EXECUTION VERSION 


 


LOAN AND SECURITY AGREEMENT


 


THIS LOAN AND SECURITY AGREEMENT is made
and dated as of June 11, 2012 and is entered into by and between GLORI ENERGY INC., a Delaware corporation, GLORI CALIFORNIA INC.,
a Delaware corporation, GLORI HOLDINGS INC., a Delaware corporation and GLORI OIL (ARGENTINA) LIMITED, a Delaware corporation (hereinafter
collectively referred to as the “Borrower”), and HERCULES TECHNOLOGY GROWTH CAPITAL, INC., a Maryland corporation (“Lender”).


 


RECITALS


 


A.          Borrower
has requested Lender to make available to Borrower a loan in an aggregate principal amount of up to Eight Million Dollars ($8,000,000)
(the “Term Loan”);


 


B.           Lender
is willing to make the Term Loan on the terms and conditions set forth in this Agreement.


 


AGREEMENT


 


NOW, THEREFORE, Borrower and Lender agree as follows:


 


SECTION 1.


DEFINITIONS AND RULES OF CONSTRUCTION


 


1.1          Unless
otherwise defined herein, the following capitalized terms shall have the following meanings:


 


“Account Control Agreement(s)”
means any agreement entered into by and among the Lender, any Borrower and a third party Bank or other institution (including a
Securities Intermediary) in which such Borrower maintains a Deposit Account or an account holding Investment Property and which
perfects Lender’s first priority security interest in the subject account or accounts.


 


“ACH Authorization” means
the ACH Debit Authorization Agreement in substantially the form of Exhibit E.


 


“Advance” means a Term Loan Advance.


 


“Advance Date” means the funding
date of any Advance.


 


“Advance Request” means
a request for an Advance submitted by Borrower to Lender in substantially the form of Exhibit A.


 


“Affiliate” of a person
means any other person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under
common control with, such person. The term “control” (including the terms “controlled by” and “under
common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of voting securities, by contract or otherwise.


 




    	 



    	 



    

 


“Agreement” means this
Loan and Security Agreement, as amended from time to time.


 


“Assignee” has the meaning given
to it in Section 11.13.


 


“Borrower Services” means
all services provided by Borrower and any goods, offerings, technical data or technology currently being designed, manufactured
or provided by Borrower in connection with such services or which Borrower intends to sell, license, or distribute in the future
including any products or service offerings under development, collectively, together with all service offerings, technical data
or technology that have been sold, licensed or distributed by Borrower since its incorporation.


 


“Business Day” means any
day which is not a Saturday, Sunday, or other day on which banking institutions in Houston, Texas or Palo Alto, California are
authorized or obligated to close.


 


“Cash” means all cash and liquid
funds.


 


“Change in Control” means
any (i) reorganization, recapitalization, consolidation or merger (or similar transaction or series of related transactions) of
any Borrower, sale or exchange of outstanding shares (or similar transaction or series of related transactions) of a Borrower in
which the holders of such Borrower’s outstanding shares immediately before consummation of such transaction or series of
related transactions do not, immediately after consummation of such transaction or series of related transactions, retain shares
representing more than fifty percent (50%) of the voting power of the surviving entity of such transaction or series of related
transactions (or the parent of such surviving entity if such surviving entity is wholly owned by such parent), in each case without
regard to whether such Borrower is the surviving entity, or (ii) sale or issuance by a Borrower of new shares of Preferred Stock
of such Borrower to investors, none of whom are current investors in such Borrower, and such new shares of Preferred Stock are
senior to all existing Preferred Stock and Common Stock with respect to liquidation preferences, and the aggregate liquidation
preference of the new shares of Preferred Stock is more than fifty percent (50%) of the aggregate liquidation preference of all
shares of Preferred Stock of such Borrower; provided, however, neither an Initial Public Offering nor a reorganization in which
the stock of a Borrower is sold or transferred to another Borrower nor the conversion of any series of preferred stock of a Borrower
existing on the date hereof shall constitute a Change in Control.


 


“Claims” has the meaning given to
it in Section 11.10.


 


“Closing Date” means the date of
this Agreement.


 


“Collateral” has the meaning given
to it in Section 3.1.


 




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“Commitment
Fee” means $35,000, which fee is due to Lender on or prior to the Closing Date, and shall be deemed fully earned on such
date regardless of the early termination of this Agreement.


 


“Confidential Information” has the
meaning given to it in Section 11.12.


 


“Contingent Obligation”
means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to (i)
any indebtedness, lease, dividend, letter of credit or other obligation of another Person, including any such obligation directly
or indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by such other Person, or in respect of which such
other Person is otherwise directly or indirectly liable; (ii) any obligations with respect to undrawn letters of credit, corporate
credit cards or merchant services issued for the account of that Person; and (iii) all obligations arising under any interest rate,
currency or commodity swap agreement, interest rate cap agreement, interest rate collar agreement, or other agreement or arrangement
designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; provided, however,
that the term “Contingent Obligation” shall not include endorsements for collection or deposit in the ordinary course
of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determined amount of
the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good faith; provided, however, that such amount shall
not in any event exceed the maximum amount of the obligations under the guarantee or other support arrangement.


 


“Copyright License” means
any written agreement granting any right to use any Copyright or Copyright registration, now owned or hereafter acquired by any
Borrower or in which any Borrower now holds or hereafter acquires any interest.


 


“Copyrights” means all
copyrights, whether registered or unregistered, held pursuant to the laws of the United States, any State thereof, or of any other
country.


 


“Debtor Relief Laws” means
Title 11 of the United States Code and all other applicable liquidation, conservatorship, bankruptcy, fraudulent transfer,
moratorium, rearrangement, receivership, insolvency, reorganization, suspension of payments, or similar Laws in effect from time
to time affecting the rights of creditors generally.


 


“Deposit Accounts” means
any “deposit accounts,” as such term is defined in the UCC.


 


“Disclosure Letter” means
that certain Disclosure Letter dated as of even date herewith from Borrower to Lender.


 




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“Environmental Laws” means
any and all Governmental Requirements pertaining to public health and safety, worker health and safety, the environment or the
preservation or reclamation of natural resources, in effect in any and all jurisdictions in which any Borrower is conducting or
at any time has conducted business, or where any Property of Borrower is located, including without limitation, the Oil Pollution
Act of 1990 (“OPA”), 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, and other environmental conservation or protection
Governmental Requirements. The term “oil” shall have the meaning specified in OPA, the terms “hazardous substance”
and “release” (or “threatened release”) shall have the meanings specified in CERCLA, the terms “solid
waste” and “disposal” (or “disposed”) shall have the meanings specified in RCRA and the term “oil
and gas waste” shall have the meaning specified in Section 91.1011 of the Texas Natural Resources Code (“Section 91.1011”);
provided, however, that (a) in the event either OPA, CERCLA, RCRA or Section 91.1011 is amended so as to broaden the meaning of
any term defined thereby, such broader meaning shall apply subsequent to the effective date of such amendment and (b) to the extent
the laws of the state or other jurisdiction in which any Oil and Gas Property of Borrower is located establish an applicable meaning
for “oil,” “hazardous substance,” “release,” “solid waste,” “disposal”
or “oil and gas waste” which is broader than that specified in either OPA, CERCLA, RCRA or Section 91.1011, such broader
meaning shall apply.


 


“ERISA” is the Employee
Retirement Income Security Act of 1974, and its regulations.


 


“Event of Default” has the meaning
given to it in Section 9.


 


“Etzold Property” means Etzold Unit
North located in Seward County, Kansas.


 


“Excluded Taxes”
means, with respect to Lender, income or franchise taxes imposed on (or measured by) its net income by the United States of America
or such other jurisdiction under the laws of which Lender is organized or in which its principal office is located or in which
its applicable lending office is located.


 


“Facility Charge” means
one percent (1.0%) of the Maximum Term Loan Amount.


 


“Financial Statements” has the meaning
given to it in Section 7.1.


 


“GAAP” means generally
accepted accounting principles in the United States of America, as in effect from time to time.


 


“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.


 


“Governmental Requirement”
means any law, statute, code, ordinance, order, determination, rule, regulation, judgment, decree, injunction, franchise, permit,
certificate, license, authorization or other directive or requirement, whether now or hereinafter in effect, including, without
limitation, Environmental Laws, energy regulations and occupational, safety and health standards or controls, of any Governmental
Authority.


 




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“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 any Borrower.


 


“Hydrocarbons” means oil,
gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all
products refined or separated therefrom. Unless otherwise indicated herein, each reference to the term “Hydrocarbons”
shall mean Hydrocarbons of any Borrower.


 


“Indebtedness” means (without
duplication), with respect to any Borrower, (a) all indebtedness for borrowed money or the deferred purchase price of property
or services (excluding trade credit entered into in the ordinary course of business due within sixty (60) days), including reimbursement
and other obligations with respect to surety bonds and letters of credit, (b) all obligations evidenced by notes, bonds, debentures
or similar instruments, (c) all capital lease obligations, and (d) all Contingent Obligations.


 


“Initial Advance” has the meaning
given to it in Section 2.1.


 


“Initial Public Offering”
means the initial firm commitment underwritten offering of a Borrower’s common stock pursuant to a registration statement
under the Securities Act of 1933 filed with and declared effective by the Securities and Exchange Commission.


 


“Initial Reserve Report”
means the report of Collarini Associates dated January 1, 2012, with respect to the Etzold Property.


 


“Insolvency Proceeding”
is any proceeding by or against any Person under the United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.


 


“Insolvent” means, with
respect to any Borrower, as of any date of determination, (a) the aggregate fair market value of such Borrower’s assets does
not exceed such Borrower’s liabilities, or (b) such Borrower does not have sufficient cash flow or cash on hand to enable
it to pay its debts as they mature.


 


“Intellectual Property”
means all of each Borrower’s Copyrights; Trademarks; Patents; Licenses; trade secrets and inventions; mask works; each Borrower’s
applications therefor and reissues, extensions, or renewals thereof; and each Borrower’s goodwill associated with any of
the foregoing, together with each Borrower’s rights to sue for past, present and future infringement of Intellectual Property
and the goodwill associated therewith.


 


“Investment” means any
beneficial ownership (including stock, partnership or limited liability company interests) of or in any Person, or any loan, advance
or capital contribution to any Person or the acquisition of all, or substantially all, of the assets of another Person.


 




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“Joinder Agreements” means
for each Subsidiary, a completed and executed Joinder Agreement in substantially the form attached hereto as Exhibit D.


 


“knowledge”, as it relates
to a Borrower, means knowledge of any officer of such Person.


 


“Lender” has the meaning given to
it in the preamble to this Agreement.


 


“Lender Expenses” are all
audit fees and expenses, costs, and expenses (including reasonable attorneys’ fees and expenses) for preparing, negotiating,
defending and enforcing the Loan Documents (including, without limitation, those incurred in connection with appeals or Insolvency
Proceedings) or otherwise incurred with respect to Borrower.


 


“License” means any Copyright
License, Patent License, Trademark License or other license of rights or interests.


 


“Lien” means any mortgage,
deed of trust, pledge, hypothecation, assignment for security, security interest, encumbrance, levy, lien or charge of any kind,
whether voluntarily incurred or arising by operation of law or otherwise, against any property, any conditional sale or other title
retention agreement, and any lease in the nature of a security interest.


 


“Loan” means the Advances made under
this Agreement.


 


“Loan Documents” means
this Agreement, the Disclosure Letter, the Notes, the ACH Authorization, the Account Control Agreements, the Joinder Agreements,
all UCC Financing Statements, the Warrant (provided that Lender or a an Affiliate of Lender holds the Warrant), the Mortgages,
the Collateral Information Certificate and any other documents executed in connection with the Secured Obligations or the transactions
contemplated hereby, as the same may from time to time be amended, modified, supplemented or restated.


 


“Material Adverse Effect”
means a material adverse effect upon: (i) the business, operations, properties, assets, prospects or condition (financial or otherwise)
of Borrower; or (ii) the ability of Borrower to perform the Secured Obligations in accordance with the terms of the Loan Documents,
or the ability of Lender to enforce any of its rights or remedies with respect to the Secured Obligations; or (iii) the Collateral
or Lender’s Liens on the Collateral or the priority of such Liens.


 


“Maximum Term Loan Amount”
means Eight Million Dollars and No/100 Dollars ($8,000,000).


 


“Maximum Rate” shall have the meaning
assigned to such term in Section 2.2.


 


“Mortgage”
means each mortgage, deed of trust or other document creating and evidencing a Lien on real or immovable Property and other Property
to secure the Obligations, which shall be in a form substantially similar to Exhibit F hereto, as the same may be amended, modified,
supplemented or restated from time to time in accordance with the Loan Documents.


 


“Note” means a Term Note.


 




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“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, pooling agreements and declarations of pooled units and the units created thereby (including without
limitation all units created under orders, regulations and rules of any Governmental Authority) which may affect all or any portion
of the Hydrocarbon Interests; (d) all operating agreements, contracts and other agreements, including production sharing contracts
and agreements, which relate to any of the Hydrocarbon Interests or the production, sale, purchase, exchange or processing of Hydrocarbons
from or attributable to such Hydrocarbon Interests; (e) all Hydrocarbons in and under and which may be produced and saved or attributable
to the Hydrocarbon Interests, including all oil in tanks, and all rents, issues, profits, proceeds, products, revenues and other
incomes from or attributable to the Hydrocarbon Interests; (f) all tenements, hereditaments, appurtenances and Properties in any
manner appertaining, belonging, affixed or incidental to the Hydrocarbon Interests and (g) all Properties, rights, titles, interests
and estates described or referred to above, including any and all Property, real or personal, now owned or hereinafter acquired
and situated upon, used, held for use or useful in connection with the operating, working or development of any of such Hydrocarbon
Interests or Property (excluding drilling rigs, automotive equipment, rental equipment or other personal Property which may be
on such premises for the purpose of drilling a well or for other similar temporary uses) and including any and all oil wells, gas
wells, injection wells or other wells, buildings, structures, fuel separators, liquid extraction plants, plant compressors, pumps,
pumping units, field gathering systems, tanks and tank batteries, fixtures, valves, fittings, machinery and parts, engines, boilers,
meters, apparatus, equipment, appliances, tools, implements, cables, wires, towers, casing, tubing and rods, surface leases, rights-of-way,
easements and servitudes together with all additions, substitutions, replacements, accessions and attachments to any and all of
the foregoing. Unless otherwise indicated herein, each reference to the term “Oil and Gas Properties” shall mean Oil
and Gas Properties of any Borrower or its Subsidiaries.


