# EDGAR Filing Document

**Accession Number:** 0001818643
**File Stem:** 0001193125-25-149140
**Filing Date:** 2025-6
**Character Count:** 2405600
**Document Hash:** 488334cc3e4be2c5a91677e118b83eff
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001193125-25-149140.hdr.sgml**: 20250626

**ACCESSION NUMBER**: 0001193125-25-149140

**CONFORMED SUBMISSION TYPE**: 1-A

**PUBLIC DOCUMENT COUNT**: 31

**FILED AS OF DATE**: 20250626

**DATE AS OF CHANGE**: 20250626

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Phoenix Energy One, LLC
- **CENTRAL INDEX KEY:** 0001818643
- **STANDARD INDUSTRIAL CLASSIFICATION:** CRUDE PETROLEUM & NATURAL GAS [1311]
- **ORGANIZATION NAME:** 01 Energy & Transportation
- **EIN:** 834526672
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 1-A
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 024-12634
- **FILM NUMBER:** 251081397

**BUSINESS ADDRESS:**
- **STREET 1:** 4643 S. ULSTER STREET, SUITE 1510
- **CITY:** DENVER
- **STATE:** CO
- **ZIP:** 80237
- **BUSINESS PHONE:** 213-316-8720

**MAIL ADDRESS:**
- **STREET 1:** 4643 S. ULSTER STREET, SUITE 1510
- **CITY:** DENVER
- **STATE:** CO
- **ZIP:** 80237

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Phoenix Capital Group Holdings, LLC
- **DATE OF NAME CHANGE:** 20200717

## Part

##### [**Table of Contents**](#toc)
**AN OFFERING STATEMENT PURSUANT TO REGULATION A RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. INFORMATION CONTAINED IN THIS PRELIMINARY OFFERING CIRCULAR IS SUBJECT TO COMPLETION OR AMENDMENT. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED BEFORE THE OFFERING STATEMENT FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION IS QUALIFIED. THIS PRELIMINARY OFFERING CIRCULAR SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR MAY THERE BE ANY SALES OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL BEFORE REGISTRATION OR QUALIFICATION UNDER THE LAWS OF SUCH STATE. THE COMPANY MAY ELECT TO SATISFY ITS OBLIGATION TO DELIVER A FINAL OFFERING CIRCULAR BY SENDING YOU A NOTICE WITHIN TWO BUSINESS DAYS AFTER THE COMPLETION OF THE COMPANY'S SALE TO YOU THAT CONTAINS THE URL WHERE THE FINAL OFFERING CIRCULAR OR THE OFFERING STATEMENT IN WHICH SUCH FINAL OFFERING CIRCULAR WAS FILED MAY BE OBTAINED.** 

**SUBJECT TO COMPLETION, DATED JUNE 26, 2025** 

**PRELIMINARY OFFERING CIRCULAR** 

**PHOENIX ENERGY ONE, LLC**![LOGO](g72530g01n01.jpg)

**18575 Jamboree Road, Suite 830** 

**Irvine, California 92612** 

**(949) 416-5037** 

**Up to 3,750,000 10.00% Series A Cumulative Redeemable Preferred Shares** 

**Representing Limited Liability Company Interests** 

We are offering up to 3,750,000 shares of our 10.00% Series A Cumulative Redeemable Preferred Shares, representing limited liability company interests, which we refer to in this offering circular as the "***Preferred Shares***." We are offering the Preferred Shares at an offering price of $20.00 per Preferred Share for a maximum offering amount of $75,000,000. There is a minimum initial investment amount per investor of $1,000.00 for the Preferred Shares and any additional purchases must be made in increments of at least $20.00.

No market currently exists for the Preferred Shares. We have applied to list the Preferred Shares on the NYSE American LLC ("***NYSE American***") under the symbol "PHXE.P." If approved, we intend to list the Preferred Shares on NYSE American following NYSE American's certification of our Form 8-A to be filed concurrently with qualification of this, or a post-qualification amendment to this, Offering Circular (as defined below). If the Preferred Shares are not approved for listing on NYSE American, we will not complete this offering. No assurance can be given that our application to list on NYSE American will be approved or that an active trading market for the Preferred Shares will develop.

We will pay quarterly cumulative cash distributions on the Preferred Shares based on the initial stated liquidation preference of $25.00 per Preferred Share, in arrears, when authorized by our board of directors and declared by us, on the 15th day of each April, July, October and January, beginning on October 15, 2025 (provided that if any distribution payment date is not a business day, then the distribution which would otherwise have been payable on that distribution payment date (as defined herein) may be paid on the next succeeding business day) (i) from, and including, the date of original issuance to, but excluding, October 15, 2028, at a fixed rate equal to 10.00% (equivalent to $2.50 per annum per Preferred Share), (ii) from and including October 15, 2028 to, but excluding, October 15, 2029, at a fixed rate equal to 10.50% (equivalent to $2.625 per annum per Preferred Share), and (iii) from and including October 15, 2029 at a fixed rate equal to 11.00% (equivalent to $2.75 per annum per Preferred Share). See the section entitled "*Description of Capital and Preferred Shares—Series A Preferred Shares—Distributions*" for additional details. The pro-rated first distribution, payable on October 15, 2025 in the amount equal to approximately $ per Preferred Share, will be paid to the persons who are the holders of record of the Preferred Shares at the close of business on the corresponding distribution record date, which will be October 1, 2025.

We may, at our option, at any time or from time to time, redeem any or all of the Preferred Shares at $27.50 per Preferred Share plus any accumulated and unpaid distributions (whether or not authorized or declared) up to but excluding the redemption date. Any partial redemption will be on a pro rata basis or by lot. Each Preferred Share has no stated maturity, is not subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless redeemed by us. See the section entitled "*Description of Capital and Preferred Shares—Series A Preferred Shares—Redemption*" for additional details.

------

##### [**Table of Contents**](#toc)
In addition, except under limited circumstances as described in this Offering Circular, holders of the Preferred Shares generally do not have any voting rights. See the section entitled "*Description of Capital and Preferred Shares—Series A Preferred Shares—Limited Voting Rights*" for additional details.

We are currently a member-managed limited liability company organized under the laws of the State of Delaware, and do not have a board of directors, board of managers, or similar construct (or any committees thereof). In addition, we are wholly owned and controlled by Phoenix Equity Holdings, LLC, a Delaware limited liability company ("***Phoenix Equity***"). Phoenix Equity is our sole member and, as such, directs our business and operations, including appointment and compensation of our officers. Lion of Judah Capital, LLC, a Delaware limited liability company ("***LJC***"), controls Phoenix Equity and, therefore, indirectly has control over our management. Daniel Ferrari and Charlene Ferrari each own 50% of the voting membership interests in, and are the managers of, LJC. Adam Ferrari, our Chief Executive Officer and the son of Daniel and Charlene Ferrari, owns 100% of the economic interests in LJC, but has no voting or managerial interest in LJC. Adam Ferrari is also the manager of Phoenix Equity. Following this offering, we will be a manager-managed limited liability company and our business and affairs will be managed under the direction of a board of directors. In addition, Phoenix Equity will hold all of our common shares, representing limited liability company interests, and, as a result, other than under the limited circumstances described in this Offering Circular in which holders of the Preferred Shares have voting rights, we will continue to be controlled by Phoenix Equity. As a result of this concentrated control, Phoenix Equity will have the ability to determine corporate matters for the foreseeable future, including with respect to the power to add and remove any of our directors at any time with or without cause and may take action by written consent without a meeting of shareholders. See "*Risk Factors—Risks Related to the Phoenix Equity's Ownership of Our Common Shares and Certain LLCA Provisions—The interests of holders of Preferred Shares may conflict with the interests of our controlling shareholder*."

Following this offering, we will be a "controlled company" within the meaning of the corporate governance standards of the NYSE American. As a "controlled company," we intend to rely on the exemptions from certain corporate governance standards of the NYSE American. In addition, following this offering, we will be a company listing only preferred securities on NYSE American and thus will only be required to comply with certain corporate governance requirements, including with respect to our audit committee, to the extent required by Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the "***Exchange Act***"). See the section entitled "*Risk Factors—Risks Related to the Preferred Shares and this Offering—We will be a "controlled company" within the meaning of the corporate governance standards of the NYSE American. We intend to rely on exemptions from certain corporate governance standards. You will not have the same protections afforded to stockholders of companies that are subject to such requirements*" and "*—We will be a company listing only preferred securities on NYSE American and thus will only be required to comply with certain corporate governance requirements, including with respect to our audit committee, to the extent required by Rule 10A-3 under the Exchange Act*" for additional details.

The Preferred Shares will be senior to our common shares with respect to distribution rights and rights upon our liquidation, dissolution or winding up. The Preferred Shares will be junior to all of our existing and future indebtedness and to the indebtedness of our existing subsidiaries and any future subsidiaries. As of March 31, 2025, after giving effect to the borrowings of additional $50.0 million in aggregate under the Fortress Credit Agreement (as defined below) in April and May 2025, we would have had approximately $1,134.4 million of indebtedness outstanding. In addition, from time to time we may conduct offerings of notes pursuant to Regulation D or Regulation A under the Securities Act of 1933, as amended, or pursuant to our registration statement on Form S-1 (File No. 333-282862) and, as of the date of this Offering Circular, we and our subsidiaries are authorized to issue up to $2.7 billion in additional notes through such offerings. See "*Risk Factors—Risks Related to Our Indebtedness*" and "*Risk Factors—Risks Related to the Preferred Shares and this Offering—The Preferred Shares are junior and subordinated to our existing and future indebtedness*."

We recorded net income (loss) of $5.6 million and $(8.4) million for the three months ended March 31, 2025 and 2024, respectively, and net income (loss) of $(24.8) million, $(16.2) million, and $5.7 million for the years ended December 31, 2024, 2023, and 2022, respectively. Through 2024, we incurred a significant amount of debt in order to accelerate the growth of our business by acquiring additional assets and establishing our direct drilling operations. As a result, our cash flows from operations alone would not have been sufficient to service required cash interest and principal payment obligations under our then-existing debt in 2023 and 2024. During the three months ended March 31, 2025, we continued to incur a significant amount of debt. Furthermore, as of

------

##### [**Table of Contents**](#toc)
December 31, 2024, we estimate that we will need to make approximately $749.3 million and $3,224.8 million in capital expenditures to develop all our proved and probable undeveloped reserves, respectively, and that we will need to raise approximately $658.9 million in additional capital through the end of 2028 to fund such development. Although we expect our cash flows from operations to be sufficient to service cash interest and principal payment obligations under our debt for the foreseeable future, there can be no assurance as to the sufficiency of our cash flows for that purpose, and we do not expect such cash flows alone to be adequate to fund both our debt service obligations and the development of our reserves. Therefore, we expect to require additional capital to fund our growth and may require additional liquidity to service our debt. As a result, we may use the proceeds of additional debt offerings or this offering to make interest and principal payments on our existing debt. See "*Risk Factors—Risks Related to Our Business and Operations—The acquisition and development of our properties, directly or through our third-party E&P operators, will require substantial capital, and we and our third-party E&P operators may be unable to obtain needed capital or financing on satisfactory terms or at all, including as a result of increases in the cost of capital resulting from Federal Reserve policies in the past few years and otherwise*," "*Risk Factors—Risks Related to Our Indebtedness—Despite our current level of indebtedness, we will still be able to incur substantially more debt. This could further exacerbate the risks to our financial condition described above*," "*Risk Factors—Risks Related to Our Indebtedness—We may not be able to generate sufficient cash to service all of our existing and future indebtedness, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful*," "*Risk Factors—Risks Related to the Preferred Shares and this Offering—The Preferred Shares are junior and subordinated to our existing and future indebtedness*," "*Risk Factors—Risks Related to the Preferred Shares and this Offering—We may invest or spend the proceeds of this offering in ways with which you may not agree*," "*Use of Proceeds*," and "*Management's Discussion and Analysis of Financial Condition and Results of Operations*."

---

| | | | |
|:---|:---|:---|:---|
|  | **Public Offering<br>Price <sup>(1)</sup>** | **Selling Agent<br>Commissions <sup>(2)</sup>** | **Proceeds to<br>Issuer <sup>(3)</sup>** |
|  Per Preferred Share | $20.00 | $1.55 | $18.45 |
|  Total Maximum of Public Offering | $75000000 | $5812500 | $69187500 |

---

(1) The public offering price does not include distributions for the Preferred Shares. Distributions on the
Preferred Shares will accumulate from the original issuance date, which will occur at the closing of this offering.

(2) We have engaged Digital Offering, LLC ("  ***Digital Offering***") to act as lead selling agent
(the "  ***Selling Agent***") to offer the Preferred Shares to prospective investors in this offering on a "best efforts" basis, which means there is no guarantee that any minimum amount will be received by us in this
offering. In addition, the Selling Agent may engage one or more sub-agents or selected dealers to assist in its marketing efforts (Digital Offering, together with such sub-agents and/or dealers collectively, the "  ***Selling Agents*** "). Digital Offering is not purchasing the Preferred Shares offered by us and is not required to sell any specific number or
dollar amount of Preferred Shares in this offering before the closing occurs. We will pay a cash commission of 7.75% to Digital Offering on sales of Preferred Shares, and Digital Offering shall be responsible for allocating a portion of such amount
to the other Selling Agents; *provided* further that, subject to certain requirements, one of the Selling Agents, Dalmore Group, LLC ("  ***Dalmore Group***") will be entitled to receive an allocation of 2.4% of the gross
offering proceeds. Certain of our non-executive personnel, including Matthew Willer, our Managing Director, Capital Markets, are registered representatives of Dalmore Group, and will be paid a sales commission
of 2.0% by Dalmore Group as compensation for sale of the Preferred Shares, which will be paid out of the allocation of commission provided to Dalmore Group by Digital Offering. See "*Plan of Distribution*" for details of compensation
payable to the Selling Agents in connection with the offering.

(3) Does not account for the expenses of the offering. See "*Use of Proceeds*" for estimated
offering expenses payable by us in connection with the offering.

We may amend or supplement this Offering Circular from time to time by filing amendments or supplements as required. You should read this entire Offering Circular and any amendments or supplements carefully before you make an investment decision.

Investors will be required to deposit their funds to an escrow account held at Wilmington Trust, National Association ("***Wilmington Trust***"). Any such funds that Wilmington Trust receives shall be held in escrow until the closing of the offering takes place or such other time as mutually agreed between us and Digital Offering, and

------

##### [**Table of Contents**](#toc)
then used to complete securities purchases, or returned if this offering fails to close. We or our agents will instruct all investors to transfer funds by wire or ACH transfer directly to the escrow account established for this offering. The method for submitting subscriptions and a more detailed description of the offering process are included in "*Plan of Distribution—Procedures for Subscribing*" beginning on page 202 of this Offering Circular.

**The Preferred Shares will not be listed on the NYSE American upon the initial qualification of this Offering Circular by the United States Securities and Exchange Commission ("*SEC*"). As a result, no sale may be made to you in this offering, if you are a natural person, if the aggregate purchase price you pay is more than 10% of the greater of your annual income or net worth. Different rules apply to accredited investors and non-natural persons. Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A. For general information on investing, we encourage you to refer to <u>www.investor.gov</u>. See "*Plan of Distribution—Investment Limitations if We Do Not Obtain a Listing on a National Securities Exchange*" beginning on page 200 of this Offering Circular for more information on investor suitability requirements.** 

**This offering will terminate at the earliest of: (1) the date at which the maximum offering amount has been received by us, (2) one year from the date upon which the United States Securities and Exchange Commission qualifies the offering statement of which this Offering Circular forms a part, and (3) the date at which the offering is earlier terminated by us in our sole discretion. This offering is being conducted on a best-efforts basis. We intend to complete one closing for this offering. After the closing, funds tendered by investors will be made available to us.** 

**INVESTING IN THE PREFERRED SHARES INVOLVES A HIGH DEGREE OF RISK, AND SHOULD ONLY BE CONSIDERED BY THOSE WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. BEFORE YOU INVEST IN PREFERRED SHARES, YOU SHOULD CAREFULLY READ THE SECTION ENTITLED "*[RISK FACTORS](#tx72530_3)*" BEGINNING ON PAGE 22 OF THIS OFFERING CIRCULAR.** 

**THE SEC DOES NOT PASS UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SOLICITATION MATERIALS. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE SEC; HOWEVER, THE SEC HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED ARE EXEMPT FROM REGISTRATION.** 

**Sales of these securities will commence on approximately , 2025.** 

**This Offering Circular follows the disclosure format of Part I of Form S-1 pursuant to the general instructions of Part II(a)(1)(ii) of Form 1-A.**![LOGO](g72530g01n04.jpg)

------

##### [**Table of Contents**](#toc)
**TABLE OF CONTENTS** 

---

| | |
|:---|:---|
|  [ABOUT THIS OFFERING CIRCULAR](#tx72530_1) | ii |
|  [OFFERING CIRCULAR SUMMARY](#tx72530_2) | 1 |
|  [RISK FACTORS](#tx72530_3) | 22 |
|  [CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS](#tx72530_4) | 65 |
|  [USE OF PROCEEDS](#tx72530_5) | 67 |
|  [DISTRIBUTION POLICY](#tx72530_5a) | 69 |
|  [CAPITALIZATION](#tx72530_6) | 70 |
|  [MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](#tx72530_7) | 73 |
|  [BUSINESS](#tx72530_8) | 116 |
|  [MANAGEMENT](#tx72530_9) | 145 |
|  [COMPENSATION DISCUSSION AND ANALYSIS](#tx72530_10) | 151 |
|  [CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS](#tx72530_11) | 163 |
|  [SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT](#tx72530_12) | 166 |
|  [DESCRIPTION OF CAPITAL AND PREFERRED SHARES](#tx72530_13) | 168 |
|  [MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF PREFERRED SHARES](#tx72530_14) | 182 |
|  [ERISA CONSIDERATIONS](#tx72530_15) | 194 |
|  [PLAN OF DISTRIBUTION](#tx72530_16) | 197 |
|  [LEGAL MATTERS](#tx72530_17) | 206 |
|  [EXPERTS](#tx72530_18) | 206 |
|  [WHERE YOU CAN FIND ADDITIONAL INFORMATION](#tx72530_20) | 207 |
|  [INDEX TO FINANCIAL STATEMENTS](#tx72530_21) | F-1 |

---

You should read this Offering Circular carefully before you invest in the Preferred Shares. This Offering Circular and the exhibits to this Offering Circular contain the terms of the Preferred Shares we are offering. It is important for you to read and consider all of the information contained in this Offering Circular before making your investment decision.

You should rely only on the information contained in this Offering Circular, the offering statement, or any amendment or supplement to this Offering Circular we may authorize to be delivered or made available to you. Neither we nor any Selling Agent has authorized anyone to provide you with information or to make any representations other than those contained in this Offering Circular, the offering statement, or any amendment or supplement to this Offering Circular we may authorize to be delivered or made available to you. Neither we nor any Selling Agent take any responsibility for, and provide no assurance as to the reliability of, any other information that others may give you. This Offering Circular, the offering statement, or any amendment or supplement to this Offering Circular is an offer to sell only the Preferred Shares offered hereby or thereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this Offering Circular, the offering statement, or any amendment or supplement to this Offering Circular is current only as of its date, regardless of the time of its delivery or of any sale of Preferred Shares. Our business, financial condition, results of operations, and prospects may have changed since such date.

Neither we nor any Selling Agent have undertaken any efforts to qualify this offering for offers to investors in any jurisdiction outside the United States. Investors must have a U.S. mailing address (other than a P.O. Box) and a U.S. social security number and/or a U.S. tax identification number to be eligible to participate in this offering. See "*Plan of Distribution*."

i

------

##### [**Table of Contents**](#toc)
**ABOUT THIS OFFERING CIRCULAR** 

Please carefully read the information in this Offering Circular and any accompanying offering circular supplements, which we refer to collectively herein as the "Offering Circular." You should rely only on the information contained in this Offering Circular. We have not authorized anyone to provide you with different information. This Offering Circular may only be used in any jurisdictions where it is not unlawful to offer and sell these securities. You should not assume that the information contained in this Offering Circular is accurate as of any date later than the date hereof or such other dates as are stated herein or as of the respective dates of any documents or other information incorporated herein by reference.

The offering statement we filed with the SEC includes exhibits that provide more detailed descriptions of the matters discussed in this Offering Circular. You should read this Offering Circular and the related exhibits filed with the SEC and any offering circular supplement, together with additional information contained in our annual reports, semi-annual and other reports and information statements that we will file periodically with the SEC.

The offering statement and all supplements and reports that we have filed or will file in the future can be read at the SEC website, www.sec.gov, or on the Phoenix website, https://phoenixenergy.com/.

ii

------

##### [**Table of Contents**](#toc)
**CERTAIN DEFINED TERMS** 

As used in this Offering Circular, unless otherwise noted or the context otherwise requires, references to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***Adamantium***" means Adamantium Capital LLC, a Delaware limited liability company and a
direct, wholly owned subsidiary of the Issuer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***Adamantium Bonds***" means unsecured bonds offered and sold by Adamantium pursuant to an
offering under Rule 506(c) of Regulation D under the Securities Act, the proceeds of which are loaned to the Issuer under the Adamantium Loan Agreement (as defined below) as further described in "*Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness—Adamantium Debt*."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***Adamantium Debt***" means, collectively, indebtedness outstanding under the Adamantium
Bonds, Adamantium Loan Agreement, and Adamantium Secured Note.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***Adamantium Loan Agreement***" means that certain Loan Agreement, dated as of
September 14, 2023, by and among the Issuer and PhoenixOp, as borrowers, and Adamantium, as lender, as the same may be amended and supplemented from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***Adamantium Secured Note***" means that certain Secured Subordinated Promissory Note, dated
as of November 1, 2024, by and between Adamantium and the noteholder named therein, as the same may be amended and supplemented from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***Adamantium Securities***" means, collectively, indebtedness outstanding under the
Adamantium Bonds and Adamantium Secured Note.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***Bbl***" means one stock tank barrel, of 42 U.S. gallons liquid volume, used in this
Offering Circular in reference to crude oil or other liquid hydrocarbons.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***Boe***" means barrel of oil equivalent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***Btu***" means British thermal unit, which is the heat required to raise the temperature of
one pound of liquid water by one degree Fahrenheit.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***Code***" means the U.S. Internal Revenue Code of 1986, as amended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***Digital Offering***" or the "  ***lead selling agent***" means Digital
Offering LLC, a Delaware limited liability company and a member of FINRA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***DLLCA***" means the Delaware Limited Liability Company Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***E&P***" means exploration and production.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***Exchange Act***" means the Securities Exchange Act of 1934, as amended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***Fortress***" means Fortress Credit Corp., a Delaware corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***Fortress Credit Agreement***" means that certain Amended and Restated Senior Secured Credit
Agreement, dated as of August 12, 2024, by and among the Issuer, PhoenixOp, as borrower, each of the lenders from time to time party thereto, and Fortress, as administrative agent for the lenders, as the same may be amended or supplemented from
time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***Indenture***" means that certain indenture, dated on or around the date of this Offering
Circular, by and between the Issuer and UMB Bank, N.A., as trustee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***Issuer***" means Phoenix Energy One, LLC, a Delaware limited liability company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***LJC***" means Lion of Judah Capital, LLC, a Delaware limited liability company and the
holder of a majority of the voting membership interests in Phoenix Equity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***Mcf***" means one thousand cubic feet.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***MMBtu***" means one million Btus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***NGL***" means natural gas liquids.

iii

------

##### [**Table of Contents**](#toc)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***Notes***" means, collectively, the Registered Notes and the Reg D/Reg A Bonds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***NMAs***" means net mineral acres.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***NRAs***" means net royalty acres.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***NYSE American***" means NYSE American LLC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***Phoenix Equity***" means Phoenix Equity Holdings, LLC, a Delaware limited liability company
and the sole member of the Issuer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***PhoenixOp***" means Phoenix Operating LLC, a Delaware limited liability company and a
direct, wholly owned subsidiary of the Issuer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***Reg A Bonds***" means unsecured bonds offered and sold to date by the Issuer pursuant to an
offering under Regulation A under the Securities Act as further described in "*Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness—Reg D/Reg A Bonds* ".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***Reg D Bonds***" means unsecured bonds offered and sold to date by the Issuer pursuant to
offerings under Rule 506(b) or (c), as applicable, of Regulation D under the Securities Act as further described in "*Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness—Reg D/Reg A Bonds* ".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***Reg D/Reg A Bonds***" means, collectively, the Reg D Bonds and the Reg A Bonds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***Registered Notes***" means unsecured notes offered and sold by the Issuer on a continuous
basis pursuant to its registration statement on Form S-1 (File No. 333-282862), including the related prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***Registration Statement***" means that certain registration statement on Form S-1 (File No. 333-282862), including the related prospectus, related to the Registered Notes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***SEC***"  **** ** means the U.S. Securities and Exchange Commission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***Securities Act***"  **** ** means the Securities Act of 1933, as amended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***Senior Reg D Bonds***" means, collectively, the July 2022 506(c) Bonds, the 2020 506(b)
Bonds, and the 2020 506(c) Bonds, each as described in "*Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness—Reg D/Reg A Bonds*."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***Senior Reg D/Reg A Bonds***" means the Reg D/Reg A Bonds that are not Subordinated Reg D
Bonds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***Subordinated Reg D Bonds***" means, collectively, the August 2023 506(c) Bonds and the
December 2022 506(c) Bonds, each as described in "*Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness—Reg D/Reg A Bonds*."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***Third ARLLCA***" means the Third Amended and Restated Limited Liability Company Agreement
of Phoenix Energy One, LLC to be entered into in connection with this offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "  ***we*** ," "  ***us*** ," "  ***our*** ," the
"  ***Company*** ," "  ***Phoenix Energy*** ," and similar references refer to Phoenix Energy One, LLC, and, where appropriate, its subsidiaries.

For ease of reference, we have repeated definitions for certain of these terms in other portions of the body of this Offering Circular. All such definitions conform to the definitions set forth above.

Certain monetary amounts, percentages, and other figures included in this Offering Circular have been subject to rounding adjustments. Percentage amounts included in this Offering Circular have not in all cases been calculated on the basis of such rounded figures, but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this Offering Circular may vary from those obtained by performing the same

iv

------

##### [**Table of Contents**](#toc)
calculations using the figures in our consolidated financial statements included elsewhere in this Offering Circular. Certain other amounts that appear in this Offering Circular may not sum due to rounding.

**TRADEMARKS, TRADE NAMES, AND SERVICE MARKS** 

We own or have rights to trademarks, trade names, or service marks that we use in conjunction with the operation of our business. In addition, our name, logo, and website name and address are our service marks or trademarks. Solely for convenience, our trademarks, trade names, and service marks referred to in this Offering Circular appear without the <sup>®</sup>, <sup>TM</sup>, and <sup>SM</sup> symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent permitted under applicable law, our rights or the rights of the applicable licensors to these trademarks, trade names, and service marks. This Offering Circular may also contain additional trademarks, trade names, and service marks of other companies. We do not intend our use or display of other companies' trademarks, trade names, or service marks to imply, and such use or display should not be construed to imply, relationships with, or endorsement or sponsorship of us by, these other companies.

**INDUSTRY DATA AND OPERATING METRICS** 

This Offering Circular contains estimates, projections, and information concerning our industry and our business. We are responsible for all of the disclosure in this Offering Circular, and while we believe that each of the publications, studies, and surveys used throughout this Offering Circular are prepared by reputable sources and are generally reliable, we have not independently verified market and industry data from third-party sources. Some data and statistical and other information are based on internal estimates and calculations that are derived from publicly available information, research we conducted, internal surveys, our management's knowledge of our industry, and their assumptions based on such information and knowledge, which we believe to be reasonable. In each case, this information and data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such information, estimates, or projections. Industry publications and other reports we have obtained from independent parties may state that the data contained in these publications or other reports have been obtained in good faith or from sources considered to be reliable, but they do not guarantee the accuracy or completeness of such data. In addition, projections, assumptions, and estimates of the future performance of the industry in which we operate and our future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in "*Risk Factors*" and "*Cautionary Statement Regarding Forward-Looking Statements*." These and other factors could cause our future performance to differ materially from the assumptions and estimates made by third parties and us.

Reserve engineering is a process of estimating underground accumulations of oil, natural gas, and NGL that cannot be measured in an exact way. The accuracy of any reserve estimate depends on the quality of available data, the interpretation of such data, and price and cost assumptions made by reserve engineers. In addition, the results of drilling, testing, and production activities may justify revisions of estimates that were made previously. If significant, such revisions could impact our strategy. Accordingly, reserve estimates may differ significantly from the quantities of oil, natural gas, and NGL that we expect our operators to ultimately recover.

**WEBSITES** 

This Offering Circular includes references to various websites where investors may find additional information or further instructions or information regarding, among other things, this offering, including *www.sec.gov, www.investor.gov., https://invest.phoenixenergy.com* and *https://phoenixenergy.com/*. For the avoidance of doubt, the contents of these website are not incorporated by reference in or otherwise a part of this Offering Circular, and you should not consider such information part of this Offering Circular or rely on any such information in making your decision whether to purchase the Preferred Shares.

v

------

##### [**Table of Contents**](#toc)
**NON-GAAP FINANCIAL MEASURES** 

In addition to measures determined in accordance with generally accepted accounting principles in the United States ("***GAAP***"), this Offering Circular contains non-GAAP financial measures, which either exclude or include amounts that are not excluded from or included in the most directly comparable measures calculated and presented in accordance with GAAP.

Specifically, we utilize the non-GAAP financial measures "EBITDA" and "PV-10" in this Offering Circular as supplemental measures of financial performance that are not required by, or presented in accordance with, GAAP.

We calculate EBITDA by adding back to net income (loss) interest income, interest expense, depreciation, depletion, amortization, and accretion expense for the respective periods. Our management uses EBITDA to understand and compare our operating results across accounting periods, for internal budgeting and forecasting purposes, and to evaluate financial performance and liquidity, in each case, without regard to financing methods, capital structure, or historical cost basis. EBITDA is presented as supplemental disclosure as we believe it provides useful information to investors and others in understanding and evaluating our results, prospects, and liquidity period over period, including as compared to results of other companies. By providing this non-GAAP financial measure, together with a reconciliation to GAAP results, we believe we are enhancing investors' understanding of our business and our operating performance, as well as assisting investors in evaluating how well we are executing strategic initiatives.

EBITDA has important limitations as an analytical tool because it excludes some but not all items that affect net income (loss), the most directly comparable GAAP measure. In particular, EBITDA excludes certain material costs, such as interest expense, and certain non-cash charges, such as depreciation, depletion, amortization, and accretion expense, that have been necessary elements of our expenses. Because EBITDA does not account for these expenses, its utility as a measure of our operating performance has material limitations. Other companies may not publish this or similar metrics, and our computation of EBITDA may differ from computations of similarly titled measures of other companies. Therefore, our EBITDA should be considered in addition to, and not as a substitute for, in isolation from, or superior to, our financial information prepared in accordance with GAAP, and should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this Offering Circular.

We calculate PV-10 as the discounted future net cash flows attributable to our proved oil and natural gas reserves before income taxes, discounted at 10% annually. PV-10 differs from the standardized measure of discounted future net cash flows, which is the most directly comparable GAAP financial measure, because it is calculated on a pre-tax basis. We use PV-10 when assessing the potential return on investment related to our oil and natural gas properties. We believe that the presentation of PV-10 is relevant and useful to investors because it presents the discounted future net cash flows attributable to our estimated net proved reserves prior to taking into account future income taxes, and is useful for evaluating the relative monetary significance of our oil and natural gas properties. Further, investors may utilize PV-10 as a basis for comparison of the relative size and value of our reserves to other companies without regard to the specific tax characteristics of such entities.

Because the Issuer is a limited liability company and has currently elected to be treated as a partnership for income tax purposes, the *pro rata* share of taxable income or loss is included in the individual income tax returns of members based on their percentage of ownership. Consequently, no provision for income taxes is made in our standardized measure of discounted future net cash flows, and so currently our PV-10 is identical to the standardized measure of discounted future net cash flows. Notwithstanding the foregoing, we believe that the presentation of PV-10 is useful to investors because it is a commonly utilized measure in our industry for assessing the value of reserves.

vi

------

##### [**Table of Contents**](#toc)
PV-10 is not a substitute for the standardized measure of discounted future net cash flows. Neither PV-10 nor the standardized measure of discounted future net cash flows purport to represent the fair value of our oil and natural gas reserves.

For a further discussion of our non-GAAP measures, including reconciliations to the most directly comparable GAAP measure, see "*Offering Circular Summary—Summary Historical Financial and Other Data*" and "*Management's Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures*."

vii

------

##### [**Table of Contents**](#toc)
**OFFERING CIRCULAR SUMMARY** 

*The following summary highlights information contained in more detail elsewhere in this Offering Circular, is not complete, and does not contain all the information that may be important to you in making an investment decision. Before making an investment decision, you should read this entire Offering Circular carefully, including the sections entitled "Risk Factors," "Cautionary Statement Regarding Forward-Looking Statements," and "Management's Discussion and Analysis of Financial Condition and Results of Operations," as well as our consolidated financial statements and the notes thereto appearing elsewhere in this Offering Circular.* 

**Our Company** 

***Overview***

We operate in the oil and gas industry and execute on a three-pronged strategy involving (i) direct drilling operations of operated working interests, (ii) the acquisition of royalty assets, and (iii) the acquisition of non-operated working interest assets. Our direct drilling operations are currently primarily focused on development efforts in the Williston Basin in North Dakota and Montana and the Powder River and Denver-Julesburg ("***DJ***") Basins in Wyoming. Our royalty and working interest acquisitions center around a variety of assets, including mineral interests, leasehold interests, overriding royalty interests, and perpetual royalty interests. These efforts have historically targeted assets in the Williston, Permian, Powder River, Uinta, and DJ Basins. We are agnostic as to geography and prioritize operational and asset potential when executing on our strategy.

We began operations in 2019 with the development of our specialized software system, which we have designed and improved over time to support our ability to identify, analyze, underwrite, transact, and manage our oil and gas assets. In 2019, we acquired our first mineral interest asset and began to generate revenue. In 2020, we expanded our operations and team to include specialists across a variety of key focus areas. From 2020 to 2024, we experienced significant growth in operations. For example, in 2020, the exploration and production ("***E&P***") operators of our properties operated 725 gross and 2.8 net productive development wells on the acreage underlying our mineral and royalty interests, and the total acreage underlying our gross and net royalty interests was 177,824 and 1,506, respectively. In the four years since then, the E&P operators of our properties have operated an additional 6,312 gross and 75.1 net productive development wells on the acreage underlying our mineral and royalty interests, of which approximately 463 gross and 43.2 net productive development wells were drilled in 2024 alone. As of December 31, 2024, we had 3,962,065 and 531,120 acres underlying our gross and net royalty interests, respectively, as compared to 177,824 and 1,506 acres underlying our gross and net royalty interests, respectively, at December 31, 2020. Furthermore, our total production for the year ended December 31, 2020 was under 0.2 million Boe as compared to over 4.7 million Boe for the year ended December 31, 2024. In the same period our number of employees grew from 21 at December 31, 2020 to 135 at December 31, 2024. Additionally, we commenced direct drilling operations and spudded our first wells in the third quarter of 2023 and, as of March 31, 2025, we have drilled a total of 44 gross and 39.9 net producing development and injection wells. We expect these direct drilling operations to be a core component of our business strategy going forward.

Since our initial mineral interest asset acquisition in 2019, we have leveraged our specialized software system and experienced management team to identify asset opportunities that fit our desired criteria and potential for returns. While we evaluate and acquire a wide variety of assets, we have historically prioritized assets with potential for high monthly recurring cashflows and primarily target assets that have a potential payback within the short to medium-term and long-term cashflows.

As of March 31, 2025, we have completed 3,687 acquisitions from landowners and other mineral interest owners, representing approximately 539,258 net royalty acres ("***NRAs***") of royalty assets and 520,922 of net mineral acres ("***NMAs***") of leasehold assets since 2019. Over that same period, in addition to completing

------

##### [**Table of Contents**](#toc)
numerous small transactions, we completed more than 70 transactions larger than 1,000 NMAs that account for approximately 85% of our NMAs. We have acquired mineral, royalty, and leasehold interests from individuals, families, trusts, partnerships, small minerals aggregators, minerals brokers, large private minerals companies, private oil and gas E&P companies, and public minerals companies. We also actively manage our portfolio of assets and, as of March 31, 2025, have sold 3,152 NMAs since 2019.

Following the acquisition of an asset, we typically share in the proceeds of the natural resources extracted and sold by a third-party E&P operator. For certain assets, we operate our own direct drilling operations through our direct wholly owned subsidiary, Phoenix Operating LLC, a Delaware limited liability company ("***PhoenixOp***").

For the three months ended March 31, 2025 and 2024 we had revenue of $115.7 million and $40.7 million, respectively, net income (loss) of $5.6 million and $(8.4) million, respectively, and EBITDA of $72.0 million and $21.9 million, respectively. For the years ended December 31, 2024, 2023, and 2022, we had revenue of $281.2 million, $118.1 million, and $54.6 million, respectively, net income (loss) of $(24.8) million, $(16.2) million, and $5.7 million, respectively, and EBITDA of $150.7 million, $65.9 million, and $29.7 million, respectively. As of March 31, 2025 and December 31, 2024, 2023, and 2022, we had total assets of $1,134.7 million, $1,029.1 million, $493.2 million, and $157.0 million, respectively, total liabilities of $1,163.1 million, $1,063.1 million, $498.0 million, $148.3 million, respectively (inclusive of total indebtedness of $1,084.3 million, $987.9 million, $447.9 million, and $117.4 million, respectively), and retained earnings (accumulated deficit) of $(28.9) million, $(34.5) million, $(9.7) million, and $6.5 million, respectively. Through 2024, we incurred a significant amount of debt in order to accelerate the growth of our business by acquiring additional assets and establishing our direct drilling operations. As a result, our cash flows from operations alone would not have been sufficient to service required cash interest and principal payment obligations under our then-existing debt in 2023 and 2024. During the three months ended March 31, 2025, we continued to incur a significant amount of debt. Furthermore, as of December 31, 2024, we estimate that we will need to make approximately $749.3 million and $3,224.8 million in capital expenditures to develop all our proved and probable undeveloped reserves, respectively, and that we will need to raise approximately $658.9 million in additional capital through the end of 2028 to fund such development. Although we expect our cash flows from operations to be sufficient to service cash interest and principal payment obligations under our debt for the foreseeable future, there can be no assurance as to the sufficiency of our cash flows for that purpose, and we do not expect such cash flows alone to be adequate to fund both our debt service obligations and the development of our reserves. Therefore, we expect to require additional capital to fund our growth and may require additional liquidity to service our debt. As a result, we may use the proceeds of additional debt offerings or this offering to make interest and principal payments on our existing debt. See "*Risk Factors—Risks Related to Our Business and Operations—The acquisition and development of our properties, directly or through our third-party E&P operators, will require substantial capital, and we and our third-party E&P operators may be unable to obtain needed capital or financing on satisfactory terms or at all, including as a result of increases in the cost of capital resulting from Federal Reserve policies in the past few years and otherwise*," "*Risk Factors—Risks Related to Our Indebtedness—Despite our current level of indebtedness, we will still be able to incur substantially more debt. This could further exacerbate the risks to our financial condition described above*," "*Risk Factors—Risks Related to Our Indebtedness—We may not be able to generate sufficient cash to service all of our existing and future indebtedness, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful*," "*Risk Factors—Risks Related to the Preferred Shares and this Offering—The Preferred Shares are junior and subordinated to our existing and future indebtedness*," "*Risk Factors—Risks Related to the Preferred Shares and this Offering—We may invest or spend the proceeds of this offering in ways with which you may not agree*," "*Use of Proceeds*," and "*Management's Discussion and Analysis of Financial Condition and Results of Operations*."

------

##### [**Table of Contents**](#toc)
***Market Opportunity***

Our royalty and working interest acquisitions generally focus on specific subsets of mineral and leasehold assets in the United States. From a market perspective, we focus on highly attractive and defined basins, currently serviced by top-tier operators, with assets that we believe will generate high near-term cash flow. All the assets we seek to acquire are purchased at what management believes are attractive price points and have a liquidity profile that is desirable in the secondary market. We generally seek to acquire assets that have near-term payback and long-term residual cash flow upside.

***Business Strategy***

Our three-pronged strategy centers around (i) direct drilling operations of operated working interests, (ii) the acquisition of royalty assets, and (iii) the acquisition of non-operated working interest assets.

***Direct Drilling Operations***

We currently run our own direct drilling activities through PhoenixOp. Throughout 2024, we increased the extent to which we run our own direct drilling operations and expect to continue to grow our drilling activities going forward. We intend to actively drill and develop select assets in an effort to maximize value and resource potential, and we will generally seek to increase our production, reserves, and cash flow from operations over time. We have identified a number of potential drilling locations that we believe have the potential for attractive growth and opportunities. In accordance with that business plan, we acquired our second drilling rig in October 2024 and our third drilling rig in April 2025.

As we rely more on our own direct drilling operations, our capital expenditures and operating expenses have also increased significantly, and we expect this increase in capital and operating expenses to continue as compared to our previous business model, which relied heavily on royalty and working interest acquisitions. As such, in 2025, we expect to have increased needs for additional capital in excess of cash flows from operating activities in order to fund the growth of our business and the development of our reserves. We expect to require additional outside funding, including through sales of the Preferred Shares offered hereby, to successfully execute this business strategy. Although we believe that running our own direct drilling operations will require significantly greater funds than partnering with a third-party operator, we believe that this strategy will provide greater control of cashflow, increased revenue, and larger potential for shorter payback periods as compared to returns on royalty assets and working interest assets. We expect that this ongoing shift in our business model will allow us to capture more of the upside from the use of our specialized software system. As of March 31, 2025, we estimate that our direct drilling operations will require approximately $423.6 million in additional capital throughout the rest of 2025 in order to achieve our intended business plan. We expect that these capital needs will be met in the near to medium term by capital contributions to PhoenixOp by us, which we expect to fund from time to time in varying amounts through a combination of cash from operations and the proceeds from loans and offerings of debt and equity securities. As of March 31, 2025, we had contributed approximately $192.9 million in cash and $44.8 million in lease assets to PhoenixOp. As of March 31, 2025, we had $202.6 million available for us to borrow under the Adamantium Loan Agreement (assuming Adamantium is able to issue the corresponding amount of Adamantium Securities). We also continue to issue August 2023 506(c) Bonds and, as of March 31, 2025, after giving effect to the raise in target offering amount effected in May 2025, we had $813.3 million of additional headroom until we reach the announced target offering amount of $1,500.0 million. Furthermore, the Registration Statement related to our continuous offering of up to $750.0 million aggregate principal amount of Registered Notes was declared effective on May 14, 2025. Our funding of additional amounts to PhoenixOp will not be subject to specific milestones or triggering events, but instead will be guided by our business judgment in order to execute on our intended business plan. We intend to make such capital contributions to PhoenixOp until such time as PhoenixOp procures its own financing, if any, or has sufficient

------

##### [**Table of Contents**](#toc)
cash from operations to operate without supplemental financing from us. PhoenixOp is currently a borrower under certain of our loan agreements, including the Fortress Credit Agreement and Adamantium Loan Agreement, and could borrow amounts under such agreements directly. There is currently no committed amount of additional financing available under the Fortress Credit Agreement. Although we have issued over $200.0 million of Adamantium Securities to date, there can be no assurance that we will be successful in issuing additional Adamantium Securities and utilizing then-available commitments under the Adamantium Loan Agreement. See "*Risk Factors—Risks Related to Our Business and Operations—The acquisition and development of our properties, directly or through our third-party E&P operators, will require substantial capital, and we and our third-party E&P operators may be unable to obtain needed capital or financing on satisfactory terms or at all, including as a result of increases in the cost of capital resulting from Federal Reserve policies in the past few years and otherwise.*"

Leases are contributed to PhoenixOp at a value equal to our cost of acquisition of the contributed asset, and we anticipate contributing additional oil and gas properties to PhoenixOp in the future. Leases are generally contributed in order for PhoenixOp to operate extraction activities on such assets with the requisite title and permissions. We expect to only contribute oil and gas properties to PhoenixOp that are located in an area where we own or lease enough continuous productive acreage to support meaningful mineral extraction activities. Whether and when we have properties we decide to contribute to PhoenixOp will depend on, among other things, our ability to acquire properties from multiple owners, the amount and quality of mineral reserves discovered on such properties, the presence of or proximity to third-party operators with existing extraction activities, and the suitability of the area's topography for drilling and operating producing wells. See "*Risk Factors—Risks Related to Our Business and Operations—We, through our investment in PhoenixOp and future assignment of oil and gas properties to PhoenixOp, conduct direct drilling and extraction activities. Such activities pose additional risks to us*."

***Royalty and Working Interest Acquisitions***

For our royalty and working interest acquisitions, we have developed a process for the identification, acquisition, and monetization of assets. Below is a general illustration of our process:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our specialized software provides market intelligence to identify and rank potential assets and support our
acquisition strategy and functions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We make contact with the owner of the asset and begin the conversation on how we can increase the value of the
property for the owner.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We provide the potential seller with a packet detailing our business, industry data, property valuation, and an all-cash offer based on the valuation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our sales team engages the potential seller to discuss the terms of the sale and the value of the property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We handle the closing of the property, and the property is migrated to our portfolio.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We utilize our land rights to extract natural resources from the property through third-party operators or
determine to proceed with our own direct drilling operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We collect a portion of the revenue generated from the natural resources extracted and sold by a third-party
operator. Our share of the revenue depends on the type of asset, either mineral rights or non-operated working interests, and the underlying contract with the third-party operator.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We continue to operate the property to extract the minerals through third-party operators or PhoenixOp until we
decide to sell the property rights.

Separate from the ordinary royalty income assets, we maintain a structural discipline to participate in non-operated working interests, in part for their tax benefits. Due to favorable U.S. Internal Revenue Service (the

------

##### [**Table of Contents**](#toc)
"***IRS***") treatment, marrying this asset class to our pure royalty income creates an augmented "write off" strategy whereby the balanced portfolio effectively creates little to no annual taxable income. Functionally, the transactions we enter into are similar to traditional real estate transactions with respect to the mechanics. A seller agrees to sell to us, a purchase and sale agreement is executed, earnest money is conveyed, and manual diligence and title review is conducted as an audit function prior to closing. Upon closing, the funds are conveyed to the seller and the title is recorded by us in the applicable jurisdiction. Assets can produce for upwards of 20 years; however, there is a considerable regression/depletion curve over the life of the asset. As such, we tend to focus on wells that have recently begun producing or are likely to have new production in the near term. We focus on a closed-loop process from discovery to acquisition to long-term balance sheet ownership. We believe the recurring nature of these cash flows will allow for considerable scale without material increases in fixed overhead.

***Our Specialized Software System***

Our software system is designed to be scalable and process inputs from a variety of internal and external sources, supports our ability to identify, analyze, underwrite, and formally transact in the purchasing of oil and gas assets. Our software system operates across three key facets of our business:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Asset Discovery*** – The data-driven system has customized inputs that are selected by management
to pull in and incorporate data sets from multiple third-party sources through custom application interfaces that automatically retrieve updated information on a regular basis. For example, the system retrieves detailed land and title data and
well-level data, including operator, production metrics, well status, dates of activities, well-specific activities, and historical reporting. The software system compiles these inputs and creates dashboards that can be accessed by management to
analyze and review granular data on an asset-by-asset level. These dashboards present certain key information, including, among others, the geography of the asset, the
estimated probability of future oil wells, the estimated predictability of the timing and value of cashflows, and local and national oil prices. We believe this process provides us with key market intelligence and insights, tailored to prioritize
asset traits curated and targeted by management, to identify and rank potential assets. We believe this provides us with a competitive advantage because we are able to identify potentially valuable assets, based on our own hierarchy and
prioritization of asset traits and data inputs, that may otherwise be overlooked by other industry participants.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Asset Grading and Estimates*** – The outputs from the asset discovery process are then run
through a discounted cash flow model, using management inputs for discount rate and the price of oil to generate asset value and pricing estimates. The software system grades these assets based on management's desired target criteria for high
probability of high near-term cash flow, and generates a summary version of assets to prospect for acquisition for our sales team. The system also generates an acquisition price for each asset, which informs the sales team as to the maximum price
that we may be willing to offer in any prospective transaction. This process is used to further characterize high-priority targets for sales and acquisition efforts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Asset Acquisition*** – Based on management input, the software system then routes the pricing and
asset information from the asset grading and estimates process through an automated document generator to create customized, asset-specific document packages for utilization and distribution by our sales team. The workflow for these document
packages is then processed and monitored using our internally developed software, which distributes the documents to our operations team for the preparation of an offering and sale package, which is then delivered to the prospective seller. Using
relationship management features within our internally developed software, the sales team is able to record notes and each opportunity can be tracked from its original data upload through the lifecycle of the sales process.

------

##### [**Table of Contents**](#toc)
While the data inputs utilized by our software system are largely based on public information, considerable customization and coding have been undertaken to generate a system that we can successfully leverage in our business. This software was designed and built by us to address our specific needs, and we are not aware of a similar competitive product. We rely on trade secret laws to protect our software system and do not own any registered copyright, patent, or other intellectual property rights regarding our software. However, we believe the investment of significant monetary and intellectual resources have created a system that would be difficult to replicate. We currently have no intention of licensing or selling our software. See "*Risk Factors—Risks Related to Legal, Regulatory, and Environmental Matters—We do not currently own any registered intellectual property rights relating to our software system and may be subject to competitors developing the same technology.*"

**Company Structure** 

The following chart summarizes our corporate structure and principal indebtedness, as of the date of this Offering Circular. This chart is provided for illustrative purposes only and may not represent all legal entities affiliated with, or obligations of, the Issuer and its subsidiaries from time to time:

![LOGO](g72530g01n16.jpg)

(1) The Issuer is currently a member-managed limited liability company and is wholly owned and controlled by
Phoenix Equity. Phoenix Equity is the Issuer's sole member and, as such, directs the Issuer's business and operations, including appointment and compensation of the Issuer's officers. LJC controls Phoenix Equity and, therefore,
indirectly has control over the Issuer's management. Daniel Ferrari and Charlene Ferrari each own 50% of the voting membership interests in, and are the managers of, LJC. Adam Ferrari, our Chief Executive Officer and the son of Daniel and
Charlene Ferrari, owns 100% of the economic interests in LJC, but has no voting or managerial interest in LJC. Adam Ferrari is also the manager of Phoenix Equity. See "*Certain Relationships and Related-Party Transactions—Second Amended and Restated Limited Liability Company Agreement of Phoenix Energy One, LLC*." Phoenix Equity was formed primarily to provide an entity to pledge the equity interests of the Issuer as collateral to secure the borrowings under the Fortress
Credit Agreement. In connection with the consummation of that transaction, the equityholders in the Issuer immediately prior to the consummation of the transaction exchanged their limited liability company interests in the Issuer for limited
liability company interests in Phoenix Equity. As a result, the beneficial ownership of Phoenix Equity immediately after the transaction substantially reflects the beneficial ownership of the Issuer immediately prior to the transaction. Furthermore,
following the formation of Phoenix Equity and the exchange of equity interests of the Issuer for equity interests of Phoenix Equity, equity awards that had previously been granted or promised by the Issuer and/or PhoenixOp were converted into equity
awards granted by Phoenix Equity. See "*Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness—Fortress Credit Agreement*" and

------

##### [**Table of Contents**](#toc)
"*Compensation Discussion and Analysis—Details of Our Compensation Program—Equity Compensation*." Following this offering, the Issuer will be a manager-managed limited liability company and its business and affairs will be managed under the direction of a board of directors. In addition, Phoenix Equity will hold all of the Issuer's common shares, representing limited liability company interests (our "***common shares***"), and, as a result, other than under the limited circumstances described in this Offering Circular in which holders of the Preferred Shares have voting rights, the Issuer will continue to be controlled by Phoenix Equity. As a result of this concentrated control, Phoenix Equity will have the ability to determine corporate matters for the foreseeable future, including with respect to the power to add and remove any of the Issuer's directors at any time with or without cause and may take action by written consent without a meeting of shareholders.

(2) See "*Security Ownership of Certain Beneficial Owners and Management*" and
" *Management*" for a description of our ownership structure and management.

(3) For a description of the terms of the Adamantium Debt, see "*Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness—Adamantium Debt*."

(4) See "*Risk Factors*" for a discussion of the risks related to our capital structure and your
investment in the Preferred Shares. Terms of the Preferred Shares do not prohibit the Issuer or its subsidiaries from incurring additional indebtedness, and the Preferred Shares will be junior to all of our existing and future indebtedness and to
the indebtedness of our existing subsidiaries and any future subsidiaries. See "*Description of Capital and Preferred Shares—Series A Preferred Shares—Ranking*."

(5) For a description of the terms of the Reg D Bonds, see "*Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness—Reg D/Reg A Bonds*."

(6) For a description of the terms of the Reg A Bonds, see "*Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness—Reg D/Reg A Bonds*."

(7) For a description of the terms of the Registered Notes, see "*Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness—Registered Notes*."

(8) Our wholly owned subsidiary, Phoenix Capital Group Holdings I, LLC, previously filed an offering statement
under Regulation A under the Securities Act ("  ***Regulation A***") in connection with a potential offering of senior subordinated unsecured bonds in an amount not to exceed $75 million annually in the aggregate, the proceeds
of which would be loaned to us pursuant to an agreement secured by junior mortgages on certain properties. As of the date of this Offering Circular, we do not intend to pursue this offering or the qualification of this offering statement.

(9) Firebird Services, LLC is a direct wholly owned subsidiary of PhoenixOp, which currently provides water
management and disposal services for the wells operated by PhoenixOp.

(10) Phoenix Capital Group Holdings, LLC is our direct wholly owned subsidiary, which currently has no operations.

(11) Firebird Marketing, LLC is our direct wholly owned subsidiary, which provides marketing services for our wells
operated by PhoenixOp.

(12) For a description of the terms of the Fortress Credit Agreement, see "*Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness—Fortress Credit Agreement.* "

**Company Information** 

We were originally formed in Delaware on April 23, 2019. On January 23, 2025, we changed our name from "Phoenix Capital Group Holdings, LLC" to "Phoenix Energy One, LLC." Our principal executive offices are located at 18575 Jamboree Road, Suite 830, Irvine, California 92612, and our telephone number at that address is (949) 416-5037. Our website address is *https://phoenixenergy.com*. The information contained on or linked to or

------

##### [**Table of Contents**](#toc)
from our website is not part of, and is not incorporated by reference into, this Offering Circular, and you should not consider such information part of this Offering Circular or rely on any such information in making your decision whether to purchase the Preferred Shares.

**Summary Risk Factors** 

Investing in the Preferred Shares involves numerous risks and uncertainties, including risks associated with our business, operating results, and financial condition. Before investing in the Preferred Shares, you should carefully read the sections of this Offering Circular entitled "*Risk Factors*" and "*Cautionary Statement Regarding Forward-Looking Statements*" for an explanation of these risks. These risks include, among others, the following:

***Risks Related to Our Business and Operations***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The businesses of direct drilling and extraction of minerals and acquisition of mineral rights are highly
competitive. If we are unable to successfully compete within these businesses through our direct drilling operations conducted by PhoenixOp, we may not be able to identify and purchase attractive assets and successfully operate our properties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We, through our investment in PhoenixOp and future assignment of oil and gas properties to PhoenixOp, conduct
direct drilling and extraction activities. Such activities pose additional risks to us.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our business is sensitive to the price of oil and gas and declines in prices may adversely affect our financial
position, financial results, cash flows, access to capital, and ability to grow.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The acquisition and development of our properties, directly or through our third-party E&P operators, will
require substantial capital, and we and our third-party E&P operators may be unable to obtain needed capital or financing on satisfactory terms or at all, including as a result of increases in the cost of capital resulting from Federal Reserve
policies over the past few years and otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our success relies extensively on our direct operations, through PhoenixOp and various third-party E&P
operators, which could have a material adverse effect on our results of operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We rely on our third-party E&P operators, third parties, and government databases for information regarding
our assets, and to the extent that information is incorrect, incomplete, or lost, our financial and operational information and projections may be incorrect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our estimated mineral reserves quantities and future production rates are based on many assumptions that may
prove to be inaccurate and they have not been verified by an independent third-party reserve engineering report. Any material inaccuracies in the reserves estimates or the underlying assumptions will materially affect the quantities and present
value of our reserves.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The development of our estimated proved and probable undeveloped reserves may take longer and may require higher
levels of capital expenditures than we currently anticipate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The substantial majority of the wells in which we have a mineral or royalty interest and all the wells we
directly operate are located in the Williston Basin, making us vulnerable to risks associated with concentration of our assets in a limited geographic area.

***Risks Related to Legal, Regulatory, and Environmental Matters***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We are subject to significant governmental regulations, and governmental authorities can delay or deny permits
and approvals or change legal requirements governing our operations, which could restrict our operations, increase costs of conducting our business, and delay our implementation of, or cause us to change, our business strategy.

------

##### [**Table of Contents**](#toc)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We do not currently own any registered intellectual property rights relating to our software system and may be
subject to competitors developing the same technology. Third parties may initiate legal proceedings alleging that our use of our software system is infringing or otherwise violating their intellectual property rights, which could lead to costly
disputes or disruptions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Current and future litigation, regulatory, administrative, or other legal proceedings could have a material
adverse effect on our business and results of operations.

***Risks Related to Our Indebtedness***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our substantial indebtedness could adversely affect our financial condition and prevent us from fulfilling our
obligations under the Preferred Shares and our indebtedness.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Despite our current level of indebtedness, we will still be able to incur substantially more debt. This could
further exacerbate the risks to our financial condition described above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The terms of our outstanding indebtedness restrict, and the terms of future indebtedness we may incur may
restrict, our current and future operations, particularly our ability to respond to changes in the economy or our industry or to take certain actions, which could harm our long-term interests.

***Risks Related to the Preferred Shares and this Offering***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Preferred Shares represent perpetual equity interests in us, and investors should not expect us to redeem any
Preferred Shares on any particular date following the completion of this offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Preferred Shares are junior and subordinated to our existing and future indebtedness, and your interests
could be diluted by the issuance of additional equity interests, including additional Preferred Shares, and by other transactions.

***Risks Related to the Phoenix Equity's Ownership of Our Common Shares and Certain LLCA Provisions.***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The interests of holders of Preferred Shares may conflict with the interests of our controlling shareholder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our Third ARLLCA eliminates members of our board of directors' duties to us. If conflicts of interest arise
among members of our board of directors and us, members of our board of directors may make decisions in their sole and absolute discretion, and shall be entitled to consider only such interests and factors as they desire, including their own
interests.

***Risks Related to Certain Tax Matters.***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our tax treatment depends on our status as a partnership for federal income tax purposes, as well as our not
being subject to a material amount of entity-level taxation by individual states. If the IRS were to treat us as a corporation for federal income tax purposes or if we were otherwise subject to a material amount of entity-level taxation, then cash
available for distribution could be reduced.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The tax treatment of publicly traded partnerships or an investment in our shares could be subject to potential
legislative, judicial or administrative changes and differing interpretations, possibly on a retroactive basis.

***Risks Relating to Our Status as a Public Reporting Company***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We only recently became a public reporting company, and the obligations associated with being a public reporting
company will require significant resources and management attention.

------

##### [**Table of Contents**](#toc)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We identified certain misstatements to our previously issued financial statements and have restated certain of
our consolidated financial statements, which may create additional risks and uncertainties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We will be a "controlled company" within the meaning of the corporate governance standards of NYSE
American and will be a company listing only preferred securities. We intend to rely on exemptions from certain corporate governance standards and will only be required to comply with certain requirements, including with respect to our audit
committee, to the extent required by Rule 10A-3 under the Exchange Act.

**Controlled Company and Status as a Company Listing Only Preferred Shares** 

The rules of NYSE American define a "controlled company" as a company in which more than 50% of the voting power is held by an individual, a group or another company. Following this offering, Phoenix Equity will hold all of our common shares, representing limited liability company interests, and, as a result, other than under the limited circumstances described in this Offering Circular in which holders of the Preferred Shares have voting rights, Phoenix Equity will have all of the voting power of our company. As such, we will be a "controlled company" under the rules of NYSE American. As a result, we will qualify for exemptions from, and will elect not to comply with, certain corporate governance requirements under the rules, including the requirements that we have a board that is composed of a majority of "independent directors," as defined under the rules, a nominating and corporate governance committee, or a compensation committee.

