ANNEXES,
EXHIBITS AND SCHEDULES
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Annex
I
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List
of Maximum Credit Amounts
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Exhibit
A
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Form
of Note
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Exhibit
B
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Form
of Borrowing Request
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Exhibit
C
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[Reserved]
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Exhibit
D
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Form
of Compliance Certificate
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Exhibit
E
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Form
of Solvency Certificate
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Exhibit
F
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Security
Instruments
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Exhibit
G
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Form
of Assignment and Assumption
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Exhibit
H-1
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Form
of U.S. Tax Compliance Certificate
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(Non-U.S.
Lenders; non-partnerships)
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Exhibit
H-2
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Form
of U.S. Tax Compliance Certificate
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(Foreign
Participants; non-partnerships)
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Exhibit
H-3
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Form
of U.S. Tax Compliance Certificate
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(Foreign
Participants; partnerships)
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Exhibit
H-4
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Form
of U.S. Tax Compliance Certificate
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(Non-U.S.
Lenders; partnerships)
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Schedule
7.05
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Litigation
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Schedule
7.06
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Environmental
Matters
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Schedule
7.12
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Insurance
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Schedule
7.14
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Subsidiaries
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Schedule
7.19
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Gas
Imbalances
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Schedule
7.20
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Marketing
of Production
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Schedule
7.22
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Swap
Agreements
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Schedule
9.05
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Investments
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CREDIT
AGREEMENT
THIS
CREDIT AGREEMENT dated as of January 5, 2022, is among U.S. ENERGY CORP., a corporation organized under the laws of the State
of Wyoming (the “Borrower”), each of the Lenders from time to time party hereto and FIRSTBANK SOUTHWEST (in
its individual capacity, “FBSW”), 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 has requested that the Lenders provide certain loans to and extensions of credit on its behalf and each Issuing Bank provide
Letters of Credit, and the Lenders have indicated their willingness to lend and each Issuing Bank has indicated its willingness to issue
Letters of Credit, in each case subject to the terms and conditions of this Agreement.
B.
In consideration of the mutual covenants and agreements herein contained and of the loans, extensions of credit 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 or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
“Administrative
Agent” has the meaning set forth in the preamble hereto.
“Administrative
Questionnaire” means an administrative questionnaire in a form supplied by the Administrative Agent.
“Affected
Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.
“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.
“Agent”
means each of the Administrative Agent and any other agent or sub-agent pursuant to Section 11.05 appointed by the Administrative
Agent with respect to matters related to the Loan Documents.
“Agent
Parties” has the meaning assigned to such term in Section 12.01(d)(ii).
“Aggregate
Maximum Credit Amounts” means, at any time, an amount equal to the sum of the Maximum Credit Amounts in effect at such time,
as the same may be reduced or terminated pursuant to Section 2.06.
“Agreement”
means this Credit Agreement, including the Schedules and Exhibits hereto, as the same may be amended, modified, supplemented, restated,
replaced or otherwise modified from time to time.
“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, and (b)
the Federal Funds Effective Rate in effect on such day plus 0.50%. Any change in the Alternate Base Rate due to a change in the Prime
Rate or the Federal Funds Effective Rate shall be effective from and including the effective date of such change in the Prime Rate or
the Federal Funds Effective Rate, respectively.
“Anti-Corruption
Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Borrower or any of its Affiliates from time
to time concerning or relating to bribery or corruption.
“Anticipated
Cure Deadline” has the meaning assigned to such term in Section 10.03(a).
“Applicable
Margin” means, for any date, with respect to any ABR Loan, or with respect to the Commitment Fee Rate, the applicable rate
per annum set forth below based upon the Borrowing Base Utilization Percentage then in effect:
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Level
1
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Level
2
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Level
3
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Level
4
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Level
5
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Borrowing
Base Utilization Percentage
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<25%
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≥25%
and <50%
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≥50%
and <75%
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≥75%
and <90%
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≥90%
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ABR
Loans
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0.25%
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0.50%
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0.75%
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1.00%
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1.25%
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Commitment
Fee Rate
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0.50%
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0.50%
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0.50%
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0.50%
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0.50%
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provided
that, from the Effective Date until the date that is six months after the Effective Date, the Applicable Margin shall be determined at
Level 3 indicated above for all purposes regardless of the Borrowing Base Utilization Percentage during such time period. After such
date, each change in the Applicable Margin shall apply during the period commencing on the effective date of such change in the Borrowing
Base Utilization Percentage and ending on the date immediately preceding the effective date of the next such change, provided,
that if at any time the Borrower fails to deliver a Reserve Report pursuant to Section 8.12(a), then until delivery of such Reserve
Report, the “Applicable Margin” shall mean the rate per annum set forth on the grid when the Borrowing Base Utilization
Percentage is at its highest level.
“Applicable
Percentage” means, with respect to any Lender, at any time, the percentage of the Aggregate Maximum Credit Amounts represented
by such Lender’s Maximum Credit Amount; provided that when a Defaulting Lender shall exist, “Applicable Percentage”
shall mean the percentage of the Aggregate Maximum Credit Amounts (disregarding any Defaulting Lender’s Maximum Credit Amount)
represented by such Lender’s Maximum Credit Amount. The initial Applicable Percentage of each Lender is set forth on Annex I.
“Approved
Counterparty” means (a) NextEra Energy Marketing, LLC. (and any Subsidiary thereof), (b) any other Secured Swap Provider, (c)
any other Person whose (or whose credit support provider’s) long term senior unsecured debt rating at the time a particular Swap
Agreement transaction is entered into is A- or A3 by S&P or Moody’s (or their equivalent), respectively, or higher and has
been approved in writing by the Administrative Agent, or (d) any other Person that has been approved by the Required Lenders.
“Approved
Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate
of an entity that administers or manages a Lender.
“Approved
Petroleum Engineers” means (a) DeGolyer and MacNaughton, (b) Cawley, Gillespie & Associates, Inc., (d) LaRoche Petroleum
Consultants, Ltd., and (e) any other independent petroleum engineers reasonably acceptable to the Administrative Agent.
“Arranger”
means FBSW, in its capacity as the sole lead arranger and sole bookrunner hereunder.
“ASC”
means the Financial Accounting Standards Board Accounting Standards Codification, as in effect.
“Assignee”
has the meaning assigned to such term in Section 12.04(b).
“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, substantially in the form of Exhibit
G or any other form approved by the Administrative Agent.
“Availability”
means, at any time, the excess, if any, of (a) the total Commitments of the Lenders at such time, over (b) the total Revolving Credit
Exposures of the Lenders at such time.
“Availability
Period” means the period from and including the Effective Date to but excluding the Termination Date.
“Bail-In
Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any
liability of an Affected Financial Institution.
“Bail-In
Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European
Parliament and of the Council of the European Union, the implementing law, regulation rule or requirement for such EEA Member Country
from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the
United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom
relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than
through liquidation, administration or other insolvency proceedings).
“Beneficial
Ownership Certification” means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.
“Beneficial
Ownership Regulation” means 31 C.F.R. § 1010.230.
“Benefit
Plan” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b)
a “plan” as defined in and subject to Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA
Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit
plan” or “plan”.
“BHC
Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with,
12 U.S.C. 1841(k)) of such party.
“Board”
means the Board of Governors of the Federal Reserve System of the United States of America or any successor Governmental Authority.
“Borrowing”
means Loans made on the same date.
“Borrowing
Base” means at any time an amount determined in accordance with Section 2.07, as the same may be adjusted from time
to time pursuant to the Borrowing Base Adjustment Provisions.
“Borrowing
Base Adjustment Provisions” means Section 2.07(e), Section 8.13(c) and Section 9.11(e) and any other provisions
hereunder which adjust the amount of the Borrowing Base.
“Borrowing
Base Deficiency” occurs if, at any time the total Revolving Credit Exposures exceed the Borrowing Base then in effect. The
amount of the Borrowing Base Deficiency at such time is the amount by which the total Revolving Credit Exposures of all Lenders at such
time exceeds the Borrowing Base in effect at such time.
“Borrowing
Base Properties” means the Oil and Gas Properties of the Loan Parties included in the Initial Reserve Report and thereafter
in the most recently delivered Reserve Report delivered pursuant to Section 8.12.
“Borrowing
Base Utilization Percentage” means, as of any day, the fraction expressed as a percentage, the numerator of which is the sum
of the Revolving Credit Exposures of the Lenders on such day, and the denominator of which is the Borrowing Base in effect on such day.
“Borrowing
Request” means a request by the Borrower for a Borrowing in accordance with Section 2.03.
“Business
Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in Amarillo, Dallas and Houston Texas
are authorized or required by law to remain closed.
“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.
“CARES
Act” means the Coronavirus Aid, Relief and Economic Security Act, as amended (including any successor thereto), and all applicable
rules and regulations with respect thereto.
“Cash
Collateralize” means, to pledge and deposit with or deliver to the Administrative Agent (in a manner reasonably satisfactory
to the Administrative Agent, which may require such deposit to be made into a controlled account), for the benefit of any Issuing Bank
or the Lenders, as collateral for LC Exposure or obligations of the Lenders to fund participations in respect of LC Exposure, cash or
deposit account balances or, if the Administrative Agent and each Issuing Bank shall agree, in their sole discretion, other credit support,
in each case pursuant to documentation in form and substance satisfactory to the Administrative Agent and each Issuing Bank. “Cash
Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such Cash Collateral and other
credit support.
“Cash
Management Services” means (a) commercial credit cards, merchant card services, purchase or debit cards, including non-card
e-payables services, (b) treasury management services (including controlled disbursement, overdraft, automated clearing house services,
return items, interstate depository network services, electronic funds transfer services, lockbox services and stop payment services),
(c) any other demand deposit or operating account relationships and (d) any other cash management services, including for collections
and for operating, payroll and trust accounts of the Borrower or any of the Borrower’s Subsidiaries.
“Cash
Receipts” means all cash received by or on behalf of the Borrower or any Subsidiary, including without limitation: (a) amounts
payable under or in connection with any Oil and Gas Properties; (b) cash representing operating revenue earned or to be earned by the
Borrower or any Subsidiary; (c) proceeds from Loans; and (d) any other cash received by or on behalf of the Borrower or any Subsidiary
from whatever source (including amounts received in respect of any Swap Termination and amounts received in respect of any disposition
of Property).
“Casualty
Event” means any loss, casualty or other insured damage to, or any nationalization, taking under power of eminent domain or
by condemnation or similar proceeding of, any Property of any Loan Party.
“CERCLA”
has the meaning assigned to such term within the definition of “Environmental Laws.”
“Change
in Control” means (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its Subsidiaries, and any person or entity
acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan), becomes the “beneficial owner”
(as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have
“beneficial ownership” of all securities that such person or group has the right to acquire, whether such right is exercisable
immediately or only after the passage of time (such right, an “option right”)), directly or indirectly, of 35% or
more of the Equity Interests of the Borrower entitled to vote for members of the board of directors or equivalent governing body of the
Borrower on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant
to any option right); or (c) during any period of 12 consecutive months, a majority of the members of the board of directors of the Borrower
cease to be composed of individuals (i) who were members of that board on the first day of such period, (ii) whose election or nomination
to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or (iii) whose election or nomination to that board was approved by individuals
referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board.
“Change
in Law” means the occurrence, after the Effective Date, of any of the following: (a) the adoption or taking effect of any Law,
(b) any change in any Law or in the administration, interpretation, implementation or application thereof by any Governmental Authority
or (c) the making or issuance of any request, rule, guideline, requirement 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, requirements or directives thereunder or issued in connection therewith (whether
or not having the force of Law) and (y) all requests, rules, guidelines, requirements 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 (whether or not having the force of Law), 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, issued, promulgated or implemented.
“Code”
means the Internal Revenue Code of 1986 as amended from time to time and any successor statute, and the regulations promulgated thereunder.
“Collateral”
means the Mortgaged Properties and all other Property of the Loan Parties, now owned or hereafter acquired, upon which a Lien is purported
to be created by any Security Instrument, in each case excluding any Excluded Assets.
“Commitment”
means, with respect to each Lender, the obligation of such Lender to make or continue Loans and to acquire participations in Letters
of Credit hereunder, expressed as an amount representing the maximum aggregate amount of such Lender’s Revolving Credit Exposure
hereunder, as such obligation may be (a) modified from time to time pursuant to Section 2.06, (b) modified from time to time pursuant
to assignments by or to such Lender pursuant to Section 12.04(b), or (c) otherwise modified pursuant to the terms of this Agreement.
The amount representing each Lender’s Commitment shall at any time be the lesser of (i) such Lender’s Maximum Credit Amount
and (ii) such Lender’s Applicable Percentage of the then effective Borrowing Base.
“Commitment
Fee Rate” has the meaning set forth in the definition of “Applicable Margin”.
“Commodity
Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor
statute and any regulations promulgated thereunder.
“Communications”
has the meaning assigned to such term in Section 12.01(d)(ii).
“Compliance
Certificate” shall have the meaning set forth in Section 8.01(c).
“Connection
Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are
franchise Taxes or branch profits Taxes.
“Consolidated
Cash Balance” means the aggregate amount of unrestricted cash and cash equivalents, in each case, held or owned by (whether
directly or indirectly), credited to the account of, or otherwise reflected as an asset on the balance sheet of, the Borrower and its
Subsidiaries other than (i) any cash set aside to pay in the ordinary course of business amounts of the Borrower and its Subsidiaries
then due and owing to unaffiliated third parties (including, for the avoidance of doubt, to pay royalty obligations, working interest
obligations, production payments and severance taxes and amounts held in suspense accounts in respect of obligations owed to third parties)
and for which the Borrower or such Subsidiary, as applicable, has issued checks or has initiated wires or ACH transfers in order to pay
(or will issue checks or initiate wires or ACH transfers in order to pay such amounts within three Business Days), (ii) any amounts held
as Cash Collateral as required pursuant to Section 2.08(j), (iii) cash of the Borrower or any Restricted Subsidiary set aside
to be used by the Borrower or any Subsidiary within three Business Days to pay the purchase price for any acquisition of any assets or
property permitted hereunder by the Borrower or any Subsidiary pursuant to a binding and enforceable purchase and sale agreement with
an unaffiliated third party containing customary provisions regarding the payment and refunding of such purchase price, (iv) amounts
in respect of reserves established and maintained in accordance with GAAP in good faith, (v) deposits made in respect of tenders, surety
and appeal bonds, performance and return of money bonds, bids, leases, contracts, statutory or regulatory obligations, or other obligations
incurred in the ordinary course of business, and (vi) while and to the extent refundable, any cash or cash equivalents of the Borrower
and any Restricted Subsidiary constituting purchase price deposits held in escrow pursuant to a binding and enforceable purchase and
sale agreement with an unaffiliated third party containing customary provisions regarding the payment and refunding of such deposits.
“Consolidated
Cash Balance Measurement Day” means the last Business Day of each calendar month.
“Consolidated
Cash Balance Threshold” means $5,000,000.
“Consolidated
Net Income” means with respect to the Borrower and the Consolidated Subsidiaries, for any Test Period, the aggregate of the
net income (or loss) of the Borrower and the Consolidated Subsidiaries after allowances for taxes for such Test Period determined on
a consolidated basis in accordance with GAAP; provided that there shall be excluded from such net income (to the extent otherwise
included therein) the following: (a) the net income 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 Test 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 Test 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, in each case
determined in accordance with GAAP; (c) the net income (or loss) of any Person acquired in a pooling of interests transaction for any
Test Period prior to the date of such transaction; (d) any extraordinary or non-recurring gains or losses during such Test Period; (e)
non-cash gains or losses under FASB ASC Topic 815 resulting from the net change in mark to market portfolio of commodity price risk management
activities during that Test Period; and (f) any gains or losses attributable to writeups or writedowns of assets, including ceiling test
writedowns.
“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. “Controlled” has a meaning correlative thereto.
“Covered
Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance
with, 12 C.F.R. § 252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12
C.F.R. § 47.3(b); or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R.
§ 382.2(b).
“Covered
Party” has the meaning assigned to such term in Section 12.19.
“Cure
Amount” has the meaning assigned to such term in Section 10.03(a).
“Cure
Right” has the meaning assigned to such term in Section 10.03(a).
“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 that are more than
one hundred twenty (120) days past the date of invoice other than those which are being contested in good faith by appropriate action
and for which adequate reserves have been maintained in accordance with GAAP (excluding any amounts owed to the Permitted Holder or any
Affiliates thereof in respect of the reimbursement of expenses and other obligations); (d) all 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 purchase the Debt or Property of others; (i) obligations to deliver
commodities, goods or services, including Hydrocarbons, in consideration of one or more advance payments, made more than one month in
advance of the month in which the commodities, goods or services are to be delivered other than gas balancing arrangements in the ordinary
course of business; (j) 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; (k) Disqualified Capital Stock; (l) 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 (m) net obligations
of such Person under any Swap Agreement. 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. Debt shall not include liabilities resulting from endorsements of instruments for collection in
the ordinary course of business.
“Debtor
Relief Laws” means the Bankruptcy Code of the United States of America, and all other liquidation, conservatorship, bankruptcy,
assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief
Laws of the United States or other applicable jurisdictions from time to time in effect.
“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.
“Default
Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81,
47.2 or 382.1, as applicable.
“Defaulting
Lender” means, subject to Section 4.05(b), any Lender that (a) has failed to (i) fund all or any portion of its Loans
within two Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent
and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent
to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing)
has not been satisfied, or (ii) pay to the Administrative Agent, any Issuing Bank, or any other Lender any other amount required to be
paid by it hereunder (including in respect of its participation in Letters of Credit) within two Business Days of the date when due,
(b) has notified the Borrower, the Administrative Agent or any Issuing Bank in writing that it does not intend to comply with its funding
obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s
obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent
to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public
statement) cannot be satisfied), (c) has failed, within three Business Days after written request by the Administrative Agent or the
Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations
hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written
confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become
the subject of a proceeding under any Debtor Relief Law, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator,
assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including
the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity, or (iii) become
the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or
acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long
as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United
States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority)
to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative
Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above shall be conclusive and
binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 4.05(b)) upon delivery
of written notice of such determination to the Borrower, each Issuing Bank, and each Lender.
“Deficiency
Notification Date” has the meaning assigned to such term in Section 3.04(c)(ii).
“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
earlier of (a) the Maturity Date and (b) the date on which there are no Loans, LC Exposure or other obligations (other than contingent
indemnity obligations) hereunder outstanding and all of the Commitments are terminated; provided that, any such Equity Interests that
are subject to the prior repayment in full of the Obligations shall not constitute Disqualified Capital Stock.
“Disqualified
Person” means any Person that is (a) actively engaged, directly or indirectly, as one of its principal businesses in the exploration,
development or production of oil, gas, or other Hydrocarbons, or any other business within the upstream, midstream, downstream, or energy
service industries in North America, or (b) is under common Control with a Person described in clause (a).
“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 provided that a Subsidiary of a Foreign Subsidiary is not a Domestic Subsidiary.
“EBITDAX”
means, for any Test Period, the sum of Consolidated Net Income for such Test Period plus the following expenses or charges to the extent
deducted from Consolidated Net Income in such Test Period: (i) interest, income and franchise taxes (including Texas margin or gross
receipts taxes), (ii) depreciation, (iii) depletion, (iv) amortization, (v) exploration expenses, (vi) non-recurring workover expenses
in an aggregate amount not to exceed $50,000 for any period of 12 consecutive months, (vii) restructuring costs, fees and expenses incurred
in connection with acquisitions and the Transactions in an aggregate amount not to exceed $250,000 for any period of 12 consecutive months,
and (viii) other similar charges (including expenses relating to stock based compensation, hedging, ceiling test impairments, etc.) minus
all noncash income added to Consolidated Net Income. For the avoidance of doubt, EBITDAX shall not include any unrealized mark-to-market
hedging gains or losses.
“EEA
Financial Institution” means (a) any institution established in any EEA Member Country which is subject to the supervision
of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in
clause (a) of this definition, or (c) any institution established in an EEA Member Country which is a subsidiary of an institution described
in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA
Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA
Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority
of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Effective
Date” means the date on which the conditions specified in Section 6.01 are satisfied (or waived in accordance with Section
12.02).
“Engineering
Reports” has the meaning assigned to such term in Section 2.07(c)(i).
“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
Cure Standstill Period” has the meaning assigned to such term in Section 10.03(a).
“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.
“ERISA
Affiliate” means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning
of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the
Code or Section 302 of ERISA).
“ERISA
Event” means (a) a Reportable Event with respect to a Pension Plan; (b) the failure by the Borrower or any ERISA Affiliate
to meet all applicable requirements under the Pension Funding Rules or the filing of an application for the waiver of the minimum funding
standards under the Pension Funding Rules; (c) the incurrence by the Borrower or any ERISA Affiliate of any liability pursuant to Section
4063 or 4064 of ERISA or a cessation of operations with respect to a Pension Plan within the meaning of Section 4062(e) of ERISA; (d)
a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer
Plan is in reorganization or insolvent (within the meaning of Title IV of ERISA); (e) the filing of a notice of intent to terminate a
Pension Plan under, or the treatment of a Pension Plan amendment as a termination under, Section 4041 of ERISA; (f) the institution by
the PBGC of proceedings to terminate a Pension Plan; (g) any event or condition that constitutes grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any Pension Plan; (h) the determination that any Pension Plan
is in at-risk status (within the meaning of Section 430 of the Code or Section 303 of ERISA) or that a Multiemployer Plan is in endangered
or critical status (within the meaning of Section 432 of the Code or Section 305 of ERISA); (i) the imposition or incurrence of any liability
under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA
Affiliate; (j) the engagement by the Borrower or any ERISA Affiliate in a transaction that could be subject to Section 4069 or Section
4212(c) of ERISA; (k) the imposition of a lien upon the Borrower pursuant to Section 430(k) of the Code or Section 303(k) of ERISA; or
(l) the making of an amendment to a Pension Plan that could result in the posting of bond or security under Section 436(f)(1) of the
Code.
“Erroneous
Payment” has the meaning assigned to it in Section 11.12(a).
“Erroneous
Payment Deficiency Assignment” has the meaning assigned to it in Section 11.12(d)(i).
“Erroneous
Payment Impacted Class” has the meaning assigned to it in Section 11.12(d)(i).
“Erroneous
Payment Return Deficiency” has the meaning assigned to it in Section 11.12(d)(i).
“Erroneous
Payment Subrogation Rights” has the meaning assigned to it in Section 11.12(e).
“EU
Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor
Person), as in effect from time to time.
“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) statutory 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 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 customary deposit account terms 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 the Borrower
or any Subsidiary to provide collateral to the depository institution (other than pursuant to the Loan Documents); (f) zoning and land
use requirements, 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,
(h) Immaterial Title Deficiencies, and (i) 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 first priority Lien granted in favor of the
Administrative Agent and the Lenders is to be hereby implied or expressed by the permitted existence of such Excepted Liens.
“Excess
Cash” means the Consolidated Cash Balance in excess of the Consolidated Cash Balance Threshold at any time.
“Excluded
Accounts” means (a) any deposit account, commodity account or securities account so long as the aggregate balance of all such
deposit accounts, commodity accounts and securities accounts does not at any time exceed $50,000, (b) any deposit account that is a zero
balance account or a deposit account for which the balance of such deposit account is transferred at the end of each date to a deposit
account that is not an Excluded Account, and (c) any other deposit accounts exclusively used for trust, payroll, payroll taxes and other
employee wage and benefit payments to or for the benefit of any employees of Loan Parties or any of their Subsidiaries.
“Excluded
Assets” means:
(a)
any permit or license issued by a Governmental Authority to any Loan Party or any contract or agreement to which any Loan Party is a
party, in each case, only to the extent and for so long as the terms of such permit, license, contract, or agreement or any Governmental
Requirement applicable thereto validly prohibit or require the consent of any person other than Borrower and its Affiliates which has
not been obtained as a condition to the creation by such Loan Party of a security interest in such permit, license or agreement in favor
of the Administrative Agent (after giving effect to Sections 9-406(d), 9-407(a), 9-408(a) or 9-409 of the UCC (or any successor provision
or provisions) or any other applicable law (including the bankruptcy law) or principles of equity);
(b)
any item of general intangibles that is now or hereafter held by any Loan Party but only to the extent that such item of general intangibles
(or any agreement evidencing such item of general intangibles) contains a term, provision or other contractual obligation or is subject
to a rule of law, statute or regulation that restricts, prohibits, or requires a consent (that has not been obtained) of a Person (other
than Borrower or any other Loan Party) to, the grant, creation, attachment or perfection of the security interest granted pursuant to
the Security Documents, and any such restriction, prohibition and/or requirement of consent is effective and enforceable under applicable
law and is not rendered ineffective by applicable law (including, without limitation, pursuant to Sections 9-406, 9-407, 9-408 or 9-409
of the UCC, and any successor provision thereto),
(c)
any property owned by any Grantor on the date hereof or hereafter acquired that is subject to a purchase money Lien or Capital Lease
obligation permitted to be incurred pursuant to the provisions of this Agreement if the contract or other agreement in which such Lien
is granted (or the documentation providing for such Capital Lease obligation) validly prohibits or requires the consent of any person
other than Borrower and its Affiliates which has not been obtained as a condition the creation of any other Lien on such property;
(d)
any United States intent-to-use trademark applications under applicable federal law; provided that upon submission and acceptance
by the United States Patent and Trademark Office of an amendment to allege use pursuant to 15 U.S.C. Section 1060(a) (or any successor
provision), such intent-to-use trademark application shall be considered Collateral;
(e)
commercial tort claims having an aggregate anticipated value of not greater than $750,000;
(f)
vehicles and rolling stock subject to a certificate of title statute; and
(g)
Excluded Accounts;
provided,
however, that any property described in the preceding clauses (a), (b), and (c) above shall constitute “Excluded Assets”
only to the extent and for so long as the grant of a security interest therein is prohibited, requires a consent, would constitute a
breach or default or result in a termination (and to the extent severable, such grant of a security interest shall attach immediately
to any portion of such property that does not result in any of the consequences specified above), in each case, as more particularly
described in the preceding clauses (a), (b), and (c) above (a “Grant Prohibition”), and any such property shall automatically
be included in the Collateral, without further action on the part of Borrower, any other Loan Party, the Administrative Agent or any
other Person, immediately when such property is no longer subject to any Grant Prohibition; provided, further, Excluded Assets
shall not include any proceeds, substitutions or replacements of any Excluded Assets (unless such proceeds, substitutions or replacements
would constitute Excluded Assets).
“Excluded
Swap Obligation” means any obligation of any Guarantor to pay or perform under any Swap Agreement, if, and to the extent that,
all or a portion of the guarantee by such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Agreement
(or any guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation, or order of the Commodity
Futures Trading Commission (or the application or official interpretation of any thereof) or any other applicable Governmental Requirement.
“Excluded
Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from
a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes,
in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the
case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof),
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, Letter of Credit or Commitment pursuant to a law in
effect on the date on which (i) such Lender acquires such interest in the Loan, Letter of Credit or Commitment (other than pursuant to
an assignment request by the Borrower under Section 5.05) 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 Recipient’s failure to comply with Section 5.03(g), and (d) any United States federal withholding Taxes imposed under
FATCA.
“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 agreements
entered into pursuant to Section 1471(b)(1) of the Code, and any fiscal or regulatory legislation, rules or practices adopted pursuant
to such intergovernmental agreement, treaty or convention among Governmental Authorities entered into in connection with the implementation
of the foregoing.
“FBSW”
has the meaning assigned to such term in the preamble hereto.
“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; provided that if
the Federal Funds Effective Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.
“Federal
Reserve Bank of New York’s Website” means the website of the Federal Reserve Bank of New York at http://www.newyorkfed.org,
or any successor source.
“Fee
Letter” means that certain fee letter dated as of the Effective Date between Borrower and the Administrative Agent, as such
fee letter may be supplemented, modified or amended from time to time.
“Financial
Officer” means, for any Person, the chief executive officer, 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.
“fiscal
quarter” means each fiscal quarter ending on the last day of each March, June, September and December.
“fiscal
year” means each fiscal year of the Borrower and its Subsidiaries for accounting and tax purposes, ending on December 31 of
each year.
“Flood
Insurance Regulations” means (a) the National Flood Insurance Act of 1968 as now or hereafter in effect or any successor statute
thereto, (b) the Flood Disaster Protection Act of 1973 as now or hereafter in effect or any successor statute thereto, (c) the National
Flood Insurance Reform Act of 1994 (amending 42 USC § 4001, et seq.), as the same may be amended or recodified from time to time,
(d) the Flood Insurance Reform Act of 2004, and (e) the Biggert-Waters Flood Reform Act of 2012, and any regulations promulgated thereunder.