 


“Patent License” means
any written agreement granting any right with respect to any invention on which a Patent is in existence or a Patent application
is pending, in which agreement Borrower now holds or hereafter acquires any interest.


 


“Patents” means all letters
patent of, or rights corresponding thereto, in the United States or in any other country, all registrations and recordings thereof,
and all applications for letters patent of, or rights corresponding thereto, in the United States or any other country.


 


“Permitted Indebtedness”
means: (i) Indebtedness of Borrower in favor of Lender arising under this Agreement or any other Loan Document; (ii) Indebtedness
existing on the Closing Date which is disclosed in Disclosure Letter Section 1A; (iii) Indebtedness of up to an aggregate of $300,000
outstanding at any time secured by liens described in clause (vii) of the defined term “Permitted Liens”; (iv) Indebtedness
to trade creditors incurred in the ordinary course of business, including Indebtedness incurred in the ordinary course of business
with corporate credit cards; (v) Indebtedness that also constitutes a Permitted Investment; (vi) Subordinated Indebtedness; (vii)
reimbursement obligations in connection with letters of credit that are secured by cash or cash equivalents and issued on behalf
of a Borrower or a Subsidiary thereof in an amount not to exceed $200,000 at any time outstanding; (viii) other Indebtedness in
an amount not to exceed $100,000 at any time outstanding; and (ix) extensions, refinancings and renewals of any items of Permitted
Indebtedness, provided that the principal amount is not increased or the terms modified to impose materially more burdensome terms
upon such Borrower or its Subsidiary, as the case may be.


 




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“Permitted Investment”
means: (i) Investments existing on the Closing Date which are disclosed in Disclosure Letter Section 1B; (ii) (a) marketable direct
obligations issued or unconditionally guaranteed by the United States of America or any agency or any State thereof maturing within
one year from the date of acquisition thereof, (b) commercial paper maturing no more than one year from the date of creation thereof
and currently having a rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s Investors
Service, (c) certificates of deposit issued by any bank with assets of at least $500,000,000 maturing no more than one year from
the date of investment therein, and (d) money market accounts and money market mutual funds; (iii) repurchases of stock from former
employees, directors, or consultants of a Borrower under the terms of applicable repurchase agreements at the original issuance
price of such securities in an aggregate amount not to exceed $250,000 in any fiscal year, provided that no Event of Default has
occurred, is continuing or would exist after giving effect to the repurchases; (iv) Investments accepted in connection with Permitted
Transfers; (v) Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers
or suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary
course of Borrower’s business; (vi) Investments consisting of notes receivable of, or prepaid royalties and other credit
extensions, to customers and suppliers who are not affiliates, in the ordinary course of business, provided that this subparagraph
(vi) shall not apply to Investments of Borrower in any Subsidiary; (vii) Investments consisting of loans not involving the net
transfer on a substantially contemporaneous basis of cash proceeds to employees, officers or directors relating to the purchase
of capital stock of a Borrower pursuant to employee stock purchase plans or other similar agreements approved by a Borrower’s
Board of Directors; (viii) Investments consisting of travel advances in the ordinary course of business; (ix) Investments by a
Borrower in any other Borrower or Investments in newly-formed Subsidiaries organized in the United States, provided that such Subsidiaries
enter into a Joinder Agreement promptly after their formation by a Borrower and execute such other documents as shall be reasonably
requested by Lender; (x) Investments in subsidiaries organized outside of the United States existing on the date hereof or approved
in advance in writing by Lender; (xi) joint ventures or strategic alliances in the ordinary course of Borrower’s business
consisting of the nonexclusive licensing of technology, the development of technology or the providing of technical support, provided
that any cash Investments by Borrower do not exceed $100,000 in the aggregate in any fiscal year; (xii) Investments by Borrower
in subsidiaries organized outside of the United States in an amount not to exceed $500,000 in the aggregate in any fiscal year
or as otherwise approved in advance by Lender; and (xiii) additional Investments that do not exceed $250,000 in the aggregate.


 




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“Permitted Liens” means
any and all of the following: (i) Liens in favor of Lender; (ii) Liens existing on the Closing Date which are disclosed in Disclosure
Letter Section 1C; (iii) Liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or
being contested in good faith by appropriate proceedings; provided, that Borrower maintains adequate reserves therefor in accordance
with GAAP; (iv) Liens securing claims or demands of materialmen, artisans, mechanics, carriers, warehousemen, landlords and other
like Persons arising in the ordinary course of Borrower’s business, provided that (i) no Lien has been filed, or (ii) the
validity or amount thereof is being contested in good faith by lawful proceedings diligently conducted, reserve or other provision
required by GAAP has been made, levy and execution thereon have been (and continue to be) stayed, or payment is fully covered
by insurance (subject to the customary deductible); (v) Liens arising from judgments, decrees or attachments in circumstances
which do not constitute an Event of Default hereunder; (vi) the following deposits, to the extent made in the ordinary course
of business: deposits under worker’s compensation, unemployment insurance, social security and other similar laws, or to
secure the performance of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure indemnity,
performance or other similar bonds for the performance of bids, tenders or contracts (other than for the repayment of borrowed
money) or to secure statutory obligations (other than liens arising under ERISA or environmental liens) or surety or appeal bonds,
or to secure indemnity, performance or other similar bonds; (vii) Liens constituting purchase money liens and liens in connection
with capital leases securing Indebtedness permitted in clause (iii) of “Permitted Indebtedness” and which encumber
only the assets acquired with such purchase money indebtedness or the assets subject to such capital lease; (viii) Liens incurred
in connection with Subordinated Indebtedness; (ix) leasehold interests in leases or subleases and licenses granted in the ordinary
course of business and not interfering in any material respect with the business of the licensor; (x) Liens in favor of customs
and revenue authorities arising as a matter of law to secure payment of custom duties that are promptly paid on or before the
date they become due; (xi) Liens on insurance proceeds securing the payment of financed insurance premiums that are promptly paid
on or before the date they become due (provided that such Liens extend only to such insurance proceeds and not to any other property
or assets); (xii) statutory and common law rights of set-off and other similar rights as to deposits of cash and securities in
favor of banks, other depository institutions and brokerage firms; (xiii) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary course of business so long as they do not materially impair
the value or marketability of the related property; (xiv) Liens on cash or cash equivalents securing obligations permitted under
clause (vii) of the definition of Permitted Indebtedness; (xv) 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 any material Property covered by such Lien for
the purposes for which such Property is held by a Borrower or materially impair the value of any material Property subject thereto;
(xvi) easements, restrictions, servitudes, permits, conditions, covenants, exceptions or reservations in any Property of any Borrower
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 such Borrower or materially impair the value of any material Property
subject thereto; and (xvii) Liens incurred in connection with the extension, renewal or refinancing of the indebtedness secured
by Liens of the type described in clauses (i) through (xi) above; provided, that any extension, renewal or replacement
Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness being extended,
renewed or refinanced (as may have been reduced by any payment thereon) does not increase.


 




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“Permitted Transfers” means
(i) sales or use of Inventory in the normal course of business, (ii) non-exclusive licenses and similar arrangements for the use
of Intellectual Property in the ordinary course of business and licenses that could not result in a legal transfer of title of
the licensed property but that may be exclusive in respects other than territory and that may be exclusive as to territory only
as to discreet geographical areas outside of the United States in the ordinary course of business, or (iii) dispositions of worn-out,
obsolete or surplus Equipment at fair market value in the ordinary course of business, and (iv) other Transfers of assets having
a fair market value of not more than $250,000 in the aggregate in any fiscal year.


 


“Person” means any individual,
sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability
company, institution, other entity or government.


 


“Preferred Stock” means
at any given time any equity security issued by a Borrower that has any rights, preferences or privileges senior to such Borrower’s
common stock.


 


“Prepayment Premium” means
the amount achieved by multiplying the percentage in the table below by the principal balance of the Term Loan Advances as of the
date of the prepayment:


 


	If prepayment occurs prior to the first anniversary of the Closing Date	 	 	3.00	%
	 	 	 	 	 
	If prepayment occurs on or after the first anniversary, but prior to the second anniversary of the Closing Date	 	 	2.00	%
	 	 	 	 	 
	If prepayment occurs on or after the second anniversary, but prior to the third anniversary of the Closing Date	 	 	1.00	%



 


 


“Prime Rate” is the rate
most recently announced as the “prime rate” in the Money Rates section of The Wall Street Journal.


 


“Principal Commencement Date” means
April 1, 2013.


 


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


 




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“Receivables” means (i)
all of each Borrower’s Accounts, Instruments, Documents, Chattel Paper, Supporting Obligations, letters of credit, proceeds
of any letter of credit, and Letter of Credit Rights, and (ii) all customer lists, software, and business records related thereto.


 


“Remedial Work” has the
meaning assigned to such term in Section 7.16(a).


 


“Reserve Report” means
an annual report, in form and substance reasonably satisfactory to Lender, setting forth, the oil and gas reserves attributable
to the Oil and Gas Properties, together with a projection of the rate of production and future net revenue, taxes, operating expenses
and capital expenditures with respect thereto as of such date, either (i) prior to an Initial Public Offering of any Borrower based
upon the economic assumptions consistent with Lender’s lending requirements at the time, or (ii) following an Initial Public
Offering of any Borrower, consistent with Securities and Exchange Commission reporting requirements at the time.


 


“Secured Obligations” means
Borrower’s obligations under this Agreement and any Loan Document, including any obligation to pay any amount now owing or
later arising.


 


“Subordinated Indebtedness”
means Indebtedness subordinated to the Secured Obligations on subordination terms and conditions satisfactory to Lender in its
sole discretion.


 


“Subsequent Financing”
means the closing of any Borrower financing which becomes effective after the Closing Date.


 


“Subsidiary” means an entity,
whether corporate, partnership, limited liability company, joint venture or otherwise, in which a Borrower owns or controls 50%
or more of the outstanding voting securities, including each entity listed on Disclosure Letter Section 1.


 


“Term Loan Advance” means
any Term Loan funds advanced under this Agreement.


 


“Term Loan Interest Rate”
means for any day a per annum rate of interest equal to the greater of (i) 10.0% or (ii) the sum of 10.0%, plus the Prime Rate
minus 3.25%.


 


“Term Loan Maturity Date” means June
1, 2015.


 


“Term Note” means a Promissory
Note in substantially the form of Exhibit B.


 


“Trademark License” means
any written agreement granting any right to use any Trademark or Trademark registration, now owned or hereafter acquired by any
Borrower or in which a Borrower now holds or hereafter acquires any interest.


 


“Trademarks”
means all trademarks (registered, common law or otherwise) and any applications in connection therewith, including registrations,
recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States,
any State thereof or any other country or any political subdivision thereof.


 




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“UCC” means the Uniform
Commercial Code as the same is, from time to time, in effect in the State of California; provided, that in the event that, by reason
of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to, Lender’s
Lien on any Collateral is governed by the Uniform Commercial Code as the same is, from time to time, in effect in a jurisdiction
other than the State of California, then the term “UCC” shall mean the Uniform Commercial Code as in effect, from time
to time, in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority
or remedies and for purposes of definitions related to such provisions.


 


“Warrant” means the warrant entered
into in connection with the Loan.


 


Unless otherwise specified, all references
in this Agreement or any Annex or Schedule hereto to a “Section,” “subsection,” “Exhibit,”
“Annex,” or “Schedule” shall refer to the corresponding Section, subsection, Exhibit, Annex, or Schedule
in or to this Agreement. Unless otherwise specifically provided herein, any accounting term used in this Agreement or the other
Loan Documents shall have the meaning customarily given such term in accordance with GAAP, and all financial computations hereunder
shall be computed in accordance with GAAP, consistently applied. Unless otherwise defined herein or in the other Loan Documents,
terms that are used herein or in the other Loan Documents and defined in the UCC shall have the meanings given to them in the UCC.


 


SECTION 2.


THE LOAN


 


2.1          Term
Loan.


 


(a)          Advances.
Subject to the terms and conditions of this Agreement, Lender will make, and Borrower agrees to draw, a Term Loan Advance of $4,000,000
on the Closing Date (the “Initial Advance”). Borrower may request additional Term Loan Advances in an aggregate
amount up to $4,000,000 in minimum increments of $1,000,000 through August 31, 2012. The aggregate outstanding Term Loan Advances
may be up to the Maximum Term Loan Amount.


 


(b)          Advance
Request. To obtain a Term Loan Advance, Borrower shall complete, sign and deliver an Advance Request (at least five Business Days
before the Advance Date) and Term Note to Lender. Lender shall fund the Term Loan Advance in the manner requested by the Advance
Request provided that each of the conditions precedent to such Term Loan Advance is satisfied as of the requested Advance Date.


