Exhibit 10.5


 





 



 


 


 


FORM OF


 


AMENDED AND RESTATED

CREDIT AGREEMENT







among








CARBON ENERGY CORPORATION

(f/k/a CARBON NATURAL GAS COMPANY),

as Borrower







THE LENDERS FROM TIME TO TIME PARTY HERETO







and







LEGACYTEXAS BANK,

as Administrative Agent and L/C Issuer









LEGACYTEXAS BANK,

as Sole Lead Arranger and Sole Book Runner









DATED AS OF JULY [__], 2018


 







 






 







     


     


    

 


TABLE OF CONTENTS


 


	 	 	Page
	 	 	 
	ARTICLE 1 DEFINITIONS	1
	Section 1.1	Definitions	1
	Section 1.2	Accounting Matters	29
	Section 1.3	ERISA Matters	29
	Section 1.4	Letter of Credit Amounts	29
	Section 1.5	Other Definitional Provisions	30
	Section 1.6	Interpretative Provision	30
	Section 1.7	Times of Day	30
	Section 1.8	Other Loan Documents	30
	ARTICLE 2 THE COMMITMENTS AND CREDIT EXTENSIONS	30
	Section 2.1	The Loans	30
	Section 2.2	Letters of Credit	32
	Section 2.3	Fees	39
	Section 2.4	Payments Generally; Administrative Agent’s Clawback	39
	Section 2.5	Evidence of Debt	40
	Section 2.6	Cash Collateral	41
	Section 2.7	Interest; Payment Terms	42
	Section 2.8	Voluntary Termination or Reduction of Commitments; Prepayments	43
	Section 2.9	Borrowing Base	44
	ARTICLE 3 TAXES, YIELD PROTECTION AND INDEMNITY	49
	Section 3.1	Increased Costs	49
	Section 3.2	Illegality	50
	Section 3.3	Inability to Determine Rates; Replacement Index Rate	51
	Section 3.4	Taxes	51
	Section 3.5	Compensation for Losses	55
	Section 3.6	Mitigation of Obligations; Replacement of Lenders	56
	Section 3.7	Survival	57
	ARTICLE 4 SECURITY	57
	Section 4.1	Mortgaged Properties	57
	Section 4.2	Collateral	57
	Section 4.3	Setoff	57
	Section 4.4	Authorization to File Financing Statements	58
	ARTICLE 5 CONDITIONS PRECEDENT 	58
	Section 5.1	Extension of Credit on Closing Date	58
	Section 5.2	All Extensions of Credit	61



 






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	ARTICLE 6 REPRESENTATIONS AND WARRANTIES	62
	Section 6.1	Entity Existence	62
	Section 6.2	Financial Statements; Etc	62
	Section 6.3	Action; No Breach	62
	Section 6.4	Operation of Business	63
	Section 6.5	Litigation and Judgments	63
	Section 6.6	Rights in Properties; Liens	63
	Section 6.7	Enforceability	64
	Section 6.8	Approvals	64
	Section 6.9	Taxes	64
	Section 6.10	Use of Proceeds; Margin Securities	64
	Section 6.11	ERISA	64
	Section 6.12	Disclosure	65
	Section 6.13	Subsidiaries	65
	Section 6.14	Agreements	65
	Section 6.15	Compliance with Laws	65
	Section 6.16	Inventory	66
	Section 6.17	Regulated Entities	66
	Section 6.18	Environmental Matters	66
	Section 6.19	Intellectual Property	67
	Section 6.20	Anti-Corruption Laws and Sanctions	67
	Section 6.21	Patriot Act	67
	Section 6.22	Insurance	67
	Section 6.23	Solvency	67
	Section 6.24	Security Documents	67
	Section 6.25	Businesses	67
	Section 6.26	Labor Matters	67
	Section 6.27	Gas Balancing Agreements and Advance Payment Contracts	68
	Section 6.28	Hedging Agreements and Transactions	68
	Section 6.29	Flood Matters	68
	ARTICLE 7 AFFIRMATIVE COVENANTS	68
	Section 7.1	Reporting Requirements	68
	Section 7.2	Maintenance of Existence; Conduct of Business	71
	Section 7.3	Maintenance and Operation of Properties	71
	Section 7.4	Taxes and Claims	72
	Section 7.5	Insurance	72
	Section 7.6	Inspection Rights	73
	Section 7.7	Keeping Books and Records	74
	Section 7.8	Compliance with Laws	74
	Section 7.9	Compliance with Agreements	74
	Section 7.10	Further Assurances	74
	Section 7.11	ERISA	74
	Section 7.12	Depository Relationship	74
	Section 7.13	Additional Guarantors	74
	Section 7.14	Title Assurances	75
	Section 7.15	Commodity Hedging Transactions	75
	Section 7.16	Concerning Operator’s Liens	75



 






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	ARTICLE 8 NEGATIVE COVENANTS	76
	Section 8.1	Debt	76
	Section 8.2	Limitation on Liens	76
	Section 8.3	Mergers, Etc	79
	Section 8.4	Restricted Payments	79
	Section 8.5	Loans and Investments	79
	Section 8.6	Limitation on Issuance of Equity	81
	Section 8.7	Transactions With Affiliates	81
	Section 8.8	Disposition of Assets	82
	Section 8.9	Sale and Leaseback	82
	Section 8.10	Prepayment of Debt	82
	Section 8.11	Nature of Business	82
	Section 8.12	Environmental Protection	82
	Section 8.13	Accounting	83
	Section 8.14	Burdensome Agreements	83
	Section 8.15	Subsidiaries	83
	Section 8.16	Amendments of Constituent Documents and Material Agreements	83
	Section 8.17	Hedging Agreements and Transactions	83
	Section 8.18	Gas Balancing Agreements and Advance Payment Contracts	84
	Section 8.19	Certain Accounts Payable	84
	Section 8.20	Use of Proceeds	84
	Section 8.21	Joint Operating Agreements	84
	Section 8.22	Excluded Subsidiaries	84
	ARTICLE 9 FINANCIAL COVENANTS	85
	Section 9.1	Leverage Ratio	85
	Section 9.2	Current Ratio	85
	ARTICLE 10 DEFAULT	85
	Section 10.1	Events of Default	85
	Section 10.2	Remedies Upon Default	87
	Section 10.3	Application of Funds	87
	Section 10.4	Performance by Administrative Agent	88
	ARTICLE 11 AGENCY	89
	Section 11.1	Appointment and Authority	89
	Section 11.2	Rights as a Lender	89
	Section 11.3	Exculpatory Provisions	90
	Section 11.4	Reliance by Administrative Agent	91
	Section 11.5	Delegation of Duties	91
	Section 11.6	Resignation of Administrative Agent	91
	Section 11.7	Non-Reliance on Administrative Agent and Other Lenders	93
	Section 11.8	Administrative Agent May File Proofs of Claim	93
	Section 11.9	Collateral and Guaranty Matters	94
	Section 11.10	Bank Product Agreements	94



 






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	ARTICLE 12 MISCELLANEOUS	95
	Section 12.1	Expenses	95
	Section 12.2	INDEMNIFICATION	96
	Section 12.3	Limitation of Liability	97
	Section 12.4	No Duty	97
	Section 12.5	Lenders Not Fiduciary	97
	Section 12.6	Equitable Relief	97
	Section 12.7	No Waiver; Cumulative Remedies	97
	Section 12.8	Successors and Assigns	98
	Section 12.9	Survival	102
	Section 12.10	Amendment	102
	Section 12.11	Notices	103
	Section 12.12	Governing Law; Venue; Service of Process	104
	Section 12.13	Counterparts	105
	Section 12.14	Severability	105
	Section 12.15	Headings	105
	Section 12.16	Construction	105
	Section 12.17	Independence of Covenants	106
	Section 12.18	WAIVER OF JURY TRIAL	106
	Section 12.19	Additional Interest Provision	106
	Section 12.20	Ceiling Election	107
	Section 12.21	USA Patriot Act Notice	107
	Section 12.22	Defaulting Lenders	107
	Section 12.23	Sharing of Payments by Lenders	109
	Section 12.24	Payments Set Aside	110
	Section 12.25	Confidentiality	110
	Section 12.26	Electronic Execution of Assignments and Certain Other Documents	111
	Section 12.27	Intercreditor Agreement	111
	Section 12.28	Flood Insurance	111
	Section 12.29	Acknowledgement and Consent to Bail-In of EEA Financial Institutions	111
	Section 12.30	Amendment and Restatement	112
	Section 12.31	Assignment and Assumption from CAE Borrower to Borrower	112
	Section 12.32	NOTICE OF FINAL AGREEMENT	112


 




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INDEX TO SCHEDULES


 


	Schedule	 	Description of Schedule	 	Section
	 	 	 	 	 
	2.1	 	Commitments and Applicable Percentages	 	2.1
	6.5	 	Litigation and Judgments	 	6.5
	6.13(a)	 	Subsidiaries	 	6.13(a)
	6.13(b)	 	Excluded Subsidiaries	 	6.13(b)
	6.28	 	Hedging Agreements and Hedging Transactions	 	6.28
	8.1	 	Existing Debt	 	8.1
	8.2	 	Existing Liens	 	8.2
	8.5	 	Existing Investments	 	8.5
	12.11	 	Notices	 	12.11


 




    v 


     


    

 


INDEX TO EXHIBITS


 


	Exhibit	 	Description of Exhibit	 	Section
	 	 	 	 	 
	A	 	Assignment and Assumption	 	1.1
	B	 	Compliance Certificate	 	1.1
	C	 	Borrowing Request	 	1.1
	D	 	Note	 	1.1
	E	 	Tax Forms	 	3.4(g)
	F	 	Borrowing Base Adjustment Letter	 	2.9(d)




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AMENDED
AND RESTATED CREDIT AGREEMENT


 


THIS AMENDED AND RESTATED
CREDIT AGREEMENT, dated as of July [__], 2018, is among CARBON ENERGY CORPORATION (f/k/a CARBON NATURAL GAS COMPANY), a Delaware
corporation (“Borrower”), the lenders from time to time party hereto (collectively, “Lenders”
and individually, a “Lender”), and LEGACYTEXAS BANK, a Texas state bank, as Administrative Agent and L/C Issuer.


 


RECITALS


 


		A.	Borrower, Administrative Agent, and certain Lenders have previously entered into that certain Credit
Agreement dated as of October 3, 2016 (as amended, restated, supplemented or otherwise modified prior to the Closing Date, the
“Existing Credit Agreement”).



 


		B.	In connection with the CAC Acquisition (hereinafter defined), the parties desire to amend and restate
the Existing Credit Agreement to, among other amendments, increase the borrowing base, add additional lenders, and consolidate
the indebtedness and obligations under the Existing CAE Credit Agreement (as defined herein) with the indebtedness and obligations
under this Agreement.



 


		C.	Contemporaneously with the execution of this Agreement and pursuant to the terms of the Omnibus
Assignment and Acceptance agreement, (1) the lenders under the Existing CAE Credit Agreement have assigned to the Lenders party
hereto all of their right, title and interest in and to the Existing CAE Credit Agreement and the indebtedness outstanding thereunder,
and (2) all of the mortgages and other collateral documents securing the obligations and indebtedness of the CAE Borrower (as defined
herein) under the Existing CAE Credit Agreement have been assigned to LegacyTexas Bank, as Administrative Agent for the Lenders
party hereto.



 


NOW, THEREFORE, in
consideration of the mutual covenants and agreements contained herein, the parties hereto hereby agree as follows, amending and
restating in its entirety, as of the date above, the Existing Credit Agreement and giving effect to the assignments, as necessary,
by the lenders under the Existing CAE Credit Agreement to the Lenders of the loan balance and letter of credit exposure under the
Existing Credit Agreement, such that, upon the effectiveness of this Agreement, the Applicable Percentage (as defined herein) and
the Commitment (as defined herein) of each of the Lenders party to this Agreement will be as set forth in Schedule 2.1,
the parties hereto agree that the Existing Credit Agreement is amended and restated to read in its entirety as follows:


 


ARTICLE
1



DEFINITIONS


 


Section 1.1 Definitions.
As used in this Agreement, all exhibits, appendices and schedules hereto and in any note, certificate, report or other Loan Documents
made or delivered pursuant to this Agreement, the following terms will have the meanings given such terms in this Section 1.1
or in the provision, section or recital referred to below:


 


“Account”
means an account, as defined in the UCC.


 






    	CREDIT AGREEMENT – Page 1



     


    

 


“Acquisition”
means the acquisition by any Person of (a) a majority of the Equity Interests of another Person, (b) all or substantially
all of the assets of another Person or (c) all or substantially all of a business unit or line of business of another Person,
in each case (i) whether or not involving a merger or consolidation with such other Person and (ii) whether in one transaction
or a series of related transactions.


 


“Acquisition
Documents” means the Acquisition Agreement and all agreements, assignments, deeds, conveyances, certificates or other
documents and instruments now or hereafter executed and delivered by any Seller and/or Borrower pursuant to the Acquisition Agreement
or in connection with the transactions contemplated by the Acquisition Agreement.


 


“Adjusted EBITDAX”
means, with respect to Borrower and its Subsidiaries on a consolidated basis as of any applicable date of determination thereof,
an amount equal to (a) EBITDAX, plus without duplication (b) reimbursements of general and administrative expenses that were paid
by Borrower for the benefit of Carbon California Company, LLC as of the most recently ended fiscal quarter, annualized by taking
such amount and multiplying it by 4.


 


“Adjusted LIBOR”
means, with respect to any Portion for any Interest Period or day, as applicable, an interest rate per annum equal to LIBOR for
such Interest Period or day multiplied by the Statutory Reserve Rate; provided, however, if Adjusted LIBOR shall
be less than zero, such rate shall be deemed zero for purposes of this Agreement.


 


“Administrative
Agent” means LegacyTexas Bank, in its capacity as administrative agent under any of the Loan Documents, until the appointment
of a successor administrative agent pursuant to the terms of this Agreement and, thereafter, shall mean such successor administrative
agent.


 


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


 


“Advance Payment
Contract” means any take-or-pay or similar contract whereby Borrower or any of its Subsidiaries agrees to accept a defined
payment (whether at the time the contract is entered into or in the future) as payment-in-full for the purchase of present or future
production of Hydrocarbons from its Oil and Gas Properties (each, an “Advance Payment”) and to deliver such Hydrocarbons
at some future time without then or thereafter receiving full payment therefor at the prevailing market price for such Hydrocarbons
as of the date of delivery thereof.


 


“Affiliate”
means, as to any Person, any other Person (a) that directly or indirectly, through one or more intermediaries, Controls or
is Controlled by, or is under common Control with, such Person; (b) that directly or indirectly beneficially owns or holds
10% or more of any class of voting Equity Interests of such Person; or (c) 10% or more of the voting Equity Interests of which
is directly or indirectly beneficially owned or held by such Person; provided, however, in no event shall any Lender
be deemed an Affiliate of Borrower or any of its Subsidiaries or Affiliates.


 


“Agent Parties”
means, collectively, Administrative Agent and its Related Parties.


 


“Aggregate
Commitments” means, at any time, the aggregate amount of the Commitments of the Lenders at such time, which aggregate
amount shall be the lesser of (a) the aggregate amount set forth on Schedule 2.1 and (b) the Borrowing Base in effect
at such time.


 


“Aggregate
Revolving Credit Exposure” means, at any time, the aggregate Revolving Credit Exposures of all Lenders at such time.


 






    	CREDIT AGREEMENT – Page 2



     


    

 


“Agreement”
means this Amended and Restated Credit Agreement, together with all schedules, exhibits and appendices attached to or otherwise
identified herewith, in each case as amended, restated supplemented or otherwise modified from time to time.


 


“Anti-Corruption
Laws” means all Laws, rules, and regulations of any jurisdiction applicable to Borrower and its Affiliates from time to
time concerning or relating to bribery or corruption.


 


“Applicable
Margin” means the applicable percentages per annum set forth below based upon the Utilization applicable from time to
time. The Applicable Margin shall immediately and automatically change when and as the Utilization changes.


 


	Pricing

Level	 	Utilization	 	Base Rate Portion	 	 	LIBOR Portion
 and Letter
 of Credit Fee	 	 	Commitment Fee	 
	1	 	< 25%	 	 	0.00	%	 	 	2.75	%	 	 	0.50	%
	2	 	> 25% but < 50%	 	 	0.00	%	 	 	3.00	%	 	 	0.50	%
	3	 	> 50% but < 75%	 	 	0.25	%	 	 	3.25	%	 	 	0.50	%
	4	 	> 75% but < 90%	 	 	0.50	%	 	 	3.50	%	 	 	0.50	%
	5	 	> 90%	 	 	0.75	%	 	 	3.75	%	 	 	0.50	%



 


“Applicable
Percentage” means, with respect to any Lender at any time, the percentage (carried out to the ninth decimal place) of
the Aggregate Commitments represented by such Lender’s Commitment at such time; provided that if the Aggregate Commitments
have been terminated pursuant to the terms hereof, then the Applicable Percentage of each Lender shall be determined based upon
the Applicable Percentage of such Lender immediately prior to such termination and after giving effect to any subsequent assignments
made pursuant to the terms hereof.


 


“Applicable
Rate” means (a) in the case of a Portion bearing interest based upon the Base Rate, the Base Rate plus the
Applicable Margin; and (b) in the case of a Portion bearing interest based upon LIBOR, Adjusted LIBOR plus the Applicable
Margin.


 


“Approved Commodity
Swap Counterparty” means (a) each Bank Product Provider, (b) BP Energy Company, a Delaware corporation, or its Affiliates
and (c) each other swap counterparty approved in writing from time to time by Administrative Agent; provided, however,
Administrative Agent may, by giving written notice to Borrower (with respect to clauses (b) and (c)), elect to revoke
such swap counterparty’s status as an Approved Commodity Swap Counterparty for purposes of any Commodity Hedging Transactions entered
into following such notice if the Administrative Agent has any concerns about the long or short term financial well-being or creditworthiness
of such swap counterparty.


 


“Approved Fund”
means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or
an Affiliate of an entity that administers or manages a Lender.


 


“Arranger”
means LegacyTexas Bank in its capacity as sole lead arranger and sole book runner.


 






    	CREDIT AGREEMENT – Page 3



     


    

 


“ASC 410”
means the Accounting Standards Codification No. 410 (Asset Retirement and Environmental Obligations), as issued by the Financial
Accounting Standards Board, as amended.


 


“ASC 815”
means the Accounting Standards Codification No. 815 (Derivatives and Hedging), as issued by the Financial Accounting Standards
Board, as amended.


 


“ASC 825”
means the Accounting Standards Codification No. 825 (Financial Instruments), as issued by the Financial Accounting Standards Board,
as amended.


 


“Assignment
and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent
of any party whose consent is required by Section 12.8), and accepted by Administrative Agent, in substantially the
form of Exhibit A or any other form approved by Administrative Agent.


 


“Bail-In Action”
means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability
of an EEA Financial Institution.


 


“Bail-In Legislation”
means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of
the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the
EU Bail-In Legislation Schedule.


 


“Bank Product
Agreements” means those certain agreements entered into from time to time between any Obligated Party and a Bank Product
Provider in connection with any of the Bank Products, including without limitation, Hedging Agreements.


 


“Bank Product
Obligations” means all obligations, liabilities, contingent reimbursement obligations, fees, and expenses owing by any
Obligated Party to any Bank Product Provider pursuant to or evidenced by the Bank Product Agreements and irrespective of whether
for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising,
and including all such amounts that an Obligated Party is obligated to reimburse to any Bank Product Provider as a result of such
Bank Product Provider purchasing participations or executing indemnities or reimbursement obligations with respect to the Bank
Products provided to any Obligated Party pursuant to Bank Product Agreements. For the avoidance of doubt, the Bank Product Obligations
arising under any Hedging Transaction shall be determined by the Hedge Termination Value thereof.


 


“Bank Product
Provider” means any Person that, at the time it enters into a Bank Product Agreement is a Lender or an Affiliate of a
Lender, in its capacity as a party to such Bank Product Agreement.


 


“Bank Products”
means any service provided to, facility extended to, or transaction entered into with any Obligated Party by any Bank Product Provider
consisting of (a) deposit accounts, (b) cash management services, including treasury, depository, return items, overdraft,
controlled disbursement, merchant store value cards, e-payables services, electronic funds transfer, interstate depository network,
automatic clearing house transfer (including the Automated Clearing House processing of electronic funds transfers through the
direct Federal Reserve Fedline system) and other cash management arrangements maintained with any Bank Product Provider, (c) debit
cards, stored value cards, and credit cards (including commercial credit cards (including so-called “procurement cards”
or “P-cards”)) and debit card and credit card processing services or (d) Hedging Agreements.


 



    	CREDIT AGREEMENT – Page 4



     


    

 





“Base Rate”
means, for any day, a per annum interest rate equal to the highest of (a) the Prime Rate for such day; (b) the sum of the Federal
Funds Rate for such day plus 0.50%; and (c) Adjusted LIBOR for such day plus 1.00%.


 


“Base Rate
Portion” means each Portion bearing interest based on the Base Rate.


 


“Beneficial
Ownership Certification” means a certification regarding beneficial ownership as required by the Beneficial Ownership
Regulation.


 


“Beneficial
Ownership Regulation” means 31 C.F.R. § 1010.230.


 


“Board of Governors”
means the Board of Governors of the Federal Reserve System of the United States.


 


“Borrower”
means the Person identified as such in the introductory paragraph hereto, and its successors and assigns to the extent permitted
by Section 12.8.


 


“Borrowing”
means a borrowing consisting of simultaneous Loans made by each of the Lenders pursuant to Section 2.1.


 


“Borrowing
Base” means, as of any date, the loan amount that may be supported by the Oil and Gas Properties of Borrower and its Subsidiaries,
as determined by Administrative Agent and approved by the Required Lenders, or all of the Lenders, as applicable, as set forth
in Section 2.9.


 


“Borrowing
Base Adjustment Letter” means a borrowing base adjustment letter substantially in the
form of Exhibit F attached hereto.


 


“Borrowing
Base Deficiency” means the amount by which the Aggregate Revolving Credit Exposure exceeds the amount of the Borrowing
Base.


 


“Borrowing
Base Deficiency Notice” means a notice from Administrative Agent to Borrower that a Borrowing Base Deficiency exists because
of a periodic or special redetermination made pursuant to Section 2.9(b) or Section 2.9(c)(i).


 


“Borrowing
Request” means a writing, substantially in the form of Exhibit C, properly completed and signed by a Responsible
Officer of Borrower, requesting a Borrowing.


 


“BTU”
means a British thermal unit.


 


“Business Day”
means (a) for all purposes, a weekday, Monday through Friday, except a legal holiday or a day on which banking institutions
in Dallas, Texas are authorized or required by Law to be closed, and (b) for purposes of any LIBOR Portion, a day that satisfies
the requirements of clause (a) and that is a day on which commercial banks in the City of London, England are open
for business and dealing in offshore Dollars. Unless otherwise provided, the term “days” when used herein means calendar
days.


 


“CAC Acquisition”
means the acquisition by Borrower of certain Property from Sellers, including without limitation, all of the Equity Interests of
Carbon Appalachian Company, LLC owned by Sellers, pursuant to the Acquisition Agreement.


 






    	CREDIT AGREEMENT – Page 5



     


    

 


“CAC Acquisition
Agreement” means that certain Membership Interest Purchase Agreement, dated as of May 4, 2018, by and among the Sellers,
as sellers, and Borrower, as buyer, and all modifications, supplements and amendments thereof.


 


“CAE Borrower”
means Carbon Appalachia Enterprises, LLC (f/k/a Carbon Tennessee Company, LLC), a Delaware limited liability company, as borrower
under the Existing CAE Credit Agreement.


 


“Capitalized
Lease Obligation” means, with respect to any Person, the amount of Debt under a lease of Property by such Person that
would be shown as a liability on a balance sheet of such Person prepared for financial reporting purposes in accordance with GAAP.


 


“Cash Collateralize”
means to pledge and deposit with or deliver to Administrative Agent, for the benefit of one or more of L/C Issuer or Lenders, as
collateral for L/C Obligations or obligations of Lenders to fund participations in respect of L/C Obligations, cash or deposit
account balances or, if Administrative Agent and L/C Issuer shall agree in their sole discretion, other credit support, in each
case pursuant to documentation in form and substance satisfactory to Administrative Agent and L/C Issuer. “Cash Collateral”
shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.


 


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


 


“Change of
Control” means an event or series of events by which:


 


(a) any “person”
or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding
any employee benefit plan of such person or its Subsidiaries, and any person or entity acting in its capacity as trustee, agent
or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3
and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership”
of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after
the passage of time (such right, an “option right”)), directly or indirectly, by acquisition of 25% or more of
the Equity Interests of the Borrower entitled to vote for members of the board of directors or equivalent governing body of the
Borrower on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire
pursuant to any option right);


 


(b) a majority of the
seats (other than vacant seats) on the board of directors of Borrower are occupied by Persons who were neither (i) nominated by
the board of directors of Borrower nor (ii) appointed by directors so nominated; or


 






    	CREDIT AGREEMENT – Page 6



     


    

 


(c) Patrick McDonald
ceases for any reason to be active in the day to day management of Borrower and shall not be replaced within 180 days by another
Person acceptable to Administrative Agent in its sole discretion.


 


“Closing Date”
means the first date all the conditions precedent in Section 5.1 are satisfied or waived in accordance with Section 12.10.


 


“Code”
means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder.


 


“Collateral”
means substantially all of the Property of Borrower and its Subsidiaries as described in the Security Documents, together with
any other Property and collateral described in the Security Documents, including, among other things, the Mortgaged Properties
and any other Property which may now or hereafter secure the Obligations or any part thereof.


 


“Commitment”
means, as to each Lender, its obligation to (a) make Loans to Borrower pursuant to Section 2.1(a), and (b) purchase
participations in L/C Obligations pursuant to Section 2.2, in an aggregate principal amount at any one time outstanding
not to exceed the lesser of (i) the amount set forth opposite such Lender’s name on Schedule 2.1 under the caption
“Commitment” or opposite such caption in the Assignment and Assumption pursuant to which such Lender becomes a party
hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement and (ii) such Lender’s
Applicable Percentage of the Borrowing Base in effect from time to time.


 


“Commodity
Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any
successor statute.


 


“Commodity
Hedging Transaction” means any swap transaction, cap, floor, collar, exchange transaction, forward transaction or other
exchange or protection transaction relating to Hydrocarbons or any option with respect to any such transaction, including derivative
financial instruments.


 


“Communications”
means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of Borrower
pursuant to any Loan Document or the transactions contemplated therein which is distributed to Administrative Agent, any Lender,
or L/C Issuer by means of electronic communications pursuant to Section 12.11(d), including through the Platform.


 


“Compliance
Certificate” means a certificate, substantially in the form of Exhibit B, or in any other form agreed to by Borrower
and Administrative Agent, prepared by and certified by a Responsible Officer of Borrower.


 


“Connection
Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that
are franchise Taxes or branch profits Taxes.


 


“Constituent
Documents” means (a) in the case of a corporation, its articles or certificate of incorporation or certificate of
formation, as applicable, and bylaws; (b) in the case of a general partnership, its partnership agreement; (c) in the
case of a limited partnership, its certificate of limited partnership or certificate of formation, as applicable, and partnership
agreement; (d) in the case of a trust, its trust agreement; (e) in the case of a joint venture, its joint venture agreement;
(f) in the case of a limited liability company, its articles of organization or certificate of formation, as applicable, operating
agreement, regulations and/or other organizational and governance documents and agreements; and (g) in the case of any other
entity, its organizational and governance documents and agreements.


 






    	CREDIT AGREEMENT – Page 7



     


    

 


“Control”
means the possession, directly or indirectly, of the power to direct or cause direction of the management or policies of a Person,
whether through the ownership of voting securities, by contract, or otherwise, and the terms “Controlling”
and “Controlled” have meanings correlative thereto.


 


“Crawford Company”
means Crawford Gas Gathering Company, LLC, an Indiana limited liability company.


 


“Credit Extension”
means each of (a) a Borrowing and (b) an L/C Credit Extension.


 


“Current Ratio”
means, with respect to Borrower and its Subsidiaries on a consolidated basis as of any date of determination thereof, the ratio
of (a) the sum of current assets (but excluding the amount of any non-cash items as a result of the application of ASC 410 and
ASC 815) plus the Revolving Credit Availability on such date to (b) current liabilities (but excluding the amount of any
liabilities respecting any non-cash items as a result of the application of ASC 410 and ASC 815) excluding (i) the current
portion of the Obligations on such date and (ii) to the extent such liabilities are non-cash items, firm transportation contract
obligations resulting from a purchase accounting allocation in connection with previous Acquisitions by Carbon West Virginia Company,
LLC (a Subsidiary), determined in accordance with GAAP.


 


“Debt”
means, with respect to any Person as of any date of determination thereof, without duplication, (a) all obligations of such
Person for borrowed money; (b) all obligations of such Person evidenced by bonds, notes, debentures, or other similar instruments;
(c) all obligations of such Person to pay the deferred purchase price of Property or services, except trade accounts payable
of such Person arising in the ordinary course of business that are not past due by more than 90 days, unless such payables are
being contested in good faith by appropriate proceedings and adequate reserves for such items have been made in accordance with
GAAP; (d) all Capitalized Lease Obligations of such Person; (e) all debt or other obligations of others Guaranteed by
such Person; (f) all obligations secured by a Lien existing on Property owned by such Person, whether or not the obligations
secured thereby have been assumed by such Person or are non-recourse to the credit of such Person; (g) any other obligation
for borrowed money or other financial accommodations which in accordance with GAAP would be shown as a liability on the balance
sheet of such Person; (h) any repurchase obligation or liability of a Person with respect to Accounts, chattel paper or notes
receivable sold by such Person; (i) any liability under a sale and leaseback transaction that is not a Capitalized Lease Obligation;
(j) any obligation under Synthetic Leases; (k) any obligation arising with respect to any other transaction that is the
functional equivalent of borrowing but which does not constitute a liability on the balance sheets of a Person; (l) all payment
and reimbursement obligations of such Person (whether contingent or otherwise) in respect of letters of credit, bankers’ acceptances,
surety or other bonds and similar instruments; (m) all liabilities of such Person in respect of unfunded vested benefits under
any Plan; (n) all net Hedge Obligations of such Person, valued at the Hedge Termination Value thereof; (o) the undischarged
balance of any production payment created by such Person or for the creation of which such Person directly or indirectly received
payment; and (p) all obligations of such Person to purchase, redeem, retire, defease or otherwise
make any payment in respect of any Equity Interests in such Person or any other Person prior to the date that is 90 days after
the Maturity Date, valued, in the case of redeemable preferred stock interests, at the greater of its voluntary or involuntary
liquidation preference plus all accrued and unpaid dividends.


 


For all purposes, the
Debt of any Person shall include the Debt of any partnership or joint venture (other than a joint venture that is itself a corporation
or limited liability company) in which such Person is a general partner or a joint venturer, unless such Debt is expressly made
non-recourse to such Person.


 


“Debtor Relief
Laws” means Title 11 of the United States Code, as now or hereafter in effect, or any other applicable Law, domestic
or foreign, as now or hereafter in effect, relating to bankruptcy, insolvency, liquidation, receivership, reorganization, assignment
for the benefit of creditors, moratorium, arrangement or composition, extension or adjustment of debts, or similar Laws affecting
the rights of creditors.


 






    	CREDIT AGREEMENT – Page 8



     


    

 


“Default”
means an Event of Default or the occurrence of an event or condition which with notice or lapse of time or both would become an
Event of Default.


 


“Default Interest
Rate” means (a) when used with respect to Obligations (other than Obligations described in the following clauses
(b) and (c)), an interest rate equal to (i) the Base Rate plus (ii) the Applicable Margin, if any,
applicable to a Base Rate Portion plus (iii) 2.00% per annum; (b) when used with respect to a LIBOR Portion, an
interest rate equal to the interest rate (including any Applicable Margin) otherwise applicable to such Portion plus 2.00%
per annum; and (c) when used with respect to Letter of Credit Fees, a rate equal to the Applicable Margin plus 2.00%
per annum; provided, however, in no event shall the Default Interest Rate exceed the Maximum Rate.


 


“Defaulting
Lender” means, subject to Section 12.22(b), any Lender that (a) has failed to (i) fund all or any
portion of its Loans within two Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies
Administrative Agent and Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions
precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified
in such writing) has not been satisfied, or (ii) pay to Administrative Agent or any other Lender any other amount required
to be paid by it hereunder (including in respect of its participation in Letters of Credit) within two Business Days of the date
when due, (b) has notified Borrower, Administrative Agent, or L/C Issuer in writing that it does not intend to comply with
its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates
to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that
a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified
in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after written request
by Administrative Agent or Borrower to confirm in writing to Administrative Agent and Borrower that it will comply with its prospective
funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c)
upon receipt of such written confirmation by Administrative Agent and Borrower), or (d) has, or has a direct or indirect parent
company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had appointed for it a receiver,
custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization
or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory
authority acting in such a capacity, or (iii) become the subject of a Bail-In Action; provided that a Lender shall not be
a Defaulting Lender solely by virtue of the ownership or acquisition of any Equity Interest in that Lender or any direct or indirect
parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender
with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment
on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or
agreements made with such Lender. Any determination by Administrative Agent that a Lender is a Defaulting Lender under any one
or more of clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender
shall be deemed to be a Defaulting Lender (subject to Section 12.22(b)) upon delivery of written notice of such determination
to Borrower and each Lender, which notice shall be promptly provided by the Administrative Agent.


 


“Disposition”
means any sale, lease, sub-lease, transfer, assignment, conveyance, release, loss or other disposition, or the entry into any contract,
including any Farmout, the performance of which would result in any of the foregoing, of any interest in Property (including any
Oil and Gas Property), or of any Equity Interest in a Subsidiary that owns Property (including, but not limited to, any Oil and
Gas Property), in any transaction or event or series of transactions or events, and “Dispose” has the correlative
meaning thereto.


 






    	CREDIT AGREEMENT – Page 9



     


    

 


“Disqualified
Capital Stock” means any Equity Interest that, by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable) or upon the happening of any event, matures or is mandatorily redeemable for any consideration
other than other Equity Interests (which would not constitute Disqualified Capital Stock), pursuant to a sinking fund obligation
or otherwise, or is convertible or exchangeable for Debt or redeemable for any consideration other than other Equity Interests
(which would not constitute Disqualified Capital Stock) at the option of the holder thereof, in whole or in part, on or prior to
the date that is one year after the earlier of (a) the Maturity Date and (b) the date on which there are no Loans or
other obligations hereunder outstanding and all of the Commitments are terminated.


 


“Dollars”
and “$” mean lawful money of the United States of America.


 


“EBITDAX”
means, with respect to Borrower and its Subsidiaries on a consolidated basis as of any applicable date of determination thereof
and for any Test Period, without duplication, an amount equal to (a) Net Income (excluding any non-cash revenue or expense associated
with Hedging Agreements resulting from ASC 815 and any non-cash charges attributable to the application of ASC 410), plus
without duplication (b) the sum of the following to the extent deducted in the calculation of Net Income: (i) interest expense;
(ii) income taxes; (iii) depreciation; (iv) depletion; (v) amortization; (vi) extraordinary losses determined in accordance with
GAAP; (vii) other non-recurring expenses reducing such Net Income which do not represent a cash item in such Test Period or any
future period; (viii) IDC and other exploration expenses deducted in determining Net Income under successful efforts accounting;
(ix) all other non-cash charges and credits to income including ceiling test impairments under full cost accounting; (x) fees paid
to the Lenders, L/C Issuer, and Administrative Agent under this Agreement; (xi) transaction-related costs and expenses with respect
to (A) this Agreement, (B) the Intercreditor Agreement, (C) the public offering of the Borrower’s common stock pursuant
to the registration statement on Form S-1 filed with the SEC on May 25, 2018 and (D) and the CAC Acquisition Agreement; and
(xii) losses on the sale of assets, minus without duplication (c) the sum of the following to the extent included in the
calculation of Net Income: (i) income tax credits; (ii) extraordinary gains determined in accordance with GAAP; (iii) gains on
the sale of assets; and (iv) all non-recurring, non-cash items increasing Net Income.


 


“EEA Financial
Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject
to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an
institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which
is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision
with its parent.


 


“EEA Member
Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.


 


“EEA Resolution
Authority” means any public administrative authority or any Person entrusted with public administrative authority of any
EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.






    	CREDIT AGREEMENT – Page 10



     


    

 


 


“Eligible Assignee”
means any Person that meets the requirements to be an assignee under Sections 12.8(b)(iii), 12.8(b)(v) and 12.8(b)(vi)
(subject to such consents, if any, as may be required under Section 12.8(b)(iii)).


 


“Environmental
Laws” means any and all federal, state, and local Laws, regulations, judicial decisions, orders, decrees, plans, rules,
permits, licenses, and other governmental restrictions and requirements pertaining to health, safety, or the environment, including,
without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. § 9601
et seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6901 et seq., the Occupational Safety and
Health Act, 29 U.S.C. § 651 et seq., the Clean Air Act, 42 U.S.C. § 7401 et seq., the Clean Water
Act, 33 U.S.C. § 1251 et seq., and the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq.


 


“Environmental
Liabilities” means, as to any Person, all liabilities, obligations, responsibilities, Remedial Actions, losses, damages,
punitive damages, consequential damages, treble damages, costs, and expenses (including, without limitation, all reasonable fees,
disbursements and expenses of counsel, expert and consulting fees and costs of investigation and feasibility studies), fines, penalties,
sanctions, and interest incurred as a result of any claim or demand, by any Person, whether based in contract, tort, implied or
express warranty, strict liability, criminal or civil statute, including any Environmental Law, permit, order or agreement with
any Governmental Authority or other Person, arising from environmental, health or safety conditions or the Release or threatened
Release of a Hazardous Material into the environment, resulting from the past, present, or future operations of such Person or
its Affiliates.


 


“Equity Interests”
means any and all shares, interests, participations or other equivalents (however designated) of capital stock or other equivalent
ownership (or profit) interests in a Person, securities convertible into or exchangeable for shares of capital stock of (or other
ownership or profit interests in) such Person, and any and all warrants, rights or options to purchase any of the foregoing, whether
voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are authorized or otherwise existing
on any date of determination.


 


“ERISA”
means the Employee Retirement Income Security Act of 1974.


 


“ERISA Affiliate”
means any corporation or trade or business which is a member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as an Obligated Party or is under common control (within the meaning of Section 414(c) of
the Code and Sections 414(m) and (o) of the Code for purposes of the provisions relating to Section 412 of the Code)
with an Obligated Party.


 


“ERISA Event”
means (a) a Reportable Event with respect to a Plan, (b) a withdrawal by any Obligated Party or any ERISA Affiliate from
a Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2)
of ERISA) or a cessation of operations which is treated as such a withdrawal under Section 4062(e) of ERISA, (c) a complete
or partial withdrawal by any Obligated Party or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer
Plan is in reorganization, (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination
under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Plan or Multiemployer
Plan, (e) the occurrence of an event or condition which might reasonably be expected to constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to administer, any Plan or Multiemployer Plan, (f) the imposition
of any liability to the PBGC under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007
of ERISA, upon any Obligated Party or any ERISA Affiliate, (g) the failure of any Obligated Party or ERISA Affiliate to meet
any funding obligations with respect to any Plan or Multiemployer Plan, (h) a Plan becomes subject to the at-risk requirements
in Section 303 of ERISA and Section 430 of the Code or (i) a Multiemployer Plan becomes subject to the requirements for
plans in endangered or critical status under Section 432 of the Code or Section 305 of ERISA.


 






    	CREDIT AGREEMENT – Page 11



     


    

 


“EU Bail-In
Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor
Person), as in effect from time to time.


 


“Event of Default”
has the meaning set forth in Section 10.1.


 


“Excluded Subsidiaries”
means each of the entities listed in Schedule 6.13(b). For the avoidance of doubt, the Subsidiaries of Excluded Subsidiaries
shall also be considered as an Excluded Subsidiary for purposes of this Agreement or any other Loan Document.


 


“Excluded Swap
Obligation” means, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of
the Guarantee of such Guarantor of, or the grant by such Guarantor of a Lien to secure, such Swap Obligation (or any Guarantee
thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading
Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason
to constitute an “eligible contract participant” as defined in the Commodity Exchange Act (determined after giving effect
to any “keepwell, support or other agreement” for the benefit of such Guarantor and any and all Guarantees of such Guarantor’s
Swap Obligations by Borrower or any other Guarantor) at the time the Guarantee of such Guarantor, or a grant by such Guarantor
of a Lien, becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing
more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which
such Guarantee or Lien is or becomes excluded in accordance with the first sentence of this definition.


 


“Excluded Taxes”
means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment
to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits
Taxes, in each case, (i) imposed as a result of such Recipient being organized under the Laws of, or having its principal
office or, in the case of any Lender, its applicable Lending Office located in, the jurisdiction imposing such Tax (or any political
subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes
imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment
pursuant to a Law in effect on the date on which (i) such Lender acquires such interest in such Loan or Commitment (other
than pursuant to an assignment request by Borrower under Section 3.6(b)) or (ii) such Lender changes its Lending
Office, except in each case to the extent that, pursuant to Section 3.4, amounts with respect to such Taxes were payable
either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed
its Lending Office, (c) Taxes attributable to such Recipient’s failure to comply with Section 3.4(g) and (d) any
U.S. federal withholding Taxes imposed under FATCA.


 


“Existing Credit
Agreement” has the meaning specified in Recital A.


 


“Existing Loan
Documents” means the “Loan Documents” (as defined in the Existing Credit Agreement) as in effect prior to the
date hereof.


 


“Existing CAE
Credit Agreement” means that certain Credit Agreement dated April 3, 2017 between CAE Borrower, as borrower, and LegacyTexas
Bank, as administrative agent, and the lenders party thereto from time to time, as amended, restated or otherwise modified prior
to the Closing Date.


 






    	CREDIT AGREEMENT – Page 12



     


    

 


“Existing
CAE Loan Documents” means the “Loan Documents” (as defined in the Existing CAE Credit Agreement) as in effect
prior to the date hereof. 


 


“Farmout”
means an arrangement pursuant to any agreement whereby the owner(s) of one or more oil, gas and/or mineral leases or other oil
and natural gas working interests with respect to any property from which production of Hydrocarbons is sought agrees to transfer
or assign an interest in such property to one or more Persons in exchange for (a) drilling or participating in (or agreeing to
drill or participate in) the cost of the drilling of one or more wells, or undertaking other exploration or development activities
or participating in the cost of such activities (or agreeing to do so), in an attempt to obtain production of Hydrocarbons from
such property, or (b) obtaining production of Hydrocarbons from such property or participating in the costs of obtaining such production.


 


“FATCA”
means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is
substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations
thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.


 


“Federal Funds
Rate” means, for any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal
funds brokers on such day, as published by the Federal Reserve Bank of New York, on the Business Day next succeeding such day,
provided that (a) if the day for which such rate is to be determined is not a Business Day, the Federal Funds Rate
for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding
Business Day, and (b) if such rate is not so published for any day, the Federal Funds Rate for such day shall be the average
rate charged to Administrative Agent on such day on such transactions as determined by Administrative Agent.


 


“Fee Letter”
means the separate fee letter dated as of July [__], 2018, between Borrower and Administrative Agent and any other fee letter among
Borrower and Administrative Agent, Arranger and/or LegacyTexas Bank concerning fees to be paid by Borrower in connection with this
Agreement, including any amendments, restatements, supplements or modifications thereof. By its execution of this Agreement, each
Lender acknowledges and agrees that Administrative Agent, Arranger and/or LegacyTexas Bank may elect to treat as confidential and
not share with Lenders any Fee Letters executed from time to time in connection with this Agreement.


 


“Flood Insurance
Regulations” means (a) the National Flood Insurance Act of 1968, (b) the Flood Disaster Protection Act of 1973, (c) the
National Flood Insurance Reform Act of 1994 (amending 42 USC 4001 et seq.), and (d) the Flood Insurance Reform Act of 2004, in
each case as now or hereafter in effect or any successor statute thereto and including any regulations promulgated thereunder.


 


“Foreign Lender”
means (a) if Borrower is a U.S. Person, a Lender that is not a U.S. Person, and (b) if Borrower is not a U.S. Person,
a Lender that is resident or organized under the Laws of a jurisdiction other than that in which Borrower is resident for tax purposes.


 


“Fronting Exposure”
means, at any time there is a Defaulting Lender, such Defaulting Lender’s Applicable Percentage of the Outstanding Amount of the
L/C Obligations other than L/C Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to
other Lenders or Cash Collateralized in accordance with the terms hereof.






    	CREDIT AGREEMENT – Page 13



     


    




 


“Fund”
means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing
in commercial loans and similar extensions of credit in the ordinary course of its activities.


 


“GAAP”
means generally accepted accounting principles, applied on a consistent basis, as set forth in opinions of the Accounting Principles
Board of the American Institute of Certified Public Accountants and/or in statements of the Financial Accounting Standards Board
and/or their respective successors and which are applicable in the circumstances as of the date in question. Accounting principles
are applied on a “consistent basis” when the accounting principles applied in a current period are comparable in all
material respects to those accounting principles applied in a preceding period.


 


“Gas Balancing
Agreement” means any agreement or arrangement whereby Borrower or any of its Subsidiaries, or any other party owning an
interest in any Hydrocarbons to be produced from Oil and Gas Properties in which Borrower or any of its Subsidiaries owns an interest,
has a right to take more than its proportionate share of production therefrom.


 


“Governmental
Authority” means the government of the United States of America or any other nation, or of any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank, tribal body or other
entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to
government (including any supra-national bodies such as the European Union or the European Central Bank), and any group or body
charged with setting financial accounting or regulatory capital rules or standards (including, without limitation, the Financial
Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or any successor
or similar authority to any of the foregoing).


 


“Guarantee”
by any Person means any obligation or liability, contingent or otherwise, of such Person directly or indirectly guaranteeing any
Debt or other obligation of any other Person as well as any obligation or liability, direct or indirect, contingent or otherwise,
of such Person (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation
or liability (whether arising by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities
or services, to operate Property, to take-or-pay, or to maintain net worth or working capital or other financial statement conditions
or otherwise) or (b) entered into for the purpose of indemnifying or assuring in any other manner the obligee of such Debt
or other obligation or liability of the payment thereof or to protect the obligee against loss in respect thereof (in whole or
in part); provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course
of business. The term “Guarantee” used as a verb has a corresponding meaning.


 


“Guaranteed
Parties” means, collectively, the Administrative Agent, each Lender, L/C Issuer, each Bank Product Provider, and any other
Person the Obligations owing to which are, or are purported to be, Guaranteed under the terms of a Guaranty.


 


“Guarantors”
means each Person who from time to time Guarantees all or any part of the Obligations under the Loan Documents, and “Guarantor”
means any one of the Guarantors.


 


“Guaranty”
means each written guaranty of a Guarantor in favor of Administrative Agent, for the benefit of the Guaranteed Parties, in form
and substance satisfactory to Administrative Agent.


 


“Hazardous
Material” means any substance, product, waste, pollutant, material, chemical, contaminant, constituent, or other material
which is or becomes listed, regulated, or addressed under any Environmental Law, including, without limitation, asbestos, petroleum,
and polychlorinated biphenyls.


 






    	CREDIT AGREEMENT – Page 14



     


    

 


“Hedge Obligations”
means, at any time with respect to any Person, all indebtedness, liabilities, and obligations of such Person under or in connection
with any Hedging Agreement or Hedging Transaction, whether actual or contingent, due or to become due and existing or arising from
time to time.


 


“Hedge Termination
Value” means, in respect of any one or more Hedging Transactions, after taking into account the effect of any legally
enforceable netting agreement relating to such Hedging Transactions, (a) for any date on or after the date such Hedging Transactions
have been closed out and settlement amounts, early termination amounts or termination value(s) determined in accordance therewith,
such settlement amounts, early termination amounts or termination value(s), and (b) for any date prior to the date referenced
in clause (a), the amount(s) determined as the mark-to-market value(s) for such Hedging Transactions, as determined
based upon one or more commercially reasonable mid-market or other readily available quotations provided by any dealer which is
a party to such Hedging Transactions or any other recognized dealer in such Hedging Transactions (which may include a Lender or
any Affiliate of a Lender).


 


“Hedging Agreement”
means any International Swap Dealers Association, Inc. Master Agreement, International Swaps and Derivatives Association, Inc.
Master Agreement or other agreement and all schedules and exhibits attached thereto and incorporated therein that set forth the
general terms upon which a Person may enter into one or more Hedging Transactions.


 


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


 


“Honor Date”
has the meaning set forth in Section 2.2(c)(i).


 


“Hydrocarbons”
means oil, gas, coal seam gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate and all other liquid or
gaseous hydrocarbons produced or to be produced in conjunction therewith from a well bore and all products, by-products and other
substances derived therefrom or the processing thereof, including natural gas liquids, and all other minerals and substances produced
in conjunction with such substances, including, sulfur, geothermal steam, water, carbon dioxide, helium and any and all minerals,
ores or substances of value and the products and proceeds therefrom.


 


“IDC”
means Intangible Drilling and Development Costs, as defined in Section 263 of the Code (including, without limitation and
for the avoidance of doubt, intangible completion costs).


 


“Immaterial
Title Deficiencies” means, with respect to Oil and Gas Properties, defects or clouds on title, discrepancies in reported
net revenue or working interest ownership interests and other defects, discrepancies, Liens and similar matters which do not, individually
or in the aggregate, affect Oil and Gas Properties with a Recognized Value greater than five percent (5.00%) of the Recognized
Value of all such properties included in the Borrowing Base.


 


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


 


“Independent
Engineer” means Cawley, Gillespie & Associates, Inc. or any other third-party engineering firm acceptable to Administrative
Agent in its sole discretion.


 






    	CREDIT AGREEMENT – Page 15



     


    

 


“Information”
has the meaning set forth in Section 12.25.


 


“Initial Reserve
Report” means, collectively, the Reserve Reports for Nytis Exploration Company LLC and Carbon Appalachian Company, LLC,
each prepared by an Independent Engineer and updated by Borrower’s own engineer, dated as of January 1, 2018, covering all of the
Oil and Gas Properties of Borrower and its Subsidiaries.


 


“Intellectual
Property” means all copyrights, copyright licenses, patents, patent licenses, trademarks, trademark licenses and other
types of intellectual property, in whatever form, now owned or hereafter acquired.


 


“Intercreditor
Agreement” means that certain intercreditor agreement among Borrower, one or more Approved Commodity Swap Counterparties
that are not Bank Product Providers, and Administrative Agent, as contractual collateral representative for itself, the Lenders,
the Bank Product Providers and such Approved Commodity Swap Counterparties, as amended and in effect from time to time.


 


“Interest Period”
means, with respect to any LIBOR Portion, the period commencing on the date such Portion becomes a LIBOR Portion (whether by the
making of a Loan or its continuation or conversion) and ending on the numerically corresponding day in the calendar month that
is one, two, or three months thereafter, as Borrower may elect; provided, that (a) if any Interest Period would end
on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding
Business Day, and (b) any Interest Period pertaining to a LIBOR Portion that commences on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall
end on the last Business Day of the last calendar month of such Interest Period.


 


“Interest Rate”
means the rate equal to the lesser of (a) the Maximum Rate and (b) the Applicable Rate.


 


“IRS”
means the Internal Revenue Service or any entity succeeding to all or any of its functions.


 


“ISP”
means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of
International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance).


 


“Issuer Documents”
means, with respect to any Letter of Credit, the Letter of Credit Application and any other document, agreement and instrument
entered into by L/C Issuer and Borrower (or any Subsidiary) or in favor of L/C Issuer and relating to such Letter of Credit.


 


“L/C Advance”
means, with respect to each Lender, such Lender’s funding of its participation in any L/C Borrowing in accordance with its Applicable
Percentage.


 


“L/C Borrowing”
means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed by Borrower on the
date when made or refinanced as a Borrowing.


 


“L/C Credit
Extension” means, with respect to any Letter of Credit, the issuance thereof, the extension of the expiry date thereof,
or the increase of the amount thereof.


 






    	CREDIT AGREEMENT – Page 16



     


    

 


“L/C Issuer”
means LegacyTexas Bank in its capacity as issuer of Letters of Credit hereunder, or any successor issuer of Letters of Credit hereunder.


 


“L/C Obligations”
means, as at any date of determination thereof, the aggregate amount available to be drawn under all outstanding Letters of Credit,
plus the aggregate amount of all Unreimbursed Amounts, including all L/C Borrowings. For purposes of computing the amount
available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.4.
For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount
may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to
be “outstanding” in the amount so remaining available to be drawn.


 


“Laws”
means, collectively, all international, foreign, federal, state, provincial and local statutes, treaties, rules, guidelines, regulations,
ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof
by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative
orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in
each case whether or not having the force of law.


 


“Lease Operating
Statement” means a report, in form and substance reasonably satisfactory to Administrative
Agent, prepared by Borrower covering each of the Proved Oil and Gas Properties of Borrower and its Subsidiaries included
in the most recent redetermination of the Borrowing Base and detailing on a monthly basis the Hydrocarbon production volumes, revenues,
associated lease operating expenses, taxes and other expenses for such Proved Oil and Gas Properties.


 


“LegacyTexas
Bank” means LegacyTexas Bank, a Texas state bank, and its successors and assigns.


 


“Lender”
and “Lenders” have the meanings set forth in the introductory paragraph hereto and shall include L/C Issuer, as
the context may require.


 


“Lending Office”
means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire,
or such other office or offices as a Lender may from time to time notify Borrower and Administrative Agent.


 


“Letter of
Credit” means any standby letter of credit issued hereunder providing for the payment of cash upon the honoring of a presentation
thereunder.


 


“Letter of
Credit Application” means an application and agreement for the issuance or amendment of a Letter of Credit in the form
from time to time in use by L/C Issuer.


 


“Letter of
Credit Expiration Date” means the date that is seven days prior to the Maturity Date (or, if such day is not a Business
Day, the next preceding Business Day).


 


“Letter of
Credit Fee” has the meaning set forth in Section 2.3(b).


 


“Letter of
Credit Sublimit” means an amount equal to $1,500,000. The Letter of Credit Sublimit is part of, and not in addition to,
the Aggregate Commitments.


 


“Leverage Ratio”
means, as of any date of determination thereof, the ratio of (a) Net Debt as of such date to (b) Adjusted EBITDAX, for the Test
Period most recently ended.


 






    	CREDIT AGREEMENT – Page 17



     


    

 


“LIBOR”
means:


 


(a) for any interest
calculation with respect to a LIBOR Portion, for any Interest Period:


 


(i) the rate
per annum for deposits for the same term in Dollars that appears on Thomson Reuters ICE Benchmark Administration LIBOR Rates Page
(or the successor thereto if the ICE Benchmark Administration is no longer making a LIBOR rate available) at approximately 11:00 a.m.,
London, England time, on the related LIBOR Determination Date; provided, however, if such rate appearing on such
page is less than zero, such rate shall be deemed to be zero for purposes of this Agreement; or


 


(ii) if such
rate does not appear on such screen or service, or such screen or service shall cease to be available, then LIBOR shall be determined
by Administrative Agent to be the offered rate on such other screen or service that displays an average interest settlement rate
for deposits in Dollars (for delivery on the first day of such Interest Period) in the London interbank market for a term equivalent
to such Interest Period as of 11:00 a.m. on the relevant LIBOR Determination Date; provided, however, if such
rate appearing on such screen or service is less than zero, such rate shall be deemed to be zero for purposes of this Agreement;
or


 


(iii) if
the rates referenced in the foregoing clauses (a)(i) and (a)(ii) are not available, then LIBOR for the relevant
Interest Period will be determined by such alternate method as is reasonably selected by Administrative Agent; and


 


(b) for any interest
calculation with respect to a Base Rate Portion:


 


(i) the rate
per annum for deposits in Dollars that appears on Thomson Reuters ICE Benchmark Administration LIBOR Rates Page (or the successor
thereto if the ICE Benchmark Administration is no longer making a LIBOR rate available) at approximately 11:00 a.m., London, England
time, on the related LIBOR Determination Date for a term of one month commencing on the date of calculation; provided, however,
if such rate appearing on such page is less than zero, such rate shall be deemed to be zero for purposes of this Agreement; or


 


(ii) if such
rate does not appear on such screen or service, or such screen or service shall cease to be available, then LIBOR shall be determined
by Administrative Agent to be the offered rate on such other screen or service that displays an average interest settlement rate
for deposits in Dollars (for delivery on such date of calculation) for a term of one month as of 11:00 a.m. on the relevant LIBOR
Determination Date; provided, however, if such rate appearing on such screen or service is less than zero, such rate
shall be deemed to be zero for purposes of this Agreement; or


 


(iii) if
the rates referenced in the foregoing clauses (b)(i) and (b)(ii) are not available, then LIBOR for a term of one
month will be determined by such alternate method as is reasonably selected by Administrative Agent.


 


“LIBOR Determination
Date” means a day that is two Business Days prior to the beginning of the relevant Interest Period or prior to the
applicable date of determination, as applicable.


 


“LIBOR Portion”
means each Portion bearing interest based on Adjusted LIBOR (other than any Portion bearing interest at the Base Rate which is
determined by reference to Adjusted LIBOR).


 






    	CREDIT AGREEMENT – Page 18



     


    

 


“Lien”
means, as to any Property of any Person, (a) any lien, mortgage, security interest, tax lien, pledge, charge, hypothecation, collateral
assignment, or other encumbrance of any kind or nature whatsoever (including, without limitation, any conditional sale or title
retention agreement), whether arising by contract, operation of law, or otherwise, affecting such Property, (b) production payments
and the like payable out of such Property, and (c) the signing or filing of a financing statement which names the Person as debtor
or the signing of any security agreement, or the signing of any document authorizing a secured party to file any financing statement
which names such Person as debtor.


 


“Liquidity”
means, with respect to Borrower and its Subsidiaries, on a consolidated basis, as of any date of determination thereof, the sum
of (i) unencumbered cash and cash equivalents on hand on such date, and (ii) the Revolving Credit Availability on such date; provided,
however, solely for the purpose of this calculation, cash and cash equivalents pledged in favor of the Administrative Agent
in connection with the Loan Documents shall not constitute as encumbered.


 


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


 


“Loan Documents”
means this Agreement, each Guaranty, the Security Documents, the Notes, the Issuer Documents, and all other promissory notes, security
agreements, deeds of trust, assignments, letters of credit, guaranties, and other instruments, documents, or agreements executed
and delivered pursuant to or in connection with this Agreement or the Security Documents; provided that the term “Loan
Documents” shall not include any Bank Product Agreement or the Intercreditor Agreement.


 


“Loss”
has the meaning set forth in Section 7.5(c).


 


“Majority Lenders”
means, as of any date of determination, Lenders holding more than 50% of the Total Credit Exposure at such time (with the aggregate
amount of each Lender’s risk participation and funded participation in L/C Obligations being deemed “held” by such Lender
for purposes of this definition); provided that, if one Lender holds more than 51% but less than 100% of the Total Credit
Exposure at such time, subject to the last sentence of Section 12.10, Majority Lenders shall be at least two Lenders.
The unused Commitment of, and the Revolving Credit Exposure held or deemed held by, any Defaulting Lender shall be excluded for
purposes of making a determination of Majority Lenders.


 


“Management
Services Agreement” means that certain Management Services Agreement dated February 15, 2017 by and between Borrower and
Carbon California Company, LLC.


 


“Material Adverse
Event” means any act, event, condition, or circumstance which could materially and adversely affect (a) the operations,
business, properties, liabilities (actual or contingent), condition (financial or otherwise) or prospects of Borrower and its Subsidiaries,
taken as a whole; (b) the ability of any Obligated Party to perform its obligations under any Loan Document to which it is
a party or the Intercreditor Agreement to the extent party thereto; or (c) the legality, validity, binding effect or enforceability
against any Obligated Party of any Loan Document to which it is a party or the Intercreditor Agreement to the extent party thereto.


 


“Material Gas
Imbalance” means, with respect to all Gas Balancing Agreements to which Borrower or any of its Subsidiaries is a party
or by which any Oil and Gas Property of Borrower or any of its Subsidiaries is bound, net gas imbalance liabilities of Borrower
or any of its Subsidiaries, considered individually or in the aggregate, in excess of $500,000. Gas imbalances will be determined
based on Gas Balancing Agreements, with respect to wellhead imbalances, or gas purchase or transportation agreements, with respect
to downstream imbalances, if any, specifying the method of calculation thereof, or, alternatively, if no such Gas Balancing Agreements
or gas purchase or transportation agreements, as the case may be, are in existence, gas imbalances will be calculated by multiplying
(x) the volume of gas imbalance as of the date of calculation (expressed in thousand cubic feet) by (y) the heating value
in BTUs per thousand cubic feet, times the Henry Hub average daily spot price for the month immediately preceding the date
of calculation adjusted for location differential and transportation costs based upon the location where the Oil and Gas Property
giving rise to the imbalances are located.


 






    	CREDIT AGREEMENT – Page 19



     


    

 


“Maturity Date”
means July [__], 2022, or such earlier date on which the Commitment of each Lender terminates as provided in this Agreement; provided,
however, that if such date is not a Business Day, the Maturity Date shall be the next succeeding Business Day.


 


“Maximum Rate”
means, at all times, the maximum rate of interest which may be charged, contracted for, taken, received or reserved by Lenders
in accordance with applicable Texas Law (or applicable United States federal Law to the extent that such Law permits Lenders to
charge, contract for, receive or reserve a greater amount of interest than under Texas Law). The Maximum Rate shall be calculated
in a manner that takes into account any and all fees, payments, and other charges in respect of the Loan Documents that constitute
interest under applicable Law. Each change in any interest rate provided for herein based upon the Maximum Rate resulting from
a change in the Maximum Rate shall take effect without notice to Borrower at the time of such change in the Maximum Rate.


 


“Minimum Collateral
Amount” means, at any time, (a) with respect to Cash Collateral consisting of cash or deposit account balances provided
to reduce or eliminate Fronting Exposure during the time that a Defaulting Lender exists, an amount equal to 105% of the Fronting
Exposure of L/C Issuer with respect to Letters of Credit issued and outstanding at such time, (b) with respect to Cash Collateral
consisting of cash or deposit account balances provided in accordance with the provisions of Section 2.6(a)(i), (a)(ii)
or (a)(iii), an amount equal to 105% of the Outstanding Amount of all L/C Obligations, and (c) otherwise, an amount
determined by Administrative Agent and L/C Issuer in their sole discretion.


 


“Mortgaged
Properties” means all present and future Oil and Gas Properties of one or more of Borrower and its Subsidiaries in which
one or more of Borrower and its Subsidiaries has granted or does hereafter grant a mortgage or Lien to or for the benefit of Administrative
Agent for the benefit of the Secured Parties.


 


“Mortgages”
means, collectively, the mortgages or deeds of trust now or hereafter encumbering Borrower’s or any of its Subsidiaries’ fee or
leasehold estates in the property described therein in favor of Administrative Agent, in form and substance satisfactory to Administrative
Agent.


 


“Multiemployer
Plan” means a multiemployer plan defined as such in Section 3(37) of ERISA to which contributions are being made
or have been made by, or for which there is an obligation to make by or there is any liability, contingent or otherwise, with respect
to an Obligated Party or any ERISA Affiliate and which is covered by Title IV of ERISA.


 


“Net Debt”
means, on any date of determination, (a) all Debt of Borrower and its Subsidiaries, on a consolidated basis, as of such date, minus
(b) all unencumbered cash and cash equivalents of the Borrower and the Subsidiaries, on a consolidated basis, as of such date in
accordance with GAAP in an aggregate amount not to exceed $3,000,000; provided, however, solely for the purpose of this calculation,
cash and cash equivalents pledged in favor of the Administrative Agent in connection with the Loan Documents shall not constitute
as encumbered.


 






    	CREDIT AGREEMENT – Page 20



     


    

 


“Net Income”
means, for any Person for any Test Period, the net income (or loss) of such Person and its Subsidiaries on a consolidated basis
as determined in accordance with GAAP; provided that Net Income shall exclude (a) the net income of any Subsidiary
of such Person during such Test Period to the extent that the declaration or payment of dividends or similar distributions by such
Subsidiary of such income is not permitted by operation of the terms of its Constituent Documents or any agreement, instrument
or Law applicable to such Subsidiary during such Test Period except that such Person’s equity in any net loss of any such Subsidiary
for such Test Period shall be included in determining Net Income, and (b) any income (or loss) for such Test Period of any
other Person if such other Person is not a Subsidiary, except that Borrower’s equity in the net income of any such Person for such
Test Period shall be included in Net Income up to the aggregate amount of cash actually distributed by such Person during such
Test Period to Borrower or a Subsidiary as a dividend or other distribution (and in the case of a dividend or other distribution
to a Subsidiary, such Subsidiary is not precluded from further distributing such amount to Borrower as described in clause (a)
of this proviso).


 


“Non-Consenting
Lender” means any Lender that does not approve any consent, waiver or amendment that (a) requires the approval of
all or all affected Lenders in accordance with the terms of Section 12.10 and (b) has been approved by the Majority
Lenders.


 


“Non-Defaulting
Lender” means, at any time, each Lender that is not a Defaulting Lender at such time.


 


“Note”
means a promissory note made by Borrower in favor of a Lender evidencing Loans made by such Lender, substantially in the form of
Exhibit D.


 


“Nytis”
means Nytis Exploration Company LLC, a Delaware limited liability company.


 


“Obligated
Party” means each of the Borrower, the Guarantors and each other Person who is or becomes party to any agreement that
obligates such Person to pay or perform, or that Guarantees or secures payment or performance of, the Obligations under the Loan
Documents or any part thereof.


 


“Obligations”
means all obligations, indebtedness, and liabilities of Borrower, each Guarantor and each other Obligated Party to Administrative
Agent, each Lender, any Affiliates of Administrative Agent or any Lender and any Bank Product Provider now existing or hereafter
arising, whether direct, indirect, related, unrelated, fixed, contingent, liquidated, unliquidated, joint, several, or joint and
several, arising under or pursuant to this Agreement, any Bank Product Agreements (but in the case of Bank Product Agreements that
are Hedging Agreements, limited to obligations and liabilities of Borrower and its Subsidiaries to Bank Product Providers in respect
of Hedging Transactions that are permitted by Section 8.17 and the Hedging Agreements under which they arise, to the extent
related thereto, including any related early termination or settlement amounts) or the other Loan Documents, and all interest accruing
thereon (whether a claim for post-filing or post-petition interest is allowed in any bankruptcy, insolvency, reorganization or
similar proceeding) and all attorneys’ fees and other expenses incurred in the enforcement or collection thereof; provided
that, as to any Guarantor, the “Obligations” shall exclude any Excluded Swap Obligations of such Guarantor.


 


“Oil and Gas
Properties” means (a) all present and future interests and estates existing under any oil, gas and/or mineral leases
including, without limitation, working interests, royalty interests, overriding royalty interests, production payments, net profits
interests and carried interests, (b) all present and future rights in mineral fee interests, including without limitation,
any reversionary interests relating thereto, (c) all rights, titles and interests created by or arising under the terms of
all present and future unitization, communitization or pooling arrangements (and all properties covered and units created thereby)
whether arising by contract or operation of law which now or hereafter include all or any part of the foregoing, (d) all rights,
titles and interest created by or arising under the terms of all present and future Farmouts including, without limitation, any
back-in interests related thereto, (e) all unsevered and unextracted Hydrocarbons in, under or attributable with respect to any
of the foregoing, and (f) all rights, remedies, powers and privileges with respect to any of the foregoing, in each case,
including, without limitation, all of the foregoing which are classified as proved developed producing, proved developed non-producing,
proved developed behind pipe, proved developed shut-in, proved undeveloped, probable and possible reserves and any other reserve
category recognized by the Society of Petroleum Evaluation Engineers or any successor thereto.


 






    	CREDIT AGREEMENT – Page 21



     


    

 


“Other Connection
Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such
Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered,
become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged
in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).


 


“Other Taxes”
means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment
made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security
interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed
with respect to an assignment (other than an assignment made pursuant to Section 3.6).


 


“Outstanding
Amount” means (a) with respect to the Loans on any date, the aggregate outstanding principal amount thereof after
giving effect to any borrowings and prepayments or repayments of Loans occurring on such date, and (b) with respect to any
L/C Obligations on any date, the amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring
on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any
reimbursements by Borrower of Unreimbursed Amounts.


 


“Participant”
means any Person (other than a natural Person, or a holding company, investment vehicle or trust for, or owned and operated for
the primary benefit of, a natural Person, a Defaulting Lender, or Borrower or any of Borrower’s Affiliates or Subsidiaries or any
other Obligated Party) to which a participation is sold by any Lender in all or a portion of such Lender’s rights and/or obligations
under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it).


 


“Participant
Register” means a register in the United States on which each Lender that sells a participation enters the name and address
of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations
under the Loan Documents.


 


“Patriot Act”
means the Uniting and Strengthening America by Providing Appropriate Tools to Intercept and Obstruct Terrorism Act of 2001 (Title III
of Pub. L. 107-56, signed into law October 26, 2001).


 


“Payment Date”
means (a) in respect of each Base Rate Portion, the first day of each and every calendar quarter during the term of this Agreement
and the Maturity Date, and (b) in respect of each LIBOR Portion, the last day of each Interest Period applicable to such LIBOR
Portion (or the day that is three months after the first day of such Interest Period if such Interest Period has a length of more
than three months) and the Maturity Date.


 


“PBGC”
means the Pension Benefit Guaranty Corporation or any entity succeeding to all or any of its functions under ERISA.


 


“Permitted
Liens” means those Liens permitted by Section 8.2.


 






    	CREDIT AGREEMENT – Page 22



     


    

  


“Permitted
Refinancing” means Debt constituting a refinancing or extension of Debt permitted under Sections 8.1(b) and 8.1(c)
that (a) has an aggregate outstanding principal amount not greater than the aggregate principal amount of the Debt being refinanced
or extended plus an amount equal to the fees and expenses reasonably incurred in connection with such refinancing or extension,
(b) is not entered into as part of a sale leaseback transaction, (c) is not secured by a Lien on any assets other than
the collateral securing the Debt being refinanced or extended, (d) the obligors of which are the same as the obligors of the
Debt being refinanced or extended and (e) is otherwise on terms no less favorable to the Obligated Parties, taken as a whole,
than those of the Debt being refinanced or extended.


 


“Permitted
Tax Distributions” means, with respect to any Person, any dividend or distribution to any holder of such Person’s Equity
Interests to permit such holders to pay federal income taxes and all relevant state and local income taxes at a rate equal to the
highest marginal applicable tax rate for the applicable tax year, however denominated (together with any interest, penalties, additions
to tax, or additional amounts with respect thereto) imposed as a result of taxable income attributed to such holder as a partner,
member or stockholder of such Person under federal, state, and local income tax Laws, determined on a basis that combines those
liabilities arising out of the net effect of the income, gains, deductions, losses, and credits of such Person and attributable
to it in proportion and to the extent in which such holders hold Equity Interests of such Person, provided, however,
the computation of tax distributions under this definition shall take into account the carryovers of items of loss, deduction and
expense previously allocated by Borrower to holders of its Equity Interests, such that the excess, if any, of the aggregate items
of losses from the prior taxable year over aggregate items of income from the prior taxable year will be deducted from the current
taxable year’s income before applying the appropriate tax rate.


 


“Person”
means any individual, corporation, limited liability company, business trust, association, company, partnership, joint venture,
Governmental Authority, or other entity, and shall include such Person’s heirs, administrators, personal representatives, executors,
successors and assigns.


 


“Plan”
means any employee benefit or other plan, other than a Multiemployer Plan, established or maintained by, or for which there is
an obligation to make contributions by or there is any liability, contingent or otherwise with respect to Borrower or any ERISA
Affiliate and which is covered by Title IV of ERISA or subject to Section 412 of the Code.


 


“Platform”
means Debt Domain, Intralinks, Syndtrak or a substantially similar electronic transmission system.


 


“Portion”
means any principal amount of any Loan bearing interest based upon the Base Rate or Adjusted LIBOR.


 


“Preferred
Equity Interests” means shares of the Borrower’s Series B Convertible Preferred Stock established by that certain Certificate
of Designation filed in the Office of the Secretary of State of the State of Delaware on April 6, 2018.


 


“Prime Rate”
means, for any day, a per annum interest rate equal to the highest quoted annual rate of interest which is published from time
to time in the “Money Rates” section of The Wall Street Journal as the prime rate (or, if such source is not available,
such alternate source as reasonably determined by Administrative Agent), as adjusted from time to time in Administrative Agent’s
reasonable discretion for reserve requirements, deposit insurance assessment rates and other regulatory costs. Any change in the
rate will take effect on the effective date as indicated in The Wall Street Journal.


 






    	CREDIT AGREEMENT – Page 23



     


    

 


“Principal
Office” means the principal office of Administrative Agent, presently located at the address set forth on Schedule 12.11.


 


“Production
Report” means a report, in form and substance reasonably satisfactory to Administrative Agent, prepared by Borrower covering
each of the Proved Oil and Gas Properties of Borrower and its Subsidiaries included in the most recent redetermination of the Borrowing
Base and detailing Hydrocarbon production volumes on a well-by-well basis for the most recently-completed month, which report shall
provide whether such Hydrocarbons were produced during such month or, as a result of accounting practices, were produced in a previous
month, in which case the report shall specify the month during which such Hydrocarbons were produced.


 


“Prohibited
Transaction” means any transaction set forth in Section 406 of ERISA or Section 4975 of the Code.


 


“Projected
Production” as of any time means the projected production of oil, natural gas, condensate or natural gas liquids including
gas processing plant products (measured by volume unit or BTU equivalent, not sales price), as applicable, for the term of the
contracts or a particular month, as applicable, from properties and interests owned by Borrower or any of its Subsidiaries which
are located in or offshore of the United States and which have attributable to them proved developed producing oil and gas reserves,
as such production has been most recently projected in the most recently delivered Reserve Report, after deducting projected production
from any properties or interests sold or under contract for sale that had been included in such analysis.


 


“Property”
of a Person means any and all property, whether real, personal, tangible, intangible or mixed, of such Person, or any other assets
owned, operated or leased by such Person, and, with respect to Borrower and its Subsidiaries, shall include the Mortgaged Properties.


 


“Proved Oil
and Gas Properties” means, collectively, (a) all Oil and Gas Properties which constitute proved developed producing
reserves, (b) all Oil and Gas Properties which constitute proved developed non-producing reserves, proved developed behind
pipe reserves or proved developed shut-in reserves, (c) all Oil and Gas Properties which constitute proved undeveloped reserves
and (d) all Oil and Gas Properties which constitute other categories of proved reserves recognized by the Society of Petroleum
Evaluation Engineers or any successor thereto.


 


“Rate Management
Transaction” means any transaction (including an agreement with respect thereto) now existing or hereafter entered into
by any Obligated Party which is a rate swap, basis swap, forward rate transaction, equity or equity index swap, equity or equity
index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction,
forward transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction
(including any option with respect to any of these transactions) or any combination thereof, whether linked to one or more interest
rates, foreign currencies, commodity prices, equity prices or other financial measures, but excluding Commodity Hedging Transactions.


 


“Recipient”
means Administrative Agent, L/C Issuer, or any Lender, as applicable.


 


“Recognized
Value” means the value, as determined by the Lenders, attributed to the Oil and Gas Properties of Borrower and its Subsidiaries
from the most recent determination of the Borrowing Base, based upon the discounted present value of the estimated net cash flow
to be realized from the production of Hydrocarbons from such Oil and Gas Properties and the other standards specified in Section 2.9(a).


 






    	CREDIT AGREEMENT – Page 24



     


    

 


“Register”
means a register for the recordation of the names and addresses of Lenders, and the Commitments of, and principal amounts of the
Loans owing to, each Lender pursuant to the terms hereof from time to time.


 


“Related Indebtedness”
means any and all indebtedness paid or payable by Borrower to Administrative Agent or any Lender pursuant to any Loan Document
other than any Note.


 


“Related Parties”
means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees,
administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.


 


“Release”
means, as to any Person, any release, spill, emission, leaking, pumping, injection, deposit, disposal, disbursement, leaching,
or migration of Hazardous Materials into the indoor or outdoor environment or into or out of property owned by such Person, including,
without limitation, the movement of Hazardous Materials through or in the air, soil, surface water, ground water, or Property.


 


“Remedial Action”
means all actions required to (a) clean up, remove, treat, or otherwise address Hazardous Materials in the indoor or outdoor
environment, (b) prevent the Release or threat of Release or minimize the further Release of Hazardous Materials so that they
do not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment, or (c) perform
pre-remedial studies and investigations and post-remedial monitoring and care.


 


“Removal Effective
Date” has the meaning set forth in Section 11.6(b).


 


“Reportable
Event” means any of the events set forth in Section 4043 of ERISA.


 


“Required Lenders”
means, as of any date of determination, Lenders holding more than 66-2/3% of the Total Credit Exposure at
such time (with the aggregate amount of each Lender’s risk participation and funded participation in L/C Obligations being deemed
“held” by such Lender for purposes of this definition); provided that, if one Lender holds more than 66-2/3%
but less than 100% of the Total Credit Exposure at such time, subject to the last sentence of Section 12.10, Required
Lenders shall be at least two Lenders. The unused Commitment of, and the Revolving Credit Exposure held or deemed held by, any
Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.


 


“Required Reserve
Value” means, at any time, 90% of the Recognized Value of all Proved Oil and Gas Properties evaluated in the most recent
Reserve Report.


 


“Reserve Report”
means a report, in form and substance satisfactory to Administrative Agent, evaluating the oil and gas reserves attributable to
all of the Oil and Gas Properties of Borrower and its Subsidiaries which shall, among other things, (a) identify the wells
covered thereby, (b) specify the applicable engineer’s opinions with respect to the total volume of reserves (the “available
reserves”) of Hydrocarbons (using, as applicable, the terms or categories “proved developed producing reserves”,
“proved developed non-producing reserves”, “proved developed behind pipe reserves”, “proved developed
shut-in reserves”, “proved undeveloped reserves”, “probable reserves” and “possible reserves”
and any other reserve category recognized by the Society of Petroleum Evaluation Engineers or any successor thereto) which Borrower
has advised such engineer that Borrower and its Subsidiaries have the right to produce for their own account, (c) set forth
such engineer’s opinions with respect to the projected future cash proceeds from the available reserves, discounted for present
value at a rate acceptable to Administrative Agent, for each calendar year or portion thereof after the date of such findings and
data, (d) set forth such engineer’s opinions with respect to the projected future rate of production of the available reserves,
(e) contain such other information as requested by Administrative Agent with respect to the projected rate of production,
gross revenues, operating expenses, taxes, capital costs, net revenues and present value of future net revenues attributable to
such reserves and production therefrom, (f) contain a statement of the price and escalation parameters, procedures and assumptions
upon which such determinations were based, (g) contain a statement of price differentials between the wellhead market price
for the commodity sold and the quoted market price used in such report during the previous 12-month period, and (h) contain
summary lease operating statements for such Oil and Gas Properties for the previous 12-month period.


 






    	CREDIT AGREEMENT – Page 25



     


    

 


“Resignation
Effective Date” has the meaning set forth in Section 11.6(a).


 


“Responsible
Officer” means the chief executive officer, president, chief financial officer, or treasurer of an Obligated Party or
any Person designated by a Responsible Officer to act on behalf of a Responsible Officer; provided that such designated
Person may not designate any other Person to be a Responsible Officer. Any document delivered hereunder that is signed by a Responsible
Officer of an Obligated Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or
other action on the part of such Person and such Responsible Officer shall be conclusively presumed to have acted on behalf of
Obligated Party.


 


“Revolving
Credit Availability” means, as of any date of determination thereof, the difference between (a) the Aggregate Commitments
on such date minus (b) the Aggregate Revolving Credit Exposure on such date.


 


“Revolving
Credit Exposure” means, as to any Lender at any time, the aggregate principal amount of its outstanding Loans at such
time and such Lender’s participation in L/C Obligations at such time.


 


“RICO”
means the Racketeer Influenced and Corrupt Organization Act of 1970.


 


“Sanctions”
means all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by the U.S. government,
including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department
of State.


 


“Sanctioned
Country” means, at any time, a country, region or territory which is itself the subject or target of any Sanctions (at
the time of this Agreement, Crimea, Cuba, Iran, North Korea, Sudan, and Syria).


 


“Sanctioned
Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the
Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, (b) any Person operating,
organized, or resident in a Sanctioned Country, or (c) any Person controlled by any such Person.


 


“SEC”
means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.


 


“Secured Parties”
means, collectively, the Administrative Agent, each Lender, L/C Issuer, each Bank Product Provider, each other Approved Commodity
Swap Counterparty party to the Intercreditor Agreement (with respect to the Mortgages) and any other Person the Obligations owing
to which are, or are purported to be, secured by the Collateral under the terms of the Security Documents.


 


“Security Documents”
means, collectively, each and every Mortgage, security agreement, pledge agreement, mortgage, deed of trust, control agreement
or other collateral security agreement required by or delivered to Administrative Agent from time to time that purport to create
a Lien in favor of any of the Secured Parties to secure payment or performance of the Obligations or any portion thereof.


 






    	CREDIT AGREEMENT – Page 26



     


    

 


“Sellers”
means, collectively, Old Ironsides Fund II-A Portfolio Holding Company, LLC and Old Ironsides Fund II-B Portfolio Holding Company,
LLC.


 


“Solvent”
means, with respect to any Person as of any date of determination thereof, that the fair value of the assets of such Person (at
fair valuation) is, on the date of determination, greater than the total amount of liabilities (including contingent and unliquidated
liabilities) of such Person as of such date; that the present fair saleable value of the assets of such Person will, as of such
date, be greater than the amount that will be required to pay the probable liability of such Person on its debts as such debts
become absolute and matured; and that, as of such date, such Person will be able to pay all liabilities of such Person as such
liabilities mature, and such Person does not have unreasonably small capital with which to carry on its business. In computing
the amount of contingent or unliquidated liabilities at any time, such liabilities will be computed at the amount which, in light
of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual
or matured liability discounted to present value at rates believed to be reasonable by such Person acting in good faith.


 


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


 


“Subsidiary”
means (a) any corporation of which at least a majority of the outstanding shares of stock having by the terms thereof ordinary
voting power to elect a majority of the board of directors of such corporation (irrespective of whether or not at the time stock
of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency)
is at the time directly or indirectly owned or Controlled by Borrower, one or more of Borrower’s other Subsidiaries or by Borrower
and one or more of such Subsidiaries, and (b) any other entity (i) of which at least a majority of the ownership, equity
or voting interest is at the time directly or indirectly owned or Controlled by one or more of Borrower and other Subsidiaries
and (ii) which is treated as a subsidiary in accordance with GAAP. Unless otherwise specified herein, any reference to a “Subsidiary”
or “Subsidiaries” shall be deemed to be references to a Subsidiary or Subsidiaries of Borrower. Notwithstanding anything
to the contrary contained herein, each of the Excluded Subsidiaries shall not be a Subsidiary for purposes of this Agreement or
any other Loan Document, including without limitations, for purposes of any financial covenants set forth under Article IX or any
reporting requirements under Section 7.1.


 


“Swap Obligations”
means, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes
a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.


 


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


 






    	CREDIT AGREEMENT – Page 27



     


    

 


“Taxes”
means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments,
fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.


 


“Test Period”
means, as of any date of determination thereof, the four consecutive fiscal quarters of Borrower most recently ended (in each case
taken as one accounting period) for which financial statements have been or are required to be delivered pursuant to this Agreement,
commencing as of fiscal quarter ending September 30, 2018; provided, however, for purposes of the calculation of EBITDAX (including
Net Income and each other amount included in the determination of EBITDAX) for Test Period ending September 30, 2018, such amounts
shall be calculated as if the CAC Acquisition had occurred on or prior to July 1, 2018, and shall be annualized by taking the results
of the fiscal quarter ending September 30, 2018, and multiplying them by 4; for the Test Period ending December 31, 2018, such
amounts shall be annualized by taking the results of the two fiscal quarters ending December 31, 2018, and multiplying them by
2; for the Test Period ending March 31, 2019, such amounts shall be annualized by taking the results of the three fiscal quarters
ending March 31, 2019, and multiplying them by 4/3.


 


“Threshold
Amount” means $250,000.


 


“Total Credit
Exposure” means, as of any date of determination thereof, the sum of the unused Aggregate Commitments at such time plus
the Aggregate Revolving Credit Exposure at such time.


 


“Type”
means, with respect to a Portion, its character as a LIBOR Portion or a Base Rate Portion.


 


“UCC”
means Chapters 1 through 11 of the Texas Business and Commerce Code.


 


“Unfunded Pension
Liability” means the excess, if any, of (a) the funding target as defined under Section 430(d) of the Code without
regard to the special at-risk rules of Section 430(i) of the Code, over (b) the value of plan assets as defined under
Section 430(g)(3)(A) of the Code determined as of the last day of each calendar year, without regard to the averaging which
may be allowed under Section 430(g)(3)(B) of the Code and reduced for any prefunding balance or funding standard carryover
balance as defined and provided for in Section 430(f) of the Code.


 


“Unreimbursed
Amount” has the meaning set forth in Section 2.2(c)(i).


 


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


 


“U.S. Tax Compliance
Certificate” has the meaning specified in Section 3.4(g)(ii)(B)(3).


 


“Utilization”
means, as of any date of determination thereof, the percentage obtained by dividing the Aggregate Revolving Credit Exposure as
of such date by the Aggregate Commitments as of such date.


 


“Withholding
Agent” means each of Borrower and Administrative Agent.


 






    	CREDIT AGREEMENT – Page 28



     


    

 


“Write-Down
and Conversion Powers” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such
EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down
and conversion powers are described in the EU Bail-In Legislation Schedule.


 


Section 1.2 Accounting
Matters.


 


(a) Generally.
All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data
(including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared
in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that
used in preparing the audited financial statements described in Section 6.2, except as otherwise specifically prescribed
herein. Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the computation of any
financial covenant) contained herein, Debt of Borrower and its Subsidiaries shall be deemed to be carried at 100% of the outstanding
principal amount thereof, and the effects of FASB ASC 825 on financial liabilities shall be disregarded.


 


(b) Changes
in GAAP. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth herein,
and either Borrower or the Majority Lenders shall so request, Administrative Agent, Lenders and Borrower shall negotiate in good
faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the
approval of the Majority Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to
be computed in accordance with GAAP prior to such change therein and (ii) Borrower shall provide to Administrative Agent and
Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth
a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.


 


Section 1.3 ERISA
Matters. If, after the date hereof, there shall occur, with respect to ERISA, the adoption of any applicable Law, rule, or
regulation, or any change therein, or any change in the interpretation, implementation or administration thereof by the PBGC or
any other Governmental Authority, then either Borrower or Majority Lenders may request a modification to this Agreement solely
to preserve the original intent of this Agreement with respect to the provisions hereof applicable to ERISA, and the parties to
this Agreement shall negotiate in good faith to complete such modification.


 


Section 1.4 Letter
of Credit Amounts. Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the
stated amount of such Letter of Credit in effect at such time; provided, however, that with respect to any Letter
of Credit that, by its terms or the terms of any Issuer Document related thereto, provides for one or more automatic increases
in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter
of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.


 






    	CREDIT AGREEMENT – Page 29



     


    

 


Section 1.5 Other
Definitional Provisions. All definitions contained in this Agreement are equally applicable to the singular and plural forms
of the terms defined. The words “hereof”, “herein”, and “hereunder” and words
of similar import referring to this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement.
Unless otherwise specified, all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed
to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear. Terms used
herein that are defined in the UCC, unless otherwise defined herein, shall have the meanings specified in the UCC. Any definition
of or reference to any agreement, instrument or other document shall be construed as referring to such agreement, instrument or
other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments,
supplements or modifications set forth herein or in any other Loan Document). Any reference to any Law shall include all statutory
and regulatory provisions consolidating, amending or replacing such Law and any reference to any Law or regulation shall, unless
otherwise specified, refer to such Law or regulation as amended, modified or supplemented from time to time. Words denoting gender
shall be construed to include the masculine, feminine and neuter, when such construction is appropriate; and specific enumeration
shall not exclude the general but shall be construed as cumulative; the word “or” is not exclusive; the word “including”
(in its various forms) means “including, without limitation”; in the computation of periods of time, the word “from”
means “from and including” and the words “to” and “until” mean “to but excluding”; and
all references to money refer to the legal currency of the United States of America.


 


Section 1.6 Interpretative
Provision. For purposes of Section 10.1, a breach of a financial covenant contained in Article 9 shall
be deemed to have occurred as of any date of determination thereof by Borrower, the Majority Lenders or as of the last date of
any specified measurement period, regardless of when the financial statements or the Compliance Certificate reflecting such breach
are delivered to Administrative Agent.


 


Section 1.7 Times
of Day. Unless otherwise specified, all references herein to times of day shall be references to central time (daylight or
standard, as applicable).


 


Section 1.8 Other
Loan Documents. The other Loan Documents, including the Security Documents, and the Intercreditor Agreement contain representations,
warranties, covenants, defaults and other provisions that are in addition to and not limited by, or a limitation of, similar provisions
of this Agreement. Such provisions in such other Loan Documents and the Intercreditor Agreement may be different or more expansive
than similar provisions of this Agreement and neither such differences nor such more expansive provisions shall be construed as
a conflict.


 


ARTICLE
2



THE COMMITMENTS AND CREDIT EXTENSIONS


 


Section 2.1 The
Loans.


 


(a) Borrowings.
Subject to the terms and conditions of this Agreement, each Lender severally agrees to make one or more revolving credit loans
(each such loan, a “Loan”) to Borrower from time to time from the Closing Date until the Maturity Date in an aggregate
principal amount for such Lender at any time outstanding up to but not exceeding the amount of such Lender’s Commitment, provided
that the Aggregate Revolving Credit Exposure shall not exceed the Aggregate Commitments. Subject to the foregoing limitations,
and the other terms and provisions of this Agreement, Borrower may borrow, repay, and reborrow Loans hereunder.


 


(b) Borrowing
Procedure. Each Borrowing, each conversion of a Portion from one Type to the other, and each continuation of a LIBOR Portion
shall be made upon Borrower’s irrevocable notice to Administrative Agent, which may be given by telephone. Each such notice must
be received by Administrative Agent not later than 11:00 a.m. (i) three Business Days prior to the requested date
of any Borrowing of, conversion to, or continuation of a LIBOR Portion or of any conversion of a LIBOR Portion to a Base Rate Portion,
and (ii) on the requested date of any Borrowing of a Base Rate Portion. Each telephonic notice by Borrower pursuant to this
Section 2.1(b) must be confirmed promptly by delivery to Administrative Agent of a written Borrowing Request, appropriately
completed and signed by a Responsible Officer of Borrower. Each Borrowing of, conversion to, or continuation of a LIBOR Portion
shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof. Except as provided in Section 2.2(c),
each Borrowing of or conversion to a Base Rate Portion shall be in a principal amount of $250,000 or a whole multiple of $50,000
in excess thereof; provided that a Base Rate Portion may be in an amount equal to the Revolving Credit Availability. Each
Borrowing Request (whether telephonic or written) shall specify (A) whether Borrower is requesting a Borrowing, a conversion
of Portions from one Type to the other, or a continuation of LIBOR Portions, (B) the requested date of the Borrowing, conversion
or continuation, as the case may be (which shall be a Business Day), (C) the principal amount of Portions to be borrowed,
converted or continued, (D) the Type of Portions to be borrowed or to which existing Portions are to be converted, and (E) if
applicable, the duration of the Interest Period with respect thereto. If Borrower fails to specify a Type of Portion in a Borrowing
Request or if Borrower fails to give a timely notice requesting a conversion or continuation, then the applicable Portions shall
be made as, or converted to, Base Rate Portions. Any such automatic conversion to Base Rate Portions shall be effective as of the
last day of the Interest Period then in effect with respect to the applicable LIBOR Portions. If Borrower requests a Borrowing
of, conversion to, or continuation of a LIBOR Portion in any such Borrowing Request but fails to specify an Interest Period, it
will be deemed to have specified an Interest Period of one month.


 






    	CREDIT AGREEMENT – Page 30



     


    

 


(c) Funding.
Following receipt of a Borrowing Request, Administrative Agent shall promptly notify each Lender of the amount of its Applicable
Percentage of the applicable Portions, and if no timely notice of a conversion or continuation is provided by Borrower, Administrative
Agent shall notify each Lender of the details of any automatic conversion to Base Rate Portions as described in Section 2.1(b).
In the case of a Borrowing, each Lender shall make the amount of its Loan available to Administrative Agent in immediately available
funds at Administrative Agent’s Principal Office not later than 1:00 p.m. on the Business Day specified in the applicable
Borrowing Request. Upon satisfaction of the applicable conditions set forth in Section 5.2 (and, if such Borrowing
is the initial Credit Extension, Section 5.1), Administrative Agent shall make all funds so received available to Borrower
in like funds as received by Administrative Agent either by (i) crediting the account of Borrower on the books of LegacyTexas
Bank with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided
to (and reasonably acceptable to) Administrative Agent by Borrower; provided, however, if, on the date the Borrowing
Request with respect to such Borrowing is given by Borrower, there are L/C Borrowings outstanding, then the proceeds of such Borrowing,
first, shall be applied to the payment in full of any such L/C Borrowings, and second, shall be made available to
Borrower as provided above.


 


(d) Continuations
and Conversions. Except as otherwise provided herein, a LIBOR Portion may be continued or converted only on the last day of
an Interest Period for such LIBOR Portion. During the existence of a Default, (i) no Loans may be requested as, converted
to, or continued as LIBOR Portions without the consent of the Majority Lenders and (ii) unless repaid, each LIBOR Portion
shall be converted to a Base Rate Portion at the end of the Interest Period applicable thereto.


 


(e) Notifications.
Administrative Agent shall promptly notify Borrower and Lenders of the interest rate applicable to any Interest Period for LIBOR
Portions upon determination of such interest rate.


 






    	CREDIT AGREEMENT – Page 31



     


    

 


(f) Interest
Periods. After giving effect to all Borrowings, all conversions of Portions from one Type to the other, and all continuations
of Portions as the same Type, there shall not be more than five Interest Periods in effect with respect to LIBOR Portions.


 


Section 2.2 Letters
of Credit.


 


(a) The
Letter of Credit Commitment.


 


(i) Subject
to the terms and conditions set forth herein, (A) L/C Issuer agrees, in reliance upon the agreements of Lenders set forth
in this Section 2.2, (1) from time to time on any Business Day during the period from the Closing Date until the
Letter of Credit Expiration Date, to issue Letters of Credit for the account of Borrower or its Subsidiaries, and to amend or extend
Letters of Credit previously issued by it, in accordance with subsection (b) below, and (2) to honor drawings
under the Letters of Credit; and (B) Lenders severally agree to participate in Letters of Credit issued for the account of
Borrower or its Subsidiaries and any drawings thereunder; provided that after giving effect to any L/C Credit Extension
with respect to any Letter of Credit, (x) the Aggregate Revolving Credit Exposure shall not exceed the Aggregate Commitments,
(y) the Revolving Credit Exposure of any Lender shall not exceed such Lender’s Commitment, and (z) the Outstanding Amount
of the L/C Obligations shall not exceed the Letter of Credit Sublimit. Each request by Borrower for the issuance or amendment of
a Letter of Credit shall be deemed to be a representation by Borrower that the L/C Credit Extension so requested complies with
the conditions set forth in the proviso to the preceding sentence. Within the foregoing limits, and subject to the terms and conditions
hereof, Borrower’s ability to obtain Letters of Credit shall be fully revolving, and accordingly Borrower may, during the foregoing
period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed.


 


(ii) L/C Issuer
shall not issue any Letter of Credit, if:


 


(A) the expiry
date of the requested Letter of Credit would occur more than 12 months after the date of issuance (or, if issued in favor of the
Texas Railroad Commission, 15 months following the date of issuance), unless Required Lenders have approved such expiry date; or


 


(B) the expiry
date of the requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless all Lenders have approved
such expiry date.


 


(iii) L/C Issuer
shall not be under any obligation to issue any Letter of Credit if:


 


(A) any order,
judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain L/C Issuer from
issuing the Letter of Credit, or any Law applicable to L/C Issuer or any request or directive (whether or not having the force
of law) from any Governmental Authority with jurisdiction over L/C Issuer shall prohibit, or request that L/C Issuer refrain from,
the issuance of letters of credit generally or the Letter of Credit in particular or shall impose upon L/C Issuer with respect
to the Letter of Credit any restriction, reserve or capital requirement (for which L/C Issuer is not otherwise compensated hereunder)
not in effect on the Closing Date, or shall impose upon L/C Issuer any unreimbursed loss, cost or expense which was not applicable
on the Closing Date and which L/C Issuer in good faith deems material to it;


 






    	CREDIT AGREEMENT – Page 32



     


    

 


(B) the issuance
of the Letter of Credit would violate one or more policies of L/C Issuer applicable to letters of credit generally;


 


(C) except
as otherwise agreed by Administrative Agent and L/C Issuer, the Letter of Credit is in an initial stated amount less than $25,000;


 


(D) the Letter
of Credit is to be denominated in a currency other than Dollars;


 


(E) any Lender
is at that time a Defaulting Lender, unless L/C Issuer has entered into arrangements, including the delivery of Cash Collateral,
satisfactory to L/C Issuer (in its sole discretion) with Borrower or such Lender to eliminate L/C Issuer’s actual or potential
Fronting Exposure (after giving effect to Section 12.22(a)(iv)) with respect to such Defaulting Lender arising from
either the Letter of Credit then proposed to be issued or that Letter of Credit and all other L/C Obligations as to which L/C Issuer
has actual or potential Fronting Exposure, as it may elect in its sole discretion; or


 


(F) the Letter
of Credit contains any provisions for automatic reinstatement of the stated amount after any drawing thereunder.


 


(iv) L/C Issuer
shall not amend any Letter of Credit if L/C Issuer would not be permitted at such time to issue the Letter of Credit in its amended
form under the terms hereof.


 


(v) L/C Issuer
shall be under no obligation to amend any Letter of Credit if (A) L/C Issuer would have no obligation at such time to issue
the Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of the Letter of Credit does not accept
the proposed amendment to the Letter of Credit.


 


(vi) L/C Issuer
shall act on behalf of Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and L/C
Issuer shall have all of the benefits and immunities (A) provided to Administrative Agent in Article 11 with respect
to any acts taken or omissions suffered by L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued
by it and Issuer Documents pertaining to such Letters of Credit as fully as if the term “Administrative Agent” as used
in Article 11 included L/C Issuer with respect to such acts or omissions, and (B) as additionally provided herein
with respect to L/C Issuer.


 






    	CREDIT AGREEMENT – Page 33



     


    

 


(b) Procedures
for Issuance and Amendment of Letters of Credit.


 


(i) Each Letter
of Credit shall be issued or amended, as the case may be, upon the request of Borrower delivered to L/C Issuer (with a copy to
Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by a Responsible Officer
of Borrower. Such Letter of Credit Application may be sent by facsimile, by United States mail, by overnight courier, by electronic
transmission using the system provided by L/C Issuer, by personal delivery, or by any other means acceptable to L/C Issuer. Such
Letter of Credit Application must be received by L/C Issuer and Administrative Agent not later than 11:00 a.m. at least two
Business Days (or such later date and time as Administrative Agent and L/C Issuer may agree in a particular instance in their sole
discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial
issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to L/C Issuer:
(A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount thereof;
(C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented
by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary
in case of any drawing thereunder; (G) the purpose and nature of the requested Letter of Credit; and (H) such other matters
as L/C Issuer may require. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit
Application shall specify in form and detail satisfactory to L/C Issuer (1) the Letter of Credit to be amended; (2) the
proposed date of amendment thereof (which shall be a Business Day); (3) the nature of the proposed amendment; and (4) such
other matters as L/C Issuer may require. Additionally, Borrower shall furnish to L/C Issuer and Administrative Agent such other
documents and information pertaining to such requested Letter of Credit issuance or amendment, including any Issuer Documents,
as L/C Issuer or Administrative Agent may require.


 


(ii) Promptly
after receipt of any Letter of Credit Application, L/C Issuer will confirm with Administrative Agent (by telephone or in writing)
that Administrative Agent has received a copy of such Letter of Credit Application from Borrower and, if not, L/C Issuer will provide
Administrative Agent with a copy thereof. Unless L/C Issuer has received written notice from any Lender, Administrative Agent or
any Obligated Party, at least one Business Day prior to the requested date of issuance or amendment of the applicable Letter of
Credit that one or more applicable conditions contained in Article 5 shall not then be satisfied, then, subject to
the terms and conditions hereof, L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of Borrower
(or the applicable Subsidiary) or enter into the applicable amendment, as the case may be, in each case in accordance with L/C
Issuer’s usual and customary business practices. Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed
to, and hereby irrevocably and unconditionally agrees to, purchase from L/C Issuer a risk participation in such Letter of Credit
in an amount equal to the product of such Lender’s Applicable Percentage times the amount of such Letter of Credit.


 


(iii) Promptly
after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to
the beneficiary thereof, L/C Issuer will also deliver to Borrower and Administrative Agent a true and complete copy of such Letter
of Credit or amendment.


 


(c) Drawings
and Reimbursements; Funding of Participations.


 


(i) Upon receipt
from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, L/C Issuer shall notify Borrower
and Administrative Agent thereof. Not later than 11:00 a.m. on the Business Day following the date of any payment by L/C Issuer
under a Letter of Credit (each such date, an “Honor Date”), Borrower shall reimburse L/C Issuer through Administrative
Agent in an amount equal to the amount of such drawing. If Borrower fails to so reimburse L/C Issuer by such time, Administrative
Agent shall promptly notify each Lender of the Honor Date, the amount of the unreimbursed drawing (the “Unreimbursed Amount”),
and the amount of such Lender’s Applicable Percentage thereof. In such event, Borrower shall be deemed to have requested a Borrowing
to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, subject to the amount of the unutilized portion
of Revolving Credit Availability and the conditions set forth in Section 5.2 (other than the delivery of a Borrowing
Request). Any notice given by L/C Issuer or Administrative Agent pursuant to this Section 2.2(c)(i) may be given by
telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect
the conclusiveness or binding effect of such notice.


 






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(ii) Each Lender
shall upon any notice pursuant to Section 2.2(c)(i) make funds available (and Administrative Agent may apply Cash Collateral
provided for this purpose) for the account of L/C Issuer at Administrative Agent’s Principal Office in an amount equal to its Applicable
Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such notice by Administrative
Agent, whereupon, subject to the provisions of Section 2.2(c)(iii), each Lender that so makes funds available shall
be deemed to have made a Loan (or, if the conditions set forth in Section 5.2 are not satisfied, an L/C Borrowing as further
described in clause (iii) below) to Borrower in such amount. Administrative Agent shall remit the funds so received to L/C
Issuer.


 


(iii) With
respect to any Unreimbursed Amount that is not fully refinanced by a Borrowing because the conditions set forth in Section 5.2
cannot be satisfied or for any other reason, Borrower shall be deemed to have incurred from L/C Issuer an L/C Borrowing in the
amount of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with
interest) and shall bear interest at the Default Interest Rate. In such event, each Lender’s payment to Administrative Agent for
the account of L/C Issuer pursuant to Section 2.2(c)(ii) shall be deemed payment in respect of its participation in
such L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation under this
Section 2.2.


 


(iv) Until
each Lender funds its Loan or L/C Advance pursuant to this Section 2.2(c) to reimburse L/C Issuer for any amount drawn
under any Letter of Credit, interest in respect of such Lender’s Applicable Percentage of such amount shall be solely for the account
of L/C Issuer.


 


(v) Each Lender’s
obligation to make Loans or L/C Advances to reimburse L/C Issuer for amounts drawn under Letters of Credit, as contemplated by
this Section 2.2(c), shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any
setoff, counterclaim, recoupment, defense or other right which such Lender may have against L/C Issuer, Borrower or any other Person
for any reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition,
whether or not similar to any of the foregoing; provided, however, that each Lender’s obligation to make Loans (but
not its obligation to fund its pro rata share of L/C Advances) pursuant to this Section 2.2(c) is subject to the conditions
set forth in Section 5.2 (other than delivery by Borrower of a Borrowing Request). No such making of an L/C Advance
shall relieve or otherwise impair the obligation of Borrower to reimburse L/C Issuer for the amount of any payment made by L/C
Issuer under any Letter of Credit, together with interest as provided herein.


 






    	CREDIT AGREEMENT – Page 35



     


    

 


(vi) If any
Lender fails to make available to Administrative Agent for the account of L/C Issuer any amount required to be paid by such Lender
pursuant to the foregoing provisions of this Section 2.2(c) by the time specified in Section 2.2(c)(ii),
then, without limiting the other provisions of this Agreement, L/C Issuer shall be entitled to recover from such Lender (acting
through Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required
to the date on which such payment is immediately available to L/C Issuer at a rate per annum equal to the greater of the Federal
Funds Rate and a rate determined by L/C Issuer in accordance with banking industry rules on interbank compensation, plus any administrative,
processing or similar fees customarily charged by L/C Issuer in connection with the foregoing. If such Lender pays such amount
(with interest and fees as aforesaid), the amount so paid shall constitute such Lender’s Loan included in the relevant Borrowing
or L/C Advance in respect of the relevant L/C Borrowing, as the case may be. A certificate of L/C Issuer submitted to any Lender
(through Administrative Agent) with respect to any amounts owing under this clause (vi) shall be conclusive absent
manifest error.


 


(d) Repayment
of Participations.


 


(i) At any
time after L/C Issuer has made a payment under any Letter of Credit and has received from any Lender such Lender’s L/C Advance
in respect of such payment in accordance with Section 2.2(c), if Administrative Agent receives for the account of L/C
Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from Borrower or otherwise,
including proceeds of Cash Collateral applied thereto by Administrative Agent), Administrative Agent will distribute to such Lender
its Applicable Percentage thereof in the same funds as those received by Administrative Agent.


 


(ii) If any
payment received by Administrative Agent for the account of L/C Issuer pursuant to Section 2.2(c)(i) is required to
be returned under any of the circumstances described in Section 12.24 (including pursuant to any settlement entered
into by L/C Issuer in its discretion), each Lender shall pay to Administrative Agent for the account of L/C Issuer its Applicable
Percentage thereof on demand of Administrative Agent, plus interest thereon from the date of such demand to the date such amount
is returned by such Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of
Lenders under this clause (ii) shall survive the payment in full of the Obligations and the termination of this Agreement.


 


(e) Obligations
Absolute. The obligation of Borrower to reimburse L/C Issuer for each drawing under each Letter of Credit and to repay each
L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, including the following:


 


(i) any lack
of validity or enforceability of such Letter of Credit, this Agreement, or any other Loan Document;


 


(ii) the existence
of any claim, counterclaim, setoff, defense or other right that Borrower or any Subsidiary may have at any time against any beneficiary
or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting),
L/C Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter
of Credit or any agreement or instrument relating thereto, or any unrelated transaction;


 






    	CREDIT AGREEMENT – Page 36



     


    

 


(iii) any draft,
demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under such Letter of Credit;


 


(iv) waiver
by L/C Issuer of any requirement that exists for L/C Issuer’s protection and not the protection of Borrower or any waiver by L/C
Issuer which does not in fact materially prejudice Borrower;


 


(v) honor of
a demand for payment presented electronically even if such Letter of Credit requires that demand be in the form of a draft;


 


(vi) any payment
made by L/C Issuer in respect of an otherwise complying item presented after the date specified as the expiration date of, or the
date by which documents must be received under such Letter of Credit if presentation after such date is authorized by the UCC or
the ISP, as applicable;


 


(vii) any payment
by L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the
terms of such Letter of Credit; or any payment made by L/C Issuer under such Letter of Credit to any Person purporting to be a
trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative
of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding
under any Debtor Relief Law; or


 


(viii) any
other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that
might otherwise constitute a defense available to, or a discharge of, Borrower or any Subsidiary.


 


Borrower
shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of
any claim of noncompliance with Borrower’s instructions or other irregularity, Borrower will promptly notify L/C Issuer. Borrower
shall be conclusively deemed to have waived any such claim against L/C Issuer and its correspondents unless such notice is given
as aforesaid.


 


(f) Role
of L/C Issuer. Each Lender and Borrower agree that, in paying any drawing under a Letter of Credit, L/C Issuer shall not have
any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter
of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing
or delivering any such document. None of L/C Issuer, Administrative Agent, any of their respective Related Parties nor any correspondent,
participant or assignee of L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith
at the request or with the approval of Majority Lenders; (ii) any action taken or omitted in the absence of gross negligence
or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument
related to any Letter of Credit or Issuer Document. Borrower hereby assumes all risks of the acts or omissions of any beneficiary
or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption is not intended
to, and shall not, preclude Borrower’s pursuing such rights and remedies as it may have against the beneficiary or transferee at
law or under any other agreement. None of L/C Issuer, Administrative Agent, any of their respective Related Parties nor any correspondent,
participant or assignee of L/C Issuer shall be liable or responsible for any of the matters described in Section 2.2(e);
provided, however, that anything in such clauses to the contrary notwithstanding, Borrower may have a claim against
L/C Issuer, and L/C Issuer may be liable to Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential
or exemplary, damages suffered by Borrower which Borrower proves were caused by L/C Issuer’s willful misconduct or gross negligence
or L/C Issuer’s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft
and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation
of the foregoing, L/C Issuer may accept documents that appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary, and L/C Issuer shall not be responsible for the validity
or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason. L/C
Issuer may send a Letter of Credit or conduct any communication to or from the beneficiary via the Society for Worldwide Interbank
Financial Telecommunication message or overnight courier, or any other commercially reasonable means of communicating with a beneficiary.


 






    	CREDIT AGREEMENT – Page 37



     


    

 


(g) Applicability
of ISP; Limitation of Liability. Unless otherwise expressly agreed by L/C Issuer and Borrower when a Letter of Credit is issued,
the rules of the ISP shall apply to such Letter of Credit. Notwithstanding the foregoing, L/C Issuer shall not be responsible to
Borrower for, and L/C Issuer’s rights and remedies against Borrower shall not be impaired by, any action or inaction of L/C Issuer
required or permitted under any Law, order, or practice that is required or permitted to be applied to any Letter of Credit or
this Agreement, including the Law or any order of a jurisdiction where L/C Issuer or the beneficiary is located, the practice stated
in the ISP or in the decisions, opinions, practice statements, or official commentary of the ICC Banking Commission, the Bankers
Association for Finance and Trade – International Financial Services Association (BAFT-IFSA), or the Institute of International
Banking Law & Practice, whether or not any Letter of Credit or other Issuer Document chooses such Law or practice.


 


(h) Fronting
Fee and Documentary and Processing Charges Payable to L/C Issuer. At any time there is more than one Lender, Borrower shall
pay directly to L/C Issuer for its own account a fronting fee with respect to each Letter of Credit, at the rate per annum separately
agreed between Borrower and L/C Issuer, computed on the daily amount available to be drawn under such Letter of Credit and payable
on a quarterly basis in arrears. Such fronting fee shall be due and payable on the first Business Day of each April, July, October
and January so long as such Letter of Credit remains outstanding. For purposes of computing the daily amount available to be drawn
under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.4.
In addition, Borrower shall pay directly to L/C Issuer for its own account the customary issuance, presentation, amendment and
other processing fees, and other standard costs and charges, of L/C Issuer relating to letters of credit as from time to time in
effect. Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable.


 


(i) Conflict
with Issuer Documents. In the event of any conflict between the terms hereof and the terms of any Issuer Document, the terms
hereof shall control.


 






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(j) Letters
of Credit Issued for Subsidiaries. Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of
any obligations of, or is for the account of, a Subsidiary, Borrower shall be obligated to reimburse L/C Issuer hereunder for any
and all drawings under such Letter of Credit. Borrower hereby acknowledges that the issuance of Letters of Credit for the account
of Subsidiaries inures to the benefit of Borrower, and that Borrower’s business derives substantial benefits from the businesses
of such Subsidiaries.


 


Section 2.3 Fees.


 


(a) Fees.
Borrower agrees to pay to Administrative Agent and Arranger, for the account of Administrative Agent, Arranger and each Lender,
as applicable, fees, in the amounts and on the dates set forth in any Fee Letter.


 


(b) Letter
of Credit Fees. Borrower shall pay to Administrative Agent for the account of each Lender in accordance, subject to Section 12.22,
with its Applicable Percentage a Letter of Credit fee (the “Letter of Credit Fee”) for each Letter of Credit equal
to the Applicable Margin for LIBOR Portions times the daily amount available to be drawn under such Letter of Credit; provided,
however, each such Letter of Credit Fee shall be no less than $1,000. For purposes of computing the daily amount available
to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.4.
Letter of Credit Fees for each Letter of Credit shall be (i) due and payable in arrears on the first Business Day of each
April, July, October and January so long as such Letter of Credit remains outstanding and (ii) computed on a quarterly basis
in arrears. If there is any change in the Applicable Margin for LIBOR Portions during any quarter, the daily amount available to
be drawn under each Letter of Credit shall be computed and multiplied by the Applicable Margin for LIBOR Portions separately for
each period during such quarter that such Applicable Margin for LIBOR Portions was in effect. Notwithstanding anything to the contrary
contained herein while any Event of Default exists, all Letter of Credit Fees shall accrue at the Default Interest Rate.


 


(c) Commitment
Fees. Borrower agrees to pay to Administrative Agent for the account of each Lender in accordance, subject to Section 12.22,
with its Applicable Percentage a commitment fee on the daily unused amount of the Commitment of such Lender for the period from
and including the date of this Agreement to and including the Maturity Date (including at any time during which one or more of
the conditions in Article 5 is not met), at a rate equal to the Applicable Margin. For the purpose of calculating the
commitment fee hereunder, the Commitment of each Lender shall be deemed utilized by the amount of all outstanding Loans and L/C
Obligations, owing to such Lender whether directly or by participation. Accrued commitment fees shall be payable quarterly in arrears
on the first day of each April, July, October, and January during the term of this Agreement and on the Maturity Date.


 


Section 2.4 Payments
Generally; Administrative Agent’s Clawback.


 


(a) General.
All payments of principal, interest, and other amounts to be made by Borrower under this Agreement and the other Loan Documents
shall be made to Administrative Agent for the account of Administrative Agent or L/C Issuer or the pro rata accounts of the applicable
Lenders, as applicable, at the Principal Office in Dollars and immediately available funds, without setoff, deduction, or counterclaim,
and free and clear of all Taxes at the time and in the manner provided herein. Payments by check or draft shall not constitute
payment in immediately available funds until the required amount is actually received by Administrative Agent in full. Payments
in immediately available funds received by Administrative Agent in the place designated for payment on a Business Day prior to
11:00 a.m. at such place of payment shall be credited prior to the close of business on the Business Day received, while payments
received by Administrative Agent on a day other than a Business Day or after 11:00 a.m. on a Business Day shall not be credited
until the next succeeding Business Day. If any payment of principal or interest on the Notes shall become due and payable on a
day other than a Business Day, then such payment shall be made on the next succeeding Business Day. Any such extension of time
for payment shall be included in computing interest which has accrued and shall be payable in connection with such payment. Administrative
Agent is hereby authorized upon notice to Borrower to charge the account of Borrower maintained with Administrative Agent for each
payment of principal, interest and fees as it becomes due hereunder.


 






    	CREDIT AGREEMENT – Page 39



     


    

 


(b) Funding
by Lenders; Presumption by Administrative Agent. Unless Administrative Agent shall have received notice from a Lender, that
such Lender will not make available to Administrative Agent such Lender’s share of a Borrowing, Administrative Agent may assume
that such Lender has made such share available on such date in accordance with this Agreement and may, in reliance upon such assumption,
make available to Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable
Borrowing available to Administrative Agent, then the applicable Lender and Borrower severally agree to pay to Administrative Agent
forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made
available to Borrower to but excluding the date of payment to Administrative Agent, at (i) in the case of a payment to be
made by such Lender, the greater of the Federal Funds Rate and a rate determined by Administrative Agent in accordance with banking
industry rules on interbank compensation, and (ii) in the case of a payment to be made by Borrower, the interest rate applicable
to the applicable Borrowing. If Borrower and such Lender shall pay such interest to Administrative Agent for the same or an overlapping
period, Administrative Agent shall promptly remit to Borrower the amount of such interest paid by Borrower for such period. If
such Lender pays its share of the applicable Borrowing to Administrative Agent, then the amount so paid shall constitute such Lender’s
Loan. Any payment by Borrower shall be without prejudice to any claim Borrower may have against a Lender that shall have failed
to make such payment to Administrative Agent.


 


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


 


Section 2.5 Evidence
of Debt.


 


(a) The Loans
made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by Administrative Agent
in the ordinary course of business; provided that such Lender or Administrative Agent may, in addition, request that such
Loans be evidenced by the Notes. The Credit Extensions made by L/C Issuer shall be evidenced by one or more accounts or records
maintained by L/C Issuer and by Administrative Agent in the ordinary course of business. The accounts or records maintained by
Administrative Agent, L/C Issuer, and each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions
made to Borrower and, with respect to Letters of Credit issued for the account of a Subsidiary, such Subsidiary and the interest
and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation
of Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts
and records maintained by L/C Issuer or any Lender and the accounts and records of Administrative Agent in respect of such matters,
the accounts and records of Administrative Agent shall control in the absence of manifest error.


 






    	CREDIT AGREEMENT – Page 40



     


    

 


(b) In addition
to the accounts and records referred to in Section 2.5(a) above, each Lender and Administrative Agent shall maintain in
accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters
of Credit. In the event of any conflict between the accounts and records maintained by Administrative Agent and the accounts and
records of any Lender in respect of such matters, the accounts and records of Administrative Agent shall control in the absence
of manifest error.


 


Section 2.6 Cash
Collateral.


 


(a) Certain
Credit Support Events. If (i) L/C Issuer has honored any full or partial drawing request under any Letter of Credit and
such drawing has resulted in an L/C Borrowing, (ii) as of the Letter of Credit Expiration Date, any L/C Obligation for any
reason remains outstanding, (iii) Borrower shall be required to provide Cash Collateral pursuant to Section 10.2,
or (iv) there shall exist a Defaulting Lender, Borrower shall immediately (in the case of clause (iii) above)
or within one Business Day (in all other cases) following any request by Administrative Agent or L/C Issuer, provide Cash
Collateral in an amount not less than the applicable Minimum Collateral Amount (determined, in the case of Cash Collateral provided
pursuant to clause (iv) above, after giving effect to Section 12.22(a)(iv) and any Cash Collateral provided
by the Defaulting Lender).


 


(b) Grant
of Security Interest. Borrower, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grants
to (and subjects to the control of) Administrative Agent, for the benefit of Administrative Agent, L/C Issuer and Lenders, and
agrees to maintain, a first priority security interest in all such Cash Collateral and all other Property so provided as Collateral
pursuant hereto, and in all proceeds of the foregoing, all as security for the obligations to which such Cash Collateral may be
applied pursuant to Section 2.6(c). If at any time Administrative Agent determines that Cash Collateral is subject
to any right or claim of any Person other than Administrative Agent or L/C Issuer as herein provided, or that the total amount
of such Cash Collateral is less than the Minimum Collateral Amount, Borrower will, promptly upon demand by Administrative Agent,
pay or provide to Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency. All Cash
Collateral (other than credit support not constituting funds subject to deposit) shall be maintained in one or more blocked, non-interest
bearing deposit accounts at LegacyTexas Bank. Borrower shall pay on demand therefor from time to time all customary account opening,
activity and other administrative fees and charges in connection with the maintenance and disbursement of Cash Collateral.


 


(c) Application.
Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under any of this Section 2.6
or Sections 2.2, 10.2 or 12.22 in respect of Letters of Credit shall be held and applied to the satisfaction
of the specific L/C Obligations, obligations to fund participations therein (including, as to Cash Collateral provided by a Defaulting
Lender, any interest accrued on such obligation) and other obligations for which the Cash Collateral was so provided, prior to
any other application of such Property as may otherwise be provided for herein.


 






    	CREDIT AGREEMENT – Page 41



     


    

 


(d) Release.
Cash Collateral (or the appropriate portion thereof) provided to reduce Fronting Exposure or to secure other obligations shall
be released promptly following (i) the elimination of the applicable Fronting Exposure or other obligations giving rise thereto,
including by the termination of Defaulting Lender status of the applicable Lender (or, as appropriate, its assignee following compliance
with Section 12.8(b)(vii)) or (ii) the determination by Administrative Agent and L/C Issuer that there exists
excess Cash Collateral; provided, however, (x) any such release shall be without prejudice to, and any disbursement
or other transfer of Cash Collateral shall be and remain subject to, any other Lien conferred under the Loan Documents and the
other applicable provisions of the Loan Documents, and (y) the Person providing Cash Collateral and L/C Issuer may
agree that Cash Collateral shall not be released but instead held to support future anticipated Fronting Exposure or other obligations.


 


Section 2.7 Interest;
Payment Terms.


 


(a) Loans
– Payment of Principal and Interest; Revolving Nature. The unpaid principal amount of each Portion of the Loans shall,
subject to the following sentence and Section 2.7(f), bear interest at the applicable Interest Rate. If at any time
such rate of interest would exceed the Maximum Rate but for the provisions thereof limiting interest to the Maximum Rate, then
any subsequent reduction shall not reduce the rate of interest on the Loans below the Maximum Rate until the aggregate amount of
interest accrued on the Loans equals the aggregate amount of interest which would have accrued on the Loans if the interest rate
had not been limited by the Maximum Rate. All accrued but unpaid interest on the principal balance of the Loans shall be payable
on each Payment Date and on the Maturity Date, provided that interest accruing at the Default Interest Rate pursuant to
Section 2.7(f) shall be payable on demand. The then Outstanding Amount of the Loans and all accrued but unpaid interest
thereon shall be due and payable on the Maturity Date. The unpaid principal balance of the Loans at any time shall be the total
amount advanced hereunder by Lenders less the amount of principal payments made thereon by or for Borrower, which balance may be
endorsed on the Notes from time to time by Lenders or otherwise noted in Lenders’ and/or Administrative Agent’s records, which
notations shall be, absent manifest error, conclusive evidence of the amounts owing hereunder from time to time.


 


(b) Application.
Except as expressly provided herein or in the Intercreditor Agreement to the contrary, all payments on the Obligations under the
Loan Documents shall be applied in the following order of priority: (i) the payment or reimbursement of any expenses, costs
or obligations (other than the outstanding principal amount thereof and interest thereon) for which Borrower shall be obligated
or Administrative Agent, L/C Issuer, or any Lender shall be entitled pursuant to the provisions of this Agreement, the Notes or
the other Loan Documents; (ii) the payment of accrued but unpaid interest thereon; and (iii) the payment of all or any
portion of the principal balance thereof then outstanding hereunder as directed by Borrower. If an Event of Default exists under
this Agreement, the Notes or under any of the other Loan Documents, any such payment shall be applied as provided in Section 10.3
below.


 


(c) Computation
Period. Interest on the Loans and all other amounts payable by Borrower hereunder on a per annum basis shall be computed on
the basis of a 360-day year and the actual number of days elapsed (including the first day but excluding the last day) unless such
calculation would result in a usurious rate, in which case interest shall be calculated on the basis of a 365-day year or 366-day
year, as the case may be. In computing the number of days during which interest accrues, the day on which funds are initially advanced
shall be included regardless of the time of day such advance is made, and the day on which funds are repaid shall be included unless
repayment is credited prior to the close of business on the Business Day received. Each determination by Administrative Agent of
an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.


 






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(d) Unconditional
Payment. Borrower is and shall be obligated to pay all principal, interest and any and all other amounts which become payable
under any of the Loan Documents absolutely and unconditionally and without any abatement, postponement, diminution or deduction
whatsoever and without any reduction for counterclaim or setoff whatsoever. If at any time any payment received by Administrative
Agent hereunder shall be deemed by a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance
under any Debtor Relief Law, then the obligation to make such payment shall survive any cancellation or satisfaction of the Obligations
under the Loan Documents and shall not be discharged or satisfied with any prior payment thereof or cancellation of such Obligations,
but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions hereof, and such payment
shall be immediately due and payable upon demand.


 


(e) Partial
or Incomplete Payments. Remittances in payment of any part of the Obligations under the Loan Documents other than in the required
amount in immediately available funds at the place where such Obligations are payable shall not, regardless of any receipt or credit
issued therefor, constitute payment until the required amount is actually received by Administrative Agent in full in accordance
herewith and shall be made and accepted subject to the condition that any check or draft may be handled for collection in accordance
with the practice of the collecting bank or banks. Acceptance by Administrative Agent of any payment in an amount less than the
full amount then due shall be deemed an acceptance on account only, and the failure to pay the entire amount then due shall be
and continue to be an Event of Default.


 


(f) Default
Interest Rate. For so long as any Event of Default exists, regardless of whether or not there has been an acceleration of the
Loans, and at all times after the maturity of the Loans (whether by acceleration or otherwise), and in addition to all other rights
and remedies of Administrative Agent or Lenders hereunder, (i) interest shall accrue on the Outstanding Amount of the Loans
at the Default Interest Rate, (ii) interest shall accrue on any past due amount (other than the Outstanding Amount of the
Loans) at the Default Interest Rate and (iii) upon the request of the Majority Lenders, interest shall accrue on the principal
amount of all other outstanding Obligations at the Default Interest Rate, and such accrued interest shall be immediately due and
payable. Borrower acknowledges that it would be extremely difficult or impracticable to determine Administrative Agent’s or Lenders’
actual damages resulting from any late payment or Event of Default, and such accrued interest are reasonable estimates of those
damages and do not constitute a penalty.


 


Section 2.8 Voluntary
Termination or Reduction of Commitments; Prepayments.


 


(a) Voluntary
Termination or Reduction of Commitments. Borrower may, upon written notice to Administrative Agent, terminate the Aggregate
Commitments, or from time to time permanently reduce the Aggregate Commitments; provided that (i) any such notice shall
be received by Administrative Agent not later than 11:00 a.m. three Business Days prior to the date of termination or reduction,
(ii) any such partial reduction shall be in an aggregate amount of $1,000,000 or any whole multiple of $500,000 in excess
thereof, and (iii) Borrower shall not terminate or reduce the Aggregate Commitments if, after giving effect thereto and to
any concurrent prepayments hereunder, the Aggregate Revolving Credit Exposure would exceed the Aggregate Commitments. Administrative
Agent will promptly notify Lenders of any such notice of termination or reduction of the Aggregate Commitments. Any reduction of
the Aggregate Commitments shall be applied to the Commitment of each Lender according to its Applicable Percentage. All fees accrued
until the effective date of any termination or reduction of the Aggregate Commitments shall be paid on the effective date of such
termination or reduction and all commitment fees shall thereafter be computed on the basis of the Commitments, as so reduced.


 






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(b) Voluntary
Prepayments. Subject to the conditions set forth below, Borrower shall have the right, at any time and from time to time upon
at least three Business Days’ prior written notice to Administrative Agent, to prepay the principal of the Loans in full or in
part. If there is a prepayment of all or any portion of the principal of the Loans on or before the Maturity Date for such Loans,
whether voluntary or because of acceleration or otherwise, such prepayment shall also include any and all accrued but unpaid interest
on the amount of principal being so prepaid through and including the date of prepayment, plus any other sums which have become
due to Lenders under the other Loan Documents on or before the date of prepayment, but which have not been fully paid.


 


(c) Mandatory
Prepayments.


 


(i) Except
as provided in Section 2.9(e) hereof, if at any time the Aggregate Revolving Credit Exposure exceeds the Borrowing
Base then in effect, then Borrower shall immediately prepay the entire amount of such excess to Administrative Agent, for the ratable
account of the Lenders, and/or Cash Collateralize the L/C Obligations in an aggregate amount equal to such excess; provided,
however, that Borrower shall not be required to Cash Collateralize the L/C Obligations pursuant to this Section 2.8(c)
unless after the prepayment in full of the Loans the Aggregate Revolving Credit Exposure exceeds the Borrowing Base then in effect.


 


(ii) If a Borrowing
Base Deficiency exists solely because of the reduction of the Borrowing Base pursuant to Section 2.9(c)(ii), Borrower shall,
on the date of such occurrence, make a single lump sum payment in an amount sufficient to reduce the Aggregate Revolving Credit
Exposure to or below the Borrowing Base.


 


(iii) Each
prepayment required by this Section 2.8(c) shall be applied, first, to any Base Rate Portions then outstanding, and,
second, to any LIBOR Portions then outstanding, and if more than one LIBOR Portion is then outstanding, to such LIBOR Portions
in such order as Borrower may direct or, if Borrower fails to so direct, as Administrative Agent shall elect.


 


Section 2.9 Borrowing
Base.


 


(a) Borrowing
Base Standards. The Borrowing Base shall represent the approval in their sole discretion of the Required Lenders or all Lenders,
as applicable, of Administrative Agent’s determination of the loan amount that may be supported by the Required Lenders’ or all
Lenders’, as applicable, evaluation of the Proved Oil and Gas Properties of Borrower and its Subsidiaries. The determination of
the Borrowing Base will be made in accordance with then-current practices, economic and pricing parameters, methodology, assumptions,
and customary procedures and standards established by each Lender from time to time for its petroleum industry customers including
without limitation (i) an analysis of such reserve and production data with respect to all of the Proved Oil and Gas Properties
of Borrower and its Subsidiaries, including the Mortgaged Properties, as is provided to the Lenders in accordance herewith, (ii) an
analysis of the assets, liabilities, cash flow, business, properties, prospects, management and ownership of Borrower and its Subsidiaries,
(iii) Borrower’s and its Subsidiaries’ Hedging Transactions and the status (or lack thereof) of any provider of Hedging Transactions
as an “Approved Commodity Swap Counterparty,” and (iv) such other credit factors consistently applied as each Lender
customarily considers in evaluating similar oil and gas credit facilities. Borrower and the Lenders acknowledge that due to the
uncertainties of the oil and gas extraction process, the Oil and Gas Properties of Borrower and its Subsidiaries are not subject
to evaluation with a high degree of accuracy and are subject to potential rapid deterioration in value, the determination of the
loan amount will be less than the total present value of the Proved Oil and Gas Properties of Borrower and its Subsidiaries, which
Borrower acknowledges to be essential for the adequate protection of the Lenders. Without limiting the foregoing, the Lenders may
exclude from the Borrowing Base any oil and gas reserves or portion of production therefrom or any income from any other property,
at any time, because title information is not satisfactory, such oil and gas reserves are not Mortgaged Properties in violation
of this Agreement or such oil and gas reserves are not in “pay” status. The Borrowing Base shall initially be $100,000,000
on the Closing Date.


 






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(b) Periodic
Determinations of Borrowing Base.


 


(i) The Borrowing
Base shall be redetermined as of May 1 and November 1 of each year, commencing November 1, 2018. On or before April 1 of each
year, Borrower shall furnish Administrative Agent a Reserve Report as of the preceding January 1 prepared by an Independent Engineer
covering all of the Proved Oil and Gas Properties of Borrower and its Subsidiaries, including the Mortgaged Properties. On or before
October 1 of each year, Borrower shall furnish Administrative Agent a Reserve Report as of the preceding July 1 prepared by Borrower’s
own engineer and certified by a Responsible Officer of Borrower covering all of the Proved Oil and Gas Properties of Borrower and
its Subsidiaries, including the Mortgaged Properties. Upon receipt of each such Reserve Report, Administrative Agent shall make
a determination of the Borrowing Base which shall become effective upon approval by the Required Lenders or all Lenders in accordance
with the procedures set forth in Section 2.9(d) and subsequent written notification from Administrative Agent to Borrower,
and which, subject to the other provisions of this Agreement, shall be the Borrowing Base until the effective date of the next
redetermination as provided in this Section 2.9.


 


(ii) In the
event that Borrower does not furnish to Administrative Agent a Reserve Report by the dates specified in Section 2.9(b)(i),
then Administrative Agent and the Required Lenders or all Lenders, as applicable, may nonetheless redetermine the Borrowing Base
and redesignate the Borrowing Base from time to time thereafter in their sole discretion until Administrative Agent receives the
relevant Reserve Report, whereupon Administrative Agent and the Required Lenders or all Lenders, as applicable, shall redetermine
the Borrowing Base as otherwise specified in this Section 2.9.


 


(c) Special
Determinations of Borrowing Base.


 


(i) Special
determinations of the Borrowing Base may be requested (A) by Borrower not more than two times per calendar year, or (B) by Administrative
Agent at any time during the term hereof. If any special determination is requested by Borrower, Borrower shall provide, if requested
by Administrative Agent, an updated Reserve Report prepared by Borrower’s own engineer brought forward from the most recent Reserve
Report furnished by Borrower to Administrative Agent. If any special determination is requested by Administrative Agent, Borrower
will provide Administrative Agent with engineering data for the oil and gas reserves updated from the most recent Reserve Report
furnished to Administrative Agent, as soon as is reasonably possible following the request. The determination whether to increase
or decrease the Borrowing Base shall be made in accordance with the standards set forth in Section 2.9(a) and the procedures
set forth in Section 2.9(d). In the event of any special determination of the Borrowing Base pursuant to this Section
2.9(c), Administrative Agent in the exercise of its discretion may suspend the next regularly scheduled determination of the
Borrowing Base.


 






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(ii) In addition
to the special determinations described in Section 2.9(c)(i), Administrative Agent may, by notifying Borrower thereof,
elect to cause an interim redetermination of the Borrowing Base any time (A) Borrower or any of its Subsidiaries Disposes
of, whether in one Disposition or a series of Dispositions, Oil and Gas Properties the Borrowing Base value of which exceeds 5%
of the Borrowing Base then in effect, (B) any Commodity Hedging Transaction which has been taken into account in connection
with the then current Borrowing Base is terminated and the Hedge Termination Value thereof determined in accordance therewith exceeds
5% of such Borrowing Base or (C) a Person loses its status as an Approved Commodity Swap Counterparty if the then current Borrowing
Base includes credit for Hedging Transactions with such Person. Any redetermination of the Borrowing Base pursuant to this Section 2.9(c)(ii)
shall be made in accordance with the standards set forth in Section 2.9(a) and the procedures set forth in Section 2.9(d)
and shall not be considered a special determination requested by Administrative Agent within the meaning of Section 2.9(c)(i).
Borrower shall, if requested by Administrative Agent, deliver an updated Reserve Report prepared by Borrower’s own engineer brought
forward from the most recent Reserve Report furnished by Borrower to Administrative Agent.


 


(d) General
Procedures With Respect to Determination of Borrowing Base. The Borrowing Base shall be determined as of May 1 and November 1
of each year, commencing November 1, 2018, until the Maturity Date. Administrative Agent shall propose a redetermined Borrowing
Base on or about 30 days following receipt by Administrative Agent and the Lenders of a Reserve Report and other applicable information.
After having received notice of such proposal from Administrative Agent, the Required Lenders (or all Lenders in the event of a
proposed increase of the Borrowing Base) shall have 15 days to agree or disagree with such proposal. Solely as it relates to a
reaffirmation or proposed decrease of the Borrowing Base, if at the end of such 15-day period, the Required Lenders shall not have
communicated their approval or disapproval, such silence shall be deemed an approval, and Administrative Agent’s proposal shall
be the new Borrowing Base. For the avoidance of doubt, as it relates to proposed increases of the Borrowing Base, silence from
a Lender shall be deemed as disapproval. If the Required Lenders (or all Lenders, in the event of a proposed increase of the Borrowing
Base) cannot agree on the amount of the Borrowing Base within 7 days after Administrative Agent has been notified of their disapproval,
then Administrative Agent shall propose a new redetermined Borrowing Base within 15 days after the end of such 7-day period and
the foregoing process shall be repeated. This process shall be repeated until the Required Lenders (or all Lenders, in the event
of a proposed increase of the Borrowing Base) agree on a new Borrowing Base. Upon the final redetermination of the Borrowing Base,
Administrative Agent, the Lenders approving same and Borrower shall execute a Borrowing Base Adjustment Letter.


 






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(e) Borrowing
Base Deficiency.


 


(i) If a Borrowing
Base Deficiency exists because of a periodic or special determination made pursuant to Section 2.9(b) or Section 2.9(c)(i),
then Administrative Agent shall send a Borrowing Base Deficiency Notice to Borrower, and Borrower shall within 30 days following
receipt of such Borrowing Base Deficiency Notice elect whether to:


 


(A) prepay
an amount which would, if prepaid immediately, reduce the Aggregate Revolving Credit Exposure to the amount of the Borrowing Base,


 


(B) execute
one or more Mortgages (or cause a Subsidiary to execute one or more Mortgages) covering such other Oil and Gas Properties not previously
taken into account in the determination of the Borrowing Base as are acceptable to Administrative Agent and the Required Lenders
having present values which, in the opinion of Administrative Agent and the Required Lenders, based upon Administrative Agent’s
and the Required Lenders’ evaluation of the engineering data provided them, taken in the aggregate are sufficient to increase the
Borrowing Base to an amount at least equal to the Aggregate Revolving Credit Exposure, or


 


(C) do any
combination of the foregoing as is acceptable to Administrative Agent;


 


provided,
if Borrower fails to make an election within 30 days after Borrower’s receipt of the Borrowing Base Deficiency Notice, then Borrower
shall be deemed to have selected the prepayment option specified in clause (A) above.


 


(ii) Borrower
shall make such prepayments or deliver or shall cause to be delivered Mortgages of additional Oil and Gas Properties in accordance
with its election (or deemed election) pursuant to Section 2.9(e)(i) as follows:


 


(A) Prepayment
Elections. If Borrower elects (or is deemed to have elected) to prepay an amount in accordance with Section 2.9(e)(i)(A)
above, then Borrower may make such prepayment in one installment within 90 days after Borrower’s receipt of the Borrowing Base
Deficiency Notice or, provided no Default has occurred and is continuing, in 6 equal consecutive monthly installments beginning
within 30 days after Borrower’s receipt of the Borrowing Base Deficiency Notice and continuing on the same day of each month thereafter.


 


(B) Elections
to Mortgage Additional Oil and Gas Properties. If Borrower elects to mortgage additional Oil and Gas Properties in accordance
with Section 2.9(e)(i)(B) above, then (1) such properties shall be acceptable to Administrative Agent and the
Required Lenders with values determined by Administrative Agent and the Required Lenders in accordance with this Section 2.9
and (2) Borrower or such Subsidiary shall execute, acknowledge and deliver to Administrative Agent one or more Mortgages within
30 days after Borrower’s receipt of the Borrowing Base Deficiency Notice (or such longer time as Administrative Agent may agree
in its sole discretion); provided, however (x) if none of the additional Oil and Gas Properties offered by Borrower
are acceptable to Administrative Agent and the Required Lenders, Borrower shall be deemed to have elected the prepayment option
specified in Section 2.9(e)(i)(A) (and Borrower shall make such prepayment in accordance with Section 2.9(e)(ii)(A));
and (y) if the aggregate present values of additional Oil and Gas Properties which are acceptable to Administrative Agent
and the Required Lenders are insufficient to eliminate the Borrowing Base Deficiency, then Borrower shall be deemed to have selected
the option specified in Section 2.9(e)(i)(C) (and Borrower shall make prepayment and deliver one or more Mortgages
as provided in Section 2.9(e)(ii)(C)). Together with such Mortgages, Borrower shall deliver or cause to be delivered
to Administrative Agent title opinions and/or other title information and data acceptable to Administrative Agent such that Borrower
is in compliance with Section 7.14.


 






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(C) Combination
Elections. If Borrower elects (or is deemed to have elected) to eliminate the Borrowing Base Deficiency by a combination of
prepayment and mortgaging of additional Oil and Gas Properties in accordance with Section 2.9(e)(i)(C), then (1) within
30 days after Borrower’s receipt of the Borrowing Base Deficiency Notice (or such longer time as Administrative Agent may agree
in its sole discretion), Borrower shall (or shall cause a Subsidiary to) execute, acknowledge and deliver to Administrative Agent
one or more Mortgages covering such additional Oil and Gas Properties and (2) Borrower shall pay Administrative Agent the amount
by which the Borrowing Base Deficiency exceeds the present values of such additional Oil and Gas Properties in one installment
within 30 days after Borrower’s receipt of the Borrowing Base Deficiency Notice or, provided no Default has occurred and is continuing,
in six (6) equal consecutive monthly installments beginning within thirty (30) days after Borrower’s receipt of the Borrowing Base
Deficiency Notice and continuing on the same day of each month thereafter until paid.


 


(iii) Applicable
Margin Increase. During any time in which a Borrowing Base Deficiency exists, each of the Applicable Margins will be automatically
increased by a rate equal to 2.00% per annum.


 


(f) Borrowing
Base Increase Fee. A fee shall be paid to Administrative Agent for the account of the Lenders for each incremental increase
in the new Borrowing Base over the previously existing Borrowing Base; provided that, such fee shall not be subject to “double-counting”
should a future Borrowing Base be reduced, then subsequently increased to an amount at or below the highest previously determined
or redetermined Borrowing Base. The amount of each such fee shall be a percentage of such increase as reasonably determined by
Administrative Agent in accordance with then current market conditions. There shall be no obligation imposed upon Borrower to accept
an increase of the Borrowing Base proposed by the Lenders. However, if Borrower accepts the increase in the Borrowing Base, the
fee determined by Administrative Agent shall be due and payable immediately and without regard as to whether Borrower ever borrows
the increased amount available under such new Borrowing Base.


 


(g) Mortgage
of Additional Properties. Borrower may from time to time upon written notice to Administrative Agent propose to add Oil and
Gas Properties of Borrower or any Subsidiary as Mortgaged Properties to be included in the Borrowing Base. Any such proposal shall
be accompanied by a Reserve Report, which may be prepared by Borrower’s own engineer, applicable to such properties that conforms
with the requirements of this Agreement and evidence sufficient to establish that Borrower or such Subsidiary, as applicable, has
title to such Oil and Gas Properties. Any such addition shall become effective at such time as (i) Administrative Agent, with
the approval of all of the Lenders, has made a determination of the amount by which the Borrowing Base would be increased as the
result of such addition, (ii) the conditions set out in this Section 2.9(g), to the extent they are applicable to such
additional Oil and Gas Properties, have been satisfied, (iii) Mortgages duly executed and acknowledged by Borrower or such
Subsidiary, as applicable, have been delivered to Administrative Agent, and (iv) arrangements satisfactory to Administrative
Agent have been made with respect to payment of recording fees and taxes, as applicable. In determining the increase in the Borrowing
Base pursuant to this Section, Administrative Agent and the Lenders shall apply the parameters and other credit factors set forth
in this Section 2.9. A proposal by Borrower pursuant to this Section 2.9(g) shall constitute a request for a
special determination of the Borrowing Base for purposes of Section 2.9(c)(i).


 






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ARTICLE
3



TAXES, YIELD PROTECTION AND INDEMNITY


 


Section 3.1 Increased
Costs.


 


(a) Increased
Costs Generally. If any Change in Law shall:


 


(i) impose,
modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets
of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected
in Adjusted LIBOR);


 


(ii) subject
any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through
(d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its Loans, Loan principal, Letters of Credit,
Commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or


 


(iii) impose
on any Lender or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or
Loans made by such Lender;


 


and the result of any of the
foregoing shall be to increase the cost to such Lender or such other Recipient of making, converting to, continuing or maintaining
any Loan or of maintaining its obligation to make any such Loan, or to increase the cost to such Lender or such other Recipient
of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue
any Letter of Credit) or to reduce the amount of any sum received or receivable by such Lender or other Recipient hereunder (whether
of principal, interest or any other amount) then, upon request of such Lender or other Recipient, Borrower will pay to such Lender
or other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender or other Recipient, as
the case may be, for such additional costs incurred or reduction suffered.


 


(b) Capital
or Liquidity Requirements. If any Lender determines that any Change in Law affecting such Lender or any Lending Office of such
Lender or such Lender’s holding company, if any, regarding capital or liquidity requirements, has or would have the effect of reducing
the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this
Agreement, the Commitment of such Lender or the Loans made by, or participations in Letters of Credit held by such Lender or the
Letters of Credit issued by L/C Issuer, to a level below that which such Lender or such Lender’s holding company could have achieved
but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company
with respect to capital adequacy and liquidity), then from time to time Borrower will pay to such Lender such additional amount
or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.


 






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(c) Certificates
for Reimbursement. A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its
holding company, as the case may be, as specified in Sections 3.1(a) or 3.1(b) and delivered to Borrower, shall
be conclusive absent manifest error. Borrower shall pay such Lender the amount shown as due on any such certificate within 30 days
after receipt thereof.


 


(d) Delay
in Requests. Failure or delay on the part of any Lender to demand compensation pursuant to this Section 3.1 shall
not constitute a waiver of such Lender’s right to demand such compensation; provided that Borrower shall not be required
to compensate a Lender pursuant to this Section 3.1 for any increased costs incurred or reductions suffered more than
9 months prior to the date that such Lender notifies Borrower of the Change in Law giving rise to such increased costs or reductions,
and of such Lender’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased
costs or reductions is retroactive, then the 9-month period referred to above shall be extended to include the period of retroactive
effect thereof).


 


Section 3.2 Illegality.
If any Lender determines that any Law or regulation has made it unlawful, or that any Governmental Authority has asserted that
it is unlawful, for any Lender or its Lending Office to make, maintain or fund Loans whose interest is determined by reference
to LIBOR, or to determine or charge interest rates based upon LIBOR, or any Governmental Authority has imposed material restrictions
on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice
thereof by such Lender to Borrower through Administrative Agent, (a) any obligation of such Lender to make or continue LIBOR
Portions or to convert Base Rate Portions to LIBOR Portions shall be suspended, and (b) if such notice asserts the illegality
of such Lender making or maintaining Base Rate Portions the interest rate on which is determined by reference to the LIBOR component
of the Base Rate, the interest rate on which Base Rate Portions of such Lender shall, if necessary to avoid such illegality, be
determined by Administrative Agent without reference to the LIBOR component of the Base Rate, in each case until such Lender notifies
Administrative Agent and Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such
notice, (i) Borrower shall, upon demand from such Lender (with a copy to Administrative Agent), prepay or, if applicable,
convert all LIBOR Portions of such Lender to Base Rate Portions (the interest rate on which Base Rate Loans of such Lender shall,
if necessary to avoid such illegality, be determined by Administrative Agent without reference to the LIBOR component of the Base
Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such LIBOR Portions
to such day, or immediately, if such Lender may not lawfully continue to maintain such LIBOR Portions and (ii) if such notice
asserts the illegality of such Lender determining or charging interest rates based upon LIBOR, Administrative Agent shall during
the period of such suspension compute the Base Rate applicable to such Lender without reference to the LIBOR component thereof
until Administrative Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge
interest rates based upon the LIBOR. Upon any such prepayment or conversion, Borrower shall also pay accrued interest on the amount
so prepaid or converted.


 






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Section 3.3 Inability
to Determine Rates; Replacement Index Rate.


 


(a) Inability
to Determine Rates. Subject to Section 3.3(b), if (i) Administrative Agent or the Majority Lenders determine that
for any reason in connection with any request for a LIBOR Portion or a conversion to or continuation thereof that (A) Dollar
deposits are not being offered to banks in the London interbank eurodollar market for the applicable amount and Interest Period
of such LIBOR Portion, (B) adequate and reasonable means do not exist for determining LIBOR for any requested Interest Period
with respect to a proposed LIBOR Portion or in connection with an existing or proposed Base Rate Portion, or (C) LIBOR for
any requested Interest Period with respect to a proposed LIBOR Portion does not adequately and fairly reflect the cost to such
Lenders of funding such LIBOR Portion, or (ii) by reason of any Change in Law any Lender would become subject to restrictions
on the amount of a category of liabilities or assets which it may hold and notifies Administrative Agent of same, Administrative
Agent will promptly so notify Borrower and each Lender. Thereafter, (x) the obligation of Lenders to make or maintain LIBOR
Portions shall be suspended, and (y) in the event of a determination described in the preceding sentence with respect to the
LIBOR component of the Base Rate, the utilization of the LIBOR component in determining the Base Rate shall be suspended, in each
case until Administrative Agent (upon the instruction of the Majority Lenders) revokes such notice. Upon receipt of such notice,
Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of LIBOR Portions or, failing that, will
be deemed to have converted such request into a request for a Borrowing of Base Rate Portions in the amount specified therein.


 


(b) Replacement
Index Rate. Notwithstanding anything to the contrary in this Agreement or in any other Loan Document, in the event that LIBOR
is “phased out” and no longer generally used by financial institutions similar to Administrative Agent (as opposed to
temporarily unavailable), Administrative Agent shall use the offered quotation rate to first class banks for deposits in the London
interbank market, or the rate available from another replacement index widely adopted by financial institutions located in the
United States and similar to Administrative Agent, as determined by Administrative Agent in its reasonable discretion (such rate,
the “Replacement Index Rate”), to be used for purposes of calculating the interest rate for non-Base Rate Portions
and Letter of Credit Fees and in all other instances under the Loan Documents that reference LIBOR; provided that, if such
Replacement Index Rate shall be less than zero, such rate shall be deemed to be zero for purpose of this Agreement. In such event,
Administrative Agent shall promptly notify Borrower and Lenders. Until the Replacement Index Rate shall be determined in accordance
with this clause (b), the obligation of Lenders to make or maintain LIBOR Portions shall be suspended, and Borrower may
revoke any pending request for a Borrowing of, conversion to or continuation of LIBOR Portions or, failing that, will be deemed
to have converted such request into a request for a Borrowing of Base Rate Portions in the amount specified therein, without incurring
liability for breakage costs or any other premium or penalty. Further, in such event, Lenders and Borrower shall enter into an
amendment to this Agreement to reflect such Replacement Index Rate and such other related changes to this Agreement as may be applicable.


 


Section 3.4 Taxes.


 


(a) Defined
Terms. For purposes of this Section, the term “applicable Law” includes FATCA.


 






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(b) Payment
Free of Taxes. Any and all payments by or on account of any obligation of Borrower under any Loan Document shall be made without
deduction or withholding for any Taxes, except as required by applicable Law. If any applicable Law (as determined in the good
faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by
a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely
pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable Law and, if such
Tax is an Indemnified Tax, then the sum payable by Borrower shall be increased as necessary so that after such deduction or withholding
has been made (including such deductions and withholdings applicable to additional sums payable under this Section 3.4)
the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.


 


(c) Payment
of Other Taxes by Borrower. Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable
Law, or at the option of Administrative Agent timely reimburse it for the payment of, any Other Taxes.


 


(d) Indemnification
by Borrower. Borrower shall indemnify each Recipient, within 30 days after demand therefor, for the full amount of any Indemnified
Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 3.4)
payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses
arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. A certificate setting forth in reasonable detail the amount and derivation of such payment
or liability delivered to Borrower by a Lender (with a copy to Administrative Agent), or by Administrative Agent on its own behalf
or on behalf of a Lender, shall be conclusive absent manifest error.


 


(e) Indemnification
by Lenders. Each Lender shall severally indemnify Administrative Agent, within 10 days after demand therefor, for (i) any
Indemnified Taxes attributable to such Lender (but only to the extent that Borrower has not already indemnified Administrative
Agent for such Indemnified Taxes and without limiting the obligation of Borrower to do so), (ii) any Taxes attributable to
such Lender’s failure to comply with the provisions of Section 12.8 relating to the maintenance of a Participant Register
and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by Administrative Agent in
connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes
were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment
or liability delivered to any Lender by Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes
Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise
payable by Administrative Agent to such Lender from any other source against any amount due to Administrative Agent under this
Section 3.4(e).


 


(f) Evidence
of Payments. As soon as practicable after any payment of Taxes by Borrower to a Governmental Authority pursuant to this Section 3.4,
Borrower shall deliver to Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory
to Administrative Agent.


 






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(g) Status
of Lenders.


 


(i) Any Lender
that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall
deliver to Borrower and Administrative Agent, at the time or times reasonably requested by Borrower or Administrative Agent, such
properly completed and executed documentation reasonably requested by Borrower or Administrative Agent as will permit such payments
to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by Borrower
or Administrative Agent, shall deliver such other documentation prescribed by applicable Law or reasonably requested by Borrower
or Administrative Agent as will enable Borrower or Administrative Agent to determine whether or not such Lender is subject to backup
withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences,
the completion, execution and submission of such documentation (other than such documentation set forth in Section 3.4(g)(ii)(A),
(ii)(B) and (ii)(D) below) shall not be required if in such Lender’s reasonable judgment such completion, execution
or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or
commercial position of such Lender.


 


(ii) Without
limiting the generality of the foregoing, in the event that Borrower is a U.S. Person,


 


(A) any Lender
that is a U.S. Person shall deliver to Borrower and Administrative Agent on or prior to the date on which such Lender becomes a
Lender under this Agreement (and from time to time thereafter upon the reasonable request of Borrower or Administrative Agent),
executed copies of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;


 


(B) any Foreign
Lender shall, to the extent it is legally entitled to do so, deliver to Borrower and Administrative Agent (in such number of copies
as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement
(and from time to time thereafter upon the reasonable request of Borrower or Administrative Agent), whichever of the following
is applicable:


 


(1) in the
case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect
to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN-E (or IRS Form W-8BEN, as applicable) establishing
an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty
and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN-E (or IRS Form W-8BEN, as applicable)
establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other
income” article of such tax treaty;


 


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


 


(3) in the
case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a
certificate substantially in the form of Exhibit E-1 to the effect that such Foreign Lender is not a “bank”
within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of Borrower within the meaning
of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C)
of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN-E (or IRS Form
W-8BEN, as applicable); or


 






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(4) to the
extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form
W-8BEN, a U.S. Tax Compliance Certificate substantially in the form of Exhibit E-2 or Exhibit E-3, IRS
Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender
is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption,
such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit E-4 on behalf
of each such direct and indirect partner;


 


(C) any Foreign
Lender shall, to the extent it is legally entitled to do so, deliver to Borrower and Administrative Agent (in such number of copies
as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement
(and from time to time thereafter upon the reasonable request of Borrower or Administrative Agent), executed copies of any other
form prescribed by applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed,
together with such supplementary documentation as may be prescribed by applicable Law to permit Borrower or Administrative Agent
to determine the withholding or deduction required to be made; and


 


(D) if a
payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender
were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or
1472(b) of the Code, as applicable), such Lender shall deliver to Borrower and Administrative Agent at the time or times prescribed
by Law and at such time or times reasonably requested by Borrower or Administrative Agent such documentation prescribed by applicable
Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested
by Borrower or Administrative Agent as may be necessary for Borrower and Administrative Agent to comply with their obligations
under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount
to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any
amendments made to FATCA after the date of this Agreement.


 


Each Lender
agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall
update such form or certification or promptly notify Borrower and Administrative Agent in writing of its legal inability to do
so.


 






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(h) Treatment
of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund
of any Taxes as to which it has been indemnified pursuant to this Section 3.4 (including by the payment of additional
amounts pursuant to this Section 3.4), it shall pay to the indemnifying party an amount equal to such refund (but only
to the extent of indemnity payments made under this Section 3.4 with respect to the Taxes giving rise to such refund),
net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid
by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified
party, shall repay to such indemnified party the amount paid over pursuant to this Section 3.4(h) (plus any penalties,
interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required
to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this Section 3.4(h),
in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this Section 3.4(h)
the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would
have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise
imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This Section 3.4(h)
shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to
its Taxes that it deems confidential) to the indemnifying party or any other Person.


 


(i) Survival.
Each party’s obligations under this Section 3.4 shall survive the resignation or replacement of Administrative Agent
or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction
or discharge of all obligations under any Loan Document.


 


Section 3.5 Compensation
for Losses. Upon demand of any Lender (with a copy to Administrative Agent) from time to time, Borrower shall promptly compensate
such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:


 


(a) any continuation,
conversion, payment or prepayment of any LIBOR Portion on a day other than the last day of the Interest Period for such Loan (whether
voluntary, mandatory, automatic, by reason of acceleration, or otherwise);


 


(b) any failure
by Borrower (for a reason other than the failure of such Lender to lend a LIBOR Portion) to prepay, borrow, continue or convert
any LIBOR Portion on the date or in the amount notified by Borrower; or


 


(c) any assignment
of a LIBOR Portion on a day other than the last day of the Interest Period therefor as a result of a request by Borrower pursuant
to Section 3.6(b);


 


including any loss of anticipated profits
and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees
payable to terminate the deposits from which such funds were obtained as a result of any of the actions described in Section
3.5 hereunder. Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.


 


For purposes of calculating amounts payable
by Borrower to the Lenders under this Section 3.5, each Lender shall be deemed to have funded each LIBOR Portion made
by it at Adjusted LIBOR for such Loan by a matching deposit or other borrowing in the London interbank eurodollar market for a
comparable amount and for a comparable period, whether or not such LIBOR Portion was in fact so funded.


 






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Section 3.6 Mitigation
of Obligations; Replacement of Lenders.


 


(a) Designation
of a Different Lending Office. If any Lender requests compensation under Section 3.1, or requires Borrower to pay
any Indemnified Taxes or additional amounts to such Lender or any Governmental Authority for the account of such Lender pursuant
to Section 3.4, then such Lender shall (at the request of Borrower) use reasonable efforts to designate a different
Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices,
branches or Affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 3.1 or Section 3.4, as the case may be, in the future, and (ii) would
not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.


 


(b) Replacement
of Lenders. If any Lender requests compensation under Section 3.1, or if Borrower is required to pay any Indemnified
Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.4
and, in each case, such Lender has declined or is unable to designate a different Lending Office in accordance with Section 3.6(a),
or if any Lender is a Defaulting Lender or a Non-Consenting Lender, then Borrower may, at its sole expense and effort, upon notice
to such Lender and Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject
to the restrictions contained in, and consents required by, Section 12.8), all of its interests, rights (other than
its existing rights to payments pursuant to Section 3.1 or Section 3.4) and obligations under this Agreement
and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender,
if a Lender accepts such assignment); provided that:


 


(i) Borrower
shall have paid to Administrative Agent the assignment fee (if any) specified in Section 12.8;


 


(ii) such Lender
shall have received payment of an amount equal to the Outstanding Amount of its Loans, and L/C Advances, accrued interest thereon,
accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 3.5)
from the assignee (to the extent of such outstanding principal and accrued interest and fees) or Borrower (in the case of all other
amounts);


 


(iii) in the
case of any such assignment resulting from a claim for compensation under Section 3.1 or payments required to be made
pursuant to Section 3.4, such assignment will result in a reduction in such compensation or payments thereafter;


 


(iv) such assignment
does not conflict with applicable Law; and


 


(v) in the
case of any assignment resulting from a Lender becoming a Non-Consenting Lender, the applicable assignee shall have consented to
the applicable amendment, waiver or consent.


 


A Lender shall not be required to make
any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling
Borrower to require such assignment and delegation cease to apply.


 






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Section 3.7 Survival.
All of Borrower’s obligations under this Article 3 shall survive termination of the Aggregate Commitments, repayment
of all other Obligations hereunder, and resignation of Administrative Agent.


 


ARTICLE
4



SECURITY


 


Section 4.1 Mortgaged
Properties. To secure full and complete payment and performance of the Obligations, Borrower shall, and shall cause each of
its Subsidiaries to, grant a first priority Lien (subject to Permitted Liens) against the Oil and Gas Properties of Borrower and
its Subsidiaries to the extent set forth below pursuant to terms of one or more Mortgages. Borrower covenants that the Recognized
Value of all Oil and Gas Properties subject to Mortgages shall at all times be not less than the Required Reserve Value. Within
30 days (or such longer time as Administrative Agent may agree in its sole discretion) after Administrative Agent advises Borrower
of the failure to so achieve the Required Reserve Value and the percentage shortfall thereof, Borrower shall cause the Recognized
Value of all Mortgaged Properties to be not less than the Required Reserve Value by executing, or causing its Subsidiaries to execute,
Mortgages covering additional Proved Oil and Gas Properties sufficient to cover such shortfall.


 


Section 4.2 Collateral.
To secure full and complete payment and performance of the Obligations, Borrower shall, and shall cause its Subsidiaries to, execute
and deliver or cause to be executed and delivered all of the Security Documents required by Administrative Agent covering the Collateral,
subject, with respect to Oil and Gas Properties, to the limitations set forth in Section 4.1. Borrower shall execute and
cause to be executed such further documents and instruments, including without limitation, UCC financing statements, as Administrative
Agent, in its reasonable discretion, deems necessary or desirable to create, evidence, preserve, and perfect its Liens in the Collateral
and maintain the priority thereof as required by the Loan Documents.


 


Section 4.3 Setoff.
If an Event of Default exists and subject to the Intercreditor Agreement, Administrative Agent and each Lender shall have the right
to set off against the Obligations under the Loan Documents, at any time, any and all deposits (general or special, time or demand,
provisional or final) or other sums at any time credited by or owing from Administrative Agent or such Lender to Borrower whether
or not the Obligations under the Loan Documents are then due; provided that in the event that any Defaulting Lender shall
exercise any such right of setoff: (a) all amounts so set off shall be paid over immediately to Administrative Agent for further
application in accordance with the provisions of Section 12.22 and, pending such payment, shall be segregated by such
Defaulting Lender from its other funds and deemed held in trust for the benefit of Administrative Agent and Lenders; and (b) such
Defaulting Lender shall provide promptly to Administrative Agent a statement describing in reasonable detail the Obligations under
the Loan Documents owing to such Defaulting Lender as to which it exercised such right of setoff. To the extent that Borrower has
accounts, which in the style thereof as reflected in Administrative Agent’s records are designated as royalty, joint interest owner
or operator accounts, the foregoing right of setoff shall only extend to funds in such accounts which do not belong to, or otherwise
arise from payments to Borrower for the account of, third-party royalty, joint interest owners, or operators, and any funds in
such accounts improperly setoff shall be returned to Borrower upon presentation by Borrower of reasonable proof that such funds
were being held for the account of such other Persons. Each Lender or Administrative Agent making such an offset and application
shall give Borrower and other Lenders written notice of such offset and application promptly after effecting it. Subject to the
Intercreditor Agreement, each amount set off shall be paid to Administrative Agent for application to the Obligations under the
Loan Documents in the order set forth in Section 10.3. Subject to the limitations set forth in this Section 4.3,
as further security for the Obligations, Borrower hereby grants to Administrative Agent and each Lender a security interest in
all money, instruments, and other Property of Borrower now or hereafter held by Administrative Agent or such Lender, including,
without limitation, Property held in safekeeping. In addition to Administrative Agent’s and each Lender’s right of setoff and as
further security for the Obligations, subject to the limitations set forth in this Section 4.3, Borrower hereby grants
to Administrative Agent and each Lender a security interest in all deposits (general or special, time or demand, provisional or
final) and other accounts of Borrower now or hereafter on deposit with or held by Administrative Agent or such Lender and all other
sums at any time credited by or owing from Administrative Agent or such Lender to Borrower. The rights and remedies of Administrative
Agent and each Lender hereunder are in addition to other rights and remedies (including, without limitation, other rights of setoff)
which Administrative Agent or such Lender may have. Each Lender agrees to notify Borrower and the Administrative Agent within ten
(10) days after such setoff and application, provided that the failure to give such notice shall not affect the validity
of such set-off and application or any other rights and remedies of Administrative Agent and each Lender hereunder.


 






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Section 4.4 Authorization
to File Financing Statements. Borrower and each other Obligated Party that has granted a security interest in connection herewith
authorizes Administrative Agent to complete and file, from time to time, financing statements naming Borrower or such other Obligated
Party, as applicable, as debtor.


 


ARTICLE
5



CONDITIONS PRECEDENT


 


Section 5.1 Extension
of Credit on Closing Date. The obligation of Lenders to make the Credit Extension hereunder on Closing Date is subject to the
condition precedent that Administrative Agent shall have received all of the following, each dated (unless otherwise indicated
or otherwise specified by Administrative Agent) the Closing Date, in form and substance satisfactory to Administrative Agent:


 


(a) Amended
and Restated Credit Agreement. Executed counterparts of this Agreement, sufficient in number for distribution to Administrative
Agent, each Lender and Borrower;


 


(b) Resolutions.
Resolutions of the governing body of Borrower and each other Obligated Party certified by the secretary or an assistant secretary
(or a Responsible Officer or other custodian of records) of such Person which authorize the execution, delivery, and performance
by such Person of this Agreement, the other Loan Documents to which such Person is or is to be a party and the Intercreditor Agreement
to the extent party thereto;


 


(c) Incumbency
Certificate. A certificate of incumbency certified by a Responsible Officer of each Obligated Party certifying the names of
the individuals or other Persons authorized on behalf of such Person to sign this Agreement, each of the other Loan Documents to
which such Person is or is to be a party (including the certificates contemplated herein), and the Intercreditor Agreement to the
extent party thereto, together with specimen signatures of such individual Persons;


 


(d) Certificate
Regarding Consents and Approvals. A certificate of a Responsible Officer of each Obligated Party either (i) attaching copies
of all consents, licenses and approvals required in connection with the execution, delivery and performance by such Obligated Party
and the validity against such Obligated Party of the Loan Documents to which it is a party and the Intercreditor Agreement to the
extent party thereto, and such consents, licenses and approvals shall be in full force and effect, or (ii) stating that no such
consents, licenses or approvals are so required;


 






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(e) Closing
Certificate. A certificate signed by a Responsible Officer of Borrower certifying that the conditions specified in Sections
5.2(b), 5.2(c) and 5.2(d) have been satisfied;


 


(f) Constituent
Documents. The Constituent Documents and all amendments thereto for Borrower and each other Obligated Party that is not a natural
Person, with the formation documents included in the Constituent Documents being certified as of a date acceptable to Administrative
Agent by the appropriate government officials of the state of incorporation or organization of Borrower and each other Obligated
Party, and all such Constituent Documents being accompanied by certificates that such copies are complete and correct, given by
an authorized representative acceptable to Administrative Agent;


 


(g) Governmental
Certificates. Certificates of the appropriate government officials of the state of incorporation or organization of each Obligated
Party as to the existence and good standing of such Person, in each case, dated within 30 days prior to the Closing Date; provided
that any such certificate(s) due from the Texas Comptroller of Public Accounts may be satisfied with a printout of an electronic
search of such office’s records which shows that such Person’s status with respect to its right to transact business in Texas is
“active”;


 


(h) Notes.
The Notes executed by Borrower in favor of each Lender requesting Notes;


 


(i) Security
Documents. The Security Documents executed by Borrower and the other Obligated Parties, or amendments, amendments and restatements
or confirmations thereof, as applicable, in connection with the amendment and restatement of the Existing Credit Agreement by this
Agreement;


 


(j) Financing
Statements. UCC financing statements reflecting Borrower and the other Obligated Parties, as debtors, and Administrative Agent,
as secured party, which are required to grant a Lien which secures the Obligations and covering such Collateral as Administrative
Agent may request;


 


(k) Stock
Certificates and Stock Powers. With respect to each Subsidiary or Excluded Subsidiary that is a corporation, all certificates
evidencing the Equity Interests of such Subsidiary or Excluded Subsidiary, as applicable, accompanied by undated and duly executed
stock powers or instruments of transfer or assignment in blank, all in form and substance reasonably satisfactory to Administrative
Agent;


 


(l) Guaranty.
An Amended and Restated Guaranty, executed by each Guarantor;


 


(m) Insurance
Matters. Copies of insurance certificates describing all insurance policies required by Section 7.5, together with
loss payable and lender endorsements in favor of Administrative Agent with respect to all insurance policies covering Collateral;


 


(n) CAC
Acquisition. (i) A true and correct copy of each CAC Acquisition Document, (ii) evidence that all conditions precedent to the
closing of the transactions described in the Acquisition Agreement, except the funding of the Credit Extension on Closing Date
to enable Borrower to fund in part its obligations under the Acquisition Agreement, shall have been completed in a manner satisfactory
to Administrative Agent, (iii) evidence that any indebtedness owed by Sellers which is secured by a Lien on any property described
in the Acquisition Agreement has been or concurrently with the Closing Date is being paid in full and such Liens have been or concurrently
with the Closing Date are being released pursuant to lien releases satisfactory to Administrative Agent, and (iv) evidence that
pursuant to the Acquisition Documents, concurrent with the consummation of the CAC Acquisition, Borrower shall have acquired all
of the Equity Interests of Carbon Appalachian Company, LLC previously owned by Sellers;


 






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(o) Lien
Searches. The results of UCC Lien searches showing all financing statements and other documents or instruments on file against
Borrower and each other Obligated Party in the appropriate filing offices, such search to be as of a date no more than 30 days
prior to the Closing Date, and reflecting no Liens against any of the intended Collateral other than Liens being released or assigned
to Administrative Agent concurrently with the initial Credit Extension;


 


(p) Opinion
of Counsel. A favorable opinion of Welborn Sullivan Meck & Tooley, P.C., legal counsel to Borrower and Guarantors, as to
such matters as Administrative Agent may reasonably request;


 


(q) Attorneys’
Fees and Expenses. Evidence that the costs and expenses (including reasonable attorneys’ fees) referred to in Section 12.1,
to the extent invoiced, shall have been paid in full by Borrower;


 


(r) Title
Assurances. Title opinions and/or other title information and data acceptable to Administrative Agent covering Oil and Gas
Properties that in the aggregate represent not less than 85% of the Recognized Value of all Oil and Gas Properties evaluated in
the Initial Reserve Report, reflecting title to the Oil and Gas Properties of Borrower and its Subsidiaries in such Oil and Gas
Properties which is acceptable to Administrative Agent;


 


(s) Environmental
Reports. Such environmental reports, if any, regarding the Oil and Gas Properties of Borrower and its Subsidiaries as Administrative
Agent may reasonably request;


 


(t) Initial
Reserve Report. A true and correct copy of the Initial Reserve Report;


 


(u) Management
and Operating Agreements. True and correct copies of the Management Services Agreement, Nytis Operating Agreement and all other
related agreements as requested by Administrative Agent;


 


(v) Assumption
of Existing Indebtedness; Assignment of Commitments, Liens and Security Interests. Evidence that (i) all obligations and liabilities
of CAE Borrower under the Existing CAE Credit Agreement and the Existing CAE Loan Documents have been or concurrently with the
Closing Date are being assumed in full by Borrower, (ii) all rights, title, and interests of the lenders under the Existing CAE
Credit Agreement have been or concurrently with the Closing Date are being assigned to the Lenders under this Agreement, and (iii)
all Liens and security interests securing obligations under the Existing CAE Credit Agreement have been or concurrently with the
Closing Date are being assigned to Administrative Agent, on behalf of the Secured Parties, all of which shall be pursuant to agreements
and instruments satisfactory to Administrative Agent; and


 


(w) Intercreditor
Agreement. An Amended and Restated Intercreditor Agreement, duly executed by the parties thereto;


 






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(x) Minimum
Liquidity. Evidence satisfactory to Administrative Agent that as of the Closing Date, Borrower’s Liquidity is greater than
or equal to $20,000,000;


 


(y) Minimum
Equity Contribution. Evidence satisfactory to Administrative Agent that as of the Closing Date, Borrower has received, or concurrently
with the Closing Date will receive, capital or equity contributions from its Equity Interest holders in an amount greater than
or equal to $60,000,000;


 


(z) Beneficial
Ownership Certification. To the extent that Borrower qualifies as a “legal entity customer” under the Beneficial
Ownership Regulation, a Beneficial Ownership Certification in relation to Borrower;


 


(aa) Closing
Fees. Evidence that any other fees due on or before the Closing Date have been paid, including without limitation, all fees
as set forth in any Fee Letter.


 


For purposes of determining
compliance with the conditions set forth in this Section 5.1, each Lender that has signed this Agreement shall be deemed
to have consented to, approved or accepted or be satisfied with, each document or other matter required thereunder to be consented
to or approved by or be acceptable or satisfactory to a Lender unless Administrative Agent shall have received notice from such
Lender prior to the proposed Closing Date specifying its objection thereto.


 


Section 5.2 All
Extensions of Credit. The obligation of Lenders to make any Credit Extension hereunder (including the initial Credit Extension)
is subject to the following additional conditions precedent:


 


(a) Request
for Credit Extension. Administrative Agent shall have received in accordance with this Agreement, as the case may be, a Borrowing
Request or Letter of Credit Application, as applicable, pursuant to Administrative Agent’s requirements and executed by a Responsible
Officer of Borrower;


 


(b) No
Default. No Default shall have occurred and be continuing, or would result from or after giving effect to such Credit Extension;


 


(c) No
Material Adverse Event. No Material Adverse Event shall have occurred and no circumstance shall exist that could reasonably
be expected to result in a Material Adverse Event;


 


(d) Representations
and Warranties. All of the representations and warranties contained in Article 6 and in the other Loan Documents
shall be true and correct in all material respects on and as of the date of such Borrowing with the same force and effect as if
such representations and warranties had been made on and as of such date, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they shall be true and correct in all material respects as of such earlier
date, and except that for purposes of this Section 5.2, the representations and warranties contained in Section 6.2
shall be deemed to refer to the most recent statements furnished pursuant to Sections 7.1(a) and 7.1(b), respectively;


 


(e) Additional
Documentation. Administrative Agent shall have received such additional approvals, opinions, or documents as Administrative
Agent or its legal counsel may reasonably request; and


 






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(f) Revolving
Credit Availability. After giving effect to the Credit Extension so requested, the Aggregate Revolving Credit Exposure shall
not exceed the Aggregate Commitments in effect as of the date of such Credit Extension.


 


Each Credit Extension hereunder shall be
deemed to be a representation and warranty by Borrower that the conditions specified in this Section 5.2 have been
satisfied on and as of the date of the applicable Credit Extension.


 


ARTICLE
6



REPRESENTATIONS AND WARRANTIES


 


To induce Administrative
Agent and Lenders to enter into this Agreement, and to make Credit Extensions hereunder, Borrower represents and warrants to Administrative
Agent and Lenders that:


 


Section 6.1 Entity
Existence. Each of Borrower and its Subsidiaries (a) is duly incorporated or organized, as the case may be, validly existing,
and in good standing under the Laws of the jurisdiction of its incorporation or organization; (b) has all requisite power
and authority to own its assets and carry on its business as now being or as proposed to be conducted; and (c) is qualified
to do business in all jurisdictions in which the nature of its business makes such qualification necessary and where failure to
so qualify could reasonably be expected to result in a Material Adverse Event. Each of Borrower and the other Obligated Parties
has the power and authority to execute, deliver, and perform its obligations under this Agreement, the other Loan Documents to
which it is or may become a party and the Intercreditor Agreement to the extent party thereto.


 


Section 6.2 Financial
Statements; Etc. Borrower has delivered to Administrative Agent audited financial statements of Borrower and its Subsidiaries
as at and for the fiscal year ended December 31, 2017 and unaudited financial statements of Borrower and its Subsidiaries as at
and for the 3-month period ended March 31, 2018. Such financial statements are accurate and complete in all material respects,
have been prepared in accordance with GAAP, and fairly and accurately present in all material respects, on a consolidated basis,
the financial condition of Borrower and its Subsidiaries as of the respective dates indicated therein and the results of operations
for the respective periods indicated therein. Neither Borrower nor any of its Subsidiaries has any material contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments, unrealized or anticipated losses from any unfavorable commitments
except as referred to or reflected in such financial statements. No Material Adverse Event has occurred since the effective date
of the financial statements referred to in this Section 6.2. All projections delivered by Borrower to Administrative
Agent and Lenders have been prepared in good faith, with care and diligence and using assumptions that are reasonable under the
circumstances at the time such projections were prepared and delivered to Administrative Agent and Lenders and all cost, volume
and pricing assumptions are disclosed in the projections. Other than the Debt listed on Schedule 8.1 and Debt otherwise
permitted by Section 8.1, Borrower and each Subsidiary have no Debt.


 


Section 6.3 Action;
No Breach. The execution, delivery, and performance by each of Borrower and each other Obligated Party of this Agreement, the
other Loan Documents to which such Person is or may become a party and the Intercreditor Agreement to the extent party thereto
and compliance with the terms and provisions hereof and thereof have been duly authorized by all requisite action on the part of
such Person and do not and will not (a) violate or conflict with, or result in a breach of, or require any consent under (i) the
Constituent Documents of such Person, (ii) any applicable Law, rule, or regulation or any order, writ, injunction, or decree
of any Governmental Authority or arbitrator, or (iii) any agreement or instrument to which such Person is a party or by which
it or any of its Properties is bound or subject which could result in a Material Adverse Event, or (b) constitute a default
under any such agreement or instrument which could result in a Material Adverse Event, or result in the creation or imposition
of any Lien upon any of the revenues or assets of such Person.


 






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Section 6.4 Operation
of Business. Each of Borrower and its Subsidiaries possesses all licenses, permits, consents, authorizations, franchises, patents,
copyrights, trademarks, and trade names, or rights thereto, necessary to conduct its respective businesses substantially as now
conducted and as presently proposed to be conducted, and neither Borrower nor any of its Subsidiaries is in violation of any valid
rights of others with respect to any of the foregoing which could reasonably be expected to result in a Material Adverse Event.


 


Section 6.5 Litigation
and Judgments. Except as specifically disclosed in Schedule 6.5 as of the date hereof, there is no action, suit,
investigation, or proceeding before or by any Governmental Authority or arbitrator pending, or to the knowledge of Borrower, threatened
against or affecting Borrower, any of its Subsidiaries, or any other Obligated Party that could, if adversely determined, result
in a Material Adverse Event. There are no outstanding judgments against Borrower, any of its Subsidiaries, or any other Obligated
Party that could result in an Event of Default.


 


Section 6.6 Rights
in Properties; Liens.


 


(a) Each
of Borrower and its Subsidiaries has good and indefeasible title to or valid leasehold interests in its respective Properties,
including the Properties reflected in the financial statements described in Section 6.2 but excluding the Oil and Gas
Properties owned by Borrower and its Subsidiaries, and none of such Properties is subject to any Lien, except Permitted Liens.


 


(b) The most
recently delivered Reserve Report sets forth a complete and accurate list of all Oil and Gas Properties owned by Borrower and each
of its Subsidiaries as of such date, showing as of the date thereof the lessor, lessee, lease date, recording information and legal
description for each oil, gas and/or mineral lease in which Borrower or any of its Subsidiaries has an interest, which leases shall
be grouped by the applicable well or unit. Each of Borrower and its Subsidiaries has good and defensible title in and to such Oil
and Gas Properties. Such Oil and Gas Properties are free and clear of all Liens, other than Liens created or permitted by the Loan
Documents, and Liens set forth on Schedule 8.2. Except in the ordinary course of business and consistent with historical
practice, no Person other than such Person has any ownership interests, whether legal or beneficial, in such Person’s purported
interests in such Oil and Gas Properties.


 


(c) The Mortgaged
Properties are described in and covered by the Reserve Reports which have previously been delivered to and relied upon by Administrative
Agent and the Lenders in connection with this Agreement. Borrower has provided Administrative Agent with title information and
title data acceptable to Administrative Agent reflecting title to the Oil and Gas Properties of Borrower and its Subsidiaries in
accordance with Section 7.14. Borrower and each of its Subsidiaries owns (or, contemporaneously with the closing of any
Acquisitions being financed through and closed substantially contemporaneously with the initial Credit Extension, will own) at
least the net interest and production attributable to the wells and units evaluated in each Reserve Report delivered to Administrative
Agent, except such as may result, after the delivery of such Reserve Report, from customary provisions of operating agreements
requiring or allowing for the acquisition of the interests of any non-consenting parties so long as Borrower promptly notifies
Administrative Agent thereof. The ownership of such Properties shall not in the aggregate obligate Borrower or any of its Subsidiaries
to bear costs and expenses relating to the maintenance, development and operations of such Properties in an amount in excess of
the working interests of such Properties as shown in each such Reserve Report, except such as may result, after the delivery of
such Reserve Report, from customary provisions of operating agreements requiring or allowing the parties thereto to pay the share
of costs of a non-consenting party so long as Borrower promptly notifies Administrative Agent of such changes. Neither Borrower
nor any of its Subsidiaries has conveyed or transferred to any other Person a beneficial interest in the Oil and Gas Properties
owned by it of record, whether pursuant to unrecorded assignments or transfers or accounting mechanisms, except to the extent disclosed
or taken into account in the most recent Reserve Report. Borrower and each of its Subsidiaries has paid all royalties payable under
the oil and gas leases concerning which it is an operator, except to those contested in accordance with the terms of the applicable
joint operating agreement, held in suspense or otherwise contested in good faith and by appropriate proceedings and reserves for
the payment of which are being maintained in accordance with GAAP.


 



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Section 6.7 Enforceability.
This Agreement constitutes, and the other Loan Documents to which Borrower or any other Obligated Party is a party and the Intercreditor
Agreement to the extent Borrower or any other Obligated Party is party thereto, when delivered, shall constitute legal, valid,
and binding obligations of such Person, enforceable against such Person in accordance with their respective terms, except as limited
by Debtor Relief Laws and by general principles of equity, whether applied by a court of law or equity.


 


Section 6.8 Approvals.
Except for the applicable authorization, approval, or consent contemplated by and obtained for this Agreement, the other Loan Documents
or the Acquisition Agreement, no authorization, approval, or consent of, and no filing or registration with, any Governmental Authority
or third party is or will be necessary for the execution, delivery, or performance by Borrower or any other Obligated Party of
this Agreement, the other Loan Documents to which such Person is or may become a party or the Intercreditor Agreement to the extent
such Person is party thereto or the validity or enforceability thereof.


 


Section 6.9 Taxes.
Except to the extent that a failure to do so could not be reasonably expected to result in a Material Adverse Event, each of Borrower
and its Subsidiaries has filed all tax returns (federal, state, and local) required to be filed, including all income, franchise,
employment, Property, and sales tax returns, and has paid all of their respective liabilities for taxes, assessments, governmental
charges, and other levies that are due and payable, other than taxes the payment of which is being contested in good faith and
by appropriate proceedings and reserves for the payment of which are being maintained in accordance with GAAP. Borrower knows of
no pending investigation of Borrower or any of its Subsidiaries by any taxing authority or of any pending but unassessed tax liability
of Borrower or any of its Subsidiaries. Neither Borrower nor any Subsidiary thereof is party to any tax sharing agreement.


 


Section 6.10 Use
of Proceeds; Margin Securities. The proceeds of the Borrowings shall be used by Borrower for working capital in the ordinary
course of business, for the acquisition, drilling and development of the Oil and Gas Properties of Borrower and its Subsidiaries,
for the consummation of the CAC Acquisition, and for other general company or corporate purposes, as applicable. Neither Borrower
nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit
for the purpose of purchasing or carrying margin stock (within the meaning of Regulations T, U, or X of the Board of Governors),
and no part of the proceeds of any Loan will be used to purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying margin stock.


 


Section 6.11 ERISA.
Each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from
the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the knowledge
of Borrower, nothing has occurred which would prevent, or cause the loss of, such qualification. No application for a funding waiver
or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan. There
are no pending or, to the knowledge of Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan. There has been no Prohibited Transaction or violation of the fiduciary responsibility rules with respect
to any Plan. No ERISA Event has occurred or is reasonably expected to occur. No Plan has any Unfunded Pension Liability. No Obligated
Party or ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any
Plan (other than premiums due and not delinquent under Section 4007 of ERISA). No Obligated Party or ERISA Affiliate has incurred,
or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219
of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan. No Obligated
Party or ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or 4212(c) of ERISA.


 






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Section 6.12 Disclosure.
No statement, information, report, representation, or warranty made by Borrower or any other Obligated Party in this Agreement,
in any other Loan Document or the Intercreditor Agreement or furnished to Administrative Agent or any Lender in connection with
this Agreement or any of the transactions contemplated hereby contains any untrue statement of a material fact or omits to state
any material fact necessary to make the statements herein or therein not misleading. There is no fact known to Borrower which is
a Material Adverse Event, or which might in the future be reasonably expected to result in a Material Adverse Event that has not
been disclosed in writing to Administrative Agent and each Lender.


 


Section 6.13 Subsidiaries.


 


(a) Borrower
has no Subsidiaries other than those listed on Schedule 6.13(a) (and, if subsequent to the Closing Date, such additional
Subsidiaries as have been formed or acquired in compliance with Section 7.13), and Schedule 6.13(a) sets
forth the jurisdiction of incorporation or organization of each such Subsidiary and the percentage of Borrower’s ownership interest
in such Subsidiary. All of the outstanding Equity Interests in each Subsidiary described on Schedule 6.13(a) have been
validly issued, are fully paid, and are nonassessable. Other than (i) in connection with its equity incentive plans or (ii)
as disclosed in its financial statements, there are no outstanding subscriptions, options, warrants, calls, rights or other agreements
or commitments of any nature relating to any Equity Interests of Borrower or any Subsidiary.


 


(b) All Excluded
Subsidiaries are listed on Schedule 6.13(b), and sets forth the jurisdiction of incorporation or organization of each such
Excluded Subsidiary, the percentage of Borrower’s ownership interest in such Excluded Subsidiary, and the amount of investment
of Borrower in such Excluded Subsidiary.


 


Section 6.14 Agreements.
Neither Borrower nor any of its Subsidiaries is a party to any indenture, loan, or credit agreement, or to any lease or other agreement
or instrument, or subject to any charter or corporate or other organizational restriction, in each case which could reasonably
be expected to result in a Material Adverse Event. Neither Borrower nor any of its Subsidiaries is in default in any respect in
the performance, observance, or fulfillment of any of the obligations, covenants, or conditions contained in any agreement or instrument
material to its business to which it is a party which could reasonably be expected to result in a Material Adverse Event.


 


Section 6.15 Compliance
with Laws. Neither Borrower nor any of its Subsidiaries is in violation in any material respect of any Law, rule, regulation,
order, or decree of any Governmental Authority or arbitrator.


 






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Section 6.16 Inventory.
All inventory (including Hydrocarbons) of Borrower and its Subsidiaries has been and will hereafter be produced in material compliance
with all applicable Laws, rules, regulations, and governmental standards, including, without limitation, the minimum wage and overtime
provisions of the Fair Labor Standards Act (29 U.S.C. §§ 201-219).


 


Section 6.17 Regulated
Entities. Neither Borrower nor any of its Subsidiaries is (a) an “investment company” or a company “controlled”
by an “investment company” within the meaning of the Investment Company Act of 1940, (b) a “utility” under
the Laws of the State of Texas or any other jurisdiction wherein such Person is required to qualify to do business or (c) subject
to regulation under any other federal or state statute, rule or regulation limiting its ability to incur Debt, pledge its assets
or perform its obligations under the Loan Documents or the Intercreditor Agreement.


 


Section 6.18 Environmental
Matters. Except (i) as could not reasonably be expected to result in a Material Adverse Event or (ii) as set forth on
Schedule 6.18:


 


(a) Each
of Borrower and its Subsidiaries, and all of its respective Properties, assets, and operations are in compliance with all Environmental
Laws. Borrower is not aware of, nor has Borrower received notice of, any past, present, or future conditions, events, activities,
practices, or incidents which may interfere with or prevent the compliance or continued compliance of Borrower and its Subsidiaries
with all Environmental Laws;


 


(b) Each
of Borrower and its Subsidiaries has obtained all permits, licenses, and authorizations that are required under applicable Environmental
Laws, and all such permits are in good standing and Borrower and its Subsidiaries are in compliance with all of the terms and conditions
of such permits;


 


(c) No Hazardous
Materials exist on, about, or within or have been used, generated, stored, transported, disposed of on, or Released from any of
the Properties or assets of Borrower or any of its Subsidiaries. The use which Borrower and its Subsidiaries make and intend to
make of their respective Properties and assets will not result in the use, generation, storage, transportation, accumulation, disposal,
or Release of any Hazardous Material on, in, or from any of their Properties or assets;


 


(d) Neither
Borrower nor any of its Subsidiaries nor any of their respective currently or previously owned or leased Properties or operations
is subject to any outstanding or threatened order from or agreement with any Governmental Authority or other Person or subject
to any judicial or docketed administrative proceeding with respect to (i) failure to comply with Environmental Laws, (ii) Remedial
Action, or (iii) any Environmental Liabilities arising from a Release or threatened Release;


 


(e) There
are no conditions or circumstances associated with the currently or previously owned or leased Properties or operations of Borrower
or any of its Subsidiaries that could reasonably be expected to give rise to any Environmental Liabilities;


 


(f) Neither
Borrower nor any of its Subsidiaries is a treatment, storage, or disposal facility requiring a permit under the Resource Conservation
and Recovery Act, 42 U.S.C. § 6901 et seq., regulations thereunder or any comparable provision of state Law. Borrower
and its Subsidiaries are in compliance with all applicable financial responsibility requirements of all Environmental Laws;


 






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(g) Neither
Borrower nor any of its Subsidiaries has filed or failed to file any notice required under applicable Environmental Law reporting
a Release; and


 


(h) No Lien
arising under any Environmental Law has attached to any Property or revenues of Borrower or any of its Subsidiaries.


 


Section 6.19 Intellectual
Property. The Borrower and its Subsidiaries own, or are licensed to use, all Intellectual Property necessary to conduct their
business as currently conducted except for such Intellectual Property the failure of which to own or license could not result in
a Material Adverse Event.


 


Section 6.20 Anti-Corruption
Laws and Sanctions. Borrower has implemented and maintains in effect policies and procedures designed to ensure compliance
by Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable
Sanctions, and Borrower, its Subsidiaries and their respective officers and employees, and to the knowledge of Borrower its directors
and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects. None of (a) Borrower
or any Subsidiary or (b) to the knowledge of Borrower, any of their respective directors, officers, employees, or agents, is a
Sanctioned Person. No Credit Extension or use of proceeds of any Credit Extension will violate Anti-Corruption Laws or applicable
Sanctions.


 


Section 6.21 Patriot
Act. The Obligated Parties, each of their Subsidiaries, and each of their Affiliates are in compliance with (a) the Trading
with the Enemy Act, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle
B Chapter V, as amended), and all other enabling legislation or executive order relating thereto, (b) the Patriot Act, and
(c) all other federal or state Laws relating to “know your customer” and anti-money laundering rules and regulations.
No part of the proceeds of any Loan will be used directly or indirectly for any payments to any government official or employee,
political party, official of a political party, candidate for political office, or anyone else acting in an official capacity,
in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt
Practices Act of 1977.


 


Section 6.22 Insurance.
The Properties of Borrower and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates
of Borrower, in such amounts, with such deductibles and covering such risks as are customarily carried in conformity with prudent
industry practice by companies in the oil and gas industry owning similar Properties in localities where Borrower or the applicable
Subsidiary operates.


 


Section 6.23 Solvency.
Each of Borrower and the other Obligated Parties is Solvent and has not entered into any transaction with the intent to hinder,
delay or defraud a creditor.


 


Section 6.24 Security
Documents. The provisions of the Security Documents are effective to create in favor of Administrative Agent for the benefit
of the Secured Parties a legal, valid and enforceable Lien (subject to Permitted Liens) on all right, title and interest of the
respective Obligated Parties party thereto in the Collateral. Except for filings completed in connection with the Closing Date
and as otherwise contemplated hereby and by the Security Documents, no filing or other action will be necessary to perfect such
Liens in Collateral.


 


Section 6.25 Businesses.
Borrower is presently engaged directly or through its Subsidiaries in the business of oil and gas acquisition, exploration, development,
and production.


 


Section 6.26 Labor
Matters. There are no labor controversies pending, or to the best knowledge of Borrower, threatened against Borrower or any
of its Subsidiaries which could reasonably be expected to result in a Material Adverse Event.






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Section 6.27 Gas
Balancing Agreements and Advance Payment Contracts. As of the Closing Date, (a) there is no Material Gas Imbalance, and
(b) the aggregate amount of all Advance Payments received by Borrower and its Subsidiaries under Advance Payment Contracts
which have not been satisfied by delivery of production does not exceed $500,000.


 


Section 6.28 Hedging
Agreements and Transactions. Schedule 6.28 sets forth a complete and correct list of all Hedging Agreements and Hedging
Transactions entered into by Borrower or any of its Subsidiaries in effect or to be in effect on the Closing Date and on the date
of each update thereof required hereunder, the material terms thereof (including the type, term, effective date, termination date
and notional amounts or volumes), the Hedge Termination Value thereof, and the counterparty thereto.


 


Section 6.29 Flood
Matters. No “Building” (as defined in the applicable Flood Insurance Regulation) or “Manufactured (Mobile) Home”
(as defined in the applicable Flood Insurance Regulation) is located on any Mortgaged Property within an area having special flood
hazards and in which flood insurance is available under the Flood Insurance Regulations, and no “Building” or “Manufactured
(Mobile) Home” is encumbered by the Mortgages.


 


ARTICLE
7


 


AFFIRMATIVE COVENANTS


 


Borrower covenants
and agrees that, as long as the Obligations or any part thereof are outstanding (other than contingent indemnification obligations)
or any Letter of Credit shall remain outstanding (unless arrangements satisfactory to the L/C Issuer have been made) or any Lender
has any Commitment hereunder:


 


Section 7.1 Reporting
Requirements. Borrower will furnish to Administrative Agent (with copies for each Lender):


 


(a) Borrower
Annual Financial Statements. As soon as available, and in any event within 90 days after the last day of each fiscal year of
Borrower (or, if earlier, 5 days after the date required to be filed with the SEC), beginning with the fiscal year ending
December 31, 2018, a copy of the annual audited report of Borrower and its Subsidiaries for such fiscal year containing, on a consolidated
basis, balance sheets and statements of income, retained earnings, and cash flow as of the end of such fiscal year and for the
12-month period then ended, in each case setting forth in comparative form the figures for the preceding fiscal year, all in reasonable
detail and audited by and accompanied by a report of an independent certified public accountants of recognized standing reasonably
acceptable to Administrative Agent, to the effect that such report has been prepared in accordance with GAAP and containing no
material qualifications or limitations on scope;


 


(b) Borrower
Quarterly Financial Statements. As soon as available, and in any event within 60 days after the last day of each fiscal quarter
of Borrower (or, if earlier, 5 days after the date required to be filed with the SEC), commencing with the fiscal quarter
ending September 30, 2018, a copy of an unaudited financial report of Borrower and its Subsidiaries as of the end of such fiscal
quarter and for the portion of the fiscal year then ended, containing, on a consolidated basis, balance sheets and statements of
income, retained earnings, and cash flow, in each case setting forth in comparative form the figures for the corresponding period
of the preceding fiscal year, all in reasonable detail certified by a Responsible Officer of Borrower to have been prepared in
accordance with GAAP and to fairly and accurately present in all material respects (subject to year-end audit adjustments) the
financial condition and results of operations of Borrower and its Subsidiaries, on a consolidated basis, as of the dates and for
the periods indicated therein;


 






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(c) Compliance
Certificate. Concurrently with the delivery of each of the financial statements referred to in Sections 7.1(a)
and 7.1(b), a Compliance Certificate executed by a Responsible Officer of Borrower (i) stating that to the best of
the knowledge of such Responsible Officer executing the same, no Default has occurred and is continuing, or if a Default has occurred
and is continuing, a statement as to the nature thereof and the action which is proposed to be taken with respect thereto, (ii) showing
in reasonable detail the calculations demonstrating compliance with the covenants set forth in Article 9, (iii) containing
an update to Schedule 6.13(b); provided, however, only if since the date of the last delivery of such Schedule
6.13(b) (A) a new Excluded Subsidiary has been created by the Borrower or any Subsidiaries, (B) Borrower shall have invested
more than $2,000,000 in any Excluded Subsidiary, or (C) any other changes shall have occurred to such Schedule 6.13(b),
(iv) containing an update to Schedule 6.28 and (v) containing such other certifications set forth therein. For any financial
statements delivered electronically by a Responsible Officer in satisfaction of the reporting requirements set forth in Sections
7.1(a) or 7.1(b) that are not accompanied by the required Compliance Certificate, that Responsible Officer shall nevertheless
be deemed to have certified the factual matters described in this Section 7.1(c) with respect to such financial statements;
provided, however, such deemed certification shall not excuse or be construed as a waiver of Borrower’s obligation
to deliver the required Compliance Certificate;


 


(d) Management
Letters. Promptly upon receipt thereof, a copy of any management letter or written report (except standard or customary correspondence)
submitted to Borrower or any of its Subsidiaries by independent certified public accountants with respect to the business, financial
condition, operations or Properties of Borrower or any of its Subsidiaries;


 


(e) Notice
of Litigation. Promptly after the commencement thereof, notice of all actions, suits, and proceedings before any Governmental
Authority or arbitrator not previously disclosed in writing to the Administrative Agent affecting Borrower or any of its Subsidiaries
which, if determined adversely to Borrower or such Subsidiary, could be a Material Adverse Event;


 


(f) Notice
of Default. As soon as possible and in any event within 5 Business Days after the occurrence of any Default, a written notice
setting forth the details of such Default and the action that Borrower has taken and proposes to take with respect thereto;


 


(g) ERISA
Reports. Promptly after the filing or receipt thereof, copies of all reports, including annual reports, and notices which any
Borrower or ERISA Affiliate files with or receives from the PBGC, the IRS, or the U.S. Department of Labor under ERISA; as soon
as possible and in any event within 5 Business Days after Borrower or any ERISA Affiliate knows or has reason to know that any
ERISA Event or Prohibited Transaction has occurred with respect to any Plan, a certificate of the chief financial officer of Borrower
setting forth the details as to such ERISA Event or Prohibited Transaction and the action that Borrower proposes to take with respect
thereto; annually, copies of the notice described in Section 101(f) of ERISA that Borrower or ERISA Affiliate receives with
respect to a Plan or Multiemployer Plan;


 


(h) Reports
to Other Creditors. Promptly after the furnishing thereof, copies of any material statement or report furnished to any other
party pursuant to the terms of any indenture, loan, or credit or similar agreement and not otherwise required to be furnished to
Administrative Agent pursuant to any other clause of this Section 7.1;


 






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(i) Acquisitions
and Dispositions of Oil and Gas Properties. Concurrently with each Reserve Report delivered under Section 7.1(k) below,
a list and description showing the lessor, lessee, lease date, recording information and legal description for each oil, gas and/or
mineral lease (which leases shall be grouped by the applicable well or unit) and a sufficient description of any other Oil and
Gas Property in which Borrower or any of its Subsidiaries acquired an interest or Disposed of since the delivery to Administrative
Agent of the immediately previous Reserve Report;


 


(j) Notice
of Material Adverse Event. As soon as possible and in any event within 5 Business Days after the occurrence thereof, written
notice of any event or circumstance that could reasonably be expected to result in a Material Adverse Event;


 


(k) Reserve
Reports. (i) On or before April 1 of each year, a Reserve Report prepared by an Independent Engineer, (ii) on or before
October 1 of each year, a Reserve Report prepared by Borrower’s own engineers and certified by a Responsible Officer of Borrower
or prepared by an Independent Engineer, and (iii) with each Reserve Report, an update to Schedule 6.28;


 


(l) Lease
Operating Statements. Together with each Reserve Report delivered under Section 7.1(k) above, a Lease Operating Statement;


 


(m) Updated
Schedules. Within 30 days after each request from Administrative Agent, updates to Schedules 6.13(b) and 6.28
of this Agreement and updates to the schedules to such other Loan Documents as may be requested by Administrative Agent, upon which
delivery Borrower shall be deemed to have made all applicable representations and warranties with respect thereto contained in
the applicable Loan Documents;


 


(n) Material
Gas Imbalance; Advance Payments. Promptly upon the occurrence thereof, notice to Administrative Agent of any Material Gas Imbalance
or Advance Payments in violation of Section 8.18 hereof;


 


(o) Tax
Returns. Within 30 days after each filing thereof by each Obligated Party with any Governmental Authority, if requested by
Administrative Agent, complete copies of the federal and state income tax returns so filed;


 


(p) Accounts
Aging Report. Concurrently with the delivery of each of the financial statements referred to in Sections 7.1(a) and
7.1(b), a report setting forth all accounts receivable and accounts payable of Borrower and its Subsidiaries as of the date
of such delivery, such report to show the age of such accounts and such other information as Administrative Agent shall reasonably
request;


 


(q) SEC
Reports. Promptly after the same are publicly available, copies of each annual report, proxy
or financial statement or other report or communication sent to the shareholders of the Borrower, and copies of all annual, regular,
periodic and special reports and registration statements that the Borrower or any Subsidiary may file or be required to file with
the SEC or any Governmental Authority succeeding to any or all of the functions of the SEC, or with
any national securities exchange, and not otherwise required to be delivered pursuant hereto;


 


(r) Notices
from SEC. Promptly after receipt thereof by the Borrower or any Subsidiary, copies of each notice or other correspondence received
from the SEC (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation or possible investigation
or other inquiry by such agency regarding financial or other operational results of the Borrower or any Subsidiary thereof;


 






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(s) Change
in Insurance. Within 10 Business Days after any material change in insurance coverage by Borrower or any Subsidiary from that
previously disclosed to Administrative Agent, a report describing such change, and, within 30 days after each request by Administrative
Agent, certificates of insurance from the insurance companies insuring Borrower and its Subsidiaries, describing such insurance
coverage;


 


(t) Purchasers
of Production. Within 10 Business Days after receipt of each request from Administrative Agent, a report setting forth the
identities and addresses of all Persons remitting proceeds from the sale of Hydrocarbon production from or attributable to Collateral
to any Person who has executed a Mortgage;


 


(u) Operating
Budget. As soon as available, but in any event within 90 days after the last day of each fiscal year of Borrower, an annual
Borrower-prepared operating budget for the fiscal year in which such budget is due, including at a minimum an income statement,
balance sheet, cash flow statement and capital expenditure plan of Borrower;


 


(v) Production
Reports. Within 15 days after request by Administrative Agent, a Production Report; and


 


(w) General
Information. Promptly, such other information concerning (i) Borrower, any of its Subsidiaries, any other Obligated Party,
or (ii) Borrower’s, any of its Subsidiaries’ or any other Obligated Party’s Oil and Gas Properties, as Administrative Agent, or
any Lender through Administrative Agent, may from time to time reasonably request.


 


No reporting requirement in this Section
7.1 shall be construed as waiving or eliminating any covenants or restrictions set forth elsewhere in this Agreement or in
the other Loan Documents. All representations and warranties set forth in the Loan Documents with respect to any financial information
concerning Borrower or any Guarantor shall apply to all financial information delivered to Administrative Agent by Borrower, such
Guarantor, or any Person purporting to be a Responsible Officer of Borrower or such Guarantor or other representative of Borrower
or such Guarantor regardless of the method of such transmission to Administrative Agent or whether or not signed by Borrower, such
Guarantor, or such Responsible Officer or other representative, as applicable.


 


Section 7.2 Maintenance
of Existence; Conduct of Business. Borrower shall, and shall cause each of its Subsidiaries to, preserve and maintain its existence
and all of its leases, privileges, licenses, permits, franchises, qualifications, and rights that, in its reasonable business judgment,
are necessary or desirable in the ordinary conduct of its business, except to the extent a failure to so preserve and maintain
could not reasonably be expected to result in a Material Adverse Event. Borrower shall, and shall cause each of its Subsidiaries
to, conduct its business in an orderly manner in accordance with prudent industry practice by companies in the oil and gas industry
owning similar properties in localities where Borrower or the applicable Subsidiary operates.


 


Section 7.3 Maintenance
and Operation of Properties.


 


(a)
Each Obligated Party shall at all times maintain, develop and operate its Oil and Gas Properties
in a good and workmanlike manner in accordance with prudent industry practice by companies in the oil and gas industry owning similar
properties in localities where Borrower or the applicable Subsidiary operates and will observe and comply in all material respects
with all of the terms and provisions of all oil and gas leases relating to such Oil and Gas Properties so long as such oil and
gas leases are capable of producing Hydrocarbons in commercial quantities, to the extent that the failure to so observe and comply
could reasonably be expected to result in a Material Adverse Event.


 






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(b)
Each Obligated Party shall use commercially reasonable efforts to remain as the named operator
for each oil or gas well in which it now or hereafter owns an interest if (i) any such party is the operator thereof on the
date hereof or becomes the operator thereof subsequent hereto and (ii) such well is now or hereafter becomes Collateral.


 


(c)
Each Obligated Party shall at all times maintain, preserve and keep all operating equipment
used or useful with respect to its Oil and Gas Properties in proper repair, working order and condition, and make all necessary
or appropriate repairs, renewals, replacements, additions and improvements thereto as would a reasonably prudent operator of similar
properties in localities where Borrower or the applicable Subsidiary operates.


 


(d)
Each Obligated Party shall comply in all material respects with all Laws and agreements applicable
to or relating to its Oil and Gas Properties or the production and sale of Hydrocarbons therefrom and all applicable proration
and conservation Laws of the jurisdictions in which such Properties are located, to the extent that the failure to so comply with
such Laws or agreements could reasonably be expected to result in a Material Adverse Event.


 


(e)
With respect to the Oil and Gas Properties referred to in this Section 7.3
that are operated by operators other than an Obligated Party or any Affiliate of an Obligated Party, no Obligated Party shall be
obligated itself to perform any undertakings contemplated by the covenants and agreements contained in this Section 7.3
which are performable only by such operators and are beyond its control, but the Obligated Parties shall use commercially reasonable
efforts to cause such operators to perform such undertakings.


 


(f)
No Obligated Party will amend, alter or change in any respect which could reasonably be expected
to be materially adverse to its interests or that of Lenders any agreements relating to the operations or business arrangements
of such Obligated Party or the compression, gathering, sale or transportation of oil and gas from the Oil and Gas Properties included
in the most recent determination of the Borrowing Base without the prior written consent of Administrative Agent, which consent
shall not be unreasonably withheld.


 


Section 7.4 Taxes
and Claims. Borrower shall, and shall cause each of its Subsidiaries to, pay or discharge at or before maturity or before becoming
delinquent (a) all Taxes, levies, assessments, and governmental charges imposed on it or its income or profits or any of its
Property, and (b) all lawful claims for labor, material, and supplies, which, if unpaid, could become a Lien upon any of its
Property; provided, however, that neither Borrower nor any of its Subsidiaries shall be required to pay or discharge
any Tax, levy, assessment, or governmental charge which is being contested in good faith by appropriate proceedings diligently
pursued, and for which adequate reserves in accordance with GAAP have been established.


 


Section 7.5 Insurance.


 


(a) Borrower
shall, and shall cause each of its Subsidiaries and shall use its commercially reasonable efforts to cause each of the other operators
of the Oil and Gas Properties of Borrower and its Subsidiaries to, maintain insurance with financially sound and reputable insurance
companies in such amounts and covering such risks as is customarily carried in conformity with prudent industry practice by companies
in the oil and gas industry owning similar Properties in the same general areas in which Borrower and its Subsidiaries operate,
provided that in any event Borrower will maintain and cause each of its Subsidiaries to maintain workmen’s compensation
insurance, property insurance, and comprehensive general liability insurance reasonably satisfactory to Administrative Agent. Each
insurance policy of Borrower or its Subsidiaries covering Collateral shall name Administrative Agent as loss payee and each insurance
policy covering liabilities shall name Administrative Agent as additional insured, and each such insurance policy shall provide
that such policy will not be cancelled or reduced without 30 days prior written notice to Administrative Agent.


 






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(b) Subject
to the Intercreditor Agreement and subject to Section 7.5(c) below, all proceeds of insurance shall be paid over to Administrative
Agent for application to the Obligations under the Loan Documents, unless Majority Lenders otherwise agree in writing in their
sole discretion.


 


(c) So long
as no Default or Borrowing Base Deficiency is continuing, Borrower or a Subsidiary may apply the net proceeds of a casualty or
condemnation (each a “Loss”) to the repair, restoration, or replacement of the assets suffering such Loss, so
long as (i) such repair, restoration, or replacement is completed within 180 days after the date of such Loss (or such longer
period of time agreed to in writing by Majority Lenders), and (ii) such Loss did not cause an Event of Default. If (x) an
Event of Default occurs pursuant to which the Obligations under the Loan Documents are accelerated in accordance with Section 10.2
or (y) such repair, restoration, or replacement is not completed within 180 days of the date of such Loss (or such longer period
of time agreed to in writing by Majority Lenders), then in each case Administrative Agent may immediately and without notice to
any Person apply all of such net proceeds to such Obligations, regardless of any other prior agreement regarding the disposition
of such net proceeds.


 


(d) If at
any time the representations made in Section 6.30 are untrue and any Building or Manufactured (Mobile) Home (as defined
in applicable Flood Insurance Regulations) is included in the Collateral and is or has become located in an area designated as
a “flood hazard area” under applicable Flood Insurance Regulations, Borrower shall, and shall cause each of its Subsidiaries
to, (i) provide Administrative Agent with a description of such Building or Manufactured (Mobile) Home, including the address and
legal description thereof and such other information as may be requested by Administrative Agent to obtain a flood determination
or otherwise satisfy its obligations under applicable Flood Insurance Regulations, (ii) obtain flood insurance in such amounts
as required by applicable Flood Insurance Regulations and (iii) provide evidence in form and substance satisfactory to Administrative
Agent of such flood insurance to Administrative Agent.


 


Section 7.6 Inspection
Rights. At any reasonable time and from time to time during normal business hours, Borrower shall, and shall, upon at least
1 Business Day’s advance written request from Administrative Agent or any Lender, cause each of its Subsidiaries to, permit representatives
of Administrative Agent or any Lender (a) to examine, inspect, review, evaluate and make physical verifications and appraisals
of the Mortgaged Properties and other Collateral in any manner and through any medium that Administrative Agent or such Lender
considers advisable, (b) to examine, copy, and make extracts from its books and records, (c) to visit and inspect its
Properties, and (d) to discuss its business, operations, and financial condition with its officers, employees, and independent
certified public accountants, in each instance, at Borrower’s expense.


 






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Section 7.7 Keeping
Books and Records. Borrower shall, and shall cause each of its Subsidiaries to, maintain proper books of record and account
in which full, true, and correct entries in conformity with GAAP shall be made of all dealings and transactions in relation to
its business and activities.


 


Section 7.8 Compliance
with Laws. Borrower shall, and shall cause each of its Subsidiaries to, (a) comply in all material respects with all applicable
Laws and decrees of any Governmental Authority or arbitrator, (b) maintain at all times all consents or approvals required from
the United States or any state of the United States (or other applicable Governmental Authorities) necessary to grant to Administrative
Agent a Lien on the Oil and Gas Properties of Borrower and its Subsidiaries, and (c) maintain in effect
and enforce policies and procedures designed to ensure compliance by Borrower, its Subsidiaries and their respective directors,
officers, employees and agents with Anti-Corruption Laws and applicable Sanctions.


 


Section 7.9 Compliance
with Agreements. Borrower shall, and shall cause each of its Subsidiaries to, comply in all material respects with all agreements,
contracts, and instruments binding on it or affecting its Properties or business, except to the extent a failure to so comply could
not reasonably be expected to result in a Material Adverse Event.


 


Section 7.10 Further
Assurances. Borrower shall, and shall cause each of its Subsidiaries and each other Obligated Party to, execute and deliver
such further agreements and instruments and take such further action as may be reasonably requested by Administrative Agent or
any Lender to carry out the provisions and purposes of this Agreement, the other Loan Documents and the Intercreditor Agreement
and to create, preserve, and perfect the Liens of Administrative Agent in the Collateral.


 


Section 7.11 ERISA.
Borrower shall, and shall cause each of its Subsidiaries to, comply with all minimum funding requirements, and all other material
requirements, of ERISA, if applicable, so as not to give rise to any liability thereunder.


 


Section 7.12 Depository
Relationship. (a) Borrower shall, and shall cause each of its Subsidiaries to, use and maintain LegacyTexas Bank as its principal
depository bank, including for the maintenance of business, cash management, operating and administrative deposit accounts; and
(b) Borrower shall, and shall cause each of its Subsidiaries to, cause any deposit account or securities account established or
maintained after the Closing Date (other than those established or maintained with LegacyTexas Bank) to be subject to a control
agreement in favor of Administrative Agent.


 


Section 7.13 Additional
Guarantors. Borrower shall notify Administrative Agent at the time that any Person becomes a Subsidiary, and promptly thereafter
(and in any event within 30 days) Borrower shall (a) execute and deliver, or cause to be executed and delivered, to Administrative
Agent all Security Documents, stock certificates, stock powers and other agreements and instruments as may be reasonably requested
by Administrative Agent to ensure that Administrative Agent has a perfected security interest in all Equity Interests held by any
Obligated Party in such Subsidiary, and (b) cause such Person to (i) become a Guarantor by executing and delivering to Administrative
Agent a Guaranty (or a joinder to any existing Guaranty), (ii) execute and deliver all Security Documents requested by Administrative
Agent pledging to Administrative Agent for the benefit of the Secured Parties all of its Property (subject to (A) Permitted
Liens and (B) such exceptions as are provided in the Security Documents then in effect and (C) as Administrative Agent
may permit), and subject, with respect to Oil and Gas Properties, to the limitations set forth in clause (iii) below and
take all actions required by Administrative Agent to grant to the Administrative Agent for the benefit of Secured Parties a perfected
first priority Lien on such property, including the filing of UCC financing statements in such jurisdictions as may be requested
by Administrative Agent, (iii) with respect to each Oil and Gas Property owned by such Subsidiary, execute, acknowledge and deliver
a Mortgage or Mortgages and evidence of the proper recordation of each such Mortgage in the appropriate filing office, in each
case, sufficient to cause the Recognized Value of the Mortgaged Properties to be not less than the Required Reserve Value, (iv)
deliver to Administrative Agent title opinions and/or other title information and data acceptable to Administrative Agent such
that Administrative Agent shall have received, together with the title information previously delivered to Administrative Agent,
acceptable title information sufficient to meet the requirements of Section 7.14; and (v) deliver to Administrative
Agent such other documents and instruments as Administrative Agent may require, including appropriate favorable opinions of counsel
to such Person in form, content and scope reasonably satisfactory to Administrative Agent.


 






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Section 7.14 Title
Assurances. Without limitation of any other requirements contained in this Agreement and the other Loan Documents, Borrower
shall, (a) upon request by Administrative Agent, deliver to Administrative Agent title opinions and/or other title information
and data acceptable to Administrative Agent regarding the Oil and Gas Properties of Borrower and its Subsidiaries that in the aggregate
represent not less than 85% of the Recognized Value of Oil and Gas Properties evaluated in the most recent Reserve Report; and
(b) promptly, but in any event within 30 days after notice by Administrative Agent of any defect, material in the opinion
of Administrative Agent, in the title of the mortgagor under any Mortgage to any Oil and Gas Property covered thereby, clear such
title defect, and in the event any such title defects are not cured in a timely manner, pay all related costs and fees incurred
by Administrative Agent and Lenders in attempting to do so. A failure of Borrower to clear any such title defect shall not be an
Event of Default, but instead Administrative Agent and the Majority Lenders may elect to redetermine the Borrowing Base, and if
such election is made, Borrower may not make any special determinations of the Borrowing Base under Section 2.9(c)(i)
until after the next scheduled redetermination.


 


Section 7.15 Commodity
Hedging Transactions.


 


(a) Borrower
shall, (i) within 10 Business Days following the Closing Date, enter into Commodity Hedging Transactions (A) for quantities of
gaseous and liquid Hydrocarbons equal to at least 70% of the monthly Projected Production of oil and natural gas (calculated separately)
from the proved, developed producing Oil and Gas Properties of Borrower and its Subsidiaries based on the Initial Reserve Report,
(B) fixing a price for a term of 30 months, and (C) which are otherwise in compliance with Section 8.17 and on terms acceptable
to Administrative Agent in its sole discretion, and (ii) for all time thereafter, maintain Commodity Hedging Transactions (A) for
quantities of gaseous and liquid Hydrocarbons equal to at least 70% of the monthly Projected Production of oil and natural gas
(calculated separately) from the proved, developed producing Oil and Gas Properties of Borrower and its Subsidiaries, to be tested
quarterly, based on the most recently delivered Reserve Report, (B) fixing a price for a term of 30 months from each measurement
date, and (C) which are otherwise in compliance with Section 8.17 and on terms acceptable to Administrative Agent in its
sole discretion.


 


(b) Borrower
and its Subsidiaries shall maintain a commodity price risk management policy, which policy shall be reasonably acceptable to Administrative
Agent.


 


Section 7.16 Concerning
Operator’s Liens. Upon request of Administrative Agent, Borrower shall cause each Affiliated operator of its Oil and Gas Properties
to fully subordinate to the Liens securing the Obligations any and all Liens granted to or held by such operator under any present
or future joint operating agreement covering any of the Oil and Gas Properties of Borrower or any of its Subsidiaries, in a manner
satisfactory to Administrative Agent and pursuant to documentation in form and substance satisfactory to Administrative Agent.


 



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ARTICLE 8



NEGATIVE COVENANTS


 


Borrower covenants and
agrees that, as long as the Obligations or any part thereof are outstanding (other than contingent indemnification obligations)
or any Letter of Credit outstanding (unless arrangements satisfactory to the L/C Issuer have been made) or any Lender has any Commitment
hereunder:


 


Section 8.1Debt.
Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, incur, create, assume, or permit to
exist any Debt, except:


 


(a) the
Obligations under the Loan Documents and Obligations existing or arising under Bank Product Agreements other than Hedging Agreements
and Hedging Transactions;


 


(b) existing
Debt described on Schedule 8.1 and Permitted Refinancings thereof;


 


(c) purchase
money Debt and Capitalized Lease Obligations not to exceed $500,000 in the aggregate at any time outstanding and Permitted Refinancings
thereof;


 


(d) Hedge
Obligations existing or arising under Hedging Agreements and Hedging Transactions permitted by Section 8.17;


 


(e) Debt
associated with bonds or other surety obligations required by Governmental Authorities in connection with the operation of the
businesses of Borrower and its Subsidiaries;


 


(f) Debt
arising in the ordinary course of business with respect to customary indemnification and reimbursement obligations under asset
purchase and sale agreements, division and transfer orders, joint operating agreements (including funds held in suspense), pooling,
unitization or communitization agreements, gathering agreements, processing agreements, Farmout agreements and other agreements
customary in the industry pertaining to the exploration for, development, disposition or operation of, or the production or sale
of Hydrocarbons produced from, Oil and Gas Properties;


 


(g) Endorsements
for collection or deposit in the ordinary course of business;


 


(h) Debt
related to the financing of insurance policy premiums not to exceed $500,000 in the aggregate at any time outstanding; and


 


(i) other
Debt not to exceed $500,000 in the aggregate at any time outstanding.


 


Section 8.2Limitation
on Liens. Borrower shall not, and shall not permit any of its Subsidiaries to, incur, create, assume, or permit to exist any
Lien upon any of its Property, assets, or revenues, whether now owned or hereafter acquired, except:


 


(a) existing
Liens disclosed on Schedule 8.2 and Permitted Refinancings thereof;


 


(b) Liens
in favor of Administrative Agent for the benefit of the Secured Parties, so long as, with respect to Liens for the benefit of Approved
Commodity Swap Counterparties other than Bank Product Providers, such Liens are permitted by and subject to the Intercreditor Agreement;


 






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(c) encumbrances
consisting of minor easements, zoning restrictions, or other restrictions on the use of real property that are customary in the
oil and gas industry and do not (individually or in the aggregate) materially affect the value of the assets encumbered thereby
or materially impair the ability of Borrower or its Subsidiaries to use or operate such assets in their respective businesses,
and none of which is violated in any material respect by existing or proposed structures or land use or operation;


 


(d) Immaterial
Title Deficiencies;


 


(e) Liens
for Taxes, assessments, or other governmental charges which are not delinquent or which are being contested in good faith and for
which adequate reserves in accordance with GAAP have been established;


 


(f) any
interest or title of, or Liens created by, a lessor under any leases or subleases or occupancy agreement, other than oil and gas
leases or other such instruments pertaining to Oil and Gas Properties, entered into in each case by Borrower or any Subsidiary,
as tenant, in the ordinary course of business;


 


(g) Liens
of mechanics, materialmen, warehousemen, carriers, or other similar statutory Liens securing obligations that are not yet due or
are being contested in good faith and for which adequate reserves in accordance with GAAP have been established and are incurred
in the ordinary course of business;


 


(h) Liens
resulting from good faith deposits to secure payments of workmen’s compensation or other social security programs (other than Liens
imposed by ERISA) or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, contracts (other
than for payment of Debt), or leases made in the ordinary course of business;


 


(i) purchase
money Liens on specific Property to secure Debt used to acquire such Property and Liens securing Capitalized Lease Obligations
with respect to specific leased Property, in each case to the extent permitted in Section 8.1(c);


 


(j) so
long as no default has occurred by any Obligated Party in the payment or performance of such agreements, contracts, agreements,
lease provisions, defects and irregularities which (i) were in effect when such Property, assets or revenues were acquired,
(ii) were not created in contemplation of such acquisition, (iii) were not such as to materially interfere with the operation,
value or use of the Properties covered by such Lien, (iv) are ordinary and customary to the oil, gas and other mineral exploration,
development, processing or extraction business, (v) do not otherwise cause any other express representation or warranty of
any Obligated Party in any of the Loan Documents to be untrue in any material respect, and (vi) do not operate to reduce any
Obligated Party’s net revenue interest in production for the affected Oil and Gas Properties (if any) below such interests reflected
in the most recent Reserve Report, or increase the working interest for the affected Oil and Gas Properties (if any) as reflected
or warranted in the most recent Reserve Report without a corresponding increase in the corresponding net revenue interest;


 


(k) contractual
Liens for the benefit of operators of the Oil and Gas Properties of Borrower and its Subsidiaries, but only to the extent that
such operators are not Obligated Parties or Affiliates of Obligated Parties (unless such Obligated Parties or Affiliates have subordinated
such Liens to the Liens securing the Obligations in a manner satisfactory to Administrative Agent and pursuant to documentation
in form and substance reasonably satisfactory to Administrative Agent), and are not asserting a claim or right to exercise their
rights under such contractual Liens, except for such claims and rights of operators which Borrower or the applicable Subsidiary
is contesting in good faith and for which adequate reserves are maintained in accordance with GAAP;


 






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(l) to
the extent applicable, the statutory Lien to secure payment of proceeds of production established by § 9.343 of the UCC and
similar Laws of other jurisdictions;


 


(m) royalties,
overriding royalties, reversionary interests, production payments, net profits interests, calls on production, preferential purchase
rights and similar lease burdens which (i) are customarily granted in the ordinary course of business in the oil and gas industry,
(ii) are deducted in the calculation of discounted present value in the most recent Reserve Report delivered to Administrative
Agent hereunder, (iii) with respect to each Oil and Gas Property, do not operate to reduce any Obligated Party’s net revenue interest
in production for such Oil and Gas Property (if any) below such interests reflected in the most recent Reserve Report or increase
the working interest for such Oil and Gas Property (if any) as reflected or warranted in the most recent Reserve Report without
a corresponding increase in the corresponding net revenue interest, and (iv) do not materially impair the use or value of such
Oil and Gas Property subject to such Lien;


 


(n) contractual
Liens under sale contracts, farm-in agreements, Farmout agreements, area of mutual interest, joint operating agreements, or other
arrangements for the exploration, development, production, transportation, gathering, processing or sale of Hydrocarbons, and other
agreements which are usual and customary in the oil and gas business which (i) would not (when considered cumulatively with the
matters discussed in Section 8.2(m)) materially impair the use or value of such Oil and Gas Property subject to such Lien,
(ii) are ordinary and customary to the oil, gas and other mineral exploration, development, processing or extraction business,
(iii) do not otherwise cause any other express representation or warranty of any Obligated Party in any of the Loan Documents
to be untrue in any material respect, and (iv) do not operate to reduce any Obligated Party’s net revenue interest in production
for the affected Oil and Gas Properties (if any) below such interests reflected in the most recent Reserve Report, or increase
the working interest for the affected Oil and Gas Properties (if any) as reflected or warranted in the most recent Reserve Report
without a corresponding increase in the corresponding net revenue interest;


 


(o) Gas
Balancing Agreements; provided that the amount of all gas imbalances and the amount of all production which has been paid
for but not delivered shall have been disclosed or otherwise taken into account in the Reserve Reports delivered to Administrative
Agent hereunder;


 


(p) Liens
to secure plugging and abandonment obligations;


 


(q) Liens
granted by any Obligated Party on its rights under any insurance policy, but only to the extent that such Lien is granted to the
insurers under such insurance policies or any insurance premium finance company to secure payment of the premiums and other amounts
owed to the insurers or such premium finance company with respect to such insurance policy; and


 


(r) Other
Liens securing Debt not to exceed $150,000 in the aggregate at any time outstanding;


 


provided, however,
that Liens described in clauses (a), (e), (g), (h), (j) and (o) above shall continue
to be permitted only for so long as (A) the appropriate Obligated Party shall cause any proceeding instituted contesting such Lien
to stay the sale or forfeiture of any portion of Property on account of such Lien and (B) a proper reserve, if applicable, continues
to be maintained in accordance with GAAP; and provided further, that no intention to subordinate the first priority
Liens granted in favor of Administrative Agent to secure the Obligations is hereby implied or expressed or is to be inferred by
the permitted existence of such Liens.


 






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Section 8.3Mergers,
Etc. Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, become a party to a merger
or consolidation, or purchase or otherwise acquire all or substantially all of the assets of any Person or any Equity Interests
or other evidence of beneficial ownership of any Person, or wind-up, dissolve, or liquidate, except that (a) any Subsidiary may
merge or consolidate with Borrower so long as Borrower is the surviving entity; (b) any Subsidiary may merge or consolidate with
another Subsidiary so long as the Subsidiary surviving the merger or consolidation (i) is a Guarantor, or (ii) within 10 Business
Days of such merger or consolidation, becomes a Guarantor pursuant to Section 7.13; and (c) as otherwise permitted
under Section 8.5.


 


Section 8.4Restricted
Payments. Borrower shall not, directly or indirectly, declare or pay any dividends or make any other payment or distribution
(in cash, Property, or obligations) on account of its Equity Interests, or redeem, purchase, retire, call, or otherwise acquire
any of its Equity Interests, or permit any of its Subsidiaries to purchase or otherwise acquire any Equity Interest of Borrower
or another Subsidiary of Borrower, or set apart any money for a sinking or other analogous fund for any dividend or other distribution
on its Equity Interests or for any redemption, purchase, retirement, or other acquisition of any of its Equity Interests, or incur
any obligation (contingent or otherwise) to do any of the foregoing, except that:


 


(a) Subsidiaries
shall be permitted to make payments and distributions to Borrower or any Guarantor;


 


(b) annually,
but only so long as Nytis is treated as a pass-through entity for federal income tax purposes, Nytis may make Permitted Tax Distributions,
provided that no Default or Borrowing Base Deficiency exists or will exist after giving effect to such distribution;


 


(c) Borrower
shall be permitted to make distributions with respect to its Preferred Equity Interests payable solely in additional shares of
its Equity Interests (other than Disqualified Capital Stock); and


 


(d) provided
that (i) no Default or Event of Default exists or will exist after giving effect to such distribution and (ii) after giving
pro forma effect thereto, (A) the Leverage Ratio is not greater than 2.75 to 1.00 and (B) Utilization is less than eighty-five
percent (85.0%), in each case as evidenced by a certificate from a Responsible Officer of Borrower delivered to Administrative
Agent five (5) Business Days’ prior to the date of any such distribution, and provided further that Administrative
Agent has not delivered any written objection to Borrower’s pro forma calculations, Borrower may declare and pay dividends
with respect to its Equity Interests to any holder thereof.


 


Section 8.5Loans
and Investments. Borrower shall not make, and shall not permit any of its Subsidiaries, directly or indirectly, to make, hold
or maintain, any advance, loan, extension of credit, or capital contribution to or investment in, or purchase any stock, bonds,
notes, debentures, or other securities of, any Person, except:


 


(a) existing
investments described on Schedule 8.5 (including existing investments in Excluded Subsidiaries);


 






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(b) readily
marketable direct obligations of the United States of America or any agency thereof with maturities of one year or less from
the date of acquisition;


 


(c) fully
insured certificates of deposit with maturities of one year or less from the date of acquisition issued by either (i) any
commercial bank operating in the United States of America having capital and surplus in excess of $50,000,000.00 or (ii) any
Lender;


 


(d) commercial
paper of a domestic issuer if at the time of purchase such paper is rated in one of the two highest rating categories of Standard
and Poor’s Corporation or Moody’s Investors Service;


 


(e) investments
resulting in an Acquisition where:


 


(i) the
business, division or assets acquired are for use, or the Person acquired is engaged in, one of the businesses described in Section 6.25;


 


(ii) immediately
before and after giving effect to such Acquisition, no Default shall exist;


 


(iii) the
business, division or Person acquired shall not have a negative EBITDAX after giving effect to reasonable pro forma adjustments
which are approved by Administrative Agent;


 


(iv) no
less than 10 Business Days prior to such Acquisition, Administrative Agent shall have received (A) drafts of each material
document, instrument and agreement to be executed in connection with such Acquisition, (B) an acquisition summary with respect
to the Person and/or business or division to be acquired, such summary to include a reasonably detailed description thereof (including
financial information) and operating results (including financial statements for the most recent 12-month period for which they
are available and as otherwise applicable), the terms and conditions, including economic terms, of the proposed Acquisition and
Borrower’s calculation of pro forma EBITDAX relating thereto, (C) a certificate of Borrower executed on its behalf by a Responsible
Officer of Borrower, certifying that both before and after giving effect to such Acquisition, Borrower is in pro forma compliance
with all financial covenants set forth in Article 9; and (D) Administrative Agent shall have approved Borrower’s
computation of pro forma EBITDAX;


 


(v) to
the extent applicable, the provisions of Section 7.13 have been satisfied, thereby causing Administrative Agent to
have a perfected first priority Lien (subject to Permitted Liens) on all assets, including Equity Interests, that are acquired
in the Acquisition; and


 


(vi) after
giving effect to such Acquisition, there shall be at least $500,000 in unrestricted cash of Borrower plus Revolving Credit Availability;


 


(f) investments
in Subsidiaries that are Guarantors;


 






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(g) investments
consisting of direct ownership interests in Oil and Gas Properties or wells, gas gathering systems or other field facilities, seismic
data and surveys, in each case related to such Oil and Gas Properties, or related to Farmouts or farm-ins, participation
agreements, joint operating agreements, joint venture or area of mutual interest agreements or other similar arrangements which
are usual and customary in the oil and gas industry located within the geographic boundaries of the United States of America; provided
that (i) no such investment includes an investment in any Equity Interest in a Person, (ii) any Debt incurred or assumed or Lien
granted or permitted to exist pursuant to such investments is otherwise permitted under Section 8.1 and Section 8.2,
respectively, and (iii) such investments are taken into account in computing the working interests and net revenue interests set
forth in the most recent Reserve Report;


 


(h) investments
consisting of Hedging Transactions permitted under Section 8.17;


 


(i) advances
or extensions of credit in the form of accounts receivable incurred in the ordinary course of business and upon terms common in
the industry for such accounts receivable which are not more than 90 days past due;


 


(j) advances
to employees for the payment of expenses in the ordinary course of business


 


(k) investments
received in satisfaction or partial satisfaction of Investments described in clause (i) above from financially troubled account
debtors to the extent reasonably necessary in order to prevent or limit loss, provided that all such Investments under this clause
(k) shall not exceed $100,000 in the aggregate outstanding at any one time;


 


(l) additional
investments in the Excluded Subsidiaries, so long as (i) no Default or Event of Default exists or will exist after giving effect
to such additional investments and (ii) after giving pro forma effect thereto, (A) the Leverage Ratio is not greater than 2.75
to 1.00 and (B) Utilization is less than eighty-five percent (85.0%), in each case as evidenced by a certificate from a Responsible
Officer of Borrower delivered to Administrative Agent five (5) Business Days’ prior to the date of any such additional investments,
and provided that Administrative Agent has not delivered any written objection to Borrower’s pro forma calculations;
and


 


(m) other
Investments not otherwise permitted by the foregoing clauses in an amount not to exceed $250,000 in the aggregate outstanding at
any one time.


 


Section 8.6Limitation
on Issuance of Equity. Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, issue or
Dispose of any of its Equity Interests other than (i) to Borrower or another Subsidiary and only if such Equity Interests are pledged
to the Administrative Agent consistent with the Security Documents, or (ii) issuance of Equity Interests in connection with distributions
permitted by Section 8.4(c).


 


Section 8.7Transactions
With Affiliates. Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, enter into any
transaction, including, without limitation, the purchase, sale, or exchange of Property, the rendering of any service or the payment
of any management, advisory or similar fees, with any Affiliate of Borrower or such Subsidiary, except in the ordinary course of
and pursuant to the reasonable requirements of Borrower’s or such Subsidiary’s business, pursuant to a transaction which is otherwise
expressly permitted under this Agreement, and upon fair and reasonable terms no less favorable to Borrower or such Subsidiary than
would be obtained in a comparable arm’s-length transaction with a Person not an Affiliate of Borrower or such Subsidiary.


 






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Section 8.8Disposition
of Assets. Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, make any Disposition,
except:


 


(a) Dispositions
of inventory (including Hydrocarbons) in the ordinary course of business;


 


(b) Dispositions,
for fair value, of worn-out and obsolete equipment not necessary or useful to the conduct of business;


 


(c) Dispositions
consisting of any compulsory pooling or unitization ordered by a Governmental Authority with jurisdiction over Borrower’s or any
of its Subsidiaries’ Oil and Gas Properties;


 


(d) Dispositions
of unproved Oil and Gas Properties;


 


(e) subject
to Section 2.9(c)(ii) and provided no Default has occurred and is continuing or would result therefrom, Dispositions of
proved developed Oil and Gas Properties; provided that (i) all
of the consideration received in respect of any such Disposition shall be cash, (ii) the consideration received shall be equal
to or greater than the fair market value thereof (as reasonably determined by a Responsible Officer of Borrower, and if requested
by Administrative Agent, Borrower shall deliver a certificate of
a Responsible Officer of Borrower certifying to that effect), (iii) to the extent required pursuant to Section 2.9(c)(ii),
the Borrowing Base shall be automatically reduced in accordance therewith and the Borrower shall make any prepayments required
under Section 2.8(c), and (iv) the net cash proceeds from such Disposition shall be sufficient to cover any resulting Borrowing
Base Deficiency; and


 


(f) other
Dispositions not to exceed $1,000,000 in the aggregate in any fiscal year.


 


Section 8.9Sale
and Leaseback. Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, enter into any
arrangement with any Person pursuant to which it leases from such Person real or personal Property that has been or is to be sold
or transferred, directly or indirectly, by it to such Person.


 


Section 8.10Prepayment
of Debt. Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, make any optional or
voluntary payment, prepayment, repurchase or redemption of any Debt, except (a) the Obligations under the Loan Documents,
(b) Debt secured by a Permitted Lien if the asset securing such Debt has been sold or otherwise disposed of in a transaction
permitted hereunder, (c) a Permitted Refinancing of Debt permitted under Sections 8.1(b) and 8.1(c), (d) prepayments
of other Debt so long as the amounts prepaid do not exceed $250,000 in the aggregate during any period between determinations of
the Borrowing Base, and (e) prepayment of intercompany Debt to Obligated Parties.


 


Section 8.11Nature
of Business. Borrower shall not, and shall not permit any of its Subsidiaries to, engage in any business other than their businesses
as oil and gas exploration and production companies. Borrower shall not, and shall not permit any of its Subsidiaries to, make
any material change in its credit collection policies if such change would materially impair the collectability of any Account,
nor will it rescind, cancel or modify any Account except in the ordinary course of business.


 


Section 8.12Environmental
Protection. Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly (a) use (or permit
any tenant to use) any of their respective Properties or assets for the handling, processing, storage, transportation, or disposal
of any Hazardous Material in material violation of Environmental Laws, (b) generate any Hazardous Material in material violation
of Environmental Laws, (c) conduct any activity that is likely to cause a Release or threatened Release of any Hazardous Material,
or (d) otherwise conduct any activity or use any of their respective Properties or assets in any manner that is likely to
violate in any material respect any Environmental Law or create any material Environmental Liabilities for which Borrower or any
of its Subsidiaries would be responsible.


 






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Section 8.13Accounting.
Borrower shall not, and shall not permit any of its Subsidiaries to, change its fiscal year or make any change (a) in accounting
treatment or reporting practices, except as required by GAAP and disclosed to Administrative Agent and Lenders, or (b) in
tax reporting treatment, except as required by Law and disclosed to Administrative Agent and Lenders.


 


Section 8.14Burdensome
Agreements. Borrower shall not, and shall not permit any of its Subsidiaries or any other Obligated Party to, enter into or
permit to exist any arrangement or agreement, other than pursuant to this Agreement or any Loan Document, which (a) directly
or indirectly prohibits Borrower, any of its Subsidiaries, or any other Obligated Party from creating or incurring a Lien on any
of its Property, revenues, or assets, whether now owned or hereafter acquired, (b) directly or indirectly prohibits any of
its Subsidiaries, or any other Obligated Party to make any payments, directly or indirectly, to Borrower by way of dividends, distributions,
advances, repayments of loans, repayments of expenses, accruals, or otherwise or (c) in any way would be contravened by such
Person’s performance of its obligations hereunder or under the other Loan Documents; provided, that the foregoing shall
not prohibit any (i) provisions restricting subletting or assignment of any lease, (ii) provisions in any assignment, lease, easement,
permit, license, deed or other agreement or instrument restricting or prohibiting assignment of such agreement or instrument or
rights created, or property conveyed or assigned, thereunder, including, without limitation, preferential purchase rights and consent
requirements, and (iii) customary restrictions and conditions contained in any agreement relating to the sale of any property permitted
under this Agreement pending the consummation of such sale.


 


Section 8.15Subsidiaries.
Borrower shall not, directly or indirectly, form or acquire any Subsidiary unless Borrower complies with the requirements of Section 7.13.


 


Section 8.16Amendments
of Constituent Documents and Material Agreements. Borrower shall not, and shall not permit any of its Subsidiaries to, (i)
amend or restate any of their respective Constituent Documents without prior consent of the Administrative Agent, except as would
not be reasonably expected to be materially adverse to the Lenders, and (ii) amend or restate any agreement or contract of which
such Obligated Party is a party that could reasonably result in a Material Adverse Event.


 


Section 8.17Hedging
Agreements and Transactions.


 


(a) Borrower
shall not, and shall not permit any Subsidiary to, enter into any Hedging Transactions (other than, with respect to clause (a)(i)
below, puts and floors), except:


 


(i) Commodity
Hedging Transactions entered into with the purpose and effect of fixing prices on oil and gas expected to be produced by the Obligated
Parties, provided that at all times (A) no such contract fixes a price for a term of more than 36 months; and (B) the aggregate
monthly production covered by all such contracts (as determined, in the case of contracts that are not settled on a monthly basis,
by a monthly proration acceptable to Administrative Agent) for any single month does not in the aggregate exceed 90% of the Obligated
Parties’ aggregate Projected Production anticipated to be sold in the ordinary course of the Obligated Parties’ business for such
month; and


 






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(ii)Rate
Management Transactions entered into by Borrower and its Subsidiaries with the purpose and effect of fixing interest rates on a
principal amount of indebtedness of Borrower and its Subsidiaries that is accruing interest at a variable rate; provided
that (A) the term does not extend past the Maturity Date, (B) the aggregate notional amount of such contracts never exceeds 75%
of the anticipated outstanding principal balance of the indebtedness to be hedged by such contracts or an average of such principal
balances calculated by using a generally accepted method of matching interest swap contracts to declining principal balances, and
(C) the floating rate index of each such contract generally matches the index used to determine the floating rates of interest
on the corresponding indebtedness to be hedged by such contract.


 


(b) No
Hedging Transactions or Rate Management Transactions entered into by Borrower and its Subsidiaries shall (i) require Borrower or
any other Obligated Party to put up money, assets, or other security (other than Letters of Credit or Collateral under the Loan
Documents) against the event of its nonperformance prior to actual default by Borrower or its Subsidiaries in performing its obligations
thereunder, or (ii) be with any party that is not an Approved Commodity Swap Counterparty.


 


Section 8.18Gas
Balancing Agreements and Advance Payment Contracts. Borrower shall not, and shall not permit any of its Subsidiaries to, directly
or indirectly, incur, become or remain liable for, or permit any of its Subsidiaries to incur, become or remain liable for, at
any time (a) any Material Gas Imbalance, or (b) Advance Payments under Advance Payment Contracts which are to be satisfied
by delivery of production in excess of $250,000 in the aggregate.


 


Section 8.19Certain
Accounts Payable. For each well whose reserves or projected cash flow are from time to time included in any Reserve Report,
there shall be no accounts payable outstanding more than 90 days after the due date under or in connection with an authorization
for expenditure that are associated with such well, other than those that are being contested in good faith by appropriate proceedings
and for which adequate reserves in accordance with GAAP have been established.


 


Section 8.20Use
of Proceeds. Borrower will not request any Credit Extension, and Borrower shall not use, and shall ensure that its Subsidiaries
and its or their respective directors, officers, employees and agents shall not use, the proceeds of any Credit Extension, (a) directly
or indirectly, to purchase or carry margin stock (within the meaning of Regulations T, U, or X of the Board of Governors), (b) in
furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value,
to any Person in violation of any Anti-Corruption Laws, (c) for the purpose of funding, financing or facilitating any activities,
business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (d) in any manner that would result
in the violation of any Sanctions applicable to any party hereto.


 


Section 8.21Joint
Operating Agreements. Borrower shall not, and shall not permit any of its Subsidiaries to, amend, restate, supplement or otherwise
modify, or elect a new operator under, any joint operating agreement covering any of the Oil and Gas Properties of Borrower or
any of its Subsidiaries in a manner materially adverse to Borrower or such Subsidiary without the prior written consent of Administrative
Agent.


 


Section 8.22Excluded
Subsidiaries. Borrower shall not permit any of its Excluded Subsidiaries to (i) (other than Crawford Company, Carbon California
Company, LLC, and Carbon California Operating Company, LLC) directly or indirectly, incur, create, assume, or permit to exist (A)
any Debt, or (B) any Lien upon any of its Property, assets, or revenues, whether now owned or hereafter acquired, except for those
permitted by the Administrative Agent in its sole discretion, or (ii) own any Oil and Gas Properties included in the determination
of the Borrowing Base.


 






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ARTICLE
9


 


FINANCIAL COVENANTS


 


Borrower covenants and
agrees that, as long as the Obligations or any part thereof are outstanding or any Letter of Credit shall remain outstanding or
any Lender has any Commitment hereunder:


 


Section 9.1Leverage
Ratio. Borrower shall not permit, as of the last day of any Test Period, commencing with the Test Period ending September 30,
2018, the Leverage Ratio for Borrower and its Subsidiaries, on a consolidated basis, to be greater than 3.50 to 1.00.


 


Section 9.2Current
Ratio. Borrower shall not permit, as of the last day of any fiscal quarter of Borrower, commencing with the fiscal quarter
ending September 30, 2018, the Current Ratio for Borrower and its Subsidiaries, on a consolidated basis, to be less than 1.00 to
1.00.


 


ARTICLE
10


 


DEFAULT


 


Section 10.1Events
of Default. Each of the following shall be deemed an “Event of Default”:


 


(a) Borrower
shall fail to pay the Obligations under the Loan Documents or any part thereof shall not be paid when due or declared due and,
other than with respect to payments of principal, such failure shall continue unremedied for three (3) Business Days after
such payment became due;


 


(b) Borrower
shall breach any provision of Sections 7.1, 7.2, 7.5, 7.6, 7.13, or 7.15 or Article 8
or Article 9 of this Agreement and in the case of a breach of Section 7.1(i), (k), or (l),
such breach shall continue unremedied for three (3) Business Days;


 


(c) any
representation or warranty made or deemed made by Borrower or any other Obligated Party (or any of their respective officers) in
any Loan Document or the Intercreditor Agreement or in any certificate, report, notice, or financial statement furnished at any
time in connection with this Agreement shall be false, misleading, or erroneous in any material respect (without duplication of
any materiality qualifier contained therein) when made or deemed to have been made;


 


(d) Borrower,
any of its Subsidiaries, or any other Obligated Party shall fail to perform, observe, or comply with any covenant, agreement, or
term contained in this Agreement or any other Loan Document (other than as covered by Sections 10.1(a) and 10.1(b))
or the Intercreditor Agreement, and such failure continues for more than 30 consecutive days following the earlier of (i) the
date of Borrower’s receipt of written notice thereof or (ii) the date Borrower knew or should have known of such failure;


 


(e) Borrower,
any of its Subsidiaries, or any other Obligated Party shall commence a voluntary proceeding seeking liquidation, reorganization,
or other relief with respect to itself or its debts under any bankruptcy, insolvency, or other similar Law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator, custodian, or other similar official of it or a substantial
part of its Property or shall consent to any such relief or to the appointment of or taking possession by any such official in
an involuntary case or other proceeding commenced against it or shall make a general assignment for the benefit of creditors or
shall generally fail to pay its debts as they become due or shall take any corporate action to authorize any of the foregoing;


 






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(f) an
involuntary proceeding shall be commenced against Borrower, any of its Subsidiaries, or any other Obligated Party seeking liquidation,
reorganization, or other relief with respect to it or its debts under any bankruptcy, insolvency, or other similar Law now or hereafter
in effect or seeking the appointment of a trustee, receiver, liquidator, custodian, or other similar official for it or a substantial
part of its Property, and such involuntary proceeding shall remain undismissed and unstayed for a period of 60 days;


 


(g) Borrower,
any of its Subsidiaries, or any other Obligated Party shall fail to pay when due any principal of or interest on any Debt (other
than the Obligations under the Loan Documents and Hedging Agreements with Bank Product Providers) in the amount of the Threshold
Amount or more beyond any applicable grace or cure period, or the maturity of any such Debt shall have been accelerated, or any
such Debt shall have been required to be prepaid, repurchased, defeased or redeemed prior to the stated maturity thereof or any
cash collateral in respect thereof to be demanded, or any event shall have occurred that permits (or, with the giving of notice
or lapse of time or both, would permit) any holder or holders of such Debt or any Person acting on behalf of such holder or holders
to accelerate the maturity thereof or require any such prepayment, repurchase, defeasance or redemption or any cash collateral
in respect thereof to be demanded;


 


(h) there
shall occur an Early Termination Date (as defined in a Hedging Agreement) under any Hedging Agreement to which any Obligated Party
is a party, and the Hedge Termination Value, if any, owed by Borrower or another Obligated Party as a result thereof exceeds the
Threshold Amount;


 


(i) this
Agreement, any other Loan Document or the Intercreditor Agreement shall cease to be in full force and effect or shall be declared
null and void or the validity or enforceability thereof shall be contested or challenged by Borrower, any of its Subsidiaries,
any other Obligated Party or any of their respective equity holders, or Borrower or any other Obligated Party shall deny that it
has any further liability or obligation under any of the Loan Documents or the Intercreditor Agreement, or any Lien created by
the Loan Documents shall for any reason cease to be a valid, first priority perfected Lien (subject to Permitted Liens) upon any
of the Collateral purported to be covered thereby;


 


(j) any
of the following events shall occur or exist with respect to Borrower or any ERISA Affiliate: (i) any ERISA Event occurs with
respect to a Plan or Multiemployer Plan, or (ii) any Prohibited Transaction involving any Plan; and in each case above, such
event or condition, together with all other events or conditions, if any, have subjected or could in the reasonable opinion of
Administrative Agent subject Borrower or any ERISA Affiliate to any tax, penalty, or other liability to a Plan, a Multiemployer
Plan, the PBGC, the IRS, the U. S. Department of Labor, or otherwise (or any combination thereof) which in the aggregate exceed
or could reasonably be expected to result in a Material Adverse Event;


 






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(k) a
Change of Control shall occur;


 


(l) Borrower,
any of its Subsidiaries, or any other Obligated Party, or any of their Properties, revenues, or assets, shall become subject to
an order of forfeiture, seizure, or divestiture (whether under RICO or otherwise) and the same shall not have been discharged within
30 days from the date of entry thereof;


 


(m) Borrower,
any of its Subsidiaries, or any other Obligated Party shall fail to discharge within a period of 60 days after the commencement
thereof any attachment, sequestration, or similar proceeding or proceedings involving an aggregate amount in excess of the Threshold
Amount against any of its assets or Properties;


 


(n) a
final judgment or judgments for the payment of money in excess of the Threshold Amount in the aggregate shall be rendered by a
court or courts against Borrower, any of its Subsidiaries, or any other Obligated Party and the same shall not be discharged (or
provision shall not be made for such discharge), or a stay of execution thereof shall not be procured, within 60 days from the
date of entry thereof and Borrower, such Subsidiary, or such Obligated Party shall not, within such period of 60 days, or such
longer period during which execution of the same shall have been stayed, appeal therefrom and cause the execution thereof to be
stayed during such appeal;


 


(o) any
failure to cure a Borrowing Base Deficiency in accordance with Section 2.9(e) shall have occurred; or


 


(p) any
Security Document shall cease to create valid perfected first priority Liens (subject to Permitted Liens) on the Collateral purported
to be covered thereby.


 


Section 10.2Remedies
Upon Default. If any Event of Default shall occur and be continuing, then Administrative Agent may, with the consent of Majority
Lenders, or shall, at the direction of Majority Lenders, without notice do any or all of the following: (a) terminate the
Aggregate Commitments (except with respect to funding obligations for outstanding Letters of Credit), (b) terminate the obligations
of L/C Issuer to make L/C Credit Extensions, (c) require that Borrower Cash Collateralize the L/C Obligations (in an amount
equal to the Minimum Collateral Amount with respect thereto), or (d) declare the Obligations under the Loan Documents or any
part thereof to be immediately due and payable, and the same shall thereupon become immediately due and payable, without notice,
demand, presentment, notice of dishonor, notice of acceleration, notice of intent to accelerate, notice of intent to demand, protest,
or other formalities of any kind, all of which are hereby expressly waived by Borrower; provided, however, that upon
the occurrence of an Event of Default under Section 10.1(e) or 10.1(f), the Aggregate Commitments shall automatically
terminate (except for funding obligations with respect to outstanding Letters of Credit), the obligations of L/C Issuer to make
L/C Credit Extensions shall automatically terminate, the obligation of Borrower to Cash Collateralize the L/C Obligations as aforesaid
shall automatically become effective, and the Obligations under the Loan Documents shall become immediately due and payable, in
each case without notice, demand, presentment, notice of dishonor, notice of acceleration, notice of intent to accelerate, notice
of intent to demand, protest, or other formalities of any kind, all of which are hereby expressly waived by Borrower. In addition
to the foregoing, if any Event of Default shall occur and be continuing, Administrative Agent may, with the consent of Majority
Lenders, or shall, at the direction of Majority Lenders, exercise all rights and remedies available to it, Lenders and L/C Issuer
in law or in equity, under the Loan Documents, or otherwise.


 






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Section 10.3Application
of Funds. After the exercise of remedies provided for in Section 10.2 (or after the Loans have automatically become
immediately due and payable), any amounts received on account of the Obligations shall be applied by Administrative Agent in the
following order, subject to the Intercreditor Agreement:


 


First,
to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges
and disbursements of counsel to Administrative Agent) payable to Administrative Agent in its capacity as such;


 


Second,
to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal, interest,
and Letter of Credit Fees) payable to Lenders and L/C Issuer (including fees, charges and disbursements of counsel to the respective
Lenders and L/C Issuer) arising under the Loan Documents, ratably among them in proportion to the respective amounts described
in this clause Second payable to them;


 


Third,
to payment of that portion of the Obligations constituting accrued and unpaid Letter of Credit Fees and interest on the Loans,
L/C Borrowings and other Obligations arising under the Loan Documents, ratably among Lenders and L/C Issuer in proportion to the
respective amounts described in this clause Third payable to them;


 


Fourth,
to payment of that portion of the Obligations constituting unpaid principal of the Loans and L/C Borrowings and constituting unpaid
Bank Product Obligations, ratably among Lenders and Bank Product Providers in proportion to the respective amounts described in
this clause Fourth held by them;


 


Fifth,
to Administrative Agent for the account of the L/C Issuer, to Cash Collateralize that portion of L/C Obligations comprised of the
aggregate undrawn amount of Letters of Credit to the extent not otherwise Cash Collateralized by Borrower pursuant to Sections
2.2 and 2.6;


 


Sixth,
to payment of that remaining portion of the Obligations, ratably among the Lenders and Bank Product Providers in proportion to
the respective amounts described in this clause Sixth held by them; and


 


Last,
the balance, if any, after all of the Obligations have been indefeasibly paid in full, to Borrower or as otherwise required by
Law.


 


Notwithstanding the
foregoing, Bank Product Obligations shall be excluded from the application described above if Administrative Agent has not received
written notice thereof, together with supporting documentation as Administrative Agent may request from the applicable Bank Product
Provider, provided that no such notice shall be required for any Bank Product Agreement for which Administrative Agent or
any Affiliate of Administrative Agent is the applicable Bank Product Provider. Each Bank Product Provider that is not a party to
this Agreement that has given notice contemplated by the preceding sentence shall, by such notice, be deemed to have acknowledged
and accepted the appointment of Administrative Agent pursuant to the terms of Article 11 hereof for itself and its
Affiliates as if a “Lender” party hereto.


 


Section 10.4Performance
by Administrative Agent. If Borrower shall fail to perform any covenant or agreement contained in any of the Loan Documents
or the Intercreditor Agreement, then Administrative Agent may perform or attempt to perform such covenant or agreement on behalf
of Borrower. In such event, Borrower shall, at the request of Administrative Agent, promptly pay to Administrative Agent any amount
expended by Administrative Agent in connection with such performance or attempted performance, together with interest thereon at
the Default Interest Rate from and including the date of such expenditure to but excluding the date such expenditure is paid in
full. Notwithstanding the foregoing, it is expressly agreed that Administrative Agent shall not have any liability or responsibility
for the performance of any covenant, agreement, or other obligation of Borrower under this Agreement, any other Loan Document or
the Intercreditor Agreement.


 






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ARTICLE
11


 


AGENCY


 


Section 11.1Appointment
and Authority.


 


(a) Each
of the Lenders and L/C Issuer hereby irrevocably appoints LegacyTexas Bank to act on its behalf as Administrative Agent hereunder
and under the other Loan Documents and the Intercreditor Agreement and authorizes Administrative Agent to take such actions on
its behalf and to exercise such powers as are delegated to Administrative Agent by the terms hereof or thereof, together with such
actions and powers as are reasonably incidental thereto, and each of the Lenders and L/C Issuer hereby approves the terms and conditions
of the Intercreditor Agreement and authorizes Administrative Agent to enter into the Intercreditor Agreement and amendments thereto
from time to time. The provisions of this Article 11 are solely for the benefit of Administrative Agent, Lenders, and
L/C Issuer, and neither Borrower nor any other Obligated Party shall have rights as a third-party beneficiary of any of such provisions.
It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents or in the Intercreditor
Agreement (or any other similar term) with reference to Administrative Agent is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of any applicable Law. Instead such term is used as a matter of
market custom, and is intended to create or reflect only an administrative relationship between contracting parties.


 


(b) Administrative
Agent shall also act as the “collateral agent” under the Loan Documents and the Intercreditor Agreement, and each of
the Lenders (including, for itself and its Affiliates, in their capacities as potential Bank Product Providers) and L/C Issuer
hereby irrevocably appoints and authorizes Administrative Agent to act as the agent of such Lender and L/C Issuer for purposes
of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Obligated Parties to secure any of the
Obligations, together with such powers and discretion as are reasonably incidental thereto. In this connection, Administrative
Agent, as “collateral agent” and any co-agents, sub-agents and attorneys-in-fact appointed by Administrative Agent pursuant
to Section 11.5 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under
the Security Documents, or for exercising any rights and remedies thereunder at the direction of Administrative Agent, shall be
entitled to the benefits of all provisions of this Article 11 and Article 12 (including Section 12.1(b)),
as though such co-agents, sub-agents and attorneys-in-fact were the “collateral agent” under the Loan Documents and the
Intercreditor Agreement as if set forth in full herein with respect thereto.


 


Section 11.2Rights
as a Lender. The Person serving as Administrative Agent hereunder shall have the same rights and powers in its capacity as
a Lender as any other Lender and may exercise the same as though it were not Administrative Agent, and the term “Lender”
or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person
serving as Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from,
lend money to, own securities of, act as the financial advisor or in any other advisory capacity for, and generally engage in any
kind of business with, Borrower or any Subsidiary or other Affiliate thereof as if such Person were not Administrative Agent hereunder
and without any duty to account therefor to Lenders.


 






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Section 11.3Exculpatory
Provisions.


 


(a) Administrative
Agent shall not have any duties or obligations except those expressly set forth herein, in the other Loan Documents and in the
Intercreditor Agreement, and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing,
Administrative Agent:


 


(i) shall
not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;


 


(ii) shall
not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers
expressly contemplated hereby or by the other Loan Documents or the Intercreditor Agreement that Administrative Agent is required
to exercise as directed in writing by Majority Lenders (or such other number or percentage of Lenders as shall be expressly provided
for herein or in the other Loan Documents) or is required to exercise as directed in writing by any other party to the Intercreditor
Agreement, as applicable; provided that Administrative Agent shall not be required to take any action that, in its opinion
or upon the advice of its counsel, may expose Administrative Agent to liability or that is contrary to any Loan Document, the Intercreditor
Agreement or applicable Law, including for the avoidance of doubt any action that may be in violation of the automatic stay under
any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation
of any Debtor Relief Law;


 


(iii) shall
not, except as expressly set forth herein and in the other Loan Documents and the Intercreditor Agreement, have any duty to disclose,
and shall not be liable for the failure to disclose, any information relating to Borrower or any of its Affiliates that is communicated
to or obtained by the Person serving as Administrative Agent or any of its Affiliates in any capacity; and


 


(iv) shall
be fully justified in failing or refusing to take any action hereunder or under any other Loan Document or the Intercreditor Agreement
unless it shall first be indemnified to its satisfaction by Lenders pro rata against any and all liability, cost and expense that
it may incur by reason of taking or continuing to take any such action.


 


(b) Administrative
Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of Majority Lenders
(or such other number or percentage of Lenders as shall be necessary, or as Administrative Agent shall believe in good faith shall
be necessary, under the circumstances as provided in Sections 10.2 and 11.9), or (ii) in the absence of
its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment.
SUCH LIMITATION OF LIABILITY SHALL APPLY REGARDLESS OF WHETHER THE LIABILITY ARISES FROM THE SOLE, CONCURRENT, CONTRIBUTORY
OR COMPARATIVE NEGLIGENCE OF ADMINISTRATIVE AGENT. Administrative Agent shall be deemed not to have knowledge of any Default
unless and until notice describing such Default is given to Administrative Agent in writing by Borrower, a Lender or L/C Issuer.


 






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(c) Neither
Administrative Agent nor any Related Party thereof shall be responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with this Agreement, any other Loan Document or the Intercreditor
Agreement, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection
herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions
set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness
of this Agreement, any other Loan Document, the Intercreditor Agreement or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article 5 or elsewhere herein, other than to confirm receipt of items expressly
required to be delivered to Administrative Agent.


 


Section 11.4Reliance
by Administrative Agent. Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying
upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message,
internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise
authenticated by the proper Person. Administrative Agent also may rely upon any statement made to it orally or by telephone and
believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance
with any condition hereunder to the making of a Credit Extension that by its terms must be fulfilled to the satisfaction of a Lender
or L/C Issuer, Administrative Agent may presume that such condition is satisfactory to such Lender or L/C Issuer unless Administrative
Agent shall have received notice to the contrary from such Lender prior to the making of such Loan. Administrative Agent may consult
with legal counsel (who may be counsel for Borrower), independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.


 


Section 11.5Delegation
of Duties. Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under
any other Loan Document or the Intercreditor Agreement by or through any one or more sub agents appointed by Administrative Agent.
Administrative Agent and any such sub agent may perform any and all of its duties and exercise its rights and powers by or through
their respective Related Parties. The exculpatory provisions of this Article 11 shall apply to any such sub agent and
to the Related Parties of Administrative Agent and any such sub agent, and shall apply to their respective activities in connection
with the syndication of this facility as well as activities as Administrative Agent. Administrative Agent shall not be responsible
for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a
final and non-appealable judgment that Administrative Agent acted with gross negligence or willful misconduct in the selection
of such sub agents.


 


Section 11.6Resignation
of Administrative Agent.


 


(a) Administrative
Agent may at any time give notice of its resignation to Lenders, L/C Issuer, and Borrower. Upon receipt of any such notice of resignation,
Majority Lenders shall have the right, in consultation with Borrower (so long as no Event of Default has occurred and is continuing),
to appoint a successor, which shall be a bank with an office in Dallas, Texas, or an Affiliate of any such bank with an office
in Dallas, Texas. If no such successor shall have been so appointed by Majority Lenders and shall have accepted such appointment
within 30 days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed
by Majority Lenders) (such date, the “Resignation Effective Date”), then the retiring Administrative Agent may
(but shall not be obligated to), on behalf of Lenders and L/C Issuer, appoint a successor Administrative Agent meeting the qualifications
set forth above. Whether or not a successor has been appointed, such resignation shall become effective in accordance with such
notice on the Resignation Effective Date. After the Resignation Effective Date, the provisions of this Article 11 relating
to or indemnifying or releasing Administrative Agent shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement, the other Loan Documents and the Intercreditor Agreement.


 






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(b) If
the Person serving as Administrative Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof,
Majority Lenders may, to the extent permitted by applicable Law, by notice in writing to Borrower and such Person remove such Person
as Administrative Agent and, in consultation with Borrower, appoint a successor. If no such successor shall have been so appointed
by Majority Lenders and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed by Majority
Lenders) (such date, the “Removal Effective Date”), then such removal shall nonetheless become effective in accordance
with such notice on the Removal Effective Date.


 


(c) With
effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (i) the retiring or removed Administrative
Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents and the Intercreditor Agreement
(except that in the case of any Collateral held by Administrative Agent on behalf of Secured Parties under any of the Loan Documents
or the Intercreditor Agreement, the retiring or removed Administrative Agent shall continue to hold such Collateral until such
time as a successor Administrative Agent is appointed or a different Person is appointed to serve as collateral agent pursuant
to the terms of the Intercreditor Agreement) and (ii) except for any indemnity, fee or expense payments owed to the retiring
or removed Administrative Agent, all payments, communications and determinations provided to be made by, to or through Administrative
Agent shall instead be made by or to each Lender or L/C Issuer, as applicable, directly, until such time, if any, as Majority Lenders
appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successor’s appointment as Administrative
Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the
retiring or removed Administrative Agent (other than any rights to indemnity payments owed to the retiring or removed Administrative
Agent), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or
under the other Loan Documents or the Intercreditor Agreement. The fees payable by Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed between Borrower and such successor. After the retiring
or removed Administrative Agent’s resignation or removal hereunder and under the other Loan Documents and the Intercreditor Agreement,
the provisions of this Article 11, Section 12.1, and Section 12.2 shall continue in effect
for the benefit of such retiring or removed Administrative Agent, its sub agents and their respective Related Parties in respect
of any actions taken or omitted to be taken by any of them while the retiring or removed Administrative Agent was acting as Administrative
Agent.


 


(d) Any
resignation by LegacyTexas Bank as Administrative Agent pursuant to this Section shall also constitute its resignation as L/C Issuer.
If LegacyTexas Bank resigns as an L/C Issuer, it shall retain all the rights, powers, privileges and duties of L/C Issuer hereunder
with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations
with respect thereto, including the right to require Lenders to make Loans or fund risk participations in Unreimbursed Amounts
pursuant to Section 2.2(c). Upon the appointment by Borrower of a successor L/C Issuer hereunder (which successor shall
in all cases be a Lender other than a Defaulting Lender), (i) such successor shall succeed to and become vested with all of
the rights, powers, privileges and duties of the retiring L/C Issuer, (ii) the retiring L/C Issuer shall be discharged from
all of its duties and obligations hereunder or under the other Loan Documents, and (iii) the successor L/C Issuer shall issue
letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements
satisfactory to LegacyTexas Bank to effectively assume the obligations of LegacyTexas Bank with respect to such Letters of Credit.


 






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Section 11.7Non-Reliance
on Administrative Agent and Other Lenders. Each of the Lenders and L/C Issuer expressly acknowledges that neither Administrative
Agent nor any other Lender nor any Related Party thereto has made any representation or warranty to such Person and that no act
by Administrative Agent or any other Lender hereafter taken, including any review of the affairs of Borrower, shall be deemed to
constitute any representation or warranty by Administrative Agent or any Lender to any other Lender. Each of the Lenders and L/C
Issuer acknowledges that it has, independently and without reliance upon Administrative Agent or any other Lender or any of their
Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision
to enter into this Agreement. Each of the Lenders and L/C Issuer also acknowledges that it will, independently and without reliance
upon Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it
shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon
this Agreement, any other Loan Document, the Intercreditor Agreement or any related agreement or any document furnished hereunder
or thereunder. Except for notices, reports and other documents expressly required to be furnished to the Lenders by Administrative
Agent hereunder, Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, condition (financial or otherwise), or creditworthiness of Borrower
or the value of the Collateral or other Properties of Borrower or any other Person which may come into the possession of Administrative
Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates.


 


Section 11.8Administrative
Agent May File Proofs of Claim. In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial
proceeding relating to any Obligated Party, Administrative Agent (irrespective of whether the principal of any Loan shall then
be due and payable as herein expressed or by declaration or otherwise and irrespective of whether Administrative Agent shall have
made any demand on Borrower) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:


 


(a) to
file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C Obligations
and all other Obligations under the Loan Documents that are owing and unpaid and to file such other documents as may be necessary
or advisable in order to have the claims of Lenders, L/C Issuer, and Administrative Agent (including any claim for the reasonable
compensation, expenses, disbursements and advances of Lenders, L/C Issuer, and Administrative Agent and their respective agents
and counsel and all other amounts due Lenders, L/C Issuer, and Administrative Agent under Section 12.1 or Section 12.2)
allowed in such judicial proceeding; and


 


(b) to
collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;


 


and any custodian, receiver, assignee,
trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender
and L/C Issuer to make such payments to Administrative Agent and, in the event that Administrative Agent shall consent to the making
of such payments directly to Lenders and L/C Issuer, as applicable, to pay to Administrative Agent any amount due for the reasonable
compensation, expenses, disbursements and advances of Administrative Agent and its agents and counsel, and any other amounts due
Administrative Agent under Section 12.1 or Section 12.2.


 






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Section 11.9Collateral
and Guaranty Matters.


 


(a) The
Secured Parties irrevocably authorize Administrative Agent, at its option and in its discretion:


 


(i) to
release any Lien on any Property granted to or held by Administrative Agent under any Loan Document (x) upon termination of
the Aggregate Commitments and payment in full of all Obligations (other than (A) contingent indemnification obligations and
(B) obligations and liabilities under Bank Product Agreements as to which arrangements satisfactory to the applicable Bank
Product Provider shall have been made) and the expiration or termination of all Letters of Credit (other than Letters of Credit
as to which other arrangements satisfactory to Administrative Agent and L/C Issuer shall have been made), (y) that is Disposed
of or to be Disposed of as part of or in connection with any Disposition permitted under the Loan Documents, or (z) if approved,
authorized or ratified in writing by Majority Lenders, Required Lenders or all Lenders, as applicable, under Section 12.10;


 


(ii) to
subordinate any Lien on any Property granted to or held by Administrative Agent under any Loan Document to the holder of any Lien
on such Property that is permitted by Section 8.2;


 


(iii) to
release any Guarantor from its obligations under the applicable Guaranty if such Person ceases to be a Subsidiary as a result of
a transaction permitted under the Loan Documents; and


 


(iv) to
take any other action with respect to the Collateral that is permitted or required under the Intercreditor Agreement.


 


Upon request
by Administrative Agent at any time, Majority Lenders will confirm in writing Administrative Agent’s authority to release or subordinate
its interest in particular types or items of property, or to release any Guarantor from its obligations under the Guaranty pursuant
to this Section 11.9.


 


(b) Administrative
Agent shall not be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence,
value or collectability of the Collateral, the existence, priority or perfection of Administrative Agent’s Lien thereon, or any
certificate prepared by any Obligated Party in connection therewith, nor shall Administrative Agent be responsible or liable to
Lenders for any failure to monitor or maintain any portion of the Collateral.


 


Section 11.10Bank
Product Agreements. No Bank Product Provider who obtains the benefits of Section 10.3, any Guaranty or any Collateral
by virtue of the provisions hereof or of any Guaranty or any Security Document shall have any right to notice of any action or
to consent to, direct or object to any action hereunder, under any other Loan Document or the Intercreditor Agreement or otherwise
in respect of the Collateral (including the release or impairment of any Collateral) (or to notice of or to consent to any amendment,
wavier or modification of the provisions hereof or of the Guaranty or any Security Document) other than in its capacity as a Lender
and, in such case, only to the extent expressly provided in the Loan Documents and the Intercreditor Agreement. Notwithstanding
any other provision of this Article 11 to the contrary, Administrative Agent shall not be required to verify the payment
of, or that other satisfactory arrangements have been made with respect to, Bank Product Obligations unless Administrative Agent
has received written notice of such Bank Product Obligations, together with such supporting documentation as Administrative Agent
may request, from the applicable Bank Product Provider. Administrative Agent shall not be required to verify the payment of, or
that other satisfactory arrangements have been made with respect to, Bank Product Obligations arising under Bank Product Agreements
upon termination of the Aggregate Commitments and payment in full of all Obligations under the Loan Documents (other than contingent
indemnification obligations) and the expiration or termination of all Letters of Credit (other than Letters of Credit as to which
other arrangements satisfactory to Administrative Agent and L/C Issuer shall have been made).


 






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ARTICLE
12


 


MISCELLANEOUS


 


Section 12.1Expenses.


 


(a) Borrower
hereby agrees to pay on demand: (i) all reasonable out-of-pocket and documented costs and expenses of Administrative Agent,
L/C Issuer, and their Related Parties in connection with the preparation, negotiation, execution, and delivery of this Agreement,
the other Loan Documents, the Intercreditor Agreement and any and all amendments, modifications, renewals, extensions, supplements,
waivers, consents and ratifications thereof and thereto, including, without limitation, the reasonable fees and expenses of legal
counsel, advisors, consultants, and auditors for Administrative Agent, L/C Issuer, and their Related Parties, and all title due
diligence and review expenses, Oil and Gas Properties evaluation and engineering expenses, expenses associated with the investigation
of any matters relating to the transactions contemplated hereby and the satisfaction of the conditions set forth herein, the giving
of oral or written opinions or advice incident to this transaction, and the consummation of the transactions contemplated hereby;
(ii) all documented out-of-pocket costs and expenses of Administrative Agent, L/C Issuer, and each Lender in connection with
any Default and the enforcement of this Agreement, any other Loan Document or the Intercreditor Agreement, including, without limitation,
court costs and the fees and expenses of legal counsel, advisors, consultants, engineers, experts and auditors for Administrative
Agent, L/C Issuer, and each Lender; (iii) all costs and expenses incurred by L/C Issuer in connection with the issuance, amendment,
renewal or extension of any Letter of Credit or any demand for payment thereunder; (iv) all transfer, stamp, documentary,
or other similar taxes, assessments, or charges levied by any Governmental Authority in respect of this Agreement, any of the other
Loan Documents or the Intercreditor Agreement; (v) all costs, expenses, assessments, and other charges incurred in connection
with any filing, registration, recording, or perfection of any Lien contemplated by this Agreement, any other Loan Document or
the Intercreditor Agreement; and (vi) all other documented out-of-pocket costs and expenses incurred by Administrative Agent,
L/C Issuer, and any Lender in connection with this Agreement, any other Loan Document or the Intercreditor Agreement, any litigation,
dispute, suit, proceeding or action, the enforcement of its rights and remedies, and the protection of its interests in bankruptcy,
insolvency or other legal proceedings, including, without limitation, all documented out-of-pocket costs, expenses, and other charges
incurred in connection with evaluating, observing, collecting, examining, auditing, appraising, selling, liquidating, or otherwise
disposing of the Collateral or other assets of the Obligated Parties. Borrower shall be responsible for all expenses described
in this clause (a) whether or not any Credit Extension is ever made. Any amount to be paid under this Section 12.1
shall be a demand obligation owing by Borrower and if not paid within 30 days of demand shall bear interest, to the extent not
prohibited by and not in violation of applicable Law, from the date of expenditure until paid at a rate per annum equal to the
Default Interest Rate. The obligations of Borrower under this Section 12.1 shall survive payment of the Notes and other
Obligations hereunder and the assignment of any right hereunder.


 






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(b) To
the extent that Borrower for any reason fails to indefeasibly pay any amount required under Section 12.1(a) or Section 12.2
to be paid by it to Administrative Agent or L/C Issuer (or any sub-agent thereof) or any Related Party of Administrative Agent
or L/C Issuer (or any sub-agent thereof), each Lender severally agrees to pay to Administrative Agent or L/C Issuer (or any such
sub-agent) or such Related Party, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought based each Lender’s share of the Total Credit Exposure at such time) of such
unpaid amount (including any such unpaid amount in respect of a claim asserted by such Lender); provided that the unreimbursed
expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against
Administrative Agent or L/C Issuer (or any such sub-agent) or against any Related Party of Administrative Agent or L/C Issuer (or
any sub-agent thereof) acting for Administrative Agent or L/C Issuer (or any such sub-agent) in connection with such capacity.
EACH LENDER ACKNOWLEDGES THAT SUCH PAYMENTS MAY BE IN RESPECT OF LOSSES, CLAIMS, DAMAGES, LIABILITIES OR RELATED EXPENSES ARISING
OUT OF OR RESULTING FROM THE SOLE, CONTRIBUTORY, COMPARATIVE, CONCURRENT OR ORDINARY NEGLIGENCE OF THE PERSON (OR THE REPRESENTATIVES
OF THE PERSON) TO WHOM SUCH PAYMENTS ARE TO BE MADE.


 


Section 12.2INDEMNIFICATION.
BORROWER SHALL INDEMNIFY ADMINISTRATIVE AGENT, L/C ISSUER, EACH LENDER AND EACH RELATED PARTY THEREOF (EACH, AN “INDEMNIFIED
PARTY”) FROM, AND HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS,
DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING THE DOCUMENTED OUT-OF-POCKET FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY
INDEMNIFIED PARTY) TO WHICH ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE TO (A) THE NEGOTIATION,
EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION, OR ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS OR THE INTERCREDITOR AGREEMENT, (B) ANY
OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS OR THE INTERCREDITOR AGREEMENT, (C) ANY BREACH BY BORROWER OF ANY REPRESENTATION,
WARRANTY, COVENANT, OR OTHER AGREEMENT CONTAINED IN ANY OF THE LOAN DOCUMENTS OR THE INTERCREDITOR AGREEMENT, (D) THE PRESENCE,
RELEASE, THREATENED RELEASE, DISPOSAL, REMOVAL, OR CLEANUP OF ANY HAZARDOUS MATERIAL LOCATED ON, ABOUT, WITHIN, OR AFFECTING ANY
OF THE PROPERTIES OR ASSETS OF BORROWER OR ANY OF ITS SUBSIDIARIES OR ANY OTHER OBLIGATED PARTY, (E) ANY LOAN OR LETTER OF CREDIT
UNDER THIS AGREEMENT OR USE OR PROPOSED USE OF THE PROCEEDS THEREFROM (INCLUDING ANY REFUSAL BY L/C ISSUER TO HONOR A DEMAND FOR
PAYMENT UNDER A LETTER OF CREDIT IF THE DOCUMENTS PRESENTED IN CONNECTION WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH THE TERMS
OF SUCH LETTER OF CREDIT) OR (F) ANY INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY THREATENED
INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, RELATING TO ANY OF THE FOREGOING. WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT
OR OF ANY OTHER LOAN DOCUMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH INDEMNIFIED PARTY SHALL BE INDEMNIFIED
FROM AND HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND
EXPENSES (INCLUDING THE DOCUMENTED OUT-OF-POCKET FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNIFIED PARTY) ARISING
OUT OF OR RESULTING FROM THE SOLE, CONTRIBUTORY, COMPARATIVE, CONCURRENT OR ORDINARY NEGLIGENCE OF SUCH PERSON (OR THE REPRESENTATIVES
OF SUCH PERSON), provided that such indemnity shall not, as to any Indemnified Party, be available to the extent that
such losses, liabilities, claims, damages, penalties, judgments, disbursements, costs and expenses are determined by a court of
competent jurisdiction by final and non-appealable judgment to have resulted from the gross negligence or willful misconduct of
such Indemnified Party. Any amount to be paid under this Section 12.2 shall be a demand obligation owing by Borrower
and if not paid within 10 days of demand shall bear interest, to the extent not prohibited by and not in violation of applicable
Law, from the date of expenditure until paid at a rate per annum equal to the Default Interest Rate. The obligations of Borrower
under this Section 12.2 shall survive payment of the Notes and other Obligations hereunder and the assignment of any
right hereunder.


 






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Section 12.3Limitation
of Liability. No party hereto or any Related Party of any party hereto, shall assert, and each such Person hereby waives, any
claim against any other party hereto and their Related Parties for any special, indirect, consequential or punitive damages in
connection with, arising out of, or in any way related to, this Agreement, any of the other Loan Documents or the Intercreditor
Agreement, or any of the transactions contemplated by this Agreement, any of the other Loan Documents or the Intercreditor Agreement.


 


Section 12.4No
Duty. All attorneys, accountants, appraisers, and other professional Persons and consultants retained by Administrative Agent,
any Lender or L/C Issuer shall have the right to act exclusively in the interest of Administrative Agent or such Lender or L/C
Issuer and shall have no duty of disclosure, duty of loyalty, duty of care, or other duty or obligation of any type or nature whatsoever
to Borrower or any of Borrower’s equity holders, Affiliates, officers, employees, attorneys, agents, or any other Person.


 


Section 12.5Lenders
Not Fiduciary. The relationship between Borrower and Administrative Agent, Arranger, each Lender, and L/C Issuer is solely
that of debtor and creditor, and none of Administrative Agent, Arranger, any Lender, or L/C Issuer has any fiduciary or other special
relationship with Borrower, and no term or condition of any of the Loan Documents or the Intercreditor Agreement shall be construed
so as to deem the relationship between Borrower and Administrative Agent, Arranger each Lender, and L/C Issuer to be other than
that of debtor and creditor.


 


Section 12.6Equitable
Relief. Borrower recognizes that in the event Borrower fails to pay, perform, observe, or discharge any or all of the Obligations,
any remedy at law may prove to be inadequate relief to Administrative Agent or Lenders or L/C Issuer. Borrower therefore agrees
that Administrative Agent, any Lender, or L/C Issuer, if Administrative Agent or such Lender, or L/C Issuer, so requests, shall
be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages.


 


Section 12.7No
Waiver; Cumulative Remedies.


 


(a) No
failure on the part of an Obligated Party, Administrative Agent, any Lender, or L/C Issuer to exercise, and no delay in exercising,
and no course of dealing with respect to, any right, remedy, power, or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy, power, or privilege under this Agreement preclude any other
or further exercise thereof or the exercise of any other right, remedy, power, or privilege. The rights and remedies provided for
in this Agreement, the other Loan Documents and the Intercreditor Agreement are cumulative and not exclusive of any rights and
remedies provided by Law.


 






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(b) Notwithstanding
anything to the contrary contained herein, in any other Loan Document or the Intercreditor Agreement, the authority to enforce
rights and remedies hereunder and under the other Loan Documents and the Intercreditor Agreement against the Obligated Parties
or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall
be instituted and maintained exclusively by, Administrative Agent in accordance with Section 10.2 for the benefit of
all the Lenders; provided, however, that the foregoing shall not prohibit (i) Administrative Agent from exercising
on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder
and under the other Loan Documents and the Intercreditor Agreement, (ii) any Lender from exercising setoff rights in accordance
with Section 4.3 (subject to the terms of Section 12.23), or (iii) any Lender from filing proofs of
claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Obligated Party under
any Debtor Relief Law; and provided, further, that if at any time there is no Person acting as Administrative
Agent hereunder and under the other Loan Documents, then (A) the Majority Lenders shall have the rights otherwise ascribed
to Administrative Agent pursuant to Section 10.2 and (B) in addition to the matters set forth in clauses (ii)
and (iii) of the preceding proviso and subject to Section 12.23, any Lender may, with the consent of the Majority
Lenders, enforce any rights and remedies available to it and as authorized by the Majority Lenders.


 


Section 12.8Successors
and Assigns.


 


(a) Successors
and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby, except that Borrower may not assign or transfer any of its rights,
duties, or obligations under this Agreement, the other Loan Documents or the Intercreditor Agreement without the prior written
consent of Administrative Agent and each Lender, and no Lender may assign or otherwise transfer any of its rights or obligations
hereunder except (i) to an assignee in accordance with the provisions of Section 12.8(b), (ii) by way of
participation in accordance with the provisions of Section 12.8(d), or (iii) by way of pledge or assignment of
a security interest subject to the restrictions of Section 12.8(e) (and any other attempted assignment or transfer
by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon
any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent
provided in Section 12.8(d) and, to the extent expressly contemplated hereby, the Related Parties of each of Administrative
Agent and Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.


 


(b) Assignments
by Lenders. Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under
this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that any such
assignment shall be subject to the following conditions:


 


(i) Minimum
Amounts.


 


(A) In
the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and/or the Loans at the time owing
to it or contemporaneous assignments to related Approved Funds (determined after giving effect to such assignments) that equal
at least the amount specified in Section 12.8(b)(i)(B) in the aggregate or in the case of an assignment to a Lender,
an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and


 






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(B) in
any case not described in Section 12.8(b)(i)(A), the aggregate amount of the Commitment (which for this purpose includes
Loans outstanding hereunder) or, if the Commitment is not then in effect, the Outstanding Amount of the Loans of the assigning
Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment
is delivered to Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade
Date) shall not be less than $5,000,000, unless each of Administrative Agent and, so long as no Event of Default has occurred and
is continuing, Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed).


 


(ii) Proportionate
Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights
and obligations under this Agreement with respect to the Loans or the Commitment assigned.


 


(iii) Required
Consents. No consent shall be required for any assignment except to the extent required by Section 12.8(b)(i)(B)
and, in addition: (A) the consent of Borrower (such consent not to be unreasonably withheld or delayed) shall be required
unless (x) an Event of Default has occurred and is continuing at the time of such assignment, or (y) such assignment
is to a Lender, an Affiliate of a Lender or an Approved Fund; provided that Borrower shall be deemed to have consented to
any such assignment unless it shall object thereto by written notice to Administrative Agent within 5 Business Days after having
received notice thereof; (B) the consent of Administrative Agent (such consent not to be unreasonably withheld or delayed)
shall be required for assignments in respect of any Commitment or Loans if such assignment is to a Person that is not a Lender
with a Commitment, an Affiliate of such Lender or an Approved Fund with respect to such Lender, and (C) the consent of L/C
Issuer (such consent not to be unreasonably withheld or delayed) shall be required for assignments in respect of any Commitment
or Loans if such assignment is to a Person that is not a Lender with a Commitment, an Affiliate of such Lender or an Approved Fund
with respect to such Lender.


 


(iv) Assignment
and Assumption. The parties to each assignment shall execute and deliver to Administrative Agent an Assignment and Assumption,
together with a processing and recordation fee of $3,500; provided that Administrative Agent may, in its sole discretion,
elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver
to Administrative Agent an Administrative Questionnaire.


 


(v) No
Assignment to Certain Persons. No such assignment shall be made to (A) Borrower, any of Borrower’s Affiliates or Subsidiaries
or any other Obligated Party or (B) any Defaulting Lender or any of its Affiliates, or any Person who, upon becoming a Lender
hereunder, would constitute any of the foregoing Persons described in this clause (B).


 


(vi) No
Assignment to Natural Persons. No such assignment shall be made to a natural Person (or a holding company, investment vehicle
or trust for, or owned and operated for the primary benefit of, a natural Person).


 






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(vii) Certain
Additional Payments. In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such
assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to such
assignment shall make such additional payments to Administrative Agent in an aggregate amount sufficient, upon distribution thereof
as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating
actions, including funding, with the consent of Borrower and Administrative Agent, the applicable pro rata share of Loans previously
requested but not funded by such Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent),
to: (A) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to Administrative Agent or any
Lender hereunder (and interest accrued thereon) and (B) acquire (and fund as appropriate) its full pro rata share of all Loans
in accordance with its Applicable Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations
of any Defaulting Lender hereunder shall become effective under applicable Law without compliance with the provisions of this paragraph,
then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance
occurs.


 


Subject to
acceptance and recording thereof by Administrative Agent pursuant to Section 12.8(c), from and after the effective
date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent
of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and
the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from
its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights
and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits
of Section 12.1 and Section 12.2 with respect to facts and circumstances occurring prior to the effective
date of such assignment; provided that, except to the extent otherwise expressly agreed by the affected parties, no assignment
by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lenders’ having
been a Defaulting Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply
with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights
and obligations in accordance with Section 12.8(d). Upon the consummation of any assignment pursuant to this Section 12.8(b),
if requested by the transferor or transferee Lender, the transferor Lender, Administrative Agent and Borrower shall make appropriate
arrangements so that replacement Notes are issued to such transferor Lender (if applicable) and new Notes or, as appropriate, replacement
Notes, are issued to the assignee.


 


(c) Register.
Administrative Agent, acting solely for this purpose as an agent of Borrower, shall maintain at one of its offices in Dallas, Texas
a copy of each Assignment and Assumption delivered to it and a Register. The entries in the Register shall be conclusive absent
manifest error, and Borrower, Administrative Agent and Lenders shall treat each Person whose name is recorded in the Register pursuant
to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by
Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.


 


(d) Participations.
Any Lender may at any time, without the consent of, or notice to, Borrower, but subject to the prior written consent of Administrative
Agent, sell participations to a Participant in all or a portion of such Lender’s rights and/or obligations under this Agreement
(including all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Lender’s obligations
under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto
for the performance of such obligations, and (iii) Borrower, Administrative Agent, and Lenders shall continue to deal solely
and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. For the avoidance of
doubt, each Lender shall be responsible for the indemnity under Section 12.1(b) without regard to the existence of
any participation.


 






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Any agreement
or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right
to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided
that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to
any amendment, modification or waiver described in Section 12.10 which requires the consent of all Lenders and affects
such Participant. Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.1, 3.4
and 3.5 (subject to the requirements and limitations therein, including the requirements under Section 3.4(g)
(it being understood that the documentation required under Section 3.4(g) shall be delivered to the participating
Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 12.8(b);
provided that such Participant (A) agrees to be subject to the provisions of Section 3.6 as if it were
an assignee under Section 12.8(b); and (B) shall not be entitled to receive any greater payment under Sections 3.1
or 3.4, with respect to any participation, than its participating Lender would have been entitled to receive, except
to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired
the applicable participation. Each Lender that sells a participation agrees, at Borrower’s request and expense, to use reasonable
efforts to cooperate with Borrower to effectuate the provisions of Section 3.6 with respect to any Participant. To
the extent permitted by Law, each Participant also shall be entitled to the benefits of Section 4.3 as though it were
a Lender; provided that such Participant agrees to pay to Administrative Agent any amount set-off for application to the
Obligations under the Loan Documents as required pursuant to Section 4.3; provided further that such
Participant agrees to be subject to Section 12.23 as though it were a Lender. Each Lender that sells a participation
shall, acting solely for this purpose as a non-fiduciary agent of Borrower, maintain a Participant Register; provided that
no Lender shall have any obligation to disclose all or any portion of the Participant Register to any Person (including the identity
of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit
or its other obligations under any Loan Document) except to the extent that such disclosure is necessary to establish that such
commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States
Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall
treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this
Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, Administrative Agent (in its capacity as Administrative
Agent) shall have no responsibility for maintaining a Participant Register.


 


(e) Certain
Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement
to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided
that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee
or assignee for such Lender as a party hereto.


 


(f) Dissemination
of Information. Borrower and each other Obligated Party authorizes Administrative Agent and each Lender to disclose to any
actual or prospective purchaser, assignee or other recipient of a Lender’s Commitment, any and all information in Administrative
Agent’s or such Lender’s possession concerning Borrower, the other Obligated Parties and their respective Affiliates.


 






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Section 12.9Survival.
All representations and warranties made in this Agreement, any other Loan Document or the Intercreditor Agreement or in any document,
statement, or certificate furnished in connection with this Agreement shall survive the execution and delivery of this Agreement,
the other Loan Documents and the Intercreditor Agreement, and no investigation by Administrative Agent or any Lender or any closing
shall affect the representations and warranties or the right of Administrative Agent or any Lender to rely upon them. Without prejudice
to the survival of any other obligation of Borrower hereunder, the obligations of Borrower under Sections 12.1 and
12.2 shall survive repayment of the Obligations and termination of the Aggregate Commitments.


 


Section 12.10Amendment.
The provisions of this Agreement and the other Loan Documents to which Borrower is a party (other than the Issuer Documents) may
be amended or waived only by an instrument in writing signed by Majority Lenders (or by Administrative Agent with the consent of
Majority Lenders) and Borrower and acknowledged by Administrative Agent; provided, however, that no such amendment
or waiver shall:


 


(a) waive
any condition set forth in Section 5.1, without the written consent of each Lender;


 


(b) extend
or increase any Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 10.2) without
the written consent of such Lender;


 


(c) postpone
any date fixed by this Agreement or any other Loan Document for any payment (excluding mandatory prepayment) of principal, interest,
fees or other amounts due to Lenders (or any of them) hereunder or under any other Loan Document without the written consent of
each Lender directly affected thereby;


 


(d) reduce
the principal of, or the rate of interest specified herein on, any Loan, or any fees or other amounts payable hereunder or under
any other Loan Document without the written consent of each Lender directly affected thereby; provided, however,
that only the consent of Majority Lenders shall be necessary to adjust the Default Interest Rate or to waive any obligation of
Borrower to pay interest at such rate;


 


(e) change
any provision of this Section 12.10 or the definition of “Majority Lenders” or “Required Lenders”
or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights
hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender;


 


(f) change
Section 10.3 in a manner that would alter the pro rata sharing of payments required thereby without the written consent
of each Lender;


 


(g) release
any material Guaranty or all or substantially all of the Collateral (in each case, except as provided herein) without the written
consent of each Lender; or


 


(h) increase
the Borrowing Base or modify the provisions of Section 2.9(d) without the written consent of each Lender;


 


and, provided further,
that (i) no amendment, waiver or consent shall, unless in writing and signed by L/C Issuer in addition to the Lenders required
above, affect the rights or duties of the L/C Issuer under this Agreement or any Issuer Document relating to any Letter of Credit
issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by Administrative Agent
in addition to Lenders required above, affect the rights or duties of Administrative Agent under this Agreement or any other Loan
Document; (iii) the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties
thereto; and (iv) Borrower and Administrative Agent may amend this Agreement or any other Loan Document without the consent of
Lenders in order to correct, amend or cure any ambiguity, inconsistency or defect or correct any typographical error or other
manifest error in any Loan Document.


 






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Notwithstanding anything
to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder
(and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected
with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting
Lender may not be increased or extended without the consent of such Lender; and (y) any waiver, amendment or modification
requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender disproportionately
adversely relative to other affected Lenders shall require the consent of such Defaulting Lender. For the avoidance of doubt, a
Defaulting Lender shall not have the right to approve or disapprove any decrease or reaffirmation of the Borrowing Base.


 


Section 12.11Notices.


 


(a) Notices
Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and except
as provided in Section 12.11(b)), all notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile as set forth
on Schedule 12.11. Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall
be deemed to have been given when received. Notices sent by facsimile shall be deemed to have been given when sent (except that,
if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the
next Business Day for the recipient). Notices delivered through electronic communications, to the extent provided in Section 12.11(b)
shall be effective as provided in Section 12.11(b).


 


(b) Electronic
Communications.


 


(i) Notices
and other communications to Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and internet
or intranet websites) pursuant to procedures approved by Administrative Agent, provided that the foregoing shall not apply
to notices to any Lender pursuant to Article 2 if such Lender has notified Administrative Agent that it is incapable
of receiving notices under Article 2 by electronic communication. Administrative Agent or Borrower may, in its discretion,
agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by
it; provided that approval of such procedures may be limited to particular notices or communications.


 


(ii) Unless
Administrative Agent otherwise prescribes, (A) notices and other communications sent to an e-mail address shall be deemed
received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested”
function, as available, return e-mail or other written acknowledgement), and (B) notices or communications posted to an internet
or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described
in the foregoing clause (A), of notification that such notice or communication is available and identifying the website
address therefor; provided that, for both clauses (A) and (B) above, if such facsimile, email or other
electronic communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed
to have been sent at the opening of business on the next Business Day for such recipient.


 






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(c) Change
of Address, etc. Any party hereto may change its address or facsimile number for notices and other communications hereunder
by notice to the other parties hereto, Schedule 12.11 shall be deemed to be amended by each such change, and Administrative
Agent is authorized, in its discretion, from time to time to reflect each such change in an amended Schedule 12.11
provided by Administrative Agent to each party hereto.


 


(d) Platform.


 


(i) Borrower
agrees that Administrative Agent may, but shall not be obligated to, make the Communications available to the Lenders or L/C Issuer
by posting the Communications on the Platform.


 


(ii) The
Platform is provided “as is” and “as available.” The Agent Parties (as defined below) do not warrant the adequacy
of the Platform and expressly disclaim liability for errors or omissions in the Communications. No warranty of any kind, express,
implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement
of third-party rights or freedom from viruses or other code defects, is made by any Agent Party in connection with the Communications
or the Platform. In no event shall the Agent Parties have any liability to Borrower, any Lender or any other Person for damages
of any kind, including, without limitation, direct or indirect, special, incidental or consequential damages, losses or expenses
(whether in tort, contract or otherwise) arising out of Borrower’s or Administrative Agent’s transmission of communications through
the Platform.


 


(iii) Borrower
and each other Obligated Party (by its, his or her execution of a Loan Document) hereby authorizes Administrative Agent, each Lender,
and their respective counsel and agents to communicate and transfer documents and other information (including confidential information)
concerning this transaction or Borrower or any other Obligated Party and the business affairs of Borrower and such other Obligated
Parties via the internet or other electronic communication without regard to the lack of security of such communications.


 


Section 12.12Governing
Law; Venue; Service of Process.


 


(a) Governing
Law. This Agreement and the other Loan Documents and any claims, controversy, dispute or cause of action (whether in contract
or tort or otherwise) based upon, arising out of or relating to this Agreement or any other Loan Document (except, as to any other
Loan Document, as expressly set forth therein) and the transactions contemplated hereby and thereby shall be governed by, and construed
in accordance with, the Law of the State of Texas (without reference to applicable rules of conflicts of Laws), except to the extent
the Laws of any jurisdiction where Collateral is located require application of such Laws with respect to such Collateral.


 






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(b) Jurisdiction.
Borrower irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or description,
whether in law or equity, whether in contract or in tort or otherwise, against Administrative Agent, any Lender, L/C Issuer, or
any Related Party of the foregoing in any way relating to this Agreement or any other Loan Document or the transactions relating
hereto or thereto in any forum other than the courts of the State of Texas sitting in Dallas County, and of the United States District
Court of the Northern District of Texas, and any appellate court from any thereof, and each of the parties hereto irrevocably and
unconditionally submits to the jurisdiction of such courts and agrees that all claims in respect of any such action, litigation
or proceeding may be heard and determined in such Texas State court or, to the fullest extent permitted by applicable Law, in such
federal court. Each of the parties hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. Nothing in this Agreement
or in any other Loan Document shall affect any right that Administrative Agent, any Lender or L/C Issuer may otherwise have to
bring any action or proceeding relating to this Agreement or any other Loan Document against Borrower or its Properties in the
courts of any jurisdiction.


 


(c) Waiver
of Venue. Borrower irrevocably and unconditionally waives, to the fullest extent permitted by applicable Law, any objection
that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement
or any other Loan Document in any court referred to in Section 12.12(b). Each of the parties hereto hereby irrevocably waives,
to the fullest extent permitted by applicable Law, the defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.


 


(d) Service
of Process. Each party hereto irrevocably consents to service of process in the manner provided for notices in Section 12.11.
Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by applicable
Law.


 


Section 12.13Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument. Except as provided in Section 5.1, this Agreement shall become effective
when it shall have been executed by Administrative Agent and when Administrative Agent shall have received counterparts hereof
that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature
page of this Agreement by facsimile or other electronic imaging means (e.g. “pdf” or “tif”) shall be effective
as delivery of a manually executed counterpart of this Agreement.


 


Section 12.14Severability.
Any provision of this Agreement or any other Loan Document held by a court of competent jurisdiction to be invalid or unenforceable
shall not impair or invalidate the remainder of this Agreement and the effect thereof shall be confined to the provision held to
be invalid or illegal. Furthermore, in lieu of such invalid or unenforceable provision, such court shall substitute as a part of
this Agreement or the other Loan Documents a provision as similar in terms to such illegal, invalid or unenforceable provision
as may be possible and be legal, valid and enforceable.


 


Section 12.15Headings.
The headings, captions, and arrangements used in this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.


 


Section 12.16Construction.
Borrower, Administrative Agent and each Lender acknowledge that each of them has had the benefit of legal counsel of its own choice
and has been afforded an opportunity to review this Agreement, the other Loan Documents and the Intercreditor Agreement with its
legal counsel and that this Agreement, the other Loan Documents and the Intercreditor Agreement shall be construed as if jointly
drafted by Borrower, Administrative Agent, each Lender and each other Person party thereto.


 






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Section 12.17Independence
of Covenants. All covenants hereunder shall be given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an exception to, or be otherwise within the limitations
of, another covenant shall not avoid the occurrence of a Default if such action is taken or such condition exists.


 


Section 12.18WAIVER
OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT
IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 12.18.


 


Section 12.19Additional
Interest Provision. It is expressly stipulated and agreed to be the intent of Borrower, Administrative Agent and each Lender
at all times to comply strictly with the applicable Law governing the maximum rate or amount of interest payable on the indebtedness
evidenced by any Note, any other Loan Document, and the Related Indebtedness (or applicable United States federal Law to the extent
that it permits any Lender to contract for, charge, take, reserve or receive a greater amount of interest than under applicable
Law). If the applicable Law is ever judicially interpreted so as to render usurious any amount (a) contracted for, charged,
taken, reserved or received pursuant to any Note, any of the other Loan Documents or any other communication or writing by or between
Borrower and any Lender related to the transaction or transactions that are the subject matter of the Loan Documents, (b) contracted
for, charged, taken, reserved or received by reason of Administrative Agent’s or any Lender’s exercise of the option to accelerate
the maturity of any Note and/or the Related Indebtedness, or (c) Borrower will have paid or Administrative Agent or any Lender
will have received by reason of any voluntary prepayment by Borrower of any Note and/or the Related Indebtedness, then it is Borrower’s,
Administrative Agent’s and Lenders’ express intent that all amounts charged in excess of the Maximum Rate shall be automatically
canceled, ab initio, and all amounts in excess of the Maximum Rate theretofore collected by Administrative Agent or any Lender
shall be credited on the principal balance of any Note and/or the Related Indebtedness (or, if any Note and all Related Indebtedness
have been or would thereby be paid in full, refunded to Borrower), and the provisions of any Note and the other Loan Documents
shall immediately be deemed reformed and the amounts thereafter collectible hereunder and thereunder reduced, without the necessity
of the execution of any new document, so as to comply with the applicable Law, but so as to permit the recovery of the fullest
amount otherwise called for hereunder and thereunder; provided, however, if any Note or Related Indebtedness has
been paid in full before the end of the stated term thereof, then Borrower, Administrative Agent and each Lender agree that Administrative
Agent or any Lender, as applicable, shall, with reasonable promptness after Administrative Agent or such Lender discovers or is
advised by Borrower that interest was received in an amount in excess of the Maximum Rate, either refund such excess interest to
Borrower and/or credit such excess interest against such Note and/or any Related Indebtedness then owing by Borrower to Administrative
Agent or such Lender. Borrower hereby agrees that as a condition precedent to any claim seeking usury penalties against Administrative
Agent or any Lender, Borrower will provide written notice to Administrative Agent or such Lender, advising Administrative Agent
or such Lender in reasonable detail of the nature and amount of the violation, and Administrative Agent or such Lender shall have
60 days after receipt of such notice in which to correct such usury violation, if any, by either refunding such excess interest
to Borrower or crediting such excess interest against the Note to which the alleged violation relates and/or the Related Indebtedness
then owing by Borrower to Administrative Agent or such Lender. All sums contracted for, charged, taken, reserved or received by
Administrative Agent or any Lender for the use, forbearance or detention of any debt evidenced by any Note and/or the Related Indebtedness
shall, to the extent permitted by applicable Law, be amortized or spread, using the actuarial method, throughout the stated term
of such Note and/or the Related Indebtedness (including any and all renewal and extension periods) until payment in full so that
the rate or amount of interest on account of any Note and/or the Related Indebtedness does not exceed the Maximum Rate from time
to time in effect and applicable to such Note and/or the Related Indebtedness for so long as debt is outstanding. In no event shall
the provisions of Chapter 346 of the Texas Finance Code (which regulates certain revolving credit loan accounts and revolving
triparty accounts) apply to the Notes and/or any of the Related Indebtedness. Notwithstanding anything to the contrary contained
herein or in any of the other Loan Documents, it is not the intention of Administrative Agent or any Lender to accelerate the maturity
of any interest that has not accrued at the time of such acceleration or to collect unearned interest at the time of such acceleration.


 






    	CREDIT AGREEMENT – Page 106



     


    

 


Section 12.20Ceiling
Election. To the extent that any Lender is relying on Chapter 303 of the Texas Finance Code to determine the Maximum Rate
payable on any Note and/or any other portion of the Obligations under the Loan Documents, such Lender will utilize the weekly ceiling
from time to time in effect as provided in such Chapter 303. To the extent United States federal Law permits any Lender to
contract for, charge, take, receive or reserve a greater amount of interest than under Texas Law, such Lender will rely on United
States federal Law instead of such Chapter 303 for the purpose of determining the Maximum Rate. Additionally, to the extent
permitted by applicable Law now or hereafter in effect, any Lender may, at its option and from time to time, utilize any other
method of establishing the Maximum Rate under such Chapter 303 or under other applicable Law by giving notice, if required, to
Borrower as provided by applicable Law now or hereafter in effect.


 


Section 12.21USA
Patriot Act Notice. Administrative Agent and each Lender hereby notify Borrower that pursuant to the requirements of the Patriot
Act, it is required to obtain, verify and record information that identifies Borrower and each other Obligated Party, which information
includes the name and address of Borrower and each other Obligated Party and other information that will allow Administrative Agent
and such Lender to identify Borrower and each other Obligated Party in accordance with the Patriot Act.


 


Section 12.22Defaulting
Lenders.


 


(a) Adjustments.
Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such
time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law:


 


(i) Waivers
and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this
Agreement shall be restricted as set forth in the definitions of “Majority Lenders”, “Required Lenders”
and in Section 12.10.


 






    	CREDIT AGREEMENT – Page 107



     


    

 


(ii) Defaulting
Lender Waterfall. Any payment of principal, interest, fees or other amounts received by Administrative Agent for the account
of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article 10 or otherwise) or received
by Administrative Agent from a Defaulting Lender shall be applied at such time or times as may be determined by Administrative
Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to Administrative Agent hereunder;
second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to L/C Issuer hereunder; third,
to Cash Collateralize L/C Issuer’s Fronting Exposure, if any, with respect to such Defaulting Lender in accordance with Section 2.6;
fourth, as Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect
of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by Administrative
Agent; fifth, if so determined by Administrative Agent and Borrower, to be held in a deposit account and released pro rata
in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement
and (y) Cash Collateralize L/C Issuer’s future Fronting Exposure, if any, with respect to such Defaulting Lender with respect
to future Letters of Credit issued under this Agreement, in accordance with Section 2.6; sixth, to the payment
of any amounts owing to Lenders or L/C Issuer as a result of any judgment of a court of competent jurisdiction obtained by any
Lender or L/C Issuer against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this
Agreement; seventh, so long as no Default or Event of Default exists, to the payment of any amounts owing to Borrower as
a result of any judgment of a court of competent jurisdiction obtained by Borrower against such Defaulting Lender as a result of
such Defaulting Lender’s breach of its obligations under this Agreement; and eighth, to such Defaulting Lender or as otherwise
directed by a court of competent jurisdiction; provided that, if (A) such payment is a payment of the principal amount
of any Loans or L/C Borrowings in respect of which such Defaulting Lender has not fully funded its appropriate share, and (B) such
Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 5.2
were satisfied or waived, such payment shall be applied solely to pay the Loans of, and L/C Obligations owed to, all Non-Defaulting
Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or L/C Obligations owed to, such Defaulting
Lender until such time as all Loans and funded and unfunded participations in L/C Obligations are held by Lenders pro rata in accordance
with the Aggregate Commitments without giving effect to Section 12.22(a)(iv). Any payments, prepayments or other amounts
paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral
pursuant to this Section 12.22(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender
irrevocably consents hereto.


 


(iii) Certain
Fees.


 


(A) No
Defaulting Lender shall be entitled to receive any fee payable under Section 2.3(b) for any period during which that
Lender is a Defaulting Lender (and Borrower shall not be required to pay any such fee that otherwise would have been required to
have been paid to that Defaulting Lender).


 


(B) Each
Defaulting Lender shall be entitled to receive Letter of Credit Fees for any period during which that Lender is a Defaulting Lender
only to the extent allocable to its Applicable Percentage of the stated amount of Letters of Credit for which it has provided Cash
Collateral pursuant to Section 2.6.


 


(C) With
respect to any fee payable under Section 2.3(b) or Letter of Credit Fee not required to be paid to any Defaulting Lender
pursuant to clause (A) or (B) above, Borrower shall (x) pay to each Non-Defaulting Lender that portion
of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in L/C Obligations
that has been reallocated to such Non-Defaulting Lender pursuant to Section 12.22(a)(iv) below, (y) pay to L/C Issuer
the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to such L/C Issuer’s Fronting Exposure
to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such fee.


 






    	CREDIT AGREEMENT – Page 108



     


    

 


(iv) Reallocation
of Applicable Percentages to Reduce Fronting Exposure. All or any part of such Defaulting Lender’s participation in L/C Obligations
shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Applicable Percentages (calculated without
regard to such Defaulting Lender’s Commitment) but only to the extent that such reallocation does not cause the Revolving Credit
Exposure of any Non-Defaulting Lender to exceed such Non-Defaulting Lender’s Commitment. No reallocation hereunder shall constitute
a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting
Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following
such reallocation.


 


(v) Cash
Collateral. If the reallocation described in Section 12.22(a)(iv) above cannot, or can only partially, be effected,
Borrower shall, without prejudice to any right or remedy available to it hereunder or under applicable Law, Cash Collateralize
L/C Issuer’s Fronting Exposure in accordance with the procedures set forth in Section 2.6.


 


(b) Defaulting
Lender Cure. If Borrower, Administrative Agent, and L/C Issuer agree in writing that a Lender is no longer a Defaulting Lender,
Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject
to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to
the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as Administrative
Agent may determine to be necessary to cause the Loans and funded and unfunded participations in Letters of Credit to be held on
a pro rata basis by Lenders in accordance with their Applicable Percentages (without giving effect to Section 12.22(a)(iv)),
whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with
respect to fees accrued or payments made by or on behalf of Borrower while that Lender was a Defaulting Lender; and provided,
further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting
Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been
a Defaulting Lender.


 


Section 12.23Sharing
of Payments by Lenders. If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment
in respect of any principal of or interest on any of the Loans made by it or other obligations hereunder, resulting in such Lender’s
receiving payment of a proportion of the aggregate amount of such Loans and accrued interest thereon greater than its pro rata
share thereof as provided herein, then the Lender receiving such greater proportion shall:


 


(a) notify
Administrative Agent of such fact; and


 






    	CREDIT AGREEMENT – Page 109



     


    

 


(b) purchase
(for cash at face value) participations in the Loans and such other obligations of the other Lenders, or make such other adjustments
as shall be equitable, so that the benefit of all such payments shall be shared by Lenders ratably in accordance with the aggregate
amount of principal of and accrued interest on their respective Loans and other amounts owing them, provided that:


 


(i) if
any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations
shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and


 


(ii) the
provisions of this Section 12.23 shall not be construed to apply to: (A) any payment made by or on behalf of Borrower
pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence
of a Defaulting Lender); or (B) any payment obtained by a Lender as consideration for the assignment of or sale of a participation
in any of its Loans or subparticipations in L/C Obligations to any assignee or participant, other than an assignment to Borrower
or any Affiliate thereof (as to which the provisions of this Section 12.23 shall apply).


 


Borrower consents to the foregoing
and agrees, to the extent it may effectively do so under applicable Law, that any Lender acquiring a participation pursuant to
the foregoing arrangements may exercise against Borrower rights of setoff and counterclaim with respect to such participation as
fully as if such Lender were a direct creditor of Borrower in the amount of such participation.


 


Section 12.24Payments
Set Aside. To the extent that any payment by or on behalf of Borrower is made to Administrative Agent, L/C Issuer or any Lender,
or Administrative Agent, L/C Issuer or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff
or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant
to any settlement entered into by Administrative Agent, L/C Issuer or such Lender in its discretion) to be repaid to a trustee,
receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent
of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender and L/C Issuer severally
agrees to pay to Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or
repaid by Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per
annum equal to the Federal Funds Rate from time to time in effect. The obligations of Lenders and L/C Issuer under clause (b)
of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.


 


Section 12.25Confidentiality.
Each of Administrative Agent, L/C Issuer, and the Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its Affiliates and to its Related Parties (it being understood that
the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep
such Information confidential), (b) to the extent required or requested by any regulatory authority purporting to have jurisdiction
over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners) or any Governmental
Authority, quasi-Governmental Authority or legislative committee, (c) to the extent required by applicable Laws or regulations
or by any subpoena or similar legal process, (d) to any other party to this Agreement, any other Loan Document or the Intercreditor
Agreement, (e) in connection with the exercise of any remedies hereunder, under any other Loan Document or the Intercreditor
Agreement or any suit, action or proceeding relating to this Agreement, any other Loan Document or the Intercreditor Agreement
or the enforcement of rights hereunder or thereunder, (f) subject to its being under a duty of confidentiality no less restrictive
than this Section 12.25, to (i) any assignee of or Participant in, or any prospective assignee of or Participant
in, any of its rights or obligations under this Agreement, (ii) any actual or prospective counterparty (or its Related Parties)
to any Hedging Agreement relating to Borrower and its obligations, (iii) any actual or prospective purchaser of a Lender or
its holding company, (iv) any rating agency or any similar organization in connection with the rating of Borrower or the Aggregate
Commitments or (v) the CUSIP Service Bureau or any similar organization in connection with the issuance and monitoring of
CUSIP numbers with respect to the Aggregate Commitments, (g) with the consent of Borrower, or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of this Section 12.25 or (ii) becomes
available to Administrative Agent, L/C Issuer, any Lender or any of their respective Affiliates on a nonconfidential basis from
a source other than Borrower or a Subsidiary which is not actually known by Administrative Agent, L/C Issuer, any Lender or any
of their respective Affiliates to be bound by a contractual, legal or fiduciary obligation of confidentiality to the Borrower or
its Subsidiaries with respect to such information. In addition, Administrative Agent and the Lenders may disclose the existence
of this Agreement and information about this Agreement to market data collectors, similar service providers to the lending industry
and service providers to Administrative Agent and the Lenders in connection with the administration of this Agreement, the other
Loan Documents, and the Aggregate Commitments. For purposes of this Section 12.25, “Information” means
all information received from Borrower or any Subsidiary relating to Borrower or any Subsidiary or any of their respective businesses,
other than any such information that is available to Administrative Agent, L/C Issuer, or any Lender on a nonconfidential basis
prior to disclosure by Borrower or a Subsidiary. Any Person required to maintain the confidentiality of Information as provided
in this Section 12.25 shall be considered to have complied with its obligation to do so if such Person has exercised
the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential
information.


 






    	CREDIT AGREEMENT – Page 110



     


    

 


Section 12.26Electronic
Execution of Assignments and Certain Other Documents. The words “execute,” “execution,” “signed,”
“signature,” and words of like import in any Assignment and Assumption or in any amendment or other modification hereof
(including waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms
and contract formations on electronic platforms approved by Administrative Agent, or the keeping of records in electronic form,
each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in any applicable Law, including the Federal Electronic
Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar
state Laws based on the Uniform Electronic Transactions Act.


 


Section 12.27Intercreditor
Agreement. In the event of a conflict between the provisions of any of the Loan Documents and the provisions of the Intercreditor
Agreement, the provisions of the Intercreditor Agreement shall control.


 


Section 12.28Flood
Insurance. Notwithstanding any provision in this Agreement, any Security Document or any other Loan Document to the contrary,
in no event is any Building (as defined in the applicable Flood Insurance Regulations) included in the definition of “Mortgaged
Property,” or “Collateral” or “Property” and no Building or Manufactured (Mobile) Home (as defined in
the applicable Flood Insurance Regulations) is hereby encumbered by any Security Document or other Loan Document.


 


Section 12.29Acknowledgement
and Consent to Bail-In of EEA Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any
other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any
Lender that is an EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be
subject to the Write-Down and Conversion Powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and
agrees to be bound by:


 


(a) the
application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which
may be payable to it by any Lender that is an EEA Financial Institution; and


 






    	CREDIT AGREEMENT – Page 111



     


    

 


(b) the
effects of any Bail-In Action on any such liability, including, if applicable:


 


(i) a
reduction in full or in part or cancellation of any such liability;


 


(ii) a
conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution,
its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or
other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement
or any other Loan Document; or


 


(iii) the
variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution
Authority.


 


Section 12.30Amendment
and Restatement. The parties hereto agree that this Agreement is an amendment and restatement of, and an extension of, and
amendment to, the Existing Credit Agreement. This Agreement does not in any way constitute a novation of the Existing Credit Agreement,
but is an amendment and restatement of same. It is understood and agreed that, except to the extent released by the Administrative
Agent as contemplated herein, the Liens securing the Obligations under and as defined in the Existing Credit Agreement and the
rights, duties, liabilities and obligations of the Borrower under the Existing Credit Agreement and the Existing Loan Documents
to which it is a party shall not be extinguished but shall be carried forward and shall secure such obligations and liabilities
as amended, renewed, extended and restated by this Agreement. Upon the effectiveness of this Agreement, (a) each Lender’s participation
in each Letter of Credit shall be automatically adjusted to equal its Applicable Percentage (after giving effect to this amendment
and restatement), and (b) such other adjustments shall be made as the Administrative Agent shall specify so that each Lender’s
Revolving Credit Exposure equals its Applicable Percentage (after giving effect to this amendment and restatement) of the Aggregate
Revolving Credit Exposures of all of the Lenders.


 


Section 12.31Assignment
and Assumption from CAE Borrower to Borrower. Concurrently with the amendment and restatement of the Existing Credit Agreement,
the CAE Borrower irrevocably assigns, transfers and conveys all of its rights, duties, liabilities and obligations under the Existing
CAE Credit Agreement and the Existing CAE Loan Documents to which it is a party to the Borrower, and the Borrower hereby irrevocably
accepts such assignment from the CAE Borrower and as of the Closing Date (a) agrees to be bound by all of the terms, conditions
and provisions of, (b) assumes all of the rights, duties, liabilities and obligations of the CAE Borrower under and (c) promises
to keep and perform all covenants, terms, provisions and agreements of the CAE Borrower, in each case, under the Existing CAE Credit
Agreement and the Existing CAE Loan Documents, in each case as amended and restated by this Agreement and the other Loan Documents
(and to the extent not superseded) in connection with the transactions contemplated hereby.


 


Section 12.32NOTICE
OF FINAL AGREEMENT. THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE INTERCREDITOR AGREEMENT REPRESENT THE FINAL AGREEMENT
AMONG THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.


 


[Remainder of Page Intentionally Left Blank;
Signature Pages Follow]


 






    	CREDIT AGREEMENT – Page 112



     


    

 





EXECUTED to be effective
as of the date first written above.


 





	 	BORROWER:
	 	 	 	 
	 	CARBON ENERGY CORPORATION
	 	 	 	 
	 	By:	    
      
	 	 	Name:	             
	 	 	Title:	 




 






    CREDIT AGREEMENT - Signature Page [Borrower]


     


    

 


	 	ADMINISTRATIVE AGENT:
	 	 	 
	 	LEGACYTEXAS BANK
	 	 	 
	 	By:	  
	 	 	Whitney Randolph
	 	 	Senior Vice President
	 	 	 
	 	LENDERS:
	 	 	 
	 	LEGACYTEXAS BANK
	 	 	 
	 	By:	  
	 	 	Whitney Randolph
	 	 	Senior Vice President


 






    CREDIT AGREEMENT - Signature Page [Administrative Agent and Lenders]

     


    







 


SCHEDULE 2.1


 


Commitments and
Applicable Percentages


 


	Lender	 	Commitment	 	 	Applicable
 Percentage	 
	LegacyTexas Bank	 	 	[TBD]	 	 	 	[TBD]	 
	East West Bank	 	 	[TBD]	 	 	 	[TBD]	 
	Simmons Bank	 	 	[TBD]	 	 	 	[TBD]	 
	CIT Bank	 	 	[TBD]	 	 	 	[TBD]	 
	Total:	 	$	500,000,000	 	 	 	100.000000000	%



 






    	SCHEDULE 2.1 – Page 1



     


    

 





SCHEDULE 6.5


 


Litigation and Judgments


 


[To be
provided].


 


 


 






    	SCHEDULE 6.5 – Page 1



     


    

 





SCHEDULE 6.13(a)


 


Subsidiaries


 


	Subsidiary	 	Jurisdiction of Incorporation or Organization	 	Borrower’s Ownership Interest
	 	 	 	 	 
	 	 	 	 	 



 


[To be provided].


 


 


 






    	SCHEDULE 6.13(a) – Page 1



     


    

 





SCHEDULE 6.13(b)


 


Excluded Subsidiaries


 


[To be provided].


 


 


 






    	SCHEDULE 6.13(b) – Page 1



     


    

 





SCHEDULE 6.18


 


Environmental Matters


 


[To be provided].


 


 


 






    	SCHEDULE 6.18 – Page 1



     


    

 





SCHEDULE 6.28


 


Hedging
Agreements and Hedging Transactions






 


[To be provided].


 


 


 






    	SCHEDULE 6.28 – Page 1



     


    

 





SCHEDULE 8.1


 


Existing Debt


 


[To be provided].


 


 


 






    	SCHEDULE 8.1 – Page 1



     


    

 





SCHEDULE 8.2


 


Existing Liens


 


[To be provided].


 


 


 






    	SCHEDULE 8.2 – Page 1



     


    

 





SCHEDULE 8.5


 


Existing Investments


 


[To be provided].


 


 


 






    	SCHEDULE 8.5 – Page 1



     


    

 





SCHEDULE 12.11


 


Notices


 


Notices under this Agreement shall be
given:


 


(a) if to Borrower,
to it at 1700 Broadway, Suite 1170, Denver, Colorado 80290, Attention of Kevin D. Struzeski (Facsimile No. (720) 407-7031; Telephone
No. (720) 407-7037);


 


(b) if to Administrative
Agent, to it at LegacyTexas Bank at its Principal Office at 5949 Sherry Lane, Suite 600, Dallas, Texas 75225, Attention:
Whitney Randolph (Facsimile No. (214) 217-7035; Telephone No. (214) 217-7038);


 


(c) if to L/C
Issuer, to it at LegacyTexas Bank at its Principal Office at 5949 Sherry Lane, Suite 600, Dallas, Texas 75225, Attention:
Whitney Randolph (Facsimile No. (214) 217-7035; Telephone No. (214) 217-7038); and


 


(d) if to a Lender,
to it at its address (or facsimile number) set forth in its Administrative Questionnaire.


 






    	SCHEDULE 12.11 – Page 1



     


    

 





EXHIBIT A


 


Assignment and
Assumption


 


This Assignment and
Assumption (the “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered
into by and between [the][each]1 Assignor identified in item 1 below ([the][each, an] “Assignor”)
and [the][each]2 Assignee identified in item 2 below ([the][each, an] “Assignee”).
[It is understood and agreed that the rights and obligations of [the Assignors][the Assignees]3 hereunder are several
and not joint.]4 Capitalized terms used but not defined herein shall have the meanings given to them in the Amended
and Restated Credit Agreement identified below (as amended, the “Credit Agreement”), receipt of a copy of which
is hereby acknowledged by [the][each] Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto
are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein
in full.


 


For an agreed consideration,
[the][each] Assignor hereby irrevocably sells and assigns to [the Assignee][the respective Assignees], and [the][each]
Assignee hereby irrevocably purchases and assumes from [the Assignor][the respective Assignors], subject to and in
accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by Administrative
Agent as contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights and obligations in [its
capacity as a Lender][their respective capacities as Lenders] under the Credit Agreement and any other documents or instruments
delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding
rights and obligations of [the Assignor][the respective Assignors] under the respective facilities identified below (including
without limitation any letters of credit and guarantees included in such facilities), and (ii) to the extent permitted to
be assigned under applicable Law, all claims, suits, causes of action and any other right of [the Assignor (in its capacity
as a Lender)][the respective Assignors (in their respective capacities as Lenders)] against any Person, whether known or unknown,
arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the
loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract
claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations
sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by [the][any]
Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively
as [the][an] “Assigned Interest”); provided, however, that for the avoidance of doubt, the Assigned Interest
excludes any Hedging Agreements and Hedging Transactions that may exist between the Assignor(s) and Borrower or any other Obligated
Party. Each such sale and assignment is without recourse to [the][any] Assignor and, except as expressly provided in this
Assignment and Assumption, without representation or warranty by [the][any] Assignor.


 


	1.	Assignor[s]: ___________________________________



                                    ___________________________________


 





 









	1	For bracketed language here and elsewhere in this form relating to the Assignor(s), if the assignment
is from a single Assignor, choose the first bracketed language. If the assignment is from multiple Assignors, choose the second
bracketed language.






	2	For bracketed language here and elsewhere in this form relating to the Assignee(s), if the assignment
is to a single Assignee, choose the first bracketed language. If the assignment is to multiple Assignees, choose the second bracketed
language.






	3	Select as appropriate.






	4	Include bracketed language if there are either multiple Assignors or multiple Assignees.



 






    	EXHIBIT A – Assignment and Assumption – Page 1



     


    

 


[Assignor
[is] [is not] a Defaulting Lender]


 


	2.	Assignee[s]: ___________________________________



                                    ___________________________________


 


[Assignee
is an [Affiliate][Approved Fund] of [identify Lender]]


 


		3.	Borrower: 	Carbon Energy Corporation



 


		4.	Administrative Agent: 	LegacyTexas Bank, as the administrative agent under the Amended and Restated Credit Agreement



 


		5.	Credit Agreement:	$500,000,000 Amended and Restated Credit Agreement dated as of July [__], 2018 among Borrower, the Lenders parties thereto, LegacyTexas
Bank, as Administrative Agent, and the other agents parties thereto



 


		6.	Assigned Interest[s]:



 


	Assignor[s]5	 	 	Assignee[s]6	 	 	Aggregate Amount
 of Commitment/Loans for all Lenders20	 	Amount of Commitment/Loans
    Assigned7	 	 	Percentage Assigned
    of Commitment/Loans8	 	 	CUSIP Number	 
	 	 	 	 	 	 	 	 	$	 	$	 	 	 	 	            	%	 	 	                	 
	 	 	 	 	 	 	 	 	$	 	$	 	 	 	 	 	%	 	 	 	 
	 	 	 	 	 	 	 	 	$	 	$	 	 	 	 	 	%	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 



		[7.	Trade
                                         Date:______________]9



 





 






		5	List each Assignor, as appropriate.






		6	List each Assignor, as appropriate.






		7	Amount to be adjusted by the counterparties to take into account any payments or prepayments made
between the Trade Date and the Effective Date.






		8	To be completed if the Assignor(s) and the Assignee(s) intend that the minimum assignment amount
is to be determined as of the Trade Date.






		9	To
be completed if the Assignor(s) and the Assignee(s) intend that the minimum assignment amount is to be determined as of the Trade
Date.



 






    	EXHIBIT A – Assignment and Assumption – Page 2



     


    

 





Effective Date: _____________ ___, 20___
[TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]


 


The terms set forth in this Assignment
and Assumption are hereby agreed to:


 





	 	ASSIGNOR[S]10
	 	 	 	 
	 	[NAME
    OF ASSIGNOR]
	 	 	 	 
	 	By:	      	     
	 	 	Name: 	 
	 	 	Title:	 
	 	 	 	 
	 	[NAME
    OF ASSIGNOR]
	 	 
	 	By:	 	 
	 	 	Name:	 
	 	 	Title:	 
	 	 	 	 
	 	ASSIGNEE[S]11
	 	 	 	 
	 	[NAME OF ASSIGNEE]
	 	 
	 	By:	 	 
	 	 	Name: 	 
	 	 	Title:	 
	 	 	 	 
	 	[NAME OF ASSIGNEE]
	 	 	 	 
	 	By:	 	 
	 	 	Name:	 
	 	 	Title:	 


 





 









		10	Add
                                         additional signature blocks as needed. Include both Fund/Pension Plan and manager making
                                         the trade (if applicable).






		11	Add additional signature blocks as needed. Include both Fund/Pension Plan and manager making the
trade (if applicable).



 






    	EXHIBIT A – Assignment and Assumption – Page 3



     


    

 





	[Consented
    to and]12 Accepted:	 
	 	 
	LEGACYTEXAS BANK,	 
	as Administrative Agent	 
	 	 
	By:	 	 	 
	 	Name: 	 	 
	 	Title:	 	 
	 	 	 	 
	[Consented
    to]:13	 
	 	 
	[NAME OF RELEVANT PARTY]	 
	 	 	 	 
	By:	 	 	 
	 	Name:	 	 
	 	Title:	 	 




 





 






		12	To be added only if the consent of Administrative Agent is required by the terms of the Credit
Agreement.






		13	To be added only if the consent of Borrower and/or other parties (e.g. L/C Issuer) is required
by the terms of the Credit Agreement.



 






    	EXHIBIT A – Assignment and Assumption – Page 4



     


    

 





ANNEX 1


 


Standard Terms
and Conditions for Assignment and Assumption


 


1. Representations and Warranties.


 


1.1 Assignor[s].
[The][Each] Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of [the][the
relevant] Assigned Interest, (ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or
other adverse claim, (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this
Assignment and Assumption and to consummate the transactions contemplated hereby and (iv) it is [not] a Defaulting
Lender; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in
or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of Borrower,
any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document, or (iv) the performance
or observance by Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under
any Loan Document.


 


1.2. Assignee[s].
[The][Each] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all
action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby
and to become a Lender under the Credit Agreement, (ii) it meets all the requirements to be an assignee under Section 12.8(b)(iii),
(v) and (vi) of the Credit Agreement (subject to such consents, if any, as may be required under Section 12.8(b)(iii)
of the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit
Agreement as a Lender thereunder and, to the extent of [the][the relevant] Assigned Interest, shall have the obligations
of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the
Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire the Assigned Interest,
is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or
has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 7.1
thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and
decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, (vi) it has,
independently and without reliance upon Administrative Agent or any other Lender and based on such documents and information as
it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase
[the][such] Assigned Interest, and (vii) if it is a Foreign Lender, attached to the Assignment and Assumption is any
documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by [the][such]
Assignee; and (b) agrees that (i) it will, independently and without reliance on Administrative Agent, [the][any]
Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue
to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance
with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.


 


2. Payments. From and after
the Effective Date, Administrative Agent shall make all payments in respect of [the][each] Assigned Interest (including
payments of principal, interest, fees and other amounts) to [the][the relevant] Assignor for amounts which have accrued
to but excluding the Effective Date and to [the][the relevant] Assignee for amounts which have accrued from and after the
Effective Date. Notwithstanding the foregoing, Administrative Agent shall make all payments of interest, fees or other amounts
paid or payable in kind from and after the Effective Date to [the][the relevant] Assignee.


 


3. General Provisions. This
Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors
and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one
instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective
as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the Law of the State of Texas.


 






    	ANNEX 1 – Standard Terms and Conditions for Assignment and Assumption – Page 1



     


    

 





EXHIBIT B


 


Compliance Certificate


 


	FOR QUARTER/YEAR ENDED 	_______________________ (the “Subject Period”)
	 	 
	ADMINISTRATIVE AGENT:	LegacyTexas Bank
	 	 
	BORROWER:	Carbon Energy Corporation




 


This Compliance Certificate (this “Certificate”)
is delivered under the Amended and Restated Credit Agreement (the “Credit Agreement”) dated as of July [__],
2018, by and among Borrower, the Lenders from time to time party thereto and Administrative Agent. Capitalized terms used in this
Certificate shall, unless otherwise indicated, have the meanings set forth in the Credit Agreement. The undersigned hereby certifies
to Administrative Agent and Lenders as of the date hereof that: (a) he/she is the ___________________ of Borrower, and that,
as such, he/she is authorized to execute and deliver this Certificate to Administrative Agent on behalf of Borrower; (b) he/she
has reviewed and is familiar with the terms of the Credit Agreement and has made, or has caused to be made under his/her supervision,
a detailed review of the transactions and condition (financial or otherwise) of Borrower during the Subject Period; (c) during
the Subject Period, Borrower performed and observed each covenant and condition of the Loan Documents applicable to it and no
Default or Event of Default currently exists or has occurred which has not been cured or waived by Majority Lenders or all Lenders,
as required by the Loan Documents; (d) the representations and warranties of Borrower contained in Article 6
of the Credit Agreement, and any representations and warranties of Borrower that are contained in any document furnished at any
time under or in connection with the Loan Documents, are true and correct on and as of the date hereof, except to the extent that
such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such
earlier date, and except that for purposes of this Certificate, the representations and warranties contained in Section 6.2
of the Credit Agreement shall be deemed to refer to the most recent statements furnished pursuant to Section 7.1
of the Credit Agreement, including the statements in connection with which this Certificate is delivered; (e) the financial
statements of Borrower attached to this Certificate were prepared in accordance with GAAP, and present, on a consolidated basis,
fairly and accurately the financial condition and results of operations of Borrower and its Subsidiaries as of the end of and
for the Subject Period; (f) the update to Schedule 6.28attached hereto sets forth a complete and correct list of all
Hedging Agreements and Hedging Transactions in effect or to be in effect as of the date hereof, the material terms thereof (including
the type, term, effective date, termination date and notional amounts or values), the Hedge Termination Value thereof, and the
counterparty thereto; (g) the financial covenant analyses and information set forth below are true and accurate on and as
of the date of this Certificate; and (h) the status of compliance by Borrower with certain covenants of the Credit Agreement
at the end of the Subject Period is as set forth below:


 





	 	 	In Compliance as of

End of Subject Period

(Please Indicate)


 


	1.	Financial Statements and Reports	 	 
	 	 	 	 
	 	(a)	Provide annual audited FYE financial statements within

90 days after the last day of each fiscal year.	Yes	No
	 	 	 	 	 
	 	(b)	Provide quarterly financial statements within 60 days after the 

last day of each of the first three fiscal quarters of each fiscal year.	Yes	No



 






    	EXHIBIT B – Compliance Certificate – Page 1



     


    

 


	 	(c)	Provide other required reporting timely.	Yes	No
	 	 	 	 	 
	2.	Subsidiaries 

None, except as listed on Schedule 6.13.	Yes	No
	 	 	 	 
	3.	
        Commodity Hedging Transactions

        In compliance with Section 7.15 of the Credit Agreement.

         
	Yes	No
	4.	Debt

None, except Debt permitted by Section 8.1 of the Credit Agreement.	Yes	No
	 	 	 	 
	5.	Liens

None, except Liens permitted by Section 8.2 of the Credit Agreement.	Yes	No
	 	 	 	 
	6.	Acquisitions and Mergers

None, except those permitted by Section 8.3 of the Credit Agreement.	Yes	No
	 	 	 	 
	7.	Dividends and Stock Repurchase

None, except as permitted by Section 8.4 of the Credit Agreement.

(if applicable, Dollar amount during Subject Period: $_____)	Yes	No
	 	 	 	 
	8.	Loans and Investments

None, except those permitted by Section 8.5 of the Credit Agreement.	Yes	No
	 	 	 	 
	9.	Issuance of Equity

None, except issuances permitted by Section 8.6 of the Credit Agreement.	Yes	No
	 	 	 	 
	10.	Affiliate Transactions

None, except transactions permitted by Section 8.7 of the Credit Agreement.	Yes	No
	 	 	 	 
	11.	Dispositions of Assets

None, except Dispositions permitted by Section 8.8 of the Credit Agreement.	Yes	No
	 	 	 	 
	12.	Sale and Leaseback Transactions

None, except transactions permitted by Section 8.9 of the Credit Agreement.	Yes	No
	 	 	 	 
	13.	Prepayment of Debt

None, except prepayments permitted by Section 8.10 of the Credit Agreement.	Yes	No
	 	 	 	 
	14.	Changes in Nature of Business

None, except changes permitted by Section 8.11 of the Credit Agreement.	Yes	No
	 	 	 	 
	15.	Environmental Protection

No activity likely to cause violations of Environmental Laws or create any Environmental Liabilities.	Yes	No
	 	 	 	 
	16.	Changes in Fiscal Year; Accounting Practices

None, except transactions permitted by Section 8.13 of the Credit Agreement.	Yes	No



 






    	EXHIBIT B – Compliance Certificate – Page 2



     


    

 





	17.	No Negative Pledge

                                                                            None, except those permitted by Section 8.14 of the Credit Agreement.
	Yes	No
	 	 	 	 
	18.	Hedging Agreements, Transactions and Terminations

                                                                None, except those permitted by Section 8.17 of the Credit Agreement.
	Yes	No
	 	 	 	 
	19.	Gas Balancing Agreements and Advance Payment Contracts

                                                                None, except those permitted by Section 8.18 of the Credit Agreement.
	Yes	No
	 	 	 	 
	20.	Amendments to JOAs

                                                                None, except those permitted by Section 8.21 of the Amended and Restated Credit Agreement.
	Yes	No
	 	 	 	 
	21.	
        Leverage Ratio

        Maximum of 3.50 to 1.00 at end of Subject
        Period (defined as Net Debt divided by Adjusted EBITDAX; calculated for the Test Period then ended).

         

        _____________ ÷ _________________    = ____________

        Net Debt                     Adjusted EBITDAX

         
	Yes	No
	22.	
        Current Ratio

        Minimum of 1.00 to 1.00 at end of Subject
        Period (defined as current assets divided by current liabilities).

         

        _______________ ÷ _______________   = _______________

        Current Assets          Current
Liabilities
	Yes	No


 






    	EXHIBIT B – Compliance Certificate – Page 3



     


    

 


 


IN WITNESS WHEREOF,
the undersigned has executed this Certificate as of _____________________, _____.


 





	 	BORROWER:
	 	 	 	 
	 	CARBON ENERGY CORPORATION
	 	 	 	 
	 	By:	 	 
	 	 	Name: 	             
	 	 	Title:	 


 






    	EXHIBIT B – Compliance Certificate – Page 4



     


    

 





EXHIBIT C


 


Borrowing Request


 


Date: ___________, _____


 


		To:	LegacyTexas Bank, as Administrative
                                         Agent



 


Ladies and Gentlemen:


 


Reference is made to
that certain Amended and Restated Credit Agreement, dated as of July [__], 2018 (as amended, restated, extended, supplemented
or otherwise modified in writing from time to time, the “Credit Agreement;” the terms defined therein being used
herein as therein defined), among Carbon Energy Corporation, a Delaware corporation (“Borrower”), the Lenders
from time to time party thereto, and LegacyTexas Bank, as Administrative Agent and L/C Issuer.


 


The undersigned hereby
requests (select one):


 


		☐	A Borrowing of Loans



 


		☐	A conversion or continuation
                                         of Loans



 


		1.	On  ______________________________ (a Business Day).



 


		2.	In the amount of $_______________



 


		3.	Comprised of _________________________

                                                                     (Type of Portion requested)



 


		4.	For LIBOR Portion: with an Interest
                                         Period of ____ months.



 


Borrower hereby represents
and warrants that the conditions specified in Section 5.2 of the Credit Agreement shall be satisfied on and as of
the date of the requested Borrowing.


 





	 	BORROWER:
	 	 	 	 
	 	CARBON ENERGY CORPORATION
	 	 	 	 
	 	By:	 	 
	 	 	Name: 	           
	 	 	Title:	 


 






    EXHIBIT C – Borrowing Request – Page Solo


     


    

 





EXHIBIT D


 


Note


 


	 	____________,
    20___


FOR VALUE RECEIVED,
Carbon Energy Corporation, a Delaware corporation (“Borrower”), hereby promises to pay to the order of _______________________________
(“Lender”), in accordance with the provisions of the Credit Agreement (as hereinafter defined), the principal
amount of each Loan or so much thereof as may be advanced by Lender (in its capacity as Lender) from time to time to or for the
benefit or account of Borrower under that certain Amended and Restated Credit Agreement, dated as of July [__], 2018 (as amended,
restated, extended, supplemented or otherwise modified in writing from time to time, the “Credit Agreement;”
the terms defined therein being used herein as therein defined), among Borrower, the lenders from time to time party thereto,
and LegacyTexas Bank, as Administrative Agent (in such capacity, “Administrative Agent”) and L/C Issuer.


 


Borrower promises to
pay interest on the unpaid principal amount of this Note from the date hereof until the Loans made by Lender are paid in full,
at such interest rates and at such times as provided in the Credit Agreement. All payments of principal and interest shall be
made to Administrative Agent for the account of Lender in Dollars in immediately available funds at Administrative Agent’s Principal
Office. If any amount is not paid in full when due hereunder, then such unpaid amount shall bear interest, to be paid upon demand,
from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate
set forth in the Credit Agreement.


 


This Note is one of
the Notes referred to in the Credit Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject
to the terms and conditions provided therein. This Note is also entitled to the benefits of the Guaranties. Upon the occurrence
and continuation of one or more of the Events of Default specified in the Credit Agreement, all amounts then remaining unpaid
on this Note shall become, or may be declared to be, immediately due and payable all as provided in the Credit Agreement. The
Loans made by Lender shall be evidenced by an account maintained by Lender in the ordinary course of business. Lender may also
attach schedules to this Note and endorse thereon the date, amount and maturity of its Loans and payments with respect thereto.


 


Borrower, for itself,
its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and
non-payment of this Note.


 


THIS NOTE, AND ANY
CLAIM, CONTROVERSY, OR DISPUTE ARISING OUT OF OR IN CONNECTION WITH THIS NOTE, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS.


 


[Remainder
of Page Intentionally Left Blank

Signature Page Follows]


 






    	EXHIBIT D – Note – Page 1



     


    

 





IN WITNESS WHEREOF,
Borrower, intending to be legally bound hereby, has duly executed this Note as of the day and year first written above.


 





	 	BORROWER:
	 	 	 	 
	 	CARBON ENERGY CORPORATION
	 	 	 	 
	 	By:	 	 
	 	 	Name: 	              
	 	 	Title:	 




 






    	EXHIBIT D – Note – Page 2



     


    

 





EXHIBIT E-1


 


U.S. Tax Compliance Certificate

(For Foreign Lenders That Are Not Partnerships for U.S. Federal Income Tax Purposes)


 


Reference is hereby
made to the Amended and Restated Credit Agreement dated as of July [__], 2018 (as amended, supplemented or otherwise modified
from time to time, the “Credit Agreement”), among Carbon Energy Corporation, a Delaware corporation (“Borrower”),
LegacyTexas Bank, as Administrative Agent and L/C Issuer, and each Lender from time to time party thereto.


 


Pursuant to the provisions
of Section 3.4 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial
owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) it
is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of Borrower
within the meaning of Section 871(h)(3)(B) of the Code and (iv) it is not a controlled foreign corporation related to
Borrower as described in Section 881(c)(3)(C) of the Code.


 


The undersigned has
furnished Administrative Agent and Borrower with a certificate of its non-U.S. Person status on IRS Form W-8BEN. By executing
this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned
shall promptly so inform Borrower and Administrative Agent, and (2) the undersigned shall have at all times furnished Borrower
and Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each
payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.


 


Unless otherwise defined
herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.


 





	[NAME OF LENDER]	 
	 	 	 	 
	By:	 	 
	 	Name: 	                  	 
	 	Title:	 	 
	 	 	 	 
	Date:	______________ ____, 20__	 




 






    	EXHIBIT E – U.S. Tax Compliance Certificate – Page 1



     


    

 


EXHIBIT E-2


 


U.S. Tax Compliance Certificate

(For Foreign Participants That Are Not Partnerships for U.S. Federal Income Tax Purposes)


 


Reference is hereby
made to the Amended and Restated Credit Agreement dated as of July [__], 2018 (as amended, supplemented or otherwise modified
from time to time, the “Credit Agreement”), among Carbon Energy Corporation, a Delaware corporation (“Borrower”),
LegacyTexas Bank, as Administrative Agent and L/C Issuer, and each Lender from time to time party thereto.


 


Pursuant to the provisions
of Section 3.4 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial
owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning
of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of Borrower within the meaning of Section 871(h)(3)(B)
of the Code and (iv) it is not a controlled foreign corporation related to Borrower as described in Section 881(c)(3)(C)
of the Code.


 


The undersigned has
furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN. By executing this certificate,
the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so
inform such Lender in writing, and (2) the undersigned shall have at all times furnished such Lender with a properly completed
and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in
either of the two calendar years preceding such payments.


 


Unless otherwise defined
herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.


 





	[NAME
OF PARTICIPANT]	 
	 	 	 	 
	By:	 	 
	 	Name: 	                  	 
	 	Title:	 	 
	 	 	 	 
	Date:	______________ ____, 20__	 




 






    	EXHIBIT E – U.S. Tax Compliance Certificate – Page 2



     


    

 


EXHIBIT E-3


 


U.S. Tax Compliance Certificate

(For Foreign Participants That Are Partnerships for U.S. Federal Income Tax Purposes)


 


Reference is hereby
made to the Amended and Restated Credit Agreement dated as of July [__], 2018 (as amended, supplemented or otherwise modified
from time to time, the “Credit Agreement”), among Carbon Energy Corporation, a Delaware corporation (“Borrower”),
LegacyTexas Bank, as Administrative Agent and L/C Issuer, and each Lender from time to time party thereto.


 


Pursuant to the provisions
of Section 3.4 of the Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the
participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the
sole beneficial owners of such participation, (iii) with respect such participation, neither the undersigned nor any of its
direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course
of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect
partners/members is a ten percent shareholder of Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none
of its direct or indirect partners/members is a controlled foreign corporation related to Borrower as described in Section 881(c)(3)(C)
of the Code.


 


The undersigned has
furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members
that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or (ii) an IRS Form W-8IMY accompanied by
an interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this
certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times
furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each
payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.


 


Unless otherwise defined
herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.


 





	[NAME
OF PARTICIPANT]	 
	 	 	 	 
	By:	 	 
	 	Name: 	                  	 
	 	Title:	 	 
	 	 	 	 
	Date:	______________ ____, 20__	 


 






    	EXHIBIT E – U.S. Tax Compliance Certificate – Page 3



     


    

 


EXHIBIT E-4


 


U.S. Tax Compliance Certificate

(For Foreign Lenders That Are Partnerships for U.S. Federal Income Tax Purposes)


 


Reference is hereby
made to the Amended and Restated Credit Agreement dated as of July [__], 2018 (as amended, supplemented or otherwise modified
from time to time, the “Credit Agreement”), among Carbon Energy Corporation, a Delaware corporation (“Borrower”),
LegacyTexas Bank, as Administrative Agent and L/C Issuer, and each Lender from time to time party thereto.


 


Pursuant to the provisions
of Section 3.4 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner
of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its
direct or indirect partners/members are the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)),
(iii) with respect to the extension of credit pursuant to this Amended and Restated Credit Agreement or any other Loan Document,
neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement
entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none
of its direct or indirect partners/members is a ten percent shareholder of Borrower within the meaning of Section 871(h)(3)(B)
of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to Borrower
as described in Section 881(c)(3)(C) of the Code.


 


The undersigned has
furnished Administrative Agent and Borrower with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members
that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or (ii) an IRS Form W-8IMY accompanied by
an interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this
certificate changes, the undersigned shall promptly so inform Borrower and Administrative Agent, and (2) the undersigned
shall have at all times furnished Borrower and Administrative Agent with a properly completed and currently effective certificate
in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years
preceding such payments.


 


Unless otherwise defined
herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.


 





	[NAME
OF LENDER]	 
	 	 	 	 
	By:	 	 
	 	Name: 	                  	 
	 	Title:	 	 
	 	 	 	 
	Date:	______________ ____, 20__	 


 






    	EXHIBIT E – U.S. Tax Compliance Certificate – Page 4



     


    

 





EXHIBIT F


 


Form of Borrowing Base Adjustment Letter


 


As of __________, 201__


 


Carbon Energy Corporation

____________________


 ____________________


 


	Re:	Adjustment of Borrowing Base



 


Ladies and Gentlemen:


 


We refer
to that certain Amended and Restated Credit Agreement, dated as of July [__], 2018 (as
amended from time to time, the “Credit Agreement”) among Carbon Energy Corporation, a Delaware corporation (“Borrower”),
the financial institutions from time to time party thereto (the “Lenders”), and LegacyTexas Bank, as administrative
agent for the Lenders (“Administrative Agent”). The defined terms used in this letter have the same meanings
as are provided therefor in the Credit Agreement.


 


This letter will confirm our agreements
with respect to the Borrowing Base:


 


		(a)	[Increase][Decrease][Reaffirmation]
                                         of Borrowing Base. Effective as of the date hereof [and subject to the payment
                                         of the fee described below], the Borrowing Base is hereby [[increased][decreased]
                                         from [$__________] to [$__________]][reaffirmed at $__________]. The foregoing adjustment
                                         of the Borrowing Base is a periodic redetermination of the Borrowing Base under Section
                                         2.9(b) of the Credit Agreement.



 


		(b)	[Borrowing Base Increase Fee.
                                         The incremental increase in the Borrowing Base is $__________. As a condition to the
                                         increase in the Borrowing Base set forth above, Borrower will pay the Lenders a fee of
                                         $__________ for such incremental increase (_____% of $__________), to be shared among
                                         the Lenders in accordance with their Applicable Percentages.]



 


		(c)	Determination Date.
                                         The Borrowing Base as adjusted will remain in effect until __________, 201__, which is
                                         the date of the next periodic redetermination of the Borrowing Base, unless otherwise
                                         adjusted pursuant to the provisions of Section 2.9 of the Credit Agreement.



 


The agreements set forth herein are limited
precisely as written and shall not be deemed (a) to be a waiver of or a consent to the modification of or deviation from
any other term or condition of the Loan Documents, or (b) to prejudice any right or rights which Administrative Agent or
the Lenders may now have or may have in the future under or in connection with the Loan Documents. This letter constitutes a Loan
Document under the Credit Agreement.


 


The failure by Administrative Agent and
the Lenders to exercise available rights and remedies is not intended (a) to operate as a waiver of rights and remedies except
as expressly herein provided, and (b) to indicate any agreement on the part of Administrative Agent and the Lenders to waive their
rights and remedies in the future. Administrative Agent and the Lenders are not obligated in any way with respect to future dealings
between them and Borrower, except as set forth in the presently existing Loan Documents.


 


[Remainder of page intentionally
left blank. Signature pages follow.]


 






    	EXHIBIT F – Borrowing Base Adjustment Letter – Page 1



     


    

 





Kindly sign and return the enclosed counterpart
of this letter.


 





	 	Very truly yours,
	 	 	 
	 	LEGACYTEXAS BANK
	 	as Administrative Agent and as a Lender
	 	 	 
	 	By:	                  
	 	Name: 	 
	 	Title:	 


 






    EXHIBIT F – Form of Borrowing Base Adjustment Letter – Signature Page


     


    

 





AGREED AND ACCEPTED:


as of __________, 201__


 


CARBON ENERGY CORPORATION,


as Borrower


 





	By:	                  	 
	Name: 	 	 
	Title:	 	 


 


 


 


EXHIBIT F – Form of Borrowing
Base Adjustment Letter – Signature Page