“Foreign
Plan” means any employee pension benefit plan, program, policy, arrangement or agreement maintained or contributed to by the
Borrower or any Subsidiary with respect to employees employed outside the United States (other than any governmental arrangement).
“Foreign
Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.
“Fronting
Exposure” means, at any time there is a Defaulting Lender, with respect to any Issuing Bank, such Defaulting Lender’s
LC Exposure other than LC Exposure as to which such Defaulting Lender’s participation obligation has been reallocated to other
Lenders or Cash Collateralized in accordance with the terms hereof.
“Fund”
means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in
commercial loans and similar extensions of credit in the ordinary course of its activities.
“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.
“Guarantors”
means (a) Energy One LLC, New Horizon Resources LLC and BOG – Osage, LLC, and (b) each other Subsidiary that guarantees the Secured
Obligations (including pursuant to Section 6.01, Section 8.14(b), or otherwise).
“Guaranty
Agreement” means an agreement executed by the Guarantors in the form and substance acceptable to Administrative Agent, unconditionally
guaranteeing on a joint and several basis, payment of the Secured Obligations, as the same may be amended, modified or supplemented from
time to time.
“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 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. Unless otherwise
indicated herein, each reference to the term “Hydrocarbon Interests” shall mean Hydrocarbon Interests of the Borrower or
any Subsidiary, as the context may require.
“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.
“Immaterial
Title Deficiencies” means (a) minor defects or deficiencies in title which do not diminish by more than 3% the total PV-10
of the Proved Oil and Gas Properties evaluated in the Reserve Report or, (b) defects or deficiencies in title which relate to “Undeveloped
Reserves” for which no value was assigned in calculation of the Borrowing Base.
“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 any Loan Party under any Loan Document and (b) to the extent not otherwise described in clause (a) above, Other Taxes.
“Indemnitee”
has the meaning assigned to such term in Section 12.03(b).
“Information”
has the meaning assigned to such term in Section 12.12.
“Initial
Acquisition” has the meaning given to such term in Section 6.02(u).
“Initial
Acquisition Assets” means the Oil and Gas Properties and other properties acquired by the Borrower or any Guarantor pursuant
to the Initial Acquisition Documents.
“Initial
Acquisition Documents” means, collectively, (a) that certain Purchase and Sale Agreement dated as of October 4, 2021, among
Lubbock Energy Partners, LLC, as the seller, and the Borrower, as the purchaser, covering the Initial Acquisition Assets described therein
(the “Lubbock PSA”), (b) that certain Purchase and Sale Agreement dated as of October 4, 2021, among Banner Oil &
Gas, LLC, Woodford Petroleum, LLC and Llano Energy LLC, as the sellers, and the Borrower, as the purchaser, covering the Initial Acquisition
Assets described therein (the “Banner PSA”), (c) that certain Purchase and Sale Agreement dated as of October 4, 2021,
among Synergy Offshore, LLC, as the seller, and the Borrower, as the purchaser, covering the Initial Acquisition Assets described therein
(the “Synergy PSA”), (d) the First Amendment to Purchase and Sale Agreements dated as of October 25, 2021, between
Borrower and Lubbock Energy Partners, LLC, Banner Oil & Gas, LLC, Woodford Petroleum, LLC and Llano Energy LLC, and Synergy Offshore,
LLC, which amends the Lubbock PSA, the Banner PSA and the Synergy PSA, and (e) all conveyances, assignments, bills of sale, agreements,
instruments and documents executed and delivered in connection therewith, as amended.
“Initial
Reserve Report” means, collectively, the report of the chief engineer of the Borrower with respect to the Oil and Gas Properties
of the Loan Parties dated as of December 21, 2021, including without limitation the Initial Acquisition Assets.
“Intercreditor
Agreement” means an intercreditor agreement among Borrower, one or more Approved Counterparties, and Administrative Agent,
as contractual collateral representative for itself, the Lenders, the Swap Lenders and such Approved Counterparties, as amended and in
effect from time to time.
“Interest
Payment Date” means with respect to any ABR Loan, the last day of each March, June, September and December.
“Interim
Redetermination” has the meaning assigned such term in Section 2.07(b).
“Interim
Redetermination Date” means the date on which a Borrowing Base that has been redetermined pursuant to an Interim Redetermination
becomes effective as provided in Section 2.07(d).
“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 any agreement to make any such acquisition (including 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); (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 of or equity participation or
interest in, or other extension of credit to, any other Person (including the purchase of Property from another Person subject to an
understanding or agreement, contingent or otherwise, to resell such Property to such Person, but excluding any such advance, loan or
extension of credit having a term not exceeding ninety (90) days representing the purchase price of goods or services sold by such Person
in the ordinary course of business); or (c) the purchase or acquisition (in one or a series of transactions) of Property of another Person
that constitutes a business unit or any agreement to make any such acquisition.
“Issuing
Bank” means (a) FBSW and (b) and each Lender approved by the Administrative Agent and reasonably satisfactory to, or requested
by, the Borrower that agrees to act as an issuer of Letters of Credit hereunder, in each case, in its capacity as the issuer of Letters
of Credit hereunder, and its successors in such capacity as provided in Section 2.08(i). Any Issuing Bank may, in its discretion,
arrange for one or more Letters of Credit to be issued by its Affiliates, in which case the term “Issuing Bank” shall include
any such Affiliate with respect to Letters of Credit issued by such Affiliate.
“January
1 Reserve Report” has the meaning assigned to such term in Section 8.12(a).
“Law”
means any law(s) (including common law), constitution, statute, treaty, regulation, rule, ordinance, opinion, issued guidance, release,
ruling, order, executive order, injunction, writ, decree, bond, judgment, authorization or approval, lien or award of or any settlement
arrangement, by agreement, consent or otherwise, with any Governmental Authority, foreign or domestic.
“LC
Commitment” at any time means 10% of the Borrowing Base then in effect.
“LC
Disbursement” means a payment made by an Issuing Bank pursuant to a Letter of Credit.
“LC
Exposure” means, at any time of determination, the sum of (a) the aggregate amount available to be drawn of all outstanding
Letters of Credit at such time (if any Letter of Credit shall increase in amount automatically in the future, such aggregate amount available
to be drawn shall currently give effect to any such future increase) plus (b) the aggregate amount of all LC Disbursements that have
not yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of any Lender at any time shall be its Applicable
Percentage of the total LC Exposure at such time.
“Lenders”
means the Persons listed on Annex I and any Person that shall have become a party hereto pursuant to an Assignment and Assumption or
other documentation contemplated hereby, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption
or other documentation contemplated hereby. Unless the context otherwise requires, the term “Lenders” includes the
Issuing Banks.
“Letter
of Credit” means any letter of credit issued pursuant to this Agreement.
“Letter
of Credit Agreements” means all letter of credit applications and other agreements (including any amendments, modifications
or supplements thereto) submitted by the Borrower, or entered into by the Borrower, with an Issuing Bank relating to any Letter of Credit.
“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 that burden Property to the extent they secure an obligation owed to a Person other than the owner of the Property. For
the purposes of this Agreement, the Loan Parties shall be deemed to be the owner of any Property which they have acquired or hold 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.
“Loan
Documents” means this Agreement, the Notes, the Letter of Credit Agreements, the Letters of Credit, the Security Instruments,
the Intercreditor Agreement, the Fee 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 or LC Exposure is outstanding, Lenders having greater than fifty percent (50%) of
the Aggregate Maximum Credit Amounts; and at any time while any Loans or LC Exposure is outstanding, Lenders holding greater than fifty
percent (50%) of the outstanding aggregate principal amount of the Loans or participation interests in Letters of Credit (without regard
to any sale by a Lender of a participation in any Loan under Section 12.04(c)); provided that the Maximum Credit Amounts
and the principal amount of the Loans and participations interests in Letters of Credit of the Defaulting Lenders (if any) shall be excluded
from the determination of Majority Lenders.
“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 the other Loan Parties taken as a whole, (b) the ability of the Borrower or any
other Loan Party to perform any of its material obligations under any Loan Document to which it is a party, (c) the validity or enforceability
of any Loan Document, or (d) the rights and remedies of or benefits available to the Administrative Agent, any other Agent, any Issuing
Bank or any Lender under any Loan Document.
“Material
Indebtedness” means Debt (other than the Loans and Letters of Credit), or obligations in respect of one or more Swap Agreements,
of any one or more of any Loan Party in an aggregate principal amount exceeding $500,000. For purposes of determining Material Indebtedness,
the “principal amount” of the obligations of any Loan Party in respect of any Swap Agreement at any time shall be the Swap
Termination Value thereof.
“Maturity
Date” means January 5, 2026.
“Maximum
Credit Amount” means, as to each Lender, the amount set forth opposite such Lender’s name on Annex I under the caption
“Maximum Credit Amounts”, as the same may be (a) reduced or terminated from time to time in connection with a reduction or
termination of the Aggregate Maximum Credit Amounts pursuant to Section 2.06 or (b) modified from time to time pursuant to any
assignment permitted by Section 12.04(b). As of the Effective Date, the aggregate Maximum Credit Amounts of the Lenders are $100,000,000.
“Minimum
Collateral Amount” means, at any time, (i) with respect to Cash Collateral consisting of cash or deposit account balances,
an amount equal to 105% of the Fronting Exposure of all Issuing Banks with respect to Letters of Credit issued and outstanding at such
time and (ii) if the Borrower agrees to deliver Cash Collateral consisting of Property other than cash or deposit account balances, an
amount determined by the relevant Issuing Bank in its sole discretion.
“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 Parties 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 any Loan Party which is subject to the Liens existing and to exist under the terms of
the Security Instruments.
“Multiemployer
Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA
Affiliate makes or is obligated to make contributions, during the preceding five plan years has made or been obligated to make contributions,
or has any liability.
“Multiple
Employer Plan” means a Plan with respect to which the Borrower or any ERISA Affiliate is a contributing sponsor, and that has
two or more contributing sponsors at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.
“New
Borrowing Base Notice” has the meaning assigned to such term in Section 2.07(d).
“Non-U.S.
Lender” means a Lender, with respect to the Borrower, that is not a U.S. Person.
“Notes”
means the promissory notes, if any, 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.
“OFAC”
means the Office of Foreign Assets Control of the United States Department of the Treasury.
“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 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 hereafter
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, gas processing plants and pipeline systems and any related infrastructure to any thereof, 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; provided that the Oil and Gas Properties shall not include
any “building” or “mobile home” (each as defined in Regulation H as promulgated by the Federal Reserve Board
under the Flood Insurance Regulations). Unless otherwise indicated herein, each reference to the term “Oil and Gas Properties”
means Oil and Gas Properties of the Borrower or any Subsidiary, as the context may require.
“Organizational
Documents” means (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent
or comparable constitutive documents with respect to such corporation’s jurisdiction); (b) with respect to any limited liability
company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint
venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization
and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles
of formation or organization of such entity.
“Other
Connection Taxes” means with respect to any Recipient, 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, Letter of Credit 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 5.05).
“Participant”
has the meaning assigned to such term in Section 12.04(c).
“Participant
Register” has the meaning assigned to such term in Section 12.04(c).
“PATRIOT
Act” means the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).
“Payment
Recipient” has the meaning assigned to it in Section 11.12(a).
“PBGC”
means the Pension Benefit Guaranty Corporation.
“Pension
Act” means the Pension Protection Act of 2006.
“Pension
Funding Rules” means the rules of the Code and ERISA regarding minimum funding standards and minimum required contributions
(including any installment payment thereof) to Pension Plans and Multiemployer Plans and set forth in, with respect to plan years ending
prior to the effective date of the Pension Act, Section 412 of the Code and Section 302 of ERISA, each as in effect prior to the Pension
Act and, thereafter, Sections 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.
“Pension
Plan” means any employee pension benefit plan (including a Multiple Employer Plan, but excluding a Multiemployer Plan) that
is maintained or is contributed to by the Borrower or any ERISA Affiliate and is either covered by Title IV of ERISA or is subject to
the minimum funding standards under Section 412 of the Code.
“Permitted
EIDL” means one or more unsecured loans to one or more Loan Parties, in each case advanced by the SBA, pursuant to the Economic
Injury Disaster Loan Program of the CARES Act, provided that, with respect to any such loan incurred after the Closing Date, no Default
or Event of Default shall have occurred and be continuing at the time of incurrence thereof.
“Permitted
PPP Loans” means one or more unsecured loans to one or more Loan Parties, in each case advanced by a Lender, an Affiliate of
a Lender or another financial institution reasonably acceptable to the Administrative Agent, pursuant to the Paycheck Protection Program
of the CARES Act, provided that, with respect to any such loan incurred after the Closing Date, no Default or Event of Default shall
have occurred and be continuing at the time of incurrence thereof.
“Permitted
Tax Distribution” means, with respect to any taxable period during which the Borrower is a pass-through entity for United States
federal income tax purposes (including, for the avoidance of doubt, a disregarded entity not treated as separate from its owner) Restricted
Payments to holders of equity in the Borrower such that each such equity holder receives an amount from such Restricted Payment necessary
to enable such equity holder (or, to the extent such equity holder is a pass-through or disregarded entity, its direct and indirect equity
holders) to pay its U.S. federal, state and/or local income taxes (as applicable) attributable to its direct or indirect ownership of
the Borrower with respect to such taxable period (assuming that each such equity holder is subject to tax at the highest combined marginal
federal, state, and/or local income tax rate applicable to any such equity holder for such taxable period and taking into account the
deductibility of state and local income taxes for U.S. federal income tax purposes (and any limitations thereon), the alternative minimum
tax, any cumulative net taxable loss of the Borrower for prior taxable periods to the extent such loss has not previously been utilized
pursuant to this clause and is of a character that would allow such loss to be available to such equity holders to reduce such attributable
taxes of such equity holders in the current taxable period (taking into account any limitations on the utilization of such loss by such
equity holders to reduce such attributable taxes) and the character (e.g., long-term or short-term capital gain or ordinary or exempt)
of the applicable income).
“Person”
means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
“Petroleum
Industry Standards” means the Definitions for Oil and Gas Reserves promulgated by the Society of Petroleum Engineers (or any
generally recognized successor) as in effect at the time in question.
“Plan”
means any employee benefit plan within the meaning of Section 3(3) of ERISA, maintained for employees of the Borrower or any Subsidiary,
or any such plan to which the Borrower or any Subsidiary is required to contribute on behalf of any of its employees or with respect
to which the Borrower has any liability.
“Platform”
means Debt Domain, Intralinks, Syndtrak, DebtX or a substantially similar electronic transmission system.
“Prime
Rate” means the rate of interest per annum last quoted by The Wall Street Journal as the “Prime Rate” in
the U.S. or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal
Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or,
if such rate is no longer quoted therein, any similar rate quoted therein (as determined by the Administrative Agent) or any similar
release by the Federal Reserve Board (as determined by the Administrative Agent). Any change in the Prime Rate shall take effect at the
opening of business on the day such change is publicly announced or quoted as being effective.
“Prohibited
Transaction” has the meaning assigned to such term in Section 406 of ERISA and Section 4975(c) of the Code.
“Property”
means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, including cash, securities,
accounts and contract rights.
“Proposed
Borrowing Base” has the meaning assigned to such term in Section 2.07(c)(i).
“Proposed
Borrowing Base Notice” has the meaning assigned to such term in Section 2.07(c)(ii).
“Proved
Reserves” means oil and gas reserves that, in accordance with Petroleum Industry Standards, are classified as both “Proved
Reserves” and one of the following: (a) “Developed Producing Reserves”, (b) “Developed Non-Producing Reserves”
or (c) “Undeveloped Reserves”.
“PTE”
means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time
to time.
“PV-10”
means, on any date of determination, with respect to any Proved Reserves expected to be produced from any Borrowing Base Properties,
the net present value, discounted at 10% per annum, of the future net revenues expected to accrue to the Borrower’s and the Loan
Parties’ collective interests in such Proved Reserves during the remaining expected economic lives of such reserves, calculated
in accordance with the most recent bank price deck provided to the Borrower by the Administrative Agent.
“QFC”
has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C.
5390(c)(8)(D).
“QFC
Credit Support” has the meaning assigned to such term in Section 12.19.
“Qualified
ECP Guarantor” means, in respect of any Swap Obligation, each Loan Party that has total assets exceeding $10,000,000 at the
time the relevant guaranty agreement or the grant of the relevant Lien becomes effective or such other Person as constitutes an “eligible
contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder.
“RCRA”
has the meaning assigned to such term within the definition of “Environmental Laws.”
“Recipient”
means, as applicable, (a) the Administrative Agent, (b) any Lender, or (c) the Issuing Bank, or any combination thereof (as the context
requires).
“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.
“Redetermination
Date” means, with respect to any Scheduled Redetermination or any Interim Redetermination, the date that the redetermined Borrowing
Base related thereto becomes effective pursuant to Section 2.07(d).
“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
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 to such term in Section 8.10(a).
“Removal
Effective Date” has the meaning set forth in Section 11.06(b).
“Reportable
Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30-day notice period
has been waived.
“Required
Lenders” means, at any time while no Loans or LC Exposure is outstanding, Lenders having at least sixty-six and two thirds
percent (66-2/3%) of the Aggregate Maximum Credit Amounts; and at any time while any Loans or LC Exposure is outstanding, Lenders holding
at least sixty-six and two thirds percent (66-2/3%) of the outstanding aggregate principal amount of the Loans or participation interests
in Letters of Credit (without regard to any sale by a Lender of a participation in any Loan under Section 12.04(c)); provided
that the Maximum Credit Amounts and the principal amount of the Loans and participation interests in Letters of Credit of the Defaulting
Lenders (if any) shall be excluded from the determination of Required Lenders.
“Reserve
Report” means a report, in form and substance reasonably satisfactory to the Administrative Agent, setting forth, as of the
dates set forth in Section 8.12(a) (or such other date in the event of an Interim Redetermination), the Proved Reserves attributable
to the Oil and Gas Properties of the Borrower and the other Loan Parties 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 economic assumptions consistent with the Administrative Agent’s lending requirements at the time.
“Reserve
Report Certificate” has the meaning set forth in Section 8.12(c).
“Resignation
Effective Date” has the meaning set forth in Section 11.06(a).
“Resolution
Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“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 or return of capital (whether in cash, securities or other Property) with
respect to any Equity Interests in any Person, 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, conversion, cancellation or termination of
any such Equity Interests.
“Revolving
Credit Exposure” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s
Loans and its LC Exposure at such 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.
“Sanctioned
Country” means, at any time, a country, region or territory which is itself the subject or target of any Sanctions (as of the
Effective Date, Crimea, Cuba, Iran, North Korea, Sudan and Syria).
“Sanctioned
Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC or
the U.S. Department of State, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person owned or controlled
by any such Person or Persons described in the foregoing clauses (a) or (b).
“Sanctions”
means all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by the U.S. government,
including those administered by OFAC or the U.S. Department of State.
“SBA”
means the U.S. Small Business Administration.
“Scheduled
Redetermination” has the meaning assigned to such term in Section 2.07(b).
“Scheduled
Redetermination Date” means the date on which a Borrowing Base that has been redetermined pursuant to a Scheduled Redetermination
becomes effective as provided in Section 2.07(d).
“SEC”
means the Securities and Exchange Commission or any successor Governmental Authority.
“Secured
Cash Management Agreement” means an agreement related to Cash Management Services between (x) any Loan Party and (y) a Secured
Cash Management Provider.
“Secured
Cash Management Provider” means, with respect to any agreement related to Cash Management Services, a Lender, an Affiliate
of a Lender, the Administrative Agent or an Affiliate of the Administrative Agent who is the counterparty to any such agreement related
to Cash Management Services.
“Secured
Obligations” means any and all amounts owing or to be owing by any Loan Party (x) to the Administrative Agent, any Issuing
Bank or any Lender under any Loan Document, (y) to any Secured Swap Provider under any Secured Swap Agreement or Secured Cash Management
Provider under any Secured Cash Management Agreement and (z) all renewals, extensions and/or rearrangements of any of the foregoing,
in each case, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now
existing or hereafter arising (including interest accruing after the maturity of the Loans and LC Disbursements and interest accruing
after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding); provided that solely
with respect to any Guarantor that is not an “eligible contract participant” under the Commodity Exchange Act, Excluded Swap
Obligations of such Guarantor shall in any event be excluded from “Secured Obligations” owing by such Guarantor.
“Secured
Parties” means, collectively, the Administrative Agent, each Lender, each Issuing Bank, each Secured Cash Management Provider,
each Secured Swap Provider, each Indemnitee, each other Agent, and any other Person owed Secured Obligations and “Secured Party”
means any of them individually.
“Secured
Swap Agreement” means a Swap Agreement between (x) any Loan Party and (y) a Secured Swap Provider.
“Secured
Swap Provider” means, with respect to any Swap Agreement, (a) each Swap Lender, and (b) each other Approved Counterparty party
to the Intercreditor Agreement (with respect to the Mortgages) who is a counterparty to any such Swap Agreement with a Loan Party.
“Securities
Act” means the Securities Act of 1933.
“Security
Instruments” means the Guaranty Agreement, Mortgages and any security agreements, deeds of trust and other agreements, instruments
or certificates described or referred to in Exhibit F, and any and all other agreements, instruments, consents or certificates
now or hereafter executed and delivered by the Borrower, the other Loan Parties or any other Person (other than Swap Agreements with
Secured Swap Providers or participation or similar agreements between any Lender and any other lender or creditor with respect to any
Secured Obligations pursuant to this Agreement) in connection with, or as security for the payment or performance of the Secured Obligations,
the Notes, this Agreement, or reimbursement obligations under the Letters of Credit, as such agreements may be amended, modified, supplemented
or restated from time to time.
“Solvent”
means, with respect to any Person as of any date, that (a) the value of the assets of such Person and its Subsidiaries, taken as a whole,
(both at fair value and present fair saleable value) is, on the date of determination, greater than the total amount of liabilities (including
contingent and unliquidated liabilities) of such Person and its Subsidiaries, taken as a whole, as of such date, (b) as of such date,
such Person and its Subsidiaries, taken as a whole, are able to pay their liabilities as such liabilities mature, and (c) as of such
date, such Person and its Subsidiaries, taken as a whole, do not have unreasonably small capital given the nature of their business.
In computing the amount of contingent or unliquidated liabilities at any time, such liabilities shall be computed at the amount that,
in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
“Specified
Financial Covenants” has the meaning assigned to such term in Section 10.03(a).
“Subsidiary”
means as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening
of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are
at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or
both, by such Person. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this
Agreement shall refer to a direct or indirect Subsidiary or Subsidiaries of the Borrower.
“Supported
QFC” has the meaning assigned to such term in Section 12.19.
“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 (including any agreement,
contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act); provided
that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors,
officers, employees or consultants of any Loan Party shall be a Swap Agreement.
“Swap
Lender” means, with respect to any Swap Agreement, (a) a Lender or an Affiliate of a Lender who is the counterparty to any
such Swap Agreement with a Loan Party, and (b) any Person who was a Lender or an Affiliate of a Lender at time when such Person entered
into any such Swap Agreement who is a counterparty to any such Swap Agreement with a Loan Party.
“Swap
Obligation” means, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction
that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act or any rules or regulations
promulgated thereunder.
“Swap
Termination” means any Swap Agreement, which has been given value in the then effective Borrowing Base, (a) is terminated,
unwound or monetized, or (b) is not fully performed for any reason by the counterparty thereto (unless such counterparty is a non-Defaulting
Lender or an Affiliate of a non-Defaulting Lender).
“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 indebtedness 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 all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees
or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Termination
Date” means the earlier of the Maturity Date and the date of termination of the Commitments.
“Test
Period” means, at any time, the four consecutive fiscal quarters of the Borrower then last ended (in each case taken as one
accounting period) for which financial statements have been or are required to be delivered pursuant to this Agreement; provided,
however, for purposes of the calculation of the applicable components of the financial covenant calculations contained herein for the
Test Period ending March 31, 2022, such amounts shall be annualized by taking the results of the fiscal quarter then ending, and multiplying
them by four (4); for the Test Period ending June 30, 2022, such amounts shall be annualized by taking the results of the two (2) fiscal
quarters then ending, and multiplying them by two (2); and for the Test Period ending September 30, 2022, such amounts shall be annualized
by taking the results of the three (3) fiscal quarters then ending, and multiplying them by four (4) and dividing them by three (3).
“Total
Debt” means, at any date, all Debt described in clauses (a), (b), (d), and (e) of the definition thereof (and, to the extent
relating to Debt of the types described in such clauses, Debt described in clause (g) of the definition thereof), in each case of the
Borrower and its Consolidated Subsidiaries on a consolidated basis, less the LC Exposure.
“Total
Debt to Capitalization Ratio” means, as of any date of determination, the ratio of (a) total Debt of Borrower and its Subsidiaries
as of such date, to (b) the sum of (i) the total consolidated members’ equity of Borrower and its Subsidiaries as of such
date determined on a consolidated basis in accordance with GAAP as of such date, plus (ii) total Debt of Borrower and its 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
to which it is a party, the borrowing of Loans, the use of the proceeds thereof and the issuance of Letters of Credit hereunder, the
execution, delivery and performance by the Borrower of the Initial Acquisition, the Borrower’s grant of the security interests
and provision of collateral under the Security Instruments, and Borrower’s grant of Liens on Mortgaged Properties (if applicable)
and other Properties pursuant to the Security Instruments, and (b) each other Loan Party, the execution, delivery and performance by
such Loan Party of each Loan Document to which it is a party, the guaranteeing of the Secured Obligations and the other obligations under
the Guaranty Agreement by such Loan Party and such Loan Party’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 (if applicable) and other Properties pursuant
to the Security Instruments.
“UK
Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to
time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook
(as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions
and investment firms, and certain affiliates of such credit institutions or investment firms.
“UK
Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the
resolution of any UK Financial Institution.
“U.S.
Person” means a Person that is a “United States person” as defined in Section 7701(a)(30) of the Code.
“U.S.
Special Resolution Regimes” has the meaning assigned to such term in Section 12.19.
“U.S.
Tax Compliance Certificate” has the meaning assigned to such term in Section 5.03(g)(ii)(B)(3).
“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, the Guarantors and/or one or more of the Wholly-Owned
Subsidiaries.
“Withholding
Agent” means any Loan Party or the Administrative Agent.
“Write-Down
and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such
EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and
conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the
applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial
Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities
or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had
been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation
that are related to or ancillary to any of those powers.
Section
1.03 [Reserved].
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” shall be deemed to be followed by the phrase “without
limitation”, and the word “or” is not exclusive. 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, restated 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” and “until” means “to but excluding” and the word
“through” means “to and including” 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; Changes in GAAP.
(a)
Accounting Terms. Except as otherwise expressly provided herein, all accounting terms not otherwise defined herein shall be construed
in conformity with GAAP. Financial statements and other information required to be delivered by the Borrower to the Lenders pursuant
to Sections 8.01(a) and 8.01(b) shall be prepared in accordance with GAAP as in effect at the time of such preparation.
Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the computation of any financial covenant)
contained herein, Debt of the Borrower and its Subsidiaries shall be deemed to be carried at 100% of the outstanding principal amount
thereof, and the effects of FASB ASC 825 and FASB ASC 470-20 on financial liabilities shall be disregarded.
(b)
Changes in GAAP. If the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof
to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such
provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof,
then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become
effective until such notice shall have been withdrawn or such provision amended in accordance herewith.
Section
1.06 Timing of Payment or Performance. When the payment of any obligation or the performance of any covenant, duty or obligation
is stated to be due or performance required on a day which is not a Business Day, the date of such payment or performance shall extend
to the immediately succeeding Business Day.
Section
1.07 Rates. The Administrative Agent does not warrant or accept responsibility for, and shall not have any liability with respect
to, the administration, submission or any other matter related to any rate or replacement rate hereunder.
Section
1.08 Divisions. For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware
law (or any comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person
becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original
Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized
on the first date of its existence by the holders of its Equity Interests at such time.
Section
1.09 Letter of Credit Amounts. Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed
to be the amount of such Letter of Credit available to be drawn at such time; provided that with respect to any Letter of Credit that,
by its terms or the terms of any Letter of Credit Agreement related thereto, provides for one or more automatic increases in the available
amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum amount of such Letter of Credit after giving effect
to all such increases, whether or not such maximum amount is available to be drawn at such time.