 


(c)          Interest.
The principal balance of each Term Loan Advance shall bear interest thereon from the Advance Date of such Term Loan Advance at
the Term Loan Interest Rate based on a year consisting of 360 days, with interest computed daily based on the actual number of
days elapsed. The Term Loan Interest Rate will float and change on the day the Prime Rate changes from time to time.


 




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(d)          Payment.
Borrower will pay interest on each Term Loan Advance on the first day of each month, beginning the month after the Advance Date
for such Term Loan Advance. Borrower shall repay the aggregate principal balance of the Term Loan that is outstanding in twenty-seven
(27) equal monthly installments of principal beginning on the Principal Commencement Date and continuing on the first Business
Day of each month thereafter. The entire unpaid principal balance of the Term Loan and all accrued but unpaid interest thereon,
shall be due and payable on the Term Loan Maturity Date. Borrower shall make all payments under this Agreement without setoff,
recoupment or deduction and regardless of any counterclaim or defense. Lender will initiate debit entries to the Borrower’s
account as authorized on the ACH Authorization on each payment date of all periodic obligations payable to Lender under each Term
Note or Term Advance and as reflected in amortization schedules provided by Lender to Borrower from time to time. Whenever any
payment to be made hereunder shall be stated to be due on a date other than a Business Day, such payment shall be made on the immediately
succeeding Business Day.


 


2.2          Maximum
Interest. Notwithstanding any provision in this Agreement, the Notes, or any other Loan Document, it is the parties’
intent not to contract for, charge or receive interest at a rate that is greater than the maximum rate permissible by law that
a court of competent jurisdiction shall deem applicable hereto (which under the laws of the State of California shall be deemed
to be the laws relating to permissible rates of interest on commercial loans) (the “Maximum Rate”). If a court of competent
jurisdiction shall finally determine that Borrower has actually paid to Lender an amount of interest in excess of the amount that
would have been payable if all of the Secured Obligations had at all times borne interest at the Maximum Rate, then such excess
interest actually paid by Borrower shall be applied as follows: first, to the payment of principal outstanding on the Notes; second,
after all principal is repaid, to the payment of Lender’s accrued interest, costs, expenses, professional fees and any other
Secured Obligations; and third, after all Secured Obligations are repaid, the excess (if any) shall be refunded to Borrower.


 


2.3          Default
Interest. In the event any payment is not paid on the scheduled payment date, an amount equal to three percent (3%) of the
past due amount shall be payable on demand. In addition, upon the occurrence and during the continuation of an Event of Default
hereunder, all Secured Obligations, including principal, interest, interest upon interest, and professional fees, shall bear interest
at a rate per annum equal to the rate set forth in Section 2.1(c) plus five percent (5%) per annum. In the event any interest is
not paid when due hereunder, delinquent interest shall be added to principal and shall bear interest on interest, at the rate set
forth in Section 2.1(c).


 


2.4          Prepayment.
At its option upon at least 5 Business Days’ prior notice to Lender, Borrower may prepay all, but not less than all, of the
outstanding Advances by paying the entire outstanding principal balance, all accrued and unpaid interest, and the Prepayment Premium
then applicable. Borrower agrees that the Prepayment Premium is a reasonable calculation of Lender’s lost profits in view
of the difficulties and impracticality of determining actual damages resulting from an early repayment of the Advances.


 


2.5          End
of Term Charge. On the earliest to occur of (i) the Term Loan Maturity Date, (ii) the date that Borrower prepays the entire
outstanding Secured Obligations, or (iii) the date that the Secured Obligations become due and payable, Borrower shall pay Lender
a charge of $280,000. Notwithstanding the required payment date of such charge, it shall be deemed earned by Lender as of the Closing
Date.


 




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SECTION 3.


SECURITY INTEREST


 


3.1          As
security for the prompt, complete and indefeasible payment when due (whether on the payment dates or otherwise) of all the Secured
Obligations, each Borrower grants to Lender a security interest in all of such Borrower’s right, title and interest in and
to the following personal property whether now owned or hereafter acquired (collectively, the “Collateral”): (a) Receivables;
(b) Equipment; (c) Fixtures; (d) General Intangibles (other than Intellectual Property); (e) Inventory; (f) Investment Property
(but excluding thirty-five percent (35%) of the capital stock of any foreign Subsidiary that constitutes a Permitted Investment);
(g) Deposit Accounts; (h) Cash; (i) Goods, and other tangible and intangible personal property of Borrower whether now or hereafter
owned or existing, leased, consigned by or to, or acquired by, Borrower and wherever located; and, to the extent not otherwise
included, all proceeds of each of the foregoing and all accessions to, substitutions and replacements for, and rents, profits and
products of each of the foregoing; and excluding all Intellectual Property. No Borrower shall permit a Lien to exist on its Intellectual
Property (other than Permitted Liens) without the prior written consent of Lender. The Collateral shall include all proceeds from
the sale of all Intellectual Property outside the ordinary course of business and all other rights arising out of Intellectual
Property, excluding the Intellectual Property itself. Notwithstanding the foregoing, if a judicial authority (including a U.S.
Bankruptcy Court) holds that a security interest in the underlying Intellectual Property is necessary to have a security interest
in the proceeds from the sale of such Intellectual Property, at the time of a sale, then the Collateral shall automatically, and
effective as of the date of this Agreement, include the Intellectual Property to the extent necessary to permit perfection of Lender’s
security interest in the sales proceeds of Intellectual Property.


 


3.2          Notwithstanding
Section 3.1 hereof, (a) if a Borrower raises a minimum of $55,000,000 in one or more new equity financings or (b) a Borrower completes
an Initial Public Offering, (a “Qualified Financing”), any additional Oil and Gas Properties acquired by each Borrower
after the date of consummation of such Qualified Financing (such assets, the “After-Acquired Assets”) shall not constitute
Collateral; provided, that, Borrower shall not be permitted to encumber any of these After-Acquired Assets without the prior written
consent of Lender; provided, further that, if at any time after the consummation of a Qualified Financing, unrestricted cash of
Borrower is less than $16,000,000 (such occurrence, a “Collateral Event”), the After-Acquired Assets shall automatically
as of the date of such Collateral Event (and on any subsequent date of acquisition by any Borrower of any Oil and Gas Properties)
become Collateral hereunder and Borrower shall take all commercially reasonable actions necessary to grant Lender a first priority
perfected security interest in such After-Acquired Assets.


 


SECTION 4.


CONDITIONS PRECEDENT TO LOAN


 


The obligations of Lender to make the Loan
hereunder are subject to the satisfaction by Borrower of the following conditions:


 




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4.1          Initial
Advance. On or prior to the Closing Date, Borrower shall have delivered to Lender the following:


 


(a)          executed
originals of the this Agreement, the Warrant, the Mortgage, the Note, Collateral Information Certificate, the ACH Authorization
and all other documents and instruments reasonably required by Lender to effectuate the transactions contemplated hereby or to
create and perfect the Liens of Lender with respect to all Collateral, in all cases in form and substance reasonably acceptable
to Lender;


 


(b)          an
Account Control Agreement with respect to Glori Energy Inc.’s money market account and operating account at JP Morgan Chase;


 


(c)          the
Disclosure Letter;


 


(d)          certified
copy of resolutions of each Borrower’s board of directors evidencing approval of (i) the Loan and other transactions evidenced
by the Loan Documents; and (ii) the Warrant and transactions evidenced thereby;


 


(e)          certified
copy of resolutions of at least two-thirds of the holders of Glori Energy Inc.’s Series C Preferred Stock and Series B Preferred
Stock voting together as a class evidencing approval of the incurrence of indebtedness under the Loan Documents and issuance of
the Warrant;


 


(f)           certified
copies of the Certificate of Incorporation and the Bylaws, as amended through the Closing Date, of each Borrower;


 


(g)          a
certificate of good standing as of a recent date for each Borrower from Delaware and similar certificates from all other jurisdictions
in which it does business and where the failure to be qualified would have a Material Adverse Effect;


 


(h)          payment
of the Facility Charge and reimbursement of Lender’s current expenses reimbursable pursuant to this Agreement, which amounts
may be deducted from the initial Advance;


 


(i)           Lender
shall be reasonably satisfied that this Agreement and the Mortgage with respect to the Etzold Property will create upon recording
(A) first priority, perfected Lien (subject only to Permitted Liens) on at least 80% of the total value of the proved Etzold Property
evaluated in the Initial Reserve Report;


 


(j)           Lender
shall be reasonably satisfied with the environmental condition of the Etzold Property of the Borrower;


 


(k)          Lender
shall have received an opinion of (i) Fulbright & Jaworski L.L.P., special counsel to the Borrower, and (ii) Stinson Morrison
Hecker LLP, local counsel to Lender in Kansas; and


 


(l)           such
other documents as Lender may reasonably request.


 




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4.2          All
Advances. On each Advance Date:


 


(a)          Lender
shall have received (i) an Advance Request and a Note for the relevant Advance as required by Section 2.1(b) duly executed by each
Borrower’s Chief Executive Officer or Chief Financial Officer, and (ii) any other documents Lender may reasonably request.


 


(b)          The
representations and warranties set forth in this Agreement in Section 5 and in the Warrant shall be true and correct in all material
respects on and as of the Advance Date with the same effect as though made on and as of such date, except to the extent such representations
and warranties expressly relate to an earlier date.


 


(c)          Borrower
shall be in compliance with all the terms and provisions set forth herein and in each other Loan Document on its part to be observed
or performed, and at the time of and immediately after such Advance no Event of Default shall have occurred and be continuing.


 


(d)          Each
Advance Request shall be deemed to constitute a representation and warranty by Borrower on the relevant Advance Date as to the
matters specified in paragraphs (b) and (c) of this Section 4.2 and as to the matters set forth in the Advance Request.


 


4.3          No
Default. As of the Closing Date and each Advance Date, (i) no event has occurred or circumstance exists that would (or would,
with the passage of time, the giving of notice, or both) constitute an Event of Default and (ii) no event that has had or would
reasonably be expected to have a Material Adverse Effect has occurred and is continuing.


 


4.4          Post-Closing.
Borrower shall deliver to Lender the following,


 


(a)          duly
executed landlord waiver for 4315 South Drive, Houston, Texas, within thirty (30) days of the Closing Date;


 


(b)          duly
executed Account Control Agreements as required by Section 7.12 hereof.


 


SECTION 5.


REPRESENTATIONS AND WARRANTIES OF
BORROWER


 


Borrower represents and warrants that:


 


5.1          Corporate
Status. Each Borrower is a corporation duly organized, legally existing and in good standing under the laws of the State of
Delaware, and is duly qualified as a foreign corporation in all jurisdictions in which the nature of its business or location of
its properties require such qualifications and where the failure to be qualified could reasonably be expected to have a Material
Adverse Effect. Each Borrower’s present name, former names (if any), locations, place of formation, tax identification number,
organizational identification number and other information are correctly set forth in Disclosure Letter Section 5.1, as may be
updated by such Borrower in a written notice (including any Compliance Certificate) provided to Lender after the Closing Date.


 




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5.2          Collateral.
Each Borrower owns its portion of the Collateral and the Intellectual Property, free of all Liens, except for Permitted Liens.
Each Borrower has the power and authority to grant to Lender a Lien in its portion of the Collateral as security for the Secured
Obligations.


 


5.3          Consents.
Each Borrower’s execution, delivery and performance of the Notes, this Agreement and all other Loan Documents, and such Borrower’s
execution of the Warrant (if applicable), (i) have been duly authorized by all necessary corporate (and, if applicable, equity
holder) action of such Borrower, (ii) will not result in the creation or imposition of any Lien upon the Collateral, other than
Permitted Liens and the Liens created by this Agreement and the other Loan Documents, (iii) do not violate any provisions of such
Borrower’s Certificate of Incorporation, bylaws, or any, law, regulation, order, injunction, judgment, decree or writ to
which such Borrower is subject and (iv) except as described above or on Disclosure Letter Section 5.3, do not violate any contract
or agreement or require the consent or approval of any other Person. The individual or individuals executing the Loan Documents
and the Warrant are duly authorized to do so.


 


5.4          Material
Adverse Effect. Since December 31, 2011, no event that has had or could reasonably be expected to have a Material Adverse Effect
has occurred and is continuing. Borrower is not aware of any event likely to occur that is reasonably expected to result in a Material
Adverse Effect.


 


5.5          Actions
Before Governmental Authorities. Except as described on Disclosure Letter Section 5.5, there are no actions, suits or proceedings
at law or in equity or by or before any Governmental Authority now pending or, to the knowledge of Borrower, threatened against
or affecting a Borrower or its property that, if adversely determined would result, in the opinion of the board of directors of
the applicable Borrower, in the creation of an obligation or liability of Borrower in excess of $50,000 individually or $100,000
in the aggregate with any other litigation not disclosed in Section 5.5 of the Disclosure Letter.


 


5.6          Laws.
No Borrower is in violation of any law, rule or regulation, or in default with respect to any judgment, writ, injunction or decree
of any Governmental Authority applicable to it or its Property, where such violation or default is reasonably expected to result
in a Material Adverse Effect. No Borrower is in default in any material respect under any provision of any agreement or instrument
evidencing indebtedness, or any other material agreement to which it is a party or by which it is bound.


 


5.7          Information
Correct and Current. No information, report, Advance Request, financial statement, exhibit or schedule furnished, by or on
behalf of Borrower to Lender in connection with any Loan Document or included therein or delivered pursuant thereto contained,
contains or, with respect to such document to be delivered after the date hereof, will contain any material misstatement of fact
or omitted, omits or will omit to state any material fact necessary to make the statements therein, in the light of the circumstances
under which they were, are or will be made, not misleading at the time such statement was made or deemed made. Additionally, any
and all financial or business projections provided by a Borrower to Lender have been or will be (if delivered after the date hereof)
(i) provided in good faith and based on current data and information available to Borrower, and (ii) consistent with the then current
projections provided to such Borrower’s Board of Directors.