Even though we will be a controlled company, we are required to comply with the rules of the SEC and the NYSE American relating to the membership, qualifications and operations of the audit committee. The rules of NYSE American provide that companies listing only preferred or debt securities on NYSE American are only required to comply with the requirements to have a board that is composed of a majority of "independent directors," an audit committee that is composed entirely of independent directors, an audit committee charter, and audit committee meeting requirements, responsibilities and authorities, to the extent required by Rule 10A-3 under the Exchange Act. As a result, under these rules, we must have an audit committee of at least one director, which director must be independent. We expect to have at least one independent director upon the listing of the Preferred Shares on the NYSE American who will qualify as independent for audit committee purposes.

If we cease to be a controlled company and our Preferred Shares continue to be listed on the NYSE American, we will be required to take all action necessary to comply with applicable rules, including by ensuring we have a compensation committee and a nominating and corporate governance committee, each composed entirely of independent directors, subject to specified transition periods applicable to certain requirements, as the case may be. See the sections titled "*Management—Controlled Company and Status as a Company Listing Only Preferred Shares*" and "*Risk Factors—We will be a "controlled company" within the meaning of the corporate governance standards of the NYSE American. We intend to rely on exemptions from certain corporate governance standards. You will not have the same protections afforded to stockholders of companies that are subject to such requirements*" and "*—We will be a company listing only preferred securities on NYSE American and thus will only be required to comply with certain corporate governance requirements, including with respect to our audit committee, to the extent required by Rule 10A-3 under the Exchange Act*" for additional details.

------

##### [**Table of Contents**](#toc)
**THE OFFERING** 

*The following summary describes the principal terms of the Preferred Shares and is not intended to be complete. It does not contain all information that may be important to you. Some of the terms and conditions described below are subject to important limitations and exceptions. For a more complete description of the terms of the Preferred Shares, see "Description of Capital and Preferred Shares." In this summary, the terms "we," "us," and "our" each refer to Phoenix Energy One, LLC (the "****Issuer****") and its consolidated subsidiaries; provided, however, that references to "we," "us," and "our" pertaining to references to rights and obligations under the Preferred Shares do not include the Issuer's subsidiaries.* 

---

| | |
|:---|:---|
| **Issuer**  | Phoenix Energy One, LLC, a Delaware limited liability company. |

---

---

| | |
|:---|:---|
| **Securities Offered**  | Up to 3,750,000 shares of our 10.00% Series A Cumulative Redeemable Preferred Shares, representing limited liability interests (the "***Preferred Shares***"), at an offering price of $20.00 per Preferred Share for a maximum offering amount of $75,000,000. |

---

---

| | |
|:---|:---|
| **Investor Suitability Requirements**  | You should purchase Preferred Shares only if you have substantial financial means and you have no need for liquidity in your investment. Under Rule 251(d)(2)(i)(C) of Regulation A, non-accredited purchasers of the Preferred Shares are subject to an investment limitation. More specifically, non-accredited, non-natural investors may only invest funds which do not exceed 10% of the greater of the purchaser's revenue or net assets (as of the purchaser's most recent fiscal year end), and non-accredited, natural person investors may only invest funds which do not exceed 10% of the greater of the purchaser's annual income or net worth. See "*Plan of Distribution – Investment Limitations if We Do Not Obtain a Listing on a National Securities Exchange*" for further information regarding the definition of "accredited investor" under Rule 501 of Regulation D promulgated under the Securities Act ("***Regulation D***"), how to calculate your net worth, and other important information regarding investment limitations and investor suitability. |

---

---

| | |
|:---|:---|
| **Distributions**  | Holders of the Preferred Shares will be entitled to receive cumulative cash distributions based on the initial stated liquidation preference of $25.00 per Preferred Share: |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) from, and including, the date of original issuance to, but excluding, October 15, 2028, at a fixed rate
equal to 10.00% (equivalent to $2.50 per annum per Preferred Share),

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) from and including October 15, 2028 to, but excluding, October 15, 2029, at a fixed rate equal to
10.50% (equivalent to $2.625 per annum per Preferred Share), and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) from and including October 15, 2029 at a fixed rate equal to 11.00% (equivalent to $2.75 per annum per
Preferred Share).

Distributions will be payable quarterly in arrears on the 15<sup>th</sup> day of each April, July, October and January, beginning on October 15, 2025 (provided that if any distribution payment date is not a business day, then the distribution which would otherwise have been payable on

------

##### [**Table of Contents**](#toc)
that distribution payment date (as defined below) may be paid on the next succeeding business day). Distributions payable for any distribution period will be calculated on the basis of a 360-day year consisting of twelve 30-day months. Distributions will accumulate and be cumulative from, and including, the date of original issuance. The pro-rated first distribution, payable on October 15, 2025 in the amount equal to approximately $ per Preferred Share, will be paid to the persons who are the holders of record of the Preferred Shares at the close of business on the corresponding distribution record date, which will be October 1, 2025. See the section entitled "*Description of Capital and Preferred Shares—Series A Preferred Shares—Distributions*" for additional details. <br>

---

| | |
|:---|:---|
| **Optional Redemption**  | The Preferred Shares will be redeemable at our option, in whole or in part, at any time or from time to time, for $27.50 per Preferred Share plus any accumulated and unpaid distributions (whether or not previously authorized or declared) up to but excluding the redemption date. Any partial redemption will be on a pro rata basis or by lot. See the section entitled "*Description of Capital and Preferred Shares—Series A Preferred Shares—Redemption*" for additional details. |

---

---

| | |
|:---|:---|
| **Liquidation Preference**  | In the event of our voluntary or involuntary liquidation, dissolution or winding up (which for avoidance of doubt, does not include a sale, merger, consolidation or other similar transaction involving us), the holders of Preferred Shares will generally, subject to the discussion in the section entitled "*Description of Capital and Preferred Shares—Series A Preferred Shares—Liquidation Preference*," have the right to receive the initial liquidation preference of $25.00 per Preferred Share, plus an amount equal to all accumulated and unpaid distributions thereon to, but not including, the date of payment. |

---

---

| | |
|:---|:---|
| **No Maturity, Sinking Fund, Mandatory Redemption, Conversion or Preemptive Rights**  | Each Preferred Share has no stated maturity, is not subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless redeemed by us. We are not required to set aside funds to redeem the Preferred Shares. See the section entitled "*Description of Capital and Preferred Shares—Series A Preferred Shares—Redemption*" for additional details. The Preferred Shares are not convertible into any other securities or property of the Issuer and no holders of Preferred Shares will have any preemptive rights to purchase or subscribe for our common shares or any other security. |

---

---

| | |
|:---|:---|
| **Limited Voting Rights**  | Holders of the Preferred Shares will generally have no voting rights. However, if we do not pay distributions on the Preferred Shares for six or more quarterly distribution periods (whether or not consecutive), the holders of Preferred Shares and the holders of all other classes or series of our preferred shares we may issue upon which like voting rights have been conferred and are exercisable and which are entitled to vote as a class with the Preferred Shares in the  |

---

------

##### [**Table of Contents**](#toc)
election referred to below will be entitled to vote for the election of two additional directors to serve on our board of directors until we pay, or declare and set aside funds for the payment of, all distributions that we owe on the Preferred Shares. <br>

In addition, the affirmative vote of the holders of at least two-thirds of the outstanding Preferred Shares is required for us to authorize or issue any Senior Securities (as defined below), to amend, alter or repeal the provisions of our Third ARLLCA or the Share Designation (as defined below) for the Preferred Shares so as to materially and adversely affect any preferences, rights, privilege or voting powers of the Preferred Shares or to take certain other actions. If proposed amendments to our Third ARLLCA or the Share Designation for the Preferred Shares would materially and adversely affect the preferences, rights privilege or voting powers of the Preferred Shares disproportionately relative to any other class or series of parity preferred shares, the affirmative vote of the holders of at least two-thirds of the outstanding Preferred Shares, voting as a separate class, is also required.

See the section entitled "*Description of Capital and Preferred Shares—Series A Preferred Shares—Limited Voting Rights*" for additional information.

---

| | |
|:---|:---|
| **Ranking**  | The Preferred Shares will rank, with respect to rights to the payment of distributions and the distribution of assets upon our liquidation, dissolution or winding up, |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) senior to all classes or series of equity securities issued by us other than equity securities referred to in
clauses (b) and (c) ("  ***Junior Securities*** ");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) on a parity with all equity securities issued by us with terms specifically providing that those equity
securities rank on a parity with the Preferred Shares with respect to rights to the payment of distributions and the distribution of assets upon our liquidation, dissolution or winding up ("  ***Parity Securities*** ");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) junior to all equity securities issued by us with terms specifically providing that those equity securities
rank senior to the Preferred Shares with respect to rights to the payment of distributions and the distribution of assets upon our liquidation, dissolution or winding up ("  ***Senior Securities*** "); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) junior to all of our existing and future indebtedness and to the indebtedness of our existing subsidiaries and
any future subsidiaries.

As of March 31, 2025, after giving effect to the borrowings of additional $50.0 million in aggregate under the Fortress Credit Agreement in April and May 2025, we would have had approximately $1,134.4 million of indebtedness outstanding. In addition, from time to time we may conduct offerings of notes pursuant to Regulation D or Regulation A, or pursuant to our registration statement on Form <br>

------

##### [**Table of Contents**](#toc)
S-1 (File No. 333-282862) and, as of the date of this Offering Circular, we and our subsidiaries are authorized to issue up to $2.7 billion in additional notes through such offerings. <br>

See the section entitled "*Description of Capital and Preferred Shares—Series A Preferred Shares—Ranking*" for additional information.

---

| | |
|:---|:---|
| **Listing**  | We have applied to list the Preferred Shares on the NYSE American under the symbol "PHXE.P." If the Preferred Shares are not approved for listing on NYSE American, we will not complete this offering. |

---

---

| | |
|:---|:---|
| **Use of Proceeds**  | If we raise the maximum offering amount of $75,000,000, we estimate that the net proceeds we will receive from this offering will be approximately $69,187,500. |

---

We plan to use the net proceeds from this offering (a) to make investments in PhoenixOp or to otherwise finance potential drilling and exploration operations, (b) to purchase mineral rights and non-operated working interests, as well as for additional asset acquisitions, and (c) for other working capital needs. See the section titled "*Use of Proceeds*" for additional information.

---

| | |
|:---|:---|
| **Selling Agent; Best Efforts Offering**  | We have engaged Digital Offering to act as Selling Agent to offer the Preferred Shares to prospective investors in this offering on a "best efforts" basis, which means there is no guarantee that any minimum amount will be received by us in this offering. Subject to the listing standards of NYSE American, there is no minimum number or amount of Preferred Shares that we must sell in order to conduct a closing in this offering. See the section titled "*Plan of Distribution*" for additional information. |

---

---

| | |
|:---|:---|
| **Termination of the Offering**  | This offering will terminate at the earliest of: (a) the date at which the maximum offering amount has been received by us, (b) one year from the date upon which the SEC qualifies the offering statement of which this Offering Circular forms a part, and (c) the date at which the offering is earlier terminated by us in our sole discretion. |

---

---

| | |
|:---|:---|
| **Transfer Agent**  | If we complete this offering, the transfer agent and registrar for the Preferred Shares will be Equity Stock Transfer, LLC. |

---

---

| | |
|:---|:---|
| **Book-Entry Form**  | The Preferred Shares will be represented by one or more global certificates in definitive, fully registered form deposited with a custodian for, and registered in the name of, a nominee of The Depository Trust Company ("***DTC***"). |

---

---

| | |
|:---|:---|
| **Material U.S. Federal Income Tax Consequences of Preferred Shares**  | You should consult your tax advisors concerning the U.S. federal income tax consequences of investing in Preferred Shares in light of your own specific situation, as well as consequences arising under the  |

---

------

##### [**Table of Contents**](#toc)
laws of any other taxing jurisdiction. For certain material U.S. federal income tax considerations relating to the purchase, ownership, and disposition of the Preferred Shares, see the section titled "*Material U.S. Federal Income Tax Consequences of Preferred Shares*." <br>

---

| | |
|:---|:---|
| **Controlled Company and Status as a Company Listing Only Preferred Shares**  | Following this offering, we will be a "controlled company" within the meaning of the corporate governance rules of NYSE American. As a "controlled company," we intend to rely on the exemptions from certain corporate governance standards of the NYSE American. In addition, following this offering, we will be a company listing only preferred securities on NYSE American and thus will only be required to comply with certain corporate governance requirements, including with respect to our audit committee, to the extent required by Rule 10A-3 under the Exchange Act. For more information, see the section titled "*Management—Controlled Company and Status as a Company Listing Only Preferred Shares.*" |

---

---

| | |
|:---|:---|
| **Risk Factors**  | Investing in the Preferred Shares involves significant risks. You should carefully read and consider the information beginning on page 22 of this Offering Circular under the heading "*Risk Factors*" and all other information in this Offering Circular, the offering statement or any amendment or supplement to this Offering Circular before deciding to invest in the Preferred Shares. |

---

------

##### [**Table of Contents**](#toc)
**SUMMARY HISTORICAL FINANCIAL AND OTHER DATA** 

The following table sets forth our summary historical financial and other data as of the dates and for the periods indicated. The balance sheet data as of December 31, 2024, 2023 and 2022 and the related statements of operations, members' equity, and cash flows data for the years ended December 31, 2024, 2023 and 2022 have been derived from our audited consolidated financial statements included elsewhere in this Offering Circular. The balance sheet data as of March 31, 2025 and the related statements of operations, members' equity, and cash flows data for the three months ended March 31, 2025 and 2024 have been derived from our unaudited interim condensed consolidated financial statements included elsewhere in this Offering Circular. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of our management, include all adjustments, consisting only of normal and recurring adjustments, necessary for a fair statement of the information set forth herein. Interim financial results are not necessarily indicative of results for the full year or any future reporting period. The summary historical financial and other data set forth below should be read in conjunction with the sections of this Offering Circular entitled "*Risk Factors*," "*Cautionary Statement Regarding Forward-Looking Statements*," "*Capitalization*," and "*Management's Discussion and Analysis of Financial Condition and Results of Operations*," as well as our consolidated financial statements and the related notes included elsewhere in this Offering Circular.

**Consolidated Statements of Operations Data:** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the Three Months Ended**<br>**March 31,** | **For the Three Months Ended**<br>**March 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2025** | **2024<br>(As Restated)** | **2024** | **2023<br>(As Restated)** | **2022<br>(As Restated)** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  **Revenues** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mineral and royalty revenues | $29886 | $33984 | $152999 | $118088 | $54554 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Product sales | 84269 | 6678 | 125649 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Water services | 1503 |  | 2478 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other revenue | 89 | 18 | 101 | 17 |  |
|  Total revenues | 115747 | 40680 | 281227 | 118105 | 54554 |
|  **Operating expenses** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cost of sales | 27083 | 7982 | 63947 | 19733 | 9573 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation, depletion, amortization, and accretion | 31225 | 13405 | 85977 | 34228 | 12144 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Advertising and marketing | 320 | 17 | 679 | 4136 | 1353 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Selling, general, and administrative | 9514 | 5250 | 29167 | 14314 | 5563 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payroll and payroll-related expenses | 7929 | 4825 | 27934 | 12733 | 6023 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on sale of assets |  | 564 | 564 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Impairment expense | 516 |  | 564 | 974 |  |
|  Total operating expenses | 76587 | 32043 | 208832 | 86118 | 34656 |
|  Income from operations | 39160 | 8637 | 72395 | 31987 | 19898 |
|  **Other income (expenses)** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income | 689 | 22 | 705 | 66 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense, net | (35849) | (16921) | (90210) | (47882) | (11893) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain (loss) on derivatives | 1920 | (67) | (5986) | (32) | (2239) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on debt extinguishment | (321) | (76) | (1697) | (328) | (92) |
|  Total other expenses | (33561) | (17042) | (97188) | (48176) | (14224) |
|  **Net income (loss)** | $5599 | $(8405) | $(24793) | $(16189) | $5674 |

---

------

##### [**Table of Contents**](#toc)
**Consolidated Balance Sheets Data:** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As of March 31,** | **As of December 31,** | **As of December 31,** | **As of December 31,** |
|  | **2025** | **2024** | **2023<br>(As Restated)** | **2022<br>(As Restated)** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  Cash and cash equivalents | $35366 | $120814 | $5428 | $4607 |
|  Total current assets | 101320 | 156714 | 64284 | 9790 |
|  Net oil and gas properties | 1022452 | 865845 | 423668 | 144755 |
|  Total assets | 1134672 | 1029070 | 493167 | 157020 |
|  Total current liabilities | 258612 | 226611 | 183771 | 81233 |
|  Long-term debt, net of current portion | 853507 | 795215 | 295167 | 59481 |
|  Total liabilities | 1163131 | 1063128 | 498001 | 148347 |
|  Total members' equity (deficit) | (28459) | (34058) | (4834) | 8673 |

---

**Consolidated Statements of Cash Flow Data:** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the Three Months Ended**<br>**March 31,** | **For the Three Months Ended**<br>**March 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2025** | **2024**<br>**(as Restated)** | **2024** | **2023<br>(As Restated)** | **2022<br>(As Restated)** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  Net cash provided by (used in): |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating activities | $15865 | $11248 | $95239 | $(1826) | $18642 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investing activities | (182275) | (88563) | (437703) | (278661) | (91888) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financing activities | 80962 | 74351 | 457850 | 281308 | 77493 |

---

**Other Financial and Operating Data:** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the Three Months Ended**<br>**March 31,** | **For the Three Months Ended**<br>**March 31,** | **For the Three Months Ended**<br>**March 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2025** | **2024** | **2024** | **2023<br>(As Restated)** | **2022<br>(As Restated)** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  PV-10 (estimated proved developed reserves)<sup>(1)</sup> | $751363 | $403685 | $644098 | $289809 | $189885 |
|  PV-10 (estimated proved undeveloped reserves)<sup>(1)</sup> | 472937 | 197585 | 424595 | 257472 |  |
|  PV-10 (estimated total proved reserves)<sup>(1)</sup> | 1224300 | 601270 | 1068692 | 547281 | 189885 |
|  EBITDA<sup>(2)</sup> | 72000 | 21900 | 150689 | 65855 | 29711 |

---

(1) PV-10 differs from the standardized measure of discounted future net
cash flows, which is the most directly comparable GAAP financial measure, because it is calculated on a pre-tax basis.

Because the Issuer is a limited liability company and has currently elected to be treated as a partnership for income tax purposes, the pro rata share of taxable income or loss is included in the individual income tax returns of members based on their percentage of ownership. Consequently, no provision for income taxes is made in our standardized measure of discounted future net cash flows, and so currently our PV-10 is identical to the standardized measure of discounted future net cash flows.

------

##### [**Table of Contents**](#toc)
PV-10 is not a substitute for the standardized measure of discounted future net cash flows. Neither PV-10 nor the standardized measure of discounted future net cash flows purport to represent the fair value of our oil and natural gas reserves. See "*Non-GAAP Financial Measures*."

The following table includes a reconciliation of PV-10 to the standardized measure of discounted future net cash flows, the most directly comparable financial measure calculated and presented in accordance with GAAP, for the periods presented:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the Three Months Ended**<br>**March 31,** | **For the Three Months Ended**<br>**March 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2025** | **2024** | **2024** | **2023** | **2022** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  Estimated proved developed reserves: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Standardized measure of discounted future net cash flows | $751363 | $403685 | $644098 | $289809 | $189885 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Discounted future income taxes |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **PV-10** | $751363 | $403685 | $644098 | $289809 | $189885 |
|  Estimated proved undeveloped reserves: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Standardized measure of discounted future net cash flows | $472937 | $197585 | $424595 | $257472 | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Discounted future income taxes |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **PV-10** | $472937 | $197585 | $424595 | $257472 | $— |
|  Estimated total proved reserves: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Standardized measure of discounted future net cash flows | $1224300 | $601270 | $1068692 | $547281 | $189885 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Discounted future income taxes |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **PV-10** | $1224300 | $601270 | $1068692 | $547281 | $189885 |

---

(2) EBITDA has important limitations as an analytical tool because it excludes some but not all items that affect
net income (loss), the most directly comparable GAAP measure. In particular, EBITDA excludes certain material costs, such as interest expense, and certain non-cash charges, such as depreciation, depletion,
amortization, and accretion expense, that have been necessary elements of our expenses. Because EBITDA does not account for these expenses, its utility as a measure of our operating performance has material limitations. Other companies may not
publish this or similar metrics, and our computation of EBITDA may differ from computations of similarly titled measures of other companies. Therefore, our EBITDA should be considered in addition to, and not as a substitute for, in isolation from,
or superior to, our financial information prepared in accordance with GAAP, and should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this Offering Circular. See "*Non-GAAP Financial Measures*."

------

##### [**Table of Contents**](#toc)
The following table includes a reconciliation of EBITDA to net income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP, for the periods presented:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the Three Months Ended**<br>**March 31,** | **For the Three Months Ended**<br>**March 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2025** | **2024<br>(Restated)** | **2024** | **2023<br>(As Restated)** | **2022<br>(As Restated)** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  Net income (loss) | $5599 | $(8405) | $(24793) | $(16189) | $5674 |
|  Interest income | (689) | (22) | (705) | (66) |  |
|  Interest expense | 35849 | 16921 | 90210 | 47882 | 11893 |
|  Depreciation, depletion, amortization, and accretion expense | 31225 | 13405 | 85977 | 34228 | 12144 |
|  **EBITDA** | $71984 | $21899 | $150689 | $65855 | $29711 |

---

**Summary of Reserve, Production, and Operating Data** 

***Summary of Reserves***

The following table presents our estimated proved and probable oil, natural gas, and NGL reserves as of each of the dates indicated:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As of March 31,** | **As of December 31,** | **As of December 31,** | **As of December 31,** |
|  | **2025<sup>(1)(2)</sup>** | **2024<sup>(2)(3)</sup>** | **2023<sup>(2)(4)</sup>** | **2022<sup>(5)</sup>** |
|  **Estimated proved developed reserves** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Oil (Bbl) | 21203426 | 18624758 | 7124194 | 3691722 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas (Mcf) | 24553454 | 20819874 | 12250285 | 7624212 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas liquids (Bbl) | 3690384 | 2848355 | 1514761 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total (Boe)(6:1)<sup>(6)</sup> | 28986053 | 24943093 | 10680669 | 4962424 |
|  **Estimated proved undeveloped reserves** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Oil (Bbl) | 31671299 | 31197795 | 24925841 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas (Mcf) | 15155549 | 17491089 | 19565808 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas liquids (Bbl) | 4662130 | 4753257 | 6648747 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total (Boe)(6:1)<sup>(6)</sup> | 38859353 | 38866233 | 34835556 |  |
|  **Estimated proved reserves** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Oil (Bbl) | 52874725 | 49822554 | 32050035 | 3691722 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas (Mcf) | 39709003 | 38310963 | 31816093 | 7624212 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas liquids (Bbl) | 8352514 | 7601611 | 8163508 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total (Boe)(6:1)<sup>(6)</sup> | 67845406 | 63809326 | 45516225 | 4962424 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Percent proved developed | 43% | 39% | 23% | 100% |
|  **Estimated probable undeveloped reserves** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Oil (Bbl) | 111100322 | 107769309 | 74877268 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas (Mcf) | 134480280 | 134083603 | 88184111 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas liquids (Bbl) |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total (Boe)(6:1)<sup>(6)</sup> | 133513702 | 130116577 | 89574620 |  |

---

(1) Estimates of reserves of oil and natural gas as of March 31, 2025 were prepared using an average price
equal to the unweighted arithmetic average of hydrocarbon prices received on a field-by-field basis on the first day of each month of the 12 months ended March 31,
2025, in accordance with SEC guidelines applicable to reserve estimates as of the end of such period. The unweighted arithmetic average first day of the month prices were $75.33 per Bbl for oil and $2.443 per MMBtu for natural gas at March 31,
2025. Estimates of reserves of NGL as of March 31, 2025 were calculated using the average of realized wellhead prices of such

------

##### [**Table of Contents**](#toc)
reserves. The average NGL price realized at March 31, 2025 was $27.95 per Bbl. Reserve estimates do not include any value for probable or possible reserves that may exist, nor do they include any value for undeveloped acreage. The reserve estimates represent our net revenue interest in our properties. Although we believe these estimates are reasonable, actual future production, cash flows, taxes, development expenditures, production costs, and quantities of recoverable oil and natural gas reserves may vary substantially from these estimates.

(2) In early 2023, we established PhoenixOp with the intention that certain leasehold held by us would be developed
by PhoenixOp. PhoenixOp executed a contract for a drilling rig with Patterson-UTI Drilling Company on June 20, 2023. This allowed for previously unbooked reserves to be estimated and booked as proved
undeveloped in accordance with SEC guidelines for reserves categorization and estimation and in adherence to the five-year rule as set forth by the SEC.

(3) Estimates of reserves of oil and natural gas as of December 31, 2024 were prepared using an average price
equal to the unweighted arithmetic average of hydrocarbon prices received on a field-by-field basis on the first day of each month of the 12 months ended
December 31, 2024, in accordance with SEC guidelines applicable to reserve estimates as of the end of such period. The unweighted arithmetic average first day of the month prices were $76.32 per Bbl for oil and $2.130 per MMBtu for natural gas
at December 31, 2024. Estimates of reserves of NGL as of December 31, 2024 were calculated using the average of realized wellhead prices of such reserves. The average NGL price realized at December 31, 2024 was $25.22 per Bbl. Reserve
estimates do not include any value for probable or possible reserves that may exist, nor do they include any value for undeveloped acreage. The reserve estimates represent our net revenue interest in our properties. Although we believe these
estimates are reasonable, actual future production, cash flows, taxes, development expenditures, production costs, and quantities of recoverable oil and natural gas reserves may vary substantially from these estimates.

(4) Estimates of reserves of oil and natural gas as of December 31, 2023 were prepared using an average price
equal to the unweighted arithmetic average of hydrocarbon prices received on a field-by-field basis on the first day of each month of the 12 months ended
December 31, 2023, in accordance with SEC guidelines applicable to reserve estimates as of the end of such period. The unweighted arithmetic average first day of the month prices were $78.21 per Bbl for oil and $2.637 per MMBtu for natural gas
at December 31, 2023. Estimates of reserves of NGL as of December 31, 2023 were calculated using the average of realized wellhead prices of such reserves. The average NGL price realized at December 31, 2023 was $19.21 per Bbl. Reserve
estimates do not include any value for probable or possible reserves that may exist, nor do they include any value for undeveloped acreage. The reserve estimates represent our net revenue interest in our properties. Although we believe these
estimates are reasonable, actual future production, cash flows, taxes, development expenditures, production costs, and quantities of recoverable oil and natural gas reserves may vary substantially from these estimates.

(5) Estimates of reserves of oil and natural gas as of December 31, 2022 were prepared using an average price
equal to the unweighted arithmetic average of hydrocarbon prices received on a field-by-field basis on the first day of each month of the 12 months ended
December 31, 2022, in accordance with SEC guidelines applicable to reserve estimates as of the end of such period. The unweighted arithmetic average first day of the month prices were $94.14 per Bbl for oil and $6.357 per MMBtu for natural gas
at December 31, 2022. We had no NGL reserves as December 31, 2022 and, as such, no NGL price was calculated as of December 31, 2022. Reserve estimates do not include any value for probable or possible reserves that may exist, nor do
they include any value for undeveloped acreage. The reserve estimates represent our net revenue interest in our properties. Although we believe these estimates are reasonable, actual future production, cash flows, taxes, development expenditures,
production costs, and quantities of recoverable oil and natural gas reserves may vary substantially from these estimates.

(6) Estimated proved reserves are presented on an oil-equivalent basis
using a conversion of six Mcf per barrel of "oil equivalent." This conversion is based on energy equivalence and not price or value equivalence. If a price equivalent conversion based on the 12-month average prices for the period ended December 31, 2024 was used, the conversion factor would be approximately 35.8 Mcf per Bbl of oil.

------

##### [**Table of Contents**](#toc)
***Select Production and Operating Statistics***

The following table presents information regarding our production of oil, natural gas, and NGL and certain price and cost information for each of the periods indicated:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the Three Months Ended**<br>**March 31,** | **For the Three Months Ended**<br>**March 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2025** | **2024** | **2024** | **2023** | **2022** |
|  **Production Data:** |  |  |  |  |  |
|  *Bakken* |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Oil (Bbl) | 1386145 | 460994 | 3022810 | 943930 | 360604 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas (Mcf) | 331296 | 310389 | 1301782 | 1123859 | 522523 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas liquids (Bbl) | 54214 | 53464 | 270219 | 88762 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total (Boe)(6:1)<sup>(1)</sup> | 1495575 | 566190 | 3509992 | 1220003 | 447691 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Average daily production<br>(Boe/d)(6:1) | 16618 | 6222 | 9590 | 3342 | 1227 |
|  *All Properties* |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Oil (Bbl) | 1552609 | 578411 | 3830461 | 1446928 | 523416 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas (Mcf) | 712492 | 556282 | 2979341 | 2152939 | 1058506 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas liquids (Bbl) | 87962 | 80367 | 415363 | 201454 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total (Boe)(6:1)<sup>(1)</sup> | 1759320 | 751492 | 4742381 | 2007205 | 699834 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Average daily production<br>(Boe/d)(6:1) | 19548 | 8258 | 12993 | 5499 | 1917 |
|  **Average Realized Prices:** |  |  |  |  |  |
|  *Bakken* |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Oil (Bbl) | $72.17 | $66.06 | $71.77 | $71.43 | $80.67 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas (Mcf) | $3.53 | $2.84 | $2.12 | $3.47 | $3.77 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas liquids (Bbl) | $26.83 | $25.31 | $23.53 | $26.70 | $— |
|  *All Properties* |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Oil (Bbl) | $70.50 | $64.51 | $68.49 | $73.10 | $91.01 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas (Mcf) | $3.13 | $2.48 | $1.86 | $3.15 | $6.66 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas liquids (Bbl) | $27.95 | $24.48 | $25.22 | $27.50 | $— |
|  **Average Unit Cost per Boe (6:1):** |  |  |  |  |  |
|  *All Properties* |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating costs, production and *ad valorem* taxes | $18.01 | $13.69 | $16.11 | $16.18 | $19.89 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating costs excluding taxes | $12.21 | $7.95 | $10.75 | $10.86 | $12.58 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Percentage of revenue | 27.1% | 27.8% | 26.4% | 16.7% | 21.9% |

---

(1) "Btu-equivalent" production volumes are presented on an oil-equivalent basis using a conversion factor of six Mcf of natural gas per barrel of "oil equivalent," which is based on approximate energy equivalency and does not reflect the price or value
relationship between oil and natural gas.

------

##### [**Table of Contents**](#toc)
**RISK FACTORS** 

*Investing in the Preferred Shares involves significant risks. Before making an investment decision, you should carefully consider the specific risk factors set forth below, together with the other information included elsewhere in this Offering Circular. If any of the risks discussed in this Offering Circular occur, our business, prospects, liquidity, financial condition, and results of operations could be materially impaired, in which case we may be unable to pay the principal of, and interest on, the Preferred Shares and you could lose all or part of your investment. Some statements in this Offering Circular, including statements in the following risk factors, constitute forward-looking statements. See "Cautionary Statement Regarding Forward-Looking Statements."* 

**Risks Related to Our Business and Operations** 

***The businesses of direct drilling and extraction of minerals and acquisition of mineral rights are highly competitive. If we are unable to successfully compete within these businesses through our direct drilling operations conducted by PhoenixOp, we may not be able to identify and purchase attractive assets and successfully operate our properties.***

The key areas in which we face competition include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• declines in oil and natural gas prices;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• acquisition of commercially viable mineral deposits offered for sale by other companies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• access to capital for financing and operational purposes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• hiring and retention of personnel to successfully operate drilling and extraction activities, and qualified
third-party operators to assist in production activities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• purchasing, leasing, hiring, chartering, or other procuring of equipment by us and our third-party operators; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• employment of qualified and experienced management and other mineral professionals.

Competition in our markets is intense and depends, among other things, on the number of competitors in the market, their financial resources, their degree of geological, geophysical, engineering, and management expertise and capabilities, their pricing policies, their ability to develop properties on time and on budget, their ability to select, acquire, and develop reserves, and their ability to foster and maintain relationships with the relevant authorities.

Our competitors include entities with greater technical, physical, and financial resources than we have. Furthermore, companies and certain private equity firms not previously investing in minerals and their extraction may choose to acquire reserves to establish a firm supply or simply as an investment. If we are unable to successfully compete in operating our wells or acquisition of attractive assets, we may not be able to achieve or maintain profitable operations.

***The mineral rights investment business involves high-risk activities with many uncertainties.***

Our and our operating partners' activities relating to our mineral rights investment business are subject to many risks, including unanticipated problems relating to finding mineral rights assets and additional costs and expenses that may exceed current estimates. There can be no assurance that the expenditures we make in the exploration phase will result in the discovery of economic deposits of minerals, or that any investment we make in initially profitable assets will continue to be productive enough for associated revenues to be commercially viable. In addition, drilling and producing operations on the assets we invest in may be curtailed, delayed, or canceled by the operators of our properties as a result of various factors, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• declines in oil and natural gas prices;

------

##### [**Table of Contents**](#toc)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• infrastructure limitations, such as gas gathering and processing constraints;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the high cost, shortages, or delays in procurement of equipment, materials, and/or services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• unexpected operational events, adverse weather conditions and natural disasters, facility or equipment
malfunctions, and equipment failures or accidents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• inability to obtain satisfactory title to the assets we acquire and other title-related issues;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• pipe or cement failures and casing collapses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• lost or damaged oilfield development and service tools;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• compliance with environmental, health, safety, and other governmental requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• increases in severance taxes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• regulations, restrictions, moratoria, and bans on hydraulic fracturing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• unusual or unexpected geological formations, and pressure or irregularities in formations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• loss of drilling fluid circulation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• environmental hazards, such as oil, natural gas, or well fluids spills or releases, pipeline or tank ruptures,
and discharges of toxic gases;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• fires, blowouts, craterings, and explosions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• uncontrollable flows of oil, natural gas, or well fluids;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• pipeline capacity curtailments; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• evolving cybersecurity risks, such as those involving unauthorized access, third-party provider defects and
service failures, denial of service attacks, malicious software, data privacy breaches by employees, insiders, or others with authorized access, cyber or phishing attacks, ransomware, social engineering, physical breaches, or other actions.

In addition to causing curtailments, delays, and cancellations of drilling and producing operations, many of these events can cause substantial losses, including personal injury or loss of life, damage to or destruction of property, natural resources, and equipment, pollution, environmental contamination, loss of wells, regulatory penalties, and third-party claims. The insurance we maintain against various losses and liabilities arising from our operations does not cover all operational risks involved in our investments. Additionally, we may elect not to obtain insurance if we believe that the cost of available insurance is excessive relative to the perceived risks. Losses could therefore occur for uninsurable or uninsured risks or in amounts in excess of existing insurance coverage. The occurrence of an event that is not fully covered by insurance could have a material adverse impact on our business activities, financial condition, and results of operations.

***We, through our investment in PhoenixOp and future assignment of oil and gas properties to PhoenixOp, conduct direct drilling and extraction activities. Such activities pose additional risks to us.***

We, through the operations of PhoenixOp, face numerous risks relating to our drilling activities, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• failing to place a well bore in the desired target producing zone;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• not staying in the desired drilling zone while drilling horizontally through the formation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• failing to run casing the entire length of the well bore; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• not being able to run tools and other equipment consistently through the horizontal well bore.

Risks we may face while completing our wells include, but are not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• not being able to fracture stimulate the planned number of stages;

------

##### [**Table of Contents**](#toc)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• failing to run tools the entire length of the well bore during completion operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• not successfully cleaning out the well bore after completion of the final fracture stimulation stage;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• increased seismicity in areas near our completion activities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• unintended interference of completion activities performed by us or by third parties with nearby operated or non-operated wells being drilled, completed, or producing; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• failure of our optimized completion techniques to yield expected levels of production.

Further, many factors may occur that cause us to curtail, delay, or cancel scheduled drilling and completion projects, including, but not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• abnormal pressure or irregularities in geological formations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• shortages of or delays in obtaining equipment or qualified personnel;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• shortages of or delays in obtaining components used in fracture stimulation processes, such as water and
proppants;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• delays associated with suspending our operations to accommodate nearby drilling or completion operations being
conducted by other operators;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• mechanical difficulties, fires, explosions, equipment failures, or accidents, including ruptures of pipelines or
storage facilities, or train derailments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• restrictions on the use of underground injection wells for disposing of wastewater from oil and gas activities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• political events, public protests, civil disturbances, terrorist acts, or cyber-attacks;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• decreases in, or extended periods of low, crude oil and natural gas prices;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• title problems;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• environmental hazards, such as uncontrollable flows of crude oil, natural gas, brine, well fluids, hydraulic
fracturing fluids, toxic gas, or other pollutants into the environment, including groundwater and shoreline contamination;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• adverse climatic conditions and natural disasters;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• spillage or mishandling of crude oil, natural gas, brine, well fluids, hydraulic fracturing fluids, toxic gas, or
other pollutants by us or by third-party service providers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• limitations in infrastructure, including transportation, processing, refining, and exportation capacity, or
markets for crude oil and natural gas; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• delays imposed by or resulting from compliance with regulatory requirements, including permitting.

As we expand our direct drilling and extraction activities the impact of these risks on our overall business will only grow more significant. See "*—The businesses of direct drilling and extraction of minerals and acquisition of mineral rights are highly competitive. If we are unable to successfully compete within these businesses through our direct drilling operations conducted by PhoenixOp, we may not be able to identify and purchase attractive assets and successfully operate our properties*," "*—Our business is sensitive to the price of oil and gas and sustained declines in prices may adversely affect our financial position, financial results, cash flows, access to capital, and ability to grow*," "*—Properties we acquire for our direct drilling and extraction operations, currently conducted through PhoenixOp, may not produce as projected, and we may be unable to determine reserve potential, identify liabilities associated with such properties, or obtain protection from sellers against such liabilities*," and "*—Our development of successful operations relies extensively on our direct operations, through PhoenixOp and various third-party E&P operators, which could have a material adverse effect on our results of operations.*"

------

##### [**Table of Contents**](#toc)
We are not insured against all risks associated with our business. We and PhoenixOp may elect to not obtain insurance if we believe the cost of available insurance is excessive relative to the risks presented or for other reasons. In addition, some risks such as those stemming from certain environmental hazards are generally not fully insurable.

Losses and liabilities arising from any of the above events could reduce the value of our capital contributions to PhoenixOp, increase our need to provide additional capital to PhoenixOp, and otherwise harm our financial position, which could adversely affect us and our ability to pay our obligations under the Notes or the Preferred Shares.

***Our business is sensitive to the price of oil and gas and sustained declines in prices may adversely affect our financial position, financial results, cash flows, access to capital, and ability to grow.***

We are in the business of both drilling and extracting oil and gas minerals directly through our operations conducted by PhoenixOp, and purchasing mineral rights and non-operated working interests in land in the United States, including the rights to drill for oil and gas. The prices we receive for our oil and natural gas production heavily influence our revenue, operating results, profitability, access to capital, future rate of growth, and carrying value of our properties. Oil and natural gas are commodities and, therefore, their prices are subject to wide fluctuations in response to relatively minor changes in supply and demand, as well as costs and terms of transport to downstream markets.

Historically, the commodities markets have been volatile, and these markets will likely continue to be volatile in the future. For example, recently, oil prices have been significantly volatile, going from $71.20 per barrel as of April 1, 2025 to a low of $57.13 per barrel as of May 5, 2025. A decline in oil and natural gas prices can have an adverse effect on the value of our interests in the land and revenue from our own direct drilling production, which will materially and adversely affect our ability to generate cash flows and, in turn, our ability to make interest and principal payments on the Notes and distribution payments on the Preferred Shares.

The prices received for oil and natural gas produced on our land, and the levels of the production, depend on numerous factors beyond our control and include the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in global supply and demand for oil and natural gas;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the actions of the Organization of the Petroleum Exporting Countries ("  ***OPEC*** ");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• political and economic conditions and events in foreign oil, natural gas, and NGL producing countries, including
elevated levels of inflation and interest rates, embargoes, and introduction of tariffs on oil and gas products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the level of global and domestic oil and natural gas E&P activity and the degree to which consolidation among
our customers may affect spending on U.S. drilling and completions in the near-term;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the level of global and domestic oil and natural gas inventories;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the level of consumer product demand;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• inclement or hazardous weather conditions and natural disasters;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the availability of storage for hydrocarbons and technological advances affecting energy consumption and energy
supply;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• speculative trading in commodity markets, including expectations about future commodity prices;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the proximity of our production operations to, and capacity, availability, and cost of, pipelines and other
transportation and storage facilities, and other factors that result in differentials to benchmark prices;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• domestic, local, and foreign governmental regulation and taxes;

------

##### [**Table of Contents**](#toc)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• fuel and energy conservation measures and technological advances affecting energy consumption;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• armed conflict, political instability, or civil unrest in oil and gas producing regions, including instability
and conflicts in the Middle East, including conflicts involving Israel and Iran and the conflict between Russia and Ukraine, and the related potential effects on laws and regulations or the imposition of economic or trade sanctions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in regulatory and trade policy, such as tariffs, as well as the potential for general market volatility
and political uncertainty;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the occurrence or threat of epidemic or pandemic diseases, or any government response to such occurrence or
threat; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the price and availability of alternative fuels.

These factors and the volatility of oil and natural gas prices make it extremely difficult to predict future crude oil, natural gas, and NGL price movements or to estimate the value of producing properties for acquisition and often cause disruption in the market for oil and natural gas producing properties, as buyers and sellers have difficulty agreeing on such value. Certain actions by OPEC and other oil producing nations in the first half of 2020, combined with the impact of the COVID-19 pandemic and a shortage in available storage for hydrocarbons in the United States, contributed to the historic low price for crude oil in April 2020. While the prices for crude oil have generally increased since then, such prices have historically remained volatile, which has adversely affected the prices at which production from our properties is sold, as well as the production activities of operators on our properties, and may continue to do so in the future. This, in turn, has and will materially affect the amount of royalty payments that we receive from our third-party E&P operators and our income from direct drilling operations. Price volatility also makes it difficult to budget for and project the return on acquisitions and development and exploitation projects. In particular, our five-year development plan is based on assumed average oil and natural gas prices of $64.39 per barrel and $3.85 per MMBtu, respectively, and our outlook for 2025 is based on average benchmark commodity prices of $71.98 per barrel for crude oil and $3.94 per Mcf for natural gas, which are significantly higher than recent lows of $57.13 per barrel of for crude oil, as of May 5, 2025 and $2.71 per MMBtu for natural gas, as of April 25, 2025. Although prices have recovered since then, there can no be assurance that prices will not experience another significant decrease. This plan and outlook may need to be adjusted in the future as a result of any material sustained decrease in oil and natural gas prices as compared to our assumptions, which could have a material adverse effect on our business, financial condition, results of operations, and prospects. In addition, in response to a sustained decrease in oil and natural gas prices, we may determine to adjust our overall business plan by adjusting capital expenditures, decreasing drilling operations, and/or reducing production plans, among other actions. Such actions and circumstances would impact our revenue, operating expenses, and liquidity. For example, we may be required to raise additional capital, above our current expectations, in order to fully realize our current or adjusted business plan.

Our revenues, operating results, profitability, and future rate of growth depend primarily on the prices of oil and, to a lesser extent, natural gas that we sell. Any substantial decline in the price of crude oil, natural gas, and NGL or prolonged period of low commodity prices will materially adversely affect our business, financial condition, results of operations, and cash flows. Further, a slowdown in the timing of oil or natural gas production, especially if in connection with a decline in prices, may reduce our ability to collect lease payments from leaseholders, which could limit our ability to make interest and principal payments on the Notes and distribution payments on the Preferred Shares. Prices also affect the amount of cash flow available for capital expenditures and our ability to raise additional capital. In addition, we may need to record asset carrying value write-downs if prices fall. A significant decline in the prices of natural gas or oil could adversely affect our financial position, financial results, cash flows, access to capital, and ability to grow.

------

##### [**Table of Contents**](#toc)
***We have a limited operating history and have experienced periods of significant business growth in a short time, making it difficult for you to evaluate our business and prospects. If we are unable to manage our business and growth effectively, our business could be materially and adversely affected.***

Since our formation in 2019, our business has grown considerably. Our limited operating history and the significant growth in operations and revenue we have experienced since then makes evaluation of our business and prospects difficult. Any growth that we experience in the future will require us to further expand our drilling and extraction activities and our acquisitions. There can be no assurance that growth in our revenue and operations will continue at a similar pace, or that we will be able to manage our growth effectively. Furthermore, the growth of our business places significant demands on our management, including managing increased numbers of personnel, properties, and business relations, such as our E&P operators. If we do not effectively manage the increased obligations brought by the growth of our operations, we may not be able to execute on our business plan, respond to competitive pressures, take advantage of market opportunities, or satisfy delivery requirements, which could have a material adverse effect on our business, financial condition, results of operations, and prospects.

In addition, we may encounter risks and difficulties experienced by companies whose performance is dependent upon newly acquired assets, such as failing to integrate, or realizing the expected benefits of, such assets. As a result of the foregoing, we may be less successful in achieving consistent results and continue the growth of our business, as compared with companies that have longer operating histories and a more stable size of operations. In addition, we may be less equipped to identify and address risks and hazards in the conduct of our business than those companies that have longer operating histories.

***The acquisition and development of our properties, directly or through our third-party E&P operators, will require substantial capital, and we and our third-party E&P operators may be unable to obtain needed capital or financing on satisfactory terms or at all, including as a result of increases in the cost of capital resulting from Federal Reserve policies in the past few years and otherwise.***

The oil and gas industry is capital-intensive. We make, and will continue to make, substantial capital expenditures in connection with the acquisition of mineral and royalty interests. To date, we have financed capital expenditures primarily with funding from capital contributions, cash generated by operations, borrowings under credit facilities, and issuances of debt securities.

In the future, we may need capital in excess of the amounts we retain in our business, borrow under our existing credit facilities, or through issuances of debt or equity securities. There can be no assurance that we can increase the borrowing amount available under our existing credit facilities or continue to raise sufficient funds through our debt securities issuances.

Furthermore, we cannot assure you that we will be able to access other external capital on terms favorable to us or at all. For example, a significant decline in prices for oil and natural gas, rising interest rates, inflationary pressure, and broader economic turmoil may adversely impact our ability to secure financing in the capital markets on favorable terms. Additionally, our ability to secure financing or access the capital markets could be adversely affected if financial institutions and institutional lenders elect not to provide funding for fossil fuel energy companies in connection with the adoption of sustainable lending initiatives or are required to adopt policies that have the effect of reducing the funding available to the fossil fuel sector. If we are unable to fund our capital requirements, we may be unable to complete acquisitions, take advantage of business opportunities, or respond to competitive pressures, any of which could have a material adverse effect on our results of operation and financial condition.

Most of our third-party E&P operators are also dependent on the availability of external debt, equity financing sources, and operating cash flows to maintain their drilling programs. If those financing sources are not available to such third-party E&P operators on favorable terms or at all, then we expect the development of our properties would be adversely affected. If the development of our properties is adversely affected, then revenues from our mineral and royalty interests may decline.

------

##### [**Table of Contents**](#toc)
***Properties we acquire for our direct drilling and extraction operations, currently conducted through PhoenixOp, may not produce as projected, and we may be unable to determine reserve potential, identify liabilities associated with such properties, or obtain protection from sellers against such liabilities.***

Acquiring oil and natural gas properties requires us to assess reservoir and infrastructure characteristics, including recoverable reserves, development and operating costs, and potential liabilities, including, but not limited to, environmental liabilities. Such assessments are inexact and inherently uncertain. For these reasons, the properties we acquire may not produce as projected. In connection with these assessments, we perform a review of the subject properties, but such a review may not reveal all existing or potential problems. While conducting due diligence, we may not review every well, pipeline, or associated facility. We cannot necessarily observe structural and environmental problems, such as pipe corrosion or groundwater contamination, when a review is performed. We may be unable to obtain contractual indemnities from any seller for liabilities arising from or attributable to the period prior to our purchase of the property. As a result, we may be required to assume the risk of the physical condition of the properties in addition to the risk that the properties may not perform in accordance with our expectations.

***We may encounter obstacles to marketing our minerals, which could adversely impact our revenues and profits.***

The marketability of our production will depend upon numerous factors beyond our control, including the availability and capacity of natural gas gathering systems, pipelines, and other transportation and processing facilities owned by third parties.

Fuel conservation measures, alternative fuel requirements, increasing consumer demand for alternatives to oil and natural gas, technological advances in fuel economy and energy generation devices, and the increased competitiveness of alternative energy sources could reduce demand for oil and natural gas. Additionally, the increased competitiveness of alternative energy sources (such as electric vehicles, wind, solar, geothermal, tidal, fuel cells, and biofuels) could reduce demand for oil and natural gas and, therefore, our revenues.

The marketing of our production can also be affected by U.S. federal and state regulation of oil and natural gas production and transportation. The availability of markets for our production is beyond our control. If market factors dramatically change, the impact on our revenues could be substantial and could adversely affect our ability to produce and market mineral deposits.

If we have difficulty selling the oil and gas we produce, our profits may decline, and we may not be able to purchase other assets, or expand our operations.

***A limited number of purchasers and operators currently generate a significant portion of our revenue and/or accounts receivable, and we may not have contracts or agreements directly with all such operators.***

A significant portion of our consolidated revenue is generated from product sales for the delivery of commodities that we extract and deliver to purchasers, and we currently deliver to a limited number of purchasers. For example, for the three months ended March 31, 2025 and 2024 and for the year ended December 31, 2024, one purchaser of our commodities made up 66%, 16% and 21% of our consolidated revenue, respectively. While we do not believe that the loss of any one purchaser would have a material impact on our revenue, to the extent there is a delay in transferring our commodity sales or entering into purchase contracts with another, new or replacement purchaser, there could be a delay in product sales or an adverse impact on our revenue during the respective period. A large portion of our current mineral rights and lease holdings are serviced by a limited number of third-party E&P operators and, as a result, we generate a significant portion of our revenue and accounts receivable from a limited number of third-party E&P operators. For the three months ended March 31, 2025, eleven third-party E&P operators made up 23% of our consolidated revenue, as compared to eight third-party E&P operators that made up 57% of our consolidated revenue for the three months ended March 31, 2024. For the year ended December 31, 2024, one third-party E&P operator made up 21% of our

------

##### [**Table of Contents**](#toc)
consolidated revenue, as compared to one third-party E&P operator that made up 11% of our consolidated revenue for the year ended December 31, 2023, and four third-party E&P operators that made up 16%, 16%, 15%, and 14% of our consolidated revenue for the year ended December 31, 2022. Similarly, as of December 31, 2024, we had concentrations in accounts receivable of 17%, 15%, and 13% with three third-party E&P operators, as compared to 26% and 14% with two third-party E&P operators as of December 31, 2023, and 34% and 10% with two third-party E&P operators as of December 31, 2022. A significant portion of our revenue and accounts receivable are generally derived from our diverse holdings of mineral rights and lease holdings and are generally not generated pursuant to agreements directly between us and the operators of the properties underlying our mineral rights and lease holdings. These interests generate revenue from the sale of crude oil and natural gas, which is paid monthly to us by various third-party oil and gas operators once any extracted crude oil and natural gas is delivered by such operators to purchasers. Those purchasers remit payment for production to the operators of the wells pursuant to sales agreements entered into among the purchasers and such operators, and the operators, in turn, remit payment to the owners in accordance with their ownership percentage in each well (or unit of wells).

As is typical in the oil and gas industry, the third-party oil and gas operators generally remit payment to the interest owners pursuant to statute or orders from the oil and gas commission of the state in which the particular well (or unit of wells) is located. For example, the majority interest holders of a unit would petition to appoint a particular operator from the oil and gas commission of the state in which the unit is located (*e.g.*, the Wyoming Oil and Gas Commission, North Dakota Industrial Commission, Texas Railroad Commission (the "***Texas RRC***"), Montana Board of Oil and Gas Conservation, and Utah Division of Oil, Gas and Mining, among others). If the request is granted by the commission, the operator would become the designated operator for the unit and would be required to remit payments to the interest holders of the unit pursuant to permits or pooling orders from such commission. While our revenue and accounts receivable relating to our mineral rights and lease holdings are derived from a significant number of different units that are subject to different leases and pooling orders from various state oil and gas commissions, the incapacity or loss of one of the operators that generate a significant portion of our revenue and accounts receivable could negatively impact our revenue and accounts receivable and could result in a reduction or delay in revenue generated from the related mineral rights and lease holdings while a replacement operator is selected and designated. Further, although typical in the oil and gas industry, as we do not always have contracts or agreements directly with these operators, we do not always determine or control the rights, payments, discounts, or other terms related to leases or the extraction and sale of assets from the properties underlying our mineral rights and lease holdings.

***Our development of successful operations relies extensively on our direct operations, through PhoenixOp and various third-party E&P operators, which could have a material adverse effect on our results of operations.***

A significant portion of our assets consist of mineral and royalty interests. We utilize and will continue to utilize third-party E&P operators to perform the drilling and extraction operations on our assets to extract the natural resources we rely on to generate revenue. The success of our business operations depends on the timing of drilling activities and success of our direct operations and third-party E&P operators. If we or our third-party E&P operators are not successful in the development, exploitation, production, and exploration activities relating to our ownership interests, or are unable or unwilling to perform, our financial condition and results of operation would be materially adversely affected.

With respect to our investments in which we have a non-operated working interest, third-party E&P operators will make decisions in connection with their operations, which may not be in our best interests. We may have no ability to exercise influence over the operational decisions of our third-party E&P operators, including the setting of capital expenditure budgets and drilling locations and schedules. Dependence on our third-party E&P operators could prevent us from realizing target returns for those locations. The success and timing of development activities by our operators will depend on several factors that are largely outside of our control, including: the capital costs required for drilling activities by our third-party E&P operators, which could be significantly more than anticipated; the ability of our operators to access capital; prevailing mineral prices and

------

##### [**Table of Contents**](#toc)
other factors generally affecting the industry operating environment; the timing of capital expenditures; their expertise and financial resources; approval of other participants in drilling wells; selection of drilling technology; the availability of storage for hydrocarbons; and the rate of production of reserves, if any.

Furthermore, our E&P operators, including PhoenixOp, are dependent on various supplies and equipment, as well as qualified personnel, to carry out our extraction operations. Any shortage, unavailability, or increase in the cost of such supplies, personnel, equipment, and parts could have a material adverse effect on their ability to carry out operations and therefore limit or increase the cost of production and, ultimately, our profitability.

The challenges and risks faced by our third-party E&P operators and contractors may be similar to or greater than our own, including with respect to their ability to service their debt, remain in compliance with their debt instruments, and, if necessary, access additional capital. Commodity prices and/or other conditions have in the past caused, and may in the future cause, mineral operators to file for bankruptcy. The insolvency of third-party E&P operators or contractors of any of our properties, their failure to adequately perform, or their breach of applicable agreements could reduce our production and revenue or result in our liability to governmental authorities for compliance with environmental, safety, and other regulatory requirements or to such operators' suppliers and vendors. Finally, with regards to any third-party E&P operator, they may have the right, if another non-operator fails to pay its share of costs because of its insolvency or otherwise, to require us to pay its proportionate share of the defaulting party's share of costs.

***We rely on our third-party E&P operators, third parties, and government databases for information regarding our assets and, to the extent that information is incorrect, incomplete, or lost, our financial and operational information and projections may be incorrect.***

As an owner of mineral and royalty interests, we rely on the third-party E&P operators of our properties to notify us and state regulators of information regarding production on our properties in a timely and complete manner, as well as the accuracy of information obtained from third parties and government databases. We use this information in conjunction with our specialized software to evaluate operations and cash flows, as well as to predict expected production and possible future locations. To the extent we do not timely receive this information or the information is incomplete or incorrect, our financial and operational information may be incorrect and our ability to project potential growth may be materially adversely affected. Furthermore, to the extent we have to update any publicly disclosed results or projections made in reliance on this incorrect or incomplete information, investors could lose confidence in our reported financial information. If any of such third-parties' databases or systems were to fail for any reason, including as a result of a cyber-attack, possible consequences include loss of communication links and inability to automatically process commercial transactions or engage in similar automated or computerized business activities. Any of the foregoing consequences could materially adversely affect our business.

***Our estimated mineral reserves quantities and future production rates are based on many assumptions that may prove to be inaccurate and they have not been verified by an independent third-party reserve engineering report. Any material inaccuracies in the reserves estimates or the underlying assumptions will materially affect the quantities and present value of our reserves.***

It is not possible to measure underground accumulation of crude oil, natural gas, or NGL in an exact way. Numerous uncertainties are inherent in estimating quantities of mineral reserves. The process of estimating mineral reserves is complex, requiring significant expertise, decisions, and assumptions in the evaluation of available geological, engineering, and economic data for each reservoir, including assumptions regarding future natural gas and oil prices, subsurface characterization, production levels, and operating and development costs. For example, our estimates of our reserves are based on the unweighted first-day-of-the-month arithmetic average commodity prices over the prior 12 months in accordance with SEC guidelines. Future prices received for production and costs may vary, perhaps significantly, from the prices and costs assumed for purposes of those estimates. Sustained lower prices will cause the 12-month unweighted arithmetic average of the first-day-of-the-month price for each of the

------

##### [**Table of Contents**](#toc)
12 months preceding to decrease over time as the lower prices are reflected in the average price, which may result in the estimated quantities and present values of our reserves being reduced. To the extent that prices become depressed or decline materially from current levels, such conditions could render uneconomic a portion of our proved and probable reserves, and we may be required to write down our proved and probable reserves.

Additionally, we do not have an independent third-party reserve engineering report that verifies our estimates of mineral reserves quantities. We rely on our own internal team to estimate our mineral reserves, only employing third parties in limited capacities to assess the reasonableness and appropriateness of our approach and methodology to estimate our reserves. Lack of an independent third-party reserve engineering report means there is no independent complete analysis of the accuracy of mineral reserve estimates and their present value.

Furthermore, SEC rules require that, subject to limited exceptions, proved and probable undeveloped reserves may only be recorded if they relate to wells scheduled to be drilled within five years after the date of booking. This rule may limit our potential to record additional proved and probable undeveloped reserves as we pursue our drilling program through PhoenixOp. To the extent that prices become depressed or decline materially from current levels, such condition could render uneconomic a number of our identified drilling locations, and we may be required to write down our proved and probable undeveloped reserves if we do not drill those wells within the required five-year time frame or choose not to develop those wells at all.

As a result, estimated quantities of reserves and projections of future production rates and the timing of development expenditures may prove to be inaccurate. Over time, we may make material changes to our reserves estimates. Any significant variance in our assumptions and actual results could greatly affect our estimates of reserves, the economically recoverable quantities of minerals attributable to any particular group of properties, the classifications of reserves based on risk of non-recovery, and estimates of future net cash flows.

In addition, estimates of probable reserves, and the future cash flows related to such estimates, are inherently imprecise and are more uncertain than estimates of proved reserves, and the future cash flows related to such estimates, but have not been adjusted for risk due to that uncertainty. Because of such uncertainty, estimates of probable reserves, and the future cash flows related to such estimates, may not be comparable to estimates of proved reserves, and the future cash flows related to such estimates, and should not be summed arithmetically with estimates of proved reserves and the future cash flows related to such estimates. When producing an estimate of the amount of minerals that are recoverable from a particular reservoir, an estimated quantity of probable reserves is an estimate of those additional reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered. Estimates of probable reserves are also continually subject to revisions based on production history, results of additional exploration, and development, price changes, and other factors. When deterministic methods are used, it is as likely as not that actual remaining quantities recovered will exceed the sum of estimated proved plus probable reserves. Probable reserves may be assigned to areas of a reservoir adjacent to proved reserves where data control or interpretations of available data are less certain, even if the interpreted reservoir continuity of structure or productivity does not meet the reasonable certainty criterion. Probable reserves may be assigned to areas that are structurally higher than the proved area if these areas are in communication with the proved reservoir. Probable reserves estimates also include potential incremental quantities associated with a greater percentage recovery of the hydrocarbons in place than assumed for proved reserves. *See* "*Business—Our Oil and Natural Gas Properties—Evaluation and Review of Estimated Proved and Probable Reserves*."