ARTICLE
II
The Credits
Section
2.01 Commitments. Subject to the terms and conditions set forth herein and relying upon the representations and warranties herein
set forth, each Lender severally agrees to make Loans to the Borrower during the Availability Period in an aggregate principal amount
that will not result in (a) such Lender’s Revolving Credit Exposure exceeding such Lender’s Commitment or (b) the total Revolving
Credit Exposures exceeding the total Commitments. Within the foregoing limits and subject to the terms and conditions set forth herein,
the Borrower may borrow, repay and reborrow the Loans.
Section
2.02 Loans and Borrowings.
(a)
Borrowings; Several Obligations. Each Loan shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably
in accordance with their respective Commitments. 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)
[Reserved].
(c)
Minimum Amounts; Limitation on Number of Borrowings. At the time that each ABR Borrowing is made, such Borrowing shall be in an
aggregate amount that is an integral multiple of $50,000 and not less than $100,000; provided that an ABR Borrowing may be in
an aggregate amount that is equal to the entire unused balance of the total Commitments or that is required to finance the reimbursement
of an LC Disbursement as contemplated by Section 2.08(e).
(d)
Notes. If requested by a Lender, the Loans made by such Lender shall be evidenced by a single Note of the Borrower, dated, in
the case of (i) any Lender party hereto 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 Maximum Credit Amount as in effect on such date, and otherwise duly completed. Upon request from a Lender, in the event
that any such Lender’s Maximum Credit Amount increases or decreases for any reason (whether pursuant to Section 2.06, 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 Maximum Credit Amount after giving effect to such increase or decrease,
and otherwise duly completed. The date, amount, and interest rate of each Loan made by such Lender, and all payments made on account
of the principal thereof, may be recorded by such Lender on its books for its Note, and, prior to any transfer, may be endorsed 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 Borrowings. To request a Borrowing, the Borrower shall notify the Administrative Agent of such request by telephone
or by e-mail in the case of an ABR Borrowing, not later than 11:00 a.m., central standard time, on the date of the proposed Borrowing;
provided that no such notice shall be required for any deemed request of an ABR Borrowing to finance the reimbursement of an LC
Disbursement as provided in Section 2.08(e). Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed
promptly by hand delivery, fax or other electronic communication to the Administrative Agent of a written Borrowing Request in substantially
the form of Exhibit B and signed by the Borrower, it being understood that the Administrative Agent may rely on the authority
of any individual making such a telephonic request without the necessity of receipt of such written confirmation. Each such telephonic
and written Borrowing Request shall specify the following information in compliance with Section 2.02:
(i)
the aggregate amount of the requested Borrowing;
(ii)
the date of such Borrowing, which shall be a Business Day;
(iii)
[reserved];
(iv)
[reserved];
(v)
the amount of the then effective Borrowing Base, the current total Revolving Credit Exposures (without regard to the requested Borrowing)
and the pro forma total Revolving Credit Exposures (giving effect to the requested Borrowing);
(vi)
the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements
of Section 2.05; and
(vii)
the Consolidated Cash Balance (without regard to the requested Borrowing) and the pro forma Consolidated Cash Balance (giving pro forma
effect to the requested Borrowing and any use of proceeds thereof on the date such requested Borrowing will be funded).
Each
Borrowing Request shall constitute a representation (1) that the amount of the requested Borrowing shall not cause the total Revolving
Credit Exposures to exceed the total Commitments (i.e., the lesser of the Aggregate Maximum Credit Amounts and the then effective Borrowing
Base) and (2) that after giving pro forma effect to the requested Borrowing and any use of proceeds thereof on the date such requested
Borrowing will be funded, the Loan Parties shall not have any Excess Cash.
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 [Reserved]
Section
2.05 Funding of Borrowings.
(a)
Funding by the 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 2:00 p.m., central standard 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 maintained with the Administrative Agent and designated
by the Borrower in the applicable Borrowing Request; provided that ABR Loans made to finance the reimbursement of an LC Disbursement
as provided in Section 2.08(e) shall be remitted by the Administrative Agent to the applicable Issuing Bank. 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 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, and the Administrative Agent has disbursed
said amount to Borrower, 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 Termination and Reduction of Aggregate Maximum Credit Amounts.
(a)
Scheduled Termination of Commitments. Unless previously terminated, the Commitments shall terminate on the Maturity Date. If at
any time the Aggregate Maximum Credit Amounts or the Borrowing Base is terminated or reduced to zero, then the Commitments shall terminate
on the effective date of such termination or reduction.
(b)
Optional Termination and Reduction of Aggregate Maximum Credit Amounts.
(i)
The Borrower may at any time terminate, or from time to time reduce, the Aggregate Maximum Credit Amounts; provided that (A) each
reduction of the Aggregate Maximum Credit Amounts shall be in an amount that is an integral multiple of $50,000 and not less than $500,000
and (B) the Borrower shall not terminate or reduce the Aggregate Maximum Credit Amounts if, after giving effect to any concurrent prepayment
of the Loans in accordance with Section 3.04(b), the total Revolving Credit Exposures would exceed the total Commitments.
(ii)
The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Aggregate Maximum Credit Amounts under
Section 2.06(b)(i) at least three Business Days prior to the effective date of such termination or reduction, specifying such
election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders
of the contents thereof. Any election by the Borrower to terminate or reduce the Aggregate Maximum Credit Amounts pursuant to a notice
delivered by the Borrower pursuant to this Section 2.06(b)(ii) may be made to be contingent upon the consummation of a refinancing
or effectiveness of other credit facilities and such notice may otherwise be extended or revoked. Any termination or reduction of the
Aggregate Maximum Credit Amounts shall be permanent and may not be reinstated. Each reduction of the Aggregate Maximum Credit Amounts
shall be made ratably among the Lenders in accordance with each Lender’s Applicable Percentage.
Section
2.07 Borrowing Base.
(a)
Initial Borrowing Base. For the period from and including the Effective Date to but excluding the first Redetermination Date,
the amount of the Borrowing Base shall be $15,000,000. Notwithstanding the foregoing, the Borrowing Base may be subject to further adjustments
from time to time pursuant to the Borrowing Base Adjustment Provisions.
(b)
Scheduled and Interim Redeterminations. The Borrowing Base shall be redetermined on a semi-annual basis in accordance with this
Section 2.07 (each such redetermination, a “Scheduled Redetermination”). Subject to Section 2.07(d),
such redetermined Borrowing Base shall become effective and applicable to the Borrower, the Administrative Agent, the Issuing Bank and
the Lenders on or about April 1st and October 1st of each year, as applicable, commencing April 1, 2022. In addition,
(i) the Borrower may, by notifying the Administrative Agent thereof one time between any two successive Scheduled Redeterminations, and
(ii) the Administrative Agent may, at the direction of the Required Lenders, by notifying the Borrower thereof one time between any two
successive Scheduled Redeterminations, each elect to cause the Borrowing Base to be redetermined (an “Interim Redetermination”)
in accordance with this Section 2.07.
(c)
Scheduled and Interim Redetermination Procedure. Scheduled Redetermination and each Interim Redetermination shall be effectuated
as follows:
(i)
Upon receipt by the Administrative Agent of (A) the applicable Reserve Report and related Reserve Report Certificate and (B) such other
reports, data and supplemental information, including, without limitation, the information provided pursuant to Section 8.01 (as
applicable) and Section 8.12, as may, from time to time, be reasonably requested by the Administrative Agent or the Majority Lenders
(the Reserve Report, related Reserve Report Certificate and such other reports, data and supplemental information being the “Engineering
Reports”), the Administrative Agent shall evaluate the information contained in the Engineering Reports and shall, in its sole
discretion, propose a new Borrowing Base (the “Proposed Borrowing Base”) based upon any information and such other
information (including, without limitation, the status of title information with respect to the Oil and Gas Properties as described in
the Engineering Reports and the existence of any other Debt, the Loan Parties’ other assets, liabilities, fixed charges, cash flow,
business properties, prospects, management and ownership, hedged and unhedged exposure to price, price and production scenarios, interest
rate and operating cost changes) as the Administrative Agent deems appropriate in its sole discretion and consistent with its oil and
gas lending criteria as it exists at the particular time. In no event shall the Proposed Borrowing Base exceed the Aggregate Maximum
Credit Amounts.
(ii)
The Administrative Agent shall notify the Borrower and the Lenders in writing of the Proposed Borrowing Base (the “Proposed
Borrowing Base Notice”):
(A)
in the case of a Scheduled Redetermination (1) if the Administrative Agent shall have received the Engineering Reports required to be
delivered by the Borrower pursuant to Section 8.12(a) in a timely and complete manner, then on or before the fifteenth (15th)
day following the date of delivery (or such later date, within 30 days thereof, to which the Borrower and the Administrative Agent agree)
or (2) if the Administrative Agent shall not have received the Engineering Reports required to be delivered by the Borrower pursuant
to Section 8.12(a) in a timely and complete manner, then promptly after the Administrative Agent has received complete Engineering
Reports from the Borrower and has had a reasonable opportunity to determine the Proposed Borrowing Base in accordance with Section
2.07(c)(i); and
(B)
in the case of an Interim Redetermination, on or about the thirtieth (30th) day after the Administrative Agent has received
the required Engineering Reports (unless otherwise agreed by the Borrower).
(iii)
Any Proposed Borrowing Base that would (A) increase the Borrowing Base then in effect must be approved by all Lenders (other than Defaulting
Lenders) and (B) decrease or maintain the Borrowing Base then in effect must be approved or be deemed to have been approved by the Required
Lenders, in each case, as provided in this Section 2.07(c)(iii). Such decisions will be made by each Lender based upon such criteria
(including, without limitation, the status of title information with respect to the Oil and Gas Properties as described in the Engineering
Reports and the existence of any other Debt, the Loan Parties’ other assets, liabilities, fixed charges, cash flow, business properties,
prospects, management and ownership, hedged and unhedged exposure to price, price and production scenarios, interest rate and operating
cost changes) as such Lender deems appropriate in its sole discretion and consistent with its oil and gas lending criteria as it exists
at the particular time. Upon receipt of the Proposed Borrowing Base Notice, each Lender shall have fifteen (15) days to agree with the
Proposed Borrowing Base or disagree with the Proposed Borrowing Base by proposing an alternate Borrowing Base. If at the end of such
fifteen (15) days, any Lender has not communicated its approval or disapproval in writing to the Administrative Agent, such silence shall
be deemed to be (A) if the Proposed Borrowing Base would increase the Borrowing Base then in effect, a disapproval of the Proposed Borrowing
Base, or (B) if the Proposed Borrowing Base would maintain or decrease the Borrowing Base then in effect, an approval of the Proposed
Borrowing Base. If, at the end of such fifteen (15) day period, all of the Lenders (other than Defaulting Lenders), in the case of a
Proposed Borrowing Base that would increase the Borrowing Base then in effect, or the Required Lenders, in the case of a Proposed Borrowing
Base that would decrease or maintain the Borrowing Base then in effect, have approved or deemed to have approved, as aforesaid, then
the Proposed Borrowing Base shall become the Borrowing Base, effective on the date specified in Section 2.07(d). If, however,
at the end of such fifteen (15) day period, all of the Lenders (other than Defaulting Lenders) or the Required Lenders, as applicable,
have not approved or deemed to have approved the Proposed Borrowing Base as indicated above, then the Administrative Agent shall promptly
thereafter poll the Lenders (other than Defaulting Lenders) to ascertain the highest Borrowing Base then acceptable to all of the Lenders
(in the case of any increase to the Borrowing Base) or a number of Lenders sufficient to constitute the Required Lenders (in any other
case) and such amount shall become the new Borrowing Base, effective on the date specified in Section 2.07(d).
(d)
Effectiveness of a Redetermined Borrowing Base. After a redetermined Borrowing Base is approved or is deemed to have been approved
by all of the Lenders (other than Defaulting Lenders) or the Required Lenders, as applicable, pursuant to Section 2.07(c)(iii),
the Administrative Agent shall notify the Borrower and the Lenders in writing of the amount of the redetermined Borrowing Base (the “New
Borrowing Base Notice”), and such amount shall become the new Borrowing Base, effective and applicable to the Borrower, the
Administrative Agent, the Issuing Bank and the Lenders:
(i)
in the case of a Scheduled Redetermination, (A) if the Administrative Agent shall have received the Engineering Reports required to be
delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and complete manner, then on or about April 1st
or October 1st of each year, as applicable (or such later time as (x) the Borrower may agree upon request of the Administrative
Agent or (y) the Majority Lenders may agree upon the request of the Borrower), following such notice, or (B) if the Administrative Agent
shall not have received the Engineering Reports required to be delivered by the Borrower pursuant to Section 8.12(a) and (c)
in a timely and complete manner, then on the Business Day next succeeding delivery of such New Borrowing Base Notice; and
(ii)
in the case of an Interim Redetermination, on the Business Day next succeeding delivery of such New Borrowing Base Notice.
Such
amount shall then become the Borrowing Base until the next Scheduled Redetermination Date, the next Interim Redetermination Date or the
next adjustment to the Borrowing Base under the Borrowing Base Adjustment Provisions, whichever occurs first. Notwithstanding the foregoing,
no Scheduled Redetermination or Interim Redetermination shall become effective until the New Borrowing Base Notice related thereto is
received by the Borrower.
(e)
Borrowing Base Reductions.
(i)
If the sum of (A) the Borrowing Base value of the aggregate of dispositions of Oil and Gas Properties and Equity Interests occurring
in any period between Scheduled Redeterminations, plus (B) the Borrowing Base value of Swap Terminations occurring in the same
period exceeds 5% of the then effective Borrowing Base, then the Borrowing Base shall be reduced in an amount determined by the Administrative
Agent in its discretion in accordance with the standards set forth in Section 2.07(a) taking into account both Borrowing Base
value or attributed value of such dispositions and the Borrowing Base value given to such Swap Agreements. Any redetermination of the
Borrowing Base pursuant to this Section 2.07(e)(i) shall not be considered an Interim Redetermination requested by the Administrative
Agent within the meaning of Section 2.07(b).
(ii)
The Borrowing Base may be reduced as provided in Section 8.13(c).
Section
2.08 Letters of Credit.
(a)
General. Subject to the terms and conditions set forth herein, the Borrower may request the issuance of dollar denominated Letters
of Credit for its own account or for the account of any other Loan Party, in a form reasonably acceptable to the Administrative Agent
and the applicable Issuing Bank, at any time and from time to time during the period from the Effective Date until the day which is five
(5) Business Days prior to the end of the Availability Period; provided that the Borrower may not request the issuance, amendment,
renewal or extension of Letters of Credit hereunder if a Borrowing Base Deficiency exists at such time or would exist as a result thereof.
In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter
of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, the applicable Issuing Bank
relating to any Letter of Credit, the terms and conditions of this Agreement shall control.
(b)
Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or fax (or transmit by electronic communication,
if arrangements for doing so have been approved by the applicable Issuing Bank) to the applicable Issuing Bank and the Administrative
Agent (not less than five (5) Business Days, or such shorter period as may be agreed to by the Issuing Bank, in advance of the requested
date of issuance, amendment, renewal or extension) a notice:
(i)
requesting the issuance of a Letter of Credit or identifying the Letter of Credit to be amended, renewed or extended;
(ii)
specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day);
(iii)
specifying the date on which such Letter of Credit is to expire (which shall comply with Section 2.08(c));
(iv)
specifying the amount of such Letter of Credit;
(v)
specifying the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew
or extend such Letter of Credit; and
(vi)
specifying the amount of the then effective Borrowing Base and whether a Borrowing Base Deficiency exists at such time, the current total
Revolving Credit Exposures (without regard to the requested Letter of Credit or the requested amendment, renewal or extension of an outstanding
Letter of Credit) and the pro forma total Revolving Credit Exposures (giving effect to the requested Letter of Credit or the requested
amendment, renewal or extension of an outstanding Letter of Credit).
Each
notice shall constitute a representation that after giving effect to the requested issuance, amendment, renewal or extension, as applicable,
(i) the LC Exposure shall not exceed the LC Commitment and (ii) the total Revolving Credit Exposures shall not exceed the total Commitments
(i.e. the lesser of the Aggregate Maximum Credit Amounts and the then effective Borrowing Base).
If
requested by the applicable Issuing Bank, the Borrower also shall submit a letter of credit application on the Issuing Bank’s standard
form in connection with any request for a Letter of Credit and shall guarantee the reimbursement of any Letter of Credit issued hereunder.
(c)
Expiration Date. Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year
after the date of the issuance of such Letter of Credit or, if a Letter of Credit is issued in favor of the Texas Railroad Commission
or any similar regulatory or governing agency of another state (the “Specified L/Cs”), the date fifteen months after
the date of issuance of such Letter of Credit (or, in the case of any renewal or extension of a Letter of Credit, one year or, in the
case of the Specified L/Cs, fifteen (15) months after such renewal or extension), in each case unless consented to by the relevant Issuing
Bank and the Administrative Agent, and (ii) the date that is five Business Days prior to the Maturity Date.
(d)
Participations. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and
without any further action on the part of the applicable Issuing Bank or the Lenders, such Issuing Bank hereby grants to each Lender,
and each Lender hereby acquires from such Issuing Bank, a participation in such Letter of Credit equal to such Lender’s Applicable
Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing,
each Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of such Issuing Bank, such
Lender’s Applicable Percentage of each LC Disbursement made by such Issuing Bank and not reimbursed by the Borrower on the date
due as provided in Section 2.08(e), or of any reimbursement payment required to be refunded to the Borrower for any reason. Each
Lender acknowledges and agrees that its obligation to acquire participations pursuant to this Section 2.08(d) in respect of Letters
of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or
extension of any Letter of Credit or the occurrence and continuance of a Default, the existence of a Borrowing Base Deficiency or reduction
or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.
(e)
Reimbursement. If an Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse
such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 2:00 p.m., central
standard time, on the Business Day immediately following the later of the Business Day on which such LC Disbursement is made and the
Business Day the Borrower receives notice thereof; provided that, unless the Borrower has notified the relevant Issuing Bank and
Administrative Agent that it will, and does, reimburse such LC Disbursement by the required date and time, the Borrower shall, subject
to the conditions to Borrowing set forth herein, be deemed to have requested, and the Borrower does hereby request under such circumstances,
that such payment be financed with an ABR Borrowing in an equivalent amount and, to the extent so financed, the Borrower’s obligation
to make such payment shall be discharged and replaced by the resulting ABR Borrowing. If the Borrower fails to make such payment when
due, the Administrative Agent shall notify each Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect
thereof and such Lender’s Applicable Percentage thereof. Promptly following receipt of such notice, each Lender shall pay to the
Administrative Agent its Applicable Percentage of the payment then due from the Borrower, in the same manner as provided in Section
2.05 with respect to Loans made by such Lender (and Section 2.05 shall apply, mutatis mutandis, to the payment obligations
of the Lenders), and the Administrative Agent shall promptly pay to the applicable Issuing Bank the amounts so received by it from the
Lenders. Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this Section 2.08(e),
the Administrative Agent shall distribute such payment to the applicable Issuing Bank or, to the extent that Lenders have made payments
pursuant to this Section 2.08(e) to reimburse the applicable Issuing Bank, then to such Lenders and the Issuing Bank as their
interests may appear. Any payment made by a Lender pursuant to this section to reimburse the Issuing Bank for any LC Disbursement (other
than the funding of ABR Loans as contemplated above) shall not constitute a Loan and shall not relieve the Borrower of its obligation
to reimburse such LC Disbursement.
(f)
Obligations Absolute. The Borrower’s obligation to reimburse LC Disbursements as provided in Section 2.08(e) shall
be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any
and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit, any Letter of
Credit Agreement or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit
proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii)
payment by an Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms
of such Letter of Credit or any Letter of Credit Agreement, or (iv) any other event or circumstance whatsoever, whether or not similar
to any of the foregoing, that might, but for the provisions of this Section 2.08(f), constitute a legal or equitable discharge
of, or provide a right of setoff against, the Borrower’s obligations hereunder. Neither the Administrative Agent, the Lenders nor
any Issuing Bank, nor any of their Related Parties shall have any liability or responsibility by reason of or in connection with the
issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances
referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft,
notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder),
any error in interpretation of technical terms or any consequence arising from causes beyond the control of any Issuing Bank; provided
that the foregoing shall not be construed to excuse the applicable Issuing Bank from liability to the Borrower to the extent of any
direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted
by applicable law) suffered by the Borrower that are caused by such Issuing Bank’s failure to exercise care when determining whether
drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or willful misconduct on the part of the applicable Issuing Bank (as finally determined by a court
of competent jurisdiction), such Issuing Bank shall be deemed to have exercised all requisite care in each such determination. In furtherance
of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear
on their face to be in substantial compliance with the terms of a Letter of Credit, an Issuing Bank may, in its sole discretion, either
accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information
to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms
of such Letter of Credit.
(g)
Disbursement Procedures. The applicable Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting
to represent a demand for payment under a Letter of Credit. The applicable Issuing Bank shall promptly notify the Administrative Agent
and the Borrower by telephone (confirmed by fax or other electronic transmission) of such demand for payment and whether the Issuing
Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall
not relieve the Borrower of its obligation to reimburse the applicable Issuing Bank and the Lenders with respect to any such LC Disbursement.
(h)
Interim Interest. If an Issuing Bank shall make any LC Disbursement, then, until the Borrower shall have reimbursed such Issuing
Bank for such LC Disbursement (either with its own funds or a Borrowing under Section 2.08(e)), the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Borrower reimburses
such LC Disbursement, at the rate per annum then applicable to ABR Loans. Interest accrued pursuant to this Section 2.08(h) shall
be for the account of such Issuing Bank, except that interest accrued on and after the date of payment by any Lender pursuant to Section
2.08(e) to reimburse such Issuing Bank shall be for the account of such Lender to the extent of such payment.
(i)
Replacement of an Issuing Bank. An Issuing Bank may be replaced at any time by written agreement among the Borrower, the Administrative
Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such replacement
of the Issuing Bank. At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the
account of the replaced Issuing Bank pursuant to Section 3.05(b). From and after the effective date of any such replacement, (i)
the successor Issuing Bank shall have all the rights and obligations of the replaced Issuing Bank under this Agreement with respect to
Letters of Credit to be issued thereafter and (ii) references herein to the term “Issuing Bank” shall also be deemed to refer
to such successor. After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall
continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it
prior to such replacement, but shall not be required to issue additional Letters of Credit.
(j)
Cash Collateralization.
(i)
If any Event of Default shall occur and be continuing and the Borrower receives notice from the Administrative Agent or the Majority
Lenders demanding the deposit of Cash Collateral pursuant to this Section 2.08(j), then the Borrower shall deposit, in an account
with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Secured Parties, an amount in cash
equal to the LC Exposure. If the Borrower is required to pay to the Administrative Agent the excess attributable to an LC Exposure in
connection with any prepayment pursuant to Section 3.04(c), the Borrower shall deposit in such an account an amount equal to the
amount of such excess as provided in Section 3.04(c), as of such date plus any accrued and unpaid interest thereon. The obligation
to deposit such Cash Collateral pursuant to the two preceding sentences shall become effective immediately, and such deposit shall become
immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to
the Borrower or any Subsidiary described in Section 10.01(h) or Section 10.01(i).
(ii)
At any time that there shall exist a Defaulting Lender, within one Business Day following the written request of the Administrative Agent
or any Issuing Bank (with a copy to the Administrative Agent) the Borrower shall Cash Collateralize the Issuing Banks’ Fronting
Exposure with respect to such Defaulting Lender (determined after giving effect to Section 4.05(a)(iv) and any Cash Collateral
provided by such Defaulting Lender) in an amount not less than the Minimum Collateral Amount.
(A)
Grant of Security Interest. The Borrower, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby
grants to the Administrative Agent, for the benefit of the Issuing Banks, and agrees to maintain, a first priority security interest
in all such Cash Collateral as security for the Defaulting Lenders’ LC Exposure, to be applied pursuant to clause (B) below. If
at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative
Agent and the Issuing Banks as herein provided, or that the total amount of such Cash Collateral is less than the Minimum Collateral
Amount, the Borrower will, promptly upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash
Collateral in an amount sufficient to eliminate such deficiency (after giving effect to any Cash Collateral provided by the Defaulting
Lender).
(B)
Application. Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under this Section
2.08(j) or Section 4.05 in respect of Letters of Credit shall be applied to the satisfaction of the Defaulting Lender’s
LC Exposure (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) for which the
Cash Collateral was so provided, prior to any other application of such property as may otherwise be provided for herein.
(C)
Termination of Requirement. Cash Collateral (or the appropriate portion thereof) provided to reduce any Issuing Bank’s Fronting
Exposure shall no longer be required to be held as Cash Collateral pursuant to this Section 2.08(j) following (i) the elimination
of the applicable Fronting Exposure (including by the termination of Defaulting Lender status of the applicable Lender) or (ii) the determination
by the Administrative Agent and each Issuing Bank that there exists excess Cash Collateral; provided that, subject to Section
4.05 the Person providing Cash Collateral and each Issuing Bank may agree that Cash Collateral shall be held to support future anticipated
Fronting Exposure or other obligations and provided further that to the extent that such Cash Collateral was provided by the Borrower,
such Cash Collateral shall remain subject to the security interest granted pursuant to the Loan Documents.
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 Termination Date.
Section
3.02 Interest.
(a)
ABR Loans. The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate plus the Applicable Margin,
but in no event to exceed the Highest Lawful Rate.
(b)
[Reserved].
(c)
Post-Default Rate. Notwithstanding the foregoing, if (i) an Event of Default specified in Sections 10.01(a), 10.01(b),
10.01(h) or 10.01(i) has occurred and is continuing, or (ii) the Required Lenders so elect (or direct the Administrative
Agent to so elect) in connection with the occurrence and continuance of any other Event of Default, then in each case, 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 two percent (2.0%), 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 Termination Date; provided that 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 (other than an optional prepayment of an ABR Loan prior to the Termination Date),
accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment.
(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 Alternate Base 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 [Reserved].
Section
3.04 Prepayments.
(a)
Optional Prepayments. The Borrower shall have the right at any time and from time to time to prepay any Borrowing 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 fax or
other electronic transmission) of any prepayment hereunder in the case of prepayment of an ABR Borrowing, not later than 1:00 p.m., central
standard time, at least one Business Day prior to the date of prepayment. Each such notice shall be irrevocable and shall specify (i)
the prepayment date, and (ii) the principal amount of each Borrowing or portion thereof to be prepaid, which shall not be less than the
lesser of (x) the Revolving Credit Exposure or (y) $500,000 for any Loan; provided that, if a notice of prepayment is given in
connection with a conditional notice of termination of the Commitments as contemplated by Section 2.06(b), then such notice of
prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.06(b). Promptly following receipt
of any such notice relating to a Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment
of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing as provided in Section 2.02.
Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied
by accrued interest to the extent required by Section 3.02.
(c)
Mandatory Prepayments.
(i)
Upon Optional Terminations and Reductions. If, after giving effect to any termination or reduction of the Aggregate Maximum Credit
Amounts pursuant to Section 2.06(b), there is a Borrowing Base Deficiency, then the Borrower shall (A) prepay the Borrowings on
the date of such termination or reduction in an aggregate principal amount equal to such Borrowing Base Deficiency, and (B) if any Borrowing
Base Deficiency remains after prepaying all of the Borrowings as a result of LC Exposure, Cash Collateralize such remaining deficiency
as provided in Section 2.08(j). The Borrower shall be obligated to make such prepayment and/or deposit of Cash Collateral substantially
concurrently with the effectiveness of such termination or reduction.
(ii)
Upon Redeterminations, Title Related Adjustments, Etc. Upon any redetermination of the Borrowing Base pursuant to Section 2.07(b),
if there is a Borrowing Base Deficiency, then, after receiving notice from the Administrative Agent by means of (x) a New Borrowing Base
Notice or (y) written notice of adjustment pursuant to Section 8.13(c), in each case, of such Borrowing Base Deficiency (such
date of receipt of notice, the “Deficiency Notification Date”), the Borrower shall, within ten (10) Business Days
of the Deficiency Notification Date, deliver written notice to the Administrative Agent indicating the Borrower’s election to take
one of the following actions:
(A)
within thirty (30) days of the date such election is made, (1) prepay the Loans in an aggregate principal amount equal to such Borrowing
Base Deficiency and (2) if any Borrowing Base Deficiency remains after prepaying all of the Loans as a result of any LC Exposure, Cash
Collateralize such excess as provided in Section 2.08(j),
(B)
prepay the Loans in six (6) equal monthly installments, commencing on the thirtieth (30th) day following the Deficiency Notification
Date with each payment being equal to 1/6th of the aggregate principal amount of such excess (as such Borrowing Base Deficiency
may be reduced during such six-month period as a result of a Borrowing Base re-determination or other adjustment of the Borrowing Base
described herein),
(C)
within thirty (30) days (or such later date as may be approved by the Administrative Agent in writing) of the date such election is made,
provide additional collateral in the form of additional Oil and Gas Properties not evaluated in the most recently delivered Reserve Report
or other collateral reasonably acceptable to the Administrative Agent having a Borrowing Base value (as proposed by the Administrative
Agent and approved by the Required Lenders) sufficient, after giving effect to any other actions taken pursuant to this Section 3.04(c)
to eliminate any such excess, or
(D)
(1) combine the options provided in clauses (A), (B) and (C) above and specify (in the written notice delivered to the Administrative
Agent electing such option) the amount to be prepaid pursuant to clauses (A) and/or (B) and the amount to be provided as additional Mortgaged
Property pursuant to clause (C), and (2) make such payments, and deliver such additional Mortgaged Property, within the time periods
required under clauses (A), (B) and (C) above, as applicable.
provided
that, notwithstanding the options set forth above, in all cases, the Borrowing Base Deficiency must be eliminated on or prior to
the Termination Date. If, because of LC Exposure, a Borrowing Base Deficiency remains after prepaying all of the Loans, the Borrower
shall Cash Collateralize such remaining Borrowing Base Deficiency as provided in Section 2.08(j). In the event the Borrower fails
to provide written notice to the Administrative Agent of its election under this Section 3.04(c)(ii) within the ten (10) Business
Day period referred to above, the Borrower shall be deemed to have elected the option set forth in clause (A) above. The failure of the
Borrower to comply with any of the options elected (including any deemed election) pursuant to the provisions of Section 3.04(c)(ii)
and specified in such notice (or relating to such deemed election) shall constitute an Event of Default.
(iii)
Upon Certain Adjustments. If there is a Borrowing Base Deficiency as a result of a Borrowing Base adjustment other than pursuant
to Section 2.07(b) or Section 8.13(c), then on the next Business Day after the occurrence of such Borrowing Base adjustment,
the Borrower shall prepay Borrowings in an aggregate principal amount equal to such Borrowing Base Deficiency and if any Borrowing Base
Deficiency remains as a result of LC Exposure, pay to Administrative Agent an amount equal to such remaining Borrowing Base Deficiency
to be held as Cash Collateral as provided in Section 2.08(j).
(iv)
Upon Existence of Excess Cash. If, on any Consolidated Cash Balance Measurement Day, (A) the ratio of Total Debt (after giving
pro forma effect to any Borrowing to be made on such date) to EBITDAX for the Test Period most recently ended, is not less than 2.0 to
1.0, (B) there are outstanding Borrowings or LC Exposure and (C) the Loan Parties have any Excess Cash, then the Borrower shall, on or
before the end of the next Business Day, (x) prepay the Borrowings in an aggregate principal amount equal to such Excess Cash, and (y)
if any Excess Cash remains after prepaying all of the Borrowings as a result of any LC Exposure, pay to the Administrative Agent on behalf
of the Lenders an amount equal to such Excess Cash to be held as Cash Collateral as provided in Section 2.08(j). To the extent
that there are funds on deposit in, or credited to, any deposit account or other account maintained with the Administrative Agent (or
any Affiliate thereof) or any Lender (or any Affiliate thereof) on any date that the Borrower is required to prepay Loans (and/or cash
collateralize LC Exposure, as applicable) pursuant to this Section 3.04(c)(iv), the Borrower hereby irrevocably authorizes and
instructs the Administrative Agent or such Lender to apply such funds to the prepayment of Loans (and/or cash collateralization of LC
Exposure, as applicable).
(v)
Application of Prepayments to Borrowings. Each prepayment of Borrowings pursuant to this Section 3.04(c) shall be applied
ratably to any ABR Borrowings then outstanding.
(vi)
Interest to be Paid with Prepayments. Prepayments pursuant to this Section 3.04(c) shall be accompanied by accrued interest
to the extent required by Section 3.02.
(d)
No Premium or Penalty. Prepayments permitted or required under this Section 3.04 shall be without premium or penalty.
Section
3.05 Fees.
(a)
Commitment Fees. The Borrower agrees to pay to the Administrative Agent for the account of each Lender (other than a Defaulting
Lender to the extent set forth in Section 4.05) a commitment fee, which shall accrue at the applicable Commitment Fee Rate on
the average daily unused amount of the Commitment of such Lender (determined taking into account both Loans and LC Exposure) during the
period from and including the date of this Agreement to but excluding the Termination Date. Accrued commitment fees shall be payable
in arrears on the last Business Day of March, June, September and December of each year and on the Termination Date, commencing on the
first such date to occur after the date hereof. All commitment fees 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), and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).
(b)
Letter of Credit Fees. The Borrower agrees to pay (i) to the Administrative Agent for the account of each Lender (other than a
Defaulting Lender to the extent set forth in Section 4.05) a participation fee with respect to its participations in Letters of
Credit, which shall accrue at the same Applicable Margin used to determine the interest rate applicable to ABR Loans (as such rate may
be increased pursuant to Section 3.02(c)) on the average daily amount of such Lender’s LC Exposure (excluding any portion
thereof attributable to unreimbursed LC Disbursements that has been funded by such Lender) during the period from and including the date
of this Agreement to but excluding the later of the date on which such Lender’s Commitment terminates and the date on which such
Lender ceases to have any LC Exposure, (ii) to each applicable Issuing Bank a fronting fee, which shall accrue at a rate of 0.125% per
annum on the average daily amount of the LC Exposure attributable to such Issuing Bank (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the date of this Agreement to but excluding the later of the date
of termination of the Commitments and the date on which there ceases to be any LC Exposure and (iii) to each Issuing Bank, for its own
account, its standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings
thereunder. Participation fees and fronting fees accrued through and including the last Business Day of March, June, September and December
of each year shall be payable on such last Business Day, commencing on the first such date to occur after the date of this Agreement;
provided that all such fees shall be payable on the Termination Date and any such fees accruing after the Termination Date shall
be payable on demand. Any other fees payable to any Issuing Bank pursuant to this Section 3.05(b) shall be payable within 10 days
after demand. All participation fees and fronting fees 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), and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).
(c)
Administrative Agent Fees. The Borrower agrees to pay to the Administrative Agent and Arranger, for their own account, agency
and arranger fees payable in the amounts and at the times as set forth in the Fee Letter.
(d)
Other Fees. The Borrower shall pay to the Administrative Agent each of the other fees payable in the amounts and at the times
as set forth in the Fee Letter.
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,
fees or reimbursement of LC Disbursements, or of amounts payable under Section 5.01, Section 5.03 or otherwise) prior to
2:00 p.m., central standard 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 payments to be made directly to the applicable Issuing Bank as expressly provided herein and except that
payments pursuant to Section 5.01, 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, unreimbursed LC Disbursements, interest 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, and (ii) second, towards payment of principal and unreimbursed LC Disbursements
then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements
then due to such parties.
(c)
Sharing of Payments by Lenders. If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment
in respect of any principal of or interest on any of its Loans or participations in LC Disbursements resulting in such Lender receiving
payment of a greater proportion of the aggregate amount of its Loans and participations in LC Disbursements 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 and participations in LC Disbursements 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 participations in LC Disbursements; 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 or participations in LC Disbursements
to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this
Section 4.01(c) shall apply). 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 and/or any applicable Issuing Bank
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 and/or any applicable Issuing Bank, as the
case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders and/or any applicable
Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed
to such Lender or Issuing Bank 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), Section 2.08(d), Section 2.08(e) 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. If at any time prior to the acceleration or maturity of the Loans, the Administrative Agent shall receive any payment in
respect of principal of a Loan or a reimbursement of an LC Disbursement while one or more Defaulting Lenders shall be party to this Agreement,
the Administrative Agent shall apply such payment first to the Borrowing(s) for which such Defaulting Lender(s) shall have failed to
fund its pro rata share until such time as such Borrowing(s) are paid in full or each Lender (including each Defaulting Lender) is owed
its Applicable Percentage of all Loans then outstanding. 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.
Section
4.05 Defaulting Lenders.
(a)
Defaulting Lender Adjustments. Notwithstanding anything to the contrary contained
in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender,
to the extent permitted by applicable law:
(i)
Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect
to this Agreement shall be restricted as set forth in the definition of Required Lenders.
(ii)
Defaulting Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for
the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article X or otherwise) or received
by the Administrative Agent from a Defaulting Lender pursuant to Section 12.08 shall be applied at such time or times as may be
determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the
Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to any
Issuing Bank hereunder; third, to Cash Collateralize the Issuing Banks’ Fronting Exposure with respect to such Defaulting
Lender in accordance with Section 2.08(j); fourth, as the Borrower may request (so long as no Default or Event of Default
exists), to the funding of any Loan in respect of which such Defaulting Lender has failed
to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth, if so determined
by the Administrative Agent and the Borrower, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting
Lender’s potential future funding obligations with respect to Loans under this Agreement and (y) Cash Collateralize the Issuing
Banks’ future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this
Agreement, in accordance with Section 2.08(j); sixth, to the payment of any amounts owing to the Lenders or the Issuing
Bank as a result of any judgment of a court of competent jurisdiction obtained by any Lender or the Issuing Banks against such Defaulting
Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh, to the payment of
any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such
Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and eighth, to
such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment
of the principal amount of any Loans or LC Disbursements in respect of which such Defaulting Lender has not fully funded its appropriate
share, and (y) such Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in Section
6.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and LC Disbursements owed to, all non-Defaulting
Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or LC Disbursements owed to, such Defaulting Lender
until such time as all Loans and LC Exposure is held by the Lenders pro rata in accordance with the Commitments under the applicable
facility without giving effect to Section 4.05(a)(iv). Any payments, prepayments or other amounts paid or payable to a Defaulting
Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 4.05(a)(ii)
shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.
(iii)
Certain Fees.
(A)
No Defaulting Lender shall be entitled to receive any commitment fee pursuant to Section 3.05(a) for any period during which that
Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to
have been paid to that Defaulting Lender).
(B)
Each Defaulting Lender shall be entitled to receive letter of credit fees pursuant to Section 3.05(b) for any period during which
that Lender is a Defaulting Lender only to the extent allocable to its LC Exposure for which it has provided Cash Collateral pursuant
to Section 2.08(j).
(C)
With respect to any fee not required to be paid to any Defaulting Lender pursuant to clause (A) or (B) above, the Borrower shall (x)
pay to each non-Defaulting Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting
Lender’s LC Exposure that has been reallocated to such non-Defaulting Lender pursuant to clause (iv) below, (y) pay to each Issuing
Bank the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to such Issuing Bank’s Fronting
Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such fee.
(iv)
Reallocation of Participations to Reduce Fronting Exposure. All or any part of such Defaulting Lender’s LC Exposure shall
be reallocated among the non-Defaulting Lenders in accordance with their respective Applicable Percentages (calculated without regard
to such Defaulting Lender’s Commitment) but only to the extent that (x) the conditions set forth in Section 6.02 are satisfied
at the time of such reallocation (and, unless the Borrower shall have otherwise notified the Administrative Agent at such time, the Borrower
shall be deemed to have represented and warranted that such conditions are satisfied at such time), and (y) such reallocation does not
cause the aggregate Revolving Credit Exposure of any non-Defaulting Lender to exceed such non-Defaulting Lender’s Commitment. Subject
to Section 12.18, no reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a
Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a non-Defaulting Lender as a result
of such non-Defaulting Lender’s increased exposure following such reallocation.
(v)
Cash Collateral. If the reallocation described in clause (iv) above cannot, or can only partially, be effected, the Borrower shall,
without prejudice to any right or remedy available to it hereunder or under law, Cash Collateralize the Issuing Banks’ Fronting
Exposure in accordance with the procedures set forth in Section 2.08(j).
(b)
Defaulting Lender Cure. If the Borrower, the Administrative Agent and each Issuing Bank agree in writing that a Lender is no longer
a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such
notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender
will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as
the Administrative Agent may determine to be necessary to cause the Loans and funded and unfunded participations in Letters of Credit
to be held pro rata by the Lenders in accordance with the Commitments (without giving effect to Section 4.05(a)(iv), whereupon
such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees
accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided, further,
that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will
constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.
(c)
New Letters of Credit. So long as any Lender is a Defaulting Lender, no Issuing Bank shall be required to issue, extend, renew
or increase any Letter of Credit unless it is satisfied that it will have no Fronting Exposure after giving effect thereto.
ARTICLE
V
Increased Costs; Break Funding Payments; Taxes
Section
5.01 Increased Costs.
(a)
Increased Costs Generally. If any Change in Law shall:
(i)
impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets
of, deposits with or for the account of, or credit extended or participated in by, any Lender or any Issuing Bank;
(ii)
subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition
of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations,
or its deposits, reserves, other liabilities or capital attributable thereto; or
(iii)
impose on any Lender or any Issuing Bank or the London interbank market any other condition, cost or expense (other than Taxes) affecting
this Agreement or Loans made by such Lender or any Letter of Credit or participation therein;
and
the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, converting to, continuing
or maintaining any Loan or of maintaining its obligation to make any such Loan, or to increase the cost to such Lender, such Issuing
Bank or other Recipient of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate
in or to issue any Letter of Credit) or to reduce the amount of any sum received or receivable by such Lender or such other Recipient
(whether of principal, interest or any other amount), then, upon request of such Lender, Issuing Bank or other Recipient, the Borrower
will pay to such Lender or such other Recipient such additional amount or amounts as will compensate such Lender or such other Recipient
for such additional costs incurred or reduction suffered.
(b)
Capital and Liquidity Requirements. If any Lender or Issuing Bank determines that any Change in Law affecting such Lender or Issuing
Bank or any lending office of such Lender or such Lender’s or Issuing Bank’s holding company, if any, regarding capital or
liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s or Issuing Bank’s capital
or on the capital of such Lender’s or Issuing Bank’s holding company, if any, as a consequence of this Agreement, the Commitments
of such Lender or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by
any Issuing Bank, to a level below that which such Lender or Issuing Bank or such Lender’s or Issuing Bank’s holding company
could have achieved but for such Change in Law (taking into consideration such Lender’s or Issuing Bank’s policies and the
policies of such Lender’s or Issuing Bank’s holding company with respect to capital adequacy or liquidity), then from time
to time the Borrower will pay to such Lender or Issuing Bank, as the case may be, such additional amount or amounts as will compensate
such Lender or Issuing Bank or such Lender’s or Issuing Bank’s holding company for any such reduction suffered.
(c)
Certificates for Reimbursement. A certificate of a Lender or Issuing Bank setting forth the amount or amounts necessary to compensate
such Lender or Issuing Bank 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 or Issuing Bank, as the case
may be, the amount shown as due on any such certificate within 10 days after receipt thereof.
(d)
Delay in Requests. Failure or delay on the part of any Lender or Issuing Bank to demand compensation pursuant to this Section
5.01 shall not constitute a waiver of such Lender’s or Issuing Bank’s right to demand such compensation; provided
that the Borrower shall not be required to compensate a Lender or Issuing Bank pursuant to this Section 5.01 for any increased
costs or reductions incurred more than nine months prior to the date that such Lender or Issuing Bank, as the case may be, notifies the
Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or Issuing Bank’s intention
to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then
the nine month period referred to above shall be extended to include the period of retroactive effect thereof).
Section
5.02 [Reserved].
Section
5.03 Taxes.
(a)
Defined Terms. For purposes of this Section 5.03, Section 5.04 and Section 5.05, the term “Lender”
includes any Issuing Bank and the term “applicable law” includes FATCA.
(b)
Payments Free of Taxes. Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall
be made without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law (as determined in
the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment
by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely
pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is
an Indemnified Tax, then the sum payable by the applicable Loan Party shall be increased as necessary so that, after such deduction or
withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 5.03),
the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.
(c)
Payment of Other Taxes by the Loan Parties. The Loan Parties shall timely pay to the relevant Governmental Authority in accordance
with applicable law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.
(d)
Indemnification by the Loan Parties. The Loan Parties shall jointly and severally indemnify each Recipient, within 10 days after
written demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable
to amounts payable under this Section 5.03) payable or paid by such Recipient or required to be withheld or deducted from a payment
to such Recipient and any reasonable 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. A certificate as to the amount of such payment or liability delivered
to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf
of a Lender, shall be conclusive absent manifest error.
(e)
Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor,
for (i) any Taxes attributable to such Lender (but only to the extent that any Loan Party has not already indemnified the Administrative
Agent for such Taxes and without limiting the obligation of the Loan Parties to do so), (ii) any Taxes attributable to such Lender’s
failure to comply with the provisions of Section 12.04(c) relating to the maintenance of a Participant Register, and (iii) any
Excluded Taxes attributable to such Lender, in each 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 paragraph (e).
(f)
Evidence of Payments. As soon as practicable after any payment of Taxes by any Loan Party to a Governmental Authority pursuant
to this Section 5.03, such Loan Party 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.
(g)
Status of Lenders. (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments
made under any Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by
the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or
the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition,
any Lender 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(g)(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 (or any successor form) certifying that such Lender is exempt from U.S. federal backup withholding
tax;
(B)
any Non-U.S. 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 Non-U.S. 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 Non-U.S. 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 or IRS Form W-8BEN-E (or any successor form) 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 or IRS Form W-8BEN-E (or any successor form)
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 (or any successor form);
(3)
in the case of a Non-U.S. 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 H-1 to the effect that such Non-U.S. 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 IRS Form W-8BEN-E (or any successor form); or
(4)
to the extent a Non-U.S. Lender is not the beneficial owner, executed originals of IRS Form W-8IMY(or any successor form), accompanied
by IRS Form W-8ECI (or any successor form), IRS Form W-8BEN or IRS Form W-8BEN-E (or any successor form), a U.S. Tax Compliance Certificate
substantially in the form of Exhibit H-2 or Exhibit H-3, IRS Form W-9, and/or other certification documents from each beneficial
owner, as applicable; provided that if the Non-U.S. Lender is a partnership and one or more direct or indirect partners of such
Non-U.S. Lender are claiming the portfolio interest exemption, such Non-U.S. Lender may provide a U.S. Tax Compliance Certificate substantially
in the form of Exhibit H-4 on behalf of each such direct and indirect partner;
(C)
any Non-U.S. 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 Non-U.S. 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 under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender
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 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 has complied with such Lender’s 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.
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.
(h)
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 5.03 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 (h) (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 (h), in no event will the indemnified party be required to pay any amount to an indemnifying
party pursuant to this paragraph (h) 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.
(i)
Survival. Each party’s obligations under this Section 5.03 shall survive the resignation or replacement of the Administrative
Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction
or discharge of all obligations under any Loan Documents.
Section
5.04 Designation of Different Lending Office. If any Lender requests compensation under Section 5.01, or required the Borrower
to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant
to Section 5.03, then such Lender shall (at the request of the Borrower) 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 in connection with any such designation or assignment.
Section
5.05 Replacement of Lenders. If any Lender requests compensation under Section 5.01, or if the Borrower is required to
pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to
Section 5.03, and, in each case, such Lender has declined or is unable to designate a different lending office in accordance with
Section 5.04, or if any Lender is a Defaulting Lender, 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, and consents required by, Section 12.04(b)), all of its interests, rights (other than its existing
rights to payments pursuant to Section 5.01 or Section 5.03) and obligations under this Agreement and the related Loan
Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment);
provided that (i) the Borrower shall have paid to the Administrative Agent the assignment fee (if any) specified in Section
12.04, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations
in LC Disbursements, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, and under the other Loan Documents,
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), (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, and (iv) such
assignment does not conflict with applicable law. A Lender shall not be required to make any such assignment or 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
5.06 [Reserved].
ARTICLE
VI
Conditions Precedent
Section
6.01 Effective Date. The obligations of the Lenders to make Loans and of the Issuing Banks to issue Letters of Credit hereunder
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) 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 and duly executed Notes payable to each Lender that requested a Note.
(b) 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, including the Guaranty Agreement, and except in cases where no signature is required,
the other Security Instruments described on Exhibit F. In connection with the execution and delivery of the Security Instruments,
the Administrative Agent shall be reasonably satisfied that the Security Instruments create first priority Liens that may be perfected
upon recordation of properly completed financing statements and the Security Instruments in the appropriate filing offices therefor (except
that Excepted Liens identified in clauses (a) to (d) and (f) and (k) of the definition thereof, but subject to the provisos at the end
of such definition may exist) on at least a percentage acceptable to Administrative Agent of the PV-10 of the Borrowing Base Properties.
(c) The
Administrative Agent shall have received a certificate of a Responsible Officer of each Loan Party setting forth (i) resolutions of its
board of directors or other appropriate governing body with respect to the authorization of such Loan Party to execute and deliver the
Loan Documents to which it is a party and to enter into the transactions contemplated in those documents, (ii) the officers of such Loan
Party (y) who are authorized to sign the Loan Documents to which such Loan Party is a party and (z) 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 or formation and by-laws, company agreement or other applicable
Organizational Documents of such Loan Party, 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 such Loan Party to the contrary.
(d) The
Administrative Agent shall have received certificates of the appropriate State agencies, as requested by the Administrative Agent, with
respect to the existence, qualification and good standing of each Loan Party in each jurisdiction where any such Loan Party is organized
or owns Borrowing Base Properties.
(e) [Reserved].
(f) The
Administrative Agent shall have received a monthly budget and pro forma projections (including a pro forma closing balance sheet, pro
forma statements of operations and cash flow) for the twelve month period commencing on the first day of the first month immediately
following the Effective Date, including assumptions used in preparing the forecast financial statements, reasonably satisfactory to the
Administrative Agent.
(g) The
Administrative Agent shall have received evidence that adequate insurance, including flood insurance, if applicable, required to be maintained
in accordance with Section 7.12 is in full force and effect, with additional insured and lender loss payable special endorsements
attached thereto in form and substance satisfactory to the Administrative Agent and its counsel naming the Administrative Agent as additional
insured and loss payee.
(h) The
Administrative Agent shall have received a certificate of a Responsible Officer of the Borrower substantially in the form of Exhibit
E certifying that, after giving effect to the Borrowings under this Agreement, each of the Borrower and each other Loan Party is
solvent.
(i) The
Administrative Agent shall have received the Initial Reserve Report accompanied by a certificate covering the matters described in Section
8.12(c)(i)-(iii).
(j) The
Administrative Agent shall have received, at least five (5) days prior to the Effective Date, all documentation and other information
previously requested and required by regulatory authorities under applicable “know your customer” and anti-money laundering
rules and regulations, including the USA Patriot Act.
(k) [Reserved].
(l) The
Administrative Agent, the Arranger and the Lenders shall have received all fees and other amounts due and payable on or prior to the
Effective Date, including as set forth in the Fee Letter, and, to the extent invoiced, reimbursement or payment of all out-of-pocket
expenses required to be reimbursed or paid by the Borrower hereunder.
(m) The
Administrative Agent shall have received appropriate UCC search certificates reflecting no prior Liens encumbering the Properties of
the Borrower and the other Loan Parties other than those being released on or prior to the Effective Date or Liens permitted by Section
9.03.
(n) The
Administrative Agent shall have received title information as the Administrative Agent may reasonably require satisfactorily setting
forth the status of title to at least a percentage acceptable to the Administrative Agent of the PV-10 of the Borrowing Base Properties.
(o) The
corporate, capital and ownership structure of the Borrower and its Subsidiaries upon the Effective Date shall be satisfactory to Administrative
Agent.
(p) The
Administrative Agent and Lenders shall have completed, and received satisfactory results of, their due diligence investigations of the
business, assets, contracts, agreements, liabilities, operations, condition (financial and otherwise) of the Loan Parties.
(q) The
Administrative Agent shall have received such environmental information regarding the Oil and Gas Properties of the Loan Parties as it
has requested, and all such information shall be satisfactory to the Administrative Agent.
(r) To
the extent that Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, the Administrative
Agent shall have received a Beneficial Ownership Certification in relation to Borrower, in form and of substance reasonably acceptable
to the Administrative Agent.
(s) The
Administrative Agent shall have received a certificate from a Responsible Officer of Borrower in form and substance satisfactory to it,
evidencing that the Borrower’s Total Debt to Capitalization Ratio, calculated on a pro forma basis, does not exceed 40% as of the
Effective Date.
(t) [Reserved].
(u) The
Administrative Agent shall have received (i) a certificate of a Responsible Officer of the Borrower certifying: (A) that the copies of
the material Initial Acquisition Documents it has previously delivered to Administrative Agent are true, accurate and complete and have
not been further amended beyond any amendments previously delivered to Administrative Agent, (B) that on or prior to the Closing Date,
the Borrower has or will have (I) consummated the Initial Acquisition in accordance with applicable law and substantially on the terms
of the Initial Acquisition Documents without giving effect to any waiver, amendment, modification or consent with respect to any term
thereof, and (II) acquired substantially all of the assets contemplated by the Initial Acquisition Documents (and setting forth a true
and complete list of all Oil and Gas Properties which are being excluded from the Initial Acquisition and the basis therefor, if any)
(such acquired assets, the “Initial Acquisition Assets”), and (C) as to the final purchase price for the Initial Acquisition
Assets under each of the Lubbock PSA, the Banner PSA and the Synergy PSA, in each case, after giving effect to all adjustments as of
the closing date contemplated by such Initial Acquisition Documents, (ii) evidence (including mortgage releases and UCC-3 financing statement
terminations) that all Liens on the Initial Acquisition Assets to be acquired in the Initial Acquisition have been released or assigned
to the Administrative Agent in a manner satisfactory to Administrative Agent; and (iii) such other related documents and information
as the Administrative Agent shall have reasonably requested in connection therewith.
(v) The
Administrative Agent shall have received such other certificates, documents, instruments and agreements as the Administrative Agent shall
reasonably request in connection with the transactions contemplated by this Agreement and the other Loan Documents.
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 and of the Issuing Banks to issue Letters of Credit hereunder
shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 12.02) at or prior
to 4:00 p.m., central standard time, on January 5, 2022 (and, in the event such conditions are not so satisfied or waived, the Commitments
shall terminate at such time).
Section
6.02 Each Credit Event. The obligation of each Lender to make a Loan on the occasion of any Borrowing (including the initial
funding), and of the Issuing Banks to issue, amend, renew or extend any Letter of Credit and the Effective Date, is subject to the satisfaction
of the following conditions:
(a) At
the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Default or Event of Default shall have occurred and be continuing.
(b) The
representations and warranties of the Borrower and the Guarantors set forth in this Agreement and in the other Loan Documents shall be
true and correct in all material respects (unless already qualified by materiality in which case such applicable representation and warranty
shall be true and correct) on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter
of Credit, as applicable, except to the extent any such representations and warranties are expressly limited to an earlier date, in which
case, on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable,
such representations and warranties shall continue to be true and correct in all material respects (unless already qualified by materiality
in which case such applicable representation and warranty shall be true and correct) as of such specified earlier date.
(c) at
the time of and immediately after giving effect to such Borrowing and any application of the proceeds thereof on the date of such requested
Borrowing, the Loan Parties shall not have any Excess Cash.
(d) The
receipt by the Administrative Agent of a Borrowing Request in accordance with Section 2.03 or a request for a Letter of Credit
(or an amendment, extension or renewal of a Letter of Credit) in accordance with Section 2.08(b), as applicable.
Each
request for a Borrowing and each request for the issuance, amendment, renewal or extension of any Letter of Credit shall be deemed to
constitute a representation and warranty by the Borrower and the other Loan Parties 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 Loan Party is duly organized, validly existing and in good standing under the laws of the jurisdiction
of its organization, has all requisite power and authority, and has all 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 licenses, authorizations, consents, approvals
and foreign qualifications could not reasonably be expected to have a Material Adverse Effect.
Section
7.02 Authority; Enforceability. The Transactions are within each Loan Party’s entity powers and have been duly authorized
by all necessary entity and, if required, equity holder action. Each Loan Document to which a Loan Party is a party has been duly executed
and delivered by it and constitutes its legal, valid and binding obligation, as applicable, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, 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, 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 and filing of financing
statements and the Security Instruments as required by this Agreement and (ii) those third party approvals or consents which, if not
made or obtained, would not cause an Event of Default hereunder, could not reasonably be expected to have a Material Adverse Effect,
or do not have an adverse effect on the enforceability of the Loan Documents, (b) will not violate (i) in any material respect, any applicable
law or regulation or any order of any Governmental Authority or (ii) the Organizational Documents of any Loan Party, (c) will not violate
or result in a default under any indenture, note, credit agreement or other similar instrument binding upon any Loan Party or its Properties,
or give rise to a right thereunder to require any payment to be made by any Loan Party and (d) will not result in the creation or imposition
of any Lien on any Property of any Loan Party (other than the Liens created by the Loan Documents).
Section
7.04 Financial Condition; No Material Adverse Change.
(a) Since
September 30, 2021 and after giving effect to the Transactions (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 the Loan Parties has been
conducted only in the ordinary course consistent with past business practices.
(b) Neither
the Borrower nor any other Loan Party has on the date of this Agreement, after giving effect to the Transactions, any Material Indebtedness
(including Disqualified Capital Stock) other than the Secured Obligations or any contingent liabilities, off-balance sheet liabilities
or partnerships, liabilities for taxes, or unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable
commitments.
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 in writing against any Loan Party that (i) are not fully covered
by insurance (except for normal deductibles) as to which there is a reasonable possibility of an adverse determination that could reasonably
be expected, individually or in the aggregate, to result in a Material Adverse Effect or (ii) involve any Loan Document or the Transactions.
(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 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 its 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 its Subsidiaries have obtained all Environmental Permits required for their respective operations and each of their Properties,
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 denied;
(c) there
are no claims, demands, suits, orders, inquiries, or proceedings concerning any 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 the Properties;
(d) none
of the Properties of the Borrower and its Subsidiaries contain or, to the Borrower’s knowledge, have contained any: (i) underground
storage tanks; (ii) asbestos-containing materials; (iii) landfills or dumps; (iv) hazardous waste management units as defined pursuant
to RCRA or any comparable state law; or (v) sites on or nominated for 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 and there are no investigations, remediations, abatements, removals of Hazardous Materials required
under applicable Environmental Laws relating to such Releases or threatened Releases or 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) none
of the Borrower or any Subsidiary has received any written notice asserting an alleged liability or obligation under any Environmental
Laws with respect to the investigation, remediation, abatement, removal, or monitoring of any Hazardous Materials, including at, under,
or Released or threatened to be Released from any real properties offsite the Borrower’s or any Subsidiary’s Properties and
there are no conditions or circumstances that would 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 the Borrower’s or any Subsidiary’s Properties that would reasonably be expected to form the basis for a claim for damages
or compensation and, to the Borrower’s knowledge, there are no conditions or circumstances that would reasonably be expected to
result in the receipt of notice regarding such exposure; and
(h) the
Borrower and its 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 the Borrower’s or any Subsidiary’s 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 such Loan Party to Redeem or make any offer to Redeem all or any
portion of any Material Indebtedness outstanding under any indenture, note, credit agreement or other similar instrument pursuant to
which any Material Indebtedness is outstanding or by which the Loan Parties or any of their Properties is bound.
(c) No
Event of Default has occurred and is continuing.
Section
7.08 Investment Company Act. No Loan Party is an “investment company” or a company “controlled” by
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 Loan Party 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 applicable Loan Party 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, individually or in the aggregate, in a Material
Adverse Effect. To the knowledge of Borrower, no material proposed tax assessment is being asserted with respect to any Loan Party.
Section
7.10 ERISA.
(a) Except
as could not reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect, (i) each Plan is in
compliance with the applicable provisions of ERISA, the Code and other federal or state Laws and (ii) each Plan that is intended to be
a qualified plan under Section 401(a) of the Code has received a favorable determination letter from the IRS to the effect that the form
of such Plan is qualified under Section 401(a) of the Code and the trust related thereto has been determined by the IRS to be exempt
from federal income tax under Section 501(a) of the Code, or an application for such a letter is currently being processed by the IRS,
and, to the knowledge of the Borrower, nothing has occurred that would prevent or cause the loss of such tax-qualified status.
(b) There
are no pending or, to the knowledge of the Borrower, threatened or contemplated claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse
Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that, either
individually or in the aggregate, has had or could reasonably be expected to have a Material Adverse Effect.
(c) No
ERISA Event has occurred, and neither the Borrower nor any ERISA Affiliate is aware of any fact, event or circumstance that, either individually
or in the aggregate, could reasonably be expected to constitute or result in an ERISA Event with respect to any Pension Plan that, either
individually or in the aggregate, has had or could reasonably be expected to have a Material Adverse Effect.
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 Loan Party is subject, and all other existing facts and circumstances
applicable to the Loan Parties known to the Borrower, 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 Loan Parties 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) contain 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
or other information, the Loan Parties represent 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 other Loan Party 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 other Loan Party 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 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 and production and cost estimates contained in each Reserve Report are necessarily
based upon professional opinions, estimates and projections and the Loan Parties do not warrant that such opinions, estimates and projections
will ultimately prove to have been accurate. As of the Effective Date, the information included in the Beneficial Ownership Certification
is true and correct in all respects.
Section
7.12 Insurance. For the benefit of each Loan Party, the Borrower has (a) all insurance policies sufficient for the compliance
by the Loan Parties with all material Governmental Requirements and all material agreements and (b) insurance coverage, or self-insurance,
in at least such amounts and against such risk (including 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 Loan Parties. Schedule 7.12, as of the date
hereof, sets forth a list of all insurance maintained by the Borrower. The Administrative Agent, as agent for the benefit of the Secured
Parties, has been named as additional insureds in respect of such liability insurance policies and the Administrative Agent, as agent
for the benefit of the Secured Parties, has been named as loss payee with respect to Property loss insurance.
Section
7.13 Restriction on Liens. Neither the Borrower nor any other Loan Party is a party to any material agreement or arrangement
(other than Capital Leases creating Liens permitted by Section 9.03(c), but then only on the Property subject of such Capital
Lease), 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. 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, there are no other Subsidiaries.
Each Subsidiary is a wholly-owned Subsidiary. The Borrower has no Foreign Subsidiaries.
Section
7.15 Foreign Operations. The Borrower and the other Loan Parties do not own any Oil and Gas Properties not located within the
geographical boundaries of the United States.
Section
7.16 Location of Business and Offices. The Borrower’s jurisdiction of organization is Wyoming; the name of the Borrower
as listed in the public records of its jurisdiction of organization is U.S. Energy Corp.; and the organizational identification number
of the Borrower in its jurisdiction of organization is 1980-000097301 (or, in each case, as set forth in a notice delivered to the Administrative
Agent pursuant to Section 8.01(l) 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(i) 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(i)).
Section
7.17 Properties; Defensible Title, Etc.
(a) Except
for Immaterial Title Deficiencies, each Loan Party has good and defensible title to the Oil and Gas Properties evaluated in the most
recently delivered Reserve Report and good title to all its personal Properties other than Properties sold in compliance with Section
9.11 from time to time, in each case, free and clear of all Liens except Liens permitted by Section 9.03. After giving full
effect to the Excepted Liens and any Immaterial Title Deficiencies, the Loan Party specified as the owner owns the net interests in production
attributable to the Hydrocarbon Interests as reflected in the most recently delivered Reserve Report, and except as otherwise provided
by statute, regulation or the standard and customary provisions of any applicable joint operating agreement, the ownership of such Properties
shall not in any material respect obligate the Loan Party to bear the costs and expenses relating to the maintenance, development and
operations of each such Property in an amount 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 Loan Party’s net revenue interest in such Property.
(b) To
the knowledge of the Loan Parties, all material leases and agreements necessary for the conduct of the business of the Loan Parties 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, which could reasonably be expected to have
a Material Adverse Effect.
(c) The
rights and Properties presently owned, leased or licensed by the Loan Parties including all easements and rights of way, include all
rights and Properties necessary to permit the Loan Parties to conduct their business in all material respects in the same manner as their
business is conducted on the date hereof, except as would not reasonably be expected to have a Material Adverse Effect.
(d) Except
for Properties being repaired, all of the Properties of the Loan Parties which are reasonably necessary for the operation of their businesses
are in good working condition in all material respects and are maintained in accordance with prudent business standards.
(e) Each
Loan Party 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 Loan Party 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 Loan Parties 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
7.18 Maintenance of Properties. Except for such acts or failures to act as could not be reasonably expected to have a Material
Adverse Effect, or that occurred prior to the ownership of any of the Properties by any Loan Party, the Oil and Gas Properties (and Properties
unitized therewith) of the Loan Parties 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 Loan Parties. Specifically
in connection with the foregoing, except for those as could not be reasonably expected to have a Material Adverse Effect, or that occurred
prior to the ownership of any of the Properties by any Loan Party, (i) no Oil and Gas Property of the Loan Parties 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 Loan Parties is deviated from the vertical more than the maximum permitted by Governmental Requirements,
and such wells are 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 Loan Parties. To the knoweldge of the Loan Parties,
all pipelines, wells, gas processing plants, platforms and other material improvements, fixtures and equipment owned in whole or in part
by the Loan Parties 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 Loan Parties, in a manner consistent with the Loan Parties’
past practices (other than those the failure of which to maintain in accordance with this Section 7.18 could not reasonably be
expected to have a Material Adverse Effect or occurred prior to the ownership of any of the Properties by any Loan Party).
Section
7.19 Gas Imbalances; Prepayments. Except as set forth on Schedule 7.19 or on the most recent certificate delivered pursuant
to Section 8.12(c), or which occurred prior to the ownership of any of the Properties by any Loan Party and was not previously
disclosed to Borrower, on a net basis there are no gas imbalances take or pay or other prepayments which would require any Loan Party
to deliver Hydrocarbons produced from their Oil and Gas Properties at some future time without then or thereafter receiving full payment
therefor exceeding three percent (3%) of the aggregate volumes of natural gas (on an Mcf basis) listed in the most recent Reserve Report.
Section
7.20 Marketing of Production. Except for contracts listed and in effect on the date hereof on Schedule 7.20, and thereafter
either disclosed in writing to the Administrative Agent or included in the most recently delivered Reserve Report, (a) the Loan Parties
are receiving a price for all production sold thereunder which is computed substantially in accordance with the terms of the relevant
contract and are not having deliveries curtailed substantially below the subject Property’s delivery capacity and (b) no material
agreements exist which are not cancelable on 60 days’ notice or less without penalty or detriment for the sale of production from
the Loan Parties’ Hydrocarbons (including calls on or other rights to purchase, production, whether or not the same are currently
being exercised) that (i) pertain to the sale of production at a fixed price and (ii) have a maturity or expiry date of longer than six
(6) months from the date hereof.
Section
7.21 Security Documents. The Security Instruments are effective to create in favor of the Administrative Agent, for the benefit
of the Secured Parties, a legal, valid and enforceable security interest in the Mortgaged Property and Collateral and proceeds thereof.
The Secured Obligations are and shall be at all times secured by a legal, valid and enforceable perfected first priority Liens in favor
of the Administrative Agent, covering and encumbering the Mortgaged Properties and other Collateral, to the extent perfection has occurred
or will occur, by the recording of a mortgage, the filing of a UCC financing statement or, with respect to Equity Interests represented
by certificates, by possession (in each case, to the extent available in the applicable jurisdiction); provided that, except in
the case of pledged Equity Interests or as otherwise provided herein, Liens permitted by Section 9.03 may exist.
Section
7.22 Swap Agreements and Eligible Contract Participant. Schedule 7.22, as of the date hereof, and after the date hereof,
each report required to be delivered by the Borrower pursuant to Section 8.01(d), sets forth, a true and complete list of all
Swap Agreements of the Loan Parties, the material terms thereof (including the type, term, effective date, termination date and notional
amounts or volumes), the estimated net mark to market value thereof, all credit support agreements relating thereto (including any margin
required or supplied, but excluding the Security Instruments) and the counterparty to each such agreement. The Borrower is a Qualified
ECP Guarantor.
Section
7.23 Use of Loans and Letters of Credit. The proceeds of the Loans and the Letters of Credit shall be used (i) to provide funds
for working capital, (ii) to finance capital expenditures, (iii) for the acquisition and development by the Borrower and its Subsidiaries
of Oil and Gas Properties permitted hereunder, (iv) to refinance existing debt, and (v) for general corporate purposes of the Borrower
and its Subsidiaries. No Loan Party is 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 or Letter of Credit will be used for any purpose which violates the provisions
of Regulations T, U or X of the Board.
Section
7.24 Solvency. The Loan Parties and their Subsidiaries, taken as a whole are Solvent. No Loan Party is planning to take any
action described in Section 10.01(h) or Section 10.01(i).
Section
7.25 Anti-Corruption Laws; Sanctions; OFAC.
(a) The
Borrower has implemented and maintains in effect policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries
and their respective directors, officers, employees and agents with applicable Anti-Corruption Laws and applicable Sanctions.
(b) The
Borrower, its Subsidiaries, their respective officers and employees and, to the knowledge of the Borrower, its directors and agents are
in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects and are not knowingly engaged in any activity
that would reasonably be expected to result in the Borrower or any Subsidiary being designated as a Sanctioned Person.
(c) None
of (i) the Borrower, any Subsidiary or any of their respective directors, officers or employees, or (ii) to the knowledge of the Borrower,
any agent of the Borrower that will act in any capacity in connection with or benefit from the credit facility established hereby, is
a Sanctioned Person. The Borrower will not directly or, to its knowledge, 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 applicable Sanctions.
Section
7.26 EEA Financial Institution. No Loan Party is an EEA Financial Institution.
ARTICLE
VIII
Affirmative Covenants
Until
the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder and all
other amounts payable under the Loan Documents shall have been paid in full and all Letters of Credit shall have expired or terminated
(or are Cash Collateralized) and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Lenders
that:
Section
8.01 Financial Statements; Other Information. The Borrower will furnish to the Administrative Agent and each Lender:
(a) Annual
Financial Statements. As soon as available, but in any event in accordance with then applicable law and not later than 120 days after
the end of each fiscal year of the Borrower, commencing December 31, 2021, the audited consolidated balance sheet for the Borrower and
its Consolidated Subsidiaries and related statements of operations, members’ equity, as applicable, and cash flows as of the end
of and for such year, setting forth 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 60 days after
the end of each of the first three fiscal quarters of each fiscal year of the Borrower, commencing March 31, 2022, the unaudited consolidated
balance sheet for the Borrower and its Consolidated Subsidiaries and related statements of operations, members’ equity, as applicable,
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 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 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.
(c) Certificate
of Financial Officer – Compliance. Concurrently with any delivery of financial statements under Section 8.01(a) or Section
8.01(b), a certificate of a Financial Officer of the Borrower in substantially the form of Exhibit D hereto (a “Compliance
Certificate”) (i) certifying as to whether an Event of Default has occurred and, if an Event of Default has occurred, specifying
the details thereof and any action taken or proposed to be taken with respect thereto, (ii) setting forth reasonably detailed calculations
demonstrating compliance with Section 9.01 and (iii) stating whether any change in GAAP or in the application thereof has occurred
since the date of the most recently delivered financial statements referred to in Section 8.01(a) and (b) and, if any such
change has occurred, specifying the effect of such change on the financial statements accompanying such certificate.
(d) Certificate
of Financial Officer – Swap Agreements. Concurrently with any delivery of financial statements under Section 8.01(b),
a certificate of a Financial Officer, in form and substance satisfactory to the Administrative Agent, setting forth as of the last Business
Day of the period covered by such financial statements, a true and complete list of all Swap Agreements of each Loan Party, the material
terms thereof (including the type, term, effective date, termination date and notional amounts or volumes), any new credit support agreements
relating thereto (other than Security Instruments) not listed on Schedule 7.22, any margin required or supplied under any credit
support document, and the counterparty to each such agreement.
(e) Certificate
of Insurer — Insurance Coverage. Concurrently with any delivery of financial statements under Section 8.01(a), and within
ten (10) Business Days following each change in the insurance maintained in accordance with Section 8.07, certificates of insurance
coverage with respect to the insurance required by Section 8.07, in form and substance satisfactory to the Administrative Agent,
and, if requested by the Administrative Agent or any Lender, all copies of the applicable policies.
(f) Lists
of Purchasers. Concurrently with the delivery of any Reserve Report to the Administrative Agent pursuant to Section 8.12,
a list of all Persons purchasing Hydrocarbons from any Loan Party (or, with respect to Oil and Gas Properties that are not operated by
a Loan Party, a list of the operators of such properties).
(g) Notice
of Sales of Oil and Gas Properties and Unwinds of Swap Agreements. In the event the Borrower or any other Loan Party intends to (i)
sell, transfer, assign or otherwise dispose of any Oil and Gas Properties (or any Equity Interests of any Loan Party that owns Oil and
Gas Properties) or (ii) terminate, unwind, cancel or otherwise dispose of Swap Agreements which could result in an anticipated decline
in the mark-to-market value thereof or net cash proceeds therefrom in excess of $250,000 (in a single transaction or in multiple transactions
over any one-month period), in each case, in accordance with Section 9.11, prior written notice of the foregoing (of at least
5 Business Days or such shorter time as the Administrative Agent may agree), the price thereof, in the case of Oil and Gas Properties
(or any Equity Interests of any Loan Party that owns Oil and Gas Properties), and the anticipated decline in the mark-to-market value
thereof or net cash proceeds therefrom, in the case of Swap Agreements, and the anticipated date of closing and any other details thereof
reasonably requested by the Administrative Agent or any Lender.
(h) Notice
of Casualty Events. Prompt written notice, and in any event within three Business Days, of the occurrence of any Casualty Event involving
damages to a loss of Collateral in excess of $500,000 or the commencement of any action or proceeding that could reasonably be expected
to result in a Casualty Event.
(i) Information
Regarding Borrower and Guarantors. Prompt written notice of (and in any event within ten (10) days prior thereto or such other time
as the Administrative Agent may agree) any change (i) in a Loan Party’s name, (ii) in the location of the Loan Party’s chief
executive office or principal place of business, (iii) in the Loan Party’s entity type or in the jurisdiction in which such Person
is incorporated or formed, (iv) in the Loan Party’s jurisdiction of organization or such Person’s organizational identification
number in such jurisdiction of organization, and (v) in the Loan Party’s federal taxpayer identification number.
(j) Production
Report and Lease Operating Statements. Concurrently with the delivery of any financial statements pursuant to Section 8.01(a)
or (b), a report setting forth, for each fiscal quarter 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 fiscal quarter 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 fiscal quarter.
(k) Patriot
Act. Promptly upon request, all documentation and other information required by regulatory authorities under applicable “know
your customer”, the Beneficial Ownership Regulation and anti-money laundering rules and regulations, including the USA Patriot
Act.
(l) Cash
Flow Forecast. Not later than 60 days after the end of each fiscal year, a certificate of a Responsible Officer, in form and substance
satisfactory to the Administrative Agent, setting forth an operating budget (including a cash flow and capital expenditure forecast)
for the immediately succeeding twelve months in form and substance reasonably satisfactory to the Administrative Agent.
(m) Notices
of Certain Changes. Promptly, but in any event within five (5) Business Days after the execution thereof, copies of any material
amendment, modification or supplement to the Organizational Documents of the Borrower or any Subsidiary.
(n) 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 any Plan or Multiemployer Plan and any reports or other information
required to be filed under ERISA), 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 and each Lender prompt written notice
of the following:
(a) the
occurrence of any Event of 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 and its Subsidiaries 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 could reasonably be expected to result in a Material Adverse Effect;
(c) the
occurrence of any ERISA Event that, either individually or together with any other ERISA Events, could reasonably be expected to have
a Material Adverse Effect; and
(d) the
occurrence of any Material Adverse Effect.
Each
notice delivered under this Section 8.02 shall be accompanied by a statement of a Responsible Officer setting forth the 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 Loan Party to, do or cause to be done all things
necessary to 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 maintain, if necessary, 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 or dissolution permitted under Section 9.10.
Section
8.04 Payment of Obligations. The Borrower will, and will cause each other Loan Party to, pay its obligations, including tax
liabilities of the Borrower and all of the other Loan Parties 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 other Loan Party
has set aside on its books adequate reserves with respect thereto in accordance with GAAP or (b) the failure to make payment pending
such contest could not reasonably be expected to result in a Material Adverse Effect.
Section
8.05 Performance of Obligations under Loan Documents. The Borrower will pay the Loans according to the reading, tenor and effect
thereof, and cause each other Loan Party to, do and perform every act and discharge all of the obligations to be performed and discharged
by them under the Loan Documents, including this Agreement, at the time or times and in the manner specified.
Section
8.06 Operation and Maintenance of Properties. The Borrower, at its own expense, will, and will cause each other Loan Party
to:
(a) operate
its Oil and Gas Properties and other material Properties or use commercially reasonable efforts to cause such Oil and Gas Properties
and other material Properties to be operated in accordance with the practices of the industry and in compliance with all applicable contracts
and agreements and in compliance with all applicable Governmental Requirements, including 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) 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 Properties material to the conduct of its business, including all equipment, machinery and facilities.
(c) promptly
pay and discharge, or use commercially reasonable efforts to cause to be paid and discharged, all material delay rentals, royalties,
expenses and indebtedness accruing under the leases or other agreements affecting or pertaining to its Oil and Gas Properties and will
do all other things necessary, in accordance with industry standards, to keep unimpaired their rights with respect thereto and prevent
any forfeiture thereof or default thereunder.
(d) promptly
perform or use commercially reasonable 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 Oil and Gas Properties
and other material Properties.
Section
8.07 Insurance. The Borrower will maintain, with financially sound and reputable insurance companies, insurance covering all
Loan Parties, 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. The loss payable clauses or provisions in the applicable insurance policy or policies insuring
any of the collateral for the Loans shall be endorsed in favor of and made payable to the Administrative Agent as a “loss payee”
or other formulation acceptable to the Administrative Agent and such liability policies shall name the Administrative Agent, as agent
for the benefit of the Secured Parties, as “additional insured”. Such policies will also provide that the insurer will endeavor
to give at least 30 days (or, in the case of any non-payment of any premium, 10 days) prior notice of any cancellation to the Administrative
Agent.
Section
8.08 Books and Records; Inspection Rights. The Borrower will, and will cause each other Loan Party to, keep proper books of
record and account in accordance with GAAP. The Borrower will, and will cause each other Loan Party to, permit any representatives designated
by the Administrative Agent or any Lender, 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 and all at Borrower’s expense; provided that, so long as no Event
of Default has occurred and is continuing, the Borrower shall not be required to reimburse the Administrative Agent and the Lenders for
any inspection during any fiscal year.
Section
8.09 Compliance with Laws. The Borrower will, and will cause each Loan Party 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. The Borrower will maintain in effect and enforce policies and
procedures designed to ensure compliance by the Borrower and its Subsidiaries and their respective directors, officers, employees and
agents with applicable Anti-Corruption Laws and applicable Sanctions.
Section
8.10 Environmental Matters.
(a) The
Borrower shall use best efforts to: (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, except to the extent any breach thereof could not be reasonably
expected to have a Material Adverse Effect; (ii) not dispose of or otherwise Release, and shall cause each Subsidiary not to dispose
of or otherwise Release, any Hazardous Material, or solid waste on, under, about or from any of the Borrower’s or its Subsidiaries’
Properties or any other Property to the extent caused by the Borrower’s or any of the Subsidiaries’ operations except in
compliance with applicable Environmental Laws, the disposal or 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 notices, and 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 the 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 disposal
or other Release of any Hazardous Materials on, under, about or from any of the Borrower’s or the 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 each Subsidiary 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) establish and implement, and shall cause each Subsidiary to establish
and implement, such procedures as may be necessary to continuously determine and assure that the Borrower’s 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 (5) Business Days of the Borrower becoming aware thereof, notify the Administrative
Agent and the Lenders in writing of any threatened action, investigation or inquiry by any Governmental Authority or any demand or lawsuit
by any landowner or other third party threatened in writing against the Borrower or its Subsidiaries or their Properties of which the
Borrower has knowledge in connection with any Environmental Laws (excluding routine testing and corrective action) if the Borrower reasonably
anticipates 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.
(c) If
an Event of Default has occurred and is continuing, the Administrative Agent may (but shall not be obligated to), at the expense of the
Borrower and to the extent that the Borrower has the right to do so, conduct such Remedial Work as it deems appropriate to determine
the nature and extent of any noncompliance with applicable Environmental Laws, the nature and extent of the presence of any Hazardous
Material and the nature and extent of any other environmental conditions that may exist at or affect any of the Mortgaged Properties,
and the Borrower and its Subsidiaries shall cooperate with the Administrative Agent in conducting such Remedial Work. Such Remedial Work
may include a detailed visual inspection of the Mortgaged Properties, including all storage areas, storage tanks, drains and dry wells
and other structures and locations, as well as the taking of soil samples, surface water samples, and ground water samples and such other
investigations or analyses as the Administrative Agent deems appropriate. The Administrative Agent and its officers, employees, agents
and contractors shall have and are hereby granted the right to enter upon the Mortgaged Properties for the foregoing purposes.
Section
8.11 Further Assurances.
(a) The
Borrower at its sole expense will, and will cause each other Loan Party 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 any Loan Party, as the case may be, in the Loan Documents 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 without the signature of the Borrower or any other Loan Party where permitted by
law. A carbon, photographic or other reproduction of the Security Instruments or any financing statement covering the Mortgaged Property
or any part thereof shall be sufficient as a financing statement where permitted by law.
Section
8.12 Reserve Reports.
(a) On
or about March 1st and September 1st of each year, commencing March 1, 2022, the Borrower shall furnish to the
Administrative Agent and the Lenders a Reserve Report evaluating the Oil and Gas Properties of the Borrower and the other Loan Parties
as of the immediately preceding January 1st and July 1st, as applicable. The Reserve Report as of January 1st
and delivered on or about March 1st of each year (the “January 1 Reserve Report”) shall be prepared
by one or more Approved Petroleum Engineers, and each other Reserve Report of each year may be prepared by one or more Approved Petroleum
Engineers or internally under the supervision of the chief engineer of the Borrower who shall certify such Reserve Report to be true
and accurate in all material respects and, except as otherwise specified therein, to have been prepared in accordance with the procedures
used in the immediately preceding January 1 Reserve Report.
(b) In
the event of an Interim Redetermination, the Borrower shall furnish to the Administrative Agent and the Lenders a Reserve Report prepared
by or under the supervision of the chief engineer of the Borrower who shall certify such Reserve Report to be true and accurate in all
material respects and, except as otherwise specified therein, to have been prepared in accordance with the procedures used in the immediately
preceding January 1 Reserve Report. For any Interim Redetermination requested by the Administrative Agent or the Borrower pursuant to
Section 2.07(b), the Borrower shall provide such Reserve Report with an “as of” date as required by the Administrative
Agent as soon as possible, but in any event no later than thirty (30) days following the receipt of such request.
(c) With
the delivery of each Reserve Report, the Borrower shall provide to the Administrative Agent and the Lenders a certificate from a Responsible
Officer certifying that in all material respects: (i) the information contained in the Reserve Report and any other information delivered
in connection therewith is true and correct in all material respects, (ii) the Borrower or the other Loan Parties own good and defensible
title to the Oil and Gas Properties evaluated in such Reserve Report and such Properties are free of all Liens except for Liens permitted
by Section 9.03, (iii) 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 7.19 with respect to its Oil and Gas Properties evaluated
in such Reserve Report which would require the Borrower or any other Loan Party 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, (iv) none of their Oil
and Gas Properties have been sold since the date of the last Borrowing Base determination except as set forth on an exhibit to the certificate,
which exhibit shall list all of its Oil and Gas Properties sold and in such detail as reasonably required by the Administrative Agent,
(v) attached to the certificate is a list of all marketing agreements entered into by a Loan Party 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 7.20 had such agreement been in effect on the date hereof and (vi) attached thereto is a schedule of the Oil and Gas
Properties evaluated by such Reserve Report that are Mortgaged Properties and demonstrating the percentage of the Oil and Gas Properties
that the value of such Mortgaged Properties represent and that such percentage is in compliance with Section 8.14(a).
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 Borrowing Base Properties
evaluated by such Reserve Report that were not included in the immediately preceding Reserve Report, so that the Administrative Agent
shall have had the opportunity to review (including title information previously delivered to the Administrative Agent), satisfactory
title information on Hydrocarbon Interests constituting at least 90% of the PV-10 of the Borrowing Base 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
of notice from the Administrative Agent that title defects or exceptions (excluding Permitted Liens and Immaterial Title Deficiencies)
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 satisfactory title information 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 Hydrocarbon Interests constituting at least 90% of the PV-10 of the Borrowing
Base Properties evaluated by such Reserve Report.
(c) If
the Borrower is unable to cure any title defect (excluding Permitted Liens and Immaterial Title Deficiencies) requested by the Administrative
Agent or the Lenders to be cured within the 60-day period or the Borrower does not comply with the requirements to provide acceptable
title information covering 90% of the PV-10 of the Borrowing Base Properties evaluated in the most recent Reserve Report, such failure
shall not be a Default or an Event of Default, but instead the Administrative Agent and/or the Majority Lenders shall have the right
to exercise the following remedy in their sole discretion from time to time, and any failure to so exercise this remedy at any time shall
not be a waiver as to future exercise of the remedy by the Administrative Agent or the Lenders. To the extent that the Administrative
Agent or the Majority Lenders are not satisfied with title to any Mortgaged Property after the 60-day period has elapsed, such unacceptable
Mortgaged Property shall not count towards the 90% requirement, and the Administrative Agent may send a written notice to the Borrower
and the Lenders that the then outstanding Borrowing Base shall be reduced by an amount as determined by the Required Lenders to cause
the Borrower to be in compliance with the requirement to provide acceptable title information on Hydrocarbon Interests constituting 90%
of the PV-10 of the Borrowing Base Properties evaluated by such Reserve Report. This new Borrowing Base shall become effective immediately
after receipt of such notice.
Section
8.14 Additional Collateral; Additional Guarantors.
(a) In
connection with each redetermination of the Borrowing Base, the Borrower shall review the Reserve Report and the list of current Mortgaged
Properties (as described in Section 8.12(c)(vi)) to ascertain whether the Mortgaged Properties represent at least 90% of the PV-10
of the Borrowing Base 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 90% of such
PV-10, then the Borrower shall, and shall cause the other Loan Parties to, grant, within thirty (30) days of delivery of the certificate
required under Section 8.12(c), to the Administrative Agent as security for the Secured Obligations a first-priority Lien (subject
to Permitted Liens) 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 at least 90% of such PV-10. 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 grants a Lien on its Oil
and Gas Properties pursuant to Section 8.14(a) and such Subsidiary is not a Guarantor, then it shall become a Guarantor and comply
with Section 8.14(b).
(b) The
Borrower shall promptly cause each newly created or acquired Subsidiary to guarantee the Secured Obligations pursuant to the Guaranty
Agreement and to grant a lien and security interest in all of its Collateral (as defined in the security agreement) pursuant to a security
agreement. In connection with any such guaranty, the Borrower shall, or shall promptly cause (i) such Subsidiary to execute and deliver
the Guaranty Agreement (or a supplement thereto, as applicable) and a security agreement (or a supplement thereto, as applicable) and
(ii) the owners of the Equity Interests of such Subsidiary to pledge all of the Equity Interests of such new Subsidiary (including, in
the event such Equity Interests are certificated, delivery of original certificates evidencing the Equity Interests of such Subsidiary,
together with an appropriate undated powers for each certificate duly executed in blank by the registered owner thereof) and to execute
and deliver such other additional closing documents, legal opinions and certificates as shall reasonably be requested by the Administrative
Agent.
(c) The
Borrower hereby guarantees the payment of all Secured Obligations of each Loan Party (other than the Borrower) and absolutely, unconditionally
and irrevocably undertakes to provide such funds or other support as may be needed from time to time to each Loan Party (other than the
Borrower) in order for such Loan Party to honor its obligations under its respective Guaranty Agreement and other Security Instruments
including obligations with respect to Swap Agreements (provided, however, that the Borrower shall only be liable under this Section
8.14(c) for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section
8.14(c), or otherwise under this Agreement or any Loan Document, as it relates to such other Loan Parties, voidable under applicable
law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations of the Borrower under
this Section 8.14(c) shall remain in full force and effect until the Commitments have expired or terminated and the principal
of and interest on each Loan and all fees payable hereunder and all other amounts payable under the Loan Documents have been paid in
full and all Letters of Credit have expired or terminated (or are Cash Collateralized) and all LC Disbursements shall have been reimbursed.
The Borrower intends that this Section 8.14(c) constitute, and this Section 8.14(c) shall be deemed to constitute, a “keepwell,
support, or other agreement” for the benefit of each Loan Party (other than the Borrower) for all purposes of Section 1a(18)(A)(v)(II)
of the Commodity Exchange Act.
Section
8.15 ERISA Compliance. The Borrower will promptly furnish and will cause each Subsidiary and any ERISA Affiliate to promptly
furnish to the Administrative Agent (i) upon becoming aware of the occurrence of any ERISA Event or of any Prohibited Transaction, which
could reasonably be expected to result in liability of the Borrower or such Subsidiary in an aggregate amount exceeding $500,000, in
connection with any Plan or Multiemployer Plan or any trust created thereunder, a written notice of the Borrower or Subsidiary of the
Borrower, as the case may be, specifying the nature thereof, what action such Person is taking or proposes to take with respect thereto,
and, when known, any action taken or proposed by the Internal Revenue Service, the Department of Labor or the PBGC with respect thereto,
and (ii) upon receipt thereof, copies of any notice of the PBGC’s intention to terminate or to have a trustee appointed to administer
any Plan. Promptly following receipt thereof, the Borrower will furnish and will cause each Subsidiary to promptly furnish to the Administrative
Agent copies of any documents described in Section 101(k) or 101(l) of ERISA that Borrower or any Subsidiary may request with respect
to any Multiemployer Plan for which the Borrower, any Subsidiary or any of their ERISA Affiliates may be subject to any current or future
liability in excess of $500,000; provided, that if the Borrower and its Subsidiaries have not requested such documents or notices
from the administrator or sponsor of the applicable Multiemployer Plan, then, upon reasonable request of the Administrative Agent, the
Borrower and its Subsidiaries shall promptly make a request for such documents or notices from such administrator or sponsor and the
Borrower shall provide copies of such documents and notices to the Administrative Agent promptly after receipt thereof.
Section
8.16 Marketing Activities. The Borrower will not, and will not permit any of the other Loan Parties 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, (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 the other Loan Parties that the Borrower or
one of the other Loan Parties 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 and (iii) other contracts for the purchase and/or sale of Hydrocarbons
of third parties (A) which have generally offsetting provisions (i.e. corresponding pricing mechanics, delivery dates and points and
volumes) such that no “position” is taken and (B) for which appropriate credit support has been taken to alleviate the material
credit risks of the counterparty thereto.
Section
8.17 Account Control Agreements; Location of Proceeds of Loans.
(a) The
Borrower will, and will cause each other Loan Party to, establish, hold or maintain each of their primary deposit and securities accounts
(other than Excluded Accounts) with one or more Lenders.
(b) The
Borrower will, and will cause each other Loan Party to, in connection with any deposit account and/or any securities account (other than
Excluded Accounts) established, held or maintained after the Effective Date promptly, but in any event within ten (10) Business Days
after the establishment of such account (or such later date as the Administrative Agent may agree in its sole discretion), cause such
deposit account and/or securities account to be subject to a control agreement (except to the extent the Administrative Agent otherwise
has control of such account).
(c) The
Borrower shall, and shall cause each Loan Party to deposit or cause to be deposited directly all Cash Receipts (except for amounts held
in Excluded Accounts in accordance with the definition thereof) into one or more deposit accounts in which the Administrative Agent has
been granted a first-priority Lien and that is subject to a control agreement.
Section
8.18 EEA Financial Institution. No Loan Party is an EEA Financial Institution.
Section
8.19 Affirmative Hedging Covenant. The Borrower shall deliver to the Administrative Agent, (a) on or prior to the date that
is thirty (30) days after the Effective Date, and (b) thereafter, on or prior to the date that is the earlier of (x) the delivery of
financial statements for any fiscal quarter pursuant to Section 8.01(a) or (b) or (y) the date that is 60 days after the end of each
fiscal quarter, evidence reasonably satisfactory to the Administrative Agent that the Borrower has entered into, or shall have caused
another Loan Party to enter into, Swap Agreements with one or more Approved Counterparties with prices and terms reasonably satisfactory
to the Administrative Agent to hedge notional volumes covering:
(i) If
the Borrowing Base Utilization Percentage as of such measurement date is less than 25%, then for each month during the period consisting
of months 1 through 12 following such measurement date, not less than fifteen percent (15%) of the reasonably anticipated projected production
from the proved, developed producing Oil and Gas Properties of the Loan Parties of crude oil and natural gas for such calendar month
as set forth in the most recently delivered Reserve Report;
(ii) If
the Borrowing Base Utilization Percentage as of such measurement date is equal to or greater than 25% and less than 50%, then for each
month during the period consisting of months 1 through 12 following such measurement date, not less than thirty percent (30%) of the
reasonably anticipated projected production from the proved, developed producing Oil and Gas Properties of the Loan Parties of crude
oil and natural gas for such calendar month as set forth in the most recently delivered Reserve Report; and
(iii) If
the Borrowing Base Utilization Percentage as of such measurement date is equal to or greater than 50%, then (A) for each month during
the period consisting of months 1 through 12 following such measurement date, not less than fifty percent (50%), and (B) for each month
during the period consisting of months 13 through 24 following such measurement date, not less than thirty percent (30%), in each case,
of the reasonably anticipated projected production from the proved, developed producing Oil and Gas Properties of the Loan Parties of
crude oil and natural gas for such calendar month as set forth in the most recently delivered Reserve Report.
Section
8.20 Excess Cash Information. On any Consolidated Cash Balance Measurement Day on which the Borrower has any Excess Cash, the
Borrower shall provide to the Administrative Agent, (a) a certificate of a Responsible Officer in form and substance satisfactory to
the Administrative Agent, certifying as to the amount of the Consolidated Cash Balance and the amount of such Excess Cash, if any, as
of such date, and (b) attaching thereto, summary and balance statements, in a form reasonably acceptable to the Administrative Agent,
for each deposit account, securities account or other account in which any of the Consolidated Cash Balance is held, credited or carried.
Section
8.21 Permitted PPP Loans and Permitted EIDL.
(a) To
the extent that any Permitted PPP Loans are outstanding, each Loan Party will (i) comply with the requirements for the Paycheck Protection
Program as set forth in Title I of the CARES Act and related guidance, (ii) use the proceeds of the Permitted PPP Loans only for allowable
purposes under the CARES Act, (iii) use commercially reasonable efforts to conduct its business in a manner that maximizes the amount
of the Permitted PPP Loans that is forgiven, (iv) keep necessary and appropriate records relating to the use of the Permitted PPP Loans
(and promptly provide such records to the Administrative Agent upon the Administrative Agent’s reasonable request), (v) promptly
apply for forgiveness of the Permitted PPP Loans in accordance with the regulations implementing Section 1106 of the CARES Act (and promptly
provide documentation, and status, of such forgiveness to the Administrative Agent upon the Administrative Agent’s reasonable request
and, in any event, within 5 Business Days of the final determination thereof), (vi) not directly or indirectly, agree to any amendment
or modification of the Permitted PPP Loans that would be materially adverse to the Administrative Agent or the Lenders, and (vii) not
make any optional prepayment of any portion of the Permitted PPP Loans (whether by refinancing or otherwise).
(b) To
the extent that any Permitted EIDL is outstanding, each Loan Party will (i) comply with the requirements for the EIDL set forth by the
SBA, the CARES Act and related guidance, (ii) use the proceeds of the Permitted EIDL only for allowable purposes, (iii) keep necessary
and appropriate records relating to the use of the Permitted EIDL (and promptly provide such records to the Administrative Agent upon
the Administrative Agent’s reasonable request), (iv) not directly or indirectly, agree to any amendment or modification of the
Permitted EIDL that would be materially adverse to the Administrative Agent or the Lenders, and (v) not make any optional prepayment
of any portion of the Permitted EIDL (whether by refinancing or otherwise).
Section
8.22 Post Closing Obligations. Notwithstanding anything to the contrary herein,
(a) Accounts.
Within thirty (30) days after the Effective Date (or such later date to which Administrative Agent shall agree in writing), each Loan
Party shall have established its primary deposit and securities accounts with FBSW; and
(b) Minimum
Hedging. Within the timeframe set forth in Section 8.19(a), Borrower shall comply with the hedging requirements specified
therein.
(c) Legal
Opinion. Within five Business Days after the Effective Date (or such later date to which Administrative Agent shall agree in writing),
the Borrower shall deliver to the Administrative Agent an opinion of R. Reese & Associates PLLC, special counsel for the Loan Parties,
in form and of substance reasonably acceptable to the Administrative Agent.
(d) Mortgage
and Title Requirements. Within forty-five (45) days after the Effective Date (or such later date to which Administrative Agent shall
agree in writing), the Borrower shall have delivered to the Administrative Agent:
(i) Security
Instruments that create first priority Liens (except that Excepted Liens identified in clauses (a) to (d) and (f) and (k) of the definition
thereof, but subject to the provisos at the end of such definition may exist) on at least 90% of the PV-10 of the Borrowing Base Properties;
(ii) Title
information and data acceptable to the Administrative Agent satisfactorily setting forth the status of title to at least 90% of the PV-10
of the Borrowing Base Properties; and
(iii) Customary
legal opinions from local counsel for the Loan Parties in each jurisdiction where a Mortgage is or will be filed, in form and of substance
reasonably acceptable to the Administrative Agent.
ARTICLE
IX
Negative Covenants
Until
the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder and all other
amounts payable under the Loan Documents have been paid in full and all Letters of Credit have expired or terminated (or are Cash Collateralized)
and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Lenders that:
Section
9.01 Financial Covenants.
(a) Ratio
of Total Debt to EBITDAX. The Borrower will not, as of the last day of any Test Period, commencing with the Test Period ending March
31, 2022, permit its ratio of Total Debt as of such time to EBITDAX for the Test Period then ended to be greater than 3.0 to 1.0.
(b) Current
Ratio. The Borrower will not, as of the last day of any Test Period, commencing with the Test Period ending March 31, 2022, permit
its ratio of (i) consolidated current assets (including the unused amount of the total Commitments, but excluding non-cash assets under
ASC 815) to (ii) consolidated current liabilities (excluding non-cash obligations under ASC 815, reclamation obligations to the extent
classified as current liabilities under GAAP, and current maturities under this Agreement) to be less than 1.0 to 1.0.
Section
9.02 Debt. The Borrower will not, and will not permit any other Loan Party to, incur, create, assume or suffer to exist any
Debt, except:
(a) the
Loans or other Secured Obligations arising under the Loan Documents or any Secured Swap Agreement or any guaranty of or suretyship arrangement
for the Loans or other Secured Obligations arising under the Loan Documents or any Secured Swap Agreement;
(b) Debt
of any Loan Party under Capital Leases and purchase money Debt not to exceed $250,000;
(c) Debt
associated with worker’s compensation claims, bonds or surety obligations required by Governmental Requirements or by third parties
in the ordinary course of business in connection with the operation of, or provision for the abandonment and remediation of, the Oil
and Gas Properties;
(d) (i)
Debt between the Borrower and its Subsidiaries that are Loan Parties, (ii) Debt between the Subsidiaries of the Borrower which are Loan
Parties, and (iii) Debt extended to the Borrower and its Subsidiaries which are Loan Parties by any other Loan Party; provided
that (1) such Debt is not held, assigned, transferred, negotiated or pledged to any Person other than a Loan Party, and (2) any such
Debt owed by either the Borrower or a Guarantor shall be subordinated to the Secured Obligations on terms set forth in the Guaranty Agreement;
(e) endorsements
of negotiable instruments for collection in the ordinary course of business;
(f) the
Permitted EIDL in the aggregate at any one time outstanding not to exceed $500,000;
(g) [reserved];
(h) other
Debt not to exceed $250,000 in the aggregate at any one time outstanding; and
(i) any
guarantee of any other Debt permitted to be incurred hereunder.
Section
9.03 Liens. The Borrower will not, and will not permit any other Loan Party 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 of any Secured Obligations;
(b) Excepted
Liens;
(c) Liens
securing Capital Leases permitted by Section 9.02(b) but only on the Property that is the subject of any such lease, accessions
and improvements thereto, insurance thereon, and the proceeds of the foregoing; and
(d) other
Liens on Property not constituting collateral for the Secured Obligations not to exceed $250,000 in the aggregate at any one time outstanding.
Section
9.04 Restricted Payments. The Borrower will not, and will not permit any other Loan Party to, declare or make, or agree to
pay or make, directly or indirectly, any Restricted Payment, except
(a) the
Borrower may make Restricted Payments with respect to its Equity Interests payable solely in additional shares of its Equity Interests
(other than Disqualified Capital Stock);
(b) Subsidiaries
may declare and pay dividends and other Restricted Payments to the Borrower and any other Loan Party;
(c) so
long as no Event of Default exists or would result therefrom the Borrower may make Permitted Tax Distributions;
(d) so
long as no Default or Event of Default exists or would result therefrom, the repurchase, redemption or other acquisition or retirement
for value of any Equity Interests of any Loan Party, whether upon the exercise or conversion of stock appreciation rights, restricted
stock, unit options, restricted units, phantom units, warrants, incentives, rights to acquire Equity Interests or other derivative securities
of such Equity Interests or otherwise, held by any current or former officer, director, member of management, consultant or employee
(or their transferees, estates or beneficiaries under their estates) of any Loan Party pursuant to any equity subscription agreement,
stock option agreement, shareholders’ agreement, employment agreement or similar agreement, collectively, not to exceed $500,000
in the aggregate in any fiscal year;
(e) so
long as no Default or Event of Default exists or would result therefrom, the repurchase of Equity Interests, that are deemed to occur
upon the exercise or conversion of stock appreciation rights, restricted stock, unit options, restricted units, phantom units, warrants,
incentives, rights to acquire Equity Interests or other derivative securities of such Equity Interests to the extent such Equity Interests
represent a portion of the exercise price thereof and any repurchase or other acquisition of any of the foregoing made in lieu of withholding
Taxes in connection therewith not to exceed $500,000 in the aggregate in any fiscal year;
(f)
so long as no Default or Event of Default exists or would result therefrom, payments of cash, dividends, distributions, advances or other
Restricted Payments by any Loan Party to allow the payment of cash in lieu of the issuance of fractional shares upon (i) the exercise
of options or warrants or (ii) the conversion or exchange of Equity Interests of any such Person, collectively, not to exceed $500,000
in the aggregate in any fiscal year; and
(g) Borrower
may declare and make Restricted Payments to the owners of its Equity Interests, so long as (i) no Default, Event of Default exists or
would result therefrom, (ii) the ratio of Total Debt (after giving pro forma effect to any Borrowing to be made on the date of such Restricted
Payment) to EBITDAX for the Test Period most recently ended is not greater than 2.5 to 1.0, and (iii) Availability (after giving pro
forma effect to any Borrowing to be made on the date of such Restricted Payment) is greater than or equal to 20% of the then-existing
Borrowing Base.
Section
9.05 Investments, Loans and Advances. The Borrower will not, and will not permit any other Loan Party 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
which are disclosed to the Lenders in Schedule 9.05;
(b) accounts
receivable arising in the ordinary course of business;
(c) cash
and direct obligations of the United States or any agency thereof, or obligations guaranteed by the United States or any agency thereof,
in each case maturing within one year from the date of acquisition thereof;
(d) commercial
paper maturing within one year from the date of acquisition thereof rated in one of the two highest grades 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, any Lender or any office
located in the United States of any other bank or trust company which is organized under the laws of the United States 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 similar funds with assets of at least $1,000,000,000 and rated Aaa by Moody’s or AAA by S&P;
(g) Investments
(i) made by the Borrower in or to its Subsidiaries that are Loan Parties or (ii) made by Loan Parties in or to each other or in or to
the Borrower;
(h) Investments
in direct ownership interests in additional Oil and Gas Properties and gas gathering systems related thereto or related to farm-out,
farm-in, joint operating, joint venture or area of mutual interest agreements, gathering systems, pipelines or other similar arrangements
and transactions which are usual and customary in the oil and gas exploration and production business located within the geographic boundaries
of the United States of America;
(i) Investments
pursuant to Swap Agreements or hedging agreements otherwise permitted under this Agreement;
(j) Investments
in stock, obligations or securities received in settlement of debts arising from Investments permitted under this Section 9.05,
or from accounts receivable arising in the ordinary course of business, or from litigation, arbitration, or other disputes which Investments
are obtained by the Borrower or any other Loan Party as a result of a bankruptcy or other insolvency proceeding of, or difficulties in
collecting from, the obligor in respect of such obligations;
(k) loans
or advances to employees made in the ordinary course of business in an aggregate principal amount not to at any time exceed $50,000;
and
(l) other
Investments not otherwise permitted hereunder not to exceed $250,000 in the aggregate at any one time outstanding.
Section
9.06 Nature of Business; No International Operations. The Borrower will not allow any material change to be made in the character
of its business as an independent oil and gas exploration and production company. The Loan Parties will not (i) acquire or make any other
expenditures (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 or (ii) acquire or create any Foreign Subsidiary.
Section
9.07 Proceeds of Loans.
(a) The
Borrower will not permit the proceeds of the Loans to be used for any purpose other than those permitted by Section 7.23.
(b) No
Loan Party nor any Person acting on behalf of the Borrower has taken or will take any action which causes 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. If requested by the Administrative
Agent, the Borrower will furnish to the Administrative Agent and each Lender FR Form U-1 or such other form referred to in Regulation
U, Regulation T or Regulation X of the Board, as the case may be.
(c) The
Borrower will not request any Borrowing or Letter of Credit, and the Borrower shall not use, and shall procure that its Subsidiaries
and its or their respective directors, officers, employees and agents shall not use, the proceeds of any Borrowing or Letter of Credit:
(i) in
furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any
Person in violation of any Anti-Corruption Laws;
(ii) for
the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any
Sanctioned Country to the extent such activities, businesses or transaction would be prohibited by Sanctions if conducted by a corporation
incorporated in the United States; or
(iii) in
any manner that would result in the violation of any Sanctions applicable to any party hereto.
Section
9.08 ERISA Compliance. Except as could not reasonably be expected to result in liability to the Borrower or any other Loan
Party in an aggregate amount that would result in a Material Adverse Effect, the Borrower will not, and will not permit any Subsidiary
to, at any time:
(a) allow
any ERISA Event to occur;
(b) contribute
to or assume an obligation to contribute to, or permit any Subsidiary to contribute to or assume an obligation to contribute to, any
Multiemployer Plan; and
(c) acquire,
or permit any Subsidiary to acquire, an interest in any Person that causes such Person to become an ERISA Affiliate with respect to any
Subsidiary if such Person sponsors, maintains or contributes to, or at any time in the six-year period preceding such acquisition has
sponsored, maintained, or contributed to, any Multiemployer Plan.
Section
9.09 Sale or Discount of Receivables. Except for receivables obtained by the Loan Parties 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 other Loan Party
to, discount or sell (with or without recourse) any of its notes receivable or accounts receivable.
Section
9.10 Mergers, Etc. Neither the Borrower nor any other Loan Party will merge into or with or consolidate with any other Person,
or permit any other Person to merge into or consolidate with it, or sell, lease or otherwise 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, except that (a) any Loan Party may consolidate with
or into the Borrower (provided the Borrower shall be the continuing or surviving entity) and (b) any Loan Party (other than the Borrower)
may consolidate with any other Loan Party.
Section
9.11 Sale of Properties and Termination of Hedging Transactions. The Borrower will not, and will not permit any other Loan
Party to, sell, assign, farm-out, convey or otherwise transfer any Property (subject to Section 9.10) except for:
(a) the
sale of Hydrocarbons in the ordinary course of business;
(b) farmouts
in the ordinary course of business of undeveloped acreage or undrilled depths and assignments in connection with such farmouts;
(c) the
sale or transfer of equipment that is no longer necessary for the business of the Borrower or such other Loan Party or that is replaced
by equipment of at least comparable value and use;
(d) the
sale or other disposition of any Oil and Gas Property to which no Proved Reserves are attributed and the pooling or unitization of Oil
and Gas Properties to which no material Proved Reserves are attributed;
(e) the
sale or other disposition (including Casualty Events) of any Oil and Gas Property to which Proved Reserves are attributed or any interest
therein (including any Equity Interest in any Loan Party that owns Oil and Gas Property to which Proved Reserves are attributed); provided
that:
(i) 75%
of the consideration received in respect of such sale or other disposition of any such Oil and Gas Property (or such Equity Interest)
shall be cash;
(ii) (other
than in respect of Casualty Events) the consideration received in respect of a sale or other disposition of such Oil and Gas Property
or interest therein (or such Equity Interest) shall be equal to or greater than the fair market value of such Oil and Gas Property or
interest therein (or such Equity Interest) subject of such sale or other disposition (as reasonably determined by a Responsible Officer
of the Borrower and if requested by the Administrative Agent, the Borrower shall deliver a certificate of a Responsible Officer of the
Borrower certifying to the foregoing); and
(iii) if
applicable, the Borrowing Base shall be adjusted in accordance with the terms of Section 2.07(e), and the Borrower shall make
any required corresponding prepayment under Section 3.04(c)(iii).
(f) transfers
of Properties from any Loan Party to the Borrower or any other Loan Party;
(g) Swap
Terminations, provided that, if applicable, the Borrowing Base shall be adjusted in accordance with the terms of Section 2.07(e),
and the Borrower shall make any required corresponding prepayment under Section 3.04(c)(iii);
(h) Casualty
Events with respect to Properties that are not Oil and Gas Properties; and
(i) Other
sales, assignments, conveyances, and other transfers of Properties other than Borrowing Base Properties, in an aggregate amount not to
exceed $100,000 in any fiscal year.
Section
9.12 Sales and Leasebacks. The Borrower will not, and will not permit any other Loan Party to enter into any arrangement with
any Person providing for the leasing by any Loan Party of real or personal property that has been or is to be sold or transferred by
such Loan Party to such Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of
such property or rental obligations of such Loan Party.
Section
9.13 Environmental Matters. The Borrower will not, and will not permit any Subsidiary to, (a) cause or knowingly permit any
of its Property to be in violation of, or (b) do anything or knowingly permit anything to be done which will subject any such Property
to any Remedial Work (other than Remedial Work done in the ordinary course of business) under, any Environmental Laws that could reasonably
be expected to have a Material Adverse Effect; it being understood that clause (b) above will not be deemed as limiting or otherwise
restricting any obligation to disclose any relevant facts, conditions and circumstances pertaining to such Property to the appropriate
Governmental Authority.
Section
9.14 Transactions with Affiliates. The Borrower will not, and will not permit any other Loan Party to, enter into any transaction,
including any purchase, sale, lease or exchange of Property or the rendering of any service, with any Affiliate (other than between Borrower
and Loan Parties) unless such transactions are otherwise permitted 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.
Section
9.15 Negative Pledge Agreements; Dividend Restrictions. The Borrower will not, and will not permit any other Loan Party to,
create, incur, assume or suffer to exist any contract, agreement or understanding which in any way prohibits or restricts (a) the granting,
conveying, creation or imposition of any Lien on any of its Property to secure the Secured Obligations or which requires the consent
of other Persons in connection therewith or (b) the Borrower or any other Loan Party from paying dividends or making distributions to
any Loan Party or receiving any money in respect of Debt or other obligations owed to it, or which requires the consent of or notice
to other Persons in connection therewith; provided that (i) the foregoing shall not apply to restrictions and conditions under the Loan
Documents, (ii) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of
any asset or another Loan Party pending such sale; provided such restrictions and conditions apply only to the asset or other Loan Party
that is to be sold and such sale is permitted hereunder, and (iii) clause (a) of the foregoing shall not apply to (A) restrictions or
conditions imposed by any agreement relating to Capital Leases or purchase money Debt permitted by this Agreement if such restrictions
or conditions apply only to the property or assets securing such Capital Leases or Debt and (B) customary provisions in leases restricting
the assignment thereof.
Section
9.16 Take-or-Pay or Other Prepayments. The Borrower will not, and will not permit any other Loan Party to, allow take-or-pay
or other prepayments with respect to the Oil and Gas Properties of the Borrower or any other Loan Party that would require the Borrower
or such other Loan Party to deliver Hydrocarbons at some future time without then or thereafter receiving full payment therefor.
Section
9.17 Swap Agreements.
(a) The
Borrower will not, and will not permit any other Loan Party to, enter into any Swap Agreements with any Person other than:
(i) puts
or floors with respect to which neither the Borrower nor any Subsidiary has any payment obligation other than fixed premiums or other
fixed charges;
(ii) Swap
Agreements in respect of commodities (A) with an Approved Counterparty, (B) which have a term not greater than four years and (C) the
notional volumes for which (when aggregated and netted 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 and
at any time thereafter (such notional volumes to be based upon the projections contained in the then-most recently delivered Reserve
Report), 85% of the reasonably anticipated projected production from the proved, developed producing Oil and Gas Properties of the Loan
Parties for each of crude oil, natural gas and natural gas liquids, calculated separately, for each calendar month following such measurement
date;
(iii) Swap
Agreements in respect of interest rates with an Approved Counterparty, as follows: (A) 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 75% of the then outstanding principal amount
of the Borrower’s Debt for borrowed money which bears interest at a fixed rate and (B) 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.
(b) (i)
In no event shall any Swap Agreement contain any requirement, agreement or covenant for any Loan Party to post collateral or margin to
secure their obligations under such Swap Agreement or to cover market exposures (other than under the Security Instruments), (ii) Swap
Agreements shall only be entered into in the ordinary course of business (and not for speculative purposes), and (iii) no Swap Agreement
in respect of commodities shall be terminated, unwound, cancelled or otherwise disposed of except to the extent that upon such disposition
Borrower makes any required corresponding prepayment under Section 3.04(c)(iii).
Section
9.18 Amendments to Organizational Documents and Material Contracts. The Borrower shall not, and shall not permit any other
Loan Party to, (a) amend, supplement or otherwise modify (or permit to be amended, supplemented or modified) its Organizational Documents
in any material respect that could reasonably be expected to be materially adverse to the interests of the Administrative Agent or the
Lenders without the consent of the Administrative Agent (not to be unreasonably withheld or delayed), other than amendments that delete
or reduce any fees payable by any Loan Party to a Person other than the Administrative Agent or any Lender, or (b) (A) amend, supplement
or otherwise modify (or permit to be amended, supplemented or modified) any agreement to which it is a party, (B) terminate, replace
or assign any of the Loan Party’s interests in any agreement or (C) permit any agreement not to be in full force and effect and
binding upon and enforceable against the parties thereto, in each case if such occurrence could be reasonably expected to result in a
Material Adverse Effect.
Section
9.19 Changes in Fiscal Periods. The Borrower shall not, and shall not permit any other Loan Party to have its fiscal year end
on a date other than December 31 or change its method of determining fiscal quarters.
Section
9.20 No Subsidiaries. The Borrower shall not permit, and shall not permit the other Loan Parties to own or create directly
or indirectly any Subsidiaries other than any Subsidiary formed after the Effective Date that joins this Agreement as a Guarantor in
accordance with Section 8.14(b).
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 or any reimbursement obligation in respect of any LC Disbursement 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 (3) Business Days;
(c) any
representation or warranty made or deemed made by or on behalf of the Borrower or any other Loan Party 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, notice, 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 (or, to the extent
that any such representation and warranty is qualified by materiality, such representation and warranty (as so qualified) shall prove
to have been incorrect in any respect when made or deemed made);
(d) the
Borrower or any other Loan Party shall fail to observe or perform any covenant, condition or agreement contained in Section 8.01,
Section 8.02, Section 8.03, Section 8.14, Section 8.17, Section 8.19, Section 8.22 or in ARTICLE
IX;
(e) the
Borrower or any other Loan Party 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), Section 10.01(c) 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 other Loan Party otherwise becoming aware of such default;
(f) the
Borrower or any other Loan Party 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 after giving effect to any grace periods applicable thereto;
(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 such Material Indebtedness or any trustee
or agent on its or their behalf to cause such 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 or any other Loan Party to make an offer
in respect thereof;
(h) an
involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other
relief in respect of any Loan Party, or its or their debts, or of a substantial part of its or their 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 or any other Loan Party or for a substantial part of its or
their assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree
approving or ordering any of the foregoing shall be entered;
(i) the
Borrower or any other Loan Party 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, (other
than in the capacity as a creditor) (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 or any other Loan Party or for a substantial part of its or their assets, (iv) file
an answer admitting the material allegations of a petition filed against it or them in any such proceeding, (v) make a general assignment
for the benefit of creditors, (vi) take any action for the purpose of effecting any of the foregoing; or (vii) become unable, admit in
writing its inability or fail generally to pay its debts as they become due;
(j) one
or more judgments for the payment of money in an aggregate amount in excess of $500,000 (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
any Loan Party or any combination thereof and the same shall remain undischarged for a period of 45 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 any
Loan Party to enforce any such judgment;
(k) 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 Loan Party thereto or shall
be repudiated by any of them or cease to create valid and perfected Liens of the priority required thereby on the Collateral purported
to be covered thereby, except to the extent permitted by the terms of this Agreement, or the Borrower or any other Loan Party or any
of their Affiliates shall so state in writing;
(l) an
ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan that has resulted or could reasonably be expected to result in
liability of the Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount that could
reasonably be expected to have a Material Adverse Effect; and
(m) 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) or Section 10.01(i)), at any time thereafter
during the continuance of such Event of Default, the Administrative Agent may with the consent of the Majority Lenders or shall at the
request of the Majority Lenders, 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) by written notice to the Borrower,
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 Loan Parties accrued hereunder and under
the Notes and the other Loan Documents (including the payment of cash collateral to secure the LC Exposure as provided in Section
2.08(j)), shall become due and payable immediately, without presentment, demand (other than written notice), protest, notice of intent
to accelerate, notice of acceleration or other notice of any kind, all of which are hereby waived by each Loan Party; and in case of
an Event of Default described in Section 10.01(h) or Section 10.01(i), 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 other Loan Parties accrued hereunder and under the Notes and the other Loan Documents (including the payment
of cash collateral to secure the LC Exposure as provided in Section 2.08(j)), shall automatically and immediately 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 each Loan Party.
(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.
(c) All
proceeds realized from the liquidation or other disposition of collateral or otherwise received after maturity of the Loans, whether
by acceleration or otherwise, shall be applied, subject 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 and Secured Obligations referred to in clause (y) of the definition of Secured
Obligations in respect of Secured Cash Management Agreements and Secured Swap Agreements;
(v) fifth,
pro rata to any other Secured Obligations;
(vi) sixth,
to serve as Cash Collateral to be held by the Administrative Agent to secure the LC Exposure; 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.
Notwithstanding
the foregoing, amounts received from the Borrower or any Guarantor that is not an “eligible contract participant” under the
Commodity Exchange Act shall not be applied to any Excluded Swap Obligations (it being understood, that in the event that any amount
is applied to Secured Obligations other than Excluded Swap Obligations as a result of this clause, the Administrative Agent shall make
such adjustments as it determines are appropriate to distributions pursuant to clause fourth above from amounts received from “eligible
contract participants” under the Commodity Exchange Act to ensure, as nearly as possible, that the proportional aggregate recoveries
with respect to Secured Obligations described in clause fourth above by the holders of any Excluded Swap Obligations are the same as
the proportional aggregate recoveries with respect to other Secured Obligations pursuant to clause fourth above).
Section
10.03 Right to Cure. Notwithstanding anything to the contrary contained in this Agreement:
(a) in
the event that the Borrower fails to comply with the requirements of the financial covenants set forth in Section 9.01(a) or Section
9.01(b) (collectively, the “Specified Financial Covenants”) as of the end of any fiscal quarter, then during the
period commencing on the date that financial statements are delivered pursuant to Section 8.01(a) or (b) for such fiscal
quarter until the expiration of the tenth Business Day subsequent to the date that such financial statements are required to be delivered
pursuant to Section 8.01(a) or (b) for such fiscal quarter (in each case, the last day of such period being the “Anticipated
Cure Deadline” and such ten Business Day period, the “Equity Cure Standstill Period”), the Borrower shall
have the right to obtain cash contributions to its capital, other than proceeds from Disqualified Capital Stock (the “Cure Right”),
and upon the receipt by the Borrower of such cash (a “Cure Amount”), the Specified Financial Covenants shall be recalculated
giving effect to the following pro forma adjustments:
(i) EBITDAX
and consolidated current assets for such fiscal quarter as of the last day of such fiscal quarter shall each be increased by an amount
equal to such Cure Amount (or necessary portion thereof, as provided below) for purposes of calculating the Specified Financial Covenants
as of such fiscal quarter end (and such increase to such fiscal quarter’s EBITDAX and consolidated current assets shall also apply
to subsequent calculations of EBITDAX and consolidated current assets in connection with the Specified Financial Covenants for so long
as such fiscal quarter’s EBITDAX and consolidated current assets are included in such subsequent calculations); provided that to
the extent the Cure Amount is being applied to cure a failure to comply with both Specified Financial Covenants, the Cure Amount (or
portion thereof) applied to each Specified Financial Covenant shall be the minimum amount required to remedy the respective failure to
comply; and
(ii) Total
Debt as of the last day of such fiscal quarter shall not be deemed reduced by such Cure Amount, even if the proceeds of any Cure Amount
are actually used to repay Debt.
(b) If,
after giving effect to the foregoing recalculations, the Borrower shall then be in compliance with the Specified Financial Covenants,
the Borrower shall be deemed to have satisfied the requirements of the Specified Financial Covenants as of the relevant date of determination
with the same effect as though there had been no failure to comply therewith, and the applicable breach or default of the Specified Financial
Covenants that had occurred shall be deemed cured for the purposes of this Agreement.
(c) Upon
receipt by the Administrative Agent of written notice, on or prior to the Anticipated Cure Deadline, that the Borrower intends to exercise
the Cure Right in respect of a fiscal quarter, the Administrative Agent and the Lenders shall not be permitted to accelerate Loans held
by them or to exercise remedies under the Loan Documents on the basis of a failure to comply with any Specified Financial Covenant until
after the applicable Equity Cure Standstill Period; provided that no Lender or Issuing Bank shall be required to make any extension of
credit hereunder during the Equity Cure Standstill Period, unless the Borrower shall have received the Cure Amount.
(d) Notwithstanding
anything in this Section 10.03 to the contrary, (i) the Borrower may not exercise the Cure Right in more than four fiscal quarters
during the term of this Agreement or in any two consecutive fiscal quarters, (ii) for purposes of this Section 10.03, the Cure
Amount utilized shall be no greater than the minimum amount required to remedy all applicable failures to comply with the Specified Financial
Covenants, (iii) all Cure Amounts shall be disregarded for the purposes of any financial ratio determination under the Loan Documents
other than for determining compliance with the Specified Financial Covenants, and (iv) for the purpose of any calculation of EBITDAX
on an annualized basis hereunder, if the Borrower elects to increase EBITDAX for the fiscal quarter most recently ended by an amount
equal to a Cure Amount, then such increase shall be included in the calculation of EBITDAX for such fiscal quarter (and any period that
includes such fiscal quarter) only after first calculating EBITDAX on an annualized basis without giving effect to such increase (i.e.
the Cure Amount shall not be annualized), and (v) to the extent, if any, that EBITDAX or consolidated current assets is calculated under
this Agreement for any purpose other than determining compliance with Specified Financial Covenants, the Cure Amount shall not be included
in such calculation.
ARTICLE
XI
The Administrative Agent
Section
11.01 Appointment and Authority. Each of the Lenders and the Issuing Banks hereby irrevocably appoints the Administrative Agent
to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents 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 or thereof,
together with such actions and powers as are reasonably incidental thereto. Except as otherwise provided in Section 11.06(b),
the provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the Issuing Banks, and the Borrower
shall not have rights as a third-party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent”
herein or in any other Loan Documents (or any other similar term) 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. Instead such term is used
as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties. Each
of each Lender and the Issuing Bank hereby approves the terms and conditions of the Intercreditor Agreement and authorizes Administrative
Agent to enter into the Intercreditor Agreement and amendments thereto from time to time.
Section
11.02 Rights as a Lender. The Person serving as the Administrative 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 the Administrative Agent, and the term “Lender”
or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving
as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money
to, own securities of, act as the financial advisor or in any other advisory capacity for, and generally engage in any kind of business
with, the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without
any duty to account therefor to the Lenders.
Section
11.03 Exculpatory Provisions.
(a) The
Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents,
and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, the Administrative Agent:
(i) 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);
(ii) shall
not have any 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 as directed in writing by the
Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents);
provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may
expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable Law, including for the avoidance
of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a forfeiture, modification
or termination of property of a Defaulting Lender in violation of any Debtor Relief Law, 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), or other parties as set forth in the Intercreditor Agreement, 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; and
(iii) shall
not, except as expressly set forth herein and in the other Loan Documents, 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 Affiliates that is communicated to or obtained by the Person
serving as the Administrative Agent or any of its Affiliates in any capacity.
(b) The
Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required
Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good
faith shall be necessary, under the circumstances as provided in Sections 10.01 and 12.02), or (ii) in the absence of its
own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment. The
Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to
the Administrative Agent in writing by the Borrower, a Lender or an Issuing Bank. 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. If a Default has occurred
and is continuing, no Agent shall have any obligation to perform any act in respect thereof.
(c) The
Administrative Agent 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 thereunder 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 therein or the occurrence of any Default, (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, (vi) the existence, value, perfection or priority of any collateral security or the financial
or other condition of the Borrower and the 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.
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 (including any electronic
message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise
authenticated 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 have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any
condition hereunder to the making of a Loan, or the issuance, extension, increase, reinstatement or renewal of a Letter of Credit, that
by its terms must be fulfilled to the satisfaction of a Lender or an Issuing Bank, the Administrative Agent may presume that such condition
is satisfactory to such Lender or Issuing Bank unless the Administrative Agent shall have received notice to the contrary from such Lender
or Issuing Bank prior to the making of such Loan or the issuance of such Letter of Credit. 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.
Section
11.05 Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and powers
hereunder or under any other Loan Document 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 of its duties and exercise its rights and powers by or through their respective
Related Parties. The exculpatory provisions of this Article 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 facility
evidenced hereby as well as activities as Administrative Agent. The Administrative Agent shall not be responsible for the negligence
or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and nonappealable judgment
that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub agents.
Section
11.06 Resignation of Administrative Agent.
(a) The
Administrative Agent may at any time give notice of its resignation to the Lenders, the Issuing Banks and the Borrower. Upon receipt
of any such notice of resignation, the Majority Lenders shall have the right, in consultation with the Borrower and, provided that no
Event of Default has occurred and is continuing, with the Borrower’s prior written consent, to appoint a successor, which shall
be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor
shall have been so appointed by the Majority Lenders and shall have accepted such appointment within 30 days after the retiring Administrative
Agent gives notice of its resignation (or such earlier day as shall be agreed by the Majority Lenders) (the “Resignation Effective
Date”), then the retiring Administrative Agent may (but shall not be obligated to), on behalf of the Lenders and the Issuing
Banks, appoint a successor Administrative Agent meeting the qualifications set forth above; provided that in no event shall any such
successor Administrative Agent be a Defaulting Lender. Whether or not a successor has been appointed, such resignation shall become effective
in accordance with such notice on the Resignation Effective Date.
(b) If
the Person serving as Administrative Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof, the Majority Lenders
may, to the extent permitted by Applicable Law, by notice in writing to the Borrower and such Person remove such Person as Administrative
Agent and, in consultation with the Borrower, appoint a successor. If no such successor shall have been so appointed by the Majority
Lenders and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed by the Majority Lenders) (the
“Removal Effective Date”), then such removal shall nonetheless become effective in accordance with such notice on
the Removal Effective Date.
(c) With
effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (i) the retiring or removed Administrative Agent
shall be discharged from its duties and obligations hereunder and under the other Loan Documents and (ii) except for any indemnity payments
owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided to be made by, to or through
the Administrative Agent shall instead be made by or to each Lender and Issuing Bank directly, until such time, if any, as the Majority
Lenders appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successor’s appointment as Administrative
Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring
or removed Administrative Agent (other than any rights to indemnity payments owed to the retiring or removed Administrative Agent), and
the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other
Loan Documents. 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 retiring or removed Administrative Agent’s resignation
or removal hereunder and under the other Loan Documents, the provisions of this Article and Section 12.03 shall continue in effect
for the benefit of such retiring or removed 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 the retiring or removed Administrative Agent was acting as Administrative Agent.
Section
11.07 Non-Reliance on Agents and Other Lenders. Each Lender and Issuing Bank acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information
as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and Issuing Bank also
acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related
Parties 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 or 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 Subsidiary of this Agreement, the Loan Documents or any other document referred to or provided for herein or to inspect the Properties
or books of any such Person. 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 any 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 Subsidiary (or any
of their Affiliates) which may come into the possession of such Agent or any of its Affiliates. In this regard, each Lender acknowledges
that Winstead PC 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
11.08 No Other Duties. Anything herein to the contrary notwithstanding, none of the Arrangers or Agents listed on the cover
page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its
capacity, as applicable, as the Administrative Agent, a Lender or an Issuing Bank hereunder.
Section
11.09 Administrative Agent May File Proofs of Claim. In case of the pendency of any proceeding under any Debtor Relief Law
or any other judicial proceeding relative to the Borrower, the Administrative Agent (irrespective of whether the principal of any Loan
or LC Exposure 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 (but not obligated) 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, LC Exposure 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, the Issuing Banks and the Administrative Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders, the Issuing Banks and the Administrative Agent and their respective agents and counsel and
all other amounts due the Lenders, the Issuing Banks 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 and Issuing Bank 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 and the Issuing Banks, 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.
Section
11.10 Authority of Administrative Agent to Release Collateral and Liens. The Lenders and the Issuing Bank, and by accepting
the benefits of the Collateral, each Secured Swap Provider and each Secured Cash Management Provider, each authorize the Administrative
Agent to execute and deliver to the Loan Parties, at the Borrower’s sole cost and expense, any and all releases of Liens, termination
statements, assignments or other documents as reasonably requested by such Loan Party in connection with any disposition of Property
to the extent such disposition is permitted by the terms of Section 9.11 or is otherwise authorized by the terms of the Loan Documents.
Upon request by the Administrative Agent at any time, the Majority Lenders will confirm in writing the Administrative Agent’s authority
to release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations under
the Guaranty Agreement pursuant to this Section 11.10.
Section
11.11 Certain ERISA Matters.
(a) Each
Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such
Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative
Agent and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that at least one of the following
is and will be true:
(i) such
Lender is not using “plan assets” (within the meaning of Section 3(42) of ERISA or otherwise) of one or more Benefit Plans
with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit,
the Commitments or this Agreement,
(ii) the
transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent
qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts),
PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption
for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined
by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and
performance of the Loans, the Letters of Credit, the Commitments and this Agreement,
(iii) (A)
such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE
84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate
in, administer and perform the Loans, the Letters of Credit, the Commitments and this Agreement, (C) the entrance into, participation
in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement satisfies the requirements
of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a)
of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance
of the Loans, the Letters of Credit, the Commitments and this Agreement, or
(iv) such
other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and
such Lender.
(b) In
addition, unless either (1) sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or (2) a Lender has
provided another representation, warranty and covenant in accordance with sub-clause (iv) in the immediately preceding clause (a), such
Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the
date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative
Agent and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that the Administrative Agent
is not a fiduciary with respect to the assets of such Lender involved in such Lender’s entrance into, participation in, administration
of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement (including in connection with the reservation
or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related hereto or thereto).
Section
11.12 Erroneous Payments.
(a) If
the Administrative Agent (x) notifies a Lender, Issuing Bank or Secured Party, or any Person who has received funds on behalf of a Lender,
Issuing Bank or Secured Party (any such Lender, Issuing Bank, Secured Party or other recipient (and each of their respective successors
and assigns), a “Payment Recipient”) that the Administrative Agent has determined in its sole discretion (whether
or not after receipt of any notice under immediately succeeding clause (b)) that any funds (as set forth in such notice from the Administrative
Agent) received by such Payment Recipient from the Administrative Agent or any of its Affiliates were erroneously or mistakenly transmitted
to, or otherwise erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Lender, Issuing Bank, Secured
Party or other Payment Recipient on its behalf) (any such funds, whether transmitted or received as a payment, prepayment or repayment
of principal, interest, fees, distribution or otherwise, individually and collectively, an “Erroneous Payment”) and
(y) demands in writing the return of such Erroneous Payment (or a portion thereof), such Erroneous Payment shall at all times remain
the property of the Administrative Agent pending its return or repayment as contemplated below in this Section 11.12 and held
in trust for the benefit of the Administrative Agent, and such Lender, Issuing Bank or Secured Party shall (or, with respect to any Payment
Recipient who received such funds on its behalf, shall cause such Payment Recipient to) promptly, but in no event later than two Business
Days thereafter (or such later date as the Administrative Agent may, in its sole discretion, specify in writing), return to the Administrative
Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency
so received), together with interest thereon (except to the extent waived in writing by the Administrative Agent) in respect of each
day from and including the date such Erroneous Payment (or portion thereof) was received by such Payment Recipient to the date such amount
is repaid to the Administrative Agent in same day funds 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 from time to time in effect. A notice of the
Administrative Agent to any Payment Recipient under this clause (a) shall be conclusive, absent manifest error.
(b) Without
limiting immediately preceding clause (a), each Lender, Issuing Bank, Secured Party or any Person who has received funds on behalf of
a Lender, Issuing Bank or Secured Party (and each of their respective successors and assigns), agrees that if it receives a payment,
prepayment or repayment (whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise)
from the Administrative Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified
in this Agreement or in a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates) with
respect to such payment, prepayment or repayment, (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment
sent by the Administrative Agent (or any of its Affiliates), or (z) that such Lender, Issuing Bank or Secured Party, or other such recipient,
otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part), then in each such case:
(i) it
acknowledges and agrees that (A) in the case of immediately preceding clauses (x) or (y), an error and mistake shall be presumed to have
been made (absent written confirmation from the Administrative Agent to the contrary) or (B) an error and mistake has been made (in the
case of immediately preceding clause (z)), in each case, with respect to such payment, prepayment or repayment; and
(ii) such
Lender, Issuing Bank or Secured Party shall (and shall cause any other recipient that receives funds on its respective behalf to) promptly
(and, in all events, within one Business Day of its knowledge of the occurrence of any of the circumstances described in immediately
preceding clauses (x), (y) and (z)) notify the Administrative Agent of its receipt of such payment, prepayment or repayment, the details
thereof (in reasonable detail) and that it is so notifying the Administrative Agent pursuant to this Section 11.12(b).
For
the avoidance of doubt, the failure to deliver a notice to the Administrative Agent pursuant to this Section 11.12(b) shall not
have any effect on a Payment Recipient’s obligations pursuant to Section 11.12(a) or on whether or not an Erroneous Payment
has been made.
(c) Each
Lender, Issuing Bank or Secured Party hereby authorizes the Administrative Agent to set off, net and apply any and all amounts at any
time owing to such Lender, Issuing Bank or Secured Party under any Loan Document, or otherwise payable or distributable by the Administrative
Agent to such Lender, Issuing Bank or Secured Party under any Loan Document with respect to any payment of principal, interest, fees
or other amounts, against any amount that the Administrative Agent has demanded to be returned under immediately preceding clause
(a).
(d) (i)
In the event that an Erroneous Payment (or portion thereof) is not recovered by the Administrative Agent for any reason, after demand
therefor in accordance with immediately preceding clause (a), from any Lender that has received such Erroneous Payment (or portion thereof)
(and/or from any Payment Recipient who received such Erroneous Payment (or portion thereof) on its respective behalf) (such unrecovered
amount, an “Erroneous Payment Return Deficiency”), upon the Administrative Agent’s notice to such Lender at
any time, then effective immediately (with the consideration therefor being acknowledged by the parties hereto), (A) such Lender shall
be deemed to have assigned its Loans (but not its Commitments) with respect to which such Erroneous Payment was made (the “Erroneous
Payment Impacted Class”) in an amount equal to the Erroneous Payment Return Deficiency (or such lesser amount as the Administrative
Agent may specify) (such assignment of the Loans (but not Commitments) of the Erroneous Payment Impacted Class, the “Erroneous
Payment Deficiency Assignment”) (on a cashless basis and such amount calculated at par plus any accrued and unpaid interest
(with the assignment fee to be waived by the Administrative Agent in such instance)), and is hereby (together with the Borrower) deemed
to execute and deliver an Assignment and Assumption (or, to the extent applicable, an agreement incorporating an Assignment and Assumption
by reference pursuant to a Platform as to which the Administrative Agent and such parties are participants) with respect to such Erroneous
Payment Deficiency Assignment, and such Lender shall deliver any Notes evidencing such Loans to the Borrower or the Administrative Agent
(but the failure of such Person to deliver any such Notes shall not affect the effectiveness of the foregoing assignment), (B) the Administrative
Agent as the assignee Lender shall be deemed to have acquired the Erroneous Payment Deficiency Assignment, (C) upon such deemed acquisition,
the Administrative Agent as the assignee Lender shall become a Lender, as applicable, hereunder with respect to such Erroneous Payment
Deficiency Assignment and the assigning Lender shall cease to be a Lender, as applicable, hereunder with respect to such Erroneous Payment
Deficiency Assignment, excluding, for the avoidance of doubt, its obligations under the indemnification provisions of this Agreement
and its applicable Commitments which shall survive as to such assigning Lender, (D) the Administrative Agent and the Borrower shall each
be deemed to have waived any consents required under this Agreement to any such Erroneous Payment Deficiency Assignment, and (E) the
Administrative Agent will reflect in the Register its ownership interest in the Loans subject to the Erroneous Payment Deficiency Assignment.
For the avoidance of doubt, no Erroneous Payment Deficiency Assignment will reduce the Commitments of any Lender and such Commitments
shall remain available in accordance with the terms of this Agreement.
(ii) Subject
to Section 11.12 (but excluding, in all events, any assignment consent or approval requirements (whether from the Borrower or
otherwise)), the Administrative Agent may, in its discretion, sell any Loans acquired pursuant to an Erroneous Payment Deficiency Assignment
and upon receipt of the proceeds of such sale, the Erroneous Payment Return Deficiency owing by the applicable Lender shall be reduced
by the net proceeds of the sale of such Loan (or portion thereof), and the Administrative Agent shall retain all other rights, remedies
and claims against such Lender (and/or against any recipient that receives funds on its respective behalf). In addition, an Erroneous
Payment Return Deficiency owing by the applicable Lender (x) shall be reduced by the proceeds of prepayments or repayments of principal
and interest, or other distribution in respect of principal and interest, received by the Administrative Agent on or with respect to
any such Loans acquired from such Lender pursuant to an Erroneous Payment Deficiency Assignment (to the extent that any such Loans are
then owned by the Administrative Agent) and (y) may, in the sole discretion of the Administrative Agent, be reduced by any amount specified
by the Administrative Agent in writing to the applicable Lender from time to time.
(e) The
parties hereto agree that (x) irrespective of whether the Administrative Agent may be equitably subrogated, in the event that an Erroneous
Payment (or portion thereof) is not recovered from any Payment Recipient that has received such Erroneous Payment (or portion thereof)
for any reason, the Administrative Agent shall be subrogated to all the rights and interests of such Payment Recipient (and, in the case
of any Payment Recipient who has received funds on behalf of a Lender, Issuing Bank or Secured Party, to the rights and interests of
such Lender, Issuing Bank or Secured Party, as the case may be) under the Loan Documents with respect to such amount (the “Erroneous
Payment Subrogation Rights”) (provided that the Loan Parties’ Secured Obligations under the Loan Documents in respect
of the Erroneous Payment Subrogation Rights shall not be duplicative of such Secured Obligations in respect of Loans that have been assigned
to the Administrative Agent under an Erroneous Payment Deficiency Assignment) and (y) an Erroneous Payment shall not pay, prepay, repay,
discharge or otherwise satisfy any Secured Obligations owed by the Borrower or any other Loan Party; provided that this Section 11.12
shall not be interpreted to increase (or accelerate the due date for), or have the effect of increasing (or accelerating the due
date for), the Obligations of the Borrower relative to the amount (and/or timing for payment) of the Obligations that would have been
payable had such Erroneous Payment not been made by the Administrative Agent; provided, further, that for the avoidance of doubt, immediately
preceding clauses (x) and (y) shall not apply to the extent any such Erroneous Payment is, and solely with respect to the amount of such
Erroneous Payment that is, comprised of funds received by the Administrative Agent from the Borrower for the purpose of making such Erroneous
Payment.
(f) To
the extent permitted by applicable law, no Payment Recipient shall assert any right or claim to an Erroneous Payment, and hereby waives,
and is deemed to waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim
by the Administrative Agent for the return of any Erroneous Payment received, including, without limitation, any defense based on “discharge
for value” or any similar doctrine.
(g) Each
party’s obligations, agreements and waivers under this Section 11.12 shall survive the resignation or replacement of the
Administrative Agent, any transfer of rights or obligations by, or the replacement of, a Lender or Issuing Bank, the termination of the
Commitments and/or the repayment, satisfaction or discharge of all Secured Obligations (or any portion thereof) under any Loan Document.
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 fax, as follows:
(i) if
to the Borrower, to it at U.S. Energy Corp., 675 Bering Dr., Suite 390, Houston, Texas 77057, Attention: Ryan Smith (email: ryan@usnrg.com);
(ii) if
to the Administrative Agent or FBSW as the Issuing Bank, to it at FirstBank Southwest, 2401 S. Georgia, P.O. Box 32552, Amarillo, Texas
79120-2552 Attention: Dustin Hansen (Facsimile No. (806) 354-5266; email: dustinhansen@fbsw.com); and
(iii) if
to any other Lender or Issuing Bank, to it at its address (or fax 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.
Unless
the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received
upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested”
function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or
intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described in the
foregoing clause (i), of notification that such notice or communication is available and identifying the website address therefor; provided
that, for both clauses (i) and (ii) above, if such notice, email or other communication is not sent during the normal business hours
of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day
for the recipient.
(c) Any
party hereto may change its address or fax number for notices and other 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.
(d) Platform.
(i) The
Borrower agrees that the Administrative Agent may, but shall not be obligated to, make the Communications (as defined below) available
to the Issuing Banks and the other Lenders by posting the Communications on the Platform.
(ii) The
Platform is provided “as is” and “as available.” The Agent Parties (as defined below) do not warrant the adequacy
of the Platform and expressly disclaim liability for errors or omissions in the Communications. No warranty of any kind, express, implied
or statutory, including any warranty of merchantability, fitness for a particular purpose, non-infringement of third-party rights or
freedom from viruses or other code defects, is made by any Agent Party in connection with the Communications or the Platform. In no event
shall the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability
to the Borrower, any Lender or any other Person or entity for damages of any kind, including direct or indirect, special, incidental
or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of the Borrower’s or the Administrative
Agent’s transmission of communications through the Platform. “Communications” means, collectively, any notice,
demand, communication, information, document or other material provided by or on behalf of the Borrower pursuant to any Loan Document
or the transactions contemplated therein that is distributed to the Administrative Agent, any Lender or any Issuing Bank by means of
electronic communications pursuant to this Section, including through the Platform.
Section
12.02 Waivers; Amendments.
(a) No
failure on the part of the Administrative Agent, any other Agent, the Issuing Bank or 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, each other Agent, the Issuing Bank 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 any Loan Party 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 or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Administrative
Agent, any other Agent, any Lender or the Issuing Bank may have had notice or knowledge of such Default at the time.
Notwithstanding
anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under
the other Loan Documents against the Borrower shall be vested exclusively in, and all actions and proceedings at law in connection with
such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 10.02
for the benefit of all the Lenders and the Issuing Banks; provided that the foregoing shall not prohibit (i) the Administrative Agent
from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent)
hereunder and under the other Loan Documents, (ii) each Issuing Bank from exercising on its own behalf the rights and remedies that inure
to its benefit (solely in its capacity as an Issuing Bank) hereunder and under the other Loan Documents, (iii) any Lender from exercising
setoff rights in accordance with Section 12.08 (subject to the terms of Section 4.01(c)) or (iv) any Lender from filing
proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to the Borrower under
any Debtor Relief Law; provided, further, that if at any time there is no Person acting as Administrative Agent hereunder and under the
other Loan Documents, then (x) the Majority Lenders shall have the rights otherwise provided to the Administrative Agent pursuant to
Section 10.02 and (y) in addition to the matters set forth in clauses (ii), (iii) and (iv) of the preceding proviso and subject
to Section 4.01(c), any Lender may, with the consent of the Majority Lenders, enforce any rights or remedies available to it and
as authorized by the Majority Lenders.
(b) Neither
this Agreement nor any provision hereof nor any Loan Document 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/or the other applicable Loan Parties and the Majority Lenders
or by the Borrower and/or the other applicable Loan Parties and the Administrative Agent with the consent of the Majority Lenders; provided
that no such agreement shall (i) extend or increase the Commitment or Maximum Credit Amount of any Lender without the written consent
of such Lender (it being understood that a waiver of any condition precedent set forth in Article VI or the waiver of any Default shall
not constitute an extension or increase of any Commitment or Maximum Credit Amount of any Lender), (ii) except as otherwise provided
in Section 2.07, increase the Borrowing Base without the written consent of each non-Defaulting Lender, or decrease or maintain
the Borrowing Base without the consent of the Required Lenders (other than Defaulting Lenders); provided that a Scheduled Redetermination
may be postponed by the Required Lenders, (iii) reduce the principal of, or rate of interest specified herein on, any Loan or any LC
Disbursement, or any fees or other amounts payable hereunder or under any other Loan Document, without the written consent of each Lender
directly and adversely affected thereby, (iv) postpone any date scheduled for any payment of principal of, or interest on, any Loan or
any L/C Disbursement, or any fees or other amounts payable 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 and adversely affected thereby (but not any mandatory prepayment (other than a mandatory prepayment in connection with a Borrowing
Base Deficiency), which mandatory prepayments shall require the consent of the Majority Lenders), (v) 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 directly and adversely affected thereby, (vi) waive or amend Section 3.04(c) or Section 6.01 without the written
consent of each Lender directly and adversely affected thereby (other than any Defaulting Lender), (vii) release any Guarantor (except
as set forth in Section 11.10 or the Guaranty Agreement), release all or substantially all of the collateral (other than as provided
in Section 11.10), or reduce the percentages set forth in Section 8.14(a), without the written consent of each Lender (other
than any Defaulting Lender), (viii) change any of the provisions of this Section 12.02(b) or the definitions of “Majority
Lenders” or “Required 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 (other than any Defaulting Lender); or (ix) change Section
10.02(c) without the consent of each Person to whom a Secured Obligation is owed; provided further that no such agreement
shall amend, modify or otherwise affect the rights or duties of the Administrative Agent or Issuing Bank hereunder or under any other
Loan Document without the prior written consent of the Administrative Agent or Issuing Bank, as the case may be. Notwithstanding anything
herein to the contrary, (w) no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder
(and any amendment, waiver or consent that by its terms requires the consent of all the Lenders or each affected Lender may be effected
with the consent of the applicable Lenders other than Defaulting Lenders, except that (i) the Commitment of any Defaulting Lender may
not be increased or extended, or the maturity of any of its Loan may not be extended, the rate of interest on any of its Loans may not
be reduced and the principal amount of any of its Loans may not be forgiven, in each case without the consent of such Defaulting Lender
and (ii) any amendment, waiver or consent requiring the consent of all the Lenders or each affected Lender that by its terms affects
any Defaulting Lender more adversely than the other affected Lenders shall require the consent of such Defaulting Lender, (x) any supplement
to any Schedule 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, (y) if the Administrative Agent and the Borrower
shall have jointly identified an obvious error or any error or omission of a technical nature, in each case, in any provision of the
Loan Documents, then the Administrative Agent and the Borrower shall be permitted to amend such provision, and, in each case, such amendment
shall become effective without any further action or consent of any other party to any Loan Document if the same is not objected to in
writing by the Required Lenders to the Administrative Agent within ten Business Days following receipt of notice thereof, and (z) the
Intercreditor Agreement may be amended or modified with the consent of the parties so required pursuant to the terms thereof.
Section
12.03 Expenses, Indemnity; Damage Waiver.
(a) The
Borrower shall pay (i) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent and its Affiliates,
including the reasonable fees, charges and disbursements of counsel for the Administrative Agent and its Affiliates and to the extent
necessary as determined by the Administrative Agent, 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 documented out-of-pocket costs, expenses, Taxes, assessments
and other charges incurred by the Administrative 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, (iii) all reasonable and
documented out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance, amendment, renewal or extension of any
Letter of Credit or any demand for payment thereunder, (iv) all out-of-pocket expenses incurred by the Administrative Agent, any other
Agent, the Issuing Bank or any Lender, including the fees, charges and disbursements of any counsel for the Administrative Agent, any
other Agent, the Issuing Bank 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 or Letters of
Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect
of such Loans or Letters of Credit.
(b) THE
BORROWER SHALL INDEMNIFY EACH AGENT, THE ARRANGER, THE ISSUING BANK 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 OUTSIDE 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, (ii) 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, (iii) 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, (iv) ANY INACCURACY OF ANY REPRESENTATION OR ANY BREACH OF ANY WARRANTY OR COVENANT OF THE BORROWER
OR ANY SUBSIDIARY SET FORTH IN ANY OF THE LOAN DOCUMENTS OR ANY INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS DELIVERED IN CONNECTION THEREWITH,
(v) ANY LOAN OR LETTER OF CREDIT OR THE USE OF THE PROCEEDS THEREFROM, INCLUDING (A) ANY REFUSAL BY THE ISSUING BANK TO HONOR A DEMAND
FOR PAYMENT UNDER A LETTER OF CREDIT IF THE DOCUMENTS PRESENTED IN CONNECTION WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH THE TERMS
OF SUCH LETTER OF CREDIT, OR (B) THE PAYMENT OF A DRAWING UNDER ANY LETTER OF CREDIT NOTWITHSTANDING THE NON-COMPLIANCE, NON-DELIVERY
OR OTHER IMPROPER PRESENTATION OF THE DOCUMENTS PRESENTED IN CONNECTION THEREWITH, (vi) ANY OTHER ASPECT OF THE LOAN DOCUMENTS, (vii)
THE OPERATIONS OF THE BUSINESS OF THE BORROWER OR ANY SUBSIDIARY BY SUCH PERSONS, (viii) ANY ASSERTION THAT THE LENDERS WERE NOT ENTITLED
TO RECEIVE THE PROCEEDS RECEIVED PURSUANT TO THE SECURITY INSTRUMENTS, (ix) 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 OF DISPOSAL OR TREATMENT OF OIL, OIL AND GAS WASTES, SOLID WASTES OR HAZARDOUS MATERIALS ON OR AT ANY OF THEIR PROPERTIES,
(x) THE BREACH OR NON-COMPLIANCE BY THE BORROWER OR ANY SUBSIDIARY WITH ANY ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ANY SUBSIDIARY,
(xi) 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, (xii) THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT,
DISPOSAL, GENERATION, THREATENED RELEASE, TRANSPORT, ARRANGEMENT FOR TRANSPORT OR ARRANGEMENT FOR DISPOSAL OF OIL, OIL AND GAS WASTES,
SOLID WASTES OR 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 SUBSIDIARY, (xiii)
ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE BORROWER OR ANY SUBSIDIARY, (xiv) ANY OTHER ENVIRONMENTAL, HEALTH OR SAFETY CONDITION
IN CONNECTION WITH THE LOAN DOCUMENTS, OR (xv) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY
OF THE FOREGOING, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY, WHETHER BROUGHT BY A THIRD PARTY OR BY ANY LOAN PARTY, 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 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 INCLUDING ORDINARY NEGLIGENCE; 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 (X) HAVE RESULTED FROM (1) THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF SUCH INDEMNITEE OR (2) THE MATERIAL BREACH IN BAD FAITH OF SUCH INDEMNITEE’S OBLIGATIONS UNDER THIS AGREEMENT OR
THE OTHER LOAN DOCUMENTS (Y) RELATE TO DISPUTES SOLEY AMONG INDEMNITEES (EXCLUDING ANY SUCH DISPUTE INVOLVING THE ADMINISTRATIVE AGENT
IN ITS CAPACITY AS SUCH), OR (Z) RELATE TO TAXES, WHICH SHALL BE SUBJECT TO INDEMNIFICATION PURSUANT TO SECTION 5.03.
(c) To
the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent, any Agent, any Arranger or
any Issuing Bank under Section 12.03(a) or (b), each Lender severally agrees to pay to the Administrative Agent, such Agent,
such Arranger or such Issuing Bank, 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 the Administrative
Agent, such Agent, such Arranger or such Issuing Bank in its capacity as such.
(d) To
the extent permitted by applicable law, the Borrower shall not, and shall cause each Subsidiary not to, 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 Letter of Credit or the use of the proceeds thereof, provided
that nothing contained in this Section 12.03(d) shall limit the indemnity and reimbursement obligations otherwise set forth in
Section 12.03.
(e) All
amounts due under this Section 12.03 shall be payable not later than 10 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 (including any Affiliate of the Issuing Bank that issues any Letter of Credit), except that (i) the Borrower
may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative
Agent and 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 (including any Affiliate of the Issuing Bank that issues any Letter of Credit), 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, the Issuing Bank 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 assignees (each, an “Assignee”)
(other than Disqualified Persons) 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 of:
(A) the
Borrower (such consent not to be unreasonably withheld), 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
an Approved Fund; provided further, that the Borrower shall be deemed to have consented to any such assignment unless the Borrower
shall object thereto by written notice to the Administrative Agent with five (5) Business Days after having received written notice thereof;
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; and
(C) each
Issuing Bank, provided that no consent of any Issuing Bank 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, an Affiliate of a Lender, an Approved Fund 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 $5,000,000 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;
(C) the
parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500, and the Borrower shall pay all actual costs and expenses in connection with each such assignment;
(D) the
assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire; and
(E) the
assignee must not be a natural person, a Defaulting Lender, an Affiliate or Subsidiary of the Borrower, or a Disqualified Person;
(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 5.03 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 solely for this purpose as a non-fiduciary 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 Maximum Credit Amount of, and principal amount (and stated interest) of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent
manifest error, and the Borrower, the Administrative Agent, the Issuing Bank 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, the Issuing Bank 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, the Issuing Bank 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 and, if required hereunder, applicable tax forms (unless the Assignee shall already be a Lender hereunder),
the processing and recordation fee referred to in this Section 12.04(b) and any written consent to such assignment required by
this 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, no assignment or participation shall be made to any Loan Party or any Affiliate of a Loan Party.
(c) (i)
Any Lender may at any time, without the consent of, or notice to, the Borrower, the Administrative Agent, Issuing Bank or any other Person,
sell participations to any Person (other than a natural Person, the Borrower, any of the Borrower’s Affiliates or Subsidiaries,
or any Disqualified Person) (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, the Issuing Bank 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 the Participant Register. 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 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 a non-fiduciary 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 Register”); provided that no Lender
shall have any obligation to disclose all or any portion of the 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(c) of the United States Treasury Regulations. The entries in
the Participant Register shall be 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.
For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining
a Participant Register.
(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 Non-U.S. Lender if it were
a Lender shall not be entitled to the benefits of Section 5.03 unless such Participant agrees, for the benefit of the Borrower,
to comply with Section 5.03(g) as though it were a Lender (it being understood the documentation required under Section 5.03(g)
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 any pledge or assignment to secure obligations to a Federal Reserve Bank or a central bank, and this Section
12.04(d) 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.
(e) Notwithstanding
any other provisions of this Section 12.04, no transfer or assignment of the interests or obligations of any Lender or any grant
of participations therein shall be permitted if such transfer, assignment or grant would require the Borrower and the other Loan Parties
to file a registration statement with the SEC or to qualify the Loans under the “Blue Sky” laws of any state.
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
and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding
that the Administrative Agent, any other Agent, the Issuing Bank 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 or any Letter
of Credit or other Secured Obligations are outstanding and so long as the Commitments have not expired or been terminated. The provisions
of Section 5.01, 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 Letters of Credit and 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 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, and shall cause each other Loan Party to, 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, the other Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent constitute
the entire contract among the parties relating to the subject matter hereof and thereof and supersede any and all previous agreements
and understandings, oral or written, relating to the subject matter hereof and thereof. 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.
(c) Except
as provided in Section 6.01, this Agreement shall become effective when it 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 fax or other similar electronic means shall
be effective as delivery of a manually executed counterpart of this Agreement.
(d) The
words “execution,” “signed,” “signature,” and words of like import in this Agreement and the other
Loan Documents including any Assignment and Assumption shall be deemed to include electronic signatures or electronic records, each of
which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping
system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global
and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform
Electronic Transactions Act.
Section
12.07 Severability. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable,
(a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be
affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable
provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable
provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction. Without limiting the foregoing provisions of this Section, if and to the extent that the enforceability of any
provision of this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by the
Administrative Agent or any Issuing Bank, as applicable, then such provision shall be deemed to be in effect only to the extent not so
limited.
Section
12.08 Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender, each Issuing Bank, and each
of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable
law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any
time held, and other obligations (in whatever currency) at any time owing, by such Lender, such Issuing Bank or any such Affiliate, to
or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under
this Agreement or any other Loan Document to such Lender or such Issuing Bank or their respective Affiliates, irrespective of whether
or not such Lender, Issuing Bank or Affiliate shall have made any demand under this Agreement or any other Loan Document and although
such obligations of the Borrower may be contingent or unmatured or are owed to a branch office or Affiliate of such Lender or such Issuing
Bank different from the branch office or Affiliate holding such deposit or obligated on such indebtedness; provided that in the event
that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the
Administrative Agent for further application in accordance with the provisions of Section 4.05 and, pending such payment, shall
be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent, the
Issuing Banks, and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing
in reasonable detail the Secured Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The rights
of each Lender, each Issuing Bank and their respective Affiliates under this Section are in addition to other rights and remedies (including
other rights of setoff) that such Lender, such Issuing Bank or their respective Affiliates may have. Each Lender and Issuing Bank agrees
to notify the Borrower and the Administrative Agent promptly after any such setoff and application; provided that the failure to give
such notice shall not affect the validity of such setoff and application.
Section
12.09 GOVERNING LAW; JURISDICTION; ETC.
(a) Governing
Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR
TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (EXCEPT, AS TO ANY OTHER LOAN
DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF TEXAS. CHAPTER 346 OF THE TEXAS FINANCE CODE (RELATING TO REVOLVING LOAN AND REVOLVING TRIPARTY
ACCOUNTS), SHALL NOT APPLY TO THIS AGREEMENT OR ANY LOANS OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(b) Jurisdiction.
THE BORROWER IRREVOCABLY AND UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR PROCEEDING OF ANY KIND OR DESCRIPTION,
WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, AGAINST THE ADMINISTRATIVE AGENT, ANY LENDER, ANY ISSUING BANK,
OR ANY RELATED PARTY OF THE FOREGOING IN ANY WAY RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS RELATING HERETO
OR THERETO, IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF TEXAS SITTING IN POTTER COUNTY, AND OF THE UNITED STATES DISTRICT COURT
OF THE NORTHERN DISTRICT OF TEXAS, AND ANY APPELLATE COURT FROM ANY THEREOF, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY
SUBMITS TO THE JURISDICTION OF SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION OR PROCEEDING MAY BE
HEARD AND DETERMINED IN SUCH TEXAS STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF
THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION, LITIGATION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED
IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN
DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR ANY ISSUING BANK MAY OTHERWISE HAVE TO BRING ANY ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
(c) Waiver
of Venue. THE BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT.
(d) Service
of Process. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 12.01.
NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
Section
12.10 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE
OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.
Section
12.11 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
12.12 Treatment of Certain Information; Confidentiality. Each of the Administrative Agent, the Lenders and the Issuing Banks
agree to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates
and to its Related Parties (it being understood that the Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information confidential); (b) to the extent required or requested by any regulatory
authority purporting to have jurisdiction over such Person or its Related Parties (including any self-regulatory authority, such as the
National Association of Insurance Commissioners); (c) to the extent required by applicable laws or by any subpoena or similar legal process;
(d) to any other party hereto; (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any
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 12.12, to (i) any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its rights and obligations under this Agreement, or (ii) any
actual or prospective party (or its Related Parties) to any Swap Agreement or other transaction under which payments are to be made by
reference to the Borrower and its obligations, this Agreement or payments hereunder; (g) on a confidential basis to (i) any rating agency
in connection with rating the Borrower or its Subsidiaries or the credit facility evidenced hereby or (ii) the CUSIP Service Bureau or
any similar agency in connection with the issuance and monitoring of CUSIP numbers with respect to the credit facility evidenced hereby;
(h) with the consent of the Borrower; or (i) to the extent such Information (x) becomes publicly available other than as a result of
a breach of this Section 12.12, or (y) becomes available to the Administrative Agent, any Lender, any Issuing Bank or any of their
respective Affiliates on a nonconfidential basis from a source other than the Borrower who did not acquire such information as a result
of a breach of this Section 12.12. In addition, the Administrative Agent and the Lenders may disclose the existence of this Agreement
and information about this Agreement to market data collectors, similar service providers to the lending industry and service providers
to the Agents or any Lender in connection with the administration of this Agreement, the other Loan Documents, and the Commitments. For
purposes of this Section 12.12, “Information” means all information received from the Borrower or any of its
Subsidiaries relating to the Borrower or any of its Subsidiaries or any of their respective businesses, other than any such information
that is available to the Administrative Agent, any Lender or any Issuing Bank on a nonconfidential basis prior to disclosure by the Borrower
or any of its Subsidiaries; provided that, in the case of information received from the Borrower or any of its Subsidiaries 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 12.12 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
12.13 USA Patriot Act Notice. Each Lender subject to the PATRIOT Act hereby notifies the Borrower that, pursuant to the requirements
of the PATRIOT Act, it may be 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
12.14 Interest Rate Limitation. It is the intention of the parties hereto that each Lender and each Issuing Bank shall conform
strictly to usury laws applicable to it. Accordingly, if the transactions contemplated hereby would be usurious as to any Lender or any
Issuing Bank under laws applicable to it (including the laws of the United States of America and the State of Texas or any other jurisdiction
whose laws may be mandatorily applicable to such Lender or such Issuing Bank 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: (a) 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 or such Issuing Bank under any of
the Loan Documents or agreements or otherwise in connection with the Loans or 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 or such Issuing Bank to the Borrower); and (b) in the event that the maturity
of the Loans or 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 or any Issuing Bank 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 or such Issuing Bank as of the date
of such acceleration or prepayment and, if theretofore paid, shall be credited by such Lender or such Issuing Bank on the principal amount
of the Debt (or, to the extent that the principal amount of the Debt 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 or such Issuing Bank, be amortized, prorated, allocated and spread throughout
the stated term of the Loans 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 or any Issuing Bank on any date shall be computed at the Highest Lawful Rate applicable to such Lender or such Issuing Bank
pursuant to this Section 12.14 and (ii) in respect of any subsequent interest computation period the amount of interest otherwise
payable to such Lender or such Issuing Bank would be less than the amount of interest payable to such Lender computed at the Highest
Lawful Rate applicable to such Lender or such Issuing Bank, then the amount of interest payable to such Lender or such Issuing Bank in
respect of such subsequent interest computation period shall continue to be computed at the Highest Lawful Rate applicable to such Lender
or such Issuing Bank 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 or such Issuing Bank if the total amount of interest had been computed without giving effect to this Section
12.14. To the extent that Chapter 303 of the Texas Finance Code is relevant for the purpose of determining the Highest Lawful Rate
applicable to any Lender or any Issuing Bank, such Lender or such Issuing Bank elects to determine the applicable rate ceiling under
such Chapter by the weekly ceiling from time to time in effect. Chapter 346 of the Texas Finance Code does not apply to the Borrower’s
obligations hereunder.
Section
12.15 Collateral Matters; Swap Agreements. The benefit of the Security Instruments and of the provisions of this Agreement
relating to any collateral securing the Secured Obligations shall also extend to and be available to the Secured Swap Providers in respect
of the Secured Swap Agreements as set forth herein. Except as set forth in Section 12.02(b)(ix), no Lender or any Affiliate of
a Lender shall have any voting rights under any Loan Document as a result of the existence of obligations owed to it under any such Swap
Agreements.
Section
12.16 No Third Party Beneficiaries. This Agreement, the other Loan Documents, and the agreement of the Lenders to make Loans
and any Issuing Bank to issue, amend, renew or extend Letters of Credit hereunder are solely for the benefit of the Borrower, and no
other Person (including any other Loan Party 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, Issuing
Bank or Lender for any reason whatsoever. There are no third party beneficiaries.
Section
12.17 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. In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment,
waiver or other modification hereof or of any other Loan Document), the Borrower acknowledges and agrees, and acknowledges its Affiliates’
understanding, that: (a) (i) no fiduciary, advisory or agency relationship between the Borrower and its Subsidiaries and any Arranger,
the Administrative Agent, any Issuing Bank or any Lender is intended to be or has been created in respect of the transactions contemplated
hereby or by the other Loan Documents, irrespective of whether the Arranger, the Administrative Agent, any Issuing Bank or any Lender
has advised or is advising the Borrower or any Subsidiary on other matters, (ii) the arranging and other services regarding this Agreement
provided by the Arranger, the Administrative Agent, the Issuing Banks and the Lenders are arm’s-length commercial transactions
between the Borrower and its Affiliates, on the one hand, and the Arranger, the Administrative Agent, the Issuing Banks and the Lenders,
on the other hand, (iii) the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent that it has
deemed appropriate and (iv) the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the
transactions contemplated hereby and by the other Loan Documents; and (b) (i) the Arranger, the Administrative Agent, the Issuing Banks
and the Lenders each is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties,
has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower or any of its Affiliates, or any other
Person; (ii) none of the Arranger, the Administrative Agent, the Issuing Banks and the Lenders has any obligation to the Borrower or
any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in
the other Loan Documents; and (iii) the Arranger, the Administrative Agent, the Issuing Banks and the Lenders and their respective Affiliates
may be engaged, for their own accounts or the accounts of customers, in a broad range of transactions that involve interests that differ
from those of the Borrower and its Affiliates, and none of the Arranger, the Administrative Agent, the Issuing Banks and the Lenders
has any obligation to disclose any of such interests to the Borrower or its Affiliates. To the fullest extent permitted by Law, the Borrower
hereby waives and releases any claims that it may have against any of the Arranger, the Administrative Agent, the Issuing Banks and the
Lenders with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated
hereby.
Section
12.18 Flood Insurance Provisions. Notwithstanding any provision in this Agreement or any other Loan Document to the contrary,
in no event is any Building (as defined in the applicable Flood Insurance Regulation) or Manufactured (Mobile) Home (as defined in the
applicable Flood Insurance Regulation) included in the definition of “Mortgaged Property” and no Building or Manufactured
(Mobile) Home is hereby encumbered by this Agreement or any other Loan Document.
Section
12.19 Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Notwithstanding anything to the contrary in
any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that
any liability of any Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be
subject to the write-down and conversion powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and
agrees to be bound by:
(a) the
application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder
which may be payable to it by any party hereto that is an Affected Financial Institution; and
(b) the
effects of any Bail-in Action on any such liability, including, if applicable:
(i) a
reduction in full or in part or cancellation of any such liability;
(ii) a
conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution,
its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other
instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any
other Loan Document; or
(iii) the
variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of the applicable Resolution
Authority.
Section
12.20 Acknowledgement Regarding Any Supported QFCs. To the extent that the Loan Documents provide support, through a guarantee
or otherwise, for Swap Agreements or any other agreement or instrument that is a QFC (such support, “QFC Credit Support”
and each such QFC a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution
power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street
Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”)
in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents
and any Supported QFC may in fact be stated to be governed by the laws of the State of Texas and/or of the United States or any other
state of the United States):
In
the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding
under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest
and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or
such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S.
Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property)
were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of
a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that
might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted
to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported
QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the
foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event
affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.
Section
12.21 Intercreditor Agreement. In the event of a conflict between the provisions of any of the Loan Documents and the provisions
of the Intercreditor Agreement, the provisions of the Intercreditor Agreement shall control.
[SIGNATURES
BEGIN NEXT PAGE]
The
parties hereto have caused this Agreement to be duly executed as of the day and year first above written.
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BORROWER:
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U.S. ENERGY
CORP.
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By:
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/s/
Ryan Smith
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Ryan Smith
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Chief Executive Officer
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ADMINISTRATIVE
AGENT:
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FIRSTBANK
SOUTHWEST,
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as Administrative
Agent
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By:
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/s/
Dustin Hansen
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Dustin Hansen
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Senior Vice President
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LENDER:
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FIRSTBANK
SOUTHWEST,
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as a Lender
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By:
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/s/
Dustin Hansen
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Dustin Hansen
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Senior Vice President
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ANNEX
I
LIST
OF MAXIMUM CREDIT AMOUNTS
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Name of Lender
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Applicable Percentage
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Maximum Credit Amount
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|
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FIRSTBANK SOUTHWEST
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|
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100
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%
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$
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100,000,000
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TOTAL:
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100.0
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%
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$
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100,000,000
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.