 




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5.8          Tax
Matters. Except as described on Section 5.8 of the Disclosure Letter, (a) Borrower has filed all federal, state and local tax
returns that it is required to file (or extensions have been granted), (b) Borrower has duly paid or fully reserved for all taxes
or installments thereof (including any interest or penalties) as and when due, which have or may become due pursuant to such returns,
and (c) Borrower has paid or fully reserved for any tax assessment received by Borrower for the three (3) years preceding the Closing
Date, if any (including any taxes being contested in good faith and by appropriate proceedings).


 


5.9          Intellectual
Property Claims. One or more Borrowers are the sole owner(s) of, or otherwise have the right to use, the Intellectual Property.
Except as described on Disclosure Letter Section 5.9, (i) each of the material Copyrights, Trademarks and Patents is valid and
enforceable, (ii) no material part of the Intellectual Property has been judged invalid or unenforceable, in whole or in part,
and (iii) no claim has been made to a Borrower that any material part of the Intellectual Property violates the rights of any third
party. Disclosure Letter Section 5.9 also contains a true, correct and complete list of each Borrower’s Patents, registered
Trademarks, registered Copyrights, and material agreements under which such Borrower licenses Intellectual Property from third
parties (other than shrink-wrap software licenses), together with application or registration numbers, as applicable, owned by
a Borrower or any Subsidiary, in each case as of the Closing Date. The applicable Borrower is not in material breach of, nor has
such Borrower failed to perform any material obligations under, any of the foregoing contracts, licenses or agreements and, to
such Borrower’s knowledge, no third party to any such contract, license or agreement is in material breach thereof or has
failed to perform any material obligations thereunder.


 


5.10        Intellectual
Property. Except as described on Disclosure Letter Section 5.10, Borrower has, or in the case of any proposed business, will
have, all material rights with respect to Intellectual Property necessary in the operation or conduct of Borrower’s business
as currently conducted and proposed to be conducted by Borrower. Without limiting the generality of the foregoing, and in the case
of Licenses, except for restrictions that are unenforceable under Division 9 of the UCC, Borrower has the right, to the extent
required to operate Borrower’s business, to freely transfer, license or assign Intellectual Property without condition, restriction
or payment of any kind (other than license payments in the ordinary course of business) to any third party, and a Borrower owns
or has the right to use, pursuant to valid licenses, all software development tools, library functions, compilers and all other
third-party software and other items that are used in the design, development, promotion, sale, license, manufacture, import, export,
use or distribution of Borrower Services.


 




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5.11        Borrower
Services. Except as described on Disclosure Letter Section 5.11, no Intellectual Property owned by a Borrower or Borrower Services
has been or is subject to any actual or, to the knowledge of Borrower, threatened litigation, proceeding (including any proceeding
in the United States Patent and Trademark Office or any corresponding foreign office or agency) or outstanding decree, order, judgment,
settlement agreement or stipulation that restricts in any material manner such Borrower’s use, transfer or licensing thereof
or that may affect the validity or enforceability thereof. There is no decree, order, judgment, agreement, stipulation, arbitral
award or other provision entered into in connection with any litigation or proceeding that obligates a Borrower to grant licenses
or an ownership interest in any future Intellectual Property related to the operation or conduct of the business of Borrower or
Borrower Services. No Borrower has received any written notice or claim, or, to the knowledge of Borrower, oral notice or claim,
challenging or questioning a Borrower’s ownership in any of its Intellectual Property (or, to Borrower’s knowledge,
written notice of any claim challenging or questioning the ownership in any licensed Intellectual Property of the owner thereof)
or suggesting that any third party has any claim of legal or beneficial ownership with respect thereto nor, to Borrower’s
knowledge, is there a reasonable basis for any such claim. To Borrower’s knowledge, neither Borrower’s use of its Intellectual
Property nor the production and sale of Borrower Services infringes the Intellectual Property or other rights of others.


 


5.12        Financial
Accounts. Disclosure Letter Section 5.12, as may be updated by the Borrower in a written notice provided to Lender after the
Closing Date, is a true, correct and complete list of (a) all banks and other financial institutions at which a Borrower maintains
Deposit Accounts and (b) all institutions at which a Borrower maintains an account holding Investment Property, and such exhibit
correctly identifies the name, address and telephone number of each bank or other institution, the name in which the account is
held, a description of the purpose of the account, and the complete account number therefor.


 


5.13        Employee
Loans. No Borrower has outstanding loans to any employee, officer or director of such Borrower nor has such Borrower guaranteed
the payment of any loan made to an employee, officer or director of such Borrower by a third party, except for such guarantees
for travel expenses or other business expenses in the ordinary course of business that may be provided by a third party (e.g. corporate
credit card).


 


5.14        Capitalization
and Subsidiaries. Borrower’s capitalization as of the Closing Date is set forth on Disclosure Letter Section 5.14. No
Borrower does owns any stock, partnership interest or other securities of any Person, except for Permitted Investments. Listed
on Disclosure Letter Section 5.14, as may be updated by Borrower in a written notice provided after the Closing Date, is a true,
correct and complete list of each Subsidiary.


 


5.15        Properties.
(a) Each Borrower has good and defensible title to its Oil and Gas Properties and such Borrower has good title to all of its personal
Properties, in each case, free and clear of all Liens except Permitted Liens. After giving full effect to Permitted Liens, the
Borrower specified as the owner owns the net interests in production attributable to the Hydrocarbon Interests, and the ownership
of such Properties shall not in any material respect obligate such Borrower 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 that is not offset
by a corresponding proportionate increase in Borrower’s net revenue interest in such Property.


 




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5.16        Maintenance
of Properties. Except for such acts or failures to act as could not be reasonably expected to have a Material Adverse Effect,
the Oil and Gas Properties (and Properties unitized therewith) 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.
Specifically in connection with the foregoing, except for those as could not be reasonably expected to have a Material Adverse
Effect, no Oil and Gas Property is subject to having allowable production reduced below the full and regular allowable level (including
the maximum permissible tolerance) because of any overproduction (whether or not the same was permissible at the time) and none
of the wells comprising a part of the Oil and Gas Properties (or Properties unitized therewith) is deviated from the vertical more
than the maximum permitted by the requirements of any applicable Governmental Authority, and such wells are, in fact, bottomed
under and are producing from, and the well bores are wholly within, the Oil and Gas Properties (or in the case of wells located
on Properties unitized therewith, such unitized Properties). All pipelines, wells, gas processing plants, platforms and other material
improvements, fixtures and equipment owned in whole or in part by a Borrower 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 a Borrower or any of its Subsidiaries, in a manner consistent with customary industry practices (other than those the failure
of which to maintain in accordance with this Section 5.16 could not reasonably be expected to have a Material Adverse Effect).


 


5.17        Environmental
Matters. Except for such matters that, individually or in the aggregate, could not reasonably be expected to have a Material
Adverse Effect:


 


(a)          no
real property of Borrower nor the operations conducted thereon violate any order of any court or Governmental Authority or any
requirement of any applicable Environmental Law.


 


(b)          no
real property of Borrower nor the operations currently conducted thereon or, to the knowledge of Borrower, by any prior owner or
operator of such Property or operation, are in violation of or subject to any existing, pending or threatened action, suit, investigation,
inquiry or proceeding by or before any court or Governmental Authority or to any remedial obligations under Environmental Laws.


 


(c)          all
notices, permits, licenses, exemptions, approvals or similar authorizations, if any, required to be obtained or filed in connection
with the operation or use of any and all Property of Borrower, including, without limitation, past or present treatment, storage,
disposal or release of a hazardous substance, oil and gas waste or solid waste into the environment, have been duly obtained or
filed, and Borrower is in compliance with the terms and conditions of all such notices, permits, licenses and similar authorizations.


 


(d)          all
hazardous substances, solid waste and oil and gas waste, if any, generated at any and all Property of Borrower has in the past
been transported, treated and disposed of in accordance with Environmental Laws and, to the knowledge of Borrower, all such transport
carriers and treatment and disposal facilities have been and are operating in compliance with Environmental Laws and, to the knowledge
of Borrower, are not the subject of any existing, pending or threatened action, investigation or inquiry by any Governmental Authority
in connection with any Environmental Laws.


 




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(e)          Borrower
has taken reasonable steps to determine and has determined that no oil, hazardous substances, solid waste or oil and gas waste,
have been disposed of or otherwise released, and there has been no threatened release of any oil, hazardous substances, solid waste
or oil and gas waste, on or to any Property of Borrower, except in material compliance with Environmental Laws.


 


(f)           to
the extent applicable, all Property of Borrower currently satisfies all design, operation, and equipment requirements imposed by
the OPA, and Borrower has no reason to believe that such Property, to the extent subject to the OPA, will not be able to maintain
compliance with the OPA requirements during the term of this Agreement, subject to ordinary wear and tear, obsolescence or repair
or replacement of such Property in the ordinary course of business.


 


(g)          Borrower
has no known contingent liability or Remedial Work in connection with any release or threatened release of any oil, hazardous substance,
solid waste or oil and gas waste into the environment.


 


5.18        Marketing
of Production. Except for contracts listed and in effect on the date hereof on Disclosure Letter Section 5.19, and thereafter
either disclosed in writing to Lender (with respect to all of which contracts the applicable Borrower represents that it or its
Subsidiaries are receiving a price for all production sold thereunder which is computed substantially in accordance with the terms
of the relevant contract and are not having deliveries curtailed substantially below the subject Property’s delivery capacity,
except as disclosed in Disclosure Letter Section 5.19), no material agreements exist which are not cancelable on sixty (60) days
notice or less without penalty or detriment for the sale of production from a Borrower’s or its Subsidiaries’ Hydrocarbons
(including, without limitation, calls on or other rights to purchase, production, whether or not the same are currently being exercised)
that pertain to the sale of production at a fixed price and have a maturity or expiry date of longer than six (6) months. 


 


SECTION 6.


INSURANCE; INDEMNIFICATION


 


6.1          Coverage.
Borrower shall cause to be carried and maintained commercial general liability insurance, on an occurrence form, against risks
customarily insured against in Borrower’s line of business, but in no event less than set forth in this Section 6.1. Such
risks shall include the risks of bodily injury, including death, property damage, personal injury, advertising injury, and contractual
liability per the terms of the indemnification agreement found in Section 6.3. Borrower must maintain a minimum of $2,000,000 of
commercial general liability insurance for each occurrence. Borrower has and agrees to maintain a minimum of $2,000,000 of directors
and officers’ insurance for each occurrence and $5,000,000 in the aggregate. So long as there are any Secured Obligations
outstanding, Borrower shall also cause to be carried and maintained insurance upon the Collateral, insuring against all risks of
physical loss or damage howsoever caused, in an amount not less than the full replacement cost of the Collateral, provided that
such insurance may be subject to standard exceptions and deductibles. Borrower shall also carry and maintain a fidelity insurance
policy in an amount not less than $100,000 and maintain a title insurance policy with respect to the Oil and Gas Properties.


 




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6.2          Certificates.
On or before the Closing Date and thereafter upon request, Borrower shall deliver to Lender certificates of insurance that evidence
Borrower’s compliance with its insurance obligations in Section 6.1 and the obligations contained in this Section 6.2. Borrower’s
insurance certificate shall state Lender is an additional insured for commercial general liability, an additional insured and a
lender loss payee for all risk property damage insurance, subject to the insurer’s approval, a loss payee for fidelity insurance,
and a lender loss payee for property insurance and additional insured for liability insurance for any future insurance that Borrower
may acquire from such insurer. Attached to the certificates of insurance will be additional insured endorsements for liability
and lender’s loss payable endorsements for all risk property damage insurance and fidelity. All certificates of insurance
will provide for a minimum of thirty (30) days advance written notice to Lender of cancellation. Any failure of Lender to scrutinize
such insurance certificates for compliance is not a waiver of any of Lender’s rights, all of which are reserved.


 


6.3          Indemnity.
Borrower agrees to indemnify and hold harmless the Indemnified Persons from and against any and all claims, costs, expenses, damages
and liabilities (including such claims, costs, expenses, damages and liabilities based on liability in tort, including strict liability
in tort), including reasonable attorneys’ fees and disbursements and other reasonable costs of investigation or defense (including
those incurred upon any appeal), that may be instituted or asserted by a third party against and incurred by such Indemnified Person
as the result of credit having been extended, suspended or terminated under this Agreement and the other Loan Documents or the
administration of such credit, or in connection with or arising out of the transactions contemplated hereunder and thereunder,
or any actions or failures to act in connection therewith, or arising out of the disposition or utilization of the Collateral,
excluding in all cases claims resulting primarily from Lender’s gross negligence or willful misconduct. “Indemnified
Persons” means Lender and its officers, directors, employees, agents, representatives and shareholders. Borrower agrees to
pay, and to save Lender harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and
all excise, sales or other similar taxes (excluding taxes imposed on or measured by the net income of Lender) that may be payable
or determined to be payable with respect to any of the Collateral or this Agreement.


 


SECTION 7.