***The development of our estimated proved and probable undeveloped reserves may take longer and may require higher levels of capital expenditures than we currently anticipate.***

Recovery of proved and probable undeveloped reserves requires significant capital expenditures and successful drilling operations. As of March 31, 2025, approximately 57% of our total estimated proved reserves and 100% of our total estimated probable reserves were undeveloped. Furthermore, as of March 31, 2025, we had

------

##### [**Table of Contents**](#toc)
133.5 million Boe in total estimated probable undeveloped reserves, which is approximately 2.0 times our total proved reserves. Our reserves estimates assume that substantial capital expenditures will be made to develop non-producing reserves. As of December 31, 2024, we estimate that we will need to make approximately $749.3 million and $3,224.8 million in capital expenditures to develop all our proved and probable undeveloped reserves, respectively. Estimates of capital expenditures are subject to fluctuations in oil and natural gas prices, equipment availability, labor markets, and other factors that we may not foresee or control. As such, we cannot be sure that the estimated costs attributable to our reserves are accurate.

We anticipate that over the next several years our cash flows from operations alone will not be sufficient to finance the development of our estimated proved and probable undeveloped reserves over that period. As a result, we expect that we will need to raise additional capital to develop our reserves. However, we cannot be certain that additional financing will be available to us on acceptable terms, or at all. See "—*The acquisition and development of our properties, directly or through our third-party E&P operators, will require substantial capital, and we and our third-party E&P operators may be unable to obtain needed capital or financing on satisfactory terms or at all, including as a result of increases in the cost of capital resulting from Federal Reserve policies in the past few years and otherwise*." Additionally, sustained or further declines in commodity prices may require use to revise the future net revenues of our estimated proved and probable undeveloped reserves and may result in some projects becoming uneconomical. Further, our drilling efforts may be delayed or unsuccessful and actual reserves may prove to be less than current reserves estimates, which could have a material adverse effect on our financial condition, future cash flows, and results of operations.

The ability to develop our reserves is subject to a number of uncertainties, which could defer our drilling more than five years from the date undeveloped reserves were first assigned to a drilling location. Alternatively, our estimated reserves may not be ultimately developed or produced. Recovery of undeveloped reserves requires significant capital expenditures and successful drilling operations. If we choose not to spend the capital to develop these reserves, or if we are not otherwise able to successfully develop these reserves, we will be required to remove the associated volumes from our reported proved reserves. In addition, because undeveloped reserves may be booked only if they relate to wells scheduled to be drilled within five years of the date of booking, we may be required to remove any undeveloped reserves that are not developed within this five-year time frame or to reclassify the category of the applicable reserves. A removal or reclassification of reserves could reduce the quantity and present value of our natural gas and oil reserves, which would adversely affect our business and financial condition.

***We may experience delays in the payment of royalties and be unable to replace third-party E&P operators that do not make required royalty payments, and we may not be able to terminate our leases with defaulting lessees if any of such third-party E&P operators on those leases declare bankruptcy.***

We may experience delays in receiving royalty payments from our third-party E&P operators, including as a result of delayed division orders received by our third-party E&P operators. A failure on the part of our third-party E&P operators to make royalty payments typically gives us the right to terminate the lease, repossess the property, and enforce payment obligations under the lease. If we repossessed any of our properties, we would seek a replacement E&P operator. However, we might not be able to find a replacement E&P operator and, if we did, we might not be able to enter into a new lease on favorable terms within a reasonable period of time. In addition, the outgoing third-party E&P operator could be subject to a proceeding under Title 11 of the United States Code (the "***Bankruptcy Code***"), in which case our right to enforce or terminate the lease for any defaults, including non-payment, may be substantially delayed or otherwise impaired. In general, in a proceeding under the Bankruptcy Code, the bankrupt third-party E&P operator would have a substantial period of time to decide whether to ultimately reject or assume the lease, which could prevent the execution of a new lease or the assignment of the existing lease to another E&P operator. For example, certain of our third-party E&P operators historically have undergone restructurings under the Bankruptcy Code and any future restructurings of our third-party E&P operators may impact their future operations and ability to make royalty payments to us. If the third-party E&P operator rejected the lease, our ability to collect amounts owed would be substantially delayed, and

------

##### [**Table of Contents**](#toc)
our ultimate recovery may be only a fraction of the amount owed or nothing. In addition, if we are able to enter into a new lease with a new E&P operator, the replacement E&P operator may not achieve the same levels of production or sell oil or natural gas at the same price as the third-party E&P operator we replaced.

***Our PV-10 will not necessarily be the same as the current market value of our estimated proved reserves.***

You should not assume that our PV-10 is the current market value of our estimated proved reserves. We currently base the estimated discounted future net revenues from our proved reserves on the 12-month unweighted arithmetic average of the first-day-of-the-month price for the preceding 12 months. Actual future net revenues from our reserves will be affected by factors such as:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• actual prices we receive for natural gas and oil;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• actual cost of development and production expenditures;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the amount and timing of actual production;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• transportation and processing; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in governmental regulations or taxation.

The timing of both our production and our incurrence of expenses in connection with the development and production of our properties will affect the timing and amount of actual future net revenues from proved reserves and, thus, their actual present value. In addition, the 10% discount factor we use when calculating discounted future net revenues may not be the most appropriate discount factor based on interest rates in effect from time to time and risks associated with our business or the natural gas and oil industry in general. Actual future prices and costs may differ materially from those used in the present value estimate.

***Estimated reserves do not represent or measure the fair value of the respective property or asset and we may sell or divest an asset for much less than the amount of estimated reserves.***

Estimated proved reserves and estimated probable reserves do not represent or measure the fair value of the respective properties or the fair market value at which a property or properties could be sold. In the event of any such sale, proceeds to us may be significantly less than the value of the estimated reserves. The development of our estimated proved and probable undeveloped reserves may take longer and may require higher levels of capital expenditures than we currently anticipate. Estimates of probable reserves, and the future cash flows related to such estimates, are inherently imprecise and are more uncertain than estimates of proved reserves and the future cash flows related to such estimates but have not been adjusted for risk due to such uncertainty.

***Our future success depends on our ability to replace reserves.***

Because the rate of production from oil and natural gas properties generally declines as reserves are depleted, our future success depends upon our ability to economically find or acquire and produce additional oil and natural gas reserves. Except to the extent that we acquire additional properties containing proved reserves, conduct successful exploration and development activities, or, through engineering studies, identify additional behind-pipe zones or secondary recovery reserves, our proved reserves will decline as our reserves are produced. Future oil and natural gas production, therefore, is highly dependent upon our level of success in acquiring or finding additional reserves that are economically recoverable. We cannot assure you that we will be able to find or acquire and develop additional reserves at an acceptable cost. We may acquire significant amounts of unproved property to further our development efforts. Development and exploratory drilling and production activities are subject to many risks, including the risk that no commercially productive reservoirs will be discovered. We seek to acquire both proved and producing properties as well as undeveloped acreage that we believe will enhance growth potential and increase our earnings over time. However, we cannot assure you that all of these properties will contain economically viable reserves or that we will not abandon our initial

------

##### [**Table of Contents**](#toc)
investments. Additionally, we cannot assure you that unproved reserves or undeveloped acreage that we acquire will be profitably developed, that new wells drilled on our properties will be productive, or that we will recover all or any portion of our investments in our properties and reserves.

***We rely on our software system to identify attractive assets with oil and gas reserves and there can be no assurance that we will be able to continue to scale this software or that such software will be accurate in identifying assets.***

We have built and operated our software system on a relatively limited scale. While we believe that our development and testing to date has proven the concept of our software, there can be no assurance that, as we commence larger-scale operations, we will not incur unexpected costs or hurdles that might restrict the desired scale of our intended operations or negatively impact our business prospects, financial condition, and results of operation. In addition, due to the limited and changing scale of use, there can be no assurance that the software will be accurate on an ongoing or continuous basis. If our software is unable to scale or to adopt to the changing nature of our operations, or is inaccurate, our ability to successfully invest in commercially viable mineral deposits and PhoenixOp's ability to successfully extract minerals from assets transferred to it by us could be significantly impacted and our business and operating results may suffer.

***We may be unable to realize all of the anticipated benefits from our acquisitions or successfully integrate future acquisitions of mineral rights into our business.***

Our ability to achieve the anticipated benefits of our completed and future acquisitions of mineral rights will depend in part upon whether we can integrate the acquired assets into our existing business in an efficient and effective manner. We may not be able to accomplish this integration process successfully. The successful acquisition of producing properties requires an assessment of several factors, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• recoverable reserves;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• future oil and natural gas prices and their appropriate differentials;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• availability and cost of transportation of production to markets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• availability and cost of drilling equipment and of skilled personnel for our third-party operators;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• development and operating costs of PhoenixOp and our third-party E&P operators, including potential
environmental and other liabilities; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• regulatory, permitting, and similar matters.

The accuracy of these assessments is inherently uncertain, and we may not be able to identify attractive acquisition opportunities. In connection with these assessments, in conjunction with the use of our specialized software, we perform a review of the subject properties that we believe to be generally consistent with industry practices, given the nature of our interests. Our review will not reveal all existing or potential problems, nor will it permit us to become sufficiently familiar with the properties to assess fully their deficiencies and capabilities. Even when problems are identified, the seller may be unwilling or unable to provide effective contractual protection against all or part of such problems. Even if we identify attractive acquisition opportunities, we may not be able to complete the acquisition or do so on commercially acceptable terms. We depend on acquisitions to grow our reserves, production, and cash flows.

There is intense competition for acquisition opportunities in our industry. Competition for acquisitions may increase the cost of, or cause us to refrain from, completing acquisitions. Additionally, acquisition opportunities vary over time. Our ability to complete acquisitions is dependent upon, among other things, our ability to obtain the necessary financing and, in some cases, regulatory approvals. Further, these acquisitions may be in geographic regions in which we do not currently hold assets, which could result in unforeseen difficulties. In addition, if we acquire interests in new geographic regions, we may be subject to additional and unfamiliar legal

------

##### [**Table of Contents**](#toc)
and regulatory requirements. Moreover, the success of any completed acquisition will depend on our ability to effectively integrate the acquired business into our existing business. The process of integrating acquired businesses may involve unforeseen difficulties, including delays, and may require a disproportionate amount of our managerial and financial resources.

No assurance can be given that we will be able to identify suitable acquisition opportunities, negotiate acceptable terms, obtain financing for acquisitions on acceptable terms, or successfully acquire identified targets. Our failure to successfully integrate the acquired assets into our existing operations, achieve cost savings, or minimize any unforeseen difficulties could materially and adversely affect our financial condition, results of operations, and cash flows. The inability to effectively manage these acquisitions could reduce our focus on subsequent acquisitions and current operations, which, in turn, could negatively impact our growth, results of operations, and cash flows.

***Our E&P operators' identified potential drilling locations, which are scheduled out over many years, are susceptible to uncertainties that could materially alter the occurrence or timing of their drilling.***

Proved and probable undeveloped drilling locations represent a significant part of our growth strategy. However, we do not fully control the development of these locations that we do not directly operate. The ability of our E&P operators to drill and develop identified potential drilling locations depends on a number of uncertainties, including the availability of capital, construction of and limitations on access to infrastructure, the generation of additional seismic or geological information, seasonal conditions and inclement weather, regulatory changes and approvals, oil and gas prices, costs, negotiation of agreements with third parties, drilling results, lease expirations, and the availability of water. Further, our E&P operators' identified potential drilling locations are in various stages of evaluation, ranging from locations that are ready to drill to locations that will require substantial additional interpretation. The use of technologies and the study of producing fields in the same area will not enable our E&P operators, or us, to know conclusively prior to drilling whether mineral reserves will be present or, if present, whether such resources will be present in sufficient quantities to be economically viable. Even if sufficient amounts of such resources exist, our E&P operators may damage the potentially productive hydrocarbon-bearing formation or experience mechanical difficulties while drilling or completing the well, possibly resulting in a reduction in production from the well or abandonment of the well. If our E&P operators drill additional wells that they identify as dry holes in current and future drilling locations, their drilling success rate may decline and materially harm their business and ours.

There is no guarantee that the conclusions our E&P operators draw from available data from the wells on our acreage, more fully explored locations, or producing fields will be applicable to their drilling locations. Further, initial production rates reported by our or other E&P operators in the areas in which our reserves are located may not be indicative of future or long-term production rates. Additionally, actual production from wells may be less than expected. For example, several third-party E&P operators have previously announced that newer wells drilled close in proximity to already producing wells have produced less oil and gas than forecast. Because of these uncertainties, we do not know if the potential drilling locations identified will ever be drilled or if our third-party E&P operators will be able to produce oil and/or gas from these or any other potential drilling locations. As such, the actual drilling activities of our E&P operators may materially differ from those presently identified, which could adversely affect our business, results of operations, and cash flows.

Finally, the potential drilling locations we have identified are based on the geologic and other data available to us and our interpretation of such data through our specialized software. As a result, our third-party E&P operators may have reached different conclusions about the potential drilling locations on our properties, and our third-party E&P operators control the ultimate decision as to where and when a well is drilled.

------

##### [**Table of Contents**](#toc)
***Acreage must be drilled before lease expiration, generally within three to five years, in order to hold the acreage by production. Our E&P operators' failure to drill sufficient wells to hold acreage may result in the deferral of prospective drilling opportunities.***

Leases on crude oil and natural gas properties typically have a term of three to five years, after which they expire unless, prior to expiration, production is established within the spacing units covering the undeveloped acres. In addition, even if production or drilling is established during such primary term, if production or drilling ceases on the leased property, the lease typically terminates, subject to certain exceptions.

Any reduction in our E&P operators' drilling programs, either through a reduction in capital expenditures or the unavailability of drilling rigs, could result in the expiration of existing leases. If the lease governing any of our mineral interests expires or terminates, all mineral rights revert back to us, and we will have to seek new lessees to explore and develop such mineral interests.

***We have limited control over the activities on properties that we do not operate.***

Some of the properties in which we have an interest are operated by other companies and involve third-party working interest owners. As a result, we have limited ability to influence or control the operation or future development of such properties, including compliance with environmental, safety, and other regulations, or the amount of capital expenditures that we will be required to fund with respect to such properties. Moreover, we are dependent on the other working interest owners of such projects to fund their contractual share of the capital expenditures of such projects. In addition, a third-party E&P operator could decide to shut-in or curtail production from wells, or plug and abandon marginal wells, on properties owned by that operator during periods of decreases in oil and gas prices. These limitations and our dependence on the third-party E&P operators and third-party working interest owners for these projects could cause us to incur unexpected future costs, lower production, and materially and adversely affect our financial condition, results of operations, and cash flows.

***We have completed numerous acquisitions of mineral and royalty interests for which separate financial information is not required or provided.***

We have completed numerous acquisitions of mineral and royalty interests that are not "significant" under Rule 3-05 of Regulation S-X ("***Rule 3-05***"). Therefore, we are not required to, and have elected not to, provide separate historical financial information in our public filings relating to those acquisitions. While these acquisitions are not individually or collectively significant for purposes of Rule 3-05, they have or will have an impact on our financial results and their aggregated effect on our business and results of operations may be material.

***The substantial majority of the wells in which we have a mineral or royalty interest and all the wells we directly operate are located in the Williston Basin, making us vulnerable to risks associated with concentration of our assets in a limited geographic area.***

The substantial majority of the wells in which we have a mineral or royalty interest and all the wells we directly operate are geographically concentrated in the Williston Basin. As a result, we may be disproportionately exposed to various factors, including, among others:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the impact of regional supply and demand factors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• delays or interruptions of production from wells in such areas caused by governmental regulation, including
changes to field wide rules;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• processing or transportation capacity constraints;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• market limitations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• availability of equipment and personnel;

------

##### [**Table of Contents**](#toc)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• water shortages or other drought-related conditions; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• interruption of the processing or transportation of natural gas.

This concentration in a limited geographic area also increases our exposure to changes in local laws and regulations, certain lease stipulations designed to protect wildlife, and unexpected events that may occur in the region, such as natural disasters, seismic events, industrial accidents, or labor difficulties. Any one of these factors has the potential to cause producing wells to be shut-in, delay operations, decrease cash flows, increase operating and capital costs, and prevent development of lease inventory before expirations. Any of the risks described above could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

***Cybersecurity attacks on our technological systems, or those of our third-party vendors, could significantly disrupt our business operations and subject us to liability.***

Our business, like other companies in the oil and gas industry, has become increasingly dependent upon digital technologies. We utilize digital technologies to, among other things, process and record financial and operating data, communicate with our business partners, analyze mineral deposits information, and estimate quantities of mineral reserves. Strategic targets, such as energy-related assets, may be at greater risk of future terrorist or cyber-attacks than other targets in the United States. Deliberate attacks on, or security breaches in, our systems or infrastructure, the systems or infrastructure of third parties, or cloud-based applications could lead to corruption or loss of our proprietary data and potentially sensitive data, delays in production or delivery, difficulty in completing and settling transactions, challenges in maintaining our books and records, environmental damage, communication interruptions, other operational disruptions, and third-party liability.

There is no guarantee that our security measures will provide absolute security. We may not be able to anticipate, detect, or prevent cyberattacks, particularly because the methodologies used by attackers change frequently or may not be recognized until launched, and because attackers are increasingly using techniques designed to circumvent controls and avoid detection. We and our third-party service providers may therefore be vulnerable to security events that are beyond our control, and we may be the target of cyber-attacks, as well as physical attacks, which could result in the unauthorized access to our information systems or data, the data of our third-party E&P operators, and our employees, or significant disruption to our business. These attacks could adversely impact our business operations, our revenue and profits, our ability to comply with legal, contractual, and regulatory requirements, our reputation and goodwill, and could result in legal risk, enforcement actions, and litigation. As cyberattacks continue to evolve, we may be required to expend significant additional resources to respond to cyberattacks, to continue to modify or enhance our protective measures, or to investigate and remediate any information systems and related infrastructure security vulnerabilities. Additionally, the continuing and evolving threat of cybersecurity attacks has resulted in evolving legal and compliance matters, including increased regulatory focus on prevention, which could require us to expend significant additional resources to meet such requirements.

Security incidents can also occur as a result of non-technical issues, such as physical theft. More recently, advancements in artificial intelligence ("***AI***") may pose serious risks for many of the traditional tools used to identify individuals, including voice recognition (whether by machine or the human ear), facial recognition, or screening questions to confirm identities. In addition, generative AI systems may also be used by malicious actors to create more sophisticated cyberattacks (*i.e.*, more realistic phishing or other attacks). The advancements in AI could lead to an increase in the frequency of identity fraud or cyberattacks (whether successful or unsuccessful), which could cause us or our third-party E&P operators to incur increasing costs, including costs associated with additional personnel, protection technologies and policies and procedures, and third-party experts and consultants. If any of these security breaches were to occur, we could suffer disruptions to our operations and other aspects of our business.

------

##### [**Table of Contents**](#toc)
***Our inability to retain or obtain key personnel could directly affect our efficiency and profitability.***

Our future success depends on retaining the services of our planned management team. Our executive officers possess a unique and comprehensive knowledge of our industry and related matters that are vital to our success within the industry. The knowledge, leadership, and technical expertise of these individuals would be difficult to replace. The loss of one or more of our officers could have a material adverse effect on our operating and financial performance, including our ability to develop and execute our long-term business strategy.

***We may incur losses as a result of title defects in the properties that we acquire.***

It is our practice in acquiring oil and natural gas leases or interests not to incur the expense of retaining lawyers to examine the title to the mineral interest at the time of acquisition. Rather, we rely upon the judgment of lease brokers or landmen who perform the fieldwork in examining records in the appropriate governmental office before attempting to acquire a lease or other interest in a specific mineral interest. The existence of a material title deficiency can render a lease or other interest worthless and can adversely affect our results of operations and financial condition. The failure of title on a lease, in a unit, or in any other mineral interest may not be discovered until after a well is drilled, in which case we may lose the lease and the right to produce all or a portion of the minerals under the property.

***If the third-party E&P operators of our properties suspend our right to receive royalty payments due to title or other issues, our business, financial condition, results of operations, and cash flows may be adversely affected.***

We depend in part on acquisitions to grow our reserves, production, and cash generated from operations. In connection with these acquisitions, record title to mineral and royalty interests are conveyed to us by asset assignment, and we become the record owner of these interests. Upon such a change in ownership of mineral interests, and at regular intervals pursuant to routine audit procedures at each of our third-party E&P operators at its discretion, the third-party E&P operator of the underlying property has the right to investigate and verify the title and ownership of mineral and royalty interests with respect to the properties it operates. If any title or ownership issues are not resolved to its reasonable satisfaction in accordance with customary industry standards, the third-party E&P operator may suspend payment of the related royalty. If a third-party E&P operator of our properties is not satisfied with the documentation we provide to validate our ownership, such third-party E&P operator may suspend our royalty or mineral interest right payment until such issues are resolved, at which time we would receive in full payments that would have been made during the suspension, without interest. Certain of our third-party E&P operators impose significant documentation requirements for title transfer and may suspend royalty payments for significant periods of time. During the time that a third-party E&P operator puts our assets in pay suspense, we would not receive the applicable mineral or royalty payment owed to us from sales of the underlying oil or natural gas related to such mineral or royalty interest. Placement of a significant amount of our royalty interests in suspense may have a material advance effect on our business and results of operations.

***Our decommissioning costs are unknown and may be substantial and may force us to divert resources from our other operations.***

We may become responsible for costs associated with abandoning and reclaiming wells, facilities, and pipelines ("***decommissioning costs***") we use for production of oil, natural gas, and NGL reserves. We accrue a liability for decommissioning costs associated with our wells but have not established any cash reserve account for these potential costs in respect of any of our properties. If decommissioning is required before economic depletion of our properties or if our estimates of the costs of decommissioning exceed the value of the reserves remaining at any particular time to cover such decommissioning costs, we may have to draw on funds from other sources to satisfy such costs. The use of other funds to satisfy such decommissioning costs could impair our ability to focus capital investment in other areas of our business.

------

##### [**Table of Contents**](#toc)
***Limitation or restrictions on our ability to obtain water for our direct drilling and hydraulic fracturing processes may have an adverse effect on our operating results.***

Water is an essential component of shale oil and natural gas development during both the drilling and hydraulic fracturing processes. Our access to water to be used in these processes may be adversely affected due to reasons such as periods of extended drought, private, third-party competition for water in localized areas, or the implementation of local or state governmental programs to monitor or restrict the beneficial use of water subject to their jurisdiction for hydraulic fracturing to assure adequate local water supplies. In addition, treatment and disposal of water is becoming more highly regulated and restricted. Thus, our costs for obtaining and disposing of water could increase significantly. In addition, the use, treatment, and disposal of water has become a focus of certain investors and other stakeholders who may seek to engage with us on this and other environmental matters, which may result in activism, negative reputational impacts, increased costs, or other adverse effects on our business, results of operations, and financial condition. The inability to locate or contractually acquire and sustain the receipt of sufficient amounts of water could adversely impact operations our E&P operators and have a corresponding adverse effect on our business, results of operations, and financial condition.

***Weather conditions, which could become more frequent or severe due to climate change, could adversely affect our ability to conduct drilling, completion, and production activities in the areas where we operate.***

Exploration and development activities and equipment of PhoenixOp and our third-party operators operating on our lands can be adversely affected by severe weather, such as well freeze-offs, which may cause a loss of production from temporary cessation of activity or lost or damaged equipment. Our and our third-party operators' planning for normal climatic variation, insurance programs, and emergency recovery plans may inadequately mitigate the effects of such weather conditions, and not all such effects can be predicted, eliminated, or insured against. In addition, demand for oil and gas are, to a degree, dependent on weather and climate, which impact the price we receive for the commodities we produce. These constraints could delay or temporarily halt our operations and materially increase our operating and capital costs, which could have a material adverse effect on our business, financial condition, and results of operations.

***Our hedging activities could result in financial losses and reduce earnings.***

To achieve a more predictable cash flow and to reduce our exposure to adverse fluctuations in the prices of oil and natural gas, we currently have entered, and may in the future enter, into derivative contracts for a portion of our future oil and natural gas production, including fixed price swaps, collars, and basis swaps. We have not designated and do not plan to designate any of our derivative contracts as hedges for accounting purposes and, as a result, record all derivative contracts on our balance sheet at fair value with changes in fair value recognized in current period earnings. Accordingly, our earnings may fluctuate significantly as a result of changes in the fair value of our derivative contracts. Derivative contracts also expose us to the risk of financial loss in some circumstances, including when:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• production is less than expected;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the counterparty to the derivative contract defaults on its contract obligation; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the actual differential between the underlying price in the derivative contract or actual prices received are
materially different from those expected.

In addition, these types of derivative contracts can limit the benefit we would receive from increases in the prices for oil and natural gas.

------

##### [**Table of Contents**](#toc)
**Risks Related to Legal, Regulatory, and Environmental Matters** 

***We are subject to significant governmental regulations, and governmental authorities can delay or deny permits and approvals or change legal requirements governing our operations, which could restrict our operations, increase costs of conducting our business, and delay our implementation of, or cause us to change, our business strategy.***

The current and future operations of our business and that of the third-party E&P operators on our land are and will be governed by complex and stringent federal, state, local, and other laws and regulations, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• laws and regulations governing mineral concession acquisition, prospecting, development, mining, production,
transportation, marketing, and sales;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• laws and regulations related to exports, taxes, and fees;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• labor standards and regulations related to occupational health and mine safety;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• environmental laws and regulations related to air emissions, waste disposal, remediation of contaminated sites,
water and wastewater discharges, management and exposure to hazardous substances, land use, and protection of natural resources; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• other matters.

Federal, state, and local agencies may assert overlapping authority to regulate in these areas. In addition, certain of these laws and regulations may apply retroactively and may impose strict or joint and several liability on us for events or conditions over which we and our predecessors had no control, without regard to fault, legality of the original activities, or ownership or control by third parties.

Companies engaged in exploration activities often experience increased costs and delays in production and other schedules as a result of the need to comply with applicable laws, regulations, and permits. Costs of compliance may increase, and operational delays or restrictions may occur, as existing laws and regulations are revised or reinterpreted, or as new laws and regulations become applicable to our operations. Government authorities and other organizations continue to study health, safety, and environmental aspects of mineral operations, including those related to air, soil, and water quality, ground movement or seismicity, and natural resources. Government authorities have also adopted or proposed new or more stringent requirements for permitting, well construction, and public disclosure or environmental review of, or restrictions on, mineral operations. Such requirements or associated litigation could result in potentially significant added costs to comply, delay, or curtail our exploration, development, disposal, or production activities, and preclude us from carrying out our exploration program, which could have a material adverse effect on our expected production, other operations, and financial condition.

To operate in compliance with these laws and regulations, we and our third-party E&P operators must obtain and maintain permits, approvals, and certificates from federal, state, and local government authorities for a variety of activities. These permits are generally subject to protest, appeal, or litigation, which could in certain cases delay or halt projects, production of wells, and other operations. Failure to comply with laws and regulations, including obtaining and maintaining permits, approvals, and certificates, may result in enforcement actions, including the forfeiture of claims, or orders issued by regulatory or judicial authorities requiring operations to cease or be curtailed, the assessment of administrative, civil, and criminal fines and penalties and liability for noncompliance, costs of corrective action, cleanup or restoration, including capital expenditures, installation of additional equipment, or remedial actions, compensation for personal injury, property damage or other losses, and the imposition of injunctive or declaratory relief restricting or limiting our operations.

Our operations may also be adversely affected by seasonal or permanent restrictions on drilling activities designed to protect various wildlife. Such restrictions may limit our ability to operate in protected areas and can intensify competition for drilling rigs, oilfield equipment, services, supplies, and qualified personnel, which may

------

##### [**Table of Contents**](#toc)
lead to periodic shortages when drilling is allowed. Permanent restrictions imposed to protect threatened or endangered species or their habitat could prohibit drilling in certain areas or require the implementation of expensive mitigation measures.

***The development and enactment of climate change legislation and regulation regarding emissions of greenhouse gases ("GHGs") could adversely affect our operations, including the mineral industry and the demand for the oil and natural gas that we produce.***

The energy industry is affected from time to time in varying degrees by political developments and a wide range of federal, tribal, state, and local statutes, rules, orders, and regulations that may, in turn, adversely affect the operations and costs of the companies engaged in the energy industry. Laws, regulations and existing policies related to climate change and to GHG emissions have been rapidly evolving and are increasingly difficult to predict, particularly in light of recent announcements and actions by the U.S. government to reconsider air-related regulations and policies.

For instance, in response to the U.S. Environmental Protection Agency (the "***EPA***") endangerment finding on GHGs, the EPA has adopted regulations under existing provisions of the Clean Air Act of 1970 (as amended, the "***CAA***") that, among other things, require preconstruction and operating permits for GHG emissions from certain large stationary sources that already emit conventional pollutants above a certain threshold. In addition, the EPA has adopted rules requiring the monitoring and reporting of GHG emissions from specified onshore and offshore oil and gas production sources in the United States on an annual basis, which may include operations on our properties. However, on June 11, 2025, EPA proposed a rule to repeal all GHG emissions standards for the power sector under the CAA and to repeal amendments to the 2024 Mercury and Air Toxics Standards.

Further, the Infrastructure Investment and Jobs Act and the Inflation Reduction Act of 2022 (the "***IRA 2022***") includes billions of dollars in incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles, investments in advanced biofuels and supporting infrastructure, and carbon capture and sequestration. Additionally, the IRA 2022 includes a charge for methane emissions from specific types of facilities that emit 25,000 metric tons of carbon dioxide equivalent or more per year, and although the IRA 2022 generally provides for a conditional exemption under certain circumstances, the change applies to emissions that exceed an established emissions threshold for each type of covered facility. On November 12, 2024, the EPA finalized the methane emissions charge rule, implementing the IRA 2022. To the extent the methane emissions charge rule is implemented as originally promulgated, it could increase the operating costs of our E&P operators and adversely affect our business. On March 14, 2025, the Trump Administration signed legislation disapproving this rule, and therefore, the future of this rule remains unclear.

Additional GHG regulation could also result from the agreement crafted during the United Nations climate change conference in Paris, France, in December 2015 (the "***Paris Agreement***"). Under the Paris Agreement, the United States committed to reducing its GHG emissions by 26-28% by the year 2025 as compared with 2005 levels; however, in January 2025, President Trump issued an executive order directing the United States' withdrawal from the Paris Agreement. As a result, the effect of the Paris Agreement on our business is uncertain. Moreover, in November 2021, at the U.N. Framework Convention on Climate Change 26<sup>th</sup> Conference of the Parties, the United States and the European Union advanced a Global Methane Pledge to reduce global methane emissions at least 30% from 2020 levels by 2030, which over 100 countries have signed. While Congress has from time to time considered legislation to reduce emissions of GHGs, comprehensive legislation aimed at reducing GHG emissions has not yet been adopted at the federal level.

New or existing laws and regulations relating to climate change, including, state cap-and-trade programs, may affect our business operations through imposing reporting obligations on, or limiting emissions of GHGs from, operators' equipment and operations could require them to incur costs to reduce emissions of GHGs associated with their operations. In addition, substantial limitations on GHG emissions could adversely affect demand for the oil and gas produced from our properties. Restrictions on emissions of methane or carbon dioxide,

------

##### [**Table of Contents**](#toc)
such as restrictions on venting and flaring of natural gas, that may be imposed in various states, as well as state and local climate change initiatives, such as increased energy efficiency standards or mandates for renewable energy sources, could adversely affect the oil and gas industry, and, at this time, it is not possible to accurately estimate how potential future laws or regulations addressing GHG emissions would impact oil and gas assets.

***Our business and results of operations are subject to physical risks associated with climate change.***

Changes in climate have caused, and are expected to continue to cause, among other things, increasing mean annual temperatures, rising sea levels and changes to meteorological and hydrological patterns, as well as impacts to the frequency and intensity of wildfires, freezes, floods, drought, hurricanes, other storms and severe weather-related events and natural disasters. These changes have and could continue to significantly impact our future results of operations and may have a material adverse effect on our business, financial condition and results of operations. Accordingly, a natural disaster has the potential to disrupt our and our third-party E&P operators' businesses and may cause us to experience work stoppages, project delays, financial losses and additional costs to resume operations, including increased insurance costs or loss of coverage, legal liability and reputational losses, and we expect that increasing physical climate-related impacts may result in further changes to the cost or availability of insurance in the future.

***Our and our third-party E&P operators are subject to complex federal, state and other environmental, health and safety laws and regulations that could adversely affect the cost, manner or feasibility of conducting our operations or expose us and our third-party E&P operators to significant liabilities.***

Our operations, through PhoenixOp and our third-party E&P operators, are subject to a complex and rapidly evolving set of federal, state, local and international environmental, health and safety laws and regulations. These laws govern the generation, use, storage, release, management and disposal of, or exposure to, hazardous materials and wastes, the remediation of contaminated sites, fuel storage, wastewater and stormwater discharges, air emissions, the protection of natural resources (such as protected wetlands or threatened and endangered species and their habitat) and occupational health and safety. These laws, rules and regulations may require us to obtain and maintain regulatory licenses, permits and other approvals, comply with the requirements of such licenses, permits and other approvals and perform environmental impact studies prior to commencing new projects or making changes to existing projects.

We, through PhoenixOp and our third-party E&P operators, perform work involving hazards and operating risks associated with drilling for and production of crude oil, natural gas, and NGL, including the risk of fire, explosions, blowouts, surface cratering, uncontrollable flows of crude oil, natural gas, NGL, and formation water, pipe or pipeline failures, abnormally pressured formations, casing collapses, and environmental hazards, such as crude oil and NGL spills, natural gas leaks and ruptures, or discharges of toxic gases.

In addition, their operations are subject to risks associated with hydraulic fracturing. These risks include any mishandling, surface spillage, or potential underground migration of fracturing fluids, including chemical additives. The occurrence of any of these events could result in substantial losses to us or our third-party E&P operators due to injury or loss of life, severe damage to or destruction of property, natural resources, and equipment, pollution or other environmental damage, clean-up responsibilities, regulatory investigations and penalties, suspension of operations, and repairs required to resume operations, which in turn could have a material adverse effect on our financial condition, results of operations, and cash flows.

The exploration and possible future development phases of our business and the business of our third-party E&P operators are and will be subject to federal, state, and local environmental regulation. These regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation. They also set out limitations on the generation, transportation, storage, and disposal of solid and hazardous waste. New environmental legislation may impose stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental regulatory scrutiny, and a heightened degree of responsibility for

------

##### [**Table of Contents**](#toc)
companies and their officers, directors, and employees. Potential changes in environmental regulations, if any, may adversely affect our operations and the operations of the third-party E&P operators on our land. If we fail to comply with any of the applicable environmental laws, regulations, or permit requirements, we could face regulatory or judicial sanctions. Penalties imposed by either the courts or administrative bodies could delay or stop our operations or the operations of the third-party E&P operators on our land or require considerable capital expenditures. Furthermore, certain groups opposed to exploration and mining may attempt to interfere with our operations through the legal or regulatory process or by engaging in disruptive protest activities.

Unknown environmental hazards, potentially caused by previous or existing owners or operators, may exist on properties in which we hold an interest. Our properties could be located on or near an ongoing environmental cleanup site, which may result in unexpected liabilities, with total costs that are difficult to predict.

The Comprehensive Environmental, Response, Compensation and Liability Act ("***CERCLA***") and comparable state statutes impose strict joint and several liability on current and former owners and operators of sites and on persons who disposed of or arranged for the disposal of hazardous substances found at such sites. It is not uncommon for the government to file claims requiring cleanup actions, demands for reimbursement for government-incurred cleanup costs, or natural resource damages, or for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by hazardous substances released into the environment. The Federal Resource Conservation and Recovery Act ("***RCRA***") and comparable state statutes govern the disposal of solid waste and hazardous waste and authorize the imposition of substantial fines and penalties for noncompliance, as well as requirements for corrective actions. CERCLA, RCRA, and comparable state statutes can impose liability for clean-up costs of sites and disposal of substances found on exploration, mining, and processing sites long after activities on such sites have been completed.

The CAA restricts the emission of air pollutants from many sources, including mining and processing activities. The mining operations conducted by third parties on our land may produce air emissions, including fugitive dust and other air pollutants from stationary equipment, storage facilities, and the use of mobile sources such as trucks and heavy construction equipment, which are subject to review, monitoring, and/or control requirements under the CAA and state air quality laws. In undeveloped properties, third-party operators may be required to obtain permits before work can begin, and, in properties with existing facilities, our operators may need to incur capital costs in order to remain in compliance. In addition, permitting rules may impose limitations on their production levels or result in additional capital expenditures to comply with the rules.

The National Environmental Policy Act requires federal agencies to integrate environmental considerations into their decision-making processes by evaluating the environmental impacts of their proposed actions, including issuance of permits to mining facilities, and assessing alternatives to those actions. If a proposed action could significantly affect the environment, the agency must prepare a detailed statement known as an Environmental Impact Statement ("***EIS***"). The EPA, other federal agencies, and any interested third parties will review and comment on the scoping of the EIS and the adequacy of and findings set forth in the draft and final EIS. This process can cause delays in issuance of required permits or result in changes to a project to mitigate its potential environmental impacts, which can in turn adversely impact the economic feasibility of a proposed project.

The Clean Water Act (the "***CWA***") and comparable state statutes impose restrictions and controls on the discharge of pollutants into waters of the United States. The discharge of pollutants into regulated waters is prohibited, except in accordance with the terms of a permit issued by the EPA or an analogous state agency. The CWA regulates storm water mining facilities and requires a storm water discharge permit for certain activities. Such a permit requires the regulated facility to monitor and sample storm water run-off from its operations. The CWA and regulations implemented thereunder also prohibit discharges of dredged and fill material in wetlands and other waters of the United States unless authorized by an appropriately issued permit. The CWA and comparable state statutes provide for civil, criminal, and administrative penalties for unauthorized discharges of pollutants and impose liability on parties responsible for those discharges for the costs of cleaning up any environmental damage caused by the release and for natural resource damages resulting from the release.

------

##### [**Table of Contents**](#toc)
The Safe Drinking Water Act (the "***SDWA***") and the Underground Injection Control (the "***UIC***") program promulgated thereunder regulate the drilling and operation of subsurface injection wells. The EPA directly administers the UIC program in some states and in others the responsibility for the program has been delegated to the state. The program requires that a permit be obtained before drilling a disposal or injection well. Violation of these regulations and/or contamination of groundwater by mining-related activities may result in fines, penalties, and remediation costs, among other sanctions and liabilities under the SDWA and state laws. In addition, third-party claims may be filed by neighboring landowners and other parties claiming damages for alternative water supplies, property damages, and bodily injury.

There can be no assurance that our defense of such claims will be successful. A successful claim against us or any of the third parties we contract with could have an adverse effect on our business prospects, financial condition, and results of operation.

***We or our third-party E&P operators could be subject to environmental lawsuits.***

The oil and natural gas industry involves various operational hazards and risks, such as well blowouts, pipe failures, casing collapse, explosions, uncontrollable flows of oil, natural gas, or well fluids, fires, spills, pollution, releases of toxic gas, and other environmental threats. These hazards could result in substantial losses from, among other things, injury or loss of life, severe damage to or destruction of property, natural resources, and equipment, pollution or other environmental damage, cleanup responsibilities, regulatory investigation and penalties, and suspension of operations. In addition, we may be held liable for environmental damages caused by previous owners or operators of property we have acquired. Environmental hazards and damages resulting may extend beyond our land, prompting neighboring landowners and other third parties to file claims under environmental statutes and common law for personal injury and property damage allegedly resulting from the release of hazardous substances or other waste material into the environment on or near our properties. There can be no guarantee that our defense of such claims will be successful. A successful claim against us or any of the third parties we contract with to conduct operations on our land could have an adverse effect on our business prospects, financial condition, and results of operation.

***We do not currently own any registered intellectual property rights relating to our software system and may be subject to competitors developing the same technology.***

As of the date of this Offering Circular, we do not own any registered intellectual property rights for our software system used in our mineral rights discovery, grading and estimates, and acquisition. We rely on trade secret laws to protect our software. There can be no assurance that these protections will be available in all cases or will be adequate to prevent third parties from copying, reverse engineering, or otherwise obtaining and using our software. We substantially rely on this software to identify profitable assets ahead of our competitors. If an existing competitor or anyone else replicates our software, then we may be unable to successfully compete and may be unable to identify, acquire, and invest in attractive assets, which would have a material adverse effect on our business and our ability to repay any of our debts, including the obligations under the Notes and the Preferred Shares.

***Third parties may initiate legal proceedings alleging that our use of our software system is infringing or otherwise violating their intellectual property rights, which could lead to costly disputes or disruptions.***

Our commercial success depends in part on our ability to continue to develop and use our proprietary mineral exploration software system without infringing the intellectual property or proprietary rights of third parties. However, from time to time, we may be subject to legal proceedings and claims in the ordinary course of business with respect to intellectual property. Intellectual property disputes can be costly to defend and may cause our business, operating results, and financial condition to suffer. As the applied science industry and investments in mineral rights in the United States expand, the risk increases that there may be patents issued to third parties that relate to our software of which we are not aware or that we must challenge to continue our operations as

------

##### [**Table of Contents**](#toc)
currently contemplated. Whether merited or not, we may face allegations that we or parties indemnified by us have infringed or otherwise violated the patents, trademarks, copyrights, or other intellectual property rights of third parties. Such claims may be made by competitors seeking to obtain a competitive advantage or by other parties. We may also face allegations that our employees have misappropriated the intellectual property or proprietary rights of their former employers or other third parties.

It may be necessary for us to initiate litigation to defend ourselves in order to determine the scope, enforceability, and validity of third-party intellectual property or proprietary rights, or to establish our respective rights. Regardless of whether claims that we are infringing patents or other intellectual property rights have merit, such claims can be time-consuming, can divert management's attention and financial resources, and can be costly to evaluate and defend. Results of any such litigation are difficult to predict and may require us to stop commercializing or using our products or technology, obtain licenses, modify our solutions and technology while we develop non-infringing substitutes, incur substantial damages or settlement costs, or face a temporary or permanent injunction prohibiting us from marketing or providing the affected products and solutions. If we require a third-party license, it may not be available on reasonable terms or at all, and we may have to pay substantial royalties or upfront fees or grant cross-licenses to intellectual property rights for the use of our software. We may also have to redesign our software so it does not infringe third-party intellectual property rights, which may not be possible or may require substantial monetary expenditures and time, during which our technology may not be available for use. Even if we have an agreement to indemnify us against such costs, the indemnifying party may be unable to uphold its contractual obligations. If we cannot or do not obtain a third-party license to the infringed technology, license the technology on reasonable terms, or obtain similar technology from another source, our operations could be adversely impacted.

Further, some third parties may be able to sustain the costs of complex litigation more effectively than we can because they have substantially greater resources. Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses and could distract our technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions, or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a material adverse effect on our business. Moreover, any uncertainties resulting from the initiation and continuation of any legal proceedings could have a material adverse effect on our ability to raise the funds necessary to continue our operations. Assertions by third parties that we violate their intellectual property rights could therefore have a material adverse effect on our business, financial condition, and results of operations.

***Current and future litigation, regulatory, administrative, or other legal proceedings could have a material adverse effect on our business and results of operations.***

Lawsuits and regulatory, administrative, or other legal proceedings that have arisen or may arise, including, but not limited to, in connection with our oil and gas operations and the financing thereof, can involve substantial costs, including the costs associated with investigation, litigation, and possible settlement, judgment, penalty, or fine. In addition, such matters may be time-consuming to defend or prosecute and may require a commitment of management and personnel resources that will be diverted from our normal business operations. There can be no assurance that costs associated with such matters will not exceed the limits of any applicable insurance policies that we may have. Moreover, we may be unable to continue to maintain any insurance at a reasonable cost, if at all, or to secure additional coverage, which may result in costs being uninsured. Our business, financial condition, and results of operations could be adversely affected if a matter is adversely determined and, irrespective of a final determination, any such matter could significantly impact our reputation and ability to conduct our business.

**General Risks** 

***Our business could be adversely affected by unfavorable economic and political conditions.***

Our future business and operations are sensitive to general business and economic conditions in the United States. National and regional economies and financial markets have become increasingly interconnected, which

------

##### [**Table of Contents**](#toc)
increases the possibilities that conditions in one country, region, or market might adversely impact companies in a different country, region, or market. Major economic or political disruptions, such as trade disputes between the United States and other countries, the slowing economy in China, the conflicts in the Middle East, including with Iran and between Hamas and Israel in Gaza, the war in Ukraine and sanctions on Russia, and a potential economic slowdown in the United Kingdom and Europe, may have global negative economic and market repercussions. While we do not have or intend to have operations in those countries, such disruptions may nevertheless cause fluctuations in oil prices, which could impact our ability to generate cash flows and, in turn, make interest and principal payments to you. Additionally, the resulting political instability and societal disruption from these events and other factors, such as declining business and consumer confidence, may contribute to an economic slowdown and a recession. If the economic climate in the United States or abroad deteriorates, worldwide demand for oil and natural gas products could diminish, which could impact our and our third-party E&P operators' operations, affect our ability and the ability of our third-party E&P operators to continue operations, and ultimately materially adversely impact our results of operations, financial condition, and cash flows.

Other significant factors that are likely to continue to affect commodity prices in future periods include, but are not limited to, the effect of U.S. energy, monetary, and trade policies and the new administration's energy and environmental policies, all of which are beyond our control. Our business may also be adversely impacted by any future government rule, regulation, or order that may impose production limits, as well as pipeline capacity and storage constraints. We cannot predict the ultimate impact of these factors on our business, financial condition, and cash flows.

***Any future global or domestic health crisis and uncertainty in the financial markets may adversely affect our ability to generate revenues.***

The COVID-19 pandemic and other public health emergencies historically have had a material adverse effect on oil and gas businesses, due to governmental restrictions, associated repercussions, and operational challenges to supply and demand for oil and natural gas and the economy generally. The impacts of public health emergencies are uncertain and hard to predict. An extended period of global supply chain and economic disruption, as well as significantly decreased demand for oil and gas, due to any future public health emergencies, or otherwise, could have a material adverse effect on our business, access to sources of liquidity, and financial condition. Additionally, extended disruptions to the global economy are likely to cause fluctuations in oil prices and the timing of oil production, which could have a material adverse effect on our ability to generate cash flow, which in turn could limit our ability to pay principal and interest on the Notes and distributions on the Preferred Shares.

***Inflation could adversely impact our ability to control costs, including the operating expenses and capital costs of our third-party operating partners.***

Concerns over global economic conditions, energy costs, supply chain disruptions, increased demand, labor shortages associated with a fully employed U.S. labor force, the imposition of new tariffs, geopolitical issues, high levels of inflation, the availability and cost of credit and the U.S. financial market, and other factors have contributed to increased economic uncertainty and diminished expectations for the global economy. Although inflation in the United States had been relatively low for many years, there was a significant increase in inflation beginning in the second half of 2021 and higher rates have generally persisted through the first quarter of 2025. We continue to develop plans to address these pressures and protect our access to commodities and services. Nevertheless, we expect for the foreseeable future to experience supply chain constraints and inflationary pressure on operating costs.

High inflation may cause our third-party operators to experience increasing costs for their operations, including oilfield services and equipment and increased personnel costs. Our operating partners may pass on such increased costs to us and have a negative effect on our business and financial condition. Sustained levels of high

------

##### [**Table of Contents**](#toc)
inflation have likewise caused the United States Federal Reserve ("***Federal Reserve***") and other central banks to increase interest rates multiple times in an effort to curb inflationary pressure on the costs of goods and services across the United States, which has had the effects of raising the cost of capital and depressing economic growth, either of which, or the combination thereof, could hurt the financial results of our business. We cannot predict any future trends in the rate of inflation and any continued significant increase in inflation, to the extent we are unable to recover higher costs through higher prices and revenues for our products, would negatively impact our business, financial condition, and results of operations.

***Increased attention to environmental, social, and governance ("ESG") matters may impact our business.***

Businesses across all industries are facing increasing scrutiny from stakeholders related to their ESG practices. If we do not adapt to or comply with investor or stakeholder expectations and standards, which are evolving, or if we are perceived to have not responded appropriately to the growing concern for ESG issues, regardless of whether there is a legal requirement to do so, we may suffer from reputational damage and our business, financial condition, and results of operations could be materially and adversely affected. Increasing attention to climate change, increasing societal expectations on businesses to address climate change, and potential consumer use of substitutes to energy commodities may result in increased costs, reduced demand for our hydrocarbon products, reduced profits, increased investigations and litigation, and negative impacts on our ability to access capital markets.

In addition, organizations that provided information to investors on corporate governance and related matters have developed rating processes for evaluating business entities on their approach to ESG matters. Currently, there are no universal standards for such scores or ratings, but the importance of sustainability evaluations is becoming more broadly accepted by investors and shareholders. Such ratings are used by some investors to inform their investment and voting decisions.

Additionally, certain investors use these scores to benchmark businesses against their peers. If we are perceived as lagging, our investors may engage with such third-party organizations to require improved ESG disclosure or performance.

Certain other stakeholders have also pressured commercial and investment banks to stop financing oil and gas and related infrastructure projects. Although the impact of future Trump Administration policies is currently unknown, if this negative sentiment continues, it may reduce the availability of capital funding for potential development projects, which could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

***Investment in new business ventures could prove unsuccessful and adversely affect our business, financial condition, and results of operations.***

In the future, we may invest in new business ventures. Such endeavors may involve risks and uncertainties, including greater-than-expected liabilities and expenses, as well as economic and regulatory challenges associated with operating in new businesses, regions, or countries. Investment into new business ventures may expose us to additional risks that could delay or prevent us from completing an investment or otherwise limit our ability to fully realize the anticipated benefits of an investment. The failure of any significant investment could adversely affect our business, financial condition, and results of operations.

**Risks Related to Our Indebtedness** 

***Our substantial indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations under Notes, the Preferred Shares and our other indebtedness.***

We have a significant amount of indebtedness. We may not generate sufficient cash flow from operations, or have future borrowings available under credit facilities or other sources of financing, to enable us to repay our

------

##### [**Table of Contents**](#toc)
indebtedness, to pay distributions on the Preferred Shares, or to fund our other liquidity needs. As of March 31, 2025, after giving effect to the borrowing of additional $50.0 million in aggregate under the Fortress Credit Agreement in April and May 2025, we had approximately $1,134.4 million of indebtedness outstanding, which comprised $300.0 million outstanding under the Fortress Credit Agreement, $163.0 million outstanding under the Adamantium Loan Agreement (and corresponding amount of Adamantium Securities), $571.7 million of Reg D Bonds outstanding, and $99.6 million of Reg A Bonds outstanding. Furthermore, the Fortress Credit Agreement provides for a rebate of approximately $8.5 million in original issue discount, payable by setoff against final payment in full of the Fortress Credit Agreement, if (a) all outstanding principal and accrued interest on the loans under the Fortress Credit Agreement are paid in full in cash on or before March 31, 2027, and (b) no event of default resulting from the failure to pay principal or interest when due under the terms and conditions of the Fortress Credit Agreement has occurred prior to such date, subject to certain other conditions. See "*Capitalization*" and "*Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness*."

Specifically, our high level of indebtedness could have important consequences, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• making it more difficult for us to satisfy our obligations with respect to the Notes, the Preferred Shares and
our other indebtedness, and if we fail to comply with these requirements, an event of default could result under the Notes or other indebtedness and we may be unable to make distributions or conduct redemptions with respect to the Preferred Shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• limiting our ability to obtain additional financing to fund future working capital, capital expenditures,
investments, acquisitions, or other general corporate requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other
purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, investments, acquisitions, and other general corporate purposes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• increasing our vulnerability to general adverse economic and industry conditions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• exposing us to the risk of increased interest rates, as borrowings under the Fortress Credit Agreement are at
variable rates of interest;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• limiting our flexibility in planning for and reacting to changes in the industry in which we compete and to
changing business and economic conditions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• placing us at a disadvantage compared to other, less leveraged competitors or competitors with better access to
capital resources, and generally affecting our ability to compete; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• increasing our cost of borrowing.

Any such consequences could have a material adverse effect on our business, results of operations, and financial condition.

***Despite our current level of indebtedness, we will still be able to incur substantially more debt. This could further exacerbate the risks to our financial condition described above.***

We may incur significant additional indebtedness in the future. The indentures that govern our Notes do not contain any limitations on our ability to incur additional indebtedness. Although the Fortress Credit Agreement contains, and the terms of future indebtedness we incur may contain, restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the additional indebtedness incurred in compliance with these restrictions could be substantial. If we incur any additional debt, the holders of that indebtedness will be entitled to repayment in full from any proceeds distributed in connection with any insolvency, liquidation, reorganization, dissolution, or other winding up of us prior to any payment to holders of Preferred Shares. This could reduce the amount of proceeds paid to you. These restrictions also will not prevent us from incurring obligations that do not constitute indebtedness. If new indebtedness or other obligations are added to our current indebtedness levels, the related risks that we now face would increase.

------

##### [**Table of Contents**](#toc)
***We may not be able to generate sufficient cash to service all of our existing and future indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.***

As a result of our substantial indebtedness, a significant amount of our cash flow will be required to pay interest and principal on our outstanding indebtedness. Our ability to make scheduled payments on or refinance our indebtedness, or to make distribution payments on the Preferred Shares, depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory, and other factors beyond our control. We may be unable to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal of, premium, if any, and interest on our indebtedness, the distributions on the Preferred Stock or to service our other obligations.

We recorded net income (loss) of $5.6 million and $(8.4) million for the three months ended March 31, 2025 and 2024, respectively, and net income (loss) of $(24.8) million, $(16.2) million, and $5.7 million for the years ended December 31, 2024, 2023, and 2022, respectively. Through 2024, we incurred a significant amount of debt in order to accelerate the growth of our business by acquiring additional assets and establishing our direct drilling operations. As a result, our cash flows from operations alone would not have been sufficient to service required cash interest and principal payment obligations under our then-existing debt in 2023 and 2024. During the three months ended March 31, 2025, we continued to incur a significant amount of debt. Furthermore, as of December 31, 2024, we estimate that we will need to make approximately $749.3 million and $3,224.8 million in capital expenditures to develop all our proved and probable undeveloped reserves, respectively, and that we will need to raise approximately $658.9 million in additional capital through the end of 2028 to fund such development. Although we expect our cash flows from operations to be sufficient to service cash interest and principal payment obligations under our debt for the foreseeable future, there can be no assurance as to the sufficiency of our cash flows for that purpose, and we do not expect such cash flows alone to be adequate to fund both our debt service obligations and the development of our reserves. Therefore, we expect to require additional capital to fund our growth and may require additional liquidity to service our debt. As a result, we may use the proceeds of additional debt offerings or this offering to make interest and principal payments on our existing debt. See "*Risk Factors—Risks Related to Our Business and Operations—The acquisition and development of our properties, directly or through our third-party E&P operators, will require substantial capital, and we and our third-party E&P operators may be unable to obtain needed capital or financing on satisfactory terms or at all, including as a result of increases in the cost of capital resulting from Federal Reserve policies in the past few years and otherwise*," "*Risk Factors—Risks Related to Our Indebtedness—Despite our current level of indebtedness, we will still be able to incur substantially more debt. This could further exacerbate the risks to our financial condition described above*," "*Risk Factors—Risks Related to Our Indebtedness—We may not be able to generate sufficient cash to service all of our existing and future indebtedness, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful*," "*Risk Factors—Risks Related to the Preferred Shares and this Offering—The Preferred Shares are junior and subordinated to our existing and future indebtedness*," "*Risk Factors—Risks Related to the Preferred Shares and this Offering—We may invest or spend the proceeds of this offering in ways with which you may not agree*," "*Use of Proceeds*," and "*Management's Discussion and Analysis of Financial Condition and Results of Operations*."

If our cash flows from operations and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital, or restructure or refinance our indebtedness. We may not be able to effect any such alternative measures on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations. If we cannot make scheduled payments on our indebtedness, we will be in default and holders of such indebtedness could declare all outstanding principal of, premium on, and interest, if any, on such indebtedness to be due and payable, and the lenders under any revolving or delayed draw credit facilities, including the Fortress Credit Agreement, could terminate their commitments to loan money to us. As a result of a default, any secured lenders could foreclose against the assets securing their borrowings and we could be forced into bankruptcy or liquidation. All of these events could result in your losing all or a part of your investment in the Preferred Shares.

------

##### [**Table of Contents**](#toc)
Furthermore, the Fortress Credit Agreement restricts, and our future indebtedness may restrict, our ability to dispose of assets and use the proceeds from such dispositions and may also restrict our ability to raise debt or equity capital to be used to repay other indebtedness when it becomes due. We may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due.

***We will need to repay or refinance a substantial amount of our indebtedness. Failure to do so could have a material adverse effect on our business, results of operations, and financial condition.***

As of March 31, 2025, after giving effect to the borrowing of additional $50.0 million in aggregate under the Fortress Credit Agreement in April and May 2025, we had approximately $590.7 million of indebtedness maturing within three years, including all amounts under the Fortress Credit Agreement, $674.0 million of indebtedness maturing within five years, $811.2 million of indebtedness maturing within seven years, and $1,134.4 million of indebtedness maturing within eleven years. Furthermore, the Fortress Credit Agreement provides for a rebate of approximately $8.5 million in original issue discount, payable by setoff against final payment in full of the Fortress Credit Agreement, if (a) all outstanding principal and accrued interest on the loans under the Fortress Credit Agreement are paid in full in cash on or before March 31, 2027, and (b) no event of default resulting from the failure to pay principal or interest when due under the terms and conditions of the Fortress Credit Agreement has occurred prior to such date, subject to certain other conditions. The terms of the Registered Notes, Adamantium Securities, the Reg A Bonds, the Subordinated Reg D Bonds, and the July 2022 506(c) Bonds contain mandatory redemption provisions providing the holders thereof with the ability to request redemption of their bonds at any time prior to maturity at a price equal to 100% (with respect to the Adamantium Secured Note), 90% (with respect to the July 2022 506(c) Bonds), or 95% (with respect to the Adamantium Bonds, the Reg A Bonds, and the Subordinated Reg D Bonds) of the principal amount being redeemed. The amount of such redemption is limited (i) on an annual basis to 10% of the aggregate principal amount of Registered Notes, Adamantium Bonds, Reg A Bonds, or Subordinated Reg D Bonds, as applicable, then issued and outstanding and (ii) $5.0 million in aggregate principal amount of the Adamantium Secured Note in any 12-month period. See "*Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness*." Consequently, we will need to repay, refinance, replace, or otherwise extend the maturity of a substantial amount of our existing indebtedness. Our ability to repay, refinance, replace, or extend will be dependent on, among other things, business conditions, our financial performance, and the general condition of the financial markets. If a financial disruption were to occur at the time that we are required to repay such indebtedness, we could be forced to undertake alternate financings, negotiate for an extension of the maturity of such indebtedness, or sell assets and delay capital expenditures in order to generate proceeds that could be used to repay such indebtedness. We cannot assure you that we will be able to consummate any such transaction on terms that are commercially reasonable, on terms acceptable to us, or at all. Our failure to repay, refinance, replace, or otherwise extend the maturity of our indebtedness could result in an event of default under the documents governing our indebtedness, which could lead to an acceleration or repayment of substantially all of our outstanding indebtedness. All of these events could result in your losing all or a part of your investment in the Preferred Shares.

***The terms of our outstanding indebtedness restrict, and the terms of future indebtedness we may incur may restrict, our current and future operations, particularly our ability to respond to changes in the economy or our industry or to take certain actions, which could harm our long-term interests.***

The agreements governing certain of our existing indebtedness contain, and the agreements governing future indebtedness we may incur may contain, a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interest, including restrictions on our ability to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• incur additional indebtedness and guarantee indebtedness;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• issue equity securities;

------

##### [**Table of Contents**](#toc)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• pay distributions or make other distributions in respect of, or repurchase or redeem, any of our securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• prepay, redeem, or repurchase certain indebtedness;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• make loans and investments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• sell or otherwise dispose of assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• incur liens;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• enter into transactions with affiliates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• designate any of our subsidiaries as unrestricted subsidiaries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• enter into agreements restricting our subsidiaries' ability to pay distributions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• consolidate, merge, sell, or otherwise dispose of all or substantially all of our assets; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• prepay subordinated or junior lien indebtedness.

In addition, the Fortress Credit Agreement contains financial covenants that require us to maintain (a) a maximum total secured leverage ratio (i) as of the last day of any fiscal quarter ending on or before December 31, 2025 of less than or equal to 2.00 to 1.00 (commencing with the fiscal quarter ending December 31, 2024) and (ii) as of the last day of any fiscal quarter ending on or after March 31, 2026 of less than or equal to 1.50 to 1.00, (b) a minimum current ratio as of the last day of each calendar month of (i) 0.90 to 1.00 from September 30, 2024 through October 31, 2024, (ii) 0.80 to 1.00 from November 30, 2024 through November 30, 2025, (iii) 0.90 to 1.00 from December 31, 2025 through December 31, 2026, and (iv) 1.00 to 1.00 for each calendar month ending thereafter, and (c) a minimum asset coverage ratio as of the last day of any fiscal quarter (i) ending during the period from June 30, 2024 through December 31, 2024, of at least 2.00 to 1.00, (ii) ending during the period from March 31, 2025 through September 30, 2025, of at least 1.70 to 1.00, and (iii) ending during the period from December 31, 2025 and thereafter, of at least 2.00 to 1.00. Our ability to meet the financial covenant could be affected by events beyond our control.

Furthermore, subject to certain conditions, the Reg A Bonds require that we offer to purchase all or any amount of the outstanding Reg A Bonds at a price equal to the then outstanding principal on the Reg A Bonds being repurchased plus any accrued but unpaid interest on such Reg A Bonds, upon a change of control.

These restrictions may affect our ability to service our indebtedness or grow in accordance with our strategy. As a result of all of these restrictions, we may be:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• limited in how we conduct our business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• unable to raise additional indebtedness or equity financing to operate during general economic or business
downturns; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• unable to compete effectively or to take advantage of new business opportunities.

A breach of the covenants under any such indebtedness could result in a default under the applicable indebtedness. Such a default may allow the creditors to accelerate the related indebtedness and may result in the acceleration of any other indebtedness to which a cross-acceleration or cross-default provision applies. In addition, an event of default under the Fortress Credit Agreement or any other revolving or delayed draw credit facilities would permit the lenders under those facilities to terminate all commitments to extend further credit thereunder.

Furthermore, if we were unable to repay the amounts due and payable under any secured indebtedness, including the Fortress Credit Agreement, those lenders could proceed against the collateral granted to them, including our available cash, to secure that indebtedness, subject to the provisions of any outstanding intercreditor arrangements. In the event our lenders accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness. All of these events could result in your losing all or a part of your investment in the Preferred Shares.

------

##### [**Table of Contents**](#toc)
***Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.***

Borrowings under the Fortress Credit Agreement are, and borrowings under indebtedness we may incur in the future may be, at variable rates of interest and expose us to interest rate risk. If interest rates were to increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income and cash flows, including cash available for servicing our indebtedness and paying distributions on the Preferred Shares will correspondingly decrease. In the future, we may enter into interest rate swaps that involve the exchange of floating-for fixed-rate interest payments in order to reduce interest rate volatility or risk. However, we may not maintain interest rate swaps with respect to any of our variable rate indebtedness, and any swaps we enter into may not fully or effectively mitigate our interest rate risk.

**Risks Related to the Preferred Shares and this Offering** 

***Investing in the Preferred Shares is a highly speculative investment and could result in the loss of your entire investment.***

A purchase of the Preferred Shares offered in this offering is speculative and involves a high degree of risk. The Preferred Shares should not be purchased by any person who cannot afford the loss of his, her or its entire purchase price. Our business objectives are also speculative, and there can be no assurance that we will be able to satisfy our objectives. As such, each prospective investor in the Preferred Shares should read these risk factors and this Offering Circular carefully and consult with their attorney, business advisor and/or investment advisor before investing in the Preferred Shares.

***The Preferred Shares represent perpetual equity interests in us, and investors should not expect us to redeem any Preferred Shares on any particular date following the completion of this offering.***

The Preferred Shares represent perpetual equity interests in us, and they have no maturity or mandatory redemption date and are not redeemable at the option of investors under any circumstances. As a result, unlike our indebtedness, none of the Preferred Shares will give rise to a claim for payment of a principal amount at a particular date. Instead, the Preferred Shares may be redeemed by us at our option at any time or from time to time, out of funds legally available for such redemption, at a redemption price payable in cash of $27.50 per Preferred Share plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption, whether or not declared.

Any decision we may make at any time to redeem the Preferred Shares will depend upon, among other things, our evaluation of our capital position and general market conditions at that time. In addition, the instruments governing our outstanding indebtedness currently do and may in the future limit our ability to redeem the Preferred Shares. For example, under the terms of the Fortress Credit Agreement we may only redeem the Preferred Shares so long as, among others, (i) no default or event of default has occurred and is continuing or would occur as a result of such redemption and (ii) immediately after giving effect to such redemption we remain in compliance with the financial covenants to maintain (a) a maximum total secured leverage ratio, (b) a minimum current ratio, and (c) a minimum asset coverage ratio on a pro forma basis. For a description of the terms of the Fortress Credit Agreement, including these ratios, see "*Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness—Fortress Credit Agreement*" and "*Risk Factors— Risks Related to Our Indebtedness—The terms of our outstanding indebtedness restrict, and the terms of future indebtedness we may incur may restrict, our current and future operations, particularly our ability to respond to changes in the economy or our industry or to take certain actions, which could harm our long-term interests*." As a result, the holders of the Preferred Shares should expect to bear the financial risks of an investment in the Preferred Shares for an indefinite period of time. Moreover, as further described below, the Preferred Shares will rank junior to all of our existing and future indebtedness and other liabilities with respect to assets available to satisfy claims against us.

------

##### [**Table of Contents**](#toc)
***We are not required to accumulate cash for the purpose of meeting our future obligations to holders of the Preferred Shares, which, along with the agreements governing our indebtedness, may limit the cash available to make distributions on the Preferred Shares.***

Pursuant to the terms of the Preferred Shares, distributions on the Preferred Shares will accrue whether or not we have earnings, whether there are assets legally available for the payment of such distributions and whether such distributions are authorized or declared. However, future distributions on our common shares and preferred shares, including the Preferred Shares, will be at the discretion of our board of directors and will depend on, among other things, our results of operations, cash flow from operations, financial condition and capital requirements, any debt service requirements and any other factors our board of directors deems relevant. Our ability to pay cash distributions on the Preferred Shares is dependent on our ability to operate profitably and to generate cash from our operations. In addition, the instruments governing our outstanding indebtedness currently do and may in the future limit our ability to make distributions with respect to the Preferred Shares. For example, under the terms of the Fortress Credit Agreement we may only declare or make a distribution with respect to the Preferred Shares so long as, among others, (i) no default or event of default has occurred and is continuing or would occur as a result of such distribution and (ii) immediately after giving effect to such distribution we remain in compliance with the financial covenants to maintain (a) a maximum total secured leverage ratio, (b) a minimum current ratio, and (c) a minimum asset coverage ratio on a pro forma basis. For a description of the terms of the Fortress Credit Agreement, including these ratios, see "*Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness—Fortress Credit Agreement*" and "*Risk Factors— Risks Related to Our Indebtedness—The terms of our outstanding indebtedness restrict, and the terms of future indebtedness we may incur may restrict, our current and future operations, particularly our ability to respond to changes in the economy or our industry or to take certain actions, which could harm our long-term interests*." We cannot guarantee that we will be able to make cash distributions or what the actual distributions will be for any future period. Further, we are not required to accumulate cash for the purpose of meeting our future obligations to holders of the Preferred Shares and the Preferred Shares are not subject to any sinking fund, which may reduce the extent of any cash available for distributions on the Preferred Shares.

***The Preferred Shares are junior and subordinated to our existing and future indebtedness, and your interests could be diluted by the issuance of additional equity interests, including additional Preferred Shares, and by other transactions.***

The Preferred Shares are junior and subordinated to all our existing and future indebtedness and to the indebtedness of our existing subsidiaries and any future subsidiaries. We and our subsidiaries have incurred and may in the future incur substantial amounts of debt and other obligations that will rank senior to the Preferred Shares. As of March 31, 2025, after giving effect to the borrowings of additional $50.0 million in aggregate under the Fortress Credit Agreement in April and May 2025, we would have had approximately $1,134.4 million of indebtedness outstanding. We have historically conducted, and from time to time may conduct, offerings of debt securities pursuant to Regulation D or Regulation A, or pursuant to our registration statement on Form S-1 (File No. 333-282862) and, as of the date of this Offering Circular, we and our subsidiaries are authorized to issue up to $2.7 billion in additional debt securities through such offerings. The payment of principal and interest on our existing and future debt reduces cash available for distribution, including the holders of the Preferred Shares. If we are forced to liquidate our assets to pay our creditors, we may not have sufficient assets to pay amounts due on any or all of the Preferred Shares then outstanding and any Parity Securities that we have issued or may issue in the future, in which case, holders of the Preferred Shares will share ratably with holders of such Parity Securities (as defined herein).

The issuance of any Senior Securities (as defined herein) or additional Parity Securities (and including additional Preferred Shares) would dilute the interests of the holders of the Preferred Shares and could affect our ability to pay distributions on, redeem, or pay the liquidation preference on the Preferred Shares. Certain of our existing or future debt instruments may restrict the authorization, payment or setting apart of distributions for the

------

##### [**Table of Contents**](#toc)
Preferred Shares. If we decide to issue additional debt or Senior Securities in the future, it is possible that these securities will be governed by an indenture or other instrument containing covenants restricting our operating flexibility. Future issuances and sales of Senior Securities, Parity Securities or Junior Securities, or the perception that such issuances and sales could occur, may cause prevailing market prices for the Preferred Shares to decline and may adversely affect our ability to raise additional capital in the financial markets at times and prices favorable to us.

***The Preferred Shares have only limited voting rights.***

The holders of the Preferred Shares will have only limited voting rights. Except as set forth in our governing documents or as otherwise required by Delaware law, holders of the Preferred Shares generally will not have voting rights. Although the holders of the Preferred Shares are entitled to limited protective voting rights with respect to certain matters and additional voting rights contingent upon the occurrence of certain events, each as described in "*Description of Capital and Preferred Shares—Series A Preferred Shares—Limited Voting Rights*," with respect to such matters, the Preferred Shares will generally vote separately as a class along with all other series of our Parity Securities that we may issue upon which like voting rights have been conferred and are exercisable. As a result, the voting rights of holders of Preferred Shares are limited and may be significantly diluted, and the holders of any such other series of Parity Securities that we may issue may be able to control or significantly influence the outcome of any vote.

***Market interest rates and other factors may affect the value of the Preferred Shares.***

The price of the Preferred Shares will be impacted by the distribution yield on the Preferred Shares relative to market interest rates. An increase in market interest rates may lead prospective purchasers of the Preferred Shares to expect a higher yield, and higher interest rates would likely increase our borrowing costs and potentially decrease funds available for distribution, including to the holders of the Preferred Shares. Accordingly, higher market interest rates could cause the market price of the Preferred Shares to decrease.

The trading prices of the Preferred Shares of the Preferred Shares will also depend on many other factors, which may change from time to time, including but not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the market for similar securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• government action or regulation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• general economic conditions or conditions in the financial or energy markets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our financial condition, performance and prospects; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the financial condition, performance and prospects of similarly situated companies;

In addition, over the last several years, prices of equity securities, including equity securities issued by companies in our industry, in the U.S. trading markets have been experiencing extreme price fluctuations. As a result of these and other factors, investors who purchase the Preferred Shares in this offering may experience significant volatility, including a substantial and rapid decrease, in the market price of the Preferred Shares. This volatility and any decrease may be driven by factors unrelated to our operating performance or prospects.

***Your ability to transfer the Preferred Shares at a time or price you desire may be limited by the absence of an active trading market, which may not develop.***

The Preferred Shares are a new issue of securities with no established trading market. We intend to file an application to list the Preferred Shares on the NYSE American under the symbol "PHXE.P" but there can be no assurance that the NYSE American will approve the Preferred Shares for listing. Even if the NYSE American approves our application, however, an active trading market on the NYSE American for the Preferred Shares may not develop or, even if it develops, may not last, in which case the trading price of the Preferred Shares could be adversely affected and your ability to transfer your Preferred Shares will be limited. ****

------

##### [**Table of Contents**](#toc)
***We will be a "controlled company" within the meaning of the corporate governance standards of the NYSE American. We intend to rely on exemptions from certain corporate governance standards. You will not have the same protections afforded to stockholders of companies that are subject to such requirements.***

Following this offering, Phoenix Equity will hold all of our common shares, representing limited liability company interests, and, as a result, other than under the limited circumstances described in this Offering Circular in which holders of the Preferred Shares have voting rights, Phoenix Equity will have all of the voting power of our company. As such, we will be a "controlled company" under the rules of NYSE American. As a controlled company, we may elect not to comply with certain corporate governance requirements, including the requirements that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a majority of our board of directors consists of "independent directors," as defined under the rules of
such exchange;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our board of directors has a compensation committee that is composed entirely of independent directors with a
written charter addressing the committee's purpose and responsibilities; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our board of directors has a nominating and corporate governance committee that is composed entirely of
independent directors with a written charter addressing the committee's purpose and responsibilities.

Following this offering and for so long as we remain a "controlled company," we may rely on these exemptions. Immediately following this offering, we will elect not to comply with certain corporate governance requirements under the rules, including the requirements above. As a result of these and any additional future elections, our board of directors may not have a majority of independent directors, we may never have a compensation committee consisting entirely of independent directors, and our directors may not be nominated or selected by independent directors. Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of NYSE American.

***We will be a company listing only preferred securities on NYSE American and thus will only be required to comply with certain corporate governance requirements, including with respect to our audit committee, to the extent required by Rule 10A-3 under the Exchange Act.***

The rules of NYSE American provide that companies listing only preferred or debt securities on NYSE American are only required to comply with the requirements to have a board that is composed of a majority of "independent directors," an audit committee that is composed entirely of independent directors, an audit committee charter, and audit committee meeting requirements, responsibilities and authorities, to the extent required by Rule 10A-3 under the Exchange Act. Following this offering, we will be a company listing only preferred securities on NYSE American and thus will only be required to comply with such requirements to the extent required by Rule 10A-3 under the Exchange Act. We intend to comply with these reduced requirements and with the requirements of Rule 10A-3 under the Exchange Act. As a result, under these rules, we must have an audit committee of at least one director, which director must be independent. We expect to have at least one independent director upon the listing of the Preferred Shares on the NYSE American who will qualify as independent for audit committee purposes. As a result of these reduced requirements, you will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of NYSE American, particularly with respect to the audit committee requirements set forth in the rules of NYSE American.

***Assuming NYSE American approves our listing application, we may fail to comply with the continued listing standards of the NYSE American, which may result in a delisting of our Preferred Shares.***

We have applied to list the Preferred Shares on the NYSE American under the symbol "PHXE.P." Although after giving effect to this offering we expect to meet the minimum initial and continued listing standards set forth in NYSE American listing standards, we cannot assure you that the Preferred Shares will be, or will continue to be, listed on NYSE American in the future. In order to continue listing the Preferred Shares on NYSE American,

------

##### [**Table of Contents**](#toc)
we must maintain certain financial, distribution and stock price levels and must maintain a minimum number of holders of Preferred Shares.

If NYSE American determines to delist the Preferred Shares and we are not able to list the Preferred Shares on another national securities exchange, a reduction in some or all of the following may occur, each of which could have a material adverse effect on the holders of Preferred Shares:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the liquidity of the Preferred Shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the market of the Preferred Shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to obtain financing for the continuation of our operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the number of investors that will consider investing in the Preferred Shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the number of market makers in the Preferred Shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the availability of information concerning the trading prices and volume of the Preferred Shares; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the number of broker-dealers willing to execute trades in the Preferred Shares.

In addition, the National Securities Markets Improvement Act of 1996 ("NSMIA") provides for the federal preemption of state securities laws of "covered securities" under certain circumstances. Under NSMIA, covered securities include, among others, securities that are listed or approved on certain national securities exchanges (including NYSE American) and securities of an issuer that has securities listed or approved for listing on certain national securities exchanges where those securities are senior to the listed securities (for example, bonds issued by companies that have equity listed on a national securities exchange) or equal in rank to the listed securities. As a result, for so long as the Preferred Shares are listed on the NYSE American, we will not be required to register or qualify in any state the offer, transfer or sale of our Preferred Shares and any of our other securities that are senior or equal in rank to the Preferred Shares, including our Notes. If the Preferred Shares are delisted from the NYSE American and are not listed on another national securities exchange, the sale or transfer of the Preferred Shares and any of our other securities that are senior or equal in rank to the Preferred Shares, including our Notes, may not be exempt from state securities laws. In such event, we may need to register or otherwise qualify such securities for any offer, transfer or sale in certain states or determine that any such offer, transfer or sale is exempt under applicable state securities laws. To the extent that we do not register or otherwise qualify such securities, or determine that such securities are not exempt under applicable state securities laws, we and the holders of such securities may be limited in the ability to offer, transfer or sell such securities, which could have a material adverse effect on the value of such securities, on our ability to raise capital, and on our liquidity, business, financial condition, results of operations and prospects.

***Our ability to issue Parity Securities in the future could adversely affect the rights of holders of our Preferred Shares.***

We may in the future issue Parity Securities, which could have the effect of reducing the amounts available to the holders of the Preferred Shares issued in this offering upon our liquidation, dissolution or winding up if we do not have sufficient funds to pay all liquidation preferences of the Preferred Shares and any such Parity Securities in full. It also would reduce amounts available to make distributions on the Preferred Shares issued in this offering if we do not have sufficient funds to pay distributions on all outstanding Preferred Shares and any such Parity Securities. In addition, future issuances and sales of Parity Securities, or the perception that such issuances and sales could occur, may cause prevailing market prices for the Preferred Shares to decline and may adversely affect our ability to raise additional capital in the financial markets at times and prices favorable to us.

***Our ability to make distributions is limited by the requirements of Delaware law.***

Our ability to make distributions may be adversely affected by a number of factors, including the risk factors described herein. Any reduction of our distributions would not only reduce the amount of distributions you would

------

##### [**Table of Contents**](#toc)
receive as a holder of our Preferred Shares, but could also have the effect of reducing the market price of our Preferred Shares and our ability to raise funds in new securities offerings.

In addition, the rate at which holders of our Preferred Shares are taxed on distributions we pay and the characterization of our distribution — be it ordinary income, capital gains, or a return of capital — could have an impact on the market price of our Preferred Shares and, in turn, our ability to raise funds in new securities offerings. After we announce the expected characterization of dividend distributions we have paid, the actual characterization (and, therefore, the rate at which holders of our Preferred Shares are taxed on the dividend distributions they have received) could vary from our expectation, including due to errors, changes made in the course of preparing our corporate tax returns, or changes made in response to an IRS audit, with the result that holders of our Preferred Shares could incur greater income tax liabilities than expected.

***Holders of Preferred Shares may have liability to repay distributions.***

Under certain circumstances, the holders of the Preferred Shares may have to repay amounts wrongfully returned or distributed to them. Under Section 18-607 of the Delaware Limited Liability Company Act (the "***DLLCA***"), we generally may not make a distribution if the distribution would cause our liabilities to exceed the fair value of our assets. Liabilities to members on account of their equity interests and liabilities that are non-recourse to us are not counted for purposes of determining whether a distribution is permitted. Delaware law provides that, unless otherwise agreed, for a period of three years from the date of an impermissible distribution, members who received the distribution and who knew at the time of the distribution that it violated Delaware law will be liable to the limited liability company for the distribution amount.

***Using a credit card to purchase shares may impact the return on your investment as well as subject you to other risks inherent in this form of payment.***

Investors in this offering have the option of paying for their investment with a credit card, which is not usual in the traditional investment markets. Transaction fees charged by your credit card company (which can reach 5% of transaction value if considered a cash advance) and interest charged on unpaid card balances (which can reach or exceed 25% in some states) add to the effective purchase price of the Preferred Shares you buy. The cost of using a credit card may also increase if you do not make the minimum monthly card payments and incur late fees.

Using a credit card is a relatively new form of payment for securities and will subject you to other risks inherent in this form of payment, including that, if you fail to make credit card payments (e.g. minimum monthly payments), you risk damaging your credit score and payment by credit card may be more susceptible to abuse than other forms of payment. Moreover, where a third-party payment processor is used, as in this offering, your recovery options in the case of disputes may be limited.

The increased costs due to transaction fees and interest may reduce the return on your investment. The SEC's Office of Investor Education and Advocacy issued an Investor Alert dated February 14, 2018 entitled *Credit Cards and Investments – A Risky Combination*, which explains these and other risks you may want to consider before using a credit card to pay for your investment.

***We may invest or spend the proceeds of this offering in ways with which you may not agree.***

Our management will have broad discretion in the application of the net proceeds from this offering, including for any of the currently intended purposes described in the section entitled "*Use of Proceeds*." Because of the number and variability of factors that will determine our use of the net proceeds from this offering, their ultimate use may vary substantially from their currently intended use. We may not apply its cash from this offering in ways that ultimately increases the value of any investment in our securities. We may choose to use the proceeds in a manner that you do not agree with, and you will have no recourse. The failure by our management to apply the net proceeds from this offering effectively could harm our business.

------

##### [**Table of Contents**](#toc)
***There may be a delay in transfer of Preferred Shares from the transfer agent to your broker and shares will not be able to be traded until received and cleared by your broker.***

If you purchased your Preferred Shares online, your Preferred Shares will be held at the transfer agent in book entry. Once the Preferred Shares is listed on the NYSE American, you will be able to deposit any shares you purchased with a broker. Until you deposit your Preferred Shares in a brokerage account, the transfer agent will maintain the record of your ownership. Once you deposit your Preferred Shares with a broker, the broker will maintain that record. The transfer request must originate from your broker. The timing of the transfer varies from broker to broker and the Preferred Shares may take several days to transfer. During such time the trading shares may experience rapid and substantial price volatility, and price decline and you will not be able to trade until your broker receives and clears your shares for trading.

***This offering is being conducted on a "best efforts" basis.***

We are offering our Preferred Shares on a "best efforts" basis and we can give no assurance that all the offered Preferred Shares will be sold. If less than $75,000,000 of Preferred Shares are sold, we may be unable to fund all the intended uses described in this Offering Circular from the net proceeds anticipated from this offering without obtaining funds from alternative sources or using working capital that we generate from operations. Alternative sources of funding may not be available to us at what we consider to be a reasonable cost, and the working capital generated by our operations may not be sufficient to fund any uses not financed by net proceeds from this offering. No assurance can be given to you that any funds will be invested in this offering other than your own.

**Risks Related to the Phoenix Equity's Ownership of Our Common Shares and Certain LLCA Provisions.** 

***The interests of holders of Preferred Shares may conflict with the interests of our controlling shareholder.***

We are currently a member-managed limited liability company organized under the laws of the State of Delaware, and do not have a board of directors, board of managers, or similar construct (or any committees thereof). We are wholly owned and controlled by Phoenix Equity. LJC controls Phoenix Equity and, therefore, indirectly has control over our management. Following this offering, we will be a manager-managed limited liability company and our business and affairs will be managed under the direction of a board of directors. In addition, Phoenix Equity will continue to hold all of our common shares, representing limited liability company interests, and, as a result, other than under the limited circumstances described in this Offering Circular in which holders of the Preferred Shares have voting rights, we will continue to be controlled by Phoenix Equity. As a result of this concentrated control, Phoenix Equity will have the ability to determine corporate matters for the foreseeable future, including the power to, among other things:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• elect or remove any of our directors, at any time, with or without cause;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• approve changes to the Third ARLLCA that require shareholder approval (subject to the limited voting rights of
the Preferred Shares), as described in the Section of this offering circular entitled *Description of Capital and Preferred Shares—Series A Preferred Shares—Limited Voting Rights*; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ratify the appointment of our auditors.

Phoenix Equity may also be able to prevent or cause (either by way of a sale of their own stake or by approving our merger or sale of as a whole) a change of control of Phoenix Energy One, LLC. Phoenix Equity's control over us, and the Phoenix Equity's ability to prevent or cause a change of control of Phoenix Energy One, LLC, may delay or prevent a change of control, or cause a change of control to occur at a time when it is not favored by other shareholders. As a result, the trading price of the Preferred Shares could be adversely affected.

------

##### [**Table of Contents**](#toc)
***Our Third ARLLCA eliminates members of our board of directors' fiduciary duties to us. If conflicts of interest arise among members of our board of directors and us, members of our board of directors may make decisions in their sole and absolute discretion, and shall be entitled to consider only such interests and factors as they desire, including their own interests.***

Our Third ARLLCA contains provisions that eliminate the standards to which members of our board of directors' would otherwise be held by state law, other than an implied contractual duty of good faith and fair dealing. To the extent permitted by any applicable law, members of board of directors will be able make any decision or determination with respect to the us or our business and affairs, whether pursuant to the terms of the Third ARLLCA or otherwise in their sole and absolute discretion, and shall be entitled to consider only such interests and factors as they desire, including their own interests, and shall have no duty or obligation, fiduciary or otherwise, to give any consideration to any interest of or factors affecting us or any of our shareholders, including holders of Preferred Shares. As a result, if members of our board of directors interests and duties to other entities conflict with our interests, members of our board of directors may favor their own interest over the interest of us and our shareholders.

Furthermore, the Third ARLLCA will provide that to the fullest extent permitted by DLLCA, members of our board of directors will not be liable to us or any of our shareholders for monetary damages unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that such member engaged in fraud, and we will also indemnify such members of our board of directors for to the fullest extent permitted by the DLLCA.

***The Third ARLLCA contains an exclusive forum provision that may discourage lawsuits against us or our directors and officers.***

These choice of forum provisions may result in increased costs to shareholders to bring a claim, limit a shareholder's ability to bring a claim in a forum that it finds favorable for disputes with us or our directors, officers or other employees, and may generally have the effect of discouraging lawsuits against us and our directors, officers and other employees. However, shareholders are not deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder. The enforceability of similar choice of forum provisions in other companies' governing documents has been challenged in legal proceedings, and it is possible that a court could find these types of provisions to be inapplicable or unenforceable. If a court were to find these provisions in our Third ARLLCA to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition.

------

##### [**Table of Contents**](#toc)
**Risks Related to Certain Tax Matters** 

***Our tax treatment depends on our status as a partnership for federal income tax purposes, as well as our not being subject to a material amount of entity-level taxation by individual states. If the IRS were to treat us as a corporation for federal income tax purposes or if we were otherwise subject to a material amount of entity-level taxation, then cash available for distribution could be reduced.***

The anticipated after-tax economic benefit of an investment in us depends largely on our being treated as a partnership for U.S. federal income tax purposes. Despite the fact that we are organized as a limited liability company under Delaware law, we will be treated as a corporation for U.S. federal income tax purposes unless we satisfy a "qualifying income" requirement. Based on our current operations, we believe we satisfy the qualifying income requirement. Failing to meet the qualifying income requirement or a change in current law could cause us to be treated as a corporation for U.S. federal income tax purposes or otherwise subject us to taxation as an entity. We have not requested, and do not plan to request, a ruling from the IRS with respect to our classification as a partnership for U.S. federal income tax purposes.

If we were treated as a corporation for U.S. federal income tax purposes, we would pay U.S. federal income tax on our taxable income at the corporate tax rate and we would also likely pay additional state and local income taxes at varying rates. Distributions would generally be taxed again as corporate dividends, and no income, gains, losses or deductions would flow through to our members. Because a tax would be imposed upon us as a corporation, the cash available for distribution could be reduced. Thus, treatment of us as a corporation could result in a reduction in the anticipated cash-flow and after-tax return to our members, which would cause a reduction in the value of an investment in us.

At the state level, several states have been evaluating ways to subject partnerships to entity-level taxation through the imposition of state income, franchise, capital, and other forms of business taxes, as well as subjecting nonresident partners to taxation through the imposition of withholding obligations and composite, combined, group, block, or similar filing obligations on nonresident partners receiving a distributive share of state "sourced" income. We currently own property or do business in Montana, Utah, Wyoming, Texas, North Dakota and Colorado, among other states. Imposition on us of any of these taxes in jurisdictions in which we own assets or conduct business or an increase in the existing tax rates could result in a reduction in the anticipated cash-flow and after-tax return to our members, which would cause a reduction in the value of your investment in us.

***The tax treatment of publicly traded partnerships or an investment in our shares could be subject to potential legislative, judicial or administrative changes and differing interpretations, possibly on a retroactive basis.***

The present federal income tax treatment of publicly traded partnerships, including us, or an investment in our shares, may be modified by administrative, legislative or judicial interpretation. From time to time, members of Congress propose and consider substantive changes to the existing federal income tax laws that affect publicly traded partnerships or an investment in our shares, including eliminating partnership tax treatment for certain publicly traded partnerships, as well as reducing or eliminating certain key U.S. federal income tax incentives currently available to oil and natural gas exploration and production companies.

Any changes to federal income tax laws and interpretations thereof may or may not be applied retroactively and could make it more difficult or impossible for us to be treated as a partnership for federal income tax purposes or otherwise adversely affect our business, financial condition or results of operations. Any such changes or interpretations thereof could adversely impact the value of an investment in us.

***A successful IRS contest of the federal income tax positions we take may adversely impact the market for Preferred Shares and the cost of any IRS contest will reduce our cash available for distribution.***

The IRS has made no determination as to our status as a partnership for U.S. federal income tax purposes. The IRS may adopt positions that differ from the positions we take, even positions taken with advice of counsel.

------

##### [**Table of Contents**](#toc)
It may be necessary to resort to administrative or court proceedings to sustain some or all of the positions we take and such positions may not ultimately be sustained. A court may not agree with some or all of the positions we take. As a result, any such contest with the IRS may materially and adversely impact the market for our shares and the price at which our shares trade. In addition, our costs of any contest with the IRS, principally legal, accounting and related fees, will be indirectly borne by our members because the costs will reduce our cash available for distribution.

***Preferred Shares that are the subject of a securities loan (e.g., a loan to a "short seller" to cover a short sale of Preferred Shares) may be considered disposed. If so, the holder of such Preferred Shares would no longer be treated for tax purposes as a partner with respect to those Preferred Shares during the period of the loan and may recognize gain or loss from the disposition.***

Because there are no specific rules governing the U.S. federal income tax consequence of loaning a partnership interest, a holder of Preferred Shares that are the subject of a securities loan may be considered as having disposed of the loaned shares. In that case, the holder of such Preferred Shares may no longer be treated for tax purposes as a partner with respect to those Preferred Shares during the period of the loan and may recognize gain or loss from such disposition. Moreover, during the period of the loan, any of our income, gain, loss or deduction with respect to those Preferred Shares may not be reportable by the shareholder and any cash distributions received by the holder as to those Preferred Shares could be fully taxable as ordinary income. You are encouraged to consult a tax advisor if you desire to assure your status as a partner and avoid the risk of gain recognition from a securities loan.

***Certain tax consequences of the ownership of our Preferred Shares, including treatment of distributions as guaranteed payments for the use of capital, are uncertain.***

The tax treatment of distributions on our Preferred Shares is uncertain. We will treat the holders of the Preferred Shares as partners for tax purposes and will treat distributions on the Preferred Shares as guaranteed payments for the use of capital that will generally be taxable to the holders of the Preferred Shares as ordinary income. Although a holder of Preferred Shares will recognize taxable income from the accrual of such a guaranteed payment (even in the absence of a contemporaneous cash distribution), we anticipate accruing and making the guaranteed payment distributions quarterly. Otherwise, except in the case of our liquidation, the holders of Preferred Shares are generally not anticipated to share in our items of income, gain, loss or deduction, nor will we allocate any share of our nonrecourse liabilities to the holders of Preferred Shares. See "*Description of Capital and Preferred Shares—Series A Preferred Shares*." If the Preferred Shares were treated as indebtedness for tax purposes, rather than as guaranteed payments for the use of capital, distributions likely would be treated as payments of interest by us to the holders of Preferred Shares.

A holder of Preferred Shares will be required to recognize a gain or loss on a sale of Preferred Shares equal to the difference between the amount realized by such holder and such holder's tax basis in the Preferred Shares sold. The amount realized generally will equal the sum of the cash and the fair market value of other property such holder receives in exchange for such Preferred Shares. Subject to general rules requiring a blended basis among multiple partnership interests, the tax basis of a Preferred Share will generally be equal to the sum of the cash and the fair market value of other property paid by the holder of such Preferred Shares to acquire such Preferred Shares. Gain or loss recognized by a holder of Preferred Shares on the sale or exchange of a Preferred Share held for more than one year generally will be taxable as long-term capital gain or loss. Because holders of Preferred Shares will generally not be allocated a share of our items of depreciation, depletion or amortization, it is not anticipated that such holders would be required to recharacterize any portion of their gain as ordinary income as a result of the recapture rules.

Investment in the Preferred Shares by tax-exempt investors, such as employee benefit plans and individual retirement accounts, and non-U.S. persons raises issues unique to them. The treatment of guaranteed payments for the use of capital to tax-exempt investors is not certain and such payments may be treated as unrelated business taxable income for U.S. federal income tax purposes.

------

##### [**Table of Contents**](#toc)
Distributions to non-U.S. holders of Preferred Shares will be subject to withholding taxes. If the amount of withholding exceeds the amount of U.S. federal income tax actually due, non-U.S. holders of Preferred Shares may be required to file U.S. federal income tax returns in order to seek a refund of such excess. If you are a tax-exempt entity or a non-U.S. person, you should consult your tax advisor with respect to the consequences of owning our Preferred Shares.

***Our treatment of distributions on our Preferred Shares as guaranteed payments for the use of capital means that such distributions will not be eligible for the 20% deduction for qualified business income.***

For taxable years ending on or before December 31, 2025, a non-corporate member may be entitled to a deduction equal to 20% of its "qualified business income" attributable to its interest in a partnership, subject to certain limitations. As described above, we will treat distributions on the Preferred Shares as guaranteed payments for the use of capital, and under the applicable Treasury Regulations (as defined below), a guaranteed payment for the use of capital will not be taken into account for purposes of computing qualified business income. As a result, distributions received by the holders of our Preferred Shares will not be eligible for the 20% deduction for qualified business income. Prospective holders of Preferred Shares should consult their tax advisors regarding the availability of the deduction for qualified business income.

**Risks Relating to Our Status as a Public Reporting Company** 

***We only recently became a public reporting company, and the obligations associated with being a public reporting company will require significant resources and management attention.***

We only recently became a public reporting company, following the effectiveness of our Registration Statement with respect to the continuous offering of up to $750.0 million aggregate principal amount of Registered Notes, on May 14, 2025. As a recent public reporting company, we incur significant legal, regulatory, finance, accounting, investor relations, and other expenses that we previously did not incur as a private company, including costs associated with public company reporting requirements. We also have incurred and will continue to incur costs associated with the Sarbanes-Oxley Act of 2002 ("***SOX***") and the Dodd-Frank Wall Street Reform and Consumer Protection Act, and related rules implemented by the SEC. The expenses incurred by public reporting companies for reporting and corporate governance purposes have been increasing. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. Our management currently does, and will need to continue to, devote a substantial amount of time to ensure that we comply with all of these additional requirements, diverting the attention of management away from revenue-producing activities. These laws and regulations also could make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve as our executive officers. Furthermore, if we are unable to satisfy our obligations as a public reporting company, we could be subject to fines, sanctions, and other regulatory action and potentially civil litigation.

***Failure to comply with requirements to design, implement, and maintain effective internal controls could have a material adverse effect on our business.***

We were not previously required to evaluate our internal control over financial reporting in a manner that meets the standards of public reporting companies required by Section 404(a) of SOX ("***Section 404***"). As a public reporting company, we are subject to significant requirements for enhanced financial reporting and internal controls. The process of designing, implementing and maintaining effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public reporting company. If we are unable to establish or maintain

------

##### [**Table of Contents**](#toc)
appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations on a timely basis, result in material misstatements in our consolidated financial statements, and harm our results of operations. In addition, we will be required, pursuant to Section 404, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting in the second annual report following the effectiveness of the Registration Statement. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. The rules governing the standards that must be met for our management to assess our internal control over financial reporting are complex and require significant documentation, testing, and possible remediation. Testing and maintaining internal controls may divert our management's attention from other matters that are important to our business.

In connection with the implementation of the necessary procedures and practices related to internal control over financial reporting, we may identify deficiencies that we may not be able to remediate in time to meet the deadline imposed by SOX for compliance with the requirements of Section 404. In addition, we may encounter problems or delays in completing the remediation of any deficiencies identified by us or our independent registered public accounting firm in connection with the issuance of their attestation report. Our testing, or the subsequent testing (if required) by our independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses. Any material weaknesses could result in a material misstatement of our annual or quarterly financial statements or disclosures that may not be prevented or detected.

Specifically, in connection with the audits of our financial statements as of and for the years ended December 31, 2022, 2023, and 2024, our auditors identified several material weaknesses, including material weaknesses concerning our internal control over financial reporting. These material weaknesses in internal controls were caused by inadequate separation of duties of our management within key financial areas. Other material weaknesses that were identified pertained to our lack of testing over our accounting systems, absence of a board of directors or an audit committee, improper use of accrual accounting, improper controls over the depletion calculation of proved and probable undeveloped reserves, and our use of an inadequate payroll reporting system. Any steps we take to enhance our internal control environment and address the underlying cause of our material weaknesses may not be sufficient to remediate such material weaknesses or to avoid the identification of additional material weaknesses in the future.

We may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404, or our independent registered public accounting firm may not issue an unqualified opinion. If we are unable to remediate the identified material weaknesses, identify additional material weaknesses in the future, or otherwise fail to maintain an effective system of internal controls, or our independent registered public accounting firm is unable to provide us with an unqualified report (to the extent it is required to issue a report), investors could lose confidence in our reported financial information, which could have a material adverse effect on our business, results of operations, and financial condition.

***We identified certain misstatements to our previously issued financial statements and have restated certain of our consolidated financial statements, which may create additional risks and uncertainties.***

On September 12, 2024, our management determined that our audited consolidated financial statements for the fiscal year ended December 31, 2022 (the "***GAAS 2022 Audited Financial Statements***"), contained in our Annual Report on Form 1-K for that year, which was filed in compliance with our offerings under Regulation A, should no longer be relied upon due to certain errors in the GAAS 2022 Audited Financial Statements as addressed in Financial Accounting Standards Board ("***FASB***") Accounting Standards Codification ("***ASC***") Topic 250. We previously filed our Annual Report on Form 1-K for the fiscal year ended December 31, 2023 (the "***2023 Form 1-K***") with the SEC on April 30, 2024, which filing contained corrected financial information for the fiscal year ended December 31, 2022. On September 26, 2024, we amended our 2023 Form 1-K (the "***Form 1-K/A***") to reflect that we had restated the GAAS 2022 Audited Financial Statements.

------

##### [**Table of Contents**](#toc)
Subsequently, on March 7, 2025, our management concluded that each of (i) of our previously issued audited consolidated financial statements as of and for the fiscal years ended December 31, 2023 and 2022 (the "***2023 and 2022 Audited Financial Statements***") contained in the Form 1-K/A and (ii) our previously issued unaudited condensed consolidated financial statements for the fiscal semiannual periods ended June 30, 2024 and 2023 (the "***Semiannual Unaudited Financial Statements***" and, together with the 2023 and 2022 Audited Financial Statements, the "***Existing Financial Statements***") contained in our Semiannual Report on Form 1-SA/A for the fiscal semiannual period ended June 30, 2024 (the "***Form 1-SA/A***"), filed with the SEC on September 26, 2024, should no longer be relied upon due to certain errors in the Existing Financial Statements, as addressed in FASB ASC Topic 250. In the Existing Financial Statements, we had immediately expensed debt issuance costs related to our unregistered bond offerings rather than amortizing them over the weighted-average term of the bonds, which resulted in overstated advertising and marketing expense, selling, general, and administrative expense, and payroll and payroll-related expense, and understated interest expense and loss on debt extinguishment. Additionally, in the Existing Financial Statements, we had previously expensed all interest costs, rather than capitalizing interest incurred on expenditures made in connection with our exploration and development projects as permitted under ASC Topic 835-20, "*Capitalized Interest*," resulting in us overstating our interest expense and understating our oil and gas properties, in corresponding amounts. Accordingly, on March 27, 2025, we further amended the Form 1-K/A and Form 1-SA/A to reflect that we had restated the Existing Financial Statements.

As a result of the restatements, we may become subject to a number of additional risks and uncertainties and unanticipated costs for accounting, legal, and other fees and expenses. We may become subject to legal proceedings brought by regulatory or governmental authorities, or other proceedings, as a result of the errors or the related restatements, which could result in a loss of investor confidence or other reputational harm, additional defense, and other costs. In addition, we cannot assure you that additional restatements of financial statements will not arise in the future. Any of the foregoing impacts, individually or in aggregate, may have a material adverse effect on our business, financial position, and results of operations.

------

##### [**Table of Contents**](#toc)
**CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS** 

This Offering Circular contains forward-looking statements, which are statements regarding all matters that are not historical facts. They appear in a number of places throughout this Offering Circular and include statements regarding our current views, hopes, intentions, beliefs, or expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies, and position in the markets and the industries in which we operate. These forward-looking statements are generally identifiable by forward-looking terminology such as "guidance," "expect," "believe," "anticipate," "outlook," "could," "target," "project," "intend," "plan," "seek," "estimate," "should," "will," "would," "approximately," "predict," "potential," "may," "continue," and "assume," as well as the negative version of such words, variations of such words, and similar expressions referring to the future.

Forward-looking statements are based on our beliefs, assumptions, and expectations, taking into account currently known market conditions and other factors. Our ability to predict results or the actual effect of future events, actions, plans, or strategies is inherently uncertain and involves certain risks and uncertainties, many of which are beyond our control. Our actual results and performance could differ materially from those set forth or anticipated in our forward-looking statements. Factors that could cause our actual results to differ materially from the expectations we describe in our forward-looking statements include, but are not limited to, the factors listed below and in the section of this Offering Circular entitled "*Risk Factors*." When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements in this Offering Circular. You are cautioned that the forward-looking statements contained in this Offering Circular are not guarantees of future performance, and we cannot assure you that such statements will be realized or that the forward-looking events and circumstances will occur. All forward-looking statements in this Offering Circular are made only as of the date this Offering Circular, based on information available to us as of the date of this Offering Circular, and we caution you not to place undue reliance on forward-looking statements in light of the risks and uncertainties associated with them.

The matters summarized below and elsewhere in this Offering Circular could cause our actual results and performance to differ materially from those set forth or anticipated in forward-looking statements:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in the markets in which we compete;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• increasing costs of capital expenditures to acquire and develop properties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the continued success of our E&P operators;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• delays in development of and higher capital expenditures in our estimated proved and probable undeveloped
reserves;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• developments in governmental regulations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• deviations between the current market value of estimated proved reserves and the present value of future net
revenues from our proved reserves;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in current or future commodity prices;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the fact that reserve estimates depend on many assumptions that may turn out to be inaccurate and that any
material inaccuracies in reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to replace reserves;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• cybersecurity attacks;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the development of our software and its ability to continue identifying productive assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our current or future levels of indebtedness;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• repayment of our current or future indebtedness;

------

##### [**Table of Contents**](#toc)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• current and future litigation or other regulatory, administrative, or other legal proceedings;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the restatement of our financial statements; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the other factors set forth in the section entitled "*Risk Factors*."

Except as required by law, we are under no duty to, and we do not intend to, update or review any of our forward-looking statements after the date of this Offering Circular, whether as a result of new information, future events or developments, or otherwise.

------

##### [**Table of Contents**](#toc)
**USE OF PROCEEDS** 

Assuming we raise the maximum offering amount of $75,000,000, we estimate that the net proceeds we will receive from this offering will be approximately $68,437,500 million, after deducting the Selling Agent commissions and estimated offering expenses payable by us. The following table below sets forth the expected net proceeds from this offering assuming the sale of 25%, 50%, 75% and 100% of the securities offered for sale in this offering by us.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Assumed Percentage of Preferred Shares Sold** | **Assumed Percentage of Preferred Shares Sold** | **Assumed Percentage of Preferred Shares Sold** | **Assumed Percentage of Preferred Shares Sold** |
|  | **25%** | **50%** | **75%** | **100%** |
|  Gross Proceeds | $18750000 | $37500000 | $56250000 | $75000000 |
|  Selling Agent Commissions | $(1453125) | $(2906250) | $(4359375) | $(5812500) |
|  Other Offering Expenses | $(750000) | $(750000) | $(750000) | $(750000) |
|  Net Proceeds | $16546875 | $33843750 | $51140625 | $68437500 |

---

We plan to use the net proceeds from this offering (i) to make investments in PhoenixOp or to otherwise finance potential drilling and exploration operations, (ii) to purchase mineral rights and non-operated working interests, as well as additional asset acquisitions, and (iii) for other working capital needs, such as the payment of executive and employee salaries, general overhead, and operating costs, including payments on our debt, and the acquisition of assets in the oil and gas space that are not mineral rights or non-operated working interests. Our actual use of offering proceeds will depend on many considerations, including market conditions, but we currently expect to use the net proceeds from this offering as follows assuming we issue and sell all of the Preferred Shares offered by this Offering Circular:

---

| | | |
|:---|:---|:---|
| **Expected Uses of Proceeds** | **Approximate<br>Percentage of<br>Proceeds Used** | **Approximate<br>Amount of<br>Proceeds Used** |
|  Investments in PhoenixOp | 70% | $47906250 |
|  Purchases of mineral rights and non-operated working interests | 20% | $13687500 |
|  Other working capital, other asset acquisitions, and general corporate purposes | 10% | $6843750 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | 100.0% | $68437500 |

---

As of March 31, 2025, we had approximately $132.8 million of indebtedness maturing within one year, as described below:

---

| | | |
|:---|:---|:---|
| **Series** | **Interest Rate** | **Amount** |
|  Reg A Bonds | 9% | 40020000 |
|  2020 506(b) Bonds | 5% | 940000 |
|  2020 506(c) Bonds | 13%-15% | 1448000 |
|  December 2022 506(c) Bonds—Series B | 10% | 5862000 |
|  August 2023 506(c) Bonds—Series U, AA, and FF | 9% -10% | 84497000 |
|  Total |  | 132767000 |

---

We currently intend to utilize the net proceeds from this offering in the order set out in the preceding paragraph. However, the expected use of net proceeds from this offering represents our intentions based upon our present plans and business conditions, which could change in the future as our plans and business conditions evolve. In addition to the potential net proceeds from this offering of Preferred Shares, we have cash flow from operations, as well as multiple current and potential sources of financing, including under the Adamantium Loan

------

##### [**Table of Contents**](#toc)
Agreement, our offerings of debt securities pursuant to Regulation D and our Registered Notes, that can be utilized for the purposes described above, and so we cannot accurately predict whether and in what amounts the net proceeds from this offering of the Preferred Shares will be applied. In particular, to the extent we use any proceeds from this offering of the Preferred Shares to repay outstanding indebtedness, we cannot accurately predict which indebtedness we may repay with such proceeds, and in what amounts. We may find it necessary or advisable to use the net proceeds of this offering for other purposes, and we will have broad discretion in the application and specific allocations of the net proceeds of this offering. See "*Risk Factors—Risks related to the Preferred Shares and this Offering—We may invest or spend the proceeds of this offering in ways with which you may not agree*."

Furthermore, we will receive cash proceeds from this offering in varying amounts from time to time as Preferred Shares are sold, which makes it difficult for us to precisely calculate the allocation of net proceeds.

Subject to the listing standards of NYSE American, there is no minimum number or amount of Preferred Shares that we must sell in order to receive and use the proceeds from this offering, and we cannot assure you that all or any portion of the Preferred Shares will be sold. In the event that we do not raise sufficient proceeds from this offering, we may adjust our use of proceeds by limiting the speed of growth, delaying or canceling certain purchases or initiatives related to our drilling and production operations, and streamlining our operations.

------

##### [**Table of Contents**](#toc)
**DISTRIBUTION POLICY** 

***Distributions to Holders of Common Shares***

Subject to the applicable provisions of the DLLCA and the terms of any applicable Share Designation, distributions may be paid to the holders of our common shares out of our assets legally available therefor only when, as and if determined by our board of directors. Any decision to declare and pay distributions in the future will be made at the sole discretion of our board of directors and will depend on, among other things, our financial condition, results of operations, cash requirements, contractual restrictions and other factors that our board of directors may deem relevant.

***Distributions to Holders of Preferred Shares***

Prior to making any distributions to the holders of our common shares as described above, the holders of our Preferred Shares are entitled to receive, when, as, and if authorized by our board of directors and declared by us, cumulative quarterly cash distributions. The distribution rate for such quarterly cash distributions is based on the initial stated liquidation preference of $25.00 per Preferred Share and equal to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) from, and including, the date of original issuance to, but excluding, October 15, 2028, at a fixed rate equal to 10.00% (equivalent to $2.50 per annum per Preferred Share),

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) from and including October 15, 2028 to, but excluding, October 15, 2029, at a fixed rate equal to 10.50% (equivalent to $2.625 per annum per Preferred Share), and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) from and including October 15, 2029 at a fixed rate equal to 11.00% (equivalent to $2.75 per annum per Preferred Share).

------

##### [**Table of Contents**](#toc)
**CAPITALIZATION** 

The following table sets forth our cash and cash equivalents and total capitalization as of March 31, 2025:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• on an actual basis; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• on an as adjusted basis to give effect to the following, in each case, as if they had occurred on March 31,
2025:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the issuance of an additional $83.8 million of Adamantium Securities (and a corresponding amount borrowed
under the Adamantium Loan Agreement) between March 31, 2025 and May 31, 2025;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the issuance of an additional $30.9 million of August 2023 506(c) Bonds between March 31, 2025 and
May 31, 2025;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• additional borrowings under the Fortress Credit Agreement of $50.0 million made after March 31, 2025;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the repurchase or retirement of outstanding indebtedness between March 31, 2025 and May 31, 2025; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• on an as further adjusted basis to give effect to the sale and issuance by us of 3,750,000 Preferred Shares in
this offering at the offering price of $20.00 per Preferred Share, after deducting the Selling Agent commissions and estimated offering expenses payable by us. Subject to the listing standards of NYSE American, there is no minimum number or amount
of Preferred Shares that we must sell in order to receive and use the proceeds from this offering, and we cannot assure you that all or any portion of the Preferred Shares will be sold.

You should read this table in conjunction with the information presented under the sections of this Offering Circular entitled "*Summary—Summary Historical Financial and Other Data*," "*Use of Proceeds*," and "*Management's Discussion and Analysis of Financial Condition and Results of Operations*," as well as our consolidated financial statements and related notes included elsewhere in this Offering Circular.

---

| | | | |
|:---|:---|:---|:---|
|  | **As of March 31, 2025** | **As of March 31, 2025** | **As of March 31, 2025** |
|  | **Actual** | **As Adjusted** | **As Further<br>Adjusted** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  Cash and cash equivalents<sup>(1)</sup> | $35366 | $145214 | $213651 |
|  Debt: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Registered Notes |  | 2061 | 2061 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fortress Credit Agreement<sup>(2)</sup> | 250000 | 300000 | 300000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other Secured Indebtedness |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reg A Bonds<sup>(3)</sup> | 99577 | 91144 | 91144 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reg D Bonds: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2020 506(b) Bonds<sup>(4)</sup> | 940 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2020 506(c) Bonds<sup>(5)</sup> | 1448 | 1448 | 1448 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; July 2022 506(c) Bonds<sup>(6)</sup> | 10147 | 9922 | 9922 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; December 2022 506(c) Bonds<sup>(7)</sup> | 65888 | 63154 | 63154 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; August 2023 506(c) Bonds<sup>(8)</sup> | 493290 | 541664 | 541664 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exchange Bonds |  | 3067 | 3067 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Adamantium Securities<sup>(9)</sup> | 163048 | 181726 | 181726 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total debt | 1084338 | 1194186 | 1194186 |
|  Total members' deficit | (28459) | (28459) | 39979 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total capitalization | 1055879 | 1165727 | 1234165 |

---

------

##### [**Table of Contents**](#toc)
(1) As adjusted reflects cash and cash equivalents gives effect to (i) proceeds received from the issuance of
additional Adamantium Securities and August 2023 506(c) Bonds between March 31, 2025 and May 31, 2025, and (ii) cash used to repurchase or retire outstanding indebtedness between March 31, 2025 and May 31, 2025. As further
adjusted cash and cash equivalents gives effect to net proceeds received from the sale and issuance by us of 3,750,000 Preferred Shares in this offering at the offering price of $20.00 per Preferred Share, after deducting the Selling Agent
commissions and estimated offering expenses payable by us. As further adjusted cash and cash equivalents does not reflect the use of any such net proceeds. See "*Use of Proceeds*."

(2) The Fortress Credit Agreement provides for a $100.0 million term loan facility, borrowed in full on
August 12, 2024, a $35.0 million delayed draw term loan facility, which was fully drawn on October 11, 2024, a $115.0 million term loan facility, borrowed in full on December 18, 2024, a $25.0 million term loan
facility, borrowed in full on April 16, 2025, and a $25.0 million delayed draw term loan facility borrowed in full on May 9, 2025. The Fortress Credit Agreement also provides for a rebate of approximately $8.5 million in original
issue discount, payable by setoff against final payment in full of the Fortress Credit Agreement, if (a) all outstanding principal and accrued interest on the loans under the Fortress Credit Agreement are paid in full in cash on or before March 31,
2027, and (b) no event of default resulting from the failure to pay principal or interest when due under the terms and conditions of the Fortress Credit Agreement has occurred prior to such date, subject to certain other conditions. All obligations
under the Fortress Credit Agreement are secured on a first-lien priority basis, subject to certain exceptions and excluded assets, by security interests in, and mortgages on, substantially all personal property and owned real property of Phoenix
Equity and its subsidiaries. $150.0 million of the lenders' commitments under the Fortress Credit Agreement and the loans thereunder are due and payable on December 31, 2026. The remainder of lenders' commitments under the
Fortress Credit Agreement and the loans thereunder are scheduled to terminate and mature, and be due and payable, on December 18, 2027. For a description of the terms of the Fortress Credit Agreement, see "*Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness—Fortress Credit Agreement*."

(3) The Reg A Bonds have a term of three years from the issue date and an interest rate of 9.0% *per annum*.
The outstanding Reg A Bonds mature between June 2025 and December 2027. For a description of the terms of the Reg A Bonds, see "*Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness—Reg D/Reg A Bonds*."

(4) The 2020 506(b) Bonds have initial maturity dates ranging from one to four years from the issue date and an
interest rate of 5.0% *per annum*. The outstanding 2020 506(b) Bonds matured in May 2025. For a description of the terms of the 2020 506(b) Bonds, see "*Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness—Reg D/Reg A Bonds*."

(5) The 2020 506(c) Bonds have maturity dates ranging from one to four years from the issue date and interest rates
ranging from 13.0% to 15.0% *per annum*. For a description of the terms of the 2020 506(c) Bonds, see "*Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness—Reg D/Reg A Bonds*."

(6) The July 2022 506(c) Bonds have a maturity date of five years from the issue date and an interest rate of 11.0% *per annum*. The outstanding July 2022 506(c) Bonds mature between July 2027 and December 2027. For a description of the terms of the July 2022 506(c) Bonds, see "*Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness—Reg D/Reg A Bonds*."

(7) The December 2022 506(c) Bonds have maturity dates ranging from one to seven years from the issue date and
interest rates ranging from 8.0% to 12.0% *per annum*. The outstanding December 2022 506(c) Bonds mature between December 2025 and October 2030. For a description of the terms of the December 2022 506(c) Bonds, see "*Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness—Phoenix Reg D/Reg A Bonds*."

(8) The August 2023 506(c) Bonds have maturity dates ranging from one to eleven years from the issue date and
interest rates ranging from 9.0% to 14.0% *per annum*. The outstanding August 2023 506(c) Bonds

------

##### [**Table of Contents**](#toc)
mature between June 2025 and May 2036. For a description of the terms of the August 2023 506(c) Bonds, see "*Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness—Reg D/Reg A Bonds*."

(9) Includes $174.7 million aggregate principal amount of Adamantium Bonds and $7.0 million aggregate
principal amount of the Adamantium Secured Note. The Adamantium Bonds have maturity dates ranging from five to eleven years from the issue date and interest rates ranging from 13.0% to 16.0% *per annum*. The outstanding Adamantium Bonds mature
between January 2029 and May 2036. The Adamantium Secured Note initially matures in November 2031, has an interest rate of 16.5% *per annum*, and is secured by Adamantium's rights under the Adamantium Loan Agreement. Adamantium may, but is
not guaranteed to, issue $400.0 million in aggregate principal amount of Adamantium Bonds to fund advances to the Issuer and PhoenixOp pursuant to the Adamantium Loan Agreement. For a description of the terms of the Adamantium Debt, see
" *Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness—Adamantium Debt*."

------

##### [**Table of Contents**](#toc)
**MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS** 

*You should read the following management's discussion and analysis of financial condition and results of operations in conjunction with "Offering Circular Summary—Summary Historical Financial and Other Data," our consolidated financial statements, and the related notes thereto included elsewhere in this Offering Circular. The following discussion contains forward-looking statements that reflect our future plans, estimates, beliefs, and expected performance. These forward-looking statements are dependent upon events, risks, and uncertainties that may be outside of our control. Our actual results could differ materially from those disclosed in these forward-looking statements. Factors that could cause or contribute to such differences include those described in "Risk Factors," "Cautionary Statement Regarding Forward-Looking Statements," and elsewhere in this Offering Circular. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.* 

***Overview***

We operate in the oil and gas industry and execute on a three-pronged strategy involving (i) direct drilling operations of operated working interests, (ii) the acquisition of royalty assets, and (iii) the acquisition of non-operated working interest assets. Our direct drilling operations are currently primarily focused on development efforts in the Williston Basin in North Dakota and Montana and the Powder River and Denver Julesburg Basins in Wyoming. Our royalty and working interest acquisitions center around a variety of assets, including mineral interests, leasehold interests, overriding royalty interests, and perpetual royalty interests. These efforts have historically targeted assets in the Williston, Permian, Powder River, Uinta, and DJ Basins. We are agnostic as to geography and prioritize operational and asset potential when executing on our strategy.

We began operations in 2019 with the development of our specialized software system, which we have designed and improved over time to support our ability to identify, analyze, underwrite, transact, and manage our oil and gas assets. In 2019, we acquired our first mineral interest asset and began to generate revenue. In 2020, we expanded our operations and team to include specialists across a variety of key focus areas. From 2020 to 2024, we experienced significant growth in operations. For example, in 2020, the E&P operators of our properties operated 725 gross and 2.8 net productive development wells on the acreage underlying our mineral and royalty interests, and the total acreage underlying our gross and net royalty interests was 177,824 and 1,506, respectively. In the four years since then, the E&P operators of our properties have operated an additional 6,312 gross and 75.1 net productive development wells on the acreage underlying our mineral and royalty interests, of which approximately 463 gross and 43.2 net productive development wells were drilled in 2024 alone. As of December 31, 2024, we had 3,962,065 and 531,120 acres underlying our gross and net royalty interests, respectively, as compared to 177,824 and 1,506 acres underlying our gross and net royalty interests, respectively, at December 31, 2020. Furthermore, our total production for the year ended December 31, 2020 was under 0.2 million Boe as compared to over 4.7 million Boe for the year ended December 31, 2024. In the same period our number of employees grew from 21 at December 31, 2020 to 135 at December 31, 2024. Additionally, we commenced direct drilling operations and spudded our first wells in the third quarter of 2023 and, as of March 31, 2025, we have drilled a total of 44 gross and 39.9 net producing development and injection wells. We expect these direct drilling operations to be a core component of our business strategy going forward.

Since our initial mineral interest asset acquisition in 2019, we have leveraged our specialized software system and experienced management team to identify asset opportunities that fit our desired criteria and potential for returns. While we evaluate and acquire a wide variety of assets, we have historically prioritized assets with potential for high monthly recurring cashflows and primarily target assets that have a potential payback within the short to medium-term and long-term cashflows.

As of March 31, 2025, we have completed 3,687 acquisitions from landowners and other mineral interest owners, representing approximately 539,258 NRAs of royalty assets and 520,922 of NMAs of leasehold assets

------

##### [**Table of Contents**](#toc)
since 2019. Over that same period, in addition to completing numerous small transactions, we completed more than 70 transactions larger than 1,000 NMAs that account for approximately 85% of our NMAs. We have acquired mineral, royalty, and leasehold interests from individuals, families, trusts, partnerships, small minerals aggregators, minerals brokers, large private minerals companies, private oil and gas E&P companies, and public minerals companies. We also actively manage our portfolio of assets and, as of March 31, 2025, have sold 3,152 NMAs since 2019.

Following the acquisition of an asset, we typically share in the proceeds of the natural resources extracted and sold by a third-party E&P operator. For certain assets, we operate our own direct drilling operations through our direct wholly owned subsidiary, PhoenixOp.

For the three months ended March 31, 2025 and 2024 we had revenue of $115.7 million and $40.7 million, respectively, net income (loss) of $5.6 million and $(8.4) million, respectively, and EBITDA of $72.0 million and $21.9 million, respectively. For the years ended December 31, 2024, 2023, and 2022, we had revenue of $281.2 million, $118.1 million, and $54.6 million, respectively, net income (loss) of $(24.8) million, $(16.2) million, and $5.7 million, respectively, and EBITDA of $150.7 million, $65.9 million, and $29.7 million, respectively. As of March 31, 2025 and December 31, 2024, 2023, and 2022, we had total assets of $1,134.7 million, $1,029.1 million, $493.2 million, and $157.0 million, respectively, total liabilities of $1,163.1 million, $1,063.1 million, $498.0 million, $148.3 million, respectively (inclusive of total indebtedness of $1,084.3 million, $987.9 million, $447.9 million, and $117.4 million, respectively), and retained earnings (accumulated deficit) of $(28.9) million, $(34.5) million, $(9.7) million, and $6.5 million, respectively. Through 2024, we incurred a significant amount of debt in order to accelerate the growth of our business by acquiring additional assets and establishing our direct drilling operations. As a result, our cash flows from operations alone would not have been sufficient to service required cash interest and principal payment obligations under our then-existing debt in 2023 and 2024. During the three months ended March 31, 2025, we continued to incur a significant amount of debt. Furthermore, as of December 31, 2024, we estimate that we will need to make approximately $749.3 million and $3,224.8 million in capital expenditures to develop all our proved and probable undeveloped reserves, respectively, and that we will need to raise approximately $658.9 million in additional capital through the end of 2028 to fund such development. Although we expect our cash flows from operations to be sufficient to service cash interest and principal payment obligations under our debt for the foreseeable future, there can be no assurance as to the sufficiency of our cash flows for that purpose, and we do not expect such cash flows alone to be adequate to fund both our debt service obligations and the development of our reserves. Therefore, we expect to require additional capital to fund our growth and may require additional liquidity to service our debt. As a result, we may use the proceeds of additional debt offerings or this offering to make interest and principal payments on our existing debt. See "*Risk Factors—Risks Related to Our Business and Operations—The acquisition and development of our properties, directly or through our third-party E&P operators, will require substantial capital, and we and our third-party E&P operators may be unable to obtain needed capital or financing on satisfactory terms or at all, including as a result of increases in the cost of capital resulting from Federal Reserve policies in the past few years and otherwise*," "*Risk Factors—Risks Related to Our Indebtedness—Despite our current level of indebtedness, we will still be able to incur substantially more debt. This could further exacerbate the risks to our financial condition described above*," "*Risk Factors—Risks Related to Our Indebtedness—We may not be able to generate sufficient cash to service all of our existing and future indebtedness, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful*," "*Risk Factors—Risks Related to the Preferred Shares and this Offering—The Preferred Shares are junior and subordinated to our existing and future indebtedness*," "*Risk Factors—Risks Related to the Preferred Shares and this Offering—We may invest or spend the proceeds of this offering in ways with which you may not agree*," "*Use of Proceeds*," and "*Management's Discussion and Analysis of Financial Condition and Results of Operations*."

**Our Segments** 

We operate under three segments: mineral and non-operating, operating, and securities. Our mineral and non-operating segment comprises our operations for the acquisition of mineral interests and non-operated

------

##### [**Table of Contents**](#toc)
working interests in oil and gas properties, through which we share in the proceeds of the natural resources extracted and sold by the operator. Our operating segment comprises our operations related to our drilling, extraction, and production activities, which today are conducted through PhoenixOp. Our securities segment comprises our operations related to our capital raising activities associated with our debt securities offerings. Our management evaluates our performance and allocates resources based in part on segment operating profit, which is calculated as total segment revenue less operating expenses attributable to the segment, which includes allocated corporate costs.

**Sources of Our Revenue** 

Our revenues have historically primarily constituted mineral and royalty payments received from our third-party E&P operators based on the sale of crude oil, natural gas, and NGL production from our interests. In 2024, we commenced sales of crude oil, natural gas, and NGL and began generating product sales in our operating segment through our wholly owned subsidiary, PhoenixOp, which was formed for the purposes of drilling, extracting, and operating producing wells. Product sales accounted for over 72% and 45% of our total revenues for the three months ended March 31, 2025 and the year ended December 31, 2024, respectively, and we expect to derive a significant portion of our total revenues from product sales of crude oil, natural gas, and NGL to PhoenixOp's customers in the future. Our revenues may vary significantly from period to period because of changes in commodity prices, production mix, and volumes of production sold by our E&P operators, including PhoenixOp. We also derive revenues from performing saltwater disposal services on wells operated by PhoenixOp, as well as redemption fees charged to investors, generally in connection with the early redemption of their investments. Other revenue in the securities segment is derived almost exclusively from intersegment interest expense to the mineral and non-operating segment and the operating segment, and is eliminated in consolidation.

**Principal Components of Our Cost Structure** 

As a mineral, royalty, and non-operated working interest owner, we may incur lease operating expenses and our proportionate share of production, severance, and ad valorem taxes. In those circumstances, revenues are recognized net of production taxes and post-production expenses. Through PhoenixOp's operations, we also incur certain production costs, including gathering, processing, and transportation costs, which are presented as a component of cost of sales on our consolidated statements of operations. Shared corporate costs that are overhead in nature and not directly associated with any one of our segments, including certain general and administrative expenses, executive or shared-function payroll costs, and certain limited marketing activities, are allocated to our segments based on usage and headcount, as appropriate. Cost of sales and depreciation, depletion, and amortization are not applicable to the securities segment.

***Cost of Sales***

*Lease Operating Expenses* 

We incur lease operating expenses through: (i) our ownership of non-operated working interests, paying our pro rata share of cost of labor, equipment, maintenance, saltwater disposal, workover activity, and other miscellaneous costs; and (ii) PhoenixOp, where such costs are directly incurred through our own drilling and extraction activities. We generally expect that these expenses will increase as our number of mineral interest and non-operated working interests in oil and gas properties increase, and as our operating activities on wells operated by PhoenixOp continue to increase.

*Production and Ad Valorem Taxes* 

Production taxes are paid at fixed rates on produced crude oil, natural gas, and NGL based on a percentage of revenues from our volume of products sold, established by federal, state, or local taxing authorities. Where we

------

##### [**Table of Contents**](#toc)
utilize third-party operators, the E&P companies that operate on our interests withhold and pay our pro rata share of production taxes on our behalf. We directly pay ad valorem taxes in the counties where our properties are located. Ad valorem taxes are generally based on the appraised value of our crude oil, natural gas, and NGL properties. We generally expect that these expenses will increase as our number of mineral interest and non-operated working interests in oil and gas properties increase, as we continue oil and gas operating activities on operated properties, and as production from such properties increases.

*Production Costs* 

Production costs include gathering, processing, and transportation costs that we incur to gather and transport our oil and gas production to a point of sale. We generally expect that these costs will increase as our activities in our operating segment increase and as our oil and gas operating activities result in increased production volumes. For example, our production costs increased throughout 2024 and the first quarter of 2025 as our oil and gas operating activities came online and PhoenixOp operated production from our first operated properties.

***Depreciation, Depletion, and Amortization***

Depreciation, depletion, and amortization is the systematic expensing of the capitalized costs incurred to acquire, explore, and develop crude oil, natural gas, and NGL. We follow the successful efforts method of accounting, pursuant to which we capitalize the costs of our proved crude oil, natural gas, and NGL mineral interest properties, which are then depleted on a unit-of-production basis based on proved crude oil, natural gas, and NGL reserve quantities. Our estimates of crude oil, natural gas, and NGL reserves are, by necessity, projections based on geologic and engineering data, and there are uncertainties inherent in the interpretation of such data, as well as the projection of future rates of production. Any significant variance in these assumptions could materially affect the estimated quantity of the reserves, which could affect the rate of depletion related to our crude oil, natural gas, and NGL properties. Depreciation, depletion, and amortization also includes the expensing of office leasehold costs and equipment. We expect depletion to continue to increase in subsequent periods as our gross production of oil, gas, and other products increases.

***Selling, General, and Administrative Expense***

Selling, general, and administrative expenses consist of costs incurred related to overhead, office expenses, and fees for professional services such as audit, tax, legal, and other consulting services. In connection with this offering, we expect to incur additional costs related to being a public company. See "*—Factors Affecting the Comparability of Our Financial Condition and Results of Operations*."

Selling, general, and administrative expenses are allocated directly to a segment when there is a clear cost-benefit relationship between the expense and the segment that received the benefit. All other costs are aggregated within pools and allocated to each segment using a level-of-effort formula. We expect general and administrative expense to continue to increase period over period as we continue to grow and capitalize on opportunities within each segment; however, we do expect the percentage of growth to begin to decline as our business matures.

***Payroll and Payroll-Related Expense***

Payroll and payroll-related expenses consist of personnel costs for executive and employee compensation and related benefits. Payroll and payroll-related expenses are allocated directly to the segment associated with a respective employee, with the exception of corporate personnel, whose costs are allocated to the segments based on a reasonable level-of-effort formula. We expect payroll expenses to continue to increase period over period as we continue to grow; however, we do expect the percentage of growth to begin to decline as our business matures.

------

##### [**Table of Contents**](#toc)
***Advertising and Marketing Expense***

We incur advertising and marketing costs primarily in our securities segment. Advertising and marketing costs include third-party services related to public relations, market research, and the development of strategic initiatives, brand messaging, and communication materials that are produced for our investors to generate greater awareness and promote investor engagement. We expect advertising and marketing costs to vary from period to period as we undertake targeted campaigns or initiatives. Advertising and marketing costs are expensed as incurred.

***Interest Expense, Net***

We have financed a significant portion of our working capital requirements and acquisitions with borrowings under credit facilities and the issuance of debt securities. As a result, we incur interest expense that is affected by both fluctuations in interest rates and our financing decisions. We reflect interest paid to the lenders under credit facilities and holders of our debt securities and amortization of debt discount and debt issuance costs in interest expense in our consolidated statements of operations. Interest expense is primarily incurred within the securities segment and allocated to the mineral and non-operating segment and the operating segment based on the carrying value of the oil and gas properties owned by the respective segment at the balance sheet date. Allocated intersegment interest expense is eliminated in consolidation. We expect interest expense to continue to increase period over period as we raise additional capital to meet our objectives.

**How We Evaluate Our Operations** 

We use a variety of operational and financial measures to assess our performance. Among the measures considered by management are the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• volumes of oil, natural gas, and NGL produced;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• number of producing wells, spud wells, and permitted wells;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• commodity prices; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• revenue and EBITDA.

***Volumes of Oil, Natural Gas, and NGL Produced***

In order to track and assess the performance of our assets, we monitor and analyze our production volumes from our mineral and royalty interests. We also regularly compare projected volumes to actual reported volumes and investigate unexpected variances.

***Producing Wells, Spud Wells, and Permitted Wells***

In order to track and assess the performance of our assets, we monitor the number of permitted wells, spud wells, completions, and producing wells on our mineral and royalty interests in an effort to evaluate near-term production growth.

***Commodity Prices***

Historically, oil, natural gas, and NGL prices have been volatile and may continue to be volatile in the future. During the past five years, the posted price for West Texas Intermediate ("***WTI***") has ranged from a low of negative $36.98 per barrel in April 2020 to a high of $123.64 per barrel in March 2022. Over the same period, the Henry Hub spot market for natural gas has ranged from a low of $1.21 per MMBtu in November 2024 to a high of $23.86 per MMBtu in February 2021. Recently, oil and natural gas prices have been significantly volatile, going from $71.20 per barrel and $3.95 per MMBtu as of April 1, 2025 to a low of $57.13 per barrel as of

------

##### [**Table of Contents**](#toc)
May 5, 2025 and $2.71 per MMBtu as of April 25, 2025. Lower prices may not only decrease our revenues, but also potentially the amount of oil, natural gas, and NGL that our operators can produce economically. See "*Risk Factors—Risks Related to Our Business and Operations—Our business is sensitive to the price of oil and gas and sustained declines in prices may adversely affect our financial position, financial results, cash flows, access to capital, and ability to grow*."

*Oil*. The substantial majority of our oil production is sold at prevailing market prices, which fluctuate in response to many factors that are outside of our control. The majority of our oil production is priced at the prevailing market price with the final realized price affected by both quality and location differentials. The chemical composition of crude oil plays an important role in its refining and subsequent sale as petroleum products. As a result, variations in chemical composition relative to the benchmark crude oil, usually WTI, will result in price adjustments, which are often referred to as quality differentials. The characteristics that most significantly affect quality differentials include the density of the oil, as characterized by its American Petroleum Institute gravity, and the presence and concentration of impurities, such as sulfur. Location differentials generally result from transportation costs based on the produced oil's proximity to consuming and refining markets and major trading points.

*Natural Gas*. The U.S. New York Mercantile Exchange ("***NYMEX***") price quoted at Henry Hub is a widely used benchmark for the pricing of natural gas in the United States. The actual prices realized from the sale of natural gas differ from the quoted NYMEX price as a result of quality and location differentials. Quality differentials result from the heating value of natural gas measured in Btu and the presence of impurities, such as hydrogen sulfide, carbon dioxide, and nitrogen. Natural gas containing ethane and heavier hydrocarbons has a higher Btu value and will realize a higher volumetric price than natural gas that is predominantly methane, which has a lower Btu value. Natural gas with a higher concentration of impurities will realize a lower price due to the presence of the impurities in the natural gas when sold or the cost of treating the natural gas to meet pipeline quality specifications. Natural gas, which currently has limitations on transportation in certain regions, is subject to price variances based on local supply and demand conditions and the cost to transport natural gas to end-user markets.

*NGL*. NGL pricing is generally tied to the price of oil, but varies based on differences in liquid components and location.

***EBITDA***

We calculate EBITDA by adding back to net income (loss), interest income and expense and depreciation, depletion, amortization, and accretion expense for the respective periods. EBITDA is a non-GAAP supplemental financial measure used by our management to understand and compare our operating results across accounting periods, for internal budgeting and forecasting purposes, and to evaluate financial performance and liquidity, in each case, without regard to financing methods, capital structure, or historical cost basis. EBITDA is presented as supplemental disclosure as we believe it provides useful information to investors and others in understanding and evaluating our results, prospects, and liquidity period over period, including as compared to results of other companies. EBITDA does not represent and should not be considered an alternative to, or more meaningful than, net income (loss), income from operations, cash flows from operating activities, or any other measure of financial performance presented in accordance with GAAP as measures of financial performance. EBITDA has important limitations as an analytical tool because it excludes some but not all items that affect net income (loss), the most directly comparable GAAP financial measure. Other companies may not publish this or similar metrics, and our computation of EBITDA may differ from computations of similarly titled measures of other companies.

------

##### [**Table of Contents**](#toc)
**Factors Affecting the Comparability of Our Financial Condition and Results of Operations** 

Our historical financial condition and results of operations for the periods presented may not be comparable, either from period to period or going forward, primarily for the following reasons:

***Acquisitions***

There is typically a lag (*e.g.*, six to eighteen months) between when acquisitions are made and when those investments generate meaningful revenue. As a result, many of the investments we made in 2023 began generating revenue in 2024, and we anticipate the same delayed effect will occur from 2024 to 2025 and in the future as we continue to invest in new opportunities. We intend to pursue potential accretive acquisitions of additional mineral and royalty interests by capitalizing on our specialized software, as well as our management team's expertise and relationships. We believe we will be well-positioned to acquire such assets and, should such opportunities arise, identifying and executing acquisitions will be a key part of our strategy. However, if we are unable to make acquisitions on economically acceptable terms, our future growth may be limited, and any acquisitions we make may reduce, rather than increase, our cash flows and ability to make further investments in our business, satisfy our debt obligations and pay distributions on the Preferred Shares. Additionally, it is possible that we will effect divestitures of certain of our assets. Any such acquisitions or divestitures affect the comparability of our results of operations from period to period.

***Supply, Demand, Market Risk, and Their Impact on Oil Prices***

Commodity prices are a significant factor impacting our revenues, profitability, operating cash flows, the amount of capital we invest in our business, and redemption of our debt. During the period from January 1, 2021 through March 31, 2025, prices for crude oil reached a high of $123.70 per Bbl and a low of $47.47 per Bbl. Over the same time period, natural gas prices reached a high of $23.86 per MMBtu and a low of $1.21 per MMBtu. These prices experience large swings, sometimes on a day-to-day or week-to-week basis. For the three months ended March 31, 2025, the average NYMEX crude oil and natural gas prices were $71.79 per Bbl and $4.14 per MMBtu, respectively, representing a decrease of 7.4% and an increase of 93.0%, respectively, from the average NYMEX prices during the three months ended March 31, 2024. Recently, oil and natural gas prices have been significantly volatile, going from $71.20 per barrel and $3.95 per MMBtu as of April 1, 2025 to a low of $57.13 per barrel, as of May 5, 2025 and $2.71 per MMBtu as of April 25, 2025.

Commodity prices over that time period have been volatile and will likely continue to be volatile in the future. Crude oil prices over that time period were impacted by a variety of factors affecting current and expected supply and demand dynamics, including strong demand for crude oil, domestic supply reductions, OPEC control measures, market disruptions resulting from broader macroeconomic drivers, such as the Russia-Ukraine war, sanctions on Russia, and conflicts and tensions in the Middle East, including involving Israel and Iran. More recently, we believe that commodity prices, including crude oil prices, have been impacted by uncertainties regarding U.S. trade policies and concerns over slowing economic growth and resulting reductions in estimated oil consumption. Market prices for NGL are influenced by the components extracted, including ethane, propane, and butane and natural gasoline, among others, and the respective market pricing for each component. Other factors impacting supply and demand include weather conditions, pipeline capacity constraints, inventory storage levels, basis differentials, export capacity, and the strength of the U.S. dollar, as well as other factors, the majority of which are outside of our control.

We expect commodity price volatility to continue given the complex global dynamics of supply and demand that exist in the market. See "*Risk Factors—Risks Related to Our Business and Operations—Our business is sensitive to the price of oil and gas and sustained declines in prices may adversely affect our financial position, financial results, cash flows, access to capital, and ability to grow*" for further discussion on how volatility in commodity prices could impact us.

------

##### [**Table of Contents**](#toc)
We are currently monitoring our operations and industry developments, including our drilling operations and production plans, in light of recent changes in the commodity price environment and industry volatility. While we believe the company is well-positioned to navigate a lower-price environment, in the event of a prolonged period of lower commodity prices, our cash flows from operations would decrease and we may determine to adjust our business plan by adjusting capital expenditures, decreasing drilling operations, and/or reducing production plans, among other actions. Such actions and circumstances would also impact our revenue, operating expenses, and liquidity. For example, we may also be required to raise additional capital, above our current expectations, in order to fully realize our current or adjusted business plan.

We are also monitoring the impact of the tariffs announced by the United States federal government in 2025. While there is significant uncertainty as to the duration of these and any further tariffs, and the impacts these tariffs and any corresponding retaliatory tariffs will have on the oil and gas industry and on commodity prices, we do not currently expect that the financial impact of the tariffs will be material to capital expenditures or operating expenses in 2025. We expect the primary impact of the tariffs to be on certain drilling input costs, such as steel casing.

***Reporting and Compliance Expenses***

In connection with this offering, we expect to incur incremental non-recurring costs related to our transition to being a listed public company. We also expect to continue to incur significant and recurring expenses as a public reporting company, such as expenses associated with SEC reporting requirements, including annual and quarterly reports, SOX compliance expenses, costs associated with the employment of additional personnel, increased independent auditor fees, increased legal fees, investor relations expenses, and increased director and officer insurance expenses. Certain of these general and administrative expenses are not included in our historical financial statements.

***Derivatives***

To reduce the impact of fluctuations in oil, NGL, and natural gas prices on our revenues, we periodically enter into commodity derivative contracts with respect to certain of our oil, NGL, and natural gas production through various transactions that limit the risks of fluctuations of future prices. We plan to continue our practice of entering into such transactions to reduce the impact of commodity price volatility on our cash flows from operations.

***Impairment***

We evaluate our producing properties for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When assessing proved properties for impairment, we compare the expected undiscounted future cash flows of the proved properties to the carrying amount of the proved properties to determine recoverability. If the carrying amount of proved properties exceeds the expected undiscounted future cash flows, the carrying amount is written down to the properties' estimated fair value, which is measured as the present value of the expected future cash flows of such properties. The factors used to determine fair value include estimates of proved reserves, future commodity prices, timing of future production, and a risk-adjusted discount rate. The proved property impairment test is primarily impacted by future commodity prices, changes in estimated reserve quantities, estimates of future production, overall proved property balances, and depletion expense. If pricing conditions decline or are depressed, or if there is a negative impact on one or more of the other components of the calculation, we may incur proved property impairments in future periods. For example, commodity prices remain volatile and have generally decreased over the course of 2025. As a result, we may be required to incur such impairments in future periods.

***Debt and Interest Expense***

We have a significant amount of debt and may incur significantly more in the future to finance, among other things, acquisitions, investments in PhoenixOp, and payments on our debt. As a result, we incur interest expense

------

##### [**Table of Contents**](#toc)
that is affected by both fluctuations in interest rates and our financing decisions. Increases in interest rates as a result of inflation and a potentially recessionary economic environment in the United States could have a negative effect on the demand for oil and natural gas, as well as our borrowing costs.

***PhoenixOp***

Our wholly owned subsidiary, PhoenixOp, was formed to manage and conduct drilling, extraction, and related oil and gas operating activities. PhoenixOp commenced the spudding of its first wells in the third quarter of 2023. The first five wells completed by PhoenixOp began production in the first quarter of 2024, and the next five wells began production in the second quarter of 2024. As of March 31, 2025, PhoenixOp placed an additional 27 wells in production, and had an additional 41 wells in various stages of development. Given its limited operations in 2023, PhoenixOp's revenue was $1.2 million for that year and ramped to $125.6 million in 2024. For the three months ended March 31, 2025, PhoenixOp's operations increased as compared to the three months ended March 31, 2024 and its revenue was $84.3 million. As more wells continue to commence production, and more properties are contributed to PhoenixOp for potential future production, we expect to derive a significant portion of our total revenues from PhoenixOp and our operating segment. We believe these operations represent a significant source of potential revenue growth. In addition, as PhoenixOp is an E&P operator, it incurs greater operating costs related to drilling, extraction, and related oil and gas operating activities than our mineral and non-operating activities. As a result, we expect our operating costs to increase as PhoenixOp's operations expand and become a greater portion of our overall business. These operations continue to execute well against our business plan and we expect these trends to continue through 2025. We are currently monitoring PhoenixOp operations and industry developments in light of recent changes in the commodity price environment. While we believe these operations are well-positioned to navigate a lower-price environment, we may reduce operations, such as reducing rigs or completion crews, in response to prolonged periods of decreased commodity prices, which would reduce our revenue generated by PhoenixOp and could have an adverse effect on our business, financial condition, results of operations, and cash flows from operations.

**2025 Outlook** 

The following table presents our current estimates of certain financial and operating results for the full year of 2025. These forward-looking statements reflect our expectations as of the date of this offering circular, and are subject to substantial uncertainty. Our results are inherently unpredictable, may fluctuate significantly, and may be materially affected by many factors, such as fluctuations in commodity prices, changes in global economic and geopolitical conditions, and changes in governmental regulations, among others. The following estimates are based on, among other things, our anticipated capital expenditures and drilling and operations programs, our ability to drill and complete wells consistent with our expectations, certain drilling, completion, and equipping cost assumptions, and certain well performance assumptions. In addition, achieving these estimates and maintaining the required drilling activity to achieve these estimates will depend on the availability of capital, the existing regulatory environment, commodity prices and differentials, rig and service availability, and actual drilling results, as well as other factors. Factors that could cause or contribute to changes of such estimates include those described in the sections entitled "*Risk Factors*" and "*Cautionary Statement Regarding Forward-Looking Statement*" presented elsewhere in this prospectus. If any of these risks and uncertainties actually occur or the assumptions underlying our estimates are incorrect, our actual operating results, costs and activities may be materially and adversely different from our expectations or guidance. For example, we are currently monitoring our operations and industry developments in light of recent changes in the commodity price environment and industry volatility. While we believe the company is well-positioned to navigate a lower-price environment, a prolonged period of commodity prices below those assumed for purposes of our business plan and current estimates would have an adverse effect on our business, financial condition, results of operations, cash flows from operations, and 2025 outlook. If we adjust our business plan in response to such events, we may subsequently revise our 2025 outlook to reduce our expected ranges. For example, in such event, our expected ranges for revenue, net income, EBITDA, and production would likely decrease. Further, our total outstanding debt may increase to the extent we are required to raise additional capital, above our current expectations, in order

------

##### [**Table of Contents**](#toc)
to fully realize our current or adjusted business plan. In addition, investors should recognize that the reliability of any guidance diminishes in as much as it involves estimates for figures farther in the future, and so the farther we are from the end of 2025 the more likely that our actual results will differ materially from our guidance. In light of the foregoing, investors are urged to put our guidance in context and not to place undue reliance upon it.

---

| | | |
|:---|:---|:---|
|  | **As of and for the Year Ending<br>December 31, 2025** | **As of and for the Year Ending<br>December 31, 2025** |
|  | **Lower Range** | **Upper Range** |
|  | **(dollars in thousands)** | **(dollars in thousands)** |
|  Revenue<sup>(1)</sup> | $595000 | $625000 |
|  Total operating expenses | 442000 | 430000 |
|  Net income | 10000 | 35000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense, net | 143000 | 160000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation, depletion, amortization, and accretion expense | 157000 | 180000 |
|  EBITDA<sup>(2)</sup> | 310000 | 375000 |
|  Total outstanding debt<sup>(3)</sup> | 1550000 | 1800000 |
|  Production: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Crude oil (Bbls) | 8231000 | 8404000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas (Mcf)<sup>(4)</sup> | 10600000 | 10845000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NGLs (Bbls) | 396000 | 406000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total (Boe) (6:1) | 10393667 | 10617500 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Average daily production (Boe/d) (6:1) | 28476 | 29089 |

---

(1) Based on an average benchmark commodity price of $71.98/Bbl for crude oil and $3.94/Mcf for natural gas.
Recently, oil and natural gas prices have been significantly volatile, going from $71.20 per barrel and $3.95 per MMBtu as of April 1, 2025 to a low of $57.13 per barrel, as of May 5, 2025 and $2.71 per MMBtu, as of April 25, 2025,
before recovering to $74.84 per barrel and $3.851 per MMBtu as of April 25, 2025. See "*Risk Factors—Risks Related to Our Business and Operations—Our business is sensitive to the price of oil and gas and sustained declines in prices may adversely affect our financial position, financial results, cash flows, access to capital, and ability to grow*."

(2) EBITDA is a non-GAAP financial measure. See "*—Non-GAAP Financial Measures*."

(3) Assumes repayment of an aggregate of $103.3 million of debt outstanding as of December 31, 2024 and
maturing prior to December 31, 2025, without any prepayments of debt not maturing prior to December 31, 2025, and the issuance of between $665.4 million and $915.4 million of new debt during the year ending December 31,
2025. (4) Revenue from natural gas has not historically represented a significant portion of our total revenues. We
anticipate this trend to continue and, as a result, we currently estimate 844 MMcf to 866 MMcf of natural gas volumes (of the production range presented above) will be sold and recognized as revenues for the year ending December 31, 2025.

------

##### [**Table of Contents**](#toc)
**Results of Operations for the Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024** 

The following table summarizes our consolidated results of operations for the periods indicated:

---

| | | | |
|:---|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,****Change** | **Change** |
|  | **2025** | **2024<br>(As Restated)** | **%** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  **Revenues** |  |  |  |
|  Mineral and royalty revenues | $29886 | $33984) | (12)% |
|  Product sales | 84269 | 6678 | 1162% |
|  Water services | 1503 |  | NM |
|  Other revenues | 89 | 18 | 394% |
|  Total revenues | $115747 | $40680 | 185% |
|  **Operating expenses** |  |  |  |
|  Cost of sales | $27083 | $7982 | 239% |
|  Depreciation, depletion, amortization, and accretion | 31225 | 13405 | 133% |
|  Selling, general, and administrative | 9514 | 5250 | 81% |
|  Payroll and payroll-related | 7929 | 4825 | 64% |
|  Advertising and marketing | 320 | 17 | 1782% |
|  Loss on sale of assets |  | 564) | (100)% |
|  Impairment expense | 516 |  | NM |
|  Total operating expenses | $76587 | $32043 | 139% |
|  Income from operations | $39160 | $8637 | 353% |
|  **Other income (expenses)** |  |  |  |
|  Interest income | $689 | $22 | 3032% |
|  Interest expense, net | (35849) | (16921) | (112)% |
|  Gain (loss) on derivatives | 1920 | (67) | (2966)% |
|  Loss on debt extinguishment | (321) | (76) | 322% |
|  Total other expenses | $(33561) | $(17042) | (97)% |
|  **Net income (loss)** | $5599 | $(8405) | 167% |

---

NM – not meaningful.

The following tables summarize our segment operating profit (loss) for the periods indicated:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** |
|  | **Mineral and<br>Non-operating** | **Operating** | **Securities** | **Eliminations** | **Total** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  Total revenues | $29924 | $85772 | $29841 | $(29790) | $115747 |
|  Total operating expenses | (22266) | (49515) | (4844) | 38 | (76587) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Segment operating profit (loss) | $7658 | $36257 | $24997 | $(29752) | $39160 |

---

------

##### [**Table of Contents**](#toc)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended March 31, 2024** | **Three Months Ended March 31, 2024** | **Three Months Ended March 31, 2024** | **Three Months Ended March 31, 2024** | **Three Months Ended March 31, 2024** |
|  | **Mineral and<br>Non-operating** | **Operating** | **Securities** | **Eliminations** | **Total** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  Total revenues | $33995 | $6678 | $15561 | $(15554) | $40680 |
|  Total operating expenses | (23504) | (5776) | (2774) | 11 | (32043) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Segment operating profit (loss) | $10491 | $902 | $12787 | $(15543) | $8637 |

---

The following table summarizes our production data and average realized prices for the periods indicated:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Change** | **Change** |
|  | **2025** | **2024** | **Amount** | **%** |
|  **Production Data:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Crude oil (Bbls) | 1552609 | 578411 | 974198 | 168% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas (Mcf) | 712492 | 556282 | 156210 | 28% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NGL (Bbls) | 87962 | 80367 | 7595 | 9% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total (BOE)(6:1) | 1759320 | 751492 | 1007828 | 134% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Average daily production (BOE/d) (6:1) | 19548 | 8258 | 11290 | 137% |
|  **Average Realized Prices<sup>(a)</sup>:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Crude oil (Bbl) | $70.50 | $64.51 | $5.99 | 9% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas (Mcf) | $3.13 | $2.48 | $0.65 | 26% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NGL (Bbl) | $27.95 | $24.48 | $3.47 | 14% |

---

(a) Average realized prices are net of certain post-production costs that are deducted from our royalties.

***Revenues***

The following table shows the components of our revenue for the periods presented:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Change** | **Change** |
|  | **2025** | **2024** | **Amount** | **%** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  Mineral and royalty revenues |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Crude oil | $26263 | $30760 | $(4497) | (15)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas | 1803 | 1366 | 437 | 32% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NGL | 1820 | 1858 | (38) | (2)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total mineral and royalty revenues | 29886 | 33984 | (4098) | (12)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Product sales |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Crude oil | 83202 | 6554 | 76648 | 1169% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas | 428 | 15 | 413 | 2753% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NGL | 639 | 109 | 530 | 486% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total product sales | 84269 | 6678 | 77591 | 1162% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Water services | 1503 |  | 1503 | NM |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other revenue | 89 | 18 | 71 | 394% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total revenues | $115747 | $40680 | $75067 | 185% |

---

NM – not meaningful.

Revenue was $115.7 million for the three months ended March 31, 2025, as compared to $40.7 million for the same period in 2024, an increase of $75.1 million, or 185%. The increase was primarily attributable to a

------

##### [**Table of Contents**](#toc)
$77.6 million increase in product sales generated from our direct drilling, extraction, and related oil and gas operating activities, partially offset by a $4.1 million decrease in mineral and royalty revenues generated from our mineral and non-operating activities.

*Mineral and Non-Operating Segment* 

Mineral and non-operating segment revenue was $29.9 million for the three months ended March 31, 2025, as compared to $34.0 million for the same period in 2024, a decrease of $4.1 million, or 12%. The decrease in segment revenue was primarily driven by decreased revenues from crude oil due to a 21% decrease in production volumes from our acquisitions of mineral and non-operated working interests in 2025 as compared to the same period in 2024, partially offset by a 7.8% increase in the average realized price for crude oil within the mineral and non-operating segment.

*Operating Segment* 

Operating segment revenue was $85.8 million for the three months ended March 31, 2025, as compared to $6.7 million for the same period in 2024, an increase of $79.1 million, or 1,184%. The increase in segment revenue was driven by increased wells placed into service, of which there were 37 producing wells placed into service as of March 31, 2025, as compared to 10 producing wells in service as of March 31, 2024.

***Operating Expenses***

*Cost of Sales* 

The following table shows the components of our cost of sales for the periods presented:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Change** | **Change** |
|  | **2025** | **2024** | $**%** | **%** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  Cost of sales |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Production taxes | $10206 | $3892 |  | 162% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lease operating expenses | 7877 | 3953 |  | 99% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Production costs | 9000 | 137 |  | 6469% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $27083 | $7982 |  | 239% |

---

Cost of sales was $27.1 million for the three months ended March 31, 2025, as compared to $8.0 million for the same period in 2024, an increase of $19.1 million, or 239%. The increase was primarily driven by increased drilling, extraction and related oil and gas operating activities associated with wells operated by PhoenixOp, partially offset by a decrease in cost of sales due to decreased production volumes from our acquisitions of mineral and non-operated working interests during the three months ended March 31, 2025 as compared to the same period in 2024.

*<u>Mineral and Non-Operating Segment</u>*

Mineral and non-operating segment cost of sales was $4.6 million for the three months ended March 31, 2025, as compared to $6.4 million for the same period in 2024, a decrease of $1.8 million, or 28%. The decrease in segment cost of sales was primarily driven by a 21% decrease in crude oil production volumes from our acquisitions of mineral and non-operated working interests during the three months ended March 31, 2025 as compared to the same period in 2024.

*<u>Operating Segment</u>*

Operating segment cost of sales was $22.5 million for the three months ended March 31, 2025, as compared to $1.6 million for the same period in 2024, an increase of $20.9 million, or 1,307%. The increase in segment cost

------

##### [**Table of Contents**](#toc)
of sales was driven by increased production from PhoenixOp, which commenced operated production in the first quarter of 2024. As of March 31, 2025, there were 37 producing wells placed into service, as compared to 10 producing wells in service as of March 31, 2024, resulting in increased lease operating expenses, production and *ad valorem* taxes, and production costs during the three months ended March 31, 2025 as compared to the same period in 2024.

*Depreciation, Depletion, Amortization, and Accretion Expense* 

The following table shows the components of our depletion, depreciation, amortization, and accretion expense for the periods presented:

---

| | | | |
|:---|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,****Change** | **Change** |
|  | **2025** | **2024<br>(As Restated)** | **%** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  Depreciation, depletion, amortization, and accretion |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depletion | $31258 | $13251 | 136% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation | 5 | 81) | (94)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accretion on asset retirement obligations | (38) | 73) | (152)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $31225 | $13405 | 133% |

---

Depreciation, depletion, amortization, and accretion expense was $31.2 million for the three months ended March 31, 2025, as compared to $13.4 million for the same period in 2024, an increase of $17.8 million, or 133%, primarily due to a $21.2 million increase in depletion expense within the operating segment driven by increases in our depletable cost bases and depletion rate, partially offset by a $3.3 million decrease within the mineral and non-operating segment primarily due to decreases in the depletion rate in the first quarter of 2025.

*<u>Mineral and Non-Operating Segment</u>*

Depletion for the mineral and non-operating segment was $8.3 million for the three months ended March 31, 2025, as compared to $11.6 million for the same period in 2024, a decrease of $3.3 million, or 29%. The decrease in our segment depletion expense was predominantly driven by decreases in the depletion rate associated with our capitalized property acquisition costs and development capital expenditures during the three months ended March 31, 2025 as compared to the same period in 2024.

*<u>Operating Segment</u>*

Depletion for the operating segment was $23.0 million for the three months ended March 31, 2025, as compared to $1.8 million for the same period in 2024, an increase of $21.2 million, or 1,169%, primarily due to increases in the depletable cost bases and increases in the depletion rate driven by increased production during the three months ended March 31, 2025 as compared to the same period in 2024.

*Selling, General, and Administrative Expense* 

Selling, general, and administrative expense was $9.5 million for the three months ended March 31, 2025, as compared to $5.3 million for the same period in 2024, an increase of $4.3 million, or 81%. The increase was primarily due to a $1.7 million increase in fees associated with land acquisition and title work in our mineral and non-operating segment, a $1.5 million increase in allocated corporate overhead, and a $0.7 million increase in legal costs directly associated with our securities offerings, as further discussed below.

*<u>Mineral and Non-Operating Segment</u>*

Selling, general, and administrative expense for the mineral and non-operating segment was $4.9 million for three months ended March 31, 2025, as compared to $2.3 million for the same period in 2024, an increase of

------

##### [**Table of Contents**](#toc)
$2.6 million, or 112%. The increase was primarily due to increased fees associated with land acquisition and title work of $1.7 million and higher allocated corporate overhead of $0.8 million during the three months ended March 31, 2025 as compared to the same period in 2024. This was primarily associated with our increased activity in acquiring leasehold and mineral assets.

*<u>Operating Segment</u>*

Selling, general, and administrative expense for the operating segment was $2.0 million for the three months ended March 31, 2025 as compared to $1.3 million for the same period in 2024, an increase of $0.7 million, or 53%, primarily due to increased allocated corporate overhead of $0.5 million to the operating segment.

*<u>Securities Segment</u>*

Selling, general, and administrative expense for the securities segment was $2.6 million for the three months ended March 31, 2025, as compared to $1.6 million for the same period in 2024, an increase of $1.0 million, or 59%. The increase was primarily due to increased legal costs directly associated with our securities offerings of $0.7 million and increased allocated corporate overhead of $0.2 million.

*Payroll and Payroll-Related Expense* 

Payroll and payroll-related expense was $7.9 million for the three months ended March 31, 2025, as compared to $4.8 million for the same period in 2024, an increase of $3.1 million, or 64%, primarily as a result of increased employee headcount and compensation. Employee headcount increased from 113 employees at March 31, 2024 to 154 employees at March 31, 2025.

*<u>Mineral and Non-Operating Segment</u>*

Payroll and payroll-related expense for the mineral and non-operating segment was $4.0 million for the three months ended March 31, 2025, as compared to $2.6 million for the same period in 2024, an increase of $1.3 million, or 52%, due to increased activity in acquiring leasehold and mineral assets.

*<u>Operating Segment</u>*

Payroll and payroll-related expense for the operating segment was $2.0 million for the three months ended March 31, 2025, as compared to $1.1 million for the same period in 2024, an increase of $1.0 million, or 91%, primarily due to the increased number of personnel engaged in our oil and gas operating activities.

*<u>Securities Segment</u>*

Payroll and payroll-related expense for the securities segment was $2.0 million for the three months ended March 31, 2025, as compared to $1.2 million for the same period in 2024, an increase of $0.8 million, or 69%, primarily due to the increased number of personnel engaged in the administration and management of our securities offerings.

*Advertising and Marketing Expense* 

Advertising and marketing expense was $0.3 million for the three months ended March 31, 2025, as compared to less than $0.1 million for the same period in 2024, which was not material for any of the periods presented.

*Loss on Sale of Assets* 

Loss on sale of assets was $0.6 million for the three months ended March 31, 2024, as result of the disposition of certain mineral interests in the Williston Basin within the mineral and non-operating segment, with no comparable activity in the current-year period.

------

##### [**Table of Contents**](#toc)
*Impairment Expense* 

Impairment expense was $0.5 million for the three months ended March 31, 2025, primarily as a result of lease expirations within the mineral and non-operating segment, with no comparable activity in the prior-year period.

***Other Expenses***

*Interest Expense, Net* 

Interest expense, net, was $35.8 million for the three months ended March 31, 2025, as compared to $16.9 million for the same period in 2024, an increase of $18.9 million, or 112%. The increase was primarily due to a $11.9 million increase in interest costs associated with sales of our unregistered debt securities, which increased from $497.9 million outstanding at March 31, 2024 to $1,084.3 million outstanding at March 31, 2025, with no significant changes in interest rates between the periods, and $8.2 million in interest costs associated with the Fortress Credit Agreement for the three months ended March 31, 2025 that did not occur in the prior-year period. The increase was partially offset by decreased interest costs of $1.3 million associated with merchant cash advances and a line of credit which were previously outstanding as of March 31, 2024, but were repaid in full prior to 2025.

*Gain (Loss) on Derivatives* 

Gain on derivatives was $1.9 million for the three months ended March 31, 2025, as compared to a loss on derivatives of $0.1 million for the same period in 2024, primarily due to changes in the forward commodity price curves for crude oil.

*Loss on Debt Extinguishment* 

Loss on debt extinguishment was $0.3 million for the three months ended March 31, 2025, as compared to $0.1 million for the same period in 2024. The increase was primarily due to increased write-offs of debt issuance costs associated with the redemption of bonds issued pursuant to Regulation A and Regulation D, of which $2.6 million of bonds were redeemed during the three months ended March 31, 2025, as compared to $1.0 million of bonds redeemed for the same period in 2024.

The following table summarizes the par value of bonds redeemed for the periods indicated:

---

| | | | |
|:---|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,****Change** | **Change** |
|  | **2025** | **2024** | **%** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  August 2023 506(c) Bonds | $1593 | $250 | 537% |
|  Reg A Bonds | 319 | 517) | (38)% |
|  December 2022 506(c) Bonds | 40 | 240) | (83)% |
|  Adamantium Bonds | 500 |  | NM |
|  July 2022 506(c) Bonds | 100 |  | NM |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $2552 | $1007 | 153% |

---

NM – not meaningful.

------

##### [**Table of Contents**](#toc)
**Results of Operations for the Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023** 

The following table summarizes our consolidated results of operations for the periods indicated:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,****Change** | **Change** |
|  | **2024** | **2023<br>(As Restated)** | **%** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  **Revenues** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mineral and royalty revenues | $152999 | $118088 | 30% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Product sales | 125649 |  | NM |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Water services | 2478 |  | NM |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other revenues | 101 | 17 | 494% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total revenues | $281227 | $118105 | 138% |
|  **Operating expenses** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cost of sales | $63947 | $19733 | 224% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation, depletion, amortization, and accretion | 85977 | 34228 | 151% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Advertising and marketing | 679 | 4136) | (84)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Selling, general, and administrative | 29167 | 14314 | 104% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payroll and payroll-related | 27934 | 12733 | 119% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on sale of assets | 564 |  | NM |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Impairment expense | 564 | 974) | (42)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total operating expenses | $208832 | $86118 | 142% |
|  Income from operations | $72395 | $31987 | 126% |
|  **Other expenses** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income | $705 | $66 | 968% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense | (90210) | (47882) | (88)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on derivatives | (5986) | (32) | 18606% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on debt extinguishment | (1697) | (328) | 417% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other expenses | $(97188) | $(48176) | (102)% |
|  **Net loss** | $(24793) | $(16189) | (53)% |

---

NM – not meaningful.

The following tables summarize our segment operating profit (loss) for the periods indicated:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** |
|  | **Mineral and<br>Non-operating** | **Operating** | **Securities** | **Eliminations** | **Total** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  Total revenues | $153135 | $128127 | $102131 | $(102166) | $281227 |
|  Total operating expenses | (109636) | (83982) | (15350) | 136 | (208832) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Segment operating profit (loss) | $43499 | $44145 | $86781 | $(102030) | $72395 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31, 2023** | **Year Ended December 31, 2023** | **Year Ended December 31, 2023** | **Year Ended December 31, 2023** | **Year Ended December 31, 2023** |
|  | **Mineral and<br>Non-operating** | **Operating** | **Securities** | **Eliminations** | **Total** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  Total revenues | $116902 | $1225 | $40509 | $(40531) | $118105 |
|  Total operating expenses | (67884) | (6725) | (11548) | 39 | (86118) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Segment operating profit (loss) | $49018 | $(5500) | $28961 | $(40492) | $31987 |

---

------

##### [**Table of Contents**](#toc)
The following table summarizes our production data and average realized prices for the periods indicated:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Change** | **Change** |
|  | **2024** | **2023** | **Amount** | **%** |
|  **Production Data:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Crude oil (Bbls) | 3830461 | 1446928 | 2383533 | 165% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas (Mcf) | 2979341 | 2152939 | 826402 | 38% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NGL (Bbls) | 415363 | 201454 | 213909 | 106% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total (BOE)(6:1) | 4742381 | 2007205 | 2735176 | 136% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Average daily production (BOE/d) (6:1) | 12993 | 5499 | 7494 | 136% |
|  **Average Realized Prices<sup>(a)</sup>:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Crude oil (Bbl) | $68.49 | $73.10 | $(4.61) | (6)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas (Mcf) | $1.86 | $3.15 | $(1.29) | (41)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NGL (Bbl) | $25.22 | $27.50 | $(2.28) | (8)% |

---

(a) Average realized prices are net of certain post-production costs that are deducted from our royalties.

***Revenues***

The following table shows the components of our revenue for the periods presented:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,****Change** | **Change** |
|  | **2024** | **2023** | **%** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  Mineral and royalty revenues |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Crude oil | $138640 | $105771 | 31% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas | 5424 | 6790) | (20)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NGL | 8935 | 5527 | 62% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total mineral and royalty revenues | $152999 | $118088 | 30% |
|  Product sales |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Crude oil | $123340 | $— | NM |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas | 315 |  | NM |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NGL | 1994 |  | NM |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total product sales | $125649 | $— | NM |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Water services | $2478 | $— | NM |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other revenue | 101 | 17 | 494% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total revenues | $281227 | $118105 | 138% |

---

NM – not meaningful.

Revenue was $281.2 million for the year ended December 31, 2024, as compared to $118.1 million for the same period in 2023, an increase of $163.1 million, or 138%. The increase was primarily attributable to a $125.6 million increase in product sales generated from our direct drilling, extraction, and related oil and gas operating activities and a $34.9 million increase in mineral and royalty revenues generated from our mineral and non-operating activities.

*Mineral and Non-Operating Segment* 

Mineral and non-operating segment revenue was $153.1 million for the year ended December 31, 2024, as compared to $116.9 million for the same period in 2023, an increase of $36.2 million, or 31%. The increase in

------

##### [**Table of Contents**](#toc)
segment revenue was primarily driven by an overall increase in our mineral interests and non-operated working interests in oil and gas properties, which have expanded significantly in recent years. Acquisitions of such interests generally generate revenue in subsequent periods (*e.g.,* on a six to eighteen-month lag). As a result, our mineral and non-operating segment revenue has increased over time as our portfolio of mineral interests and non-operated working interests in oil and gas properties has expanded. During the year ended December 31, 2024, we closed 1,802 unique transactions that added 134,809 NMAs of leasehold interests and 52,959 NRAs of mineral interests to our portfolio, as compared to 790 unique transactions, 64,569 NMA of leasehold interests, and 15,086 NRAs of mineral interests for the same period in 2023. The increase in our mineral and non-operating segment revenue was partially offset by lower commodity prices and higher post-production costs passed through to us relative to the increase in production volumes.

*Operating Segment* 

Operating segment revenue was $128.1 million for the year ended December 31, 2024, as compared to $1.2 million for the same period in 2023. The increase in segment revenue was driven by the commencement of drilling activities by PhoenixOp. PhoenixOp began its operations in the third quarter of 2023 with the acquisition of five producing wells from another operator. As a result, segment revenues for the year ended December 31, 2023 were not material. PhoenixOp commenced production on its operated wells in 2024 and placed into service 32 additional wells as of December 31, 2024, resulting in increased segment revenue for the year ended December 31, 2024 as compared to the same period in 2023.

***Operating Expenses***

The following table shows the components of our cost of sales for the periods presented:

*Cost of Sales* 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Change** | **Change** |
|  | **2024** | **2023** | $**%** | **%** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  Cost of sales |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lease operating expenses | $26424 | $9011 |  | 193% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Production taxes | 25457 | 10672 |  | 139% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Production costs | 12066 | 50 |  | 24032% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $63947 | $19733 |  | 224% |

---

Cost of sales was $63.9 million for the year ended December 31, 2024, as compared to $19.7 million for the same period in 2023, an increase of $44.2 million, or 224%. The increase was primarily driven by the commencement of our direct drilling, extraction, and related oil and gas operating activities in 2024, as well as an increase in our mineral interests and non-operated working interests in oil and gas properties.

*<u>Mineral and Non-Operating Segment</u>*

Mineral and non-operating segment cost of sales was $30.2 million for the year ended December 31, 2024, as compared to $19.3 million for the same period in 2023, an increase of $10.9 million, or 57%. The increase in segment cost of sales was primarily driven by an overall increase in our mineral interests and non-operated working interests in oil and gas properties and the resulting increase in lease operating expenses and production taxes.

*<u>Operating Segment</u>*

Operating segment cost of sales was $33.8 million for the year ended December 31, 2024, as compared to $0.5 million for the same period in 2023. The increase in segment cost of sales was driven by the commencement

------

##### [**Table of Contents**](#toc)
of operated production from newly drilled wells by PhoenixOp in the first quarter of 2024, at which time we began to recognize lease operating expenses, production and *ad valorem* taxes, and production costs in our operating segment. PhoenixOp began its operations in the third quarter of 2023, when it became the operator of five producing wells acquired from another operator. As a result, there were no material cost of sales incurred for the year ended December 31, 2023.

*Depreciation, Depletion, Amortization, and Accretion Expense* 

The following table shows the components of our depletion, depreciation, amortization, and accretion expense for the period presented:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,****Change** | **Change** |
|  | **2024** | **2023** | **%** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  Depletion, depreciation, amortization and accretion |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depletion | $85706 | $34035 | 152% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation | 91 | 136) | (33)% |
|  Accretion on asset retirement obligations | 180 | 57 | 216% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $85977 | $34228 | 151% |

---

Depreciation, depletion, amortization, and accretion expense was $86.0 million for the year ended December 31, 2024, as compared to $34.2 million for the same period in 2023, an increase of $51.7 million, or 151%, primarily due to an increase in our depletable bases within both the mineral and non-operating segment and the operating segment. On a per unit basis, depletion expense was $18.13 per Boe and $17.05 per Boe for the years ended December 31, 2024 and 2023, respectively. The increase in our depletion expense per Boe was predominantly driven by a higher depletion rate for the year ended December 31, 2024 as compared to the year ended December 31, 2023, as a direct result of the incurrence of significant capital expenditures related to developing operated wells under our operating entity, PhoenixOp. The depletion rate for the development capital is depleted at a higher rate as compared to leasehold due to the use of proved developed reserves versus total proved reserves under the successful efforts accounting method.

*<u>Mineral and Non-Operating Segment</u>*

Depletion for the mineral and non-operating segment was $50.6 million for the year ended December 31, 2024, as compared to $34.2 million for the same period in 2023. The increase in our segment depletion expense was predominantly driven by increased production and increased capital expenditures.

*<u>Operating Segment</u>*

Depletion for the operating segment was $35.4 million for the year ended December 31, 2024, as compared to less than $0.1 million for the same period in 2023 due to limited operations in the period.

*Selling, General, and Administrative Expense* 

Selling, general, and administrative expense was $29.2 million for the year ended December 31, 2024, as compared to $14.3 million for the same period in 2023, an increase of $14.9 million, or 104%. The increase was primarily due to a $9.8 million increase in corporate overhead costs not directly associated with the segments but which have been allocated to the segments based on headcount and a level-of-effort formula, including a $8.8 million increase in legal, accounting, and consulting professional services fees, a $2.8 million increase in costs associated with our capital raise initiatives in our securities segment, and a $2.8 million increase in fees associated with land acquisition and title work in our mineral and non-operating segment, as further described below.

------

##### [**Table of Contents**](#toc)
*<u>Mineral and Non-Operating Segment</u>*

Selling, general, and administrative expense for the mineral non-operating segment was $14.5 million for the year ended December 31, 2024, as compared to $6.8 million for the same period in 2023, an increase of $7.7 million, or 113%. The increase was primarily due to higher allocated corporate overhead of $4.5 million and increased fees associated with land acquisition and title work of $2.8 million during the year ended December 31, 2024 as compared to the same period in the prior year. This was primarily associated with our increased activity in acquiring leasehold and mineral assets.

*<u>Operating Segment</u>*

Selling, general, and administrative expense for the operating segment was $6.2 million for the year ended December 31, 2024, as compared to $2.8 million for the same period in 2023, an increase of $3.4 million, or 121%. The increase was due to PhoenixOp's first full year period of full-time operations. PhoenixOp began its drilling and completion activities in September 2023 and operations continually grew throughout 2024.

*<u>Securities Segment</u>*

Selling, general, and administrative expense for the securities segment was $8.5 million for the year ended December 31, 2024, as compared to $4.7 million for the same period in 2023, an increase of $3.8 million, or 81%. The increase was primarily due to increased legal costs associated with our securities offerings of $2.0 million, increased securities administration costs of $0.8 million, and increased allocated corporate overhead of $0.9 million.

*Payroll and Payroll-Related Expense* 

Payroll and payroll-related expense was $27.9 million for the year ended December 31, 2024, as compared to $12.7 million for the same period in 2023, an increase of $15.2 million, or 119%, primarily as a result of increased employee headcount, which increased from 118 employees at December 31, 2023 to 135 employees at December 31, 2024.

*<u>Mineral and Non-Operating Segment</u>*

Payroll and payroll-related expense for the mineral and non-operating segment was $13.3 million for the year ended December 31, 2024, as compared to $6.4 million for the same period in 2023, an increase of $6.9 million, or 108%, due to increased activity in acquiring leasehold and mineral assets.

*<u>Operating Segment</u>*

Payroll and payroll-related expense for the operating segment was $8.6 million for the year ended December 31, 2024, as compared to $3.2 million for the same period in 2023, an increase of $5.4 million, or 171%, due to PhoenixOp's first full year period of full time operations.

*<u>Securities Segment</u>*

Payroll and payroll-related expense for the securities segment was $6.1 million for the year ended December 31, 2024, as compared to $3.2 million for the same period in 2023, an increase of $2.9 million, or 91%, primarily due to the increased number of personnel engaged in the administration and management of our securities offerings.

*Advertising and Marketing Expense* 

Advertising and marketing expense was $0.7 million for the year ended December 31, 2024, as compared to $4.1 million for the same period in 2023, a decrease of $3.5 million, or 84%. The decrease was primarily the result of spending $3.6 million on an audio marketing campaign in 2023 attributable to the securities segment that did not recur in 2024.

------

##### [**Table of Contents**](#toc)
*Loss on Sale of Assets* 

Loss on sale of assets was $0.6 million for the year ended December 31, 2024 as a result of the disposition of certain mineral interests in the Williston basin within the mineral and non-operating segment, with no comparable activity in the prior-year period.

*Impairment Expense* 

Impairment expense was $0.6 million for the year ended December 31, 2024, as compared to $1.0 million for the same period in 2023. In 2024, impairment expense was a result of write-offs associated with title defects and lease expirations within the mineral and non-operating segment, whereas impairment expense in 2023 was attributable to a decrease in natural gas prices and the resulting impairment of the carrying value of our proved natural gas properties within the mineral and non-operating segment.

**Other Expenses** 

*Interest Expense* 

Interest expense was $90.2 million for the year ended December 31, 2024, as compared to $47.9 million for the same period in 2023, an increase of $42.3 million, or 88%. The increase was primarily due to increased sales of our unregistered debt securities, which increased from $421.8 million outstanding at December 31, 2023 to $737.9 million outstanding at December 31, 2024, with no significant changes in interest rates between the periods, and a $2.9 million increase in amortized debt discount and debt issuance costs for the year ended December 31, 2024 as compared to the prior-year period.

*Loss on Derivatives* 

Loss on derivatives was $6.0 million for the year ended December 31, 2024, as compared to less than $0.1 million for the same period in 2023. The increase was primarily a result of unfavorable changes in the mark-to-market value of commodity derivatives entered into during the second half of 2024, with limited comparable activity for the same period in 2023.

*Loss on Debt Extinguishment* 

Loss on debt extinguishment was $1.7 million for the year ended December 31, 2024, as compared to $0.3 million for the same period in 2023. The increase was primarily due to increased write-offs of debt issuance costs associated with the early redemptions of bonds issued pursuant to Regulation A and Regulation D, of which $17.7 million of bonds were redeemed during the year ended December 31, 2024, as compared to $4.3 million of bonds redeemed for the same period in 2023.

The following table summarizes the par value of bonds redeemed for the periods indicated:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,****Change** | **Change** |
|  | **2024** | **2023** | **%** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  August 2023 506(c) Bonds | $12426 | $265 | 4589% |
|  Reg A Bonds | 2306 | 2122 | 9% |
|  December 2022 506(c) Bonds | 1592 | 1004 | 59% |
|  Adamantium Bonds | 1319 |  | NM |
|  July 2022 506(c) Bonds | 100 | 915) | (89)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $17743 | $4306 | 312% |

---

NM – not meaningful.

------

##### [**Table of Contents**](#toc)
**Results of Operations for the Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022** 

The following table summarizes our consolidated results of operations for the periods indicated:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,****Change** | **Change** |
|  | **2023<br>(As Restated)** | **2022<br>(As Restated)** | **%** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  **Revenues** | $118105 | $54554 | 116% |
|  **Operating expenses** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cost of sales | $19733 | $9573 | 106% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation, depletion, amortization, and accretion | 34228 | 12144 | 182% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Selling, general, and administrative | 14314 | 5563 | 157% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payroll and payroll-related | 12733 | 6023 | 111% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Advertising and marketing | 4136 | 1353 | 206% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Impairment expense | 974 |  | NM |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total operating expenses | $86118 | $34656 | 148% |
|  Income from operations | $31987 | $19898 | 61% |
|  **Other expenses** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income | $66 | $— | NM |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense | (47882) | (11893) | 303% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on derivatives | (32) | (2239) | (99)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on debt extinguishment | (328) | (92) | 257% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other expenses | $(48176) | $(14224) | 239% |
|  **Net income (loss)** | $(16189) | $5674) | (385)% |

---

NM – not meaningful.

The following tables summarize our segment operating profit (loss) for the periods indicated:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31, 2023** | **Year Ended December 31, 2023** | **Year Ended December 31, 2023** | **Year Ended December 31, 2023** | **Year Ended December 31, 2023** |
|  | **Mineral and<br>Non-operating** | **Operating** | **Securities** | **Eliminations** | **Total** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  Total revenues | $116902 | $1225 | $40509 | $(40531) | $118105 |
|  Total operating expenses | (67884) | (6725) | (11548) | 39 | (86118) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Segment operating profit (loss) | $49018 | $(5500) | $28961 | $(40492) | $31987 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31, 2022** | **Year Ended December 31, 2022** | **Year Ended December 31, 2022** | **Year Ended December 31, 2022** | **Year Ended December 31, 2022** |
|  | **Mineral and<br>Non-operating** | **Operating** | **Securities** | **Eliminations** | **Total** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  Total revenues | $54554 | $— | $4991 | $(4991) | $54554 |
|  Total operating expenses | (31306) |  | (3350) |  | (34656) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Segment operating profit (loss) | $23248 | $— | $1641 | $(4991) | $19898 |

---

------

##### [**Table of Contents**](#toc)
The following table summarizes our production data and average realized prices for the periods indicated:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,****Change** | **Change** |
|  | **2023** | **2022** | **%** |
|  **Production Data:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Crude oil (Bbls) | 1446928 | 523416 | 177% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas (Mcf) | 2152939 | 1058506 | 103% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NGL (Bbls) | 201454 |  | NM |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total (BOE)(6:1) | 2007205 | 699834 | 187% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Average daily production (BOE/d)(6:1) | 5499 | 1917 | 187% |
|  **Average Realized Prices<sup>(a)</sup>:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Crude oil (Bbl) | $73.10 | $91.01) | (20)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas (Mcf) | $3.15 | $6.66) | (53)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NGL (Bbl) | $27.50 | $— | NM |

---

NM – not meaningful.

(a) Average realized prices are net of certain post-production costs which are deducted from our royalties.

***Revenues***

The following table shows the components of our revenue for the periods presented:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,****Change** | **Change** |
|  | **2023** | **2022** | **%** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  Mineral and royalty revenues |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Crude oil | $105771 | $47493 | 123% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas | 6790 | 7061) | (4)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NGL | 5527 |  | NM |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total mineral and royalty revenues | $118088 | $54554 | 116% |
|  Other revenue | $17 | $— | NM |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total revenues | $118105 | $54554 | 116% |

---

NM – not meaningful.

Total revenue was $118.1 million for the year ended December 31, 2023, as compared to $54.6 million for the same period in 2022, an increase of $63.6 million, or 116%. The increase was primarily attributable to a $63.5 million increase in mineral and royalty revenues generated from our increased mineral and non-operating activities.

*Mineral and Non-Operating Segment* 

Mineral and non-operating segment revenue was $116.9 million for the year ended December 31, 2023, as compared to $54.6 million for the same period in 2022, an increase of $62.3 million, or 114%. The increase in segment revenue was primarily driven by an overall increase in our mineral interests and non-operated working interests in oil and gas properties, which have expanded significantly in recent years. Acquisitions of such interests generally generate revenue in subsequent periods (*e.g.,* on a six to eighteen month lag). As a result, our mineral and non-operating segment revenue has increased over time as our portfolio of mineral interests and non-operated working interests in oil and gas properties has expanded. We closed 825 unique transactions, which added 71,693 NMAs of leasehold interests and 12,043 NRAs of mineral interests to our portfolio, in the year

------

##### [**Table of Contents**](#toc)
ended December 31, 2023, as compared to 259 unique transactions, 19,712 NMAs of leasehold interests, and 10,306 NRAs of mineral interests in the prior year. The increase was partially offset by lower commodity prices, with average NYMEX crude oil and natural gas prices down 18% and 61%, respectively, in 2023 from 2022, and higher post-production costs of $3.0 million, which were passed through to us relative to an increase in production volumes.

*Operating Segment* 

Operating segment revenue was $1.2 million for the year ended December 31, 2023. Prior year operating segment revenues are not included in our financial results because PhoenixOp commenced operations in the third quarter of 2023, when it became the operator of five producing wells acquired from another operator.

***Operating Expenses***

*Cost of Sales* 

The following table shows the components of our cost of sales for the periods presented:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Change** | **Change** |
|  | **2023** | **2022** | $**%** | **%** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  Cost of sales |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Production taxes | $10672 | $4624 |  | 131% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lease operating expenses | 9011 | 4949 |  | 82% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Production costs | 50 |  |  | NM |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $19733 | $9573 |  | 106% |

---

NM – not meaningful.

Cost of sales was $19.7 million for the year ended December 31, 2023, as compared to $9.6 million for the same period in 2022, an increase of $10.2 million, or 106%. The increase was primarily due to an increase in our mineral interests and non-operated working interests in oil and gas properties and the resulting increase in lease operating expenses, production taxes, and *ad valorem* taxes.

*<u>Mineral and Non-Operating Segment</u>*

Mineral and non-operating segment cost of sales was $19.3 million for the year ended December 31, 2023, as compared to $9.6 million for the same period in 2022, an increase of $9.7 million, or 101%. The increase in segment cost of sales was primarily driven by an overall increase in our mineral interests and non-operated working interests in oil and gas properties and the resulting increase in lease operating expenses and production taxes.

*<u>Operating Segment</u>*

Operating segment cost of sales was $0.5 million for the year ended December 31, 2023. Prior year operating segment cost of sales is not included in our financial results because PhoenixOp commenced operations in the third quarter of 2023, when it became the operator of five producing wells acquired from another operator.

------

##### [**Table of Contents**](#toc)
*Depreciation, Depletion, Amortization, and Accretion Expense* 

The following table shows the components of our depletion, depreciation, amortization, and accretion expense for the periods presented:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Change** | **Change** |
|  | **2023** | **2022<br>(As Restated)** | $**%** | **%** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  Depletion, depreciation, amortization, and accretion |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depletion | $34035 | $12042 |  | 183% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation | 136 | 86 |  | 58% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accretion on asset retirement obligation | 57 | 16 |  | 256% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $34228 | $12144 |  | 182% |

---

Depreciation, depletion, amortization, and accretion expense was $34.2 million for the year ended December 31, 2023, as compared to $12.1 million for the same period in 2022, an increase of $22.1 million, or 182%, primarily driven by increased production and an increase in our depletable bases within the mineral and non-operating segment. Depletion expense in the operating segment was not material for the year ended December 31, 2023.

*<u>Mineral and Non-Operating Segment</u>*

Depletion for the mineral and non-operating segment was $34.2 million for the year ended December 31, 2023, as compared to $12.1 million for the same period in 2022, an increase of $22.1 million, or 182%. The increase in depletion expense was predominantly driven by increased production and an increase in our depletable bases.

*Selling, General, and Administrative Expense* 

Selling, general, and administrative expense was $14.3 million for the year ended December 31, 2023, as compared to $5.6 million for the same period in 2022, an increase of $8.7 million, or 157%. The increase was primarily due to increased costs associated with our capital raise initiatives in our securities segment, increased fees associated with land acquisition and title work in our mineral and non-operating segment, and increased corporate overhead costs not directly associated with the segments but which have been allocated to the segments based on headcount and a level-of-effort formula.

*<u>Mineral and Non-Operating Segment</u>*

Selling, general, and administrative expense in the mineral and non-operating segment was $6.8 million for the year ended December 31, 2023, as compared to $3.7 million for the same period in 2022, an increase of $3.1 million, or 84%, due to higher legal and land-related professional fees associated with our increased activity in acquiring leasehold and mineral assets.

*<u>Operating Segment</u>*

Selling, general, and administrative expense in the operating segment was $2.8 million for the year ended December 31, 2023, with no comparable activity in 2022 as PhoenixOp did not commence operations until 2023.

*<u>Securities Segment</u>*

Selling, general, and administrative expense in the securities segment was $4.7 million for the year ended December 31, 2023, as compared to $1.9 million for the same period in 2022, an increase of $2.8 million, or 155%. The increase was primarily due to increased legal costs and allocated corporate overhead related to our securities offerings.

------

##### [**Table of Contents**](#toc)
*Payroll and Payroll-Related Expense* 

Payroll and payroll-related expense was $12.7 million for the year ended December 31, 2023, as compared to $6.0 million for the same period in 2022, an increase of $6.7 million, or 111%, primarily as a result of increased employee headcount, which increased from 54 employees at December 31, 2022 to 118 employees at December 31, 2023.

*<u>Mineral and Non-Operating Segment</u>*

Payroll and payroll-related expense for the mineral and non-operating segment was $6.4 million for the year ended December 31, 2023, as compared to $5.3 million for the same period in 2022, an increase of $1.1 million, or 21%, due to increased activity in acquiring leasehold and mineral assets.

*<u>Operating Segment</u>*

Payroll and payroll-related expense for the operating segment was $3.2 million for the year ended December 31, 2023, with no comparable activity in 2022 as PhoenixOp did not commence operations until 2023.

*<u>Securities Segment</u>*

Payroll and payroll-related expense for the securities segment was $3.2 million for the year ended December 31, 2023, as compared to $0.7 million for the same period in 2022, an increase of $2.5 million, or 338%, primarily due to the increased number of personnel engaged in the administration and management of our securities offerings.

*Advertising and Marketing Expense* 

Advertising and marketing expense was $4.1 million for the year ended December 31, 2023, as compared to $1.4 million for the same period in 2022, an increase of $2.7 million. The increase was primarily driven by increased spend on an audio marketing campaign within the securities segment to acquire investors.

*Impairment Expense* 

Impairment expense was $1.0 million for the year ended December 31, 2023 and was attributable to a decrease in natural gas prices, which resulted in the impairment of our proved natural gas properties within the mineral and non-operating segment. We did not incur any impairment expense for the year ended December 31, 2022.

***Other Expenses***

*Interest Expense* 

Interest expense was $47.9 million for the year ended December 31, 2023 as compared to $11.9 million for the same period in 2022, an increase of $36.0 million, or 303%. The increase was primarily driven by an increase in the amount of our debt securities outstanding, which increased from $82.8 million outstanding at December 31, 2022 to $421.8 million at December 31, 2023, with no significant changes in interest rates during 2023 as compared to 2022, and a $10.1 million increase in amortized debt issuance costs for the year ended December 31, 2023 as compared to the prior year.

*Loss on Derivatives* 

Loss on derivatives was less than $0.1 million for the year ended December 31, 2023 as compared to $2.2 million for the same period in 2022. The decrease was primarily due to a loss that was recognized in connection with a derivatives settlement agreement executed in July 2022 that did not recur in 2023.

------

##### [**Table of Contents**](#toc)
*Loss on Debt Extinguishment* 

Loss on debt extinguishment was $0.3 million for the year ended December 31, 2023 as compared to less than $0.1 million for the same period in 2022. The increase was primarily due to increased write-offs of debt issuance costs associated with the early redemptions of bonds issued pursuant to Regulation A and Regulation D, of which $4.3 million of bonds were redeemed during the year ended December 31, 2023, as compared to $1.6 million of bonds redeemed for the same period in 2022.

The following table summarizes the par value of bonds redeemed for the periods indicated:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,****Change** | **Change** |
|  | **2023** | **2022** | **%** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  Reg A Bonds | $2122 | $268 | 692% |
|  December 2022 506(c) Bonds | 1004 |  | NM |
|  August 2023 506(c) Bonds | 265 |  | NM |
|  July 2022 506(c) Bonds | 915 | 1285) | (29)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $4306 | $1553 | 177% |

---

NM – not meaningful.

**Non-GAAP Financial Measures** 

Our management uses EBITDA to understand and compare our operating results across accounting periods, for internal budgeting and forecasting purposes, and to evaluate financial performance and liquidity, in each case, without regard to financing methods, capital structure, or historical cost basis. EBITDA is presented as supplemental disclosure as we believe it provides useful information to investors and others in understanding and evaluating our results, prospects, and liquidity period over period, including as compared to results of other companies. By providing this non-GAAP financial measure, together with a reconciliation to GAAP results, we believe we are enhancing investors' understanding of our business and our operating performance, as well as assisting investors in evaluating how well we are executing strategic initiatives.

EBITDA has important limitations as an analytical tool because it excludes some but not all items that affect net income (loss), the most directly comparable GAAP measure. In particular, EBITDA excludes certain material costs, such as interest expense, and certain non-cash charges, such as depreciation, depletion, amortization, and accretion expense, which have been necessary elements of our expenses. Because EBITDA does not account for these expenses, its utility as a measure of our operating performance has material limitations. Other companies may not publish this or similar metrics, and our computation of EBITDA may differ from computations of similarly titled measures of other companies. Therefore, our EBITDA should be considered in addition to, and not as a substitute for, in isolation from, or superior to, our financial information prepared in accordance with GAAP, and should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this prospectus.

------

##### [**Table of Contents**](#toc)
The following table shows a reconciliation of EBITDA to net income (loss), the most comparable GAAP measure, as presented in the consolidated statements of operations for the periods presented:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the Three Months Ended<br>March 31,** | **For the Three Months Ended<br>March 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2025** | **2024**<br>**(Restated)** | **2024** | **2023** | **2022** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  Net income (loss) | $5599 | $(8405) | $(24793) | $(16189) | $5674 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income | (689) | (22) | (705) | (66) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense | 35849 | 16921 | 90210 | 47882 | 11893 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation, depletion, amortization, and accretion expense | 31225 | 13405 | 85977 | 34228 | 12144 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; EBITDA | $71984 | $21899 | $150689 | $65855 | $29711 |

---

EBITDA was $72.0 million for the three months ended March 31, 2025, as compared to $21.9 million for the same period in 2024, an increase of $50.1 million, or 229%. The increase in EBITDA was primarily driven by a $75.1 million increase in consolidated revenues and a $2.0 million increase in gain on derivatives due to changes in the forward commodity price curves for crude oil, partially offset by a $26.7 million increase in operating expense (excluding depreciation, depletion, amortization, and accretion expense), primarily driven by increased cost of sales, increased selling, general and administrative expense and increased payroll and payroll-related expenses.

EBITDA was $150.7 million for the year ended December 31, 2024, as compared to $65.9 million for the same period in 2023, an increase of $84.8 million, or 129%. The increase in EBITDA was primarily driven by a $163.1 million increase in consolidated revenues, partially offset by a $71.0 million increase in operating expense (excluding depreciation, depletion, amortization and accretion expense), primarily driven by increased cost of sales and increased legal, accounting and land-related professional service fees and other corporate overhead costs, and a $6.0 million increase in loss on derivatives primarily due to unfavorable changes in the mark-to-market value of commodity derivatives entered into during the second half of 2024.

EBITDA was $65.9 million for the year ended December 31, 2023 as compared to $29.7 million for the year ended December 31, 2022, an increase of $36.1 million, or 122%. The increase in EBITDA was primarily driven by an increase in consolidated revenues, partially offset by increased cost of sales and corporate overhead costs resulting from our growth, and increased advertising costs of $2.8 million primarily due to an audio marketing campaign in 2023 with no comparable activity in the prior year.

We expect our EBITDA to grow substantially in 2025 as the capital raised and deployed by us is expected to produce meaningful revenues. In 2024, the majority of revenues were produced from our properties acquired in 2023. Our management expects that the $864.0 million raised during the year ended December 31, 2024, and the corresponding investments in properties acquired and, in the case of properties and cash contributed to PhoenixOp, developed through the year ended December 31, 2024, will continue producing substantial revenues in 2025.

**Liquidity and Capital Resources** 

***Overview***

Our primary sources of liquidity are cash flows from operations, borrowings under credit agreements, and issuances of debt securities pursuant to a Registration Statement, Regulation D and Regulation A, including the Registered Notes, Adamantium Securities and the Reg D/Reg A Bonds. Future sources of liquidity may also include other credit facilities, additional capital contributions, and continued issuances of debt or equity securities. Our primary uses of cash have been the acquisition of mineral and royalty interests, lease operating

------

##### [**Table of Contents**](#toc)
expenses, and our proportionate share of production, severance, and *ad valorem* taxes for mineral and royalty interests, production costs, including gathering, processing, and transportation costs, debt service payments, the reduction of outstanding debt balances, general overhead and other corporate expenses, and distributions to our members. As we continue to engage in increased drilling and direct production activities through PhoenixOp, we expect development and operation of PhoenixOp's properties to become an increasingly significant use of our cash. As of March 31, 2025, we had cash and cash equivalents of $35.4 million and outstanding indebtedness of $1,084.3 million.

As of March 31, 2025, we had $132.9 million of debt coming due and $81.4 million of interest payable within the next 12 months. Over the next 12 months, we expect to drill between 75 to 85 gross and 45.0 to 51.0 net wells across our operated leasehold acreage in the Bakken/Willison Basin in North Dakota and Montana, and expect to participate in the drilling of approximately between 115 to 165 gross and 11.3 to 16.1 net wells across our non-operated leasehold. We estimate that these direct drilling operations and non-operated activity will require between $750.0 million and $850.0 million of capital expenditures over the next 12 months.

Our ability to finance our operations, including funding capital expenditures and acquisitions, paying distributions on the Preferred Shares, meeting our indebtedness obligations, or to refinancing our indebtedness, will depend on our ability to generate cash in the future. Although we expect that our cash flows from operations will be sufficient to meet our fixed obligations, to fully realize our business plan we expect that we will need to raise approximately $400 million in capital in 2025 through the incurrence of additional debt and issuance of additional equity securities. We believe that these sources of liquidity will be sufficient to meet our cash requirements, including normal operating needs, debt service obligations, and capital expenditures, for at least the next 12 months, and will allow us to continue to execute on our strategy of expanding our direct drilling operations through PhoenixOp and acquiring attractive mineral and royalty interests in order to position us to grow our cash flows.

We periodically assess changes in current and projected cash flows, acquisition and divestiture activities, and other factors to determine the effects on our liquidity. Our ability to generate cash is subject to a number of factors, many of which are beyond our control, including commodity prices, weather, and general economic, financial, competitive, legislative, regulatory, and other factors. We are currently monitoring our operations and industry developments, including our drilling operations and production plans, in light of recent changes in the commodity price environment and industry volatility. Recently, oil and natural gas prices have been significantly volatile, going from $71.20 per barrel and $3.95 per MMBtu as of April 1, 2025 to a low of $57.13 per barrel as of May 5, 2025 and $2.71 per MMBtu as of April 25, 2025, which prices are for certain periods were below those assumed for purposes of our business plan. While we believe the company is well-positioned to navigate a lower-price environment, in the event of a prolonged period of commodity prices below those assumed for purposes of our business plan, our cash flows from operations would decrease and we may determine to adjust our business plan by adjusting capital expenditures, decreasing drilling operations, and/or reducing production plans, among other actions. We may also be required to raise additional capital, above our current expectations, in order to fully realize our current or adjusted business plan. See "*Risk Factors—Risks Related to Our Business and Operations—Our business is sensitive to the price of oil and gas and sustained declines in prices may adversely affect our financial position, financial results, cash flows, access to capital, and ability to grow*." If cash flow from operations does not meet our expectations, we may reduce our expected level of capital expenditures. If we require additional capital for acquisitions or other reasons, we may raise such capital through additional borrowings, asset sales, offerings of equity and debt securities, or other means. We cannot assure you that necessary capital will be available on acceptable terms or at all. Our ability to raise funds through the incurrence of additional indebtedness could be limited by covenants in our debt arrangements. If we are unable to obtain funds when needed or on acceptable terms, we may not be able to complete acquisitions that are favorable to us or finance the capital expenditures necessary to maintain our production or proved reserves. See "*Risk Factors*."

We or our affiliates may from time to time seek to repurchase or retire indebtedness through cash purchases and/or exchanges for equity or debt securities, in open-market purchases, privately negotiated transactions, tender

------

##### [**Table of Contents**](#toc)
or exchange offers, or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity, contractual restrictions, and other factors. The amounts involved may be material. For more information regarding the material terms of our outstanding indebtedness, see "—*Indebtedness*" below.

***Cash Flows***

The following table summarizes our cash flows for the periods indicated:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Months Ended March 31,** | **Months Ended March 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2025** | **2024<br>(As Restated)** | **2024** | **2023<br>(As Restated)** | **2022<br>(As Restated)** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  Net cash provided by (used in) |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating activities | $15865 | $11248 | $95239 | $(1826) | $18642 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investing activities | (182275) | (88563) | (437703) | (278661) | (91888) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financing activities | 80962 | 74351 | 457850 | 281308 | 77493 |
|  Net increase / (decrease) in cash and cash equivalents | $(85448) | $(2964) | $115386 | $821 | $4247 |

---

*Operating Activities* 

Net cash provided by operating activities for the three months ended March 31, 2025 was $15.9 million, as compared to $11.2 million for the same period in 2024, an increase of $4.6 million in net cash provided by operating activities. The increase was primarily due to a $30.5 million increase in net income, adjusted for non-cash charges of $16.5 million, and net unfavorable fluctuations of $25.9 million from changes in operating assets and liabilities. The $25.9 million cash outflow from changes in operating assets and liabilities was primarily due to a net decrease of $27.2 million in accounts receivable, earnest payments, and accounts payable, and a net increase of $4.4 million in accrued and other liabilities, primarily due to the timing of cash receipts and payments during the three months ended March 31, 2025 as compared to the same period in 2024.

Net cash provided by operating activities for the year ended December 31, 2024 was $95.2 million, as compared to $1.8 million used in operations for the same period in 2023, an increase of $97.0 million in cash provided by operating activities. The increase was primarily due to a $54.7 million increase in net income, adjusted for non-cash charges of $63.3 million, and net favorable fluctuations of $41.8 million from changes in operating assets and liabilities. The $41.8 million cash inflow from changes in operating assets and liabilities was primarily due to a net increase of $28.6 million in accounts receivable, accounts payable, and accrued and other liabilities, primarily due to the timing of cash receipts and payments, and a $13.8 million increase in accrued interest from the increased amount of debt securities issued during the year ended December 31, 2024 as compared to the same period in 2023.

Net cash used in operating activities was $1.8 million for the year ended December 31, 2023 as compared to net cash provided by operating activities of $18.6 million for the year ended December 31, 2022, an increase of $20.4 million. The increase was driven by a $28.7 million increase in cash paid for our operating costs, a $14.1 million increase in cash paid for interest, net of capitalized interest, and a $23.8 million increase in earnest payments, partially offset by a $37.5 million in proceeds received from revenues earned and a $14.8 million decrease in other working capital balances due to fluctuations in the timing of cash receipts and disbursements.

*Investing Activities* 

Net cash used in investing activities for the three months ended March 31, 2025 was $182.3 million, as compared to $88.6 million for the same period in 2024, an increase of $93.7 million in net cash used in investing activities. The increase was primarily driven by an $87.5 million increase in additions to oil and gas properties,

------

##### [**Table of Contents**](#toc)
primarily due to increased drilling and completion activities in our operating segment during the three months ended March 31, 2025, as compared to the same period in 2024, and $6.2 million of proceeds received in connection with the disposition of mineral interests during the three months ended March 31, 2024 that did not recur in the current year period.

Net cash used in investing activities for the year ended December 31, 2024 was $437.7 million, as compared to $278.7 million for the same period in 2023, an increase of $159.0 million. The increase was primarily driven by a $165.2 million increase in additions to oil and gas properties, primarily due to increased drilling and completion activities in our operating segment during the year ended December 31, 2024, with limited operations for the same period in 2023, and $6.2 million of proceeds received in connection with the disposition of mineral interests during the year ended December 31, 2024 that did not occur in the prior-year period.

Net cash used in investing activities for the year ended December 31, 2023 was $278.7 million as compared to $91.9 million for the year ended December 31, 2022, an increase of $186.8 million. The increase was primarily driven by a $91.8 million increase in cash paid to acquire mineral and leasehold interests, a $30.1 million increase in cash paid to our operators for our portion of drilling and completion costs incurred, cash payments of $63.4 million primarily associated with PhoenixOp's drilling and completion activities, and $2.1 million of capitalized interest paid in 2023 that did not exist in the prior year.

*Financing Activities* 

Net cash provided by financing activities for the three months ended March 31, 2025 was $81.0 million, as compared to $74.4 million for the same period in 2024, an increase of $6.6 million in net cash provided by financing activities. The increase was primarily driven by increased proceeds from issuances of debt, net of debt discount, of $11.2 million and a $0.8 million decrease in payments of deferred closings associated with mineral interest acquisitions, partially offset by a $2.5 million increase in repayments of debt, a $2.5 million increase in payments of debt issuance costs, and a $0.3 million decrease in members' contributions.

Net cash provided by financing activities for the year ended December 31, 2024 was $457.9 million, as compared to $281.3 million for the same period in 2023, an increase of $176.6 million. The increase was primarily driven by increased proceeds from issuances of debt, net of debt discount, of $399.5 million and a $2.7 million decrease in members' distributions, partially offset by a $188.7 million increase in repayments of debt, a $20.3 million increase in payments of debt issuance costs, a $9.8 million decrease in members' contributions, and a $6.9 million increase in payments of deferred closings associated with mineral interest acquisitions.

Net cash provided by financing activities for the year ended December 31, 2023 was $281.3 million as compared to $77.5 million for the year ended December 31, 2022, an increase of $203.8 million. The increase was primarily driven by increased proceeds from issuances of debt, net of debt discount, of $379.5 million and a $10.0 million increase in members contributions, which was partially offset by a $38.1 million increase in debt issuance costs, a $137.7 million increase in repayments of debt, a $7.4 million increase in distributions to our members, and a $2.5 million increase in payments of deferred closings associated with mineral interest acquisitions.

------

##### [**Table of Contents**](#toc)
**Indebtedness** 

Set forth below is a chart of our outstanding third-party indebtedness as of March 31, 2025 (dollars in thousands):

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Indebtedness** | **Offering<br>Commencement** | **Principal<br>Amount<br>Outstanding** | **Term** | **Earliest<br>Maturity** | **Latest<br>Maturity** | **Interest Rate** |
|  **Secured** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fortress Credit Agreement<sup>(1)</sup> | N/A | $250000 | 3 years |  | 12/18/2027 | Term SOFR + 7.10% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Adamantium Secured Note<sup>(2)</sup> | N/A | 7000 | 7 years |  | 11/1/2031 | 16.5% |
|  **Unsecured** |  |  |  |  |  |  |
|  Reg A Bonds<sup>(3)</sup> | 12/23/2021 | 99577 | 3 years | 4/10/2025 | 8/10/2027 | 9.0% |
|  2020 506(b) Bonds<sup>(4)</sup> | 7/20/2020 | 940 | 2 years |  | 5/31/2025 | 5.0% |
|  2020 506(c) Bonds<sup>(4)</sup> | 10/22/2020 | 1448 | 1-4 years | 9/30/2025 | 6/27/2027 | 13.0% - 15.0% |
|  July 2022 506(c) Bonds<sup>(4)</sup> | 7/20/2022 | 10147 | 5 years | 7/31/2027 | 12/31/2027 | 11.0% |
|  December 2022 506(c) Bonds<sup>(5)</sup>: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Series B | 12/22/2022 | 15889 | 3 years | 4/10/2025 | 10/10/2026 | 10.0% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Series C | 12/22/2022 | 9589 | 5 years | 12/10/2027 | 9/10/2028 | 11.0% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Series D | 12/22/2022 | 40410 | 7 years | 12/10/2029 | 10/10/2030 | 12.0% |
|  August 2023 506(c) Bonds<sup>(5)</sup>: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Series U, AA, and FF | 8/29/2023 | 84497 | 1 year | 4/10/2025 | 3/10/2026 | 9.0% - 10.0% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Series V, BB, and GG | 8/29/2023 | 75278 | 3 years | 8/10/2026 | 3/10/2028 | 10.0% - 11.0% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Series W, CC, and HH | 8/29/2023 | 45989 | 5 years | 8/10/2028 | 3/10/2030 | 11.0% - 12.0% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Series X, DD, and II | 8/29/2023 | 68471 | 7 years | 9/10/2030 | 3/10/2032 | 12.0% - 13.0% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Series Y | 8/29/2023 | 3908 | 9 years | 9/10/2032 | 9/10/2033 | 12.5% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Series Z, EE, and JJ | 8/29/2023 | 215147 | 11 years | 8/10/2034 | 3/10/2036 | 13.0% - 14.0% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Reg D/Reg A Bonds |  | 671290 |  |  |  |  |
|  Adamantium Bonds<sup>(6)</sup> | 9/29/2023 | 156048 | 5-11 years | 1/10/2029 | 3/10/2036 | 13.0% - 16.0% |
|  Total Unsecured Debt |  | 827338 |  |  |  |  |
|  **Total Debt** |  | $1084338 |  |  |  |  |

---

(1) The Fortress Credit Agreement provides for a $100.0 million term loan facility, borrowed in full on
August 12, 2024, a $35.0 million delayed draw term loan facility, which was fully drawn on October 11, 2024, a $115.0 million term loan facility, borrowed in full on December 18, 2024, a $25.0 million term loan facility, borrowed in full on
April 16, 2025, and a $25.0 million delayed draw term loan facility borrowed in full on May 9, 2025. Amount displayed above does not include amounts drawn after March 31, 2025. The Fortress Credit Agreement also provides for a rebate of
approximately $8.5 million in original issue discount, payable by setoff against final payment in full of the Fortress Credit Agreement, if (a) all outstanding principal and accrued interest on the loans under the Fortress Credit Agreement are paid
in full in cash on or before March 31, 2027, and (b) no event of default resulting from the failure to pay principal or interest when due under the terms and conditions of the Fortress Credit Agreement has occurred prior to such date, subject to
certain other conditions. All obligations under the Fortress Credit Agreement are

------

##### [**Table of Contents**](#toc)
secured on a first-lien priority basis, subject to certain exceptions and excluded assets, by security interests in, and mortgages on, substantially all personal property and owned real property of Phoenix Equity and its subsidiaries. $150.0 million of the lenders' commitments under the Fortress Credit Agreement and the loans thereunder are due and payable on December 31, 2026. The remainder of lenders' commitments under the Fortress Credit Agreement and the loans thereunder are scheduled to terminate and mature, and be due and payable, on December 18, 2027. See "*—Fortress Credit Agreement*."

(2) The Adamantium Secured Note is contractually subordinated to amounts under the Fortress Credit Agreement,
contractually senior to the Adamantium Bonds and the Registered Notes, and structurally senior to the Reg D/Reg A Bonds and the Registered Notes to the extent of the value of Adamantium's assets, including the collateral securing the Adamantium
Loan Agreement.

(3) The Reg A Bonds are *pari passu* obligations with the Senior Reg D Bonds, and are contractually senior to
obligations under the Subordinated Reg D Bonds and the Registered Notes.

(4) The Senior Reg D Bonds are *pari passu* obligations with the Reg A Bonds, are contractually subordinated
to amounts under the Fortress Credit Agreement, and are contractually senior to obligations under the Subordinated Reg D Bonds and the Registered Notes.

(5) The Subordinated Reg D Bonds are contractually subordinated to obligations under the Fortress Credit Agreement,
the Reg A Bonds, the Senior Reg D Bonds and the Registered Notes. Between April 1, 2025 and May 31, 2025, we issued an additional $83.8 million of August 2023 506(c) Bonds, with maturities ranging from March 2026 to May 2036 and
interest rates between 9.0% and 14.0% *per annum*.

(6) The Adamantium Bonds are contractually subordinated to amounts under the Fortress Credit Agreement and the
Adamantium Secured Note, structurally senior to the Reg D/Reg A Bonds to the extent of the value of Adamantium's assets, including the collateral securing the Adamantium Loan Agreement, and are contractually senior to the obligations under the
Registered Notes. Between April 1, 2025 and May 31, 2025, we issued an additional $30.9 million of Adamantium Bonds (and borrowed a corresponding amount under the Adamantium Loan Agreement), with maturities ranging from March 2030 to
May 2036 and interest rates between 13.0% and 16.0% *per annum*.

*ANB Credit Agreement* 

The Issuer and PhoenixOp were borrowers under that certain Commercial Credit Agreement (the "***ANB Credit Agreement***"), which they entered into with Amarillo National Bank, a national banking association ("***ANB***") on July 24, 2023. The ANB Credit Agreement provided for a $30.0 million revolving credit loan by ANB, and, as of June 30, 2024, the outstanding balance was $30.0 million. The proceeds from the borrowing under the ANB Credit Agreement were used in part to repay in full our outstanding facility with Cortland Credit Lending Corporation. ANB's commitments under the ANB Credit Agreement and the loans thereunder were initially scheduled to terminate and mature, and be due and payable in full, on July 24, 2024. On July 24, 2024, we entered into an agreement that extended ANB's commitments and the maturity of the loans under the ANB Credit Agreement to September 24, 2024. We fully repaid all amounts owed under the ANB Credit Agreement on August 12, 2024 in connection with entering into the Fortress Credit Agreement.

*Fortress Credit Agreement* 

The Issuer and PhoenixOp, as borrower, entered into the Fortress Credit Agreement with Fortress on August 12, 2024. The Fortress Credit Agreement provides for a $100.0 million term loan facility (the "***Fortress Term Loan***"), borrowed in full on August 12, 2024, and a $35.0 million delayed draw term loan facility, which was borrowed in full on October 11, 2024 (any loans thereunder, together with the Fortress Term Loan, the "***Fortress Tranche A Loans***"). On December 18, 2024, the Fortress Credit Agreement was amended to, among other things, provide for a new tranche of term loans (the "***Fortress Tranche C Loan***") in an aggregate principal amount of $115.0 million that was borrowed in full on December 18, 2024. On April 16, 2025, the Fortress Credit Agreement was further amended to, among other things, establish a new tranche of term loans (the "***Fortress Tranche D Loans***") in an aggregate principal amount of $50.0 million, with $25.0 million aggregate principal amount borrowed on April 16, 2025 and $25.0 million aggregate principal amount borrowed on May 9, 2025.

------

##### [**Table of Contents**](#toc)
The Fortress Credit Agreement also provides for a rebate of approximately $8.5 million in original issue discount (the "***Fortress Tranche B Loan***" and, together with the Fortress Tranche A Loans, the Fortress Tranche C Loan, and the Fortress Tranche D Loans, the "***Fortress Loans***"), payable by setoff against final payment in full of the Fortress Credit Agreement, if (a) all outstanding principal and accrued interest on the loans under the Fortress Credit Agreement are paid in full in cash on or before March 31, 2027, and (b) no event of default resulting from the failure to pay principal or interest when due under the terms and conditions of the Fortress Credit Agreement has occurred prior to such date, subject to certain other conditions.

Obligations under the Fortress Credit Agreement are secured by substantially all of the assets of Phoenix Equity and its subsidiaries that have guaranteed the obligations of the obligors under the Fortress Credit Agreement, subject to certain exceptions (the Issuer, PhoenixOp, and such subsidiaries, collectively, the "***Credit Parties***"). Furthermore, pursuant to that certain Assignment of Loans and Liens, dated as of August 12, 2024, among the Issuer, Phoenix Operating, ANB, Fortress, as administrative agent and as collateral agent, and the new lenders party thereto, ANB assigned, and Fortress assumed, all security interests granted by the Credit Parties in favor of ANB under the ANB Credit Agreement. The lenders under the Fortress Credit Agreement also purchased and assumed from ANB all of the outstanding extensions of credit made by ANB under the ANB Credit Agreement. As a result of the foregoing, the ANB Credit Agreement and all related documentation ceased to be of any force and effect.

The Fortress Term Loan and the Fortress Tranche B Loan were each subject to an original issue discount ("***OID***") of 10.59907834%, and each of the Fortress Tranche A Loans made under the delayed draw term loan facility, the Fortress Tranche C Loan, and the Fortress Tranche D Loans were subject to 3.00% OID.

Borrowings under the Fortress Credit Agreement bear interest at a rate per annum equal to Term SOFR (as defined in the Fortress Credit Agreement) plus 0.10% plus 7.00%. Interest on the Fortress Tranche A Loans and Fortress Tranche C Loan is payable quarterly in arrears. The outstanding principal amount of the Fortress Loans (including, if applicable, the Fortress Tranche B Loan) must be repaid as follows: (i) on December 31, 2026, $150.0 million of the outstanding principal amount of the Fortress Loans less the aggregate amount of all voluntary prepayments and mandatory prepayments made as of December 31, 2026; and (ii) the remaining aggregate outstanding principal amount on December 18, 2027. In connection with any payment in full of the Fortress Loans (whether by voluntary prepayment, acceleration, or on the maturity date), PhoenixOp will pay a repayment premium in an amount sufficient to achieve a MOIC (as defined in the Fortress Credit Agreement) of 1.18.

The Fortress Credit Agreement contains various customary affirmative and negative covenants, as well as financial covenants. The Fortress Credit Agreement requires the Issuer to maintain (a) a maximum total secured leverage ratio (i) as of the last day of any fiscal quarter ending on or before December 31, 2025 of less than or equal to 2.00 to 1.00 (commencing with the fiscal quarter ending December 31, 2024), and (ii) as of the last day of any fiscal quarter ending on or after March 31, 2026 of less than or equal to 1.50 to 1.00, (b) a minimum current ratio as of the last day of each calendar month of (i) 0.90 to 1.00 from September 30, 2024 through October 31, 2024, (ii) 0.80 to 1.00 from November 30, 2024 through November 30, 2025, (iii) 0.90 to 1.00 from December 31, 2025 through December 31, 2026, and (iv) 1.00 to 1.00 for each calendar month ending thereafter, and (c) a minimum asset coverage ratio as of the last day of any fiscal quarter (i) ending during the period from June 30, 2024 through December 31, 2024, of at least 2.00 to 1.00, (ii) ending during the period from March 31, 2025 through September 30, 2025, of at least 1.70 to 1.00, and (iii) ending during the period from December 31, 2025 and thereafter, of at least 2.00 to 1.00. The Fortress Credit Agreement also places certain limits on the Issuer's ability to incur additional indebtedness, including the issuance of unsecured notes or bonds and accounts receivable factoring arrangements. In addition, the Fortress Credit Agreement also places certain limits on the Issuer's ability to issue equity securities, modify the terms of existing equity securities, and to redeem or make distributions with respect to any such equity securities, including the Preferred Shares. As of March 31, 2025, we believe we were in compliance with all of the financial covenants contained in the Fortress Credit Agreement.

The Fortress Credit Agreement contains customary events of default, including, but not limited to, nonpayment of the Fortress Tranche A Loans or Fortress Tranche C Loan and any other material indebtedness,

------

##### [**Table of Contents**](#toc)
material inaccuracies of representations and warranties, violations of covenants, certain bankruptcies and liquidations, certain material judgments, and certain events related to the security documents.

As described above, a portion of the proceeds from the Fortress Term Loan was used to pay all amounts owed under the ANB Credit Agreement. The Issuer and PhoenixOp will use the remaining proceeds of the Fortress Loans to finance the development of oil and gas properties in accordance with the approved plan of development as provided in the Fortress Credit Agreement.

***Adamantium Debt***

Adamantium was formed on June 21, 2023, as a wholly owned financing subsidiary of the Issuer for the purpose of undertaking financing efforts under Regulation D and subsequently loaning amounts to the Issuer and/or its subsidiaries, as needed. Adamantium offers high net worth individuals Adamantium Bonds pursuant to an offering under Rule 506(c) of Regulation D that commenced in September 2023, and does not expect to undertake financing efforts under Regulation A. Adamantium has in the past, and may in the future, issue debt securities in other offerings exempt from registration under the Securities Act under Section 4(a)(2) thereof or any other available exemption, including, for example, the Adamantium Secured Note.

On September 14, 2023, the Issuer, as borrower, entered into the Adamantium Loan Agreement with Adamantium, as lender. On October 30, 2023, the Issuer, Adamantium, and PhoenixOp entered into an amendment to the Adamantium Loan Agreement to add PhoenixOp as a borrower, and on November 1, 2024 entered into another amendment to increase the loan amount thereunder. The Adamantium Loan Agreement provides for up to $407.0 million in aggregate principal amount of borrowings in one or more advances, comprising $400.0 million from the proceeds of Adamantium Bonds and $7.0 million from the proceeds of the Adamantium Secured Note. Adamantium may, but is not guaranteed to, issue $400.0 million in aggregate principal amount of Adamantium Bonds to fund advances to the Issuer and PhoenixOp pursuant to the Adamantium Loan Agreement. The timing of any advance under the Adamantium Loan Agreement is contingent upon Adamantium's receipt of proceeds from the sale of Adamantium Securities. Each advance will have a maturity and interest rate that matches the terms of the respective Adamantium Securities sold prior to such advance and to which such advance relates. We expect to use the proceeds of borrowings under the Adamantium Loan Agreement (i) to purchase mineral rights and non-operated working interests, as well as additional asset acquisitions, (ii) to finance potential drilling and exploration operations of one or more subsidiaries (including PhoenixOp), and (iii) for other working capital needs.

As of March 31, 2025, $156.0 million aggregate principal amount of Adamantium Bonds was outstanding, with maturity dates ranging from five to eleven years from the issue date and interest rates ranging from 13.0% to 16.0% *per annum*, and $7.0 million aggregate principal amount was outstanding under the Adamantium Secured Note, which initially matures in November 2031, has an interest rate of 16.5% *per annum*, and is secured by Adamantium's rights under the Adamantium Loan Agreement, and, in each case, the corollary amount of borrowings was outstanding under the Adamantium Loan Agreement. Between April 1, 2025 and May 31, 2025, we issued an additional $30.9 million of Adamantium Bonds (and borrowed a corresponding amount under the Adamantium Loan Agreement), with maturities ranging from March 2030 to May 2036 and interest rates between 13.0% and 16.0% *per annum.*

The Adamantium Securities contain customary events of default and may be redeemed at the option of Adamantium at any time without premium or penalty. The holders of Adamantium Bonds also have a right to request redemption of their bonds in certain circumstances at a discount to par, subject to a limit of 10% of the then-outstanding principal amount of Adamantium Bonds in any given calendar year. The holder of the Adamantium Secured Note has the right to request redemption of its note at par, subject to a limit of $5.0 million in aggregate principal amount of the Adamantium Secured Note in any 12-month period.

Amounts loaned under the Adamantium Loan Agreement are secured by mortgages on certain of our properties, which mortgages are junior to the security interest under the Fortress Credit Agreement and other

------

##### [**Table of Contents**](#toc)
existing and future senior secured indebtedness. The aggregate outstanding amount of all advances under the Adamantium Loan Agreement may not exceed 100% of the aggregate total discounted present value of the junior mortgages serving as collateral thereunder, after deducting any allocable amount securing any of our outstanding senior indebtedness (the "***Adamantium Loan-to-Value Ratio***"). The value of such collateral will be determined by one or more reserve studies performed by a third party retained by us on an annual basis. In the event the aggregate amount outstanding under the Adamantium Loan Agreement exceeds the Adamantium Loan-to-Value Ratio, we may cure such deficiency by either pledging additional collateral or repaying a portion of the borrowings under the Adamantium Loan Agreement until the Adamantium Loan-to-Value Ratio is achieved.

At the option of Adamantium, an advance may be made on either (i) a current basis, whereby the Issuer makes interest-only monthly payments in cash to Adamantium on the tenth day of each month or (ii) an accrual basis, whereby interest is compounded monthly and the Issuer will pay all accrued and unpaid interest at maturity of the respective advance. Interest will accrue a full pro rata portion of the annual rate of interest for each calendar month regardless of the number of days an advance is outstanding during such calendar month, on the same terms as the interest payable on the Adamantium Securities sold prior to such advance and to which such advance relates. On each respective maturity date for advances made on both a current and accrual basis, the outstanding principal amount, together with all accrued and unpaid interest thereon, will mature and be due and payable to Adamantium. To the extent the Adamantium Securities are accelerated or prepaid, in whole or in part, the Issuer will be obligated to pay or prepay, in whole or in part, all or any part of any outstanding indebtedness under the Adamantium Loan Agreement so as to satisfy the obligations and terms of the accelerated or prepaid Adamantium Securities. Adamantium will use any amounts repaid under the Adamantium Loan Agreement to repay the corresponding Adamantium Securities. The Adamantium Loan Agreement is not a revolving facility and the Issuer may not reborrow amounts repaid.

The Adamantium Loan Agreement can be amended or waived with the consent of the Issuer and Adamantium, including in order to change the amount, rate, payment terms, collateral package, and borrowers thereunder. The consent of holders of the Adamantium Securities, the Reg D/Reg A Bonds, and/or the Registered Notes is not required for any amendment or waiver of the Adamantium Loan Agreement, and any such amendment or waiver may be adverse to the interests of such holders. Because Adamantium is a wholly owned financing subsidiary of the Issuer with common management, there exists the potential for conflicts of interest with respect to decisions regarding the Adamantium Loan Agreement, including with respect to waivers and amendments thereto. Management is committed to fulfilling its fiduciary duties and operating in good faith.

***Reg D/Reg A Bonds***

As of March 31, 2025, the Issuer had $671.3 million aggregate principal amount outstanding of unsecured bonds issued pursuant to Regulation D or Regulation A, consisting of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) $12.5 million aggregate principal amount outstanding of Senior Reg D Bonds, which rank pari passu with the Reg A Bonds, are contractually subordinated to amounts under the Fortress Credit Agreement, are contractually senior to obligations under the Subordinated Reg D Bonds and the Registered Notes, comprising:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) $0.9 million aggregate principal amount outstanding of 2020 506(b) Bonds, which are unsecured bonds offered and sold pursuant to an offering under Rule 506(b) of Regulation D that commenced in July 2020 and terminated in September 2021, with initial maturity dates ranging from one to four years from the issue date and an interest rate of 5.0% per annum;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) $1.4 million aggregate principal amount outstanding of 2020 506(c) Bonds, which are unsecured bonds offered and sold pursuant to an offering under Rule 506(c) of Regulation D that commenced in October 2020 and terminated in July 2022, with maturity dates ranging from one to four years from the issue date and interest rates ranging from 13.0% to 15.0% per annum; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) $10.1 million aggregate principal amount outstanding of July 2022 506(c) Bonds, which are unsecured bonds offered and sold pursuant to an offering under Rule 506(c) of Regulation D that

------

##### [**Table of Contents**](#toc)
commenced in July 2022 and terminated in December 2022, with a maturity date of five years from the issue date and an interest rate of 11.0% per annum;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) $559.2 million aggregate principal amount outstanding of Subordinated Reg D Bonds, which are contractually subordinated to obligations under the Fortress Credit Agreement, the Reg A Bonds, the Senior Reg D Bonds, and the Registered Notes, comprising:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) $65.9 million aggregate principal amount outstanding of Series AAA through Series D-1 December 2022 506(c) Bonds, which are unsecured bonds offered and sold pursuant to an offering under Rule 506(c) of Regulation D that commenced in December 2022 and terminated in August 2023, with maturity dates ranging from nine months to seven years from the issue date and interest rates ranging from 8.0% to 12.0% per annum; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) $493.3 million aggregate principal amount outstanding of Series U through Series JJ-1 August 2023 506(c) Bonds, which are unsecured bonds offered and sold to date pursuant to an offering under Rule 506(c) of Regulation D that commenced in August 2023 with maturity dates ranging from one to eleven years from the issue date and interest rates ranging from 9.0% to 14.0% per annum; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) $99.6 million aggregate principal amount outstanding of Reg A Bonds, which are unsecured bonds offered and sold to date pursuant to an offering under Regulation A, which commenced in December 2021 and are being offered on a continuous basis, which Reg A Bonds rank pari passu with the Senior Reg D Bonds, are contractually senior to obligations under the Subordinated Reg D Bonds, and will be contractually senior to obligations under the Registered Notes.

The Reg D/Reg A Bonds contain customary events of default. The Reg D/Reg A Bonds may be redeemed at the option of the Issuer at any time without premium or penalty. The Issuer will also be obligated to offer to holders of Reg A Bonds the right to have their Reg A Bonds repurchased upon a change of control (as described in the indenture governing the Reg A Bonds). The holders of Reg D/Reg A Bonds (other than the 2020 506(b) Bonds and 2020 506(c) Bonds) also have a right to request redemption of their bonds in certain circumstances at a discount to par, subject to a limit of 10% of the then-outstanding principal amount of the applicable series in any given calendar year.

Between April 1, 2025 and May 31, 2025, the Issuer issued an additional $83.8 million of August 2023 506(c) Bonds with maturities ranging from March 2026 to May 2036 and interest rates between 9.0% and 14.0% per annum.

On May 15, 2025, the Issuer entered into an indenture with UMB Bank, N.A., as trustee, pursuant to which it may, from time to time, issue debt securities to holders of the Reg A Bonds in exchange for their Reg A Bonds in offerings exempt from registration under Section 3(a)(9) and/or 4(a)(2) of the Securities Act.

***Registered Notes***

In October 2024, the Issuer filed a registration statement on Form S-1 (File No. 333-282862) (the "***Registration Statement***") with the SEC with respect to the continuous offering of up to $750.0 million aggregate principal amount of Registered Notes with maturity dates ranging from three to eleven years from the issue date and interest rates ranging from 9.0% to 12.0% per annum. The Registration Statement was declared effective on May 14, 2025. The Registered Notes are contractually senior to the Subordinated Reg D Bonds and contractually subordinated to the Fortress Credit Agreement, the Adamantium Debt, and the Senior Reg D/Reg A Bonds.

The Registered Notes contain customary events of default. The Registered Notes may be redeemed at the option of the Issuer at any time without premium or penalty. The holders of Registered Notes also have a right to request redemption of their notes in certain circumstances at a discount to par, subject to a limit of 10% of the then-outstanding principal amount of the applicable series in any given calendar year.

------

##### [**Table of Contents**](#toc)
***Contractual Obligations and Commitments***

A summary of our contractual obligations, commitments, and other liabilities as of December 31, 2024 is presented below:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2026-2027** | **2028-2029** | **Thereafter** | **Total** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  Debt obligations<sup>(1)</sup> | $103319 | $416255 | $58424 | $409889 | $987887 |
|  Interest payable<sup>(2)</sup> | 80488 | 135451 | 87063 | 667443 | 970445 |
|  Operating lease obligations<sup>(3)</sup> | 1293 | 2657 | 2480 | 3047 | 9477 |
|  Deferred closing arrangements<sup>(4)</sup> | 7189 | 3324 |  |  | 10513 |
|  Drilling rig obligations<sup>(5)</sup> | 8442 |  |  |  | 8442 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $200731 | $557687 | $147967 | $1080379 | $1986764 |

---

(1) Debt obligations represent the principal amounts outstanding under our short-term debt and long-term debt
(including the current portion) as of December 31, 2024 and are based on the stated maturity dates. The table above assumes no prepayments or early redemptions, and does not reflect additional debt incurred or repaid after December 31,
2024. (2) Interest payable is estimated based on final maturity dates of debt securities outstanding at December 31,
2024 and does not reflect anticipated future refinancing, early redemptions, or new debt issuances after December 31, 2024. Floating rate interest obligations are estimated based on rates as of December 31, 2024.

(3) We lease office space in California, Colorado, Florida, Texas, and Wyoming, which have non-cancelable lease agreements expiring in various years through April 2034. The amounts in this table represent the minimum lease payments required over the term of the lease.

(4) For certain mineral interest acquisitions, we have agreed to pay the purchase price in installments together
with interest, with interest rates ranging from 8.0% to 15.0% *per annum*. The amounts in this table represent the remaining payments due over bespoke terms ranging from 11 to 48 months.

(5) Drilling rig obligations represent amounts outstanding under the remaining term of drilling rig contracts
entered into with third parties during the year ended December 31, 2024.

**Critical Accounting Policies and Use of Estimates** 

This discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, and expenses, and disclosures of contingent assets and liabilities, including with respect to quantities of oil, natural gas, and NGL reserves that are the basis for the calculations of depreciation, depletion, and amortization and determinations of impairment of oil and natural gas properties. Our significant accounting policies are described in Note 2, "*Significant Accounting Policies*," of the accompanying consolidated financial statements included elsewhere in this prospectus.

Critical accounting policies are those that we consider to be the most important in portraying our financial condition and results of operations and also require the greatest amount of judgments by management, including requiring an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably possible could materially impact the financial statements. We base our estimates on historical experience and on various other assumptions we believe to be reasonable according to the facts and circumstances at the time the estimates are made. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements. Judgments or uncertainties regarding the application of these policies may result in materially different amounts being reported under different conditions or using different assumptions. There can be no assurance that actual results will not differ from those estimates and assumptions.

------

##### [**Table of Contents**](#toc)
Furthermore, reservoir engineering is a subjective process of estimating underground accumulations of oil and natural gas and there are numerous uncertainties inherent in estimating quantities of proved oil and natural gas reserves. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment along with estimated selling prices. As a result, reserve estimates may materially differ from the quantities of oil and natural gas that are ultimately recovered. We consider the following policies to be the most critical in understanding the judgments that are involved in preparing our consolidated financial statements.

***Oil and Gas Properties***

We invest in crude oil and natural gas properties, including mineral interests and working interests as a non-operator and operator. E&P activities are accounted for in accordance with the successful-efforts method of accounting. Under this method, costs of acquiring proved mineral interests in crude oil and natural gas properties, development wells, related plant and equipment, and related asset retirement obligation assets are capitalized. Costs of proved but undeveloped wells are initially capitalized to wells-in-progress until the well becomes productive. Once the well is productive, accumulated capitalized costs are reclassified to proved and producing properties and accounted for following the successful efforts method of accounting. Costs are also capitalized for unevaluated wells that have found crude oil and natural gas reserves even if the reserves cannot be classified as proved when the drilling is completed, provided the unevaluated well has found a sufficient quality of reserves to justify its completion as an economically and operationally viable producing well. If proved reserves are not found, unevaluated well costs are expensed as dry holes. All other unevaluated wells and costs, and all general and administrative costs unrelated to acquisitions, are expensed as incurred.

Depletion of capitalized costs is recorded using the units-of-production method based on proved reserves. The depletion rate is determined by dividing the cumulative recovered barrels of oil equivalent by the estimated ultimate recovery by well and averaged among all wells within the pooled unit. This rate is multiplied by the original cost basis and reduced by depletion taken in prior periods. The cost basis remaining represents the percentage of the asset remaining to be recovered by the wells within the pooled unit.

***Impairment of Long-lived Assets***

We follow the provisions of FASB ASC 360, *Property, Plant, and Equipment* ("***ASC 360***"). ASC 360 requires that our long-lived assets be assessed for potential impairment of their carrying values whenever events or changes in circumstances indicate such impairment may have occurred. Proved oil and natural gas properties are evaluated by geologic basin for potential impairment. In accordance with the successful efforts method of accounting, impairment on proved properties is recognized when the estimated undiscounted projected future net cash flows or evaluation value using expected future prices of a geologic basin are less than its carrying value. If impairment occurs, the carrying value of the impaired geologic basin is reduced to its estimated fair value.

Unproved oil and natural gas properties do not have producing properties and are valued on acquisition by management, with the assistance of an independent expert when necessary. As reserves are proved through the successful completion of exploratory wells, the cost is transferred to proved properties. The cost of the remaining unproved basis is periodically evaluated by management to assess whether the value of a property has diminished. To do this assessment, management considers (i) estimated potential reserves and future net revenues from an independent expert (ii) our history in exploring the area, (iii) our future drilling plans per our capital drilling program prepared by our reservoir engineers and operations management, and (iv) other factors associated with the area. Impairment is taken on the unproved property value if it is determined that the costs are not likely to be recoverable. The valuation is subjective and requires management to make estimates and assumptions that, with the passage of time, may prove to be materially different from actual results.

***Revenue from Contracts with Customers***

We recognize our revenues following ASC Topic 606*, Revenue from Contracts with Customers*. Our revenues are primarily derived from our interests in the sale of oil and natural gas production. Oil, natural gas,

------

##### [**Table of Contents**](#toc)
and NGL sales revenues are generally recognized when control of the product is transferred to the customer, the performance obligations under the terms of the contracts with customers are satisfied, and collectability is reasonably assured. In circumstances where we are the non-operator or mineral right owner, we do not consider ourselves to have control of the product, and revenues are recognized net of production taxes and post-production expenses. The performance obligations for our contracts with customers are satisfied as of a point in time through the delivery of oil and natural gas to our customers. Given the inherent time lag between when oil, natural gas, NGL production, and sales occur and when operators or purchasers often make disbursements to royalty interest owners and due to the large potential fluctuations of both oil production and sale price, a significant portion of our revenue may represent accrued revenue based on estimated net sales volumes and estimated selling prices.

For crude oil and natural gas produced by PhoenixOp, each delivery order is treated as a separate performance obligation. Revenue is recognized when the performance obligation is satisfied, which typically occurs at the point in time control of the product transfers to the customer. Revenue is measured as the amount we expect to receive in exchange for transferring commodities to the customer. Our commodity sales are typically based on prevailing market-based prices. When deliveries contain multiple products, an observable standalone selling price is generally used to measure revenue for each product. Revenues from product sales are presented separately from post-production expenses, including transportation costs, as we control the operated production prior to its transfer to customers.

**Recent Accounting Pronouncements** 

In November 2024, the FASB issued Accounting Standards Update ("***ASU***") 2024-03, *Income Statement—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses*, which requires companies to provide more detailed disclosures about the disaggregation of income statement expenses. The ASU aims to enhance the transparency and usefulness of financial statements by providing better insight into the components of expense line items, and becomes effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. We are currently evaluating the impact of the standard on our financial statements and disclosures.

**Quantitative and Qualitative Disclosures About Market Risk** 

We are exposed to market risk, including the effects of adverse changes in commodity prices and interest rates or from counterparty or customer credit risk, each as described below. The primary objective of the following information is to provide quantitative and qualitative information about our potential exposure to market risks. These disclosures are not meant to be precise indicators of expected future losses, but rather indicators of reasonably possible losses. This forward-looking information provides indicators of how we view and manage our ongoing market risk exposures. All of our instruments that are sensitive to market risk were entered into for purposes other than speculative trading. Also, gains and losses on these instruments are generally offset by losses and gains on the offsetting expenses.

***Commodity Price Risk***

Our major market risk exposure is in the pricing applicable to the oil, NGL, and natural gas production of our E&P operators, including PhoenixOp, which affects our revenue from PhoenixOp and the royalty payments we receive from our third-party E&P operators. Realized pricing is primarily driven by the prevailing worldwide price for crude oil and spot market prices applicable to our natural gas production. Pricing for oil, NGL, and natural gas has been volatile and unpredictable for several years, and this volatility is expected to continue in the future. The prices that our E&P operators receive for oil, NGL, and natural gas production depend on many factors outside of their and our control, such as the strength of the global economy and global supply and demand for the commodities they produce.

To reduce the impact of fluctuations in oil, NGL, and natural gas prices on our revenues, we periodically enter into commodity derivative contracts with respect to certain of our oil, NGL, and natural gas production through various transactions that limit the risks of fluctuations of future prices. Additionally, we are required to

------

##### [**Table of Contents**](#toc)
hedge a portion of anticipated oil production pursuant to certain covenants under the Fortress Credit Agreement. As a part of our derivative contracts, as of March 31, 2025, over the next three years, we had nearly 4.6 million Bbl hedged at a weighted average strike price of $63.57 per Bbl, which would generate revenues of approximately $290 million over the same period, assuming a price of $0 per Bbl. We plan to continue our practice of entering into such transactions to reduce the impact of commodity price volatility on our cash flow from operations. Future transactions may include price swaps whereby we will receive a fixed price for our production and pay a variable market price to the contract counterparty. Additionally, we may enter into collars, whereby we receive the excess, if any, of the fixed floor over the floating rate or pay the excess, if any, of the floating rate over the fixed ceiling. These hedging activities are intended to limit our exposure to product price volatility and to maintain stable cash flows.

By using derivative instruments to economically limit exposure to changes in commodity prices, we expose ourselves to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk. See "—*Counterparty and Customer Credit Risk*" below.

The fair market value of our commodity derivative contracts was a net liability of $4.5 million and $7.3 million as of March 31, 2025 and December 31, 2024, respectively. Based upon our open commodity derivative positions at March 31, 2025, a hypothetical 10% increase in the NYMEX WTI price would increase our net derivative liability position by $37.8 million, while a 10% decrease in the NYMEX WTI price would decrease our net liability position by $37.0 million. Based upon our open commodity derivative positions at December 31, 2024, a hypothetical 10% increase in the NYMEX WTI price would increase our net derivative liability position by $45.8 million, while a 10% decrease in the NYMEX WTI price would decrease our net liability position by $45.8 million.

A $1.00 per Bbl change in our realized oil price would have resulted in a $1.6 million and a $4.2 million change in our oil revenues for the three months ended March 31, 2025 and the year ended December 31, 2024, respectively. A $0.10 per Mcf change in our realized natural gas price would have resulted in a less than $0.1 million change and a $0.1 million change in our natural gas revenues for each of the three months ended March 31, 2025 and the year ended December 31, 2024, respectively. A $1.00 per Bbl change in NGL prices would have resulted in a less than $0.1 million change in our NGL revenues for each of the three months ended March 31, 2025 and the year ended December 31, 2024. Revenues from oil sales contributed 94.6% and 93.2%, revenues from natural gas sales contributed 1.9% and 2.0%, and revenues from NGL sales contributed 2.1% and 3.9% of our consolidated revenues for the three months ended March 31, 2025 and the year ended December 31, 2024, respectively.

***Interest Rate Risk***

Our primary exposure to interest rate risk results from outstanding borrowings under our credit facilities, which bear interest at a floating rate. The average annual interest rate incurred when such facility was outstanding on our borrowings under the Fortress Credit Agreement was 11.4% and 11.8% during the three months ended March 31, 2025 and the year ended December 31, 2024, respectively. Assuming no change in the amount of borrowings under the Fortress Credit Agreement outstanding, a hypothetical 100 basis point increase or decrease in the average interest rate under these borrowings would increase or decrease our interest expense on those borrowings on an annual basis by approximately $2.5 million. See "—*Liquidity and Capital Resources—Indebtedness—Fortress Credit Agreement.*"

***Counterparty and Customer Credit Risk***

Our cash and cash equivalents are exposed to concentrations of credit risk. We manage and control this risk by investing these funds in major financial institutions. We often have balances in excess of the federally insured limits.

------

##### [**Table of Contents**](#toc)
Our derivative contracts expose us to credit risk in the event of nonperformance by counterparties. We evaluate the credit standing of such counterparties as we deem appropriate. We have determined that our counterparties have an acceptable credit risk for the size of derivative position placed; therefore, we do not require collateral or other security from our counterparties. Additionally, we use master netting arrangements to minimize credit risk exposure.

Our principal exposures to credit risk are through receivables generated by the production activities of our operators and product sales from the delivery of commodities that we extract and deliver to purchasers. For the three months ended March 31, 2025, eleven third-party E&P operators made up 23% of our consolidated revenue, and one purchaser of our commodities made up 66% of our consolidated revenue, as compared to eight third-party E&P operators that made up 57% of our consolidated revenue and one purchaser of our commodities that made up 16% of our consolidated revenue for the three months ended March 31, 2024. Similarly, as of March 31, 2025, we had concentrations in accounts receivable of 20%, 15%, and 14% with three third-party E&P operators, as compared to 17%, 15%, and 13% with three third-party E&P operators as of December 31, 2024. Although we are exposed to a concentration of credit risk due to our reliance on our operators, we do not believe the loss of any single purchaser would materially impact our operating results as crude oil and natural gas are fungible products with well-established markets and numerous purchasers. If multiple purchasers were to cease making purchases at or around the same time, we believe there would be challenges initially, but there would be ample markets to handle the disruption. Additionally, recent rulings in bankruptcy cases involving our third-party E&P operators have stipulated that royalty owners must still be paid for oil, gas, and NGL extracted from their mineral acreage during the bankruptcy process. In light of this, we do not expect the entry of one of our operators into bankruptcy proceedings would materially affect our operating results.

Furthermore, as PhoenixOp increases the extent of its operations and generates revenue from the sale of crude oil and natural gas delivered to purchasers, we expect that our concentration of revenue and accounts receivable among a limited number of third-party E&P operators will decrease and we will achieve greater control over the terms of the sales agreements entered into among PhoenixOp and the purchasers.

See "*Business—Our E&P Operators*" for a further discussion of our E&P operator relationships.

------

##### [**Table of Contents**](#toc)
**BUSINESS** 

**Overview** 

We operate in the oil and gas industry and execute on a three-pronged strategy involving (i) direct drilling operations of operated working interests, (ii) the acquisition of royalty assets, and (iii) the acquisition of non-operated working interest assets. Our direct drilling operations are currently primarily focused on development efforts in the Williston Basin in North Dakota and Montana and the Powder River and Denver Julesburg Basins in Wyoming. Our royalty and working interest acquisitions center around a variety of assets, including mineral interests, leasehold interests, overriding royalty interests, and perpetual royalty interests. These efforts have historically targeted assets in the Williston, Permian, Powder River, Uinta, and DJ Basins. We are agnostic as to geography and prioritize operational and asset potential when executing on our strategy.

We began operations in 2019 with the development of our specialized software system, which we have designed and improved over time to support our ability to identify, analyze, underwrite, transact, and manage our oil and gas assets. In 2019, we acquired our first mineral interest asset and began to generate revenue. In 2020, we expanded our operations and team to include specialists across a variety of key focus areas. From 2020 to 2024, we experienced significant growth in operations. For example, in 2020, the E&P operators of our properties operated 725 gross and 2.8 net productive development wells on the acreage underlying our mineral and royalty interests, and the total acreage underlying our gross and net royalty interests was 177,824 and 1,506, respectively. In the four years since then, the E&P operators of our properties have operated an additional 6,312 gross and 75.1 net productive development wells on the acreage underlying our mineral and royalty interests, of which approximately 463 gross and 43.2 net productive development wells were drilled in 2024 alone. As of December 31, 2024, we had 3,962,065 and 531,120 acres underlying our gross and net royalty interests, respectively, as compared to 177,824 and 1,506 acres underlying our gross and net royalty interests, respectively, at December 31, 2020. Furthermore, our total production for the year ended December 31, 2020 was under 0.2 million Boe as compared to over 4.7 million Boe for the year ended December 31, 2024. In the same period our number of employees grew from 21 at December 31, 2020 to 135 at December 31, 2024. Additionally, we commenced direct drilling operations and spudded our first wells in the third quarter of 2023 and, as of March 31, 2025, we have drilled a total of 44 gross and 39.9 net producing development and injection wells. We expect these direct drilling operations to be a core component of our business strategy going forward.

Since our initial mineral interest asset acquisition in 2019, we have leveraged our specialized software system and experienced management team to identify asset opportunities that fit our desired criteria and potential for returns. While we evaluate and acquire a wide variety of assets, we have historically prioritized assets with potential for high monthly recurring cashflows and primarily target assets that have a potential payback within the short to medium-term and long-term cashflows.

As of March 31, 2025, we have completed 3,687 acquisitions from landowners and other mineral interest owners, representing approximately 539,258 NRAs of royalty assets and 520,922 of NMAs of leasehold assets since 2019. Over that same period, in addition to completing numerous small transactions, we completed more than 70 transactions larger than 1,000 NMAs that account for approximately 85% of our NMAs. We have acquired mineral, royalty, and leasehold interests from individuals, families, trusts, partnerships, small minerals aggregators, minerals brokers, large private minerals companies, private oil and gas E&P companies, and public minerals companies. We also actively manage our portfolio of assets and, as of March 31, 2025, have sold 3,142 NMAs since 2019.

Following the acquisition of an asset, we typically share in the proceeds of the natural resources extracted and sold by a third-party E&P operator. For certain assets, we operate our own direct drilling operations through our direct wholly owned subsidiary, PhoenixOp.

For the three months ended March 31, 2025 and 2024 we had revenue of $115.7 million and $40.7 million, respectively, net income (loss) of $5.6 million and $(8.4) million, respectively, and EBITDA of $72.0 million and

------

##### [**Table of Contents**](#toc)
$21.9 million, respectively. For the years ended December 31, 2024, 2023, and 2022, we had revenue of $281.2 million, $118.1 million, and $54.6 million, respectively, net income (loss) of $(24.8) million, $(16.2) million, and $5.7 million, respectively, and EBITDA of $150.7 million, $65.9 million, and $29.7 million, respectively. As of March 31, 2025 and December 31, 2024, 2023, and 2022, we had total assets of $1,134.7 million, $1,029.1 million, $493.2 million, and $157.0 million, respectively, total liabilities of $1,163.1 million, $1,063.1 million, $498.0 million, $148.3 million, respectively (inclusive of total indebtedness of $1,084.3 million, $987.9 million, $447.9 million, and $117.4 million, respectively), and retained earnings (accumulated deficit) of $(28.9) million, $(34.5) million, $(9.7) million, and $6.5 million, respectively. Through 2024, we incurred a significant amount of debt in order to accelerate the growth of our business by acquiring additional assets and establishing our direct drilling operations. As a result, our cash flows from operations alone would not have been sufficient to service required cash interest and principal payment obligations under our then-existing debt in 2023 and 2024. During the three months ended March 31, 2025, we continued to incur a significant amount of debt. Furthermore, as of December 31, 2024, we estimate that we will need to make approximately $749.3 million and $3,224.8 million in capital expenditures to develop all our proved and probable undeveloped reserves, respectively, and that we will need to raise approximately $658.9 million in additional capital through the end of 2028 to fund such development. Although we expect our cash flows from operations to be sufficient to service cash interest and principal payment obligations under our debt for the foreseeable future, there can be no assurance as to the sufficiency of our cash flows for that purpose, and we do not expect such cash flows alone to be adequate to fund both our debt service obligations and the development of our reserves. Therefore, we expect to require additional capital to fund our growth and may require additional liquidity to service our debt. As a result, we may use the proceeds of additional debt offerings or this offering to make interest and principal payments on our existing debt. See "*Risk Factors—Risks Related to Our Business and Operations—The acquisition and development of our properties, directly or through our third-party E&P operators, will require substantial capital, and we and our third-party E&P operators may be unable to obtain needed capital or financing on satisfactory terms or at all, including as a result of increases in the cost of capital resulting from Federal Reserve policies in the past few years and otherwise*," "*Risk Factors—Risks Related to Our Indebtedness—Despite our current level of indebtedness, we will still be able to incur substantially more debt. This could further exacerbate the risks to our financial condition described above*," "*Risk Factors—Risks Related to Our Indebtedness—We may not be able to generate sufficient cash to service all of our existing and future indebtedness, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful*," "*Risk Factors—Risks Related to the Preferred Shares and this Offering—The Preferred Shares are junior and subordinated to our existing and future indebtedness*," "*Risk Factors—Risks Related to the Preferred Shares and this Offering—We may invest or spend the proceeds of this offering in ways with which you may not agree*," "*Use of Proceeds*," and "*Management's Discussion and Analysis of Financial Condition and Results of Operations*."

**Market Opportunity** 

Our royalty and working interest acquisitions generally focus on specific subsets of mineral and leasehold assets in the United States. From a market perspective, we focus on highly attractive and defined basins, currently serviced by top-tier operators, with assets that we believe will generate high near-term cash flow. All the assets we seek to acquire are purchased at what management believes are attractive price points and have a liquidity profile that is desirable in the secondary market. We generally seek to acquire assets that have a near-term payback and long-term residual cash flow upside.

**Business Strategy** 

Our three-pronged strategy centers around (i) direct drilling operations of operated working interests, (ii) the acquisition of royalty assets, and (iii) the acquisition of non-operated working interest assets.

------

##### [**Table of Contents**](#toc)
***Direct Drilling Operations***

We currently run our own direct drilling activities through PhoenixOp. Throughout 2024, we increased the extent to which we run our own direct drilling operations and expect to continue to grow our drilling activities going forward. We intend to actively drill and develop select assets in an effort to maximize value and resource potential, and we will generally seek to increase our production, reserves, and cash flow from operations over time. We have identified a number of potential drilling locations that we believe have the potential for attractive growth and opportunities. In accordance with that business plan, we acquired our second drilling rig in October 2024 and our third drilling rig in April 2025.

As we rely more on our own direct drilling operations, our capital expenditures and operating expenses have also increased significantly, and we expect this increase in capital and operating expenses to continue as compared to our previous business model, which relied heavily on royalty and working interest acquisitions. As such, in 2025, we expect to have increased needs for additional capital in excess of cash flows from operating activities in order to fund the growth of our business and the development of our reserves. We expect to require additional outside funding, including through sales of the Preferred Shares offered hereby, to successfully execute this business strategy. Although we believe that running our own direct drilling operations will require significantly greater funds than partnering with a third-party operator, we believe that this strategy will provide greater control of cashflow, increased revenue, and larger potential for shorter payback periods as compared to returns on royalty assets and working interest assets. We expect that this ongoing shift in our business model will allow us to capture more of the upside from the use of our specialized software system. As of March 31, 2025, we estimate that our direct drilling operations will require approximately $423.6 million in additional capital throughout the rest of 2025 in order to achieve our intended business plan. We expect that these capital needs will be met in the near to medium term by capital contributions to PhoenixOp by us, which we expect to fund from time to time in varying amounts through a combination of cash from operations and the proceeds from loans and offerings of debt and equity securities. As of March 31, 2025, we had contributed approximately $192.9 million in cash and $44.8 million in lease assets to PhoenixOp. As of March 31, 2025, we had $202.6 million available for us to borrow under the Adamantium Loan Agreement (assuming Adamantium is able to issue the corresponding amount of Adamantium Securities). We also continue to issue August 2023 506(c) Bonds and, as of March 31, 2025, after giving effect to the raise in target offering amount effected in May 2025, we had $813.3 million of additional headroom until we reach the announced target offering amount of $1,500.0 million. Furthermore, the Registration Statement related to our continuous offering of up to $750.0 million aggregate principal amount of Registered Notes was declared effective on May 14, 2025. Our funding of additional amounts to PhoenixOp will not be subject to specific milestones or triggering events, but instead will be guided by our business judgment in order to execute on our intended business plan. We intend to make such capital contributions to PhoenixOp until such time as PhoenixOp procures its own financing, if any, or has sufficient cash from operations to operate without supplemental financing from us. PhoenixOp is currently a borrower under certain of our loan agreements, including the Fortress Credit Agreement and Adamantium Loan Agreement, and could borrow amounts under such agreements directly. There is currently no committed amount of additional financing available under the Fortress Credit Agreement. Although we have issued over $200.0 million of Adamantium Securities to date, there can be no assurance that we will be successful in issuing additional Adamantium Securities and utilizing then-available commitments under the Adamantium Loan Agreement. See "*Risk Factors—Risks Related to Our Business and Operations—The acquisition and development of our properties, directly or through our third-party E&P operators, will require substantial capital, and we and our third-party E&P operators may be unable to obtain needed capital or financing on satisfactory terms or at all, including as a result of increases in the cost of capital resulting from Federal Reserve policies in the past few years and otherwise.*"

Leases are contributed to PhoenixOp at a value equal to our cost of acquisition of the contributed asset, and we anticipate contributing additional oil and gas properties to PhoenixOp in the future. Leases are generally contributed in order for PhoenixOp to operate extraction activities on such assets with the requisite title and permissions. We expect to only contribute oil and gas properties to PhoenixOp that are located in an area where

------

##### [**Table of Contents**](#toc)
we own or lease enough continuous productive acreage to support meaningful mineral extraction activities. Whether and when we have properties we decide to contribute to PhoenixOp will depend on, among other things, our ability to acquire properties from multiple owners, the amount and quality of mineral reserves discovered on such properties, the presence of or proximity to third-party operators with existing extraction activities, and the suitability of the area's topography for drilling and operating producing wells. See "*Risk Factors—Risks Related to Our Business and Operations—We, through our investment in PhoenixOp and future assignment of oil and gas properties to PhoenixOp, conduct direct drilling and extraction activities. Such activities pose additional risks to us*."

***Royalty and Working Interest Acquisitions***

For our royalty and working interest acquisitions, we have developed a process for the identification, acquisition, and monetization of assets. Below is a general illustration of our process:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our specialized software provides market intelligence to identify and rank potential assets and support our
acquisition strategy and functions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We make contact with the owner of the asset and begin the conversation on how we can increase the value of the
property for the owner.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We provide the potential seller with a packet detailing our business, industry data, property valuation, and an all-cash offer based on the valuation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our sales team engages the potential seller to discuss the terms of the sale and the value of the property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We handle the closing of the property and the property is migrated to our portfolio.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We utilize our land rights to extract natural resources from the property through third-party operators or
determine to proceed with our own direct drilling operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We collect a portion of the revenue generated from the natural resources extracted and sold by a third-party
operator. Our share of the revenue depends on the type of asset, either mineral rights or non-operated working interests, and the underlying contract with the third-party operator.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We continue to operate the property to extract the minerals through third-party operators or PhoenixOp until we
decide to sell the property rights.

Separate from the ordinary royalty income assets, we maintain a structural discipline to participate in non-operated working interests, in part for their tax benefits. Due to favorable IRS treatment, marrying this asset class to our pure royalty income creates an augmented "write off" strategy whereby the balanced portfolio effectively creates little to no annual taxable income. Functionally, the transactions we enter into are similar to traditional real estate transactions with respect to the mechanics. A seller agrees to sell to us, a purchase and sale agreement is executed, earnest money is conveyed, and manual diligence and title review is conducted as an audit function prior to closing. Upon closing, the funds are conveyed to the seller and the title is recorded by us in the applicable jurisdiction. Assets can produce for upwards of 20 years; however, there is a considerable regression/depletion curve over the life of the asset. As such, we tend to focus on wells that have recently begun producing or are likely to have new production in the near term. We focus on a closed-loop process from discovery to acquisition to long-term balance sheet ownership. We believe the recurring nature of these cash flows will allow for considerable scale without material increases in fixed overhead.

**Our Specialized Software System** 

Our software system is designed to be scalable and process inputs from a variety of internal and external sources, and supports our ability to identify, analyze, underwrite, and formally transact in the purchasing of oil and gas assets. Our software system operates across three key facets of our business:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Asset Discovery*** – The data-driven system has customized inputs that are selected by management
to pull in and incorporate data sets from multiple third-party sources through custom application interfaces

------

##### [**Table of Contents**](#toc)
that automatically retrieve updated information on a regular basis. For example, the system retrieves detailed land and title data and well-level data, including operator, production metrics, well status, dates of activities, well-specific activities, and historical reporting. The software system compiles these inputs and creates dashboards that can be accessed by management to analyze and review granular data on an asset-by-asset level. These dashboards present certain key information, including, among others, the geography of the asset, the estimated probability of future oil wells, the estimated predictability of the timing and value of cashflows, and local and national oil prices. We believe this process provides us with key market intelligence and insights, tailored to prioritize asset traits curated and targeted by management, to identify and rank potential assets. We believe this provides us with a competitive advantage because we are able to identify potentially valuable assets, based on our own hierarchy and prioritization of asset traits and data inputs, that may otherwise be overlooked by other industry participants. <br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Asset Grading and Estimates*** – The outputs from the asset discovery process are then run
through a discounted cash flow model, using management inputs for discount rate and the price of oil, to generate asset value and pricing estimates. The software system grades these assets based on management's desired target criteria for high
probability of high near-term cash flow, and generates a summary version of assets to prospect for acquisition for our sales team. The system also generates an acquisition price for each asset, which informs the sales team as to the maximum price
that we may be willing to offer in any prospective transaction. This process is used to further characterize high-priority targets for sales and acquisition efforts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Asset Acquisition*** – Based on management input, the software system then routes the pricing and
asset information from the asset grading and estimates process through an automated document generator to create customized, asset-specific document packages for utilization and distribution by our sales team. The workflow for these document
packages is then processed and monitored using our internally developed software, which distributes the documents to our operations team for the preparation of an offering and sale package, which is then delivered to the prospective seller. Using
relationship management features within our internally developed software, the sales team is able to record notes and each opportunity can be tracked from its original data upload through the lifecycle of the sales process.

While the data inputs utilized by our software system are largely based on public information, considerable customization and coding has been undertaken to generate a system that we can successfully leverage in our business. This software was designed and built by us to address our specific needs, and we are not aware of a similar competitive product. We rely on trade secret laws to protect our software system and do not own any registered copyright, patent, or other intellectual property rights regarding our software. However, we believe the investment of significant monetary and intellectual resources have created a system that would be difficult to replicate. We currently have no intention of licensing or selling our software. See "*Risk Factors—Risks Related to Legal, Regulatory, and Environmental Matters—We do not currently own any registered intellectual property rights relating to our software system and may be subject to competitors developing the same technology.*"

**Our Oil and Natural Gas Properties** 

***Productive Wells***

Productive wells consist of producing wells, wells capable of production, and exploratory, development, or extension wells that are not dry wells. As of March 31, 2025, we owned mineral, royalty, and working interests in 6,956 productive wells, the majority of which are oil wells that produce natural gas and natural gas liquids ("***NGL***"). As of December 31, 2024, we owned mineral, royalty, and working interests in 7,037 productive wells, the majority of which are oil wells that produce natural gas and NGL.

As of March 31, 2025, we had 113 wells that fall under our "wells in progress" ("***WIP***") category and we had 32.3 net WIP. We define a WIP as a development well in a stage preliminary to production. We utilize both

------

##### [**Table of Contents**](#toc)
proprietary and public systems to identify WIPs based on four distinct criteria: (1) a well that is not actively being drilled but is in the process of being developed; (2) a well currently being drilled and awaiting completion; (3) a drilled well in the completion process; and (4) a drilled well that has been completed but is not yet producing. This term serves as a guide in our acquisition strategy, enabling us to pinpoint lower-risk investment opportunities for our stakeholders. As of December 31, 2024, we had 105 wells that fall under our WIP category, and we had 35.1 net WIP.

***Drilling Results***

In the three months ended March 31, 2025, the E&P operators of our properties, including PhoenixOp, drilled 26 gross and 4.2 net productive development wells on the acreage underlying our mineral and royalty interests. This compares to 105 gross and 7.5 net productive development wells drilled by E&P operators on the acreage underlying our mineral and royalty interests in the three months ended March 31, 2024.

In the year ended December 31, 2024, the E&P operators of our properties, including PhoenixOp, drilled 463 gross and 43.2 net productive development wells on the acreage underlying our mineral and royalty interests. This compares to 1,965 and 971 gross productive development wells and 19.2 and 8.7 net productive development wells drilled by E&P operators on the acreage underlying our mineral and royalty interests in the years ended December 31, 2023 and 2022, respectively.

Included in our total drilled wells figures, as of March 31, 2025, PhoenixOp had drilled a total of 44 gross and 39.9 net productive development wells, all of which were drilled in the Williston Basin in North Dakota and Montana. PhoenixOp has also drilled a total of seven gross and seven net saltwater disposal wells, and had 41 gross and 34.8 net development wells in progress as of March 31, 2025.

As a holder of mineral and royalty interests, we generally are not provided information as to whether any wells drilled on the properties underlying our acreage are classified as exploratory. We are not aware of any dry holes drilled on the acreage underlying our mineral and royalty interests during the relevant periods.

***Wells***

As of March 31, 2025, we had 6,956 total gross wells and 82.5 total net wells. The following table sets forth information about the productive wells in which we have a mineral or royalty interest as of March 31, 2025:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Well Count** | **Well Count** | **Well Count** | **Well Count** |
|  | **Oil** | **Oil** | **Gas** | **Gas** |
|  | **Gross** | **Net** | **Gross** | **Net** |
|  **Basin or Producing Region** |  |  |  |  |
|  Bakken/Williston Basin | 3942 | 62.2 | 3 | 0.0 |
|  DJ Basin/Rockies/Niobrara | 1225 | 15.3 | 7 | 0.0 |
|  Permian Basin | 692 | 1.2 | 2 | 0.0 |
|  Other | 548 | 1.5 | 537 | 2.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | 6407 | 80.2 | 549 | 2.3 |

---

------

##### [**Table of Contents**](#toc)
***Acreage of Mineral and Royalty Interests***

The following tables set forth information relating to the acreage underlying our mineral and working interests as of March 31, 2025:

*Acreage of Mineral Interest* 

---

| | | | |
|:---|:---|:---|:---|
|  | **Net Royalty Acres** | **Net Royalty Acres** | **Net Royalty Acres** |
|  | **Developed**<br>**Acreage** | **Undeveloped**<br>**Acreage** | **Total<br>Acreage** |
|  **Basin** |  |  |  |
|  Bakken/Williston Basin | 17043 | 70067 | 87111 |
|  DJ Basin/Rockies/Niobrara/PRB | 5010 | 10280 | 15290 |
|  Permian Basin | 657 | 356 | 1013 |
|  Other | 470 | 435374 | 435845 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Net Royalty Acres | 23180 | 516077 | 539258 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **Gross Royalty Acres** | **Gross Royalty Acres** | **Gross Royalty Acres** |
|  | **Developed**<br>**Acreage** | **Undeveloped**<br>**Acreage** | **Total<br>Acreage** |
|  **Basin** |  |  |  |
|  Bakken/Williston Basin | 552685 | 929561 | 1482247 |
|  DJ Basin/Rockies/Niobrara/PRB | 115814 | 349033 | 464847 |
|  Permian Basin | 94083 | 24603 | 118685 |
|  Other | 17579 | 2216297 | 2233876 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Gross Royalty Acres | 780161 | 3519494 | 4299655 |

---

*Acreage of Working Interest* 

---

| | | | |
|:---|:---|:---|:---|
|  | **Net Mineral Acres** | **Net Mineral Acres** | **Net Mineral Acres** |
|  | **Developed**<br>**Acreage** | **Undeveloped**<br>**Acreage** | **Total<br>Acreage** |
|  **Basin** |  |  |  |
|  Bakken/Williston Basin | 23989 | 202340 | 226329 |
|  DJ Basin/Rockies/Niobrara/PRB | 3953 | 31877 | 35830 |
|  Permian Basin | 28 | 36 | 64 |
|  Other | 349 | 258350 | 258699 |
|  Total Net Mineral Acres | 28319 | 492603 | 520922 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **Gross Mineral Acres** | **Gross Mineral Acres** | **Gross Mineral Acres** |
|  | **Developed**<br>**Acreage** | **Undeveloped**<br>**Acreage** | **Total<br>Acreage** |
|  **Basin** |  |  |  |
|  Bakken/Williston Basin | 252672 | 786065 | 1038736 |
|  DJ Basin/Rockies/Niobrara/PRB | 43179 | 189656 | 232834 |
|  Permian Basin | 7680 | 1280 | 8960 |
|  Other | 15872 | 1309568 | 1325440 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Gross Mineral Acres | 319402 | 2286568 | 2605971 |

---

Beginning with the period ended December 31, 2023 and for all subsequent periods, each land holding in which we have a net royalty interest is reviewed and associated with a specific drilling spacing unit. This allows

------

##### [**Table of Contents**](#toc)
for the estimation of gross royalty acres to be as accurate as possible. For the period ended December 31, 2022 and for all prior periods, the drilling spacing unit was estimated based on average development within a basin and applied to each land holding in which we had a net royalty interest.

***Acreage Expirations***

As of March 31, 2025, we have 175,440 gross and 26,193 net working interest acres expiring through the end of 2027, with an additional 243,669 gross and 46,271 net working acres expiring in 2028, and 609,743 gross and 85,202 net working interest acres expiring in 2029. The remaining 454,934 gross and 72,092 net working interest acres expire in years 2030 and beyond.

***Evaluation and Review of Estimated Proved and Probable Reserves***

We use the term "***probable reserves***" herein to refer to those additional reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered. The probable reserves disclosed herein have been quantified using deterministic methods and, when combined with proved reserves, have at least a 50% probability that actual quantities recovered will equal or exceed the proved plus probable reserves estimates in accordance with Rule 4-10(a)(18) of Regulation S-X. The probable reserves are adjacent to quantifiable proved reserves but where data control is present but is less certain. Our probable reserves are assigned to areas of a reservoir adjacent to proved reserves where data control or interpretations of available data are less certain, even if the interpreted reservoir continuity of structure or productivity does not meet the reasonable certainty criterion. Our probable reserves are also assigned to areas that are structurally higher than the proved area if these areas are in communication with the proved reservoir. The proved plus probable estimates must be based on reasonable alternative technical and commercial interpretations within the reservoir or subject project that are clearly documented, including comparisons to results in successful similar projects. Where direct observation has defined a highest known oil ("***HKO***") elevation and the potential exists for an associated gas cap, proved oil reserves should be assigned in the structurally higher portions of the reservoir above the HKO only if the higher contact can be established with reasonable certainty through reliable technology. Portions of the reservoir that do not meet this reasonable certainty criterion may be assigned as probable and possible oil or gas based on reservoir fluid properties and pressure gradient interpretations.

We use the term "***proved reserves***" herein to refer to quantities of oil and gas that, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation.

The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time. The area of the reservoir considered as proved includes (i) the area identified by drilling and limited by fluid contacts, if any, and (ii) adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible oil or gas on the basis of available geoscience and engineering data. In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons as seen in a well penetration unless geoscience, engineering or performance data, and reliable technology established a lower contact with reasonable certainty. Where direct observation from well penetrations has defined an HKO elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering or performance data, and reliable technology establish the higher contact with reasonable certainty. Reserves that can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when: (a) successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous

------

##### [**Table of Contents**](#toc)
reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and (b) the project has been approved for development by all necessary parties and entities, including governmental entities. Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price is the average price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.

In order to establish the appropriate level of reserve categories and estimates to assign to our properties, we utilize modern geologic and engineering technologies, some of which are proprietary and some of which are publicly available. These technologies include, but are not limited to, drilling and completions data, flowback data, productivity results, pressure performance, mapping of geologic characteristics taken from open hole logs, cased hole logs, gamma ray logs, measurement while drilling logs, electric logs, and seismic surveys.

The proved and probable reserves estimates reported herein are as of March 31, 2025, December 31, 2024, December 31, 2023, and December 31, 2022. The technical persons primarily responsible for preparing the estimates disclosed herein each have over 15 years of industry experience. Each meet or exceed the education, training, and experience requirements set forth in the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum Engineers and are proficient in judiciously applying industry standard practices to engineering and geoscience evaluations, as well as applying SEC and other industry reserves definitions and guidelines. Mr. Brandon Allen, who is our Chief Operating Officer and who, prior to that role, served as the President of PhoenixOp from February 2024 until December 2024 and its Vice President of Reservoir Engineering from March 2023 to February 2024, is primarily responsible for overseeing the preparation of the reserves estimation. He has approximately 19 years of oil and gas operations and reserves estimation and reporting experience. He has earned Bachelor of Science degrees in Biochemistry and Chemical Engineering from the University of Colorado, Boulder, and is an active member of the Society of Petroleum Engineers.

Proved and probable reserve estimates are based on the unweighted arithmetic average prices on the first day of each month for the 12-month period ended March 31, 2025, December 31, 2024, December 31, 2023, or December 31, 2022, as applicable. Average prices for the 12-month periods were as follows: WTI crude oil spot price of $76.32 per Bbl as of December 31, 2024, adjusted by lease or field for quality, transportation fees, and market differentials, and a Henry Hub natural gas spot price of $2.130 per MMBtu as of December 31, 2024, adjusted by lease or field for energy content, transportation fees, and market differentials. All prices and costs associated with operating wells were held constant in accordance with SEC guidelines.

We estimate the quantity or perceived cashflow of proved and probable undeveloped reserves for financial reporting purposes in accordance with the five-year rule as set forth by the SEC. Most proved undeveloped properties are operated by our subsidiary, PhoenixOp, whereby we and PhoenixOp have the property on the most current drill schedule. Non-operated proved and probable undeveloped properties represent properties that we have high confidence will be converted to producing properties within five years based on our diligence and review of public and non-public data sources. As it relates to a majority of our mineral and non-operated interest holdings, we do not always have the ability to accurately estimate when undeveloped reserves may be extracted and instead take a conservative approach whereby we only classify such reserves as proved when such reserves are either currently producing or where we have knowledge of a close date of extraction, such as upon our receipt of a notice from the operators of such reserves providing a specific timeframe for near-term production. We classify the remaining reserves as probable reserves. For example, for probable undeveloped reserves, we have a high confidence that the properties are on a development plan and/or will be converted to producing properties within the next five years based on, among other factors, our discussions with service providers, the location of nearby drilling rigs, permits obtained by the operators that are generally valid for one to two years, and the terms of the respective leases, which typically expire within five years.

------

##### [**Table of Contents**](#toc)
Estimates of probable reserves, and the future cash flows related to such estimates, are inherently imprecise and are more uncertain than estimates of proved reserves, and the future cash flows related to such estimates, but have not been adjusted for risk due to that uncertainty. Because of such uncertainty, estimates of probable reserves, and the future cash flows related to such estimates, may not be comparable to estimates of proved reserves, and the future cash flows related to such estimates, and should not be summed arithmetically with estimates of proved reserves, and the future cash flows related to such estimates. When producing an estimate of the amount of natural gas and oil that is recoverable from a particular reservoir, an estimated quantity of probable reserves is an estimate of those additional reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered. Estimates of probable reserves are also continually subject to revisions based on production history, results of additional exploration and development, price changes, and other factors. When deterministic methods are used, it is as likely as not that actual remaining quantities recovered will exceed the sum of estimated proved plus probable reserves. Probable reserves may be assigned to areas of a reservoir adjacent to proved reserves where data control or interpretations of available data are less certain, even if the interpreted reservoir continuity of structure or productivity does not meet the reasonable certainty criterion. Probable reserves may be assigned to areas that are structurally higher than the proved area if these areas are in communication with the proved reservoir. Probable reserves estimates also include potential incremental quantities associated with a greater percentage recovery of the hydrocarbons in place than assumed for proved reserves.

The reserves information in this disclosure represents only estimates. Reserve evaluation is a subjective process of estimating underground accumulations of oil and natural gas that cannot be measured in an exact manner. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment. In addition, results of drilling, testing, and production subsequent to the date of an estimate may lead to revising the original estimate. Accordingly, initial reserve estimates are often different from the quantities of oil and natural gas that are ultimately recovered. The meaningfulness of such estimates depends primarily on the accuracy of the assumptions upon which they were based. Except to the extent we acquire additional properties containing proved reserves or conduct successful exploration and development activities or both, our proved reserves will decline as reserves are produced.

In addition, we anticipate that the preparation of our proved and probable reserve estimates is completed in accordance with internal control procedures, including the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• review and verification of historical production data, which data is based on actual production as reported by
the operators of our properties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• preparation of reserves estimates by Mr. Brandon Allen or under his direct supervision;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• review by Mr. Brandon Allen and Mr. Curtis Allen, our Chief Financial Officer, of all of our reported
proved and probable reserves at the close of the calendar year, including the review of all significant reserve changes and all new proved and probable undeveloped reserves additions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• verification of property ownership by our land department; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• no employee's compensation being tied to the amount of reserves booked.

------

##### [**Table of Contents**](#toc)
***Oil, Natural Gas, and NGL Reserves***

The following table presents our estimated proved and probable oil, natural gas, and NGL reserves as of each of the dates indicated:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As of March 31,** | **As of December 31,** | **As of December 31,** | **As of December 31,** |
|  | **2025<sup>(1)(2)</sup>** | **2024<sup>(2)(3)</sup>** | **2023<sup>(2)(4)</sup>** | **2022<sup>(5)</sup>** |
|  **Estimated proved developed reserves** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Oil (Bbl) | 21203426 | 18624758 | 7124194 | 3691722 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas (Mcf) | 24553454 | 20819874 | 12250285 | 7624212 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas liquids (Bbl) | 3690384 | 2848355 | 1514761 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total (Boe)(6:1)<sup>(6)</sup> | 28986053 | 24943093 | 10680669 | 4962424 |
|  **Estimated proved undeveloped reserves** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Oil (Bbl) | 31671299 | 31197795 | 24925841 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas (Mcf) | 15155549 | 17491089 | 19565808 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas liquids (Bbl) | 4662130 | 4753257 | 6648747 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total (Boe)(6:1)<sup>(6)</sup> | 38859353 | 38866233 | 34835556 |  |
|  **Estimated proved reserves** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Oil (Bbl) | 52874725 | 49822554 | 32050035 | 3691722 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas (Mcf) | 39709003 | 38310963 | 31816093 | 7624212 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas liquids (Bbl) | 8352514 | 7601611 | 8163508 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total (Boe)(6:1)<sup>(6)</sup> | 67845406 | 63809326 | 45516225 | 4962424 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Percent proved developed | 43% | 39% | 23% | 100% |
|  **Estimated probable undeveloped reserves** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Oil (Bbl) | 111100322 | 107769309 | 74877268 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas (Mcf) | 134480280 | 134083603 | 88184111 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas liquids (Bbl) |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total (Boe)(6:1)<sup>(6)</sup> | 133513702 | 130116577 | 89574620 |  |

---

(1) Estimates of reserves of oil and natural gas as of March 31, 2025 were prepared using an average price
equal to the unweighted arithmetic average of hydrocarbon prices received on a field-by-field basis on the first day of each month of the 12 months ended March 31,
2025, in accordance with SEC guidelines applicable to reserve estimates as of the end of such period. The unweighted arithmetic average first day of the month prices were $75.33 per Bbl for oil and $2.443 per MMBtu for natural gas at March 31,
2025. Estimates of reserves of NGL as of March 31, 2025 were calculated using the average of realized wellhead prices of such reserves. The average NGL price realized at March 31, 2025 was $27.95 per Bbl. Reserve estimates do not include
any value for probable or possible reserves that may exist, nor do they include any value for undeveloped acreage. The reserve estimates represent our net revenue interest in our properties. Although we believe these estimates are reasonable, actual
future production, cash flows, taxes, development expenditures, production costs, and quantities of recoverable oil and natural gas reserves may vary substantially from these estimates.

(2) In early 2023, PhoenixOp was established with the intention that certain leaseholds held by us would be
developed by PhoenixOp. PhoenixOp executed a contract for a drilling rig with Patterson-UTI Drilling Company on June 20, 2023. This allowed for previously unbooked reserves as of December 31, 2022 to
be estimated and booked as of December 31, 2023 as proved undeveloped in accordance with SEC guidelines for reserves categorization and estimation and in adherence to the five-year rule as set forth in Rule 4-10(a)(31) of Regulation S-X.

(3) Estimates of reserves of oil and natural gas as of December 31, 2024 were prepared using an average price
equal to the unweighted arithmetic average of hydrocarbon prices received on a field-by-field basis on the first day of each month of the last 12 months ended
December 31, 2024, in accordance with SEC guidelines applicable to reserve estimates as of the end of such period. The unweighted arithmetic average first day of the month prices were $76.32 per Bbl for oil and $2.130 per MMBtu for natural gas
at December 31, 2024.

------

##### [**Table of Contents**](#toc)
Estimates of reserves of NGL as of December 31, 2024 were calculated using the average of realized wellhead prices of such reserves. The average NGL price realized at December 31, 2024 was $25.22 per Bbl. Reserve estimates do not include any value for probable or possible reserves that may exist, nor do they include any value for undeveloped acreage. The reserve estimates represent our net revenue interest in our properties. Although we believe these estimates are reasonable, actual future production, cash flows, taxes, development expenditures, production costs, and quantities of recoverable oil and natural gas reserves may vary substantially from these estimates.

(4) Estimates of reserves of oil and natural gas as of December 31, 2023 were prepared using an average price
equal to the unweighted arithmetic average of hydrocarbon prices received on a field-by-field basis on the first day of each month of the last 12 months ended
December 31, 2023, in accordance with SEC guidelines applicable to reserve estimates as of the end of such period. The unweighted arithmetic average first day of the month prices were $78.21 per Bbl for oil and $2.637 per MMBtu for natural gas
at December 31, 2023. Estimates of reserves of NGL as of December 31, 2023 were calculated using the average of realized wellhead prices of such reserves. The average NGL price realized at December 31, 2023 was $19.21 per Bbl. Reserve
estimates do not include any value for probable or possible reserves that may exist, nor do they include any value for undeveloped acreage. The reserve estimates represent our net revenue interest in our properties. Although we believe these
estimates are reasonable, actual future production, cash flows, taxes, development expenditures, production costs, and quantities of recoverable oil and natural gas reserves may vary substantially from these estimates.

(5) Estimates of reserves of oil and natural gas as of December 31, 2022 were prepared using an average price
equal to the unweighted arithmetic average of hydrocarbon prices received on a field-by-field basis on the first day of each month of the last 12 months ended
December 31, 2022, in accordance with SEC guidelines applicable to reserve estimates as of the end of such period. The unweighted arithmetic average first day of the month prices were $94.14 per Bbl for oil and $6.357 per MMBtu for natural gas
at December 31, 2022. We had no NGL reserves as December 31, 2022 and, as such, no NGL price was calculated as of December 31, 2022. Reserve estimates do not include any value for probable or possible reserves that may exist, nor do
they include any value for undeveloped acreage. The reserve estimates represent our net revenue interest in our properties. Although we believe these estimates are reasonable, actual future production, cash flows, taxes, development expenditures,
production costs, and quantities of recoverable oil and natural gas reserves may vary substantially from these estimates.

(6) Estimated proved reserves are presented on an oil-equivalent basis
using a conversion of six Mcf per barrel of "oil equivalent." This conversion is based on energy equivalence and not price or value equivalence. If a price equivalent conversion based on the 12-month average prices for the period ended December 31, 2024 was used, the conversion factor would be approximately 35.8 Mcf per Bbl of oil.

At March 31, 2025, total estimated proved reserves were approximately 67,845,406 Boe, a 4,036,080 Boe net increase from the estimate of 63,809,326 at December 31, 2024. Proved developed reserves of 28,986,052 Boe represented an increase of approximately 5,802,281 Boe from December 31, 2024 as a result of proved developed reserves sales and acquisitions of 599,398 Boe, extensions of 366,232 Boe, and total positive revisions of previous estimates of 4,836,651 Boe, offset by production of 1,759,320 Boe. The total positive revisions of previous estimates comprised: (i) negative price revisions of (10,671) Boe, (ii) positive revisions of 4,812,993 Boe due to transferring proved undeveloped reserves to proved developed reserves, (iii) negative well performance revisions of (94,482) Boe, (iv) write downs of (77,456) Boe, and (v) positive interest changes of 206,267 Boe. Proved undeveloped reserves of 38,859,353 Boe represented a decrease of approximately (6,880) Boe from December 31, 2024 as a result of proved undeveloped extensions of 3,222,627 Boe and total negative revisions of previous estimates of (3,229,507) Boe, which comprised (i) negative price revisions (17,599) Boe, (ii) negative revisions of (4,812,993) Boe due to transferring proved undeveloped reserves to proved developed reserves, (iii) positive well performance revisions of 1,462,943 Boe, and (iv) positive revisions of 145,022 Boe due to asset development timing. During the three months ended March 31, 2025, approximately $101.2 million in capital expenditures went toward the acquisition and development of proved reserves, which includes drilling, completion, and other facility costs associated with acquiring and developing wells. All proved undeveloped reserves disclosed as of March 31, 2025 are scheduled to be converted to proved developed status within five years of initial disclosure.

------

##### [**Table of Contents**](#toc)
At December 31, 2024, total estimated proved reserves were approximately 63,809,326 Boe, a 18,293,101 Boe net increase from the previous year end's estimate of 45,516,225 Boe. Proved developed reserves of 24,943,092 Boe increased approximately 14,262,423 Boe from December 31, 2023 as a result of proved developed reserves acquisitions of 1,047,809 Boe, extensions of 3,268,997 Boe, and total positive revisions of previous estimates of 14,759,886 Boe, offset by divestitures of 71,887 Boe and production from proved developed reserves of 4,742,381 Boe. The total positive revisions of previous estimates comprised: (i) positive price revisions of 1,263 Boe; (ii) positive transfer of 14,871,911 Boe from proved undeveloped to proved developed reserves; (iii) negative well performance revisions of (481,161) Boe; (iv) positive revisions of 715,795 Boe due to interest changes; and (v) negative revisions of (347,922) Boe due to changes in lifting cost. Proved undeveloped reserves of 38,866,233 Boe increased approximately 4,030,677 Boe from December 31, 2023 as a result of proved undeveloped reserves extensions of 21,207,289 and total negative revisions of previous estimates of 17,176,612 Boe. The total negative revisions of previous estimates comprised: (i) positive price revisions of 48,935 Boe; (ii) negative transfer of (14,871,911) Boe from proved undeveloped to proved developed reserves; and (iii) negative well performance revisions of (2,353,636) Boe due to asset development reconfiguration and type curve adjustments. During the year ended December 31, 2024, approximately $87.4 million in capital expenditures were related to the conversion of proved undeveloped reserves to proved developed reserves. During the year ended December 31, 2024, approximately $450.0 million in capital expenditures went toward the acquisition and development of proved developed reserves, which includes drilling, completion, and other facility costs associated with acquiring and developing wells. All proved undeveloped reserves disclosed as of December 31, 2024 are scheduled to be converted to proved developed status within five years of initial disclosure.

At December 31, 2023, total estimated proved reserves were approximately 45,516,225 Boe, a 40,553,802 Boe net increase from the previous year end's estimate of 4,962,424 Boe. Proved developed reserves of 10,680,669 Boe increased approximately 5,718,245 Boe from December 31, 2022 as a result of proved developed reserves acquisitions of 1,426,545 Boe, extensions of 5,682,894 Boe, and total positive revisions of previous estimates of 616,010 Boe, offset by production from proved developed reserves of 2,007,205 Boe. The total positive revisions of previous estimates comprised: (i) negative price revisions of (13,622) Boe; (ii) transfer of (89,378) Boe from proved developed to proved undeveloped due to previous misclassifications of reserve; (iii) positive well performance revisions of 515,938 Boe; and (iv) positive revisions of 203,072 Boe due to changes in lifting cost. Proved undeveloped reserves of 34,835,556 Boe increased approximately 34,835,556 Boe from December 31, 2022 as a result of revisions due to previous misclassification of 89,378 Boe of reserves as proved developed reserves and due to the addition of 34,746,179 Boe of operated proved undeveloped reserves stemming from the signing of a drilling rig contract in June 2023. During the year ended December 31, 2023, approximately $171.2 million in capital expenditures went toward the acquisition and development of proved developed reserves, which includes drilling, completion, and other facility costs associated with acquiring and developing wells. At December 31, 2022, there were no proved undeveloped reserves, Therefore, no capital expenditures for the year ended December 31, 2023 were related to the conversion of proved undeveloped reserves to proved developed reserves. All proved undeveloped reserves disclosed as of December 31, 2023 are scheduled to be converted to proved developed status within five years of initial disclosure.

At December 31, 2022, total estimated proved reserves were approximately 4,962,424 Boe, a 2,195,112 Boe net increase from the previous year end's estimate of 2,767,312 Boe. Proved developed reserves of 4,962,424 Boe increased approximately 2,195,112 Boe from December 31, 2021 as a result of proved developed reserves acquisitions of 1,554,122 Boe, extensions of 75,272 Boe, and total positive revisions of previous estimates of 1,265,552 Boe, offset by production from proved developed reserves of 699,834 Boe. The total positive revisions of previous estimates comprised (i) positive price revisions of 524,667 Boe and (ii) positive well performance revisions of 740,885 Boe. During the year ended December 31, 2022, approximately $117.1 million in capital expenditures went toward the acquisition and development of proved reserves, which includes drilling, completion, and other facility costs associated with acquiring and developing wells. At December 31, 2021, there were no proved undeveloped reserves. Therefore, no capital expenditures for the year ended December 31, 2022 were related to the conversion of proved undeveloped reserves to proved developed reserves.

------

##### [**Table of Contents**](#toc)
***Delivery Commitments***

As of March 31, 2025, PhoenixOp is subject to arrangements pursuant to which it has committed to provide a total of 2.2 million barrels of crude oil, with the highest yearly minimum of 958,000 barrels of crude oil, from June 1, 2025 to December 31, 2030. PhoenixOp will be subject to a shortfall fee for failure to meet this commitment. As a part of these arrangements, PhoenixOp has dedicated to the counterparties certain rights to all oil extracted from our wells in certain properties in Dunn County, Williams County, and Divide County, North Dakota. PhoenixOp has assessed the productivity potential of its leasehold in the area, as well as the feasibility of executing an operational plan to extract oil on its leasehold within the commitment period and dedication area, and deemed it to be reasonable to enter into such an agreement.

***Select Production and Operating Statistics***

The following table presents information regarding our production of oil, natural gas, and NGL and certain price and cost information for each of the periods indicated:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the Three Months Ended**<br>**March 31,** | **For the Three Months Ended**<br>**March 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2025** | **2024** | **2024** | **2023** | **2022** |
|  **Production Data:** |  |  |  |  |  |
|  *Bakken* |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Oil (Bbl) | 1386145 | 460994 | 3022810 | 943930 | 360604 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas (Mcf) | 331296 | 310389 | 1301782 | 1123859 | 522523 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas liquids (Bbl) | 54214 | 53464 | 270219 | 88762 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total (Boe)(6:1)(1) | 1495575 | 566190 | 3509992 | 1220003 | 447691 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Average daily production (Boe/d)(6:1) | 16618 | 6222 | 9590 | 3342 | 1227 |
|  *All Properties* |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Oil (Bbl) | 1552609 | 578411 | 3830461 | 1446928 | 523416 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas (Mcf) | 712492 | 556282 | 2979341 | 2152939 | 1058506 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas liquids (Bbl) | 87962 | 80367 | 415363 | 201454 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total (Boe)(6:1)<sup>(1)</sup> | 1759320 | 751492 | 4742381 | 2007205 | 699834 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Average daily production (Boe/d)(6:1) | 19548 | 8258 | 12993 | 5499 | 1917 |
|  **Average Realized Prices:** |  |  |  |  |  |
|  *Bakken* |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Oil (Bbl) | $72.17 | $66.06 | $71.77 | $71.43 | $80.67 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas (Mcf) | $3.53 | $2.84 | $2.12 | $3.47 | $3.77 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas liquids (Bbl) | $26.83 | $25.31 | $23.53 | $26.70 | $— |
|  *All Properties* |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Oil (Bbl) | $70.50 | $64.51 | $68.49 | $73.10 | $91.01 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas (Mcf) | $3.13 | $2.48 | $1.86 | $3.15 | $6.66 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Natural gas liquids (Bbl) | $27.95 | $24.58 | $25.22 | $27.50 | $— |
|  **Average Unit Cost per Boe (6:1):** |  |  |  |  |  |
|  *All Properties* |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating costs, production and ad valorem taxes | $18.01 | $13.69 | $16.11 | $16.18 | $19.89 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating costs excluding taxes | $12.21 | $7.95 | $10.75 | $10.86 | $12.58 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Percentage of revenue | 27.1% | 20.6% | 26.4% | 16.7% | 21.9% |

---

(1) "Btu-equivalent" production volumes are presented on an oil-equivalent basis using a conversion factor of six Mcf of natural gas per barrel of "oil equivalent," which is based on approximate energy equivalency and does not reflect the price or value
relationship between oil and natural gas.

------

##### [**Table of Contents**](#toc)
***Depletion of Oil and Natural Gas Properties***

We account for our oil and gas properties under the successful efforts method of accounting. Under this method, the costs of development wells are capitalized to proved properties whether those wells are successful or unsuccessful. Capitalized drilling and completion costs, including lease and well equipment, intangible development costs, and operational support facilities, are depleted using the units-of-production method based on estimated proved developed reserves. Proved leasehold costs are also depleted; however, the units-of-production method is based on estimated total proved reserves. The computation of depletion expense takes into consideration restoration, dismantlement, and abandonment costs, as well as the anticipated proceeds from salvaging equipment.

Depletion expense was $31.3 million and $13.3 million for the three months ended March 31, 2025 and 2024, respectively, and $86.0 million, $34.2 million, and $12.1 million for the years ended December 31, 2024, 2023, and 2022, respectively. On a per unit basis, depletion expense was $17.77 per Boe and $17.63 per Boe for the three months ended March 31, 2025 and 2024, respectively, and $18.13 per Boe, $17.06 per Boe, and $17.34 per Boe for the years ended December 31, 2024, 2023, and 2022, respectively. The increase in our depletion rate for the three months ended March 31, 2025 compared to 2024 was primarily due to the incurrence of increased development capital expenditures primarily related to developing operated wells under our operating entity, PhoenixOp. The decrease in our depletion rate for the year ended December 31, 2023 compared to 2022 was primarily due to increased proved reserves relative to the change in aggregated proved leasehold and development costs associated with those proved reserves, whereas the increase in our depletion rate for the year ended December 31, 2024 compared to 2023 was primarily due to the incurrence of significant capital expenditures related to developing operated wells under our operating entity, PhoenixOp. The depletion rate for development capital is depleted at a higher rate as compared to leasehold due to the use of proved developed reserves versus total proved reserves under the successful efforts accounting method. We expect depletion expense to continue to increase in subsequent periods as our gross production of oil, gas, and other products increase.

**Our E&P Operators** 

Our management team strives to acquire mineral and royalty interests in properties with top-tier third-party E&P operators. We seek third-party E&P operators that are well-capitalized, have a strong operational track record, and we believe will continue to produce through the application of the latest drilling and completion techniques across our mineral and royalty interests. Over 100 third-party E&P operators are currently producing oil and gas at our assets. As of March 31, 2025, our top ten third-party E&P operators operate on 7.6% of our NRAs.

**Industry Operating Environment** 

The oil and natural gas industry is a global market impacted by many factors, such as government regulations, particularly in the areas of taxation, energy, climate change, and the environment, political and social developments in the Middle East and Russia, demand in Asian and European markets, and the extent to which members of OPEC and other oil exporting nations manage oil supply through export quotas. Natural gas prices are generally determined by North American supply and demand and are also affected by imports and exports of liquefied natural gas. Weather also has a significant impact on demand for natural gas because it is a primary heating source.

Oil and natural gas prices have been, and we expect may continue to be, volatile. Lower oil and gas prices not only decrease our revenues, but an extended decline in oil or gas prices may affect planned capital expenditures and the oil and natural gas reserves that our assets can economically produce. Among other things, drilling operations and related activities can be significantly impacted by the accuracy of the estimation of reserves and the effect on those reserves of fluctuating market prices. If commodity prices decline, the cost of

------

##### [**Table of Contents**](#toc)
developing, completing, and operating a well may not decline in proportion to the prices that are received for the production, resulting in higher operating and capital costs as a percentage of revenues. While lower commodity prices may reduce the future net cash flow from operations of the assets in which we invest, we expect to have sufficient liquidity to continue participation in development of our oil and gas properties.

***Competition***

The oil and gas industry is intensely competitive, and we compete with other oil and natural gas E&P companies, some of which have substantially greater resources than we have and may be able to pay more for exploratory prospects and productive oil and natural gas properties, and competition for our target asset classes is subject to increase in the future. Our larger or more integrated competitors may be better able to absorb the burden of existing, as well as any changes to, federal, state, and local laws and regulations than we can, which would adversely affect our competitive position. Our ability to acquire additional assets in the future is dependent on the success of our software platform, our ability and resources to evaluate and select suitable properties, and our ability to consummate transactions in this highly competitive environment.

***Marketing and Customers***

The market for oil and natural gas that will be produced from our assets depends on many factors, including the extent of domestic production and imports of oil and natural gas, the proximity and capacity of pipelines and other transportation and storage facilities, demand for oil and natural gas, the marketing of competitive fuels, and the effects of state and federal regulation. The oil and natural gas industry also competes with other industries in supplying the energy and fuel requirements of industrial, commercial, and individual consumers.

Our oil and natural gas production is expected to be sold under short-term contracts and priced based on first of the month index prices or on daily spot market prices. We rely on our third-party operating and service partners to market and sell our production. Our operating partners include a variety of E&P companies, from large, publicly traded companies to small, privately owned companies. Our service partners include a variety of oil and natural gas gathering, transportation, processing, and marketing companies. We do not believe the loss of any single operator or service partner would have a material adverse effect on our company as a whole.

***Seasonality***

Winter weather events and conditions, such as ice storms, freezing conditions, droughts, floods, and tornados, breeding and nesting seasons, and lease stipulations can limit or temporarily halt our and our operating partners' drilling and producing activities and other oil and natural gas operations. These constraints and the resulting shortages or high costs could delay or temporarily halt our and our operating partners' operations and materially increase our operating and capital costs. Such seasonal anomalies can also pose challenges for meeting well drilling objectives and may increase competition for equipment, supplies, and personnel during the spring and summer months, which could lead to shortages and increase costs or delay or temporarily halt our and our operating partners' operations.

**Title to Properties** 

Prior to completing an acquisition of mineral and royalty interests, we perform due diligence title reviews on a majority of tracts to be acquired. Our title review is meant to confirm the quantum of mineral and royalty interest owned by a prospective seller, the property's lease status and royalty amount, and encumbrances or other related burdens. Said title review consists of a patent to present title search on the prospective tract and a "grantor/grantee" search of the prospective seller in county records, in addition to a lien/judgement search related to the seller's ownership.

In addition to our initial title work and due diligence title review, the third-party E&P operators will conduct a thorough title examination prior to leasing and/or drilling a well and paying out the royalty owner. Should a

------

##### [**Table of Contents**](#toc)
third-party E&P operator's title work uncover any further title defects, either we or the third-party E&P operator will perform curative work with respect to such defects. A third-party E&P operator generally will not pay out royalty payments on the property until any material title defects on such property have been cured.

We believe that the title to our assets is satisfactory in all material respects. Although title to these properties is in some cases subject to encumbrances, such as customary interests generally retained in connection with the acquisition of crude oil and gas interests, non-participating royalty interests, and other burdens, easements, restrictions, or minor encumbrances customary in the crude oil and natural gas industry, we believe that none of these encumbrances will materially detract from the value of these properties or from our interest in these properties.

**Governmental Regulation and Environmental Matters** 

Our operations are subject to various rules, regulations, and limitations impacting the oil and natural gas E&P industry as a whole, including those associated with E&P operators and other owners of working interests in crude oil and natural gas properties. The legislation and regulation affecting the crude oil and natural gas industry are under constant review for amendment or expansion. Some of these requirements carry substantial penalties for failure to comply. The regulatory burden on the crude oil and natural gas industry increases the cost of doing business.

***Environmental Matters***

Crude oil and natural gas exploration, development, and production operations are subject to stringent laws and regulations governing the discharge of materials into the environment or otherwise relating to protection of the environment or occupational health and safety. These laws and regulations have the potential to impact production on the properties in which we own mineral interests, which could materially adversely affect our business and prospects. Numerous federal, state, and local governmental agencies, such as the EPA, issue regulations that often require difficult and costly compliance measures that carry substantial administrative, civil, and criminal penalties and may result in injunctive obligations for non-compliance. These laws and regulations may require the acquisition of a permit before drilling commences, restrict the types, quantities, and concentrations of various substances that can be released into the environment in connection with drilling and production activities, limit or prohibit construction or drilling activities on certain lands lying within wilderness, wetlands, ecologically sensitive, and other protected areas, require action to prevent or remediate pollution from current or former operations, such as plugging abandoned wells or closing earthen pits, result in the suspension or revocation of necessary permits, licenses, and authorizations, require that additional pollution controls be installed, and impose substantial liabilities for pollution resulting from operations. The strict, joint, and several liability nature of such laws and regulations could impose liability upon the E&P operators of our properties, including PhoenixOp regardless of fault. Moreover, it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the release of hazardous substances, hydrocarbons, or other waste products into the environment. In the opinion of our management, we are in substantial compliance with current applicable environmental laws and regulations, and we have no material commitments for capital expenditures to comply with existing environmental requirements. However, changes in environmental laws and regulations occur frequently, and any changes that result in more stringent and costly pollution control or waste handling, storage, transport, disposal, or cleanup requirements could materially adversely affect our business and prospects.

*Non-Hazardous and Hazardous Waste* 

The RCRA and comparable state statutes and regulations promulgated thereunder affect crude oil and natural gas exploration, development, and production activities by imposing requirements regarding the generation, transportation, treatment, storage, disposal, and cleanup of hazardous and non-hazardous wastes. With federal approval, the individual states administer some or all of the provisions of the RCRA, sometimes in

------

##### [**Table of Contents**](#toc)
conjunction with their own, more stringent requirements. Administrative, civil, and criminal penalties can be imposed for failure to comply with waste handling requirements. Although most wastes associated with the exploration, development, and production of crude oil and natural gas are exempt from regulation as hazardous wastes under RCRA, these wastes typically constitute nonhazardous solid wastes that are subject to less stringent requirements. From time to time, the EPA and state regulatory agencies have considered the adoption of stricter disposal standards for nonhazardous wastes, including crude oil and natural gas wastes. Moreover, it is possible that some wastes generated in connection with E&P of oil and gas that are currently classified as nonhazardous may, in the future, be designated as "hazardous wastes," resulting in the wastes being subject to more rigorous and costly management and disposal requirements. Any changes in the laws and regulations could have a material adverse effect on the E&P operators of our properties' capital expenditures and operating expenses, including those of PhoenixOp, which in turn could affect production from the acreage underlying our mineral and royalty interests and adversely affect our business and prospects.

*Remediation* 

CERCLA and analogous state laws generally impose strict, joint and several liability, without regard to fault or legality of the original conduct, on classes of persons who are considered to be responsible for the release of a "hazardous substance" into the environment. These persons include the current owner or operator of a contaminated facility, a former owner or operator of the facility at the time of contamination, and those persons who disposed or arranged for the disposal of the hazardous substance at the facility. Under CERCLA and comparable state statutes, persons deemed "responsible parties" may be subject to strict, joint, and several liability for the costs of removing or remediating previously disposed wastes (including wastes disposed of or released by prior owners or operators) or property contamination (including groundwater contamination), for damages to natural resources, and for the costs of certain health studies. In addition, it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the hazardous substances released into the environment. In addition, the risk of accidental spills or releases could expose the operators of the acreage underlying our mineral interests to significant liabilities that could have a material adverse effect on the operators' businesses, financial condition, and results of operations. Liability for any contamination under these laws could require the operators of the acreage underlying our mineral interests to make significant expenditures to investigate and remediate such contamination or attain and maintain compliance with such laws and may otherwise have a material adverse effect on their results of operations, competitive position, or financial condition.

*Water Discharges* 

The CWA, SDWA, the Oil Pollution Act of 1990 (the "***OPA***"), and analogous state laws and regulations promulgated thereunder impose restrictions and strict controls regarding the unauthorized discharge of pollutants, including produced waters and other crude oil and natural gas wastes, into regulated waters. The definition of regulated waters has been the subject of significant controversy in recent years, with different definitions proposed under the Obama and Trump Administrations. Both of these definitions have been subject to litigation. In January 2023, the EPA and the U.S. Army Corps of Engineers (the "***Corps***") released a final revised definition of "waters of the United States" founded upon a pre-2015 definition and included updates to incorporate existing Supreme Court decisions and regulatory guidance. However, the January 2023 rule was challenged and is currently enjoined in 27 states. In May 2023, the U.S. Supreme Court released its opinion in *Sackett v. EPA*, which involved issues relating to the legal tests used to determine whether wetlands qualify as waters of the United States. The *Sackett* decision invalidated certain parts of the January 2023 rule and significantly narrowed its scope, resulting in a revised rule being issued in September 2023. However, due to the injunction of the January 2023 rule, the implementation of the September 2023 rule currently varies by state. In March 2025, the EPA announced that it will work with the Corps to review and revise the definition of "waters of the United States," guided by the Sackett decision. To the extent the implementation of the final rule, results of the litigation, or any further action expands the scope of jurisdiction, it may impose greater compliance costs or operational requirements on our operators, including PhoenixOp. The discharge of pollutants into regulated waters is

------

##### [**Table of Contents**](#toc)
prohibited, except in accordance with the terms of a permit issued by the EPA or the state. The CWA and regulations implemented thereunder also prohibit the discharge of dredge and fill material into regulated waters, including jurisdictional wetlands, unless authorized by an appropriately issued permit. In addition, spill prevention, control, and countermeasure plan requirements under federal law require appropriate containment berms and similar structures to help prevent the contamination of navigable waters in the event of a petroleum hydrocarbon tank spill, rupture, or leak. The EPA has also adopted regulations requiring certain crude oil and natural gas E&P facilities to obtain individual permits or coverage under general permits for storm water discharges, and, in June 2016, the EPA finalized effluent limitation guidelines for the discharge of wastewater from hydraulic fracturing.

The OPA is the primary federal law for crude oil spill liability. The OPA contains numerous requirements relating to the prevention of and response to petroleum releases into regulated waters, including the requirement that operators of offshore facilities and certain onshore facilities near or crossing waterways must develop and maintain facility response contingency plans and maintain certain significant levels of financial assurance to cover potential environmental cleanup and restoration costs. The OPA subjects owners of facilities to strict, joint and several liability for all containment and cleanup costs and certain other damages arising from a release, including, but not limited to, the costs of responding to a release of crude oil into surface waters.

Noncompliance with the CWA, the SDWA, or the OPA may result in substantial administrative, civil, and criminal penalties, as well as injunctive obligations, for the E&P operators of the acreage underlying our mineral interests, including PhoenixOp.

*Air Emissions* 

The CAA and comparable state laws and regulations regulate emissions of various air pollutants through the issuance of permits and the imposition of other requirements. The EPA has developed, and continues to develop, stringent regulations governing emissions of air pollutants at specified sources. New facilities may be required to obtain permits before work can begin, and existing facilities may be required to obtain additional permits and incur capital costs in order to remain in compliance. For example, in June 2016, the EPA established criteria for aggregating multiple small surface sites into a single source for air quality permitting purposes, which could cause small facilities, on an aggregate basis, to be deemed a major source subject to more stringent air permitting processes and requirements. These laws and regulations may increase the costs of compliance for crude oil and natural gas producers and impact production of the acreage underlying our mineral and royalty interests. In addition, federal and state regulatory agencies can impose administrative, civil, and criminal penalties for noncompliance with air permits or other requirements of the federal CAA and associated state laws and regulations. Moreover, obtaining or renewing permits has the potential to delay the development of crude oil and natural gas projects.

*Climate Change* 

Climate change continues to attract considerable public and scientific attention. As a result, numerous proposals have been made and are likely to continue to be made at the international, national, regional, and state levels of government to monitor and limit emissions of carbon dioxide, methane, and other GHGs. These efforts have included consideration of cap-and-trade programs, carbon taxes, GHG reporting and tracking programs, and regulations that directly limit GHG emissions from certain sources. The future of any climate-related regulations and any enforcement of such regulations at the federal level remains unclear in light of recent announcements and actions by the Trump Administration, including EPA's proposed rule to repeal the GHG emissions standards for fossil fuel-fired electric generating units that was issued on June 11, 2025.

In the United States, besides the IRA 2022, no comprehensive climate change legislation has been implemented at the federal level. Although former President Biden's administration highlighted addressing climate change as a priority and issued several executive orders to that effect, President Trump's administration

------

##### [**Table of Contents**](#toc)
has taken a different stance, and has revoked many of former President Biden's executive orders and imposed a regulatory freeze. Additionally, following the U.S. Supreme Court finding that GHG emissions constitute a pollutant under the CAA, the EPA has adopted regulations that, among other things, establish construction and operating permit reviews for GHG emissions from certain large stationary sources, require the monitoring and annual reporting of GHG emissions from certain petroleum and natural gas system sources in the United States, and, together with the U.S. Department of Transportation, implement GHG emissions limits on vehicles manufactured for operation in the United States. The regulation of methane from oil and gas facilities has been subject to uncertainty in recent years. However, in response to former President Biden's executive order calling on the EPA to revisit federal regulations regarding methane, the EPA finalized more stringent methane rules for new, modified, and reconstructed facilities, known as OOOOb, as well as standards for existing sources, known as OOOOc, in December 2023. Under those rules, states would have two years to prepare and submit their plans to impose methane emissions controls on existing sources. On November 12, 2024, the EPA finalized the methane emissions charge rule, implementing the IRA 2022. On March 14, 2025, the Trump Administration signed legislation disapproving this rule, and therefore, the future of this rule remains unclear. Additionally, the U.S. Congress may take action to repeal or revise the IRA 2022, including with respect to the methane charge rule, which timing or outcome similarly cannot be predicted.

The presumptive standards established under the final rule are generally the same for both new and existing sources and include enhanced leak detection survey requirements using optical gas imaging and other advanced monitoring to encourage the deployment of innovative technologies to detect and reduce methane emissions, reduction of emissions by 95% through capture and control systems, zero-emission requirements for certain devices, and the establishment of a "super emitter" response program that would allow third parties to make reports to the EPA of large methane emissions events, triggering certain investigation and repair requirements. It is likely, however, that the final rule and its requirements will be subject to legal challenges, if ever implemented. Moreover, compliance with these rules may affect the amount oil and gas companies owe under the IRA 2022, which amended the CAA to impose a first-time fee on the emission of methane from sources required to report their GHG emissions to the EPA. The methane emissions fee applies to excess methane emissions from certain facilities and starts at $900 per metric ton of leaked methane in 2024 and increases to $1,200 in 2025 and $1,500 in 2026 and thereafter. Compliance with the EPA's new final rules would exempt an otherwise covered facility from the requirement to pay the methane fee. Failure to comply with the requirements of the EPA's new rules and the methane fee could adversely affect costs of compliance and operations and result in the imposition of substantial fines and penalties, as well as costly injunctive relief. On March 14, 2025, the Trump Administration signed legislation disapproving this rule, and therefore, the future of this rule remains unclear.

Separately, various states and groups of states have adopted or are considering adopting legislation, regulation, or other regulatory initiatives that are focused on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions. For example, New Mexico has adopted regulations to restrict the venting or flaring of methane from both upstream and midstream operations. At the international level, the Paris Agreement requires member states to submit non-binding, individually determined reduction goals known as Nationally Determined Contributions every five years after 2020. Although former President Biden recommitted the United States to the Paris Agreement during his presidency and, in April 2021, announced a goal of reducing the United States' emissions by 50 to 52% below 2005 levels by 2030, President Trump has signed an executive order directing the United States' withdrawal from the Paris Agreement. The Trump Administration's stance makes it unclear whether the Global Methane Pledge announced by the United States and the European Union at the 26th Conference of the Parties to the United Nations Framework Convention on Climate Change in Glasgow in November 2021—an initiative committing to a collective goal of reducing global methane emissions by at least 30% from 2020 levels by 2030, including "all feasible reductions" in the energy sector—will move forward. In December 2023, the United Arab Emirates hosted the 28th Conference of the Parties where parties signed onto an agreement to transition "away from fossil fuels in energy systems in a just, orderly, and equitable manner" and increase renewable energy capacity so as to achieve net zero by 2050, although no timeline for doing so was set. In November 2024, Azerbaijan hosted the 29th Conference of the Parties, which concluded with an agreement calling on developed countries to deliver at least

------

##### [**Table of Contents**](#toc)
$300 billion per year to developing countries by 2035 to drastically reduce greenhouse gas emissions and protect lives and livelihoods from the impacts of climate change. The full impact of these various orders, pledges, agreements, and actions cannot be predicted at this time.

Whereas on January 27, 2021, former President Biden's administration had called for restrictions on leasing on federal land, and had issued an executive order that called for substantial action on climate change, including, among other things, the increased use of zero-emission vehicles by the federal government, the elimination of subsidies provided to the fossil fuel industry, and increased emphasis on climate-related risks across government agencies and economic sectors, the new Trump Administration has revoked many such related rules and executive orders focusing on greenhouse emissions and fossil fuel energy regulations. For example, on January 21, 2025, the Trump Administration lifted the former administration's pause on liquefied natural gas exports. However, we cannot predict whether and to what extent the Trump Administration will continue to act favorably to the energy sector.

Litigation risks are also increasing as a number of entities have sought to bring suit against various oil and natural gas companies in state or federal court, alleging, among other things, that such companies created public nuisances by producing fuels that contributed to climate change or alleging that the companies have been aware of the adverse effects of climate change for some time but defrauded their investors or customers by failing to adequately disclose those impacts.

Historically there have also been increasing financial risks for fossil fuel producers as shareholders currently invested in fossil-fuel energy companies may elect in the future to shift some or all of their investments into non-fossil fuel related sectors. Institutional lenders who provide financing to fossil fuel energy companies also have become more attentive to sustainable lending practices and some of them may elect not to provide funding for fossil fuel energy companies. There is also a risk that financial institutions will be required to adopt policies that have the effect of reducing the funding provided to the fossil fuel sector. For example, in October 2023, the Federal Reserve, Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corp. released a finalized set of principles guiding financial institutions with $100 billion or more in assets on the management of physical and transition risks associated with climate change. The limitation of investments in and financing for fossil fuel energy companies could result in the restriction, delay, or cancellation of drilling programs or development or production activities. Additionally, on March 6, 2024, the SEC adopted rules to enhance and standardize climate-related disclosures by public companies and in public offerings. However, on April 4, 2024, the SEC voluntarily stayed implementation of these rules pending completion of judicial review of consolidated challenges to the rules by the U.S. Court of Appeals for the Eighth Circuit and is expected to withdraw these rules in the near future. Although the application and viability of the proposed rules are not yet known, any adoption of such rules either by the Trump Administration or a future administration may result in additional costs to comply with any such disclosure requirements, alongside increased costs of and restrictions on access to capital.

The adoption and implementation of new or more stringent international, federal, or state legislation, regulations, or other regulatory initiatives that impose more stringent standards for GHG emissions from the oil and natural gas sector or otherwise restrict the areas in which this sector may produce oil and natural gas or generate GHG emissions could result in increased costs of compliance or costs of consuming, and thereby reduce demand for oil and natural gas, which could reduce the profitability of our interests. Additionally, political, litigation, and financial risks may result in our oil and natural gas operators restricting or canceling production activities, incurring liability for infrastructure damages as a result of climatic changes, or impairing their ability to continue to operate in an economic manner, which also could reduce the profitability of our interests. One or more of these developments could have a material adverse effect on our business, financial condition, and results of operation.

Climate change may also result in various physical risks, such as the increased frequency or intensity of extreme weather events or changes in meteorological and hydrological patterns, that could adversely impact our operations, as well as those of our operators, including PhoenixOp, and their supply chains. Such physical risks

------

##### [**Table of Contents**](#toc)
may result in damage to operators' facilities or otherwise adversely impact their operations, such as if they become subject to water-use curtailments in response to drought, or demand for their products, such as to the extent warmer winters reduce the demand for energy for heating purposes. Extreme weather conditions can interfere with production and increase costs, and damage resulting from extreme weather may not be fully insured. However, at this time, we are unable to determine the extent to which climate change may lead to increased storm or weather hazards affecting our business.

*Regulation of Hydraulic Fracturing* 

Hydraulic fracturing is an important and common practice that is used to stimulate production of hydrocarbons from tight formations. The process involves the injection of water, sand, and chemicals under pressure into formations to fracture the surrounding rock and stimulate production. Hydraulic fracturing operations have historically been overseen by state regulators as part of their crude oil and natural gas regulatory programs. However, several agencies have asserted regulatory authority over certain aspects of the process. For example, in August 2012, the EPA finalized regulations under the federal CAA that establish new air emission controls for crude oil and natural gas production and natural gas processing operations. Federal regulation of methane emissions from the oil and gas sector has been subject to substantial controversy in recent years.

In addition, governments have studied the environmental aspects of hydraulic fracturing practices. These studies, depending on their degree of pursuit and whether any meaningful results are obtained, could spur initiatives to further regulate hydraulic fracturing under the SDWA or other regulatory authorities. For example, in December 2016, the EPA issued its final report on a study it had conducted over several years regarding the effects of hydraulic fracturing on drinking water sources. The final report concluded that "water cycle" activities associated with hydraulic fracturing may impact drinking water under certain limited circumstances.

Several states where we operate, including North Dakota, Montana, Utah, Texas, Colorado, and Wyoming, have adopted, or are considering adopting, regulations that could restrict or prohibit hydraulic fracturing in certain circumstances and/or require the disclosure of the composition of hydraulic fracturing fluids. For example, the Texas RRC has previously issued a "well integrity rule," which updates the requirements for drilling, putting pipe down, and cementing wells. Local governments also may seek to adopt ordinances within their jurisdictions regulating the time, place, and manner of drilling activities in general or hydraulic fracturing activities in particular or prohibit the performance of well drilling in general or hydraulic fracturing in particular.

In addition to state laws, local land use restrictions, such as city ordinances, may restrict or prohibit the performance of well drilling in general or hydraulic fracturing in particular. For example, in November 2020, the Colorado Oil and Gas Conservation Committee (the "***COGCC***"), as part of Senate Bill 181's mandate for the COGCC to prioritize public health and environmental concerns in its decisions, adopted revisions to several regulations to increase protections for public health, safety, welfare, wildlife, and environmental resources. Most significantly, these revisions establish more stringent setbacks (2,000 feet, instead of the prior 500-foot) on new oil and gas development and eliminate routine flaring and venting of natural gas at new or existing wells across the state, each subject to only limited exceptions. Some local communities have adopted, or are considering adopting, further restrictions for oil and gas activities, such as requiring greater setbacks. The Colorado Department of Public Health and the Environment also finalized rules related to the control of emissions from certain pre-production activities; namely, curbing methane emissions by setting limits of per 1,000 barrels of oil equivalent produced, more frequent inspections, and limits on emissions during maintenance. These and other developments related to the implementation of Senate Bill 181 could adversely impact our revenues and future production from our properties.

State and federal regulatory agencies recently have focused on a possible connection between hydraulic fracturing-related activities, particularly the disposal of produced water in underground injection wells, and the increased occurrence of seismic activity. When caused by human activity, such events are called "induced seismicity." In some instances, operators of injection wells in the vicinity of seismic events have been ordered to

------

##### [**Table of Contents**](#toc)
reduce injection volumes or suspend operations. Some state regulatory agencies, including those in Colorado and Texas, have modified their regulations to account for induced seismicity. For example, in October 2014, the Texas RRC published a new rule governing permitting or re-permitting of disposal wells that would require, among other things, the submission of information on seismic events occurring within a specified radius of the disposal well location, as well as logs, geologic cross sections, and structure maps relating to the disposal area in question. The Texas RRC has used this authority to deny permits for waste disposal wells. In some instances, regulators may also order that disposal wells be shut in. In late 2021, the Texas RRC issued a notice to operators of disposal wells in the Midland area to reduce saltwater disposal well actions and provide certain data to the Texas RRC. In December 2021, the Texas RRC suspended all disposal well permits to inject oil and gas waste within the boundaries of the Gardendale Seismic Response Area. Relatedly, in March 2022, the Texas RRC began implementation of its Northern Culberson-Reeves Seismic Response Area Plan to address injection-induced seismicity with the goal to eliminate 3.5 magnitude or greater earthquakes no later than December 31, 2023. From November 8 through December 17, 2023, the TexNet Seismic Monitoring Program reported seven earthquakes with magnitudes greater than 3.5 and, in April 2024, a 4.4 magnitude earthquake was recorded in the Stanton Seismic Response Area, an area where the Texas RRC is also monitoring seismic activity linked to disposal of saltwater. In January 2024, the RRC banned saltwater disposal injection in the Northern Culberson-Reeves Seismic Area, which applied to 23 disposal wells in the area. As a result of these developments, our operators may be required to curtail operations or adjust development plans, which may adversely impact our business. In May 2024, the EPA announced it would review the Texas RRC's oversight of disposal wells used for injecting oil drilling wastewater and carbon dioxide into the ground.

The USGS has identified six states with the most significant hazards from induced seismicity, including Texas and Colorado. In addition, a number of lawsuits have been filed alleging that disposal well operations have caused damage to neighboring properties or otherwise violated state and federal rules regulating waste disposal. These developments could result in additional regulation and restrictions on the use of injection wells and hydraulic fracturing. Such regulations and restrictions could cause delays and impose additional costs and restrictions on the E&P operators of our properties, including PhoenixOp, and on their waste disposal activities.

If new laws or regulations that significantly restrict hydraulic fracturing and related activities are adopted, such laws could make it more difficult or costly to perform fracturing to stimulate production from tight formations. In addition, if hydraulic fracturing is further regulated at the federal or state level, fracturing activities could become subject to additional permitting and financial assurance requirements, more stringent construction specifications, increased monitoring, reporting, and recordkeeping obligations, plugging and abandonment requirements, and to attendant permitting delays and potential increases in costs. Such legislative changes could cause E&P operators to incur substantial compliance costs, and compliance or the consequences of any failure to comply by E&P operators could have a material adverse effect on our financial condition and results of operations. At this time, it is not possible to estimate the impact on our business of newly enacted or potential federal or state legislation governing hydraulic fracturing.

*Endangered Species Act* 

The Endangered Species Act (the "***ESA***") restricts activities that may affect endangered and threatened species or their habitats. The designation of previously unidentified endangered or threatened species could cause E&P operators to incur additional costs or become subject to operating delays, restrictions, or bans in the affected areas. As part of a stipulated settlement agreement in a case challenging its failure to timely make a 12-month finding on a petition to list the dunes sagebrush lizard, whose habitat includes parts of the Permian Basin, the United States Fish and Wildlife Service (the "***FWS***"). In June 2024, the FWS issued a final rule listing the dunes sagebrush lizard as endangered under the ESA. Additionally, in June 2021, the FWS proposed to list two distinct population sections of the Lesser Prairie Chicken, including one in portions of the Permian Basin, under the ESA. In November 2022, following an extensive review, the FWS listed the northern distinct population segment of the Lesser Prairie Chicken, encompassing southeastern Colorado, southcentral to western Kansas, western Oklahoma, and the northeast Texas Panhandle, as threatened, and the southern district population segment,

------

##### [**Table of Contents**](#toc)
covering eastern New Mexico and the southwest Texas Panhandle, as endangered. The FWS listing decisions for both the lesser prairie chicken and the dunes sagebrush lizard are subject to ongoing litigation in the U.S. District Court for the Western District of Texas. To the extent species are listed under the ESA or similar state laws, or previously unprotected species are designated as threatened or endangered in areas where our properties are located, operations on those properties could incur increased costs arising from species protection measures and face delays or limitations with respect to production activities thereon. Additionally, on April 16, 2025, the Trump Administration issued a proposed rule to change the definition of "harm" under the ESA. If finalized, the rule may significantly narrow federal habitat protections for endangered species across the United States.

*Employee Health and Safety* 

Operations on our properties are subject to a number of federal and state laws and regulations, including the federal Occupational Safety and Health Act (the "***OSHA***") and comparable state statutes, whose purpose is to protect the health and safety of workers. In addition, the OSHA hazard communication standard, the EPA community right-to-know regulations under Title III of the federal Superfund Amendment and Reauthorization Act, and comparable state statutes require that information be maintained concerning hazardous materials used or produced in operations and that this information be provided to employees, state and local government authorities, and citizens.

***Other Regulation of the Crude Oil and Natural Gas Industry***

The crude oil and natural gas industry is extensively regulated by numerous federal, state, and local authorities. Legislation affecting the crude oil and natural gas industry is under constant review for amendment or expansion, frequently increasing the regulatory burden. Also, numerous departments and agencies, both federal and state, are authorized by statute to issue rules and regulations that are binding on the crude oil and natural gas industry and its individual members, some of which carry substantial penalties for failure to comply. Although the regulatory burden on the crude oil and natural gas industry increases the cost of doing business, these burdens generally do not affect us any differently or to any greater or lesser extent than they affect other companies in the industry with similar types, quantities, and locations of production.

The availability, terms and conditions, and cost of transportation significantly affect sales of crude oil and natural gas. The interstate transportation of crude oil and natural gas and the sale for resale of natural gas is subject to federal regulation, including regulation of the terms, conditions, and rates for interstate transportation, storage, and various other matters, primarily by the Federal Energy Regulatory Commission ("***FERC***"). Federal and state regulations govern the price and terms for access to crude oil and natural gas pipeline transportation. FERC's regulations for interstate crude oil and natural gas transmission in some circumstances may also affect the intrastate transportation of crude oil and natural gas.

We cannot predict whether new legislation to regulate crude oil and natural gas might be proposed, what proposals, if any, might actually be enacted by the U.S. Congress or various state legislatures, and what effect, if any, the proposals might have on our operations. Sales of crude oil, condensate, and NGL are not currently regulated and are made at market prices.

*Drilling and Production* 

The operations of the E&P operators of our properties, including PhoenixOp, are subject to various types of regulation at the federal, state, and local level. These types of regulation include requiring permits for the drilling of wells, drilling bonds, and reports concerning operations. The states and some counties and municipalities in which we operate also regulate one or more of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the location of wells;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the method of drilling and casing wells;

------

##### [**Table of Contents**](#toc)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the timing of construction or drilling activities, including seasonal wildlife closures;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the rates of production or "allowables";

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the surface use and restoration of properties upon which wells are drilled;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the plugging and abandoning of wells; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• notice to, and consultation with, surface owners and other third parties.

State laws regulate the size and shape of drilling and spacing units or proration units governing the pooling of crude oil and natural gas properties. Some states allow forced pooling or integration of tracts to facilitate exploration while other states rely on voluntary pooling of lands and leases. In some instances, forced pooling or unitization may be implemented by third parties and may reduce our interest in the unitized properties. In addition, state conservation laws establish maximum rates of production from crude oil and natural gas wells, generally prohibit the venting or flaring of natural gas, and impose requirements regarding the ratability of production. These laws and regulations may limit the amount of crude oil and natural gas that the E&P operators of our properties can produce from our wells or limit the number of wells or the locations at which E&P operators can drill. Moreover, each state generally imposes a production or severance tax with respect to the production and sale of crude oil, natural gas, and NGL within its jurisdiction. States do not regulate wellhead prices or engage in other similar direct regulation, but we cannot assure you that they will not do so in the future. The effect of such future regulations may be to limit the amounts of crude oil and natural gas that may be produced from our wells, negatively affect the economics of production from these wells, or limit the number of locations E&P operators can drill.

Federal, state, and local regulations provide detailed requirements for the abandonment of wells, closure or decommissioning of production facilities and pipelines, and site restoration in areas where the E&P operators of our properties operate. The Corps and many other state and local authorities also have regulations for plugging and abandonment, decommissioning, and site restoration. Although the Corps does not require bonds or other financial assurances, some state agencies and municipalities do have such requirements.

*Natural Gas Sales and Transportation* 

FERC has jurisdiction over the transportation and sale for resale of natural gas in interstate commerce by natural gas companies under the Natural Gas Act of 1938 (the "***NGA***") and the Natural Gas Policy Act of 1978. Since 1978, various federal laws have been enacted that have resulted in the complete removal of all price and non-price controls for sales of domestic natural gas sold in "first sales."

Under the Energy Policy Act of 2005, FERC has substantial enforcement authority to prohibit the manipulation of natural gas markets and enforce its rules and orders, including the ability to assess substantial civil penalties. FERC also regulates interstate natural gas transportation rates and service conditions and establishes the terms under which the E&P operators of our properties may use interstate natural gas pipeline capacity, as well as the revenues such E&P operators receive for release of natural gas pipeline capacity. Interstate pipeline companies are required to provide nondiscriminatory transportation services to producers, marketers, and other shippers, regardless of whether such shippers are affiliated with an interstate pipeline company. FERC's initiatives have led to the development of a competitive, open-access market for natural gas purchases and sales that permits all purchasers of natural gas to buy gas directly from third-party sellers other than pipelines.

Gathering services, which occur upstream of jurisdictional transmission services, are regulated by the states onshore and in state waters. Section 1(b) of the NGA exempts natural gas gathering facilities from regulation by FERC under the NGA. FERC has in the past reclassified certain jurisdictional transmission facilities as non-jurisdictional gathering facilities, which may increase the E&P operators' costs of transporting gas to point-of-sale locations. This may, in turn, affect the costs of marketing natural gas that the E&P operators of our properties produce.

------

##### [**Table of Contents**](#toc)
Historically, the natural gas industry was more heavily regulated; therefore, we cannot guarantee that the regulatory approach currently pursued by FERC and the U.S. Congress will continue indefinitely into the future, nor can we determine what effect, if any, future regulatory changes might have on our natural gas related activities.

*Crude Oil Sales and Transportation* 

Crude oil sales are affected by the availability, terms, and cost of transportation. The transportation of crude oil in common carrier pipelines is also subject to rate regulation. FERC regulates interstate crude oil pipeline transportation rates under the Interstate Commerce Act, and intrastate crude oil pipeline transportation rates are subject to regulation by state regulatory commissions. The basis for intrastate crude oil pipeline regulation, and the degree of regulatory oversight and scrutiny given to intrastate crude oil pipeline rates, varies from state to state. Insofar as effective interstate and intrastate rates are equally applicable to all comparable shippers, we believe that the regulation of crude oil transportation rates will not affect our operations in any materially different way than such regulation will affect the operations of our competitors.

Further, interstate and intrastate common carrier crude oil pipelines must provide service on a non-discriminatory basis. Under this open-access standard, common carriers must offer service to all similarly situated shippers requesting service on the same terms and under the same rates. When crude oil pipelines operate at full capacity, access is governed by prorationing provisions set forth in the pipelines' published tariffs. Accordingly, we believe that access to crude oil pipeline transportation services by E&P operators of our properties will not materially differ from our competitors' access to crude oil pipeline transportation services.

*Certain State Regulations and Developments* 

*<u>North Dakota</u>*

On July 6, 2020, the U.S. District Court for the District of Columbia ordered vacatur of Dakota Access Pipeline's ("***DAPL***") easement from the Corps and further ordered the shutdown of the pipeline by August 5, 2020 while the Corps completes a full environmental impact statement for the project. On January 26, 2021, the Court of Appeals for the District of Columbia affirmed the vacatur of the easement, but declined to require the pipeline to shut down while an EIS is prepared. On May 21, 2021, the District Court denied the Plaintiff's request for an injunction and, on June 22, 2021, terminated the consolidated lawsuits and dismissed all remaining outstanding counts without prejudice. Following the denial of a rehearing *en banc* by the Court of Appeals for the District of Columbia, on September 20, 2021, Dakota Access filed a petition with the U.S. Supreme Court to hear the case. Oppositions were filed by the Solicitor General and Plaintiffs and Dakota Access filed its reply, although in February 2022, the U.S. Supreme Court denied certiorari, declining to hear the appeal. The pipeline continues to operate pending completion of the Environmental Impact Statement, which the Corps released in September 2023. The draft EIS was subject to public comment until December 2023, and the final EIS is expected to be released in 2025. Additional lawsuits challenging the legality of the DAPL have been filed by various stakeholders. We cannot determine when or how these or future lawsuits will be resolved or the impact they may have on the DAPL. If future legal challenges to DAPL are successful, we may be adversely affected by increased transportation costs, well shut ins, and future productive, negatively impacting our revenue costs.

*<u>Montana</u>*

In April 2020, a Montana federal judge vacated the Corps' Nationwide Permit ("***NWP***") 12 and enjoined the Corps from authorizing any dredge or fill activities under NWP 12 until the agency completed formal consultation with the FWS under the ESA regarding NWP 12 generally. The court later revised its order to vacate NWP 12 only as it relates to the construction of new oil and natural gas pipelines, and that order went on appeal in the Ninth Circuit Court of Appeals. The United States Supreme Court narrowed the applicability of the order to the Keystone XL pipeline pending the outcome of the Ninth Circuit's decision, and in May 2021, the Biden

------

##### [**Table of Contents**](#toc)
Administration argued that the suit was moot given the discontinuation of the Keystone XL pipeline. In March 2022, the Corps announced its formal review of NWP 12. The Corps' review of NWP 12 may adversely affect our business, preventing the advancement of our oil and gas infrastructure projects due to public interest review and studies of the impacts of our projects on the climate. There have been no recent updates of the Corps' review.

In December 2024, the Montana Supreme Court affirmed a lower court decision in Held v. State of Montana, holding that the right to a clean and healthful environment under the Montana Constitution includes a stable climate system, and that the law at question banning state agencies from weighing the impact of climate change and GHG emissions in environmental reviews was unconstitutional under state law. The policy impacts of the ruling remain unclear; however, it may lead to adverse changes in the permitting process for oil and gas development in Montana, and may lead to further lawsuits, which may negatively impact our operations in the state.

*<u>Utah</u>*

In recent years, Utah has experienced persistent and severe drought conditions. Various local governments in Utah have implemented water restrictions. Water management and our access to water, in each case at a reasonable cost, in a timely manner and in compliance with applicable laws, regulations and permits, is an essential component of our operations due to water's significance in shale oil and natural gas development. As such, any limitations or restrictions on wastewater disposal or water availability could have an adverse impact on our operations. Our E&P operators may use water supplied from various local and regional sources to support operations like steam injection in certain fields. While our E&P operators' production to date has not been materially impacted by restrictions on wastewater disposals or access to third-party water sources, we cannot guarantee that there may not be restrictions in the future.

*<u>Texas</u>*

Texas regulates the drilling for, and the production, gathering, and sale of, crude oil and natural gas, including imposing severance taxes and requirements for obtaining drilling permits. Texas currently imposes a 4.6% severance tax on the market value of crude oil production and a 7.5% severance tax on the market value of natural gas production. States also regulate the method of developing new fields, the spacing and operation of wells, and the prevention of waste of crude oil and natural gas resources.

States may regulate rates of production and may establish maximum daily production allowables from crude oil and natural gas wells based on market demand or resource conservation, or both. States do not regulate wellhead prices or engage in other similar direct economic regulation, but we cannot assure you that they will not do so in the future. Should direct economic regulation or regulation of wellhead prices by the states increase, this could limit the amount of crude oil and natural gas that may be produced from wells on our properties and the number of wells or locations the E&P operators of our properties can drill.

The petroleum industry is also subject to compliance with various other federal, state, and local regulations and laws. Some of those laws relate to resource conservation and equal employment opportunity. We do not currently believe that compliance with these laws will have a material adverse effect on our business.

*<u>Colorado</u>*

A number of municipalities in other states, including Colorado and Texas, have enacted bans on hydraulic fracturing. In Colorado, the Colorado Supreme Court has ruled the municipal bans were preempted by state law. However, in April 2019 the Colorado legislature subsequently enacted "***SB 181***" that gave significant local control over oil and gas well head operations. Municipalities in Colorado have enacted local rules restricting oil and gas operations based on SB 181; nevertheless, in November 2020, a Colorado district court upheld the prior Colorado Supreme Court ruling in finding that a hydraulic fracking ban in the City of Longmont was preempted

------

##### [**Table of Contents**](#toc)
by state law. Additionally, in May 2024, the Colorado legislature enacted a bill that mandates a 50% reduction in nitrogen oxide emissions from upstream oil and gas operations by 2030, relative to 2017 levels. Oil and gas operators are required to obtain and maintain a license to conduct operations, in addition to necessary permits. The Colorado Energy and Carbon Management Commission (the "***ECMC***") will enforce these requirements. The bill authorizes the ECMC to adopt rules requiring enhanced systems and practices to minimize emissions of ozone precursors at new oil and gas locations, particularly in areas designated as ozone nonattainment zones. The bill increases civil penalties for violations. It also allows for more stringent enforcement actions, including license suspension or revocation for severe violations. The bill also expands efforts to plug, reclaim, and remediate orphaned and marginal wells, with a focus on those at high risk of becoming orphaned, to mitigate environmental and public health risks. During the same legislative session, Colorado enacted a bill that imposes a "Production Fee for Clean Transit" and a "Production Fee for Wildlife and Land Remediation" on oil and gas produced in the state. Oil and gas producers are required to register and file returns detailing their production volumes and corresponding fees. Failure to comply with these requirements can result in penalties. In October 2024, the ECMC introduced rules to scrutinize the cumulative impacts of GHG emissions and set emissions intensity targets for operators. Local communities are considering additional restrictions, such as greater setbacks. The Colorado Department of Public Health and the Environment also set rules to curb methane emissions from pre-production activities. We cannot predict whether other similar legislation in other states will ever be enacted and if so, what the provisions of such legislation would be. If additional levels of regulation and permits were required through the adoption of new laws and regulations at the federal or state level, it could lead to delays, increased operating costs and process prohibitions that would materially adversely affect our operating partners and our revenue and results of operations.

*<u>Wyoming</u>*

On May 7, 2024, the Wyoming Department of Environmental Quality ("***WDEQ***") issued an emergency rule in response to EPA's new air regulation 40 CFR Part 60 subpart OOOOb – "Standards of Performance for Crude Oil and Natural Gas Facilities for Which Construction, Modification, or Reconstruction Commenced After December 6, 2022" (the "***Methane Rule***"). The Methane Rule establishes emission standards and compliance schedules for the control of GHGs. Subpart OOOOb requirements became federally effective on May 7, 2024, and as a result, oil and gas operators across the nation, including in Wyoming, must implement them. To assist Wyoming's regulated community with implementing EPA's new requirements, WDEQ issued an Oil and Gas Emergency Rulemaking. Given EPA's shortened timeframes and deadlines, the division initiated the emergency rulemaking process before initiating the regular rulemaking process. The regular rulemaking process will provide the public and stakeholders with the opportunity to comment and participate in the rulemaking process.

**Human Capital Resources** 

As of March 31, 2025, we had 154 total employees, all of whom were full-time employees and all of whom were located in the United States. From time to time, we utilize the services of independent contractors to perform various field and other services. We are not a party to any collective bargaining agreements and have not experienced any strikes or work stoppages. In general, we believe that employee relations are satisfactory.

We are focused on attracting, engaging, developing, retaining, and rewarding top talent. We strive to enhance the economic and social well-being of our employees and the communities in which we operate. We are committed to providing a welcoming, inclusive environment for our workforce, with training and career development opportunities to enable employees to thrive and achieve their career goals. The health, safety, and well-being of our employees is of the utmost importance.

As part of our efforts to hire and retain highly qualified employees, we have structured compensation and benefits programs that, we believe, are extremely competitive and reward outstanding performance. In addition to the incentive programs in place for our named executive officers, which are described in detail under "*Compensation Discussion and Analysis—Details of Our Compensation Program*," we have structured an

------

##### [**Table of Contents**](#toc)
incentive bonus program for non-officer employees that is dependent on an employee's individual performance and our performance as a company. We also provide a robust suite of benefits to our employees covering all aspects of life, including 401(k) contributions, medical-insurance options, and programs to encourage and support the employees' development.

**Our Offices** 

Our principal executive office is located in Irvine, California, and we have additional offices located in Dickinson and Williston, North Dakota; Denver, Colorado; Dallas, Texas; Fort Lauderdale, Florida; and Casper, Wyoming. We currently lease this office space and believe that the condition and size of our offices are adequate for our current needs, and that additional or alternative space will be available on commercially reasonable terms for future use and expansion.

**Legal Proceedings** 

On December 5, 2024, we filed a civil lawsuit against Forbes Media LLC ("***Forbes***") in the Superior Court of the State of Delaware asserting defamation by Forbes with respect to various statements contained in an article published by Forbes on October 8, 2024, and seeking damages and attorneys' fees in an amount to be proven at trial. Forbes filed a notice of removal to the United States District Court for the District of Delaware, and the case was removed to the federal district court on January 6, 2025. Forbes subsequently filed a motion to dismiss on January 15, 2025, which we have opposed. The court's decision on the motion to dismiss is pending.

On January 10, 2025, DelMorgan Group, LLC ("***DelMorgan***") and Globalist Capital, LLC ("***Globalist***") filed a civil lawsuit in the Superior Court of the State of California for the County of Los Angeles against us and PhoenixOp, asserting breach of written contract and seeking compensatory damages in the amount of at least $6,457,500 as well as prejudgment interest, attorneys' fees and costs. On March 4, 2025, DelMorgan and Globalist filed a writ of attachment seeking to attach $8,793,563 in connection with the damages and costs being sought in the filed action. We were not served with respect to this civil lawsuit until March 5, 2025. On April 3, 2025, we filed a demurrer seeking to dismiss the claim and DelMorgan and Globalist has opposed the demurrer. The hearing for the demurrer and the writ of attachment occurred on June 10, 2025, and while the court issued tentative rulings prior to the hearing indicating it would deny their request for a writ of attachment but also deny our demurrer, the court has not yest issued is filing rulings. If the demurrer is denied, we intend to answer the complaint and deny the allegations.

On May 15, 2025, we filed a civil lawsuit against Kraken Oil and Gas, LLC, Kraken Operating, LLC (collective, "***Kraken***") and United Stated Bureau of Land Management ("***BLM***") in the United States District Court for the District of Montana Billings Division, seeking declaratory judgement on several basis with respect to certain language in communitization agreements entered into by Kraken and BLM as such relate to a certain lease awarded to us effective October 1, 2024 by BLM, pursuant to which we believe we are entitled to the revenues for the federal minerals prior to the effective time of the lease upon payment of our proportionate share of the costs related to certain wells being operated by Kraken. Kraken contends, despite having no compensatory royalty agreement with BLM and the fact that we are not a party to any agreement to the contrary, that Kraken it is entitled to all revenues for the unleased federal minerals prior to the effective time of our lease even if we pay our proportionate share of the costs related thereto. Kraken and BLM have not yet filed their answers with respect to the lawsuit.

We are and from time to time we have been and may in the future be involved in various legal proceedings, lawsuits, regulatory investigations, and other claims in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with certainty. In particular, due to the nature of our business, we are, from time to time, involved in routine litigation or subject to disputes or claims related to our business activities, including workers' compensation claims and employment-related disputes. In the opinion of our management, none of the pending matters, if decided adversely, will have a material adverse effect on our financial condition, cash flows, or results of operations.

------

##### [**Table of Contents**](#toc)
**MANAGEMENT** 

We are currently a member-managed limited liability company organized under the laws of the State of Delaware, and do not have a board of directors, board of managers, or similar construct (or any committees thereof). In addition, we are wholly owned and controlled by Phoenix Equity. Phoenix Equity is our sole member and, as such, directs our business and operations, including appointment and compensation of our officers. LJC controls Phoenix Equity and, therefore, indirectly has control over our management. LJC has the power to select or remove Phoenix Equity's managers in its sole discretion pursuant to its limited liability company agreement. No other holders of Phoenix Equity are entitled to appoint managers or otherwise directly participate in Phoenix Equity's management or operations. Pursuant to our current organizational documents, any manager of Phoenix Equity will be deemed to be the manager of the Issuer for all purposes of the DLLCA. As of the date of this Offering Circular, Adam Ferrari, our Chief Executive Officer, is the sole manager of Phoenix Equity. Following this offering, we will be a manager-managed limited liability company and our business and affairs will be managed under the direction of a board of directors. In addition, Phoenix Equity will hold all of our common shares, representing limited liability company interests, and, as a result, other than under the limited circumstances described in this Offering Circular in which holders of the Preferred Shares have voting rights, we will continue to be controlled by Phoenix Equity. As a result of this concentrated control, Phoenix Equity will have the ability to determine corporate matters for the foreseeable future, including with respect to the power to add and remove any of our directors at any time with or without cause and may take action by written consent without a meeting of shareholders.

The following table sets forth certain information about our manager, executive officers, director nominees, and significant employees as of the date of this Offering Circular:

---

| | | | |
|:---|:---|:---|:---|
| **Name** | **Age** | **Position** | **Since** |
| ***Executive Officers*** |  |  |  |
| Adam Ferrari | 42 | Manager, Chief Executive Officer and Director Nominee<sup>(1)</sup> | November 2023 |
| Curtis Allen | 40 | Chief Financial Officer and Director Nominee<sup>(1)</sup> | February 2020 |
| Brandon Allen | 44 | Chief Operating Officer | December 2024 |
| Lindsey Wilson | 40 | Chief Business Officer | December 2024 |
| Sean Goodnight | 50 | Chief Acquisition Officer | June 2020 |
| Justin Arn | 45 | Chief Land and Title Officer | April 2020 |
| David Wheeler | 50 | Chief Legal Officer | October 2024 |
| ***Director Nominees*** |  |  |  |
| Daniel Ferrari | 75 | Director Nominee <sup>(1)</sup> |  |
| Jason Allan Pangracs | 51 | Director Nominee <sup>(1)</sup> |  |
| Jason Montgomery Wagner | 53 | Director Nominee <sup>(1) (2)</sup> |  |
| ***Significant Employees*** |  |  |  |
| Matthew Willer | 48 | Managing Director, Capital Markets | March 2021 |

---

(1) Each individual will be appointed to our board of directors in connection with this offering.

(2) Will be appointed as the sole member of the audit committee in connection with this offering.

Set forth below is a brief description of the business experience of our directors, manager and each of our executive officers and significant employees.

***Adam Ferrari***. Adam has been a Manager and our Chief Executive Officer since November 2023. Adam served as our Vice President of Engineering from April 2023 until November 2023, during which time he was responsible for conducting engineering evaluations across all areas of interest and making purchase

------

##### [**Table of Contents**](#toc)
recommendations to our executive team. Prior to April 2023, Adam provided us with advisory services since our founding in 2019. Adam began his career with BP America as a completions engineer in 2005. During his tenure with BP America, Adam served in various drilling, completions, and production roles, both in the Gulf of Mexico and in the onshore U.S. business units. Following his experience at BP America, Adam transitioned to an equity analyst role within the Oil and Gas division at Macquarie Capital. After gaining experience on the financial services side of the oil and gas industry, Adam transitioned back to the operating side in a lead Petroleum Engineering role with then-start-up Halcón Resources Corporation (now Battalion Oil Corporation (NYSE: BATL) ("***Halcón***")). While at Halcón, Adam supported various exploration and development programs in the broader Gulf Coast region and the Bakken shale asset in North Dakota. Following his tenure at Halcón, Adam pursued entrepreneurial opportunities on the mineral acquisitions side of the oil and gas industry that ultimately led him to us. Immediately prior to providing us advisory services, Adam was the Chief Executive Officer of The Petram Group, LLC (f/k/a Wolfhawk Energy Holdings, LLC d/b/a "***Ferrari Energy***") ("***The Petram Group***") from December 2016 until March 2019. Prior to his employment at The Petram Group, Mr. Ferrari founded and operated Ferrari Energy, LLC, which was active in acquiring and disposing of mineral interests from 2014 to 2017. In early 2016, Wolfhawk Energy Holdings, LLC (later to be renamed The Petram Group, LLC) began operating under the brand name "Ferrari Energy," even though there was no formal connection between Ferrari Energy, LLC and Wolfhawk Energy Holdings, LLC. Currently, Ferrari Energy, LLC has no employees, holds only one remaining mineral property, and is otherwise inactive. Adam graduated *magna cum laude* from the University of Illinois at Urbana-Champagne with a Bachelor of Science Degree in Chemical Engineering. Adam Ferrari is the spouse of Brynn Ferrari, our Chief Marketing Officer, and the son of Charlene and Daniel Ferrari, who control LJC.

***Curtis Allen***. Curtis has been our Chief Financial Officer since February 2020. Curtis is responsible for all accounting and finance functions and mineral underwriting, along with a multitude of day-to-day operational tasks. Curtis has over 15 years' experience in financial services with an emphasis on investment analysis. Curtis has a range of accounting and financial experience, from a private tax practice to auditing billion-dollar defense contractors with the Department of Defense. Most recently prior to joining our company, Curtis spent over seven years managing investments for personal and corporate clients at LPL Financial. Curtis is a Certified Public Accountant, has held FINRA Series 7 and Series 66 licenses, and has passed the Chartered Financial Analyst Level I exam. Curtis graduated magna cum laude from the State University of New York at Oswego with both his Bachelor of Science and Master of Business Administration concentrated in Accounting.

***Brandon Allen***. Brandon has been our Chief Operating Officer since December 2024. Brandon previously served as PhoenixOp's President from February 2024 and as its Vice President of Reservoir Engineering from March 2023 to February 2024. Brandon is responsible for overseeing all of the operations of the business, including maintaining the reserves for all Phoenix Energy ownership. Brandon has over 20 years of experience in the oil and gas business, spanning multiple basins throughout the United States. He has a range of oil and gas experience, offering expertise in reservoir engineering, SEC reserves estimation and reporting, financial reporting, operations planning, asset development and planning, and acquisition evaluation. Immediately prior to joining PhoenixOp, Brandon founded and served as the Senior Vice President of CarbonPath, Inc., a startup carbon credit business. Brandon received a Bachelor of Science degree in Chemical Engineering and a Bachelor of the Arts degree in Biochemistry from the University of Colorado at Boulder.

***Lindsey Wilson***. Lindsey has been our Chief Business Officer since December 2024. Prior to that time, Lindsey served as a Manager and as our Chief Operating Officer since she helped to found our company in 2019. Lindsey is responsible for overseeing a wide range of business matters related to our operations and takes great pride in working with all of our departments on setting and achieving aggressive business goals. Lindsey brings to our company years of extensive practical experience leading diverse, multidisciplinary teams in the energy sector. Lindsey entered the oil and gas industry in 2011 working leasing projects in Texas, and this foundational experience was the springboard that ultimately allowed her to transition into more advanced management roles within the mineral and leasehold acquisition space. From 2017 until immediately prior to helping found our company, Lindsey was employed as the Operations Manager of The Petram Group. Lindsey graduated from the University of Texas at Arlington and holds a Bachelor of Business Administration with a concentration in Marketing.

------

##### [**Table of Contents**](#toc)
***Sean Goodnight***. Sean has been our Chief Acquisitions Officer since June 2020. Sean brings over 25 years of consultative sales experience to our company. Sean leads our acquisitions, securities, and sales efforts and has implemented processes, developed tools, and introduced materials that have contributed to the continued success of our company. He has built a team of talented, sophisticated professionals who possess the expertise and skillset to maintain the high standards that have become the foundation of his department. Sean spent the early part of his career in the health care and insurance industries, and was introduced into the oil and gas industry in 2016 working with mineral acquisitions, where he quickly transitioned into management. Prior to joining our company, Mr. Goodnight was employed by The Petram Group as an acquisitions landman from 2016 to 2018.

***Justin Arn***. Justin has been our Chief Land and Title Officer since April 2020. Justin began his Land career researching mineral and royalty rights for multiple mineral acquisition companies focusing on the DJ Basin in Weld County, Colorado, and Laramie County, Wyoming. He has coordinated and managed title projects, large and small, in Wyoming, Colorado, North Dakota, Montana, and Texas, and performed and managed opportunity and due diligence title work for the purchase of thousands of royalty acres throughout the DJ, Bakken, and Permian basins. Immediately prior to joining our company, Justin was employed as a landman for The Petram Group from 2017 to 2020. Justin is an active member of the American Association of Professional Landmen and the Wyoming Association of Professional Landmen.

***David Wheeler***. David has been our Chief Legal Officer since October 2024 and is based out of our Irvine, California office. David is responsible for overseeing our day-to-day legal needs and providing advice and guidance to the management team on legal matters, including with respect to capital markets and securities laws and compliance, corporate structuring and governance, litigation management, and contract negotiation and drafting. David comes to us with over 20 years of legal experience as a corporate lawyer, serving most recently for over four years as the Chief Legal Officer of a private equity sponsored company with global operations operating in a regulated industry. Prior to that, David spent almost 13 years at Latham & Watkins LLP in their corporate department, advising both public and private clients on a wide variety of corporate law matters, including mergers and acquisitions, corporate governance, capital markets transactions, public company representation, and other general corporate and transactional matters. David graduated from The University of Southern California Gould School of Law with a Juris Doctorate and from Brigham Young University with a Bachelor of Science Degree in Business Management. David is actively licensed to practice law in the State of California.

***Daniel Ferrari***. Daniel will join our board of directors in connection with this offering and serve as the chair of the board of directors. Daniel is the founder and manager of LJC, the majority owner of Phoenix Equity. With a career spanning over four decades, Daniel brings extensive experience in public service, industrial operations and entrepreneurship. From 1996 to 1999, Daniel worked with the Illinois Department of Corrections before concluding his public service career as a Juvenile Detention Specialist, retiring in 2016 due to a vaccine-related injury. Prior to that, Daniel was employed by the maintenance department of Mobil Oil Corporation for 17 years, gaining critical expertise in operational logistics and infrastructure management within the energy sector. Daniel graduated from Eastern Illinois University in 1972 with a Bachelor of Science in Business. Daniel is the father of our chief executive officer, Adam Ferrari.

***Jason Allan Pangracs***. Jason will join our board of directors in connection with this offering. Jason is Vice President and Chief Financial Officer for SSAB Americas division, a leading North American producer of steel plate and coil, with over 25 years of experience in the steel industry. Prior to his current position at SSAB Americas division, Jason served in the same company as its Controller of Value and Business Unit from October 2019 to July 2024, and held other positions at SSAB since 2008. Prior to joining SSAB, Jason was a senior accountant at KPMG LLP, in Canada, where he qualified as a Chartered Professional Accountant in 1998, and held that certification until 2022. Jason is as a Certified Public Accountant since 2001, and graduated from the University of Regina with Bachelor of Science degree in Business Administration. As a member of our board of directors Jason brings extensive experience in financial reporting, strategic planning and budgeting, restructuring and mergers and acquisitions. Jason is the brother-in-law of our chief executive officer, Adam Ferrari.

------

##### [**Table of Contents**](#toc)
***Jason Montgomery Wagner***. Jason will join our board of directors in connection with this offering and serve as the audit committee chair and sole member of the audit committee. Jason is a Managing Director at CBIZ CPAs P.C., a national recognized independent CPA firm, since January 2021, and previously served as partner in the accounting firms of Richey May and EKS&H. He has been a Certified Public Accountant since 1998. Jason also serves as a director CCI, Inc., a construction and engineering company active in the oil and gas industry, since 2018 and Pure Midstream Partners since 2024. Jason sits in the audit and compensation committees of CCI, Inc. He has extensive experience in transaction advisory services across a wide variety of other industries, including oil and gas. Jason serves and has served on a variety of boards both profit and not-for profit. Mr. Wagner earned a bachelor's degree in accounting at Oklahoma State University in 1993, and on full scholarship a master's in taxation degree from the University of Denver in 1994.

***Matthew Willer***. Matthew has been serving as our Managing Director, Capital Markets, since March 2021. Matthew is responsible for investor relations and outreach and coordinating our investor presentations across our multiple debt offerings. Matthew is also the President and Director of M.D. Willer & Co., a boutique capital markets firm specializing in the needs of small-cap issuers, a position he has held since January 2002. Previously, Matthew co-founded Assure Holdings Corp., where he served as its President and Director from March 2016 to March 2018. Matthew received his Bachelor of Science in Finance and Management from the University of Southern California's Marshall School of Business, with an emphasis on Finance and Management.

**Family Relationships** 

Daniel Ferrari is the father of Adam Ferrari. Jason Allan Pangracs is the brother-in-law of Adam Ferrari. There are no other family relationships among any of our directors, director nominees or executive officers.

**Board Composition** 

Following this offering, our business and affairs will be managed under the direction of our board of directors. The board of directors will originally consist of five directors. Our Third ARLLCA will provide that the board of directors shall consist of no fewer than one director and no more than seven directors, that the number of directors will be fixed from time to time by our board of directors, and that each director elected to our board of directors will serve for a one-year term or until his or her earlier death, resignation, disqualification or removal.

The Third ARLLCA will provide that, subject to the right of the holders of the Preferred Shares, any directors may be removed with or without cause, by the affirmative vote of the holders of a majority of the voting power of the then outstanding common shares, taken either at a shareholders meeting called for such purpose or by written or electronic consent. The Third ARLLCA will provide that shareholders may act by written or electronic consent executed and delivered by shareholders holding at least the voting power necessary to approve such action. Following this offering, Phoenix Equity will own 100% of the outstanding common shares and thus may take action, including in respect of board composition matters, by written or electronic consent without a meeting of shareholders.

For the avoidance of doubt, if we do not pay distributions on the Preferred Shares for six or more quarterly distribution periods (whether or not consecutive), the maximum number of directors will be automatically increased by two additional directors to serve on our board of directors until we pay, or declare and set aside funds for the payment of, all distributions that we owe on the Preferred Shares, subject to certain limitations described in the section entitled "*Description of Capital and Preferred Shares—Series A Preferred Shares—Limited Voting Rights*."

For more information, see the section entitled "*Description of Capital and Preferred Shares—Third Amended and Restated Limited Liability Company Agreement*."

------

##### [**Table of Contents**](#toc)
**Controlled Company and Status as a Company Listing Only Preferred Shares** 

The rules of NYSE American define a "controlled company" as a company in which more than 50% of the voting power is held by an individual, a group or another company. Following this offering, Phoenix Equity will hold all of our common shares, representing limited liability company interests, and, as a result, other than under the limited circumstances described in this Offering Circular in which holders of the Preferred Shares have voting rights, Phoenix Equity will have all of the voting power of our company. As such, we will be a "controlled company" under the rules of NYSE American. As a result, we will qualify for exemptions from, and will elect not to comply with, certain corporate governance requirements under the rules, including the requirements that we have a board that is composed of a majority of "independent directors," as defined under the rules, a nominating and corporate governance committee, or a compensation committee.

Even though we will be a controlled company, we are required to comply with the rules of the SEC and the NYSE American relating to the membership, qualifications and operations of the audit committee. The rules of NYSE American provide that companies listing only preferred or debt securities on NYSE American are only required to comply with the requirements to have a board that is composed of a majority of "independent directors," an audit committee that is composed entirely of independent directors, an audit committee charter, and audit committee meeting requirements, responsibilities and authorities, to the extent required by Rule 10A-3 under the Exchange Act. As a result, under these rules, we must have an audit committee of at least one director, which director must be independent. We expect to have at least one independent director upon the listing of the Preferred Shares on the NYSE American who will qualify as independent for audit committee purposes.

If we cease to be a controlled company and our Preferred Shares continue to be listed on the NYSE American, we will be required to take all action necessary to comply with applicable rules, including by ensuring we have a compensation committee and a nominating and corporate governance committee, each composed entirely of independent directors, subject to specified transition periods applicable to certain requirements, as the case may be. See the sections titled "*Risk Factors—We will be a "controlled company" within the meaning of the corporate governance standards of the NYSE American. We intend to rely on exemptions from certain corporate governance standards. You will not have the same protections afforded to stockholders of companies that are subject to such requirements*" and "*—We will be a company listing only preferred securities on NYSE American and thus will only be required to comply with certain corporate governance requirements, including with respect to our audit committee, to the extent required by Rule 10A-3 under the Exchange Act*" for additional details.

Prior to the consummation of this offering, our board of directors undertook a review of the independence of our directors and considered whether any director has a material relationship with us that could compromise that director's ability to exercise independent judgment in carrying out that director's responsibilities. Our board of directors has affirmatively determined that Mr. Wagner qualifies as an "independent director," as defined under the Exchange Act and the rules of NYSE American.

**Board Committees** 

Our board of directors will establish an audit committee, which has the composition and the responsibilities described below. In addition, from time to time, other or special committees may be established under the direction of our board of directors when necessary to address specific issues.

***Audit Committee***

The audit committee will be responsible for, among other things:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• appointing, compensating, retaining, evaluating, terminating, and overseeing our independent registered public
accounting firm;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• discussing with our independent registered public accounting firm their independence from management;

------

##### [**Table of Contents**](#toc)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reviewing with our independent registered public accounting firm the scope and results of their audit;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• approving all audit and permissible non-audit services to be performed by
our independent registered public accounting firm;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• overseeing the financial reporting process and discussing with management and our independent registered public
accounting firm the interim and annual financial statements that we file with the SEC;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reviewing and monitoring our accounting principles, accounting policies, financial and accounting controls, and
compliance with legal and regulatory requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reviewing our policies on risk assessment and risk strategy and management, including risk policies and risk
mitigation strategies by management; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• establishing procedures for the confidential anonymous submission of concerns regarding questionable accounting,
internal controls, or auditing matters.

Following this offering, Mr. Wagner will be the chair and sole member of the audit committee. Our board of directors has affirmatively determined that Mr. Wagner meets the definition of "independent director" for purposes of serving on the audit committee under Rule 10A-3 and the rules of NYSE American. In addition, our board of directors has determined that Mr. Wagner will qualify as an "audit committee financial expert," as such term is defined in Item 407(d)(5) of Regulation S-K. Our board of directors will adopt a new written charter for the audit committee, which will be available on our website substantially concurrently with the consummation of this offering. The information on, or that can be accessed through, our website is deemed not to be incorporated in this Offering Circular or to be part of this Offering Circular.

**Risk Oversight** 

Our board of directors is responsible for overseeing our risk management process. Our board of directors focuses on our general risk management strategy, the most significant risks facing us, and oversees the implementation of risk mitigation strategies by management. Our board of directors is also apprised of particular risk management matters in connection with its general oversight and approval of corporate matters and significant transactions.

**Code of Ethics and Code of Conduct** 

In connection with this offering, we intend to update our written code of business conduct and ethics that applies to our directors, officers, and employees. We intend to post this updated copy of the code on our website. In addition, we intend to post on our website all disclosures that are required by law or the NYSE American listing standards concerning any amendments to, or waivers from, any provision of the code. The information on, or that can be accessed through, our website is deemed not to be incorporated in this Offering Circular or to be part of this Offering Circular.

------

##### [**Table of Contents**](#toc)
**COMPENSATION DISCUSSION AND ANALYSIS** 

Although not required by Regulation A, we are voluntarily including this compensation discussion and analysis, which was previously provided to noteholders within our registration statement on Form S-1 (File No. 333-282862).

This compensation discussion and analysis discusses the material components and principles underlying the executive compensation program for our executive officers who are named in the Summary Compensation Table (as defined below). In 2024, our "named executive officers" and their positions were as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Adam Ferrari, Chief Executive Officer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Curtis Allen, Chief Financial Officer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Sean Goodnight, Chief Acquisitions Officer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Brandon Allen, Chief Operating Officer; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Lindsey Wilson, Chief Business Officer.

Where relevant, the discussion below also reflects certain contemplated changes to our compensation structure that occurred after our 2024 fiscal year. Actual compensation programs that we adopt following the completion of this offering may differ materially from the currently planned programs summarized in this discussion but, absent a requirement to update our offering materials, we will not update this discussion to reflect any changes to the currently planned programs.

**Details of Our Compensation Program** 

***Executive Compensation Philosophy and Objectives***

Our compensation programs are designed to help achieve the goals of attracting, incentivizing, and retaining highly talented individuals who are committed to our company, while balancing the long-term interests of our members, investors, and customers. The principles and objectives of our compensation and benefits program for our named executive officers are to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• attract, retain, and motivate individuals who are capable of advancing our financial goals and, ultimately,
creating and maintaining our long-term equity value;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reward executives in a manner aligned with our financial performance to drive pay for performance; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• provide a total compensation opportunity that is competitive with our market and the industry within which we
seek executive talent.

Other than Mr. Ferrari, each of our named executive officers is a member in Phoenix Equity and may become entitled to future distributions with respect to their membership interests under the Second Amended and Restated Limited Liability Company Agreement of Phoenix Equity, dated December 4, 2024 (as the same may be amended or supplemented from time to time, the "***Phoenix Equity Operating Agreement***"). Under the terms of the Phoenix Equity Operating Agreement, any payments of wages, consulting fees, commissions, or other cash compensation for services rendered and the out-of-pocket costs incurred by us for any health, welfare, retirement, fringe, or other similar benefits provided to our members, including our executive officers, are deemed to be a draw against and will reduce future distributions to the member with respect to such member's membership interest in Phoenix Equity. Although Mr. Ferrari is not a member in Phoenix Equity, he holds 100% of the economic interests in LJC, and LJC is a member in Phoenix Equity. On April 25, 2025, the Phoenix Equity Operating Agreement was amended to clarify that any payments of wages, consulting fees, commissions, or other cash compensation for services rendered, and the out-of-pocket costs incurred, by us for any health, welfare,

------

##### [**Table of Contents**](#toc)
retirement, fringe, or other similar benefits provided to Mr. Ferrari, whether such amounts are paid on, prior to, or following April 25, 2025, will reduce future distributions to LJC with respect to LