquired Equity) to CIE pursuant to the Acquisition Documents.

(r) Other Requested Information. Promptly following any request therefor, such other

information regarding the operations, business affairs and financial condition of the Borrower or any

Subsidiary (including, without limitation, (i) any Plan and any reports or other information required

to be filed with respect thereto under the Code or under ERISA, (ii) regular production and operating

updates, and (iii) the other certificates, statements or other reports required to be delivered pursuant

to this Article VIII), or compliance with the terms of this Agreement or any other Loan Document,

as the Administrative Agent or any Lender may reasonably request.

Section 8.02. Notices of Material Events. The Borrower will furnish to the Administrative Agent prompt written notice of the following:

(a) the occurrence of any Default;

(b) the filing or commencement of, or the threat in writing of, any action, suit, proceeding,

investigation or arbitration by or before any arbitrator or Governmental Authority against or affecting

the Borrower or any Affiliate thereof not previously disclosed in writing to the Lenders or any material

adverse development in any action, suit, proceeding, investigation or arbitration (whether or not

previously disclosed to the Lenders) that, in either case, if adversely determined, could reasonably

be expected to result in a Material Adverse Effect; and

Loan Documents; and

(d) any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect.

Each notice delivered under this Section 8.02 shall be accompanied by a statement of a Responsible Officer setting forth in reasonable details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

Section 8.03. Existence; Conduct of Business. The Borrower will, and will cause each Subsidiary to, do or cause to be done all things necessary to (i) preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material to the conduct of its business and (ii) maintain its qualification to do business in each other jurisdiction in which its Oil and Gas Properties are located or the ownership of its Properties requires such qualification, except where the failure to so qualify could not reasonably be expected to have a Material Adverse Effect; provided that the foregoing shall not prohibit any merger, consolidation, liquidation, dissolution, sale or other disposition permitted under Section 9.11.

Section 8.04. Payment of Obligations. The Borrower will, and will cause each Subsidiary to, pay its obligations, including Tax liabilities of the Borrower and all of its Subsidiaries before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings and the Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (b) the failure to make payment could not reasonably be expected to result in a Material Adverse Effect or result in the seizure or levy of any material Property of the Borrower or any Subsidiary.

Section 8.05. Performance of Obligations under Loan Documents and Material Contracts. The Borrower will pay the Notes according to the terms thereof, and the Borrower will, and will cause each Subsidiary to, do and perform every act and discharge all of the obligations to be performed and discharged by them under the Loan Documents, including, without limitation, this Agreement, at the time or times and in the manner specified therein. The Borrower will comply in all material respects with the Material Contracts and all other contracts and agreements applicable to or relating to the Proved Reserves or the production and sale of Hydrocarbons and accompanying elements therefrom.

Section 8.06. Operation and Maintenance of Properties. The Borrower, at its own expense, will, and will cause each Subsidiary to:

(a) operate its Oil and Gas Properties and other material Properties or cause such Oil and

Gas Properties and other material Properties to be operated in a careful and efficient manner in

accordance with the practices of the industry and in compliance with all applicable contracts and

agreements and in compliance with all Governmental Requirements, including, without limitation,

applicable pro ration requirements and Environmental Laws, and all applicable laws, rules and

regulations of every other Governmental Authority from time to time constituted to regulate the

development and operation of its Oil and Gas Properties and the production and sale of Hydrocarbons

and other minerals therefrom, except, in each case, where the failure to comply could not reasonably

be expected to have a Material Adverse Effect.

(b) preserve, maintain and keep in good repair, working order and efficiency (ordinary

wear and tear excepted) all of its material Oil and Gas Properties and other material Properties,

including, without limitation, all equipment, machinery and facilities.

paid and discharged, all delay rentals, royalties, expenses and obligations accruing under the leases

or other agreements affecting or pertaining to its material Oil and Gas Properties and will do all other

things necessary to keep unimpaired their rights with respect thereto and prevent any forfeiture thereof

or default thereunder.

(d) promptly perform or make reasonable and customary efforts to cause to be performed,

in accordance with industry standards, the obligations required by each and all of the assignments,

deeds, leases, sub-leases, contracts and agreements affecting its interests in its material Oil and Gas

Properties.

(e) to the extent the Borrower is not the operator of any Property, the Borrower shall use

commercially reasonable efforts to cause the operator to comply with this Section 8.06, but the failure

of the operator to so comply will not constitute a Default or Event of Default hereunder.

Section 8.07. Insurance.

(a) The Borrower will, and will cause each Subsidiary to, maintain, with financially sound

and reputable insurance companies, insurance in such amounts and against such risks as are

customarily maintained by companies engaged in the same or similar businesses operating in the

same or similar locations. Such insurance policy or policies shall name the Administrative Agent as

an additional insured in respect of any such liability insurance policies and as loss payee with respect

to any such Property loss insurance policies and provide that the insurer will endeavor to give at least

30 days prior notice of any cancellation to the Administrative Agent. All such policies of insurance

shall include a waiver of subrogation. Upon the Administrative Agent’s request, the Borrower shall

deliver to the Administrative Agent certified copies of such policies of insurance and evidence of the

payment of all premiums therefor.

(b) If at any time any real property covered by a Mortgage on which a “building” or

“mobile home” (in each case, as such terms are defined for purposes of the National Flood Insurance

Program) is located is designated a “flood hazard area” in any Flood Insurance Rate Map published

by the Federal Emergency Management Agency (or any successor agency), the Borrower shall, and

shall cause each of its Subsidiaries to, (i) obtain flood insurance in such total amount as required by

Regulation H of the Federal Reserve Board, as from time to time in effect and all official rulings and

interpretations thereunder or thereof, and otherwise comply with the National Flood Insurance

Program as set forth in the Flood Disaster Protection Act of 1973, as it may be amended from time

to time and (ii) provide evidence in form and substance satisfactory to the Administrative Agent of

such flood insurance to the Administrative Agent.

Section 8.08. Books and Records; Inspection Rights. The Borrower will, and will cause each Subsidiary to, keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities. The Borrower will, and will cause each Subsidiary to, permit any representatives designated by the Administrative Agent or any Lender (coordinated through the Administrative Agent), upon reasonable prior notice, to visit and inspect its Properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested. The Borrower shall bear the cost of not more than one (1) such inspection and examination during any 12-month period unless a Default or Event of Default then exists, in which event the Borrower shall bear such cost.

Section 8.09. Compliance with Laws. The Borrower will, and will cause each Subsidiary to, comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its Property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

Section 8.10. Environmental Matters.

(a) The Borrower shall at its sole expense: (i) comply, and shall cause its Properties and

operations and each Subsidiary and each Subsidiary’s Properties and operations to comply, with all

applicable Environmental Laws, the breach of which could be reasonably expected to have a Material

Adverse Effect; (ii) not Release or threaten to Release, and shall cause each Subsidiary not to Release

or threaten to Release, any Hazardous Material on, under, about or from any of the Borrower’s or its

Subsidiaries’ Properties or any other property offsite the Property to the extent caused by the

Borrower’s or any of its Subsidiaries’ operations except in compliance with applicable Environmental

Laws, the Release or threatened Release of which could reasonably be expected to have a Material

Adverse Effect; (iii) timely obtain or file, and shall cause each Subsidiary to timely obtain or file, all

Environmental Permits, if any, required under applicable Environmental Laws to be obtained or filed

in connection with the operation or use of the Borrower’s or its Subsidiaries’ Properties, which failure

to obtain or file could reasonably be expected to have a Material Adverse Effect; (iv) promptly

commence and diligently prosecute to completion, and shall cause each Subsidiary to promptly

commence and diligently prosecute to completion, any assessment, evaluation, investigation,

monitoring, containment, cleanup, removal, repair, restoration, remediation or other remedial

obligations (collectively, the “Remedial Work”) in the event any Remedial Work is required or

reasonably necessary under applicable Environmental Laws because of or in connection with the

actual or suspected past, present or future Release or threatened Release of any Hazardous Material

on, under, about or from any of the Borrower’s or its Subsidiaries’ Properties, which failure to

commence and diligently prosecute to completion could reasonably be expected to have a Material

Adverse Effect; (v) conduct, and cause its Subsidiaries to conduct, their respective operations and

businesses in a manner that will not expose any Property or Person to Hazardous Materials that could

reasonably be expected to form the basis for a claim for damages or compensation that could

reasonably be expected to have a Material Adverse Effect; and (vi) implement, and shall cause each

Subsidiary to implement, such procedures as may be necessary to assure that the Borrower’s and its

Subsidiaries’ obligations under this Section 8.10(a) are timely and fully satisfied, which failure to

establish and implement could reasonably be expected to have a Material Adverse Effect.

(b) The Borrower will promptly, but in no event later than five days of the occurrence

thereof, notify the Administrative Agent and the Lenders in writing of any threatened action,

investigation or inquiry by any Governmental Authority or any threatened demand or lawsuit by any

Person against the Borrower or its Subsidiaries or their Properties of which the Borrower has

knowledge in connection with any Environmental Laws if the Borrower could reasonably anticipate

that such action will result in liability (whether individually or in the aggregate) in excess of $500,000,

not fully covered by insurance, subject to normal deductibles.

assessments, audits and tests in accordance with the most current version of the American Society of

Testing Materials standards upon request by the Administrative Agent and the Lenders and no more

than once per year in the absence of any Event of Default (or as otherwise required to be obtained

by the Administrative Agent or the Lenders by any Governmental Authority), in connection with the

Borrower’s and its Subsidiaries’ existing and hereafter acquired Oil and Gas Properties or other

Properties.

(d) To the extent the Borrower or a Subsidiary is not the operator of any Property, none

of the Borrower and its Subsidiaries shall be obligated to directly perform any undertakings

contemplated by the covenants and agreements contained in this Section 8.10 which are performable

only by such operators and are beyond the control of the Borrower or any of its Subsidiaries.

Notwithstanding the above, the Borrower shall, and shall cause its Subsidiaries to, use commercially

reasonable efforts to cause the operator to comply with this Section 8.10.

Section 8.11. Further Assurances.

(a) The Borrower at its sole expense will, and will cause each Subsidiary to, promptly

execute and deliver to the Administrative Agent all such other documents, agreements and instruments

reasonably requested by the Administrative Agent to comply with, cure any defects or accomplish

the conditions precedent, covenants and agreements of the Borrower or any Subsidiary, as the case

may be, in the Loan Documents, including the Notes, or to further evidence and more fully describe

the collateral intended as security for the Secured Obligations, or to correct any omissions in this

Agreement or the Security Instruments, or to state more fully the obligations secured therein, or to

perfect, protect or preserve any Liens created pursuant to this Agreement or any of the Security

Instruments or the priority thereof, or to make any recordings, file any notices or obtain any consents,

all as may be reasonably necessary or appropriate, in the sole discretion of the Administrative Agent,

in connection therewith.

(b) The Borrower hereby authorizes the Administrative Agent to file one or more financing

or continuation statements, and amendments thereto, relative to all or any part of the Mortgaged

Property or other Property subject to the Security Instruments without the signature of the Borrower

or any other Guarantor where permitted by law. A carbon, photographic or other reproduction of the

Security Instruments or any financing statement covering the Mortgaged Property or other Property

subject to the Security Instruments or any part thereof shall be sufficient as a financing statement

where permitted by law.

Section 8.12. Reserve Reports.

(a) On or before July 1st and January 1st of each year, commencing July 1, 2014, the

Borrower shall furnish to the Administrative Agent and the Lenders a Reserve Report evaluating the

Oil and Gas Properties of the Borrower and its Subsidiaries as of the immediately preceding May 1st

and November 1st. The Reserve Report as of January 1 of each year shall be prepared by one or

more Approved Petroleum Engineers, and the July 1 Reserve Report of each year shall be prepared

either (i) by one or more Approved Petroleum Engineers or (ii) by or under the supervision of the

chief engineer of the Borrower who shall certify such Reserve Report to be true and accurate and to

have been prepared in accordance with the procedures used in the immediately preceding January 1

Reserve Report.

(b) The Borrower shall also deliver to the Administrative Agent any other Reserve Report

delivered to the First Lien Administrative Agent under the First Lien Credit Agreement, together with

all other reports and information provided to the First Lien Administrative Agent and/or the First Lien

Lenders in connection with any Reserve Report.

Section 8.13. Title Information.

(a) On or before the delivery to the Administrative Agent and the Lenders of each Reserve

Report required by Section 8.12(a), the Borrower will deliver title information in form and substance

acceptable to the Administrative Agent covering enough of the Oil and Gas Properties evaluated by

such Reserve Report that were not included in the immediately preceding Reserve Report, so that

the Administrative Agent shall have received together with title information previously delivered to

the Administrative Agent, satisfactory title information on at least 80% of the total value of the Oil

and Gas Properties evaluated by such Reserve Report.

(b) If the Borrower has provided title information for additional Properties under Section

8.13(a), the Borrower shall, within 60 days (or such later date as the Administrative Agent may agree

in its sole discretion) of notice from the Administrative Agent that title defects or exceptions exist

with respect to such additional Properties, either (i) cure any such title defects or exceptions (including

defects or exceptions as to priority) which are not permitted by Section 9.03 raised by such information,

(ii) substitute acceptable Mortgaged Properties with no title defects or exceptions except for Specified

Liens having an equivalent value or (iii) deliver title information in form and substance acceptable

to the Administrative Agent so that the Administrative Agent shall have received, together with title

information previously delivered to the Administrative Agent, satisfactory title information on at least

80% of the value of the Oil and Gas Properties evaluated by such Reserve Report.

Section 8.14. Additional Collateral; Additional Guarantors.

(a) In connection with each redetermination of the Borrowing Base or delivery of a

Reserve Report hereunder, the Borrower shall review such Reserve Report and the list of current

Mortgaged Properties (as described in Section 8.01(i)(F)) to ascertain whether the Mortgaged

Properties represent at least 80% of the total value of the Oil and Gas Properties evaluated in the most

recently completed Reserve Report after giving effect to exploration and production activities,

acquisitions, dispositions and production. In the event that the Mortgaged Properties do not represent

at least 80% of such total value, then the Borrower shall, and shall cause its Subsidiaries to, grant,

within thirty (30) days of delivery of the certificate required under Section 8.01(i), to the

Administrative Agent as security for the Secured Obligations a first-priority Lien interest (provided

that Specified Liens may exist) on additional Oil and Gas Properties not already subject to a Lien of

the Security Instruments such that after giving effect thereto, the Mortgaged Properties will represent

not less than the minimum set forth above. All such Liens will be created and perfected by and in

accordance with the provisions of deeds of trust, security agreements and financing statements or

other Security Instruments, all in form and substance reasonably satisfactory to the Administrative

Agent and in sufficient executed (and acknowledged where necessary or appropriate) counterparts

for recording purposes. In order to comply with the foregoing, if any Subsidiary places a Lien on its

Oil and Gas Properties and such Subsidiary is not a Guarantor, then it shall become a Guarantor and

comply with Section 8.14(b).

(b) In the event that the Borrower creates or acquires any Domestic Subsidiary, the

Borrower shall promptly cause such Subsidiary to become a party to the Guarantee and Collateral

Agreement. In connection therewith, the Borrower shall, or shall cause such Subsidiary to, (A)

execute and deliver a supplement to the Guarantee and Collateral Agreement, (B) pledge all of the

Equity Interests of such new Subsidiary (including, without limitation, delivery of original stock

certificates evidencing the Equity Interests of such Subsidiary, together with an appropriate undated

stock powers for each certificate duly executed in blank by the registered owner thereof, to the

Administrative Agent (or to the First Lien Administrative Agent (as bailee for the Administrative

Agent)) and (C) execute and deliver such other additional closing documents, certificates and legal

opinions as shall reasonably be requested by the Administrative Agent.

Administrative Agent, the Borrower shall, and shall cause each of its Subsidiaries to grant to the

Administrative Agent a Lien to secure the Secured Obligations on all other Oil and Gas Properties,

except those assets as to which the Administrative Agent shall determine in its reasonable discretion

that the cost of obtaining a Lien or other security interest therein is excessive in relation to the value

of the security to be afforded thereby.

(d) The Borrower agrees that it will not, and will not permit any Subsidiary to, grant a

Lien on any Property to secure the First Lien Secured Obligations without first (i) giving fifteen (15)

days’ prior written notice to the Administrative Agent thereof and (ii) granting to the Administrative

Agent to secure the Secured Obligations a second-priority, perfected Lien (subject to Specified Liens)

on the same Property pursuant to Security Instruments in form and substance reasonably satisfactory

to the Administrative Agent. In connection therewith, the Borrower shall, or shall cause its

Subsidiaries to, execute and deliver such other additional closing documents, certificates and legal

opinions as shall reasonably be requested by the Administrative Agent.

(e) The Borrower will at all times cause the other material tangible and intangible assets

of the Borrower and each Subsidiary to be subject to a Lien of the Security Instruments.

Section 8.15. ERISA Compliance. The Borrower will promptly furnish and will cause the Subsidiaries and any ERISA Affiliate to promptly furnish to the Administrative Agent immediately upon becoming aware of the occurrence of any non-exempt “prohibited transaction,” as described in section 406 of ERISA or in section 4975 of the Code, in connection with any Plan or any trust created thereunder, a written notice signed by the President or the principal Financial Officer of the Borrower, the Subsidiary or the ERISA Affiliate, as the case may be, specifying the nature thereof, what action the Borrower, the Subsidiary or the ERISA Affiliate is taking or proposes to take with respect thereto, and, when known, any action taken or proposed by the Internal Revenue Service or the Department of Labor with respect thereto.

Section 8.16. Post-Closing Covenants.

(a) On or prior to the date that is 60 days after the Effective Date (or such later date that

is approved by the Administrative Agent in its sole discretion), the Borrower and the other Loan

Parties shall enter into and deliver to the Administrative Agent a Deposit Account Control Agreement

with each bank at which any Loan Party maintains any Collections Account, which agreement shall

provide for a perfected Lien in such Collections Account in favor of the Administrative Agent for the

benefit of the Secured Parties (subject in priority only to (i) Liens described in clause (e) of the

definition of “Excepted Liens” and (ii) Liens permitted by Section 9.03(e)). Subject to the foregoing,

the Borrower shall, and shall cause each of its Subsidiaries to, (x) cause all proceeds from the sales

of Hydrocarbons by the Loan Parties to be deposited into a Collections Account that is subject to a

Deposit Account Control Agreement, and (y) direct the State of Alaska to make any payment in respect

of any tax credit certificate, or right or interest therein, or any right to or interest in any payment from

the Oil and Gas Tax Credit Fund, held by such Person by virtue of Alaska’s Oil & Gas Production

Tax Credit program, directly to an account of the Borrower or such Subsidiary that is subject to a

Deposit Account Control Agreement.

(b) On or prior to the date that is 30 days after the Effective Date (or such later date that

is approved by the Administrative Agent in its sole discretion), the Borrower shall deliver to the

Administrative Agent, in form and substance reasonably satisfactory to the Administrative Agent, (i)

lien searches with respect to the Aircraft as of a recent date and (ii) evidence that the Administrative

Agent has a first-priority perfected Lien (subject only to Specified Liens) in the Aircraft that secures

the Secured Obligations.

is approved by the Administrative Agent in its sole discretion), the Borrower shall deliver to the

Administrative Agent (i) ALTA mortgagee title insurance policies subject only to encumbrances

acceptable to the Administrative Agent and issued by one or more title companies designated by the

Administrative Agent (each, a “Title Policy”) with respect to the Loan Parties’ Kustatan production

facilities, in amounts not less than the fair market value of such production facilities, together with

a title report issued by a title company with respect thereto and copies of all recorded documents

listed as exceptions to title or otherwise referred to therein, each in form and substance reasonably

satisfactory to the Administrative Agent (such Title Policies to be in a form insuring the applicable

Mortgage as a first-priority Lien, encumbering the applicable portion of the Kustatan production

facilities, subject to no Liens or encumbrances other than Specified Liens); (ii) evidence reasonably

satisfactory to the Administrative Agent that the Loan Parties have paid to the title company or to the

appropriate Governmental Authorities all expenses and premiums of the title company and all other

sums required in connection with the issuance of each Title Policy and all recording and stamp taxes

(including mortgage recording and intangible taxes) payable in connection with recording the

Mortgage for such production facilities in the appropriate real estate records; and (iii) all consents

and other requirements necessary for the Loan Parties to comply with the provisions set forth in this

Section 8.16(c).

(d) The Borrower shall, and to the extent applicable, cause each of the other Loan Parties

to, deliver to the Administrative Agent, on or before the applicable date set forth in therein (or such

later date that is approved by the Administrative Agent in its sole discretion), all items required by Schedule 8.16 in form and substance reasonably satisfactory to the Administrative Agent.

Section 8.17. Hedging Maintenance.

(a) The Loan Parties shall maintain in effect at all times on a continuous basis one or more

Swap Agreements satisfactory to Administrative Agent with respect to their oil production with an

Approved Counterparty, which Swap Agreements taken together shall at all times cover not less than

80% or more than 100% of the volume of oil of such Proved Developed Producing Reserves projected

in the most recent Reserve Report to be produced during a rolling 24-month period.

(b) The Borrower shall use such Swap Agreements solely as a part of its normal business

operations as a risk management strategy and/or hedge against changes resulting from market

conditions related to the Borrower’s and its Subsidiaries’ oil and gas operations and not as a means

to speculate for investment purposes on trends and shifts in financial or commodities markets.

aware (in any event not later than the close of business on the same Business Day) that the production

of Hydrocarbons by any Loan Party could reasonably be expected to be insufficient to meet its

obligations under any Swap Agreements.

Section 8.18. Board Observation Rights. So long as Apollo or any of its Affiliates holds at least $25,000,000 of the outstanding Loans and/or Commitments, Apollo shall have the right to designate one individual (the “Observer”) to attend all meetings of the Borrower’s Board of Directors (and any committees thereof) in a non-voting observer capacity. The Observer shall be entitled to receive all notices of meetings, reports, presentations and materials as if the Observer were a member of the Board. The Borrower shall reimburse the Observer for all reasonable travel and other out-of-pocket expenses incurred in connection with meetings of its Board of Directors and committees thereof in a manner consistent with its reimbursement policies for members of its Board of Directors. The Borrower will hold regular and customary meetings of its Board of Directors. Apollo may, in its sole discretion, transfer its right to designate an Observer pursuant to this Section 8.18 to any Eligible Assignee that assumes any of Apollo’s or its Affiliates’ rights and obligations hereunder in accordance with Section 12.04 so long as such Eligible Assignee or any of its Affiliates holds at least $25,000,000 of the outstanding Loans and/or Commitments.

Section 8.19. Appraisal. On or before each anniversary of the Effective Date thereafter, or such earlier date as the Administrative Agent shall reasonably request, the Borrower shall provide to Administrative Agent an updated appraisal of all hard assets of the Borrower and its Subsidiaries, in form and substance satisfactory to the Administrative Agent, from Hadco International Inc. or another appraiser selected by the Borrower and reasonably acceptable to the Administrative Agent.

Section 8.20. Minimum Liquidity. The Borrower shall at all times maintain Liquidity equal to or greater than $5,000,000.

ARTICLE IX

NEGATIVE COVENANTS

Until the Termination Date, the Borrower covenants and agrees with the Lenders that:

Section 9.01. Financial Covenants.

(a) Leverage Ratio. The Borrower will not, as of the last day of any fiscal quarter set

forth below, permit its Leverage Ratio to be greater than:



Date	Ratio
Fiscal quarter ending April 30, 2014	4.00:1.00
Fiscal quarter ending July 31, 2014	3.75:1.00
Fiscal quarter ending October 31, 2014 and the last day of each quarter ending thereafter	3.50:1.00

(b) Interest Coverage Ratio. The Borrower will not permit, as of the last day of any fiscal

quarter, commencing with the fiscal quarter ending April 30, 2014, its ratio of EBITDAX for the

period of four fiscal quarters ending on such date to Interest Expense for such period to be less than

2.5 to 1.0.

commencing with the fiscal quarter ending April 30, 2014, its ratio of (i) consolidated current assets

(including the unused amount of the total Commitments, but excluding non-cash assets under ASC

815 and current plugging and abandonment restricted cash) to (ii) consolidated current liabilities

(excluding non-cash obligations under ASC 815, current liabilities for plugging and abandonment

expense and current maturities under this Agreement) to be less than 1.0 to 1.0.

(d) Minimum Gross Production. The Borrower will not permit, as of the last day of any

fiscal quarter, commencing with the fiscal quarter ending April 30, 2014, the daily average of gross

production of Hydrocarbons (calculated at the wellhead on a barrel of oil equivalent basis, where 10

Mcf of natural gas is equal to one barrel of oil) from the Loan Parties’ Oil and Gas Properties

constituting Mortgaged Property during each such fiscal quarter, to be less than 2,500.

(e) Asset Coverage Ratio. The Borrower will not permit, as of any Asset Coverage Test

Date, the ratio of (a) the NYMEX Value of the total Proved Developed Reserves of the Loan Parties

as shown on the most recently delivered Reserve Report, to (b) Total Debt, to be less than 1.10 to

1.00.

For purposes of this Section 9.01(e) only, “Proved Developed Reserves” shall be determined in accordance with SEC guidelines, with the following exceptions: (i) commodity prices shall be forecast according to a “Strip Price,” adjusted for any basis differential and any existing commodity hedges for forecasting oil and gas prices; (ii) current operating expenses will be held constant; and (iii) such expenses must include an accurate estimate of net abandonment costs. As used herein, “Strip Price” shall mean the equivalent futures price as quoted by the NYMEX for three years and held constant thereafter.

Section 9.02. Debt. The Borrower will not, and will not permit any Subsidiary or Miller 2009 Partnership to, incur, create, assume or suffer to exist any Debt, except:

(a) the Notes and other Secured Obligations and any Permitted Refinancing Debt in respect

thereof.

(b) Debt of the Borrower and its Subsidiaries existing on the date hereof that is set forth

on Schedule 9.02, and any Permitted Refinancing Debt in respect thereof.

aggregate at any time outstanding.

(d) Debt associated with bonds or surety obligations required by Governmental

Requirements in connection with the operation of the Oil and Gas Properties in an aggregate amount

not to exceed $10,000,000 at any time outstanding.

(e) intercompany Debt among the Loan Parties to the extent permitted by Section 9.05

(g); provided that such Debt is not held, assigned, transferred, negotiated or pledged to any Person

other than the Borrower or one of its Wholly-Owned Subsidiaries, and, provided further, that any

such Debt owed by either the Borrower or a Guarantor shall be subordinated to the Secured Obligations

on terms set forth in the Guarantee and Collateral Agreement.

(f) endorsements of negotiable instruments for collection in the ordinary course of

business.

(g) so long as the Intercreditor Agreement has been duly executed by the parties thereto

and delivered to the Administrative Agent, Debt under the First Lien Credit Agreement, the original

principal amount of which does not exceed $100,000,000 in the aggregate at any time outstanding;

provided, however, that immediately before and after giving pro forma effect to each borrowing of

First Lien Loans or making of any other credit extension thereunder (including without limitation

any issuance of a letter of credit thereunder), the aggregate amount of Debt that has been funded

thereunder (including without limitation, the face amount of any letters of credit issued thereunder),

shall not exceed the least of (i) 30% of the NYMEX Value of the total Proved Reserves of the Loan

Parties as shown on the most recently delivered Reserve Report (as adjusted to give effect to

Dispositions, individually or in the aggregate, of 5.00% or more of Proved Reserves of the Loan

Parties as shown on the most recently delivered Reserve Report) delivered prior to the date such Debt

was incurred, (ii) the Borrowing Base as in effect on the date such Debt was incurred and (iii)

$100,000,000.

(h) insurance premiums incurred in the ordinary course of business and consistent with

past practices if the amount financed does not exceed the premium payable for the current policy

period.

(i) Debt arising under Cash Management Agreements with any financial institution in

which the Borrower or any of its Subsidiaries maintains a deposit account.

(j) Debt existing on the date hereof under the Restructuring Agreement.

(k) Debt constituting the deferred purchase price payable in connection with the Gunsight

Acquisition in accordance with the Gunsight Acquisition Agreement, in an aggregate principal amount

not to exceed $950,000.

(l) other Debt not to exceed $5,000,000 in the aggregate at any one time outstanding.

Section 9.03. Liens. The Borrower will not, and will not permit any Subsidiary or Miller 2009 Partnership to, create, incur, assume or permit to exist any Lien on any of its Properties (now owned or hereafter acquired), except:

(a) Liens securing the payment and/or performance of any Secured Obligations.

(b) Excepted Liens.

or under such Capital Lease; provided that such Liens are created within 180 days of construction,

acquisition or lease of such Property.

(d) Liens on Property not otherwise permitted by the foregoing clauses of this Section

9.03; provided that the aggregate principal or face amount of all Debt secured under this Section 9.03

(d) shall not exceed $1,000,000 at any time.

(e) Liens on Property securing the First Lien Secured Obligations to the extent permitted

under the Intercreditor Agreement; provided, however, that both before and after giving effect to the

incurrence of any such Lien, the Borrower is in compliance with Section 8.14(d).

(f) Liens on Property not constituting collateral for the Secured Obligations and not

otherwise permitted by the foregoing clauses of this Section 9.03; provided that the aggregate principal

or face amount of all Debt secured under this Section 9.03(f) shall not exceed $5,000,000 in the

aggregate at any time outstanding.

(g) Liens on cash collateral securing the Borrower’s obligations under the BP Swap

Agreement and the Cargill Swap Agreement, in an amount not to exceed $25,000,000 in the aggregate

at any time outstanding.

(h) the Lien on the property acquired by the Borrower pursuant to the Gunsight Acquisition

Agreement securing the loan of approximately $425,000 made to Gunsight Holdings LLC; provided

that such Lien is released promptly following the payment in full by the Borrower of the purchase

price therefor as set forth in the Gunsight Acquisition Agreement.

Section 9.04. Dividends, Distributions and Redemptions.

(a) Restricted Payments. The Borrower will not, and will not permit any of its Subsidiaries

or Miller 2009 Partnership to, declare or make, or agree to pay or make, directly or indirectly, any

Restricted Payment, return any capital to its stockholders or make any distribution of its Property to

its Equity Interest holders, except (a) the Borrower may declare and pay dividends with respect to

its Equity Interests payable solely in additional shares of its Equity Interests (other than Disqualified

Capital Stock), (b) Subsidiaries or Miller 2009 Partnership may declare and pay dividends ratably

with respect to their Equity Interests to the Borrower or any other Loan Party, (c) the Borrower may

make Restricted Payments pursuant to and in accordance with stock option plans or other benefit

plans for management or employees of the Borrower and its Subsidiaries, (d) distributions or dividends

made or paid by Miller 2009 Partnership to the holders of its Equity Interests out of payments received

by Miller 2009 Partnership from the Borrower under the Miller 2009 Loan Documents, (e) payments

of the Series B Preferred Dividend, the Series C Preferred Dividend and the Series D Preferred

Dividend so long as immediately prior to and after giving effect to each such payment, no Default

or Event of Default shall have occurred and be continuing and immediately after giving effect to each

such payment, the Borrower is in pro forma compliance with Section 9.01 and (f) the Borrower may

implement a discretionary Equity Interest repurchase plan on terms and conditions reasonably

satisfactory to the Administrative Agent and the Majority Lenders; provided that (i) all expenditures

or payments under such repurchase plan are made solely with Management Option Proceeds and (ii)

immediately prior to and after giving effect to any expenditure or payment under such repurchase

plan (A) Liquidity is equal to or greater than the higher of $20,000,000 and 20% of the Borrowing

Base in effect at such time, and (B) no Default or Event of Default shall have occurred and be

continuing.

(b) Redemption of Subordinated Debt. The Borrower will not, and will not permit any

Subsidiary or Miller 2009 Partnership to call, make or offer to make any optional or voluntary

prepayment or redemption of or otherwise optionally or voluntarily redeem or prepay (in whole or

in part) any Debt that is subordinated to the Secured Obligations; provided that the Borrower may

redeem or prepay any such Debt with the proceeds of any Permitted Refinancing Debt in respect

thereof.

Section 9.05. Investments, Loans and Advances. The Borrower will not, and will not permit any Subsidiary or Miller 2009 Partnership to, make or permit to remain outstanding any Investments in or to any Person, except that the foregoing restriction shall not apply to:

(a) Investments reflected in Schedule 9.05.

(b) accounts receivable arising in the ordinary course of business.

guaranteed by the United States of America or any agency thereof, in each case maturing within one

year from the date of creation thereof.

(d) commercial paper maturing within one year from the date of creation thereof rated in

the highest grade by S&P or Moody’s.

(e) deposits maturing within one year from the date of creation thereof with, including

certificates of deposit issued by, (i) any Lender or First Lien Lender or (ii) any office located in the

United States of America of any other bank or trust company which is organized under the laws of

the United States of America or any state thereof, has capital, surplus and undivided profits aggregating

at least $100,000,000 (as of the date of such bank or trust company’s most recent financial reports)

and has a short term deposit rating of no lower than A2 or P2, as such rating is set forth from time to

time, by S&P or Moody’s, respectively.

(f) Investments in money market or other mutual funds substantially all of whose assets

are described in Section 9.05(c), Section 9.05(d) and Section 9.05(e).

(g) Investments (i) made by the Borrower in or to the Guarantors and (ii) made by any

Guarantor in or to the Borrower or any Guarantor.

(h) Investments (including, without limitation, capital contributions) in general or limited

partnerships or other types of entities (each a “venture”) entered into by the Borrower or a Subsidiary

with others in the ordinary course of business; provided that (i) any such venture is engaged

exclusively in oil and gas exploration, development, production, processing and related activities,

including transportation, (ii) the interest in such venture is acquired in the ordinary course of business,

and (iii) such venture interests acquired and capital contributions made (valued as of the date such

interest was acquired or the contribution made) do not exceed $5,000,000 in the aggregate at any

time outstanding.

(i) loans or advances to employees, officers or directors in the ordinary course of business

of the Borrower or any of its Subsidiaries, in each case only as permitted by applicable law, including

Section 402 of the Sarbanes-Oxley Act of 2002, but in any event not to exceed $1,000,000 in the

aggregate outstanding at any time.

(j) Investments in stock, obligations or securities received in settlement of debts arising

from Investments permitted under this Section 9.05 owing to the Borrower or any Subsidiary as a

result of a bankruptcy or other insolvency proceeding of the obligor in respect of such debts or upon

the enforcement of any Lien in favor of the Borrower or any of its Subsidiaries.

(k) guarantees by the Borrower or any Guarantor of Debt permitted by Section 9.02.

(l) Investments arising from the endorsement of financial instruments in the ordinary

course of business.

(m) Investments arising out of the receipt by the Borrower or any Subsidiary of noncash

consideration for the sale of assets permitted under Section 9.12.

(n) the acquisition of Oil and Gas Properties and related oilfield equipment located thereon

from Persons other than Affiliates of the Borrower or its Subsidiaries so long as:

(i) at the time of and after giving effect to such acquisition, no Default or Event

of Default exists or could reasonably be expected to result from such acquisition;

(ii) the Borrower and its Subsidiaries shall have complied with all of the

requirements of Section 8.14 with respect thereto;

(iii) the Borrower is in compliance with Section 9.01(d) for the most recently ended

fiscal quarter; and

(iv) after giving effect to such acquisition, the Borrower is in pro forma compliance

with each of the covenants set forth in Section 9.01(a), (b), (c) and (e).

(o) Investments in certificates of deposit less than $100,000, provided that such certificate

of deposit is insured.

(p) consummation of the Acquisition on the Effective Date and the acquisition of the

Acquired Equity after the Effective Date, in each case, in accordance with the Acquisition Agreement.

(q) other Investments not to exceed $4,000,000 in the aggregate at any time outstanding.

Section 9.06. Nature of Business; International Operations. The Borrower will not, and will not permit any Subsidiary or Miller 2009 Partnership to, allow any material change to be made in the character of its business as an independent oil and gas exploration and production company. From and after the date hereof, the Borrower and its Subsidiaries will not acquire or make any other expenditure (whether such expenditure is capital, operating or otherwise) in or related to, any Oil and Gas Properties not located within the geographical boundaries of the United States of America.

Section 9.07. Limitation on Leases. The Borrower will not, and will not permit any Subsidiary or Miller 2009 Partnership to, create, incur, assume or suffer to exist any obligation for the payment of rent or hire of Property of any kind whatsoever (real or personal but excluding Capital Leases, leases of Hydrocarbon Interests and leases of drilling rigs, vessels, and other equipment used in operating the Oil and Gas Properties), under leases or lease agreements which would cause the aggregate amount of all payments made by the Borrower and the Subsidiaries pursuant to all such leases or lease agreements, including, without limitation, any residual payments at the end of any lease, to exceed $2,000,000 in the aggregate in any period of twelve consecutive calendar months during the life of such leases.

Section 9.08. Proceeds of Loans. The Borrower will not permit the proceeds of the Loans to be used for any purpose other than those permitted by Section 7.21. Neither the Borrower nor any Person acting on behalf of the Borrower has taken or will take any action which might cause any of the Loan Documents to violate Regulations T, U or X or any other regulation of the Board or to violate Section 7 of the Securities Exchange Act of 1934 or any rule or regulation thereunder, in each case as now in effect or as the same may hereinafter be in effect.

Section 9.09. ERISA Compliance. The Borrower will not, and will not permit any Subsidiary or Miller 2009 Partnership to, at any time:

(a) engage in, or permit any ERISA Affiliate to engage in, any transaction in connection

with which the Borrower, a Subsidiary or any ERISA Affiliate could be subjected to either a civil

penalty assessed pursuant to subsections (c), (i), (l) or (m) of section 502 of ERISA or a tax imposed

by Chapter 43 of Subtitle D of the Code that could reasonably be expected to result in liability to the

Borrower or any of its Subsidiaries in excess of $100,000 individually or in the aggregate.

(b) fail to make, or permit any ERISA Affiliate to fail to make, full payment when due of

all amounts which, under the provisions of any Plan, agreement relating thereto or applicable law,

the Borrower, a Subsidiary or any ERISA Affiliate is required to pay as contributions thereto that

could reasonably be expected to result in liability to the Borrower or any of its Subsidiaries in excess

of $100,000 individually or in the aggregate.

contribute to or assume an obligation to contribute to, or permit any ERISA Affiliate to contribute to

or assume an obligation to contribute to (i) any employee welfare benefit plan, as defined in section

3(1) of ERISA, including, without limitation, any such plan maintained to provide benefits to former

employees of such entities, that may not be terminated by such entities in their sole discretion at any

time without any material liability, or (ii) any employee pension benefit plan, as defined in section 3

(2) of ERISA, that is subject to Title IV of ERISA, section 302 of ERISA or section 412 of the Code.

Section 9.10. Sale or Discount of Receivables; Alaska Oil & Gas Production Tax Credits.

(a) Except for receivables obtained by the Borrower or any Subsidiary out of the ordinary

course of business or the settlement of joint interest billing accounts in the ordinary course of business

or discounts granted to settle collection of accounts receivable or the sale of defaulted accounts arising

in the ordinary course of business in connection with the compromise or collection thereof and not

in connection with any financing transaction, the Borrower will not, and will not permit any Subsidiary

or Miller 2009 Partnership to, discount or sell (with or without recourse) any of its notes receivable

or accounts receivable.

(b) Notwithstanding anything to the contrary contained herein or in the other Loan

Documents, in no event shall the Borrower or any of its Subsidiaries sell, transfer, discount or otherwise

Dispose of any tax credit certificate, or right or interest therein, or any right to or interest in any

payment from the Oil and Gas Tax Credit Fund, held by such Person by virtue of Alaska’s Oil & Gas

Production Tax Credit program, or any receivable obtained by the Borrower or any Subsidiary in

connection therewith except a sale of such certificate to the State of Alaska the proceeds of which

have been directed to be paid directly to an account of the Borrower or a Subsidiary that is subject

to a Deposit Account Control Agreement.

Section 9.11. Mergers, Etc. The Borrower will not, and will not permit any Subsidiary or Miller 2009 Partnership to, merge into or with or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its Property to any other Person (whether now owned or hereafter acquired) (any such transaction, a “consolidation”), or liquidate or dissolve; provided that:

(a) any Subsidiary may participate in a consolidation with the Borrower (provided that

the Borrower shall be the continuing or surviving corporation) or any other Subsidiary that is a

Domestic Subsidiary (provided that if one of such Subsidiaries is a Wholly-Owned Subsidiary or

Guarantor, then the surviving Person shall be a Wholly-Owned Subsidiary or Guarantor, as the case

may be); and

(b) the Loan Parties may make Dispositions permitted by Section 9.12(b).

Section 9.12. Dispositions of Properties. The Borrower will not, and will not permit any Subsidiary or Miller 2009 Partnership to, Dispose of any Property or any interest therein (including within such prohibition transfers and dispositions of overriding royalty interests, production payments, net profits interests and any other interests payable out of or measured by production or the proceeds of production) or any Subsidiary owning any such Oil and Gas Property, other than:

(a) (i) sales of Hydrocarbons in the ordinary course of business; (ii) sales of equipment

(other than the Aircraft) that is (x) obsolete, worn out, depleted or uneconomic and disposed of in the

ordinary course of business; (y) no longer necessary for the business of the Borrower or any Subsidiary;

and (z) contemporaneously replaced by equipment of at least comparable use and value and (iii) the

exchange of equipment (other than the Aircraft) for other equipment of at least comparable value in

the ordinary course of business;

(b) Dispositions of assets by any Loan Party or the Miller 2009 Partnership to any other

Loan Party (other than any Disposition by Borrower or CIE in one transaction or a series of transactions

of all or substantially all of its respective assets); provided that, with respect to any such Disposition

that consists of Oil and Gas Properties or activities related to Oil and Gas Properties, the following

conditions must be satisfied: (i) no Default or Event of Default has occurred and is continuing, (ii)

such Disposition shall not adversely affect the Liens of the Administrative Agent or any Secured

Party granted under any Loan Document and (iii) the Administrative Agent shall have given its prior

written consent to such Disposition (not to be unreasonably withheld, conditioned or delayed);

pursuant to the sale of not less than 100% of the Equity Interests of any Subsidiary) on which no

Proved Reserve is located, so long as (i) such Dispositions do not exceed, individually or in the

aggregate, $5,000,000 and (ii) any non-cash consideration received by any Loan Party in connection

with such Disposition shall be pledged by such Loan Party to Administrative Agent for the benefit

of the Secured Parties as security for the Secured Obligations; provided that, the Borrower shall

deliver to the Administrative Agent a certificate executed by a Financial Officer of the Borrower

certifying that (A) no Default or Event of Default is existing or would result therefrom, (B) the

consideration received from any such Disposition is at least equal to the fair market value of the Oil

and Gas Properties subject to such Disposition, as reasonably determined in good faith by the board

of directors (or equivalent governing body) of such Loan Party, and (C) the Borrower is in compliance

with Section 9.01 after giving effect to such Disposition of Oil and Gas Properties;

(d) Dispositions of claims against customers, working interest owners, other industry

partners or any other Person in connection with workouts or bankruptcy, insolvency or other similar

proceedings with respect thereto;

(e) a Disposition of the Aircraft so long as (i) the Net Cash Proceeds received from such

Disposition have been or immediately shall be paid to Administrative Agent for application in

accordance with Section 3.04(c)(i) by wire transfer of immediately available funds to the

Administrative Agent, and (ii) the consideration received from such Disposition consists of cash and

is at least equal to the fair market value of the Aircraft, as reasonably determined in good faith by the

board of directors of the Borrower (and upon any Disposition of the Aircraft in accordance with this

sentence, the Administrative Agent agrees to, at the sole cost and expense of the Borrower, release

its Lien upon the Aircraft in connection with such Disposition);

(f) Dispositions of Tennessee Oil and Gas Properties;

(g) the CIE Pipeline Asset Disposition;

(h) Dispositions of Cash Equivalents and Investments permitted by Section 9.05(j) and

Section 9.05(o); and

(i) other Dispositions of Properties not regulated by Section 9.12(a) to (h) having a fair

market value not to exceed $4,000,000 during any 12-month period;

provided, that, notwithstanding the foregoing, it shall be a condition to any Disposition of Oil and Gas Properties pursuant to this Section 9.12 that (a) the Borrower is in compliance with Section 9.01 immediately before and after giving effect to such Disposition of Oil and Gas Properties, (b) the consideration received from any such Disposition is at least equal to the fair market value of the Oil and Gas Properties subject to such Disposition, as reasonably determined in good faith by the board of directors (or equivalent governing body) of such Loan Party, and (c) 100% of the consideration for such Oil and Gas Properties shall be cash or Cash Equivalents.

Section 9.13. Transactions with Affiliates. The Borrower will not, and will not permit any Subsidiary or Miller 2009 Partnership to, enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of Property or the rendering of any service, with any Affiliate; provided, however, that the foregoing restrictions will not apply to (a) transactions that are not otherwise prohibited under this Agreement and are upon fair and reasonable terms no less favorable to it than it would obtain in a comparable arm’s length transaction with a Person not an Affiliate, (b) reasonable and customary fees paid to members of the board of directors (or similar governing body) of the Borrower and its Subsidiaries, (c) reasonable and customary indemnification, benefit, compensation and other employment arrangements and agreements for directors, officers and other employees of the Borrower and its Subsidiaries entered into in the ordinary course of business, (d) transactions permitted by Section 9.04(a), (e) transactions between or among Loan Parties and (f) transactions set forth on Schedule 9.13.

Section 9.14. Subsidiaries; Equity Interests. The Borrower will not, and will not permit any Subsidiary or Miller 2009 Partnership to, create or acquire any additional Subsidiary unless the Borrower gives written notice to the Administrative Agent of such creation or acquisition and complies with Section 8.14(b). The Borrower shall not, and shall not permit any Subsidiary to (a) Dispose of any Equity Interests in any Subsidiary except in compliance with Section 9.12 or (b) issue any Equity Interest in any Subsidiary unless such Equity Interest is subject to the Lien of the Administrative Agent pursuant to the Security Instruments. None of the Borrower, any Subsidiary or Miller 2009 Partnership shall have any Foreign Subsidiaries.

Section 9.15. Negative Pledge Agreements; Dividend Restrictions. The Borrower will not, and will not permit any Subsidiary or Miller 2009 Partnership to, create, incur, assume or suffer to exist any contract, agreement or understanding which in any way prohibits or restricts (or which requires the consent of or notice

to other Persons in connection therewith) (a) the granting, conveying, creation or imposition of any Lien on any of its Property in favor of the Secured Parties, (b) any Subsidiary or Miller 2009 Partnership from paying dividends or making distributions to the Borrower or any Guarantor, or (c) any Subsidiary from guaranteeing Debt of the Borrower or any other Loan Party; provided, however, that the preceding restrictions will not apply to encumbrances or restrictions arising under or by reason of (i) this Agreement, the Security Instruments or the First Lien Loan Documents, (ii) Liens permitted by Section 9.03(c) (but only to the extent related to the Property on which such Liens were created), or (iii) any restriction with respect to the Borrower or a Subsidiary or Miller 2009 Partnership imposed pursuant to an agreement entered into for the direct or indirect sale or disposition of the Property of the Borrower or such Subsidiary or Miller 2009 Partnership or all or substantially all the equity of a Subsidiary (or the Property that is subject to such restriction) pending the closing of such sale or disposition, in each case, to the extent disposition is permitted hereby and such restriction applies only to the Property that is the subject of such disposition.

Section 9.16. Gas Imbalances, Take-or-Pay or Other Prepayments. The Borrower will not, and will not permit any Subsidiary or Miller 2009 Partnership to, allow gas imbalances, take-or-pay or other prepayments with respect to the Oil and Gas Properties of the Borrower or any Subsidiary that would require the Borrower or such Subsidiary to deliver Hydrocarbons at some future time without then or thereafter receiving full payment therefor to exceed $500,000 in the aggregate.

Section 9.17. Swap Agreements. The Borrower will not, and will not permit any Subsidiary to, enter into any Swap Agreements with any Person other than (a) Swap Agreements in respect of commodities (i) with an Approved Counterparty and (ii) the notional volumes for which (when aggregated with other commodity Swap Agreements then in effect other than basis differential swaps on volumes already hedged pursuant to other Swap Agreements) do not exceed, as of the date such Swap Agreement is executed, 100% of the reasonably anticipated projected production from proved, developed, producing Oil and Gas Properties for each month during the period during which such Swap Agreement is in effect for each of crude oil and natural gas, calculated separately, and (b) Swap Agreements in respect of interest rates with an Approved Counterparty, as follows: (i) Swap Agreements effectively converting interest rates from fixed to floating, the notional amounts of which (when aggregated with all other Swap Agreements of the Borrower and its Subsidiaries then in effect effectively converting interest rates from fixed to floating) do not exceed 50% of the then outstanding principal amount of the Borrower’s Debt for borrowed money which bears interest at a fixed rate and (ii) Swap Agreements effectively converting interest rates from floating to fixed, the notional amounts of which (when aggregated with all other Swap Agreements of the Borrower and its Subsidiaries then in effect effectively converting interest rates from floating to fixed) do not exceed 75% of the then outstanding principal amount of the Borrower’s Debt for borrowed money which bears interest at a floating rate; provided that all such Swap Agreements described in the foregoing clauses (a) and (b) shall be on commercially reasonable terms and entered into on an arm’s length basis. Except for the BP Swap Agreement and the Cargill Swap Agreement, but subject to the limitations set forth in Section 9.03(g), in no event shall any Swap Agreement contain any requirement, agreement or covenant for the Borrower or any Subsidiary to post collateral or margin to secure their obligations under such Swap Agreement or to cover market exposures. The Borrower will not permit Miller 2009 Partnership to enter into any Swap Agreements.

Section 9.18. Acquisition Documents & Organizational Documents.

(a) The Borrower will not, and will not permit any of its Subsidiaries or Miller 2009

Partnership to, amend, modify or supplement any of the Acquisition Documents or the certificate or

articles of incorporation, by-laws, or other organizational or governing documents of such Person,

in each case, if the effect thereof could reasonably be expected to be adverse to the Lenders (and

provided that the Borrower promptly furnishes to the Administrative Agent a copy of such amendment,

modification or supplement).

(b) The Borrower will not, and will not permit any of its Subsidiaries or Miller 2009

Partnership to, amend, modify or supplement the Gunsight Acquisition Agreement without the prior

written consent of the Administrative Agent.

Section 9.19. Fiscal Year; Accounting Practices. The Borrower shall not, and shall not permit any other Loan Party to, change its fiscal year-end or any material accounting practice without giving 30 days prior written notice thereof to the Administrative Agent.

Section 9.20. Preferred Equity Interests.

(a) The Borrower shall not redeem any of the Series B Preferred Stock, Series C Preferred

Stock, or Series D Preferred Stock prior to the date that is 30 days after the Termination Date. The

foregoing covenant shall survive the termination of the Loan Documents and repayment of the Secured

Obligations.

(b) The Borrower shall not amend or otherwise modify the terms or conditions of the

Series B Preferred Stock, the Series C Preferred Stock, or the Series D Preferred Stock (including

without limitation the Series B Preferred Dividend, the Series C Preferred Dividend, or the Series D

Preferred Dividend).

its terms is preferred as to the payment of dividends, or as to the distribution of assets upon any

voluntary or involuntary liquidation or dissolution of the Borrower, over common Equity Interests

of the Borrower, other than the Series B Preferred Stock, the Series C Preferred Stock, and the Series

D Preferred Stock.

Section 9.21. Marketing Activities. The Borrower will not, and will not permit any of its Subsidiaries or Miller 2009 Partnership to, engage in marketing activities for any Hydrocarbons or enter into any contracts related thereto other than (i) contracts for the sale of Hydrocarbons scheduled or reasonably estimated to be produced from their proved Oil and Gas Properties during the period of such contract, and (ii) contracts for the sale of Hydrocarbons scheduled or reasonably estimated to be produced from proved Oil and Gas Properties of third parties during the period of such contract associated with the Oil and Gas Properties of the Borrower and its Subsidiaries or Miller 2009 Partnership that the Borrower or one of its Subsidiaries or Miller 2009 Partnership has the right to market pursuant to joint operating agreements, unitization agreements or other similar contracts that are usual and customary in the oil and gas business; provided that in each case, except for contracts listed on Schedule 7.19 on the Effective Date, no such contracts shall pertain to the sale of Hydrocarbon production at a fixed price.

Section 9.22. Press Release and Related Matters. No Loan Party shall, and no Loan Party shall permit any of its Affiliates to, issue any press release or other public disclosure (other than any document filed with any Governmental Authority relating to a public offering of securities of any Loan Party) using the name, logo or otherwise referring to Apollo or of any of its Affiliates, the Loan Documents or any transaction contemplated therein to which Apollo is party without the prior consent of Apollo except to the extent required to do so under applicable Governmental Requirements and then, except with respect to securities laws, only after consulting with Apollo prior thereto.

Section 9.23. Consolidated G&A Expenses. The Borrower shall not permit Consolidated G&A Expenses to exceed $6,250,000 in any fiscal quarter.

ARTICLE X

EVENTS OF DEFAULT; REMEDIES

Section 10.01. Events of Default. One or more of the following events shall constitute an “Event of Default”:

(a) the Borrower shall fail to pay any principal of any Loan when and as the same shall

become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof,

by acceleration or otherwise.

(b) the Borrower shall fail to pay any interest on any Loan or any fee or any other amount

(other than an amount referred to in Section 10.01(a)) payable under any Loan Document, when and

as the same shall become due and payable, and such failure shall continue unremedied for a period

of three Business Days.

or any Subsidiary in or in connection with any Loan Document or any amendment or modification

of any Loan Document or waiver under such Loan Document, or in any report, certificate, financial

statement or other document furnished pursuant to or in connection with any Loan Document or any

amendment or modification thereof or waiver thereunder, shall prove to have been incorrect in any

material respect when made or deemed made (unless such representation or warranty was already

qualified by materiality, in which case such representation or warranty shall simply prove to have

been incorrect).

(d) the Borrower, any Subsidiary or Miller 2009 Partnership shall fail to observe or perform

any covenant, condition or agreement applicable to it contained in Section 8.01(m), Section 8.02,

Section 8.03, Section 8.07, Section 8.13(b), Section 8.14, Section 8.16, Section 8.20 or in Article IX.

(e) the Borrower or any Subsidiary shall fail to observe or perform any covenant, condition

or agreement contained in this Agreement (other than those specified in Section 10.01(a), Section

10.01(b) or Section 10.01(d)) or any other Loan Document, and such failure shall continue unremedied

for a period of 30 days after the earlier to occur of (A) notice thereof from the Administrative Agent

to the Borrower (which notice will be given at the request of any Lender) or (B) a Responsible Officer

of the Borrower or such Subsidiary otherwise becoming aware of such default.

(f) the Borrower, any Subsidiary or Miller 2009 Partnership shall fail to make any payment

(whether of principal or interest and regardless of amount) in respect of any Material Indebtedness,

when and as the same shall become due and payable.

(g) any event or condition occurs that results in any Material Indebtedness becoming due

prior to its scheduled maturity or that enables or permits (with or without the giving of notice, the

lapse of time or both) the holder or holders of any Material Indebtedness or any trustee or agent on

its or their behalf to cause any Material Indebtedness to become due, or to require the Redemption

thereof or any offer to Redeem to be made in respect thereof, prior to its scheduled maturity or require

the Borrower, any Subsidiary or Miller 2009 Partnership to make an offer in respect thereof; provided

that this clause (g) shall not apply to secured Debt that becomes due as a result of the voluntary sale

or transfer of the property or assets securing such Debt and permitted hereby.

(h) an involuntary proceeding shall be commenced or an involuntary petition shall be

filed seeking (i) liquidation, reorganization or other relief in respect of the Borrower, any Subsidiary

or Miller 2009 Partnership or its debts, or of a substantial part of its assets, under any Federal, state

or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the

appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the

Borrower, any Subsidiary or Miller 2009 Partnership or for a substantial part of its assets, and, in any

such case, such proceeding or petition shall continue undismissed for 60 days or an order or decree

approving or ordering any of the foregoing shall be entered.

(i) the Borrower, any Subsidiary or Miller 2009 Partnership shall (i) voluntarily

commence any proceeding or file any petition seeking liquidation, reorganization or other relief under

any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in

effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any

proceeding or petition described in Section 10.01(h), (iii) apply for or consent to the appointment of

a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower, any

Subsidiary or Miller 2009 Partnership or for a substantial part of their respective assets, (iv) file an

answer admitting the material allegations of a petition filed against it in any such proceeding, (v)

make a general assignment for the benefit of creditors or (vi) take any action for the purpose of

effecting any of the foregoing.

(j) the Borrower, any Subsidiary or Miller 2009 Partnership shall become unable, admit

in writing its inability or fail generally to pay its debts as they become due.

(k) one or more judgments for the payment of money in an aggregate amount in excess

of $5,000,000 (to the extent not covered by independent third party insurance as to which the insurer

does not dispute coverage and is not subject to an insolvency proceeding), shall be rendered against

the Borrower, any Subsidiary or Miller 2009 Partnership or any combination thereof and the same

shall remain undischarged for a period of 60 consecutive days during which execution shall not be

effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon

any assets of the Borrower, any Subsidiary or Miller 2009 Partnership to enforce any such judgment.

(l) the Loan Documents after delivery thereof shall for any reason, except to the extent

permitted by the terms thereof, cease to be in full force and effect and valid, binding and enforceable

in accordance with their terms against the Borrower or a Guarantor party thereto or shall be repudiated

by any of them, or cease to create a valid and perfected Lien of the priority required thereby on any

of the collateral purported to be covered thereby, except to the extent permitted by the terms of this

Agreement, or the Borrower, any Subsidiary or Miller 2009 Partnership or any of their Affiliates shall

so state in writing.

(m) the Intercreditor Agreement, after delivery thereof shall for any reason, except to the

extent permitted by the terms thereof, cease to be in full force and effect and valid, binding and

enforceable in accordance with its terms against any Loan Party or any holder of Debt under the First

Lien Loan Documents or shall be repudiated in writing by any such Person.

(n) (i) any Loan Party shall make any payment, whether in principal, interest, premiums

or fees, that is not allowed under the terms of the Intercreditor Agreement, or (ii) any Loan Party

amends, supplements or otherwise modifies the First Lien Credit Agreement or any other First Lien

Loan Document that is not allowed under, or otherwise violates or breaches, the provisions of the

Intercreditor Agreement.

(o) an ERISA Event occurs which results in, or could reasonably be expected to result in,

a liability of the Borrower, any Subsidiary or the Miller 2009 Partnership in an amount in excess of

$100,000.

(p) The Borrower or any ERISA Affiliate as employer under a Plan makes a complete or

partial withdrawal from such Plan and such withdrawing employer incurs, or could reasonably be

expected to incur, a withdrawal liability in an annual amount in excess of $100,000.

(q) If (i) David Voyticky ceases to be President of the Borrower, or David Hall ceases to

be Chief Executive Officer of CIE, or Scott Boruff ceases to be Chief Executive Officer of the Borrower

or (ii) either David Voyticky or Scott Boruff otherwise ceases to be substantially involved in the daily

operations of the Borrower or David Hall otherwise ceases to be substantially involved in the daily

operations of CIE.

(r) If the Borrower is delisted from the New York Stock Exchange, without giving effect

to any pending appeals.

(s) A Change in Control shall occur.

Section 10.02. Remedies.

(a) In the case of an Event of Default other than one described in Section 10.01(h), Section

10.01(i) or Section 10.01(j), at any time thereafter during the continuance of such Event of Default,

the Administrative Agent may, and at the request of the Majority Lenders, shall, by notice to the

Borrower, take either or both of the following actions, at the same or different times: (i) terminate

the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the

Notes and the Loans then outstanding to be due and payable in whole (or in part, in which case any

principal not so declared to be due and payable may thereafter be declared to be due and payable),

and thereupon the principal of the Loans so declared to be due and payable, together with accrued

interest thereon and all fees and other obligations of the Borrower and the Guarantors accrued

hereunder and under the Notes and the other Loan Documents (including, without limitation, the

Make-Whole Premium or any applicable Prepayment Premium), shall become due and payable

immediately, without presentment, demand, protest, notice of intent to accelerate, notice of

acceleration or other notice of any kind, all of which are hereby waived by the Borrower and each

Guarantor; and in case of an Event of Default described in Section 10.01(h), Section 10.01(i) or

Section 10.01(j), the Commitments shall automatically terminate and the Notes and the principal of

the Loans then outstanding, together with accrued interest thereon and all fees and the other obligations

of the Borrower and the Guarantors accrued hereunder and under the Notes and the other Loan

Documents (including, without limitation, the Make-Whole Premium or any applicable Prepayment

Premium), shall automatically become due and payable, without presentment, demand, protest, notice

of intent to accelerate, notice of acceleration or other notice of any kind, all of which are hereby

waived by the Borrower and each Guarantor.

(b) In the case of the occurrence of an Event of Default, the Administrative Agent and the

Lenders will have all other rights and remedies available at law and equity.

received after maturity of the Notes, whether by acceleration or otherwise, shall be applied (subject

in all cases to the Intercreditor Agreement):

(i) first, to payment or reimbursement of that portion of the Secured Obligations

constituting fees, expenses and indemnities payable to the Administrative Agent in its capacity

as such;

(ii) second, pro rata to payment or reimbursement of that portion of the Secured

Obligations constituting fees, expenses and indemnities payable to the Lenders;

(iii) third, pro rata to payment of accrued interest on the Loans;

(iv) fourth, pro rata to payment of principal outstanding on the Loans;

(v) fifth, pro rata to payment of the Make-Whole Premium or any Prepayment

Premium then due and owing;

(vi) sixth, pro rata to any other Secured Obligations; and

(vii) seventh, any excess, after all of the Secured Obligations shall have been

indefeasibly paid in full in cash, shall be paid to the Borrower or as otherwise required by

any Governmental Requirement.

ARTICLE XI

THE AGENTS

Section 11.01. Appointment; Powers. Each of the Lenders hereby irrevocably appoints the Administrative Agent as its agent and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof and the other Loan Documents, together with such actions and powers as are reasonably incidental thereto.

Section 11.02. Duties and Obligations of Administrative Agent. The Administrative Agent shall not have any duties or obligations except those expressly set forth in the Loan Documents. Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing (the use of the term “agent” herein and in the other Loan Documents with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law; rather, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties), (b) the Administrative Agent shall have no duty to take any discretionary action or exercise any discretionary powers, except as provided in Section 11.03, and (c) except as expressly set forth herein, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Subsidiaries that is communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to the Administrative Agent by the Borrower or a Lender, and shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation

made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or under any other Loan Document or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or in any other Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, (v) the satisfaction of any condition set forth in Article VI or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent or as to those conditions precedent expressly required to be to the Administrative Agent’s satisfaction, (vi) the existence, value, perfection or priority of any collateral security or the financial or other condition of the Borrower and its Subsidiaries or any other obligor or guarantor, or (vii) any failure by the Borrower or any other Person (other than itself) to perform any of its obligations hereunder or under any other Loan Document or the performance or observance of any covenants, agreements or other terms or conditions set forth herein or therein. For purposes of determining compliance with the conditions specified in Article VI, each Lender shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received written notice from such Lender prior to the Effective Date specifying its objection thereto.

Section 11.03. Action by Administrative Agent. The Administrative Agent shall have no duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise in writing as directed by the Majority Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 12.02) and in all cases the Administrative Agent shall be fully justified in failing or refusing to act hereunder or under any other Loan Documents unless it shall (a) receive written instructions from the Majority Lenders or the Lenders, as applicable, (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 12.02) specifying the action to be taken and (b) be indemnified to its satisfaction by the Lenders against any and all liability and expenses which may be incurred by it by reason of taking or continuing to take any such action. The instructions as aforesaid and any action taken or failure to act pursuant thereto by the Administrative Agent shall be binding on all of the Lenders. If a Default has occurred and is continuing, then the Administrative Agent shall take such action with respect to such Default as shall be directed by the requisite Lenders in the written instructions (with indemnities) described in this Section 11.03, provided that, unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default as it shall deem advisable in the best interests of the Lenders. In no event, however, shall the Administrative Agent be required to take any action which exposes the Administrative Agent to personal liability or which is contrary to this Agreement, the Loan Documents or applicable law. The Administrative Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Majority Lenders or the Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 12.02), and otherwise the Administrative Agent shall not be liable for any action taken or not taken by it hereunder or under any other Loan Document or under any other document or instrument referred to or provided for herein or therein or in connection herewith or therewith INCLUDING ITS OWN ORDINARY NEGLIGENCE, except for its own gross negligence or willful misconduct.

Section 11.04. Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon and

each of the Borrower and the Lenders hereby waives the right to dispute the Administrative Agent’s record of such statement, except in the case of gross negligence or willful misconduct by the Administrative Agent. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. The Administrative Agent may deem and treat the payee of any Note as the holder thereof for all purposes hereof unless and until a written notice of the assignment or transfer thereof permitted hereunder shall have been filed with the Administrative Agent.

Section 11.05. Subagents. The Administrative Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties. The exculpatory provisions of the preceding Sections of this Article XI shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.

Section 11.06. Resignation of Administrative Agent. Subject to the appointment and acceptance of a successor Administrative Agent as provided in this Section 11.06, the Administrative Agent may resign at any time by notifying the Lenders and the Borrower. Upon any such resignation, the Majority Lenders shall have the right, in consultation with the Borrower, to appoint a successor. If no successor shall have been so appointed by the Majority Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation of the retiring Administrative Agent, then the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent. Upon the acceptance of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the Administrative Agent’s resignation hereunder, the provisions of this Article XI and Section 12.03 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Administrative Agent.

Section 11.07. Agents as Lenders. Each bank serving as an Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not an Agent, and such bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if it were not an Agent hereunder.

Section 11.08. No Reliance. Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent, any other Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and each other Loan Document to which it is a party. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent, any other Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document, any related agreement or any document furnished hereunder or thereunder. The Agents shall not be required to keep themselves informed as to the performance or observance by the Borrower or any of its Subsidiaries of this Agreement, the Loan Documents or any other document referred to or provided for herein

or to inspect the Properties or books of the Borrower or its Subsidiaries. Except for notices, reports and other documents and information expressly required to be furnished to the Lenders by the Administrative Agent hereunder, no Agent nor the Arranger shall have any duty or responsibility to provide any Lender with any credit or other information concerning the affairs, financial condition or business of the Borrower (or any of its Affiliates) which may come into the possession of such Agent or any of its Affiliates. In this regard, each Lender acknowledges that Bracewell & Giuliani LLP is acting in this transaction as special counsel to the Administrative Agent only, except to the extent otherwise expressly stated in any legal opinion or any Loan Document. Each other party hereto will consult with its own legal counsel to the extent that it deems necessary in connection with the Loan Documents and the matters contemplated therein.

Section 11.09. Administrative Agent May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Borrower or any of its Subsidiaries, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:

(a) to file and prove a claim for the whole amount of the principal and interest owing and

unpaid in respect of the Loans and all other Secured Obligations that are owing and unpaid and to

file such other documents as may be necessary or advisable in order to have the claims of the Lenders

and the Administrative Agent (including any claim for the reasonable compensation, expenses,

disbursements and advances of the Lenders and the Administrative Agent and their respective agents

and counsel and all other amounts due the Lenders and the Administrative Agent under Section 12.03)

allowed in such judicial proceeding; and

(b) to collect and receive any monies or other property payable or deliverable on any such

claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Section 12.03.

Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Secured Obligations or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.

Section 11.10. Authority of Administrative Agent to Release Collateral and Liens. Each Lender hereby authorizes the Administrative Agent to release (a) any collateral that is permitted to be sold or released pursuant to the terms of the Loan Documents and (b) all collateral on the Termination Date. Each Lender hereby authorizes the Administrative Agent to execute and deliver to the Borrower, at the Borrower’s sole cost and expense, any and all releases of Liens, termination statements, assignments or other documents reasonably requested by the Borrower in connection with (x) any Disposition of Property to the extent such Disposition is permitted by the terms of Section 9.12 or is otherwise authorized by the terms of the Loan Documents and (y) the release of all collateral on the Termination Date.

Section 11.11. The Arranger. The Arranger shall have no duties, responsibilities or liabilities under this Agreement and the other Loan Documents other than its duties, responsibilities and liabilities in its capacity as a Lender hereunder.

ARTICLE XII

MISCELLANEOUS

Section 12.01. Notices.

(a) Except in the case of notices and other communications expressly permitted to be

given by telephone (and subject to Section 12.01(b)), all notices and other communications provided

for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by

certified or registered mail or sent by telecopy, as follows:

(i) if to the Borrower, to it at:

MILLER ENERGY RESOURCES, INC.

9721 Cogdill Road, Ste. 302,

Knoxville, Tennessee 37932

Attn: Scott M. Boruff, CEO

Fax No.: (865) 691-8209

with copies to: MILLER ENERGY RESOURCES, INC.

9721 Cogdill Road, Ste. 302,

Knoxville, Tennessee 37932

Attn: Kurt Yost, General Counsel

Fax No.: (865) 691-8209

(ii) if to the Administrative Agent, to it at:

APOLLO INVESTMENT CORPORATION

9 West 57th Street, 37th Floor

New York, New York 10019

Attention: Dan Vogel

Phone: (212) 822-0740

Email: dvogel@apolloic.com

Fax: (646) 417-6678

with copies to: Dewey J. Gonsoulin, Jr.

Bracewell & Giuliani LLP

711 Louisiana Street, Suite 2300

Houston, Texas 77002-2781

Phone: (713) 221-1110

Email: dewey.gonsoulin@bgllp.com

Fax: (713) 221-2121

and

(iii) if to any other Lender, to it at its address (or telecopy number) set forth in its

Administrative Questionnaire.

(b) Notices and other communications to the Lenders hereunder may be delivered or

furnished by electronic communications pursuant to procedures approved by the Administrative

Agent; provided that the foregoing shall not apply to notices pursuant to Article II, Article III, Article

IV and Article V unless otherwise agreed by the Administrative Agent and the applicable Lender.

The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other

communications to it hereunder by electronic communications pursuant to procedures approved by

it; provided that approval of such procedures may be limited to particular notices or communications.

communications hereunder by notice to the other parties hereto. All notices and other communications

given to any party hereto in accordance with the provisions of this Agreement shall be deemed to

have been given on the date of receipt.

Section 12.02. Waivers; Amendments.

(a) No failure on the part of the Administrative Agent, any other Agent or any Lender to

exercise and no delay in exercising, and no course of dealing with respect to, any right, power or

privilege, or any abandonment or discontinuance of steps to enforce such right, power or privilege,

under any of the Loan Documents shall operate as a waiver thereof, nor shall any single or partial

exercise of any right, power or privilege under any of the Loan Documents preclude any other or

further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies

of the Administrative Agent, any other Agent and the Lenders hereunder and under the other Loan

Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise

have. No waiver of any provision of this Agreement or any other Loan Document or consent to any

departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted

by Section 12.02(b), and then such waiver or consent shall be effective only in the specific instance

and for the purpose for which given. Without limiting the generality of the foregoing, the making of

a Loan shall not be construed as a waiver of any Default, regardless of whether the Administrative

Agent, any other Agent or any Lender may have had notice or knowledge of such Default at the time.

(b) Neither this Agreement nor any provision hereof nor any Loan Document (other than

the Fee Letter) nor any provision thereof may be waived, amended or modified except pursuant to

an agreement or agreements in writing entered into by the Borrower and the Majority Lenders or by

the Borrower and the Administrative Agent with the consent of the Majority Lenders; provided that

no such agreement shall (i) increase the Commitment of any Lender without the written consent of

such Lender, (ii) reduce the principal amount of any Loan or reduce the rate of interest thereon, or

reduce any fees payable hereunder, or reduce any other Secured Obligations hereunder or under any

other Loan Document, without the written consent of each Lender directly affected thereby, (iii)

postpone the scheduled date of payment or prepayment of the principal amount of any Loan, or any

interest thereon, or any fees payable hereunder, or any other Secured Obligations hereunder or under

any other Loan Document, or reduce the amount of, waive or excuse any such payment, or postpone

or extend the Maturity Date or the Termination Date without the written consent of each Lender

directly affected thereby, (iv) change Section 4.01(b) or Section 4.01(c) in a manner that would alter

the pro rata sharing of payments required thereby, without the written consent of each Lender, (v)

waive or amend Section 3.04(c), Section 6.01 or Section 10.02(c) without the written consent of each

Lender directly affected thereby, (vi) release any Guarantor (except as expressly set forth in the Loan

Documents), release all or substantially all of the collateral (other than as provided in Section 11.10),

or reduce the percentage set forth in Section 8.14(a) to less than 80%, without the written consent of

each Lender, (vii) change any of the provisions of this Section 12.02(b) or the definition “Majority

Lenders” or any other provision hereof specifying the number or percentage of Lenders required to

waive, amend or modify any rights hereunder or under any other Loan Documents or make any

determination or grant any consent hereunder or any other Loan Documents, without the written

consent of each Lender, or (viii) contractually subordinate the payment of all the Secured Obligations

to any other Debt or, except as set forth in the Intercreditor Agreement, contractually subordinate the

priority of any of the Administrative Agent’s Liens to the Liens securing any other Debt, in each case,

without the written consent of each Lender; provided further that no such agreement shall amend,

modify or otherwise affect the rights or duties of the Administrative Agent or any other Agent

hereunder or under any other Loan Document without the prior written consent of the Administrative

Agent or such other Agent, as the case may be. Notwithstanding the foregoing, any supplement to

Schedule 7.14 shall be effective simply by delivering to the Administrative Agent a supplemental

schedule clearly marked as such and, upon receipt, the Administrative Agent will promptly deliver

a copy thereof to the Lenders.

Section 12.03. Expenses, Indemnity; Damage Waiver.

(a) The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the

Administrative Agent and its Affiliates, including, without limitation, the reasonable and documented

fees, charges and disbursements of Bracewell & Giuliani LLP, counsel for the Administrative Agent

(and as required by a firm of local counsel in each appropriate jurisdiction and in the case of an actual

or potential conflict of interest, one additional firm of counsel to the affected Lenders) and other

outside consultants for the Administrative Agent, the reasonable travel, photocopy, mailing, courier,

telephone and other similar expenses, and the cost of environmental invasive and non-invasive

assessments and audits and surveys and appraisals, in connection with the syndication of the credit

facilities provided for herein, the preparation, negotiation, execution, delivery and administration

(both before and after the execution hereof and including advice of counsel to the Administrative

Agent as to the rights and duties of the Administrative Agent and the Lenders with respect thereto)

of this Agreement and the other Loan Documents and any amendments, modifications or waivers of

or consents related to the provisions hereof or thereof (whether or not the transactions contemplated

hereby or thereby shall be consummated), (ii) all costs and expenses incurred by any Agent in

connection with any filing, registration, recording or perfection of any security interest contemplated

by this Agreement or any Security Instrument or any other document referred to therein, and (iii) all

out-of-pocket expenses incurred by any Agent or any Lender, including the fees, charges and

disbursements of any counsel for any Agent or any Lender, in connection with the enforcement or

protection of its rights in connection with this Agreement or any other Loan Document, including its

rights under this Section 12.03, or in connection with the Loans made hereunder, including, without

limitation, all such out-of-pocket expenses incurred during any workout, restructuring or negotiations

in respect of such Loans.

(b) THE BORROWER SHALL INDEMNIFY EACH AGENT, THE ARRANGER AND

EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS

(EACH SUCH PERSON BEING CALLED AN “INDEMNITEE”) AGAINST, AND DEFEND AND

HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS,

DAMAGES, PENALTIES, LIABILITIES AND RELATED EXPENSES, INCLUDING THE FEES,

CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE,

INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE ARISING OUT OF, IN

CONNECTION WITH, OR AS A RESULT OF (i) THE EXECUTION OR DELIVERY OF THIS

AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR

INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE PERFORMANCE BY THE

PARTIES HERETO OR THE PARTIES TO ANY OTHER LOAN DOCUMENT OF THEIR

RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER OR THE CONSUMMATION

OF THE TRANSACTIONS CONTEMPLATED HEREBY OR BY ANY OTHER LOAN

DOCUMENT, (ii) THE FAILURE OF THE BORROWER OR ANY SUBSIDIARY TO COMPLY

WITH THE TERMS OF ANY LOAN DOCUMENT, INCLUDING THIS AGREEMENT, OR WITH

ANY GOVERNMENTAL REQUIREMENT, (iii) ANY INACCURACY OF ANY

REPRESENTATION OR ANY BREACH OF ANY WARRANTY OR COVENANT OF THE

BORROWER OR ANY GUARANTOR SET FORTH IN ANY OF THE LOAN DOCUMENTS OR

ANY INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS DELIVERED IN CONNECTION

THEREWITH, (iv) ANY LOAN OR THE USE OF THE PROCEEDS THEREFROM, (v) ANY

OTHER ASPECT OF THE LOAN DOCUMENTS, (vi) THE OPERATIONS OF THE BUSINESS

OF THE BORROWER AND ITS SUBSIDIARIES BY THE BORROWER AND ITS

SUBSIDIARIES, (vii) ANY ASSERTION THAT THE LENDERS WERE NOT ENTITLED TO

RECEIVE THE PROCEEDS RECEIVED PURSUANT TO THE SECURITY INSTRUMENTS,

(viii) ANY ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ANY

SUBSIDIARY OR ANY OF THEIR PROPERTIES OR OPERATIONS, INCLUDING, THE

PRESENCE, GENERATION, STORAGE, RELEASE, THREATENED RELEASE, USE,

TRANSPORT, DISPOSAL, ARRANGEMENT FOR DISPOSAL OR TREATMENT OF

HAZARDOUS MATERIALS ON OR AT ANY OF THEIR PROPERTIES, (ix) THE BREACH OR

NON-COMPLIANCE BY THE BORROWER OR ANY SUBSIDIARY WITH ANY

ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ANY SUBSIDIARY, (x) THE

PAST OWNERSHIP BY THE BORROWER OR ANY SUBSIDIARY OF ANY OF THEIR

PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR PROPERTIES WHICH, THOUGH

LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD RESULT IN PRESENT

LIABILITY, (xi) THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT, DISPOSAL,

GENERATION, THREATENED RELEASE, TRANSPORT, ARRANGEMENT FOR

TRANSPORT OR ARRANGEMENT FOR DISPOSAL OF HAZARDOUS MATERIALS ON OR

AT ANY OF THE PROPERTIES OWNED OR OPERATED BY THE BORROWER OR ANY

SUBSIDIARY OR ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS

MATERIALS ON OR FROM ANY PROPERTY OWNED OR OPERATED BY THE BORROWER

OR ANY OF ITS SUBSIDIARIES, (xii) ANY ENVIRONMENTAL LIABILITY RELATED IN ANY

WAY TO THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR (xiii) ANY OTHER

ENVIRONMENTAL, HEALTH OR SAFETY CONDITION IN CONNECTION WITH THE LOAN

DOCUMENTS, OR (xiv) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION,

INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER

BASED ON CONTRACT, TORT OR ANY OTHER THEORY AND REGARDLESS OF

WHETHER ANY INDEMNITEE IS A PARTY THERETO, AND SUCH INDEMNITY SHALL

EXTEND TO EACH INDEMNITEE NOTWITHSTANDING THE SOLE OR CONCURRENT

NEGLIGENCE OF EVERY KIND OR CHARACTER WHATSOEVER, WHETHER ACTIVE OR

PASSIVE, WHETHER AN AFFIRMATIVE ACT OR AN OMISSION, INCLUDING WITHOUT

LIMITATION, ALL TYPES OF NEGLIGENT CONDUCT IDENTIFIED IN THE RESTATEMENT

(SECOND) OF TORTS OF ONE OR MORE OF THE INDEMNITEES OR BY REASON OF

STRICT LIABILITY IMPOSED WITHOUT FAULT ON ANY ONE OR MORE OF THE

INDEMNITEES; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY

INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS,

DAMAGES, LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A COURT OF

COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE

RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH

INDEMNITEE OR RELATE TO TAXES SUBJECT TO INDEMNIFICATION UNDER SECTION

5.03.

any Agent or the Arranger under Section 12.03(a) or (b), each Lender severally agrees to pay to such

Agent or the Arranger, as the case may be, such Lender’s Applicable Percentage (determined as of

the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid

amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or

related expense, as the case may be, was incurred by or asserted against such Agent or the Arranger

in its capacity as such.

(d) To the extent permitted by applicable law, the Borrower shall not assert, and hereby

waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential

or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or

as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated

hereby or thereby, the Transactions, any Loan or the use of the proceeds thereof.

(e) All amounts due under this Section 12.03 shall be payable not later than 10 Business

Days after written demand therefor.

Section 12.04. Successors and Assigns.

(a) The provisions of this Agreement shall be binding upon and inure to the benefit of the

parties hereto and their respective successors and assigns permitted hereby, except that (i) the Borrower

may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written

consent of each Lender (and any attempted assignment or transfer by the Borrower without such

consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or

obligations hereunder except in accordance with this Section 12.04. Nothing in this Agreement,

expressed or implied, shall be construed to confer upon any Person (other than the parties hereto,

their respective successors and assigns permitted hereby, Participants (to the extent provided in Section

12.04(c)) and, to the extent expressly contemplated hereby, the Related Parties of each of the

Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by

reason of this Agreement.

(b) (i) Subject to the conditions set forth in Section 12.04(b)(ii), any Lender may

assign to one or more Eligible Assignees all or a portion of its rights and obligations under this

Agreement (including all or a portion of its Commitment and the Loans at the time owing to it) with

the prior written consent (such consent not to be unreasonably withheld) of:

(A) the Borrower, provided that no consent of the Borrower shall be

required if (1) an Event of Default has occurred and is continuing or

(2) at any other time, such assignment is to a Lender, an Affiliate of a

Lender or a Related Fund; and

(B) the Administrative Agent, provided that no consent of the

Administrative Agent shall be required for an assignment to an

assignee that is a Lender immediately prior to giving

effect to such assignment.

(ii) Assignments shall be subject to the following additional conditions:

(A) except in the case of an assignment to a Lender or an Affiliate of a

Lender or an assignment of the entire remaining amount of the

assigning Lender’s Commitment or Loans, the amount of the

Commitment or Loans of the assigning Lender subject to each such

assignment (determined as of the date the Assignment and Assumption

with respect to such assignment is delivered to the Administrative

Agent) shall not be less than $3,000,000 unless each of the Borrower

and the Administrative Agent otherwise consent, provided that no such

consent of the Borrower shall be required if an Event of Default has

occurred and is continuing;

(B) each partial assignment shall be made as an assignment of a

proportionate part of all the assigning Lender’s rights and obligations

under this Agreement;

Administrative Agent an Assignment and Assumption, together with a

processing and recordation fee of $5,000; and

(D) the assignee, if it shall not be a Lender, shall deliver to the

Administrative Agent an Administrative Questionnaire.

(iii) Subject to Section 12.04(b)(iv) and the acceptance and recording thereof, from

and after the effective date specified in each Assignment and Assumption the assignee

thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment

and Assumption, have the rights and obligations of a Lender under this Agreement, and the

assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment

and Assumption, be released from its obligations under this Agreement (and, in the case of

an Assignment and Assumption covering all of the assigning Lender’s rights and obligations

under this Agreement, such Lender shall cease to be a party hereto but shall continue to be

entitled to the benefits of Section 5.01, Section 5.02, Section 5.03 and Section 12.03). Any

assignment or transfer by a Lender of rights or obligations under this Agreement that does

not comply with this Section 12.04 shall be treated for purposes of this Agreement as a sale

by such Lender of a participation in such rights and obligations in accordance with Section

12.04(c).

(iv) The Administrative Agent, acting for this purpose as an agent of the Borrower,

shall maintain at one of its offices a copy of each Assignment and Assumption delivered to

it and a register for the recordation of the names and addresses of the Lenders, and the

Commitment of, and principal amount of the Loans owing to, each Lender pursuant to the

terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive,

and the Borrower, the Administrative Agent and the Lenders may treat each Person whose

name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all

purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be

available for inspection by the Borrower and any Lender, at any reasonable time and from

time to time upon reasonable prior notice. In connection with any changes to the Register, if

necessary, the Administrative Agent will reflect the revisions on Annex I and forward a copy

of such revised Annex I to the Borrower and each Lender.

(v) Upon its receipt of a duly completed Assignment and Assumption executed

by an assigning Lender and an assignee, the assignee’s completed Administrative

Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and

recordation fee referred to in Section 12.04(b) and any written consent to such assignment

required by Section 12.04(b), the Administrative Agent shall accept such Assignment and

Assumption and record the information contained therein in the Register. No assignment

shall be effective for purposes of this Agreement unless it has been recorded in the Register

as provided in this Section 12.04(b).

(vi) Notwithstanding the foregoing or anything to the contrary contained herein,

each Lender agrees to give the Borrower seven (7) Business Days’ prior written notice (a

“Notice of Assignment”) prior to assigning (other than (A) any assignment required pursuant

to Section 5.04(b) or (B) any assignment to another Lender or any Affiliate thereof or any

Related Fund) any of its Loans, Secured Obligations or Commitments (or any combination

thereof) (the “Subject Interests”) hereunder and of the proposed purchase price therefor (the

“Purchase Price”). Upon receipt of any Notice of Assignment, the Borrower may elect to

purchase the Subject Interests at the Purchase Price, so long as the Borrower gives written

notice of such election to the assigning Lender within seven (7) Business Days after the

Borrower’s receipt of such Notice of Assignment. If the Borrower does not make an election

to purchase the Subject Interests within such seven (7) Business Day period or the Borrower

expressly declines to do so, then such Lender shall be entitled to assign the Subject Interests

within thirty (30) days after the expiration of such seven (7) Business Day period or the date

on which the Borrower declines to purchase the Subject Interests, so long as the consideration

received for such assignment is equal to or greater than the Purchase Price. Any Loans,

Secured Obligations or Commitments acquired by the Borrower pursuant hereto shall be

retired and cancelled promptly upon the acquisition thereof (and in no event shall the Borrower

be deemed to be a Lender hereunder). Any such acquisition of Loans, Secured Obligations

or Commitments hereunder by the Borrower shall be made pursuant to documentation in form

and substance reasonably satisfactory to the Borrower, the assigning Lender and the

Administrative Agent.

Agent or any other Person, sell participations to one or more banks or other entities (a “Participant”)

in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a

portion of its Commitment and the Loans owing to it); provided that (A) such Lender’s obligations

under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to

the other parties hereto for the performance of such obligations, (C) the Borrower, the Administrative

Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection

with such Lender’s rights and obligations under this Agreement, and (D) the selling Lender shall

maintain a register containing the name and address of the Participant and the principal amount (and

stated interest) of the Loans owing to such participant. Any agreement or instrument pursuant to

which a Lender sells such a participation shall provide that such Lender shall retain the sole right to

enforce this Agreement and to approve any amendment, modification or waiver of any provision of

this Agreement; provided that such agreement or instrument may provide that such Lender will not,

without the consent of the Participant, agree to any amendment, modification or waiver described in

the first proviso to Section 12.02(b) that affects such Participant. In addition such agreement must

provide that the Participant be bound by the provisions of Section 12.03. Subject to Section 12.04

(c)(ii), the Borrower agrees that each Participant shall be entitled to the benefits of Section 5.01,

Section 5.02 and Section 5.03 to the same extent as if it were a Lender and had acquired its interest

by assignment pursuant to Section 12.04(b). To the extent permitted by law, each Participant also

shall be entitled to the benefits of Section 12.08 as though it were a Lender, provided such Participant

agrees to be subject to Section 4.01(c) as though it were a Lender. Each Lender that sells a participation

shall, acting solely for this purpose as an agent of the Borrower, maintain a register on which it enters

the name and address of each Participant and the principal amounts (and stated interest) of each

Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant

Participant Register (including the identity of any Participant or any information relating to a

Participant's interest in any commitments, loans, letters of credit or its other obligations under any

Loan Document) to any Person except to the extent that such disclosure is necessary to establish that

such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1

conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in

the Participant Register as the owner of such participation for all purposes of this Agreement

notwithstanding any notice to the contrary.

(ii) A Participant shall not be entitled to receive any greater payment under Section

5.01 or Section 5.03 than the applicable Lender would have been entitled to receive with

respect to the participation sold to such Participant, unless the sale of the participation to such

Participant is made with the Borrower’s prior written consent. A Participant that would be a

Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 5.03 such

Participant agrees, for the benefit of the Borrower, to comply with Section 5.03(e) as though

it were a Lender (it being understood the documentation required under Section 5.03(e) shall

be provided only to the selling Lender).

(d) Any Lender may at any time pledge or assign a security interest in all or any portion

of its rights under this Agreement to secure obligations of such Lender, including, without limitation,

any pledge or assignment to secure obligations to a Federal Reserve Bank or a central bank, and this

Section 12.04 shall not apply to any such pledge or assignment of a security interest; provided that

no such pledge or assignment of a security interest shall release a Lender from any of its obligations

hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

Section 12.05. Survival; Revival; Reinstatement.

(a) All covenants, agreements, representations and warranties made by the Loan Parties

herein and in the certificates or other instruments delivered in connection with or pursuant to this

Agreement or any other Loan Document shall be considered to have been relied upon by the other

parties hereto and shall survive the execution and delivery of this Agreement and the other Loan

Documents and the making of any Loans, regardless of any investigation made by any such other

party or on its behalf and notwithstanding that the Administrative Agent, any other Agent or any

Lender may have had notice or knowledge of any Default or incorrect representation or warranty at

the time any credit is extended hereunder, and shall continue in full force and effect as long as the

principal of or any accrued interest on any Loan or any fee or any other amount payable under this

Agreement is outstanding and unpaid and so long as the Commitments have not expired or terminated.

The provisions of Section 5.01, Section 5.02, Section 5.03 and Section 12.03 and Article XI shall

survive and remain in full force and effect regardless of the consummation of the transactions

contemplated hereby, the repayment of the Loans, the expiration or termination of the Commitments

or the termination of this Agreement, any other Loan Document or any provision hereof or thereof.

(b) To the extent that any payments on the Secured Obligations or proceeds of any

collateral are subsequently invalidated, declared to be fraudulent or preferential, set aside or required

to be repaid to a trustee, debtor in possession, receiver or other Person under any bankruptcy law,

common law or equitable cause, then to such extent, the Secured Obligations so satisfied shall be

revived and continue as if such payment or proceeds had not been received and the Administrative

Agent’s and the Lenders’ Liens, security interests, rights, powers and remedies under this Agreement

and each Loan Document shall continue in full force and effect. In such event, each Loan Document

shall be automatically reinstated and the Borrower shall take such action as may be reasonably

requested by the Administrative Agent and the Lenders to effect such reinstatement.

Section 12.06. Counterparts; Integration; Effectiveness.

(a) This Agreement may be executed in counterparts (and by different parties hereto on

different counterparts), each of which shall constitute an original, but all of which when taken together

shall constitute a single contract.

(b) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT

THE FINAL AGREEMENT AMONG THE PARTIES HERETO AND THERETO AND MAY

NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR

SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN

ORAL AGREEMENTS BETWEEN THE PARTIES.

shall have been executed by the Administrative Agent and when the Administrative Agent shall have

received counterparts hereof which, when taken together, bear the signatures of each of the other

parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and

their respective successors and assigns. Delivery of an executed counterpart of a signature page of

this Agreement by telecopy, facsimile or other similar electronic means shall be effective as delivery

of a manually executed counterpart of this Agreement.

Section 12.07. Severability. Any provision of this Agreement or any other Loan Document held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof or thereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

Section 12.08.Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, 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 and other obligations (of whatsoever kind, including, without limitations obligations under Swap Agreements) at any time owing by such Lender or Affiliate to or for the credit or the account of the Borrower or any Subsidiary against any of and all the obligations of the Borrower or any Subsidiary owed to such Lender now or hereafter existing under this Agreement or any other Loan Document, irrespective of whether or not such Lender shall have made any demand under this Agreement or any other Loan Document and although such obligations may be unmatured. The rights of each Lender under this Section 12.08 are in addition to other rights and remedies (including other rights of setoff) which such Lender or its Affiliates may have.

Section 12.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS

(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND

CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN

DOCUMENTS SHALL BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR

OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK,

AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HEREBY

ACCEPTS FOR ITSELF AND (TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF ITS

PROPERTY, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF

THE AFORESAID COURTS. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY

OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF

VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY

NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING

IN SUCH RESPECTIVE JURISDICTIONS.

ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY

THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE

PREPAID, TO IT AT THE ADDRESS SPECIFIED IN SECTION 12.01 OR SUCH OTHER

ADDRESS AS IS SPECIFIED PURSUANT TO SECTION 12.01 (OR ITS ASSIGNMENT AND

ASSUMPTION). NOTHING HEREIN SHALL AFFECT THE RIGHT OF A PARTY OR ANY

HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW

OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST

ANOTHER PARTY IN ANY OTHER JURISDICTION.

(d) EACH PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY

WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL

ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN

DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN; (ii) IRREVOCABLY WAIVES, TO

THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO

CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE

OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO,

ACTUAL DAMAGES; (iii) CERTIFIES THAT NO PARTY HERETO NOR ANY

REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY HERETO HAS

REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD

NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS,

AND (iv) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS

AGREEMENT, THE LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED

HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND

CERTIFICATIONS CONTAINED IN THIS SECTION 12.09.

Section 12.10. Headings . Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

Section 12.11. Confidentiality. Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and required to keep such Information confidential), (b) to the extent requested by any regulatory authority having authority over the Administrative Agent or any Lender, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement or any other Loan Document, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section 12.11, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement (provided that such Person agrees to be bound by the provisions of this Section 12.11) or (ii) any actual or prospective counterparty (or its advisors) to any Swap Agreement relating to the Borrower and its obligations (provided that such Person agrees to be bound by the provisions of this Section 12.11), (g) with the consent of the Borrower or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section 12.11 or (ii) becomes available to the Administrative Agent or any Lender on a nonconfidential basis from a source other than the Borrower. For the purposes of this Section 12.11, “Information” means all information received from the Borrower or any Subsidiary relating to the Borrower or any Subsidiary and their businesses, including any Information obtained by the Observer, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by the Borrower or a Subsidiary; provided that, in the case of information received from the Borrower or any Subsidiary after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section 12.11 shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

Section 12.12. Interest Rate Limitation. It is the intention of the parties hereto that each Lender shall conform strictly to usury laws applicable to it. Accordingly, if the transactions contemplated hereby would be usurious as to any Lender under laws applicable to it (including the laws of the United States of America and the State of New York or any other jurisdiction whose laws may be mandatorily applicable to such Lender notwithstanding the other provisions of this Agreement), then, in that event, notwithstanding anything to the contrary in any of the Loan Documents or any agreement entered into in connection with or as security for the Notes, it is agreed as follows: (i) the aggregate of all consideration which constitutes interest under law applicable to any Lender that is contracted for, taken, reserved, charged or received by such Lender under any of the Loan Documents or agreements or otherwise in connection with the Notes shall under no circumstances exceed the maximum amount allowed by such applicable law, and any excess shall be canceled automatically and if theretofore paid shall be credited by such Lender on the principal amount of the Secured Obligations (or, to the extent that the principal amount of the Secured Obligations shall have been or would thereby be paid in full, refunded by such Lender to the Borrower); and (ii) in the event that the maturity of the Notes is accelerated by reason of an election of the holder thereof resulting from any Event of Default under this Agreement or otherwise, or in the event of any required or permitted prepayment, then such consideration that constitutes interest under law applicable to any Lender may never include more than the maximum amount allowed by such applicable law, and excess interest, if any, provided for in this Agreement or otherwise shall be canceled automatically by such Lender as of the date of such acceleration or prepayment and, if theretofore paid, shall be credited by such Lender on the principal amount of the Secured Obligations (or, to the extent that the principal amount of the Secured Obligations shall have been or would thereby be paid in full, refunded by such Lender to the Borrower). All sums paid or agreed to be paid to any Lender

for the use, forbearance or detention of sums due hereunder shall, to the extent permitted by law applicable to such Lender, be amortized, prorated, allocated and spread throughout the stated term of the Loans evidenced by the Notes until payment in full so that the rate or amount of interest on account of any Loans hereunder does not exceed the maximum amount allowed by such applicable law. If at any time and from time to time (i) the amount of interest payable to any Lender on any date shall be computed at the Highest Lawful Rate applicable to such Lender pursuant to this Section 12.12 and (ii) in respect of any subsequent interest computation period the amount of interest otherwise payable to such Lender would be less than the amount of interest payable to such Lender computed at the Highest Lawful Rate applicable to such Lender, then the amount of interest payable to such Lender in respect of such subsequent interest computation period shall continue to be computed at the Highest Lawful Rate applicable to such Lender until the total amount of interest payable to such Lender shall equal the total amount of interest which would have been payable to such Lender if the total amount of interest had been computed without giving effect to this Section 12.12.

Section 12.13. EXCULPATION PROVISIONS. EACH OF THE PARTIES HERETO SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT “CONSPICUOUS.”

Section 12.14. Reserved.

Section 12.15. No Third Party Beneficiaries. This Agreement, the other Loan Documents, and the agreement of the Lenders to make Loans hereunder are solely for the benefit of the Borrower, and no other Person (including, without limitation, any Subsidiary of the Borrower, any obligor, contractor, subcontractor, supplier or materialsman) shall have any rights, claims, remedies or privileges hereunder or under any other Loan Document against the Administrative Agent, any other Agent or any Lender for any reason whatsoever. There are no third party beneficiaries.

Section 12.16. USA Patriot Act Notice. Each Lender hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender to identify the Borrower in accordance with the Patriot Act.

Section 12.17. Alaska Statutes. The Loan Parties are personally obligated and fully liable for the amount due under this Agreement. The Administrative Agent has the right to sue on this Agreement and the

other Loan Documents and obtain a personal judgment against each Loan Party for satisfaction of the amount due under this Agreement and the other Loan Documents either before or after a judicial foreclosure of any Mortgage under AS 09.45.170 - 09.45.220.

Section 12.18. Intercreditor Agreement. The Administrative Agent is hereby authorized on behalf of the Lenders to enter into the Intercreditor Agreement substantially in the form attached hereto as Exhibit G. Each Lender acknowledges and agrees to the terms of such Intercreditor Agreement and agrees that the terms thereof shall be binding on such Secured Party and its successors and assigns, as if it were a party thereto.

Section 12.19. Amendment and Restatement. This Agreement represents an amendment and restatement of the Existing Credit Agreement. Any indebtedness under the Existing Credit Agreement continues, without duplication, under this Agreement, and the execution of this Agreement does not indicate a payment, satisfaction, novation or discharge thereof.

[SIGNATURES BEGIN NEXT PAGE]

The parties hereto have caused this Agreement to be duly executed as of the day and year first above written.



BORROWER:	MILLER ENERGY RESOURCES, INC.


	By:	/s/ Scott M. Boruff
	Name:	Scott M. Boruff
	Title:	Chief Financial Officer