COVENANTS OF BORROWER


 


Borrower agrees as follows:


 


7.1          Financial
Reports. Borrower shall furnish to Lender the financial statements and reports listed hereinafter (the “Financial Statements”):


 




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(a)          as
soon as practicable (and in any event within 30 days) after the end of each month, unaudited interim and year-to-date financial
statements as of the end of such month (prepared on a consolidated basis), including balance sheet and related statements of income
and cash flows accompanied by a report detailing any material contingencies (including the commencement of any material litigation
by or against Borrower) or any other occurrence that would reasonably be expected to have a Material Adverse Effect, all certified
by Borrower’s Chief Executive Officer or Chief Financial Officer to the effect that they have been prepared in accordance
with GAAP and on a basis consistent with Borrower’s historical financial statements, except (i) for the absence of footnotes,
(ii) that they are subject to normal year end adjustments, and (iii) they do not contain certain non-cash items that are customarily
included in quarterly and annual financial statements;


 


(b)          as
soon as practicable (and in any event within one hundred fifty (150) days) after the end of each fiscal year, unqualified audited
financial statements as of the end of such year (prepared on a consolidated basis), including balance sheet and related statements
of income and cash flows, and setting forth in comparative form the corresponding figures for the preceding fiscal year, certified
by Grant Thornton LLP or another firm of independent certified public accountants selected by Borrower and reasonably acceptable
to Lender, accompanied by any management report from such accountants;


 


(c)          as
soon as practicable (and in any event within 30 days) after the end of each month, a Compliance Certificate in the form of Exhibit
C;


 


(d)          within
sixty (60) days after the end of each fiscal quarter, a report setting forth, for each calendar month during the then current fiscal
year to date, the volume of production and sales attributable to production (and the prices at which such sales were made and the
revenues derived from such sales) for each such calendar month from the Oil and Gas Properties, and setting forth the related ad
valorem, severance and production taxes and lease operating expenses attributable thereto and incurred for each such calendar month;


 


(e)          promptly
after the sending or filing thereof, as the case may be, copies of any proxy statements, financial statements or reports that Borrower
has made available to holders of its Preferred Stock and copies of any regular, periodic and special reports or registration statements
that Borrower files with the Securities and Exchange Commission or any governmental authority that may be substituted therefor,
or any national securities exchange; provided, that after an Initial Public Offering of any Borrower, any documents required to
be delivered pursuant to this clause shall be deemed delivered on the date that such documents are publicly available on “EDGAR”
or other similar publicly accessible sources of which Borrower provides written notice to Lender.


 


(f)           within
10 days of transmission to and in the same manner as it gives to its directors, copies of all notices, minutes, consents and other
materials that Borrower provides to its directors in connection with meetings of the Board of Directors, and within 30 days after
each such meeting, minutes of such meeting (excluding, in each case, Intellectual Property, proprietary and technical information,
sensitive information regarding the Borrower’s activities, including acquisition, customer and research activities, executive
session materials, attorney-client privileged materials and materials presenting a conflict of interest with respect to Lender);
and


 




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(g)          budgets
promptly following their approval by Borrower’s Board of Directors, as well as other financial information reasonably requested
by Lender.


 


Borrower shall not (without the consent of Lender,
such consent not to be unreasonably withheld or delayed), make any change in its (a) accounting policies or reporting practices,
except as required by GAAP or (b) fiscal years or fiscal quarters. As of the Closing Date, the fiscal year of Borrower ends on
December 31.


 


The executed Compliance Certificate and all Financial
Statements required to be delivered pursuant to clauses (a), (b) and (c) shall be sent via e-mail to financialstatements@herculestech.com
with a copy to jbourque@htgc.com provided, that if e-mail is not available or sending such Financial Statements via e-mail is
not possible, they shall be sent via facsimile to Lender at: (866) 468-8916, attention Chief Credit Officer; provided, that after
an Initial Public Offering of any Borrower, documents required to be delivered pursuant to clause (b) hereof shall be deemed delivered
on the date that such documents are publicly available on “EDGAR” or other similar publicly accessible sources
of which Borrower provides written notice to Lender at the email addresses set forth above.


 


7.2          Management
Rights. Borrower shall permit any representative that Lender authorizes, including its attorneys and accountants, to inspect
the Collateral and examine and make copies and abstracts of the books of account and records of Borrower at reasonable times and
upon reasonable notice during normal business hours. In addition, any such representative shall have the right to meet with management
and officers of Borrower to discuss such books of account and records. In addition, Lender shall be entitled at reasonable times
and intervals to consult with and advise the management and officers of Borrower concerning significant business issues affecting
Borrower. Such consultations shall not unreasonably interfere with Borrower’s business operations and Borrower shall have
no obligation to follow the advice of Lender or its representatives as it relates to these meetings. The parties intend that the
rights granted Lender shall constitute “management rights” within the meaning of 29 C.F.R Section 2510.3-101(d)(3)(ii),
but that any advice, recommendations or participation by Lender with respect to any business issues shall not be deemed to give
Lender, nor be deemed an exercise by Lender of, control over Borrower’s management or policies.


 


7.3          Further
Assurances. Borrower shall from time to time execute, deliver and file, alone or with Lender, any financing statements, security
agreements, collateral assignments, notices, control agreements, or other documents to perfect or give the highest priority to
Lender’s Lien on the Collateral. Borrower shall from time to time procure any instruments or documents as may be reasonably
requested by Lender, and take all further action that may be necessary or desirable, or that Lender may reasonably request, to
perfect and protect the Liens granted hereby and thereby. In addition, and for such purposes only, each Borrower hereby authorizes
Lender to at any time, and from time to time, to file in any jurisdiction any initial financing statements and amendments thereto
that (a) indicate the Collateral, and (b) contain any other information required by Chapter 9 of the UCC of the jurisdiction wherein
such financing statement or amendment is filed regarding the sufficiency or filing office acceptance of any financing statement
or amendment, including, without limitation, (i) whether such Borrower is an organization, the type of organization and the organization
number issued to such Borrower and (ii) in the case of a financing statement filed as a fixture filing or indicating Collateral
to be extracted or timber to be cut, a sufficient description of the real property to which the Collateral relates. Each Borrower
shall protect and defend such Borrower’s title to the Collateral and Lender’s Lien thereon against all Persons claiming
any interest adverse to such Borrower or Lender other than Permitted Liens.


 




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7.4          Indebtedness.
Borrower shall not create, incur, assume, guarantee or be or remain liable with respect to any Indebtedness, or permit any Subsidiary
so to do, other than Permitted Indebtedness, or, except with respect to any Indebtedness in the aggregate not in excess of $50,000
in any fiscal year of Borrower (i) prepay any Indebtedness or (ii) take any actions which impose on Borrower an obligation to prepay
any Indebtedness, except for the conversion of Indebtedness into equity securities and the payment of cash in lieu of fractional
shares in connection with such conversion.


 


7.5          Collateral.
Borrower shall at all times keep the Collateral and real property that is subject to a Mortgage to secure the Secured Obligations
free and clear from any legal action reasonably expected to have a material adverse effect on such Collateral or real property
or Liens whatsoever (except for Permitted Liens), and shall give Lender prompt written notice of any such legal action affecting
the Collateral such real property, or any Liens thereon. Borrower shall at all times keep the Intellectual Property free and clear
from any Liens (except for Permitted Liens), and shall give Lender prompt written notice of any Liens thereon. Borrower shall cause
its Subsidiaries to protect and defend such Subsidiary’s title to its assets from and against all Persons claiming any interest
adverse to such Subsidiary, and Borrower shall cause its Subsidiaries at all times to keep such Subsidiary’s property and
assets free and clear from any legal action reasonably expected to have a material adverse effect on such property or assets or
Liens whatsoever (except for Permitted Liens), and shall give Lender prompt written notice of any such legal action affecting such
Subsidiary’s assets. Borrower shall not agree with any Person other than Lender not to encumber its property.


 


7.6          Investments.
No Borrower shall directly or indirectly acquire or own, or make any Investment in or to any Person, or permit any of its Subsidiaries
so to do, other than Permitted Investments.


 


7.7          Distributions.
No Borrower shall, and no Borrower shall allow any of its Subsidiaries to, (a) repurchase or redeem any class of stock or other
equity interest other than pursuant to employee, director or consultant repurchase plans or other similar agreements, provided,
however, in each case the repurchase or redemption price does not exceed the original consideration paid for such stock or equity
interest, or (b) declare or pay any cash dividend or make a cash distribution on any class of stock or other equity interest, except
that a Subsidiary or a Borrower may pay dividends or make distributions to a Borrower, or (c) lend money to any employees, officers
or directors or guarantee the payment of any such loans granted by a third party in excess of $100,000 in the aggregate or (d)
waive, release or forgive any indebtedness owed by any employees, officers or directors in excess of $100,000 in the aggregate.


 




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7.8           Transfers.
(a) Except for Permitted Transfers, a Borrower shall not voluntarily or involuntarily transfer, sell, lease, license, lend or in
any other manner convey any equitable, beneficial or legal interest in any material portion of their assets; and (b) in the event
a Borrower enters into any agreement to sell, transfer, assign or otherwise dispose of any Oil or Gas Properties, such Borrower
shall provide prior written notice of such disposition, the price thereof and the anticipated date of closing and any other details
thereof reasonably requested by Lender.


 


7.9           Mergers
or Acquisitions. No Borrower shall merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with or
into any other business organization (other than mergers or consolidations of a Subsidiary into another Subsidiary or into Borrower),
or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another
Person (other than the capital stock or property of a Subsidiary or a Borrower).


 


7.10         Taxes.
Borrower and its Subsidiaries shall pay when due all taxes, fees, assessments or other governmental charges or levies (together
with any related interest or penalties) now or hereafter imposed or assessed against Borrower, Lender (except for Excluded Taxes)
or the Collateral or upon Borrower’s ownership, possession, use, operation or disposition thereof or upon Borrower’s
rents, receipts or earnings arising therefrom. Borrower shall file on or before the due date therefor all personal property tax
returns required in respect of the Collateral. Notwithstanding the foregoing, Borrower may contest, in good faith and by appropriate
proceedings, taxes for which Borrower maintains adequate reserves therefor in accordance with GAAP.


 


7.11         Corporate
Changes. No Borrower or any Subsidiary shall change its corporate name, legal form or jurisdiction of formation without ten
(10) Business Days’ prior written notice to Lender (or such shorter period as agreed to by Lender in writing). No Borrower
or any Subsidiary shall suffer a Change in Control. No Borrower or any Subsidiary shall relocate its chief executive office or
its principal place of business unless: (i) it has provided prior written notice to Lender; and (ii) such relocation shall be within
the continental United States. No Borrower or any Subsidiary shall relocate any item of Collateral (other than (x) sales or use
of Inventory in the ordinary course of business, (y) relocations of Equipment in the ordinary course of business in the continental
United States and Canada, and (z) relocations of other Collateral from a location described on Disclosure Letter Section 5.1 to
another location described on Disclosure Letter Section 5.1) unless (i) it has provided prompt written notice to Lender, (ii) such
relocation is within the continental United States and, (iii) if such relocation is to a third party bailee, it has delivered a
bailee agreement in form and substance reasonably acceptable to Lender.


 


7.12         Deposit
Accounts. Except as required by Section 4.1(b), each Borrower shall diligently pursue to cause, as soon as administratively
practicable after (i) the Closing Date (with respect to any Deposit Accounts or accounts holding Investment Property of such Borrower
existing on the Closing Date), or (ii) the date any Borrower opens or acquires any Deposit Account or account holding Investment
Property of such Borrower after the Closing Date, each bank or other financial institution with respect to such account to execute
and deliver to the Lender an Account Control Agreement, in form and substance reasonably satisfactory to the Lender, duly executed
by such Borrower and such bank or financial institution. If any Borrower has not delivered any Account Control Agreement referred
to in (i) above to the Lender within thirty (30) days after the date hereof, the Lender may request in writing that such Borrower
move the funds in such account for which no Account Control Agreement was provided to another bank or financial institution for
which an Account Control Agreement will be provided, and Borrower shall promptly comply with such request and diligently pursue
to deliver such Account Control Agreements within thirty (30) days after the date thereof.


 




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7.13         Subsidiaries.
Borrower shall notify Lender of each Subsidiary formed subsequent to the Closing Date and, within 15 days of formation, shall cause
any such Subsidiary organized under the laws of any State within the United States to execute and deliver to Lender a Joinder Agreement.


 


7.14         Capital
Expenditures. Prior to a Qualified Financing, Borrower shall not make capital expenditures in excess of $10,000,000 in the
aggregate in any fiscal year with respect to the acquisition of Oil and Gas Properties.


 


7.15         Operation
and Maintenance of Properties. Borrower, at its own expense, will, and will cause each of its Subsidiaries to:


 


(a)          operate
its Oil and Gas Properties and other material Properties or cause such Oil and Gas Properties and other material Properties to
be operated in accordance with the practices of the industry and in compliance with all applicable contracts and agreements and
in compliance with all Governmental Requirements, including, without limitation, applicable pro ration requirements and Environmental
Laws, and all applicable laws, rules and regulations of every other Governmental Authority from time to time constituted to regulate
the development and operation of its Oil and Gas Properties and the production and sale of Hydrocarbons and other minerals therefrom,
except, in each case, where the failure to comply could not reasonably be expected to have a Material Adverse Effect.


 


(b)          keep
and maintain all Property material to the conduct of its business in good working order and condition (ordinary wear and tear excepted),
and preserve, maintain and keep, or make reasonable and customary efforts to cause to be preserved, maintained and kept, in good
repair, working order (ordinary wear and tear and depletion excepted) all of its material Oil and Gas Properties.


 


(c)          promptly
pay and discharge, or make reasonable and customary efforts to cause to be paid and discharged, all 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,
or make reasonable and customary efforts to cause to be done, all other things necessary to keep unimpaired their rights with respect
thereto and prevent any forfeiture thereof or default thereunder, except where the failure to do so could not reasonably be expect
to result in a Material Adverse Effect.


 


(d)          promptly
perform or make reasonable and customary efforts to cause to be performed, in accordance with industry standards, the obligations
of Borrower under 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.


 




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(e)          operate
its Oil and Gas Properties and other material Properties or cause or make reasonable and customary 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 material compliance
with all applicable contracts and agreements and in compliance in all material respects with all Governmental Requirements.


 


7.16         Environmental
Matters.


 


(a)          Borrower
shall, at its own expense, comply, and shall cause its Properties and operations and each Subsidiary of the Borrower and each such
Subsidiary’s Properties and operations to comply, with all applicable Environmental Laws, where the failure to comply could
be reasonably expected to have a Material Adverse Effect; not dispose of or otherwise release, and shall cause each such Subsidiary
not to dispose of or otherwise release, any oil, oil and gas waste, hazardous substance, or solid waste on, under, about or from
any of Borrower’s Properties or any other Property to the extent caused by Borrower’s operations except in compliance
with applicable Environmental Laws, the disposal or release of which could reasonably be expected to have a Material Adverse Effect;
timely obtain or file all notices, permits, licenses, exemptions, approvals, registrations or other authorizations, if any, required
under applicable Environmental Laws to be obtained or filed in connection with the operation or use of Borrower Properties, which
failure to obtain or file could reasonably be expected to have a Material Adverse Effect; 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 under
applicable Environmental Laws because of or in connection with the actual or suspected past, present or future disposal or other
release of any oil, oil and gas waste, hazardous substance or solid waste on, under, about or from any of Borrower’s Properties,
which failure to commence and diligently prosecute to completion could reasonably be expected to have a Material Adverse Effect;
and establish and implement such procedures as may be necessary to determine and assure that Borrower’s obligations under
this Section 7.16 are timely and fully satisfied, which failure to establish and implement could reasonably be expected to have
a Material Adverse Effect.


 


(b)          Borrower
will promptly, but in no event later than ten (10) days after Borrower’s knowledge of the occurrence of a triggering event,
notify Lender in writing of any threatened action, investigation or inquiry by any Governmental Authority or any threatened demand
or lawsuit by any landowner or other third party against Borrower or its Properties in connection with any Environmental Laws (excluding
routine testing and corrective action) if Borrower reasonably anticipates that such action will result in liability (whether individually
or in the aggregate) in excess of $1,000,000, not fully covered by insurance or other means of recovery or reimbursement acceptable
to the Lenders, subject to normal deductibles.


 




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(c)          Borrower
will perform any environmental audits and tests of such Properties in accordance with applicable American Society of Testing Materials
standards in connection with any future acquisitions of Oil and Gas Properties or other Properties and upon reasonable written
request by Lender and no more than once per year in the absence of any Event of Default (or as otherwise required to be obtained
by Lender by any Governmental Authority) and share with Lender the reports and other results thereof.


 


7.17         Additional
Collateral. Prior to the occurrence of a Qualified Financing or following the occurrence of a Collateral Event, upon the acquisition
by Borrower of any Oil and Gas Property, the Borrower shall grant, within thirty (30) days of acquisition of such Oil and Gas Property,
as security for the Obligations a first-priority Lien (subject to Permitted Liens) on such additional Oil and Gas Property not
already subject to a Lien created by this Agreement and the Mortgages. All such Liens will be created and perfected by and in accordance
with the provisions of applicable mortgages, deeds of trust, security agreements and financing statements or other security instruments,
all in form and substance reasonably satisfactory to Lender and in sufficient executed (and acknowledged where necessary or appropriate)
counterparts for recording purposes. In connection with granting Lender a first-priority Lien in any newly acquired Oil and Gas
Property, Borrower shall deliver to Lender a Reserve Report, such opinions reasonably requested by Lender, demonstrate adequate
insurance with respect to the newly acquired Oil and Gas Property and take such further actions with respect to the newly acquired
Oil and Gas Property as requested by Lender.


 


SECTION 8. 


RIGHT TO INVEST


 


8.1           Lender
or its assignee or nominee (which assignee or nominee shall be an “Accredited Investor” pursuant to federal securities
statutes and the rules and regulations promulgated pursuant thereto) shall have the right, in its discretion, to participate in
any Subsequent Financing in an amount of up to $1,000,000 on the same terms, conditions and pricing afforded to the Series C Preferred
stockholders.


 


SECTION 9. 


EVENTS OF DEFAULT


 


The occurrence of any one or more of the following
events shall be an Event of Default:


 


9.1           Payments.
Borrower fails to pay any amount due under this Agreement, the Notes or any of the other Loan Documents on the due date; or


 


9.2           Covenants.
Borrower breaches or defaults in the performance of any covenant or Secured Obligation under this Agreement, the Note, or any of
the other Loan Documents (except as set forth in Section 9.1), and (a) with respect to a default under any covenant under this
Agreement, the Note or any of the other Loan Documents (other than under Sections 6.1, 6.3, 7.5, 7.6, 7.7, 7.8, 7.9 or 7.16) such
default continues for more than fifteen (15) days after the earlier of the date on which (i) Lender has given notice of such default
to Borrower and (ii) Borrower has actual knowledge of such default or (b) with respect to a default under any of Sections 6.1,
6.3, 7.5, 7.6, 7.7, 7.8, 7.9 or 7.16, the occurrence of such default; or


 




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9.3           Material
Adverse Effect. An event has occurred that would reasonably be expected to have a Material Adverse Effect; or


 


9.4           Representations.
Any representation or warranty made by a Borrower in any Loan Document or in the Warrant shall have been false or misleading in
any material respect at the time such representation or warranty was made; or


 


9.5           Insolvency.
(A) Borrower (i) shall make an assignment for the benefit of creditors; or (ii) shall be unable to pay its debts as they become
due, or be unable to perform under the Loan Documents, or shall become Insolvent; or (iii) voluntarily seeks, consents to, or acquiesces
in the benefit of any Debtor Relief Law; or (iv) shall seek or consent to or acquiesce in the appointment of any trustee, receiver,
or liquidator of Borrower or of all or any substantial part (i.e., 33-1/3% or more) of the assets or property of Borrower; or (v)
shall cease operations of its business as its business has normally been conducted, or terminate substantially all of its employees;
or (vi) its directors or majority shareholders shall take any action initiating any of the foregoing actions described in clauses
(i) through (v); or (B) either (i) forty-five (45) days shall have expired after the commencement of an involuntary action against
Borrower under any Debtor Relief Law, without such action being dismissed, or all orders or proceedings thereunder affecting the
operations or the business of Borrower being stayed; or (ii) a stay of any such order or proceedings shall thereafter be set aside
and the action setting it aside shall not be timely appealed; or (iii) Borrower shall file any answer admitting or not contesting
the material allegations of a petition filed against Borrower in any such proceedings; or (iv) the court in which such proceedings
are pending shall enter a decree or order against any Borrower granting the relief sought in any such proceedings; or (v) thirty
(30) days shall have expired after the appointment, without the consent or acquiescence of Borrower, of any trustee, receiver or
liquidator of Borrower or of all or any substantial part of the properties of Borrower without such appointment being vacated;
or


 


9.6           Attachments;
Judgments. Any portion of Borrower’s assets in excess of $175,000 in the aggregate is attached or seized, or a levy is
filed against any such assets, or a judgment or judgments is/are entered for the payment of money, individually or in the aggregate,
of at least $175,000 (net of applicable insurance if the insurer has accepted coverage), or Borrower is enjoined or in any way
prevented by court order from conducting any material part (either individually or in the aggregate) of its business, and such
attachment, seizure, levy, judgment or enjoinment is not discharged within ten (10) days of entry thereof; or


 


9.7           Other
Obligations. The occurrence of any default under any agreement or obligation (other than under the Loan Documents) of Borrower
(and running of any cure period provided for in any such agreement or obligations) involving any Indebtedness in excess of $75,000.


 




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SECTION 10. 


REMEDIES


 


10.1         General.
Upon and during the continuance of any one or more Events of Default, (i) Lender may, at its option, declare the entire unpaid
balance of all or any part of the Secured Obligations together with any applicable Prepayment Charge immediately due and payable
(provided, that upon the occurrence of an Event of Default of the type described in Section 9.6, the Notes and all of the Secured
Obligations shall automatically be accelerated and made due and payable, in each case without any further notice or act), and (ii)
Lender may notify any of Borrower’s account debtors to make payment directly to Lender, compromise the amount of any such
account on Borrower’s behalf and endorse Lender’s name without recourse on any such payment for deposit directly to
Lender’s account. Lender may exercise all rights and remedies with respect to the Collateral under the Loan Documents or
otherwise available to it under the UCC and other applicable law, including the right to release, hold, sell, lease, liquidate,
collect, realize upon, or otherwise dispose of all or any part of the Collateral and the right to occupy, utilize, process and
commingle the Collateral. All Lender’s rights and remedies shall be cumulative and not exclusive.


 


10.2         Collection;
Foreclosure. Upon the occurrence and during the continuance of any Event of Default, Lender may, at any time or from time to
time, apply, collect, liquidate, sell in one or more sales, lease or otherwise dispose of, any or all of the Collateral, in its
then condition or following any commercially reasonable preparation or processing, in such order as Lender may elect. Any such
sale may be made either at public or private sale at its place of business or elsewhere. Borrower agrees that any such public or
private sale may occur upon ten (10) calendar days’ prior written notice to Borrower. Lender may require Borrower to assemble
the Collateral and make it available to Lender at a place designated by Lender that is reasonably convenient to Lender and Borrower.
The proceeds of any sale, disposition or other realization upon all or any part of the Collateral shall be applied by Lender in
the following order of priorities:


 


First, to Lender in an amount sufficient to pay in
full Lender’s costs and professionals’ and advisors’ fees and expenses as described in Section 11.11;


 


Second, to Lender in an amount equal to the
then unpaid amount of the Secured Obligations (including principal, interest, and the Default Rate interest), in such order
and priority as Lender may choose in its sole discretion; and


 


Finally, after the full, final, and indefeasible payment
in Cash of all of the Secured Obligations or to Borrower or its representatives or as a court of competent jurisdiction may direct.


 


Lender shall be deemed to have acted reasonably in the custody,
preservation and disposition of any of the Collateral if it complies with the obligations of a secured party under the UCC.


 


10.3         No
Waiver. Lender shall be under no obligation to marshal any of the Collateral for the benefit of Borrower or any other Person,
and Borrower expressly waives all rights, if any, to require Lender to marshal any Collateral.


 




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10.4         Cumulative
Remedies. The rights, powers and remedies of Lender hereunder shall be in addition to all rights, powers and remedies given
by statute or rule of law and are cumulative. The exercise of any one or more of the rights, powers and remedies provided herein
shall not be construed as a waiver of or election of remedies with respect to any other rights, powers and remedies of Lender.


 


SECTION 11. 


MISCELLANEOUS


 


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


 


11.2         Notice.
Except as otherwise provided herein, any notice, demand, request, consent, approval, declaration, service of process or other communication
(including the delivery of Financial Statements) that is required, contemplated, or permitted under the Loan Documents or with
respect to the subject matter hereof shall be in writing, and shall be deemed to have been validly served, given, delivered, and
received upon the earlier of: (i) the day of transmission by facsimile or hand delivery or delivery by an overnight express service
or overnight mail delivery service; (ii) upon transmission, when sent by electronic mail, or (iii) the third calendar day after
deposit in the United States mails, with proper first class postage prepaid, in each case addressed to the party to be notified
as follows:


 


(a)          If
to Lender:


 


HERCULES TECHNOLOGY GROWTH CAPITAL, INC.


Legal Department


Attention: Chief Legal Officer


400 Hamilton Avenue, Suite 310


Palo Alto, CA 94301


Facsimile: 650-473-9194


Telephone: 650-289-3060


E-mail: nmartitsch@herculestech.com


 


HERCULES TECHNOLOGY GROWTH CAPITAL, INC.


Attention: Janice Bourque


31 St. James Avenue, Suite 790


Boston, MA 02116


Facsimile: 617-314-9997


Telephone: 617-314-9992


E-mail: jbourque@htgc.com


 




    	32



    	 



    

 


(b)          If
to Borrower:


 


GLORI ENERGY INC.


Attention: Victor M. Perez, Chief Financial Officer


4315 South Drive


Houston, Texas 77053


Facsimile: 713-237-8585


Telephone: 832-412-1432


E-mail: VPerez@glorienergy.com


 


With a copy to:


 


FULBRIGHT & JAWORSKI L.L.P.


Attn: Charles D. Powell


Fulbright Tower


1301 McKinney, Suite 5100


Facsimile: 713-651-5246


Telephone: 713-651-5431


E-mail: cpowell@fulbright.com


 


or to such other address as each party may designate
for itself by like notice.


 


11.3         Entire
Agreement; Amendments. This Agreement, the Notes, and the other Loan Documents constitute the entire agreement and understanding
of the parties hereto in respect of the subject matter hereof and thereof, and supersede and replace in their entirety any prior
proposals, term sheets, letters, negotiations or other documents or agreements, whether written or oral, with respect to the subject
matter hereof or thereof (including Lender’s revised proposal letter dated March 16, 2012). None of the terms of this Agreement,
the Notes or any of the other Loan Documents may be amended except by an instrument executed by each of the parties hereto.


 


11.4         No
Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the
parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.


 


11.5         No
Waiver. The powers conferred upon Lender by this Agreement are solely to protect its rights hereunder and under the other Loan
Documents and its interest in the Collateral and shall not impose any duty upon Lender to exercise any such powers. No omission
or delay by Lender at any time to enforce any right or remedy reserved to it, or to require performance of any of the terms, covenants
or provisions hereof by Borrower at any time designated, shall be a waiver of any such right or remedy to which Lender is entitled,
nor shall it in any way affect the right of Lender to enforce such provisions thereafter.


 


11.6         Survival.
All agreements set forth in Sections 6.3 and 8.1 of this Agreement, and the representations and warranties contained in this Agreement,
the Notes and the other Loan Documents or in any document delivered pursuant hereto or thereto shall be for the benefit of Lender
and shall survive the execution and delivery of this Agreement and, except with respect to Section 8.1 following the occurrence
of an Initial Public Offering with respect to any Borrower, the expiration or other termination of this Agreement.


 




    	33



    	 



    

 


11.7         Successors
and Assigns. The provisions of this Agreement and the other Loan Documents shall inure to the benefit of and be binding on
Borrower and its permitted assigns (if any). Borrower shall not assign its obligations under this Agreement, the Note or any of
the other Loan Documents without Lender’s express prior written consent, and any such attempted assignment shall be void
and of no effect. Subject to Section 11.12, Lender may assign, transfer, or endorse its rights hereunder and under the other Loan
Documents without prior notice to Borrower, and all of such rights shall inure to the benefit of Lender’s successors and
assign; provided that until Borrower has notice of such assignment, all obligations, covenants, and agreements under this Agreement
shall be performed or provided to or with respect to Lender.


 


11.8         Governing
Law. This Agreement, the Notes and the other Loan Documents have been negotiated and delivered to Lender in the State of California,
and shall have been accepted by Lender in the State of California. Payment to Lender by Borrower of the Secured Obligations is
due in the State of California. This Agreement, the Notes and the other Loan Documents shall be governed by, and construed and
enforced in accordance with, the laws of the State of California, excluding conflict of laws principles that would cause the application
of laws of any other jurisdiction.


 


11.9         Consent
to Jurisdiction and Venue. All judicial proceedings (to the extent that the reference requirement of Section 11.10 is not applicable)
arising in or under or related to this Agreement, the Notes or any of the other Loan Documents may be brought in any state or federal
court located in the State of California. By execution and delivery of this Agreement, each party hereto generally and unconditionally:
(a) consents to nonexclusive personal jurisdiction in Santa Clara County, State of California; (b) waives any objection as to jurisdiction
or venue in Santa Clara County, State of California; and (c) agrees not to assert any defense based on lack of jurisdiction or
venue in the aforesaid courts. Service of process on any party hereto in any action arising out of or relating to this Agreement
shall be effective if given in accordance with the requirements for notice set forth in Section 11.2, and shall be deemed effective
and received as set forth in Section 11.2. Nothing herein shall affect the right to serve process in any other manner permitted
by law or shall limit the right of either party to bring proceedings in the courts of any other jurisdiction.


 


11.10      Mutual
Waiver of Jury Trial/Judicial Reference.


 


(a)          Because
disputes arising in connection with complex financial transactions are most quickly and economically resolved by an experienced
and expert person and the parties wish applicable state and federal laws to apply (rather than arbitration rules), the parties
desire that their disputes be resolved by a judge applying such applicable laws. EACH OF BORROWER AND LENDER SPECIFICALLY WAIVES
ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY OTHER
CLAIM (COLLECTIVELY, “CLAIMS”) ASSERTED BY BORROWER AGAINST LENDER OR ITS ASSIGNEE OR BY LENDER OR ITS ASSIGNEE AGAINST
BORROWER.


 




    	34



    	 



    

 


This waiver extends to all such Claims, including
Claims that involve Persons other than Borrower and Lender; Claims that arise out of or are in any way connected to the relationship
between Borrower and Lender; and any Claims for damages, breach of contract, tort, specific performance, or any equitable or legal
relief of any kind, arising out of this Agreement or any other Loan Document.


 


(b)          If
the waiver of jury trial set forth in Section 11.10(a) is ineffective or unenforceable, the parties agree that all Claims shall
be resolved by reference to a private judge sitting without a jury, pursuant to Code of Civil Procedure Section 638, before a mutually
acceptable referee or, if the parties cannot agree, a referee selected by the Presiding Judge of the Santa Clara County, California.
Such proceeding shall be conducted in Santa Clara County, California, with California rules of evidence and discovery applicable
to such proceeding.


 


(c)          In
the event Claims are to be resolved by judicial reference, either party may seek from a court identified in Section 11.9, any prejudgment
order, writ or other relief and have such prejudgment order, writ or other relief enforced to the fullest extent permitted by law
notwithstanding that all Claims are otherwise subject to resolution by judicial reference.


 


11.11      Professional
Fees. Borrower promises to pay Lender’s fees and expenses necessary to finalize the loan documentation, including but
not limited to reasonable attorneys fees, UCC searches, filing costs, and other miscellaneous expenses. In addition, Borrower promises
to pay any and all reasonable attorneys’ and other professionals’ fees and expenses incurred by Lender after the Closing
Date in connection with or related to: (a) the Loan; (b) the collection, or enforcement of the Loan; (c) the amendment or modification
of the Loan Documents; (d) any waiver, consent, release, or termination under the Loan Documents; (e) the protection, preservation,
sale, lease, liquidation, or disposition of Collateral or the exercise of remedies with respect to the Collateral; (f) any legal,
litigation, administrative, arbitration, or out of court proceeding in connection with or related to Borrower or the Collateral,
and any appeal or review thereof; and (g) any bankruptcy, restructuring, reorganization, assignment for the benefit of creditors,
workout, foreclosure, or other action related to any Borrower, the Collateral, the Loan Documents, including representing Lender
in any adversary proceeding or contested matter commenced or continued by or on behalf of Borrower’s estate, and any appeal
or review thereof.


 




    	35



    	 



    

 


11.12         Confidentiality.
Lender acknowledges that certain items of Collateral and information provided to Lender by Borrower are confidential and proprietary
information of Borrower, if and to the extent such information either (x) is marked as confidential by Borrower at the time of
disclosure, or (y) is information received from the Borrower or any Subsidiary relating to the Borrower or any Subsidiary and their
businesses, other than any such information that is available to the Lender on a non-confidential basis other than through disclosure
by the Borrower or any Subsidiary (the “Confidential Information”). Accordingly, Lender agrees that any Confidential
Information it may obtain in the course of acquiring, administering, or perfecting Lender’s security interest in the Collateral
shall not be disclosed to any other person or entity in any manner whatsoever, in whole or in part, without the prior written consent
of Borrower, except that Lender may disclose any such information: (a) to its own directors, officers, employees, accountants,
counsel and other professional advisors and to its affiliates if Lender in its sole discretion determines that any such party should
have access to such information in connection with such party’s responsibilities in connection with the Loan or this Agreement
and, provided that such recipient of such Confidential Information either (i) agrees to be bound by the confidentiality provisions
of this paragraph or (ii) is otherwise subject to confidentiality restrictions at least as protective of the Confidential Information
as provided herein; (b) if such information is generally available to the public; (c) if required in any report, statement or testimony
submitted to any governmental authority having or claiming to have jurisdiction over Lender; (d) if required in response to any
summons or subpoena or in connection with any litigation, to the extent permitted or deemed advisable by Lender’s counsel;
(e) to comply with any legal requirement or law applicable to Lender; (f) to the extent reasonably necessary in connection with
the exercise of any right or remedy under any Loan Document, including Lender’s sale, lease, or other disposition of Collateral
after default (provided that such recipient of such Confidential Information agrees in writing as set forth in clause (a)(i) or
(a)(ii) above; (g) to any participant or assignee of Lender or any prospective participant or assignee; provided, that such participant
or assignee or prospective participant or assignee agrees in writing to be bound by this Section prior to disclosure; or (h) otherwise
with the prior consent of Borrower; provided, that any disclosure made in violation of this Agreement shall not affect the obligations
of Borrower or any of its affiliates or any guarantor under this Agreement or the other Loan Documents.


 


11.13         Assignment
of Rights. Borrower acknowledges and understands that Lender may sell and assign all of its interest hereunder and under the
Note(s) and Loan Documents to any person or entity (an “Assignee”), subject to the terms and conditions of this Section
11.12. After such assignment and notice to Borrower of such assignment, the term “Lender” as used in the Loan Documents
shall mean and include such Assignee, and such Assignee shall be vested with all rights, powers and remedies of Lender hereunder
with respect to the interest so assigned; but with respect to any such interest not so transferred, Lender shall retain all rights,
powers and remedies hereby given. No such assignment by Lender shall relieve Borrower of any of its obligations hereunder. Lender
agrees that in the event of any transfer by it of the Note(s), it will endorse thereon a notation as to the portion of the principal
of the Note(s), which shall have been paid at the time of such transfer and as to the date to which interest shall have been last
paid thereon. Lender and each Assignee thereof confirm to and agree with each other and with the Borrower as follows: (i) such
Assignee has received this Agreement and an original Note in the amount of the then current outstanding principal balance assigned
to it, together with such other documents and information it has deemed appropriate to make its own credit analysis and decision;
(ii) notwithstanding anything to the contrary herein, if there are multiple Assignees of Lender’s interest, the Assignees
holding such interests comprising sixty-seven percent (67%) or more of the then current aggregate outstanding principal balance
of the original Note made by Borrower on the date of this Agreement shall irrevocably appoint an agent to take such actions on
behalf of all holders of the Term Loan and to exercise such powers and rights as are provided to the Lender by the terms hereof
and the other Loan Documents, together with such actions and powers as are reasonably incidental thereto. Following any assignment
hereunder by Lender, the rights set forth in Sections 9 and 10 of this Agreement shall only be exercised by the agent and must
be exercised on behalf of all holders simultaneously. The instructions as aforesaid and any action taken or failure to act pursuant
thereto by the agent shall be binding on all Assigns


 




    	36



    	 



    

 


11.14         Revival
of Secured Obligations. This Agreement and the Loan Documents shall remain in full force and effect and continue to be effective
if any petition is filed by or against Borrower for liquidation or reorganization, if Borrower becomes insolvent or makes an assignment
for the benefit of creditors, if a receiver or trustee is appointed for all or any significant part of Borrower’s assets,
or if any payment or transfer of Collateral is recovered from Lender. The Loan Documents and the Secured Obligations and Collateral
security shall continue to be effective, or shall be revived or reinstated, as the case may be, if at any time payment and performance
of the Secured Obligations or any transfer of Collateral to Lender, or any part thereof is rescinded, avoided or avoidable, reduced
in amount, or must otherwise be restored or returned by, or is recovered from, Lender or by any obligee of the Secured Obligations,
whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment,
performance, or transfer of Collateral had not been made. In the event that any payment, or any part thereof, is rescinded, reduced,
avoided, avoidable, restored, returned, or recovered, the Loan Documents and the Secured Obligations shall be deemed, without any
further action or documentation, to have been revived and reinstated except to the extent of the full, final, and indefeasible
payment to Lender in Cash.


 


11.15         Counterparts.
This Agreement and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when so delivered shall be deemed an original, but all of which
counterparts shall constitute but one and the same instrument.


 


11.16         No
Third Party Beneficiaries. No provisions of the Loan Documents are intended, nor will be interpreted, to provide or create
any third-party beneficiary rights or any other rights of any kind in any person other than Lender and Borrower unless specifically
provided otherwise herein, and, except as otherwise so provided, all provisions of the Loan Documents will be personal and solely
between the Lender and the Borrower.


 


11.17         Publicity.
Lender may use Borrower’s name and logo, and include a brief description of the relationship between Borrower and Lender,
in Lender’s marketing materials, which materials are subject to Borrower’s review and approval with respect to the
use of Borrower’s name and logo.


 


(SIGNATURES TO FOLLOW)


 




    	37



    	 



    

 


IN WITNESS WHEREOF, Borrower and Lender
have duly executed and delivered this Loan and Security Agreement as of the day and year first above written.


 


	 	BORROWER:
	 	 
	 	GLORI ENERGY INC.
	 	 	 
	 	By:	/s/ Victor M. Perez
	 	 	Victor M. Perez
	 	 	Chief Financial Officer
	 	 	 
	 	GLORI CALIFORNIA INC.
	 	 	 
	 	By:	/s/ Victor M. Perez
	 	 	Victor M. Perez
	 	 	Chief Financial Officer
	 	 	 
	 	GLORI HOLDINGS INC.
	 	 	 
	 	By:	/s/ Victor M. Perez
	 	 	Victor M. Perez
	 	 	Chief Financial Officer
	 	 	 
	 	GLORI OIL (ARGENTINA) LIMITED
	 	 	 
	 	By:	/s/ Victor M. Perez
	 	 	Victor M. Perez
	 	 	Chief Financial Officer


 


[Signature Page to Loan and Security Agreement]


 




    	 



    	 



    

 


Accepted in Palo Alto, California:


 


	 	LENDER:
	 	 
	 	HERUCLES TECHNOLOGY GROWTH
	 	CAPITAL, INC.
	 	 	 
	 	Signature:	/s/ K. Nicholas Martitsch
	 	 	 
	 	Print Name:	K. Nicholas Martitsch
	 	 	 
	 	Title:	Associate General Counsel


 


[Signature Page to Loan and Security Agreement]


 




    	 



    	 



    

 


Table of Addenda, Exhibits and Schedules


 


	Exhibit A:	Advance Request
	 	Attachment to Advance Request
	 	 
	Exhibit B:	Term Note
	 	 
	Exhibit C:	Compliance Certificate
	 	 
	Exhibit D:	Joinder Agreement
	 	 
	Exhibit E:	ACH Debit Authorization Agreement


 




    	40



    	 



    

 


EXHIBIT A


 


ADVANCE REQUEST


 


	To:         Lender:	Date:     __________, 2006


 


Hercules Technology Growth Capital, Inc.


400 Hamilton Avenue, Suite 310


Palo Alto, CA 94301


Facsimile: 650-473-9194


Attn:


 


Glori Energy, Inc., Glori California Inc., Glori Holdings Inc.
and Glori Oil (Argentina) Limited. (collectively, “Borrower”) hereby requests from Hercules Technology Growth Capital,
Inc. (“Lender”) an Advance in the amount of _____________________ Dollars ($________________) on ______________, _____
(the “Advance Date”) pursuant to the Loan and Security Agreement, dated May __, 2012 between Borrower and Lender (the
“Agreement”). Capitalized words and other terms used but not otherwise defined herein are used with the same meanings
as defined in the Agreement.


 


Please:


 


	(a)	Issue a check payable to Borrower	________
	 	 	 
	 	or	 
	 	 	 
	(b)	Wire Funds to Borrower’s account	________
	 	 	 
	 	Bank:	 
	 	Address:	 
	 	 	 
	 	ABA Number:	 
	 	Account Number:	 
	 	Account Name:	 


 


Borrower represents that the conditions
precedent to the Advance set forth in the Agreement are satisfied and shall be satisfied upon the making of such Advance, including
but not limited to: (i) that no event that has had or would reasonably be expected to have a Material Adverse Effect has occurred
and is continuing; (ii) that the representations and warranties set forth in the Agreement and in the Warrant are and shall be
true and correct in all material respects on and as of the Advance Date with the same effect as though made on and as of such date,
except to the extent such representations and warranties expressly relate to an earlier date; (iii) that Borrower is in compliance
with all the terms and provisions set forth in each Loan Document on its part to be observed or performed; and (iv) that as of
the Advance Date, no fact or condition exists that would (or would, with the passage of time, the giving of notice, or both) constitute
an Event of Default under the Loan Documents. Borrower understands and acknowledges that Lender has the right to review the financial
information supporting this representation and, based upon such review in its sole discretion, Lender may decline to fund the requested
Advance.


 


Exh. A


 




    	 



    	 



    

 


Borrower hereby represents that Borrower’s
corporate status and locations have not changed since the date of the Agreement or, if the Attachment to this Advance Request is
completed, are as set forth in the Attachment to this Advance Request.


 


Borrower agrees to
notify Lender promptly before the funding of the Loan if any of the matters which have been represented above shall not be true
and correct on the Advance Date and if Lender has received no such notice before the Advance Date then the statements set forth
above shall be deemed to have been made and shall be deemed to be true and correct as of the Advance Date.


 


Executed as of [         ],
2012.


 


	 	GLORI ENERGY INC.
	 	 	 
	 	Signature:	 
	 	 	 
	 	Print Name:	 
	 	 	 
	 	Title:	 
	 	 	 
	 	GLORI CALIFORNIA INC.
	 	 	 
	 	Signature:	 
	 	 	 
	 	Print Name:	 
	 	 	 
	 	Title:	 
	 	 	 
	 	GLORI HOLDINGS INC.
	 	 	 
	 	Signature:	 
	 	 	 
	 	Print Name:	 
	 	 	 
	 	Title:	 
	 	 	 
	 	GLORI OIL (ARGENTINA) LIMITED
	 	 	 
	 	Signature:	 
	 	 	 
	 	Print Name:	 
	 	 	 
	 	Title:	 


 


Exh. A


 




    	 



    	 



    

 


ATTACHMENT TO ADVANCE REQUEST


 


Dated: _______________________


 


Borrower hereby represents and warrants to Lender that each
Borrower’s current name and organizational status is as follows:


 


	 	Name:	[                                               ]
	 	 	 
	 	Type of organization:	Corporation
	 	 	 
	 	State of organization:	[                                ]
	 	 	 
	 	Organization file number:	 


 


Borrower hereby represents and warrants to Lender that the street
addresses, cities, states and postal codes of each Borrower’s current locations are as follows:


 


Exh. A


 




    	 



    	 



    

 


EXHIBIT B


 


SECURED TERM PROMISSORY NOTE


 


	$[    ],000,000	Advance Date:  ___ __, 20[    ]
	 	 
	 	Maturity Date:  _____ ___, 20[    ]


 


FOR VALUE RECEIVED, Glori Energy, Inc.,
a Delaware corporation, Glori California Inc., a Delaware corporation, Glori Holdings Inc., a Delaware corporation and Glori Oil
(Argentina) Limited, a Delaware corporation (collectively, the “Borrower”) hereby jointly and severally promise to
pay to the order of Hercules Technology Growth Capital, Inc., a Maryland corporation or the holder of this Note (the “Lender”)
at 400 Hamilton Avenue, Suite 310, Palo Alto, CA 94301 or such other place of payment as the holder of this Secured Term Promissory
Note (this “Promissory Note”) may specify from time to time in writing, in lawful money of the United States of America,
the principal amount of [ ] Million Dollars ($[ ],000,000) or such lesser principal amount as Lender has advanced to Borrower,
together with interest at a rate equal to the greater of (i) 10.0% or (ii) the sum of 10.0%, plus the Prime Rate minus 3.25% based
upon a year consisting of 360 days, with interest computed daily based on the actual number of days in each month. For the purposes
of this Promissory Note, the “Prime Rate” is the rate most recently announced as the “prime rate” in the
Money Rates section of The Wall Street Journal.


 


This Promissory Note is a Note referred
to in, and is executed and delivered in connection with, that certain Loan and Security Agreement dated June 11, 2012, by and between
Borrower and Lender (as the same may from time to time be amended, modified or supplemented in accordance with its terms, the “Loan
Agreement”), and is entitled to the benefit and security of the Loan Agreement and the other Loan Documents (as defined in
the Loan Agreement), to which reference is made for a statement of all of the terms and conditions thereof. All payments shall
be made in accordance with the Loan Agreement. All terms defined in the Loan Agreement shall have the same definitions when used
herein, unless otherwise defined herein. An Event of Default under the Loan Agreement shall constitute a default under this Promissory
Note.


 


Borrower waives presentment and demand for
payment, notice of dishonor, protest and notice of protest under the UCC or any applicable law. Borrower agrees to make all payments
under this Promissory Note without setoff, recoupment or deduction and regardless of any counterclaim or defense. This Promissory
Note has been negotiated and delivered to Lender and is payable in the State of California. This Promissory Note shall be governed
by and construed and enforced in accordance with, the laws of the State of California, excluding any conflicts of law rules or
principles that would cause the application of the laws of any other jurisdiction.


 


	 	GLORI ENERGY INC. 
	 	 	 
	 	Signature:	 
	 	 	 
	 	Print Name:	 
	 	 	 
	 	Title:	 


 


Exh. B


 




    	 



    	 



    

 


	 	GLORI CALIFORNIA INC.
	 	 	 
	 	Signature:	 
	 	 	 
	 	Print Name:	 
	 	 	 
	 	Title:	 
	 	 	 
	 	GLORI HOLDINGS INC.
	 	 	 
	 	Signature:	 
	 	 	 
	 	Print Name:	 
	 	 	 
	 	Title:	 
	 	 	 
	 	GLORI OIL (ARGENTINA) LIMITED
	 	 	 
	 	Signature:	 
	 	 	 
	 	Print Name:	 
	 	 	 
	 	Title:	 


 


Exh. B


 




    	 



    	 



    

 


EXHIBIT C


 


COMPLIANCE CERTIFICATE


 


Hercules Technology Growth Capital, Inc.


400 Hamilton Avenue,
Suite 310


Palo Alto, CA 94301


 


Reference is made to that certain Loan and
Security Agreement dated June 11, 2012 and all ancillary documents entered into in connection with such Loan and Security Agreement
all as may be amended from time to time, (hereinafter referred to collectively as the “Loan Agreement”) between Hercules
Technology Growth Capital, Inc. (“Hercules”) as Lender and Glori Energy, Inc., Glori California Inc., Glori Holdings
Inc. and Glori Oil (Argentina) Limited (collectively, the “Company”) as Borrower. All capitalized terms not defined
herein shall have the same meaning as defined in the Loan Agreement.


 


The undersigned is an Officer of the Company,
knowledgeable of all Company financial matters, and is authorized to provide certification of information regarding the Company;
hereby certifies that in accordance with the terms and conditions of the Loan Agreement, the Company is in compliance for the period
ending ___________ with all covenants, conditions and terms of the Loan Agreement and hereby reaffirms that all representations
and warranties contained therein are true and correct on and as of the date of this Compliance Certificate with the same effect
as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier
date, after giving effect in all cases to any standard(s) of materiality contained in the Loan Agreement as to such representations
and warranties. Attached are the required documents supporting the above certification. The undersigned further certifies that,
if applicable, the supporting documents are prepared in accordance with GAAP (except for the absence of footnotes with respect
to unaudited financial statement and subject to normal year end adjustments) and are consistent from one period to the next except
as explained below.


 


	REPORTING REQUIREMENT	REQUIRED	CHECK IF ATTACHED
	 	 	 
	Interim Financial Statements	Monthly within 30 days	 
	 	 	 
	Audited Financial Statements	FYE within 150 days	 
	 	 	 
	 	Very Truly Yours,	 


 


	 	GLORI ENERGY INC.
	 	 	 
	 	Signature:	 
	 	 	 
	 	Print Name:	 
	 	 	 
	 	Title:	 


 


Exh. C


 




    	 



    	 



    

 


	 	GLORI CALIFORNIA INC.
	 	 	 
	 	Signature:	 
	 	 	 
	 	Print Name:	 
	 	 	 
	 	Title:	 
	 	 	 
	 	GLORI HOLDINGS INC.
	 	 	 
	 	Signature:	 
	 	 	 
	 	Print Name:	 
	 	 	 
	 	Title:	 
	 	 	 
	 	GLORI OIL (ARGENTINA) LIMITED
	 	 	 
	 	Signature:	 
	 	 	 
	 	Print Name:	 
	 	 	 
	 	Title:	 


 


Exh. C


 




    	 



    	 



    

 


EXHIBIT D


 


FORM OF JOINDER AGREEMENT


 


This Joinder Agreement (the “Joinder
Agreement”) is made and dated as of [         ], 20[      ],
and is entered into by and between__________________., a ___________ corporation (“Subsidiary”), and Hercules Technology
Growth Capital, Inc. as a Lender.


 


RECITALS


 


A. Subsidiary’s
Affiliate, [             ] (“Company”) has entered into that certain Loan and Security Agreement dated June 11, 2012, with Lender,
as such agreement may be amended (the “Loan Agreement”), together with the other agreements executed and delivered
in connection therewith;


 


B. Subsidiary acknowledges and agrees that
it will benefit both directly and indirectly from Company’s execution of the Loan Agreement and the other agreements executed
and delivered in connection therewith;


 


AGREEMENT


 


NOW THEREFORE, Subsidiary and Lender agree as follows:


 


1.     The
recitals set forth above are incorporated into and made part of this Joinder Agreement. Capitalized terms not defined herein shall
have the meaning provided in the Loan Agreement.


 


2.     By
signing this Joinder Agreement, Subsidiary shall be bound by the terms and conditions of the Loan Agreement the same as if it were
the Borrower (as defined in the Loan Agreement) under the Loan Agreement, mutatis mutandis, provided however, that Lender shall
have no duties, responsibilities or obligations to Subsidiary arising under or related to the Loan Agreement or the other agreements
executed and delivered in connection therewith. Rather, to the extent that Lender has any duties, responsibilities or obligations
arising under or related to the Loan Agreement or the other agreements executed and delivered in connection therewith, those duties,
responsibilities or obligations shall flow only to Company and not to Subsidiary or any other person or entity. By way of example
(and not an exclusive list): (a) Lender’s providing notice to Company in accordance with the Loan Agreement or as otherwise
agreed between Company and Lender shall be deemed provided to Subsidiary; (b) a Lender’s providing an Advance to Company
shall be deemed an Advance to Subsidiary; and (c) Subsidiary shall have no right to request an Advance or make any other demand
on Lender.


 


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


 


Exh. D


 




    	 



    	 



    

 


[SIGNATURE PAGE TO JOINDER AGREEMENT]


 


SUBSIDIARY:


 


___________________________________.


 


	 	By:
	 	Name:
	 	Title:
	 	 
	 	Address:
	 	 
	 	Telephone: _____________
	 	 
	 	Facsimile: ______________


 


LENDER:


 


HERCULES TECHNOLOGY GROWTH CAPITAL, INC.


 


	 	By:	 
	 	Name:	 
	 	Title:	 
	 	 
	 	Address:
	 	400 Hamilton Ave., Suite 310
	 	Palo Alto, CA 94301
	 	Facsimile: 650-473-9194
	 	Telephone: 650-289-3060


 


Exh. D


 




    	 



    	 



    

 


EXHIBIT E


 


ACH DEBIT AUTHORIZATION AGREEMENT


 


Hercules Technology Growth Capital, Inc.


400 Hamilton Avenue,
Suite 310


Palo Alto, CA 94301


 


Re: Loan and Security Agreement dated _______________
between Glori Energy Inc., Glori California Inc., Glori Holdings Inc. and Glori Oil (Argentina) Limited (collectively, “Borrower”)
and Hercules Technology Growth Capital, Inc. (“Company”) (the “Agreement”)


 


In connection with the above referenced
Agreement, the Borrower hereby authorizes the Company to initiate debit entries for the periodic payments due under the Agreement
to the Borrower’s account indicated below. The Borrower authorizes the depository institution named below to debit to such
account.


 


	DEPOSITORY NAME	BRANCH
	 	 
	 	 
	CITY	STATE AND ZIP CODE
	 	 
	 	 
	TRANSIT/ABA NUMBER	ACCOUNT NUMBER
	 	 
	 	 


 


This authority will remain in full force and effect so long
as any amounts are due under the Agreement.


 


	 	 
	(Borrower)(Please Print)	 
	 	 	 
	By:	 	 
	 	 	 
	Date:	 	 


 


Exh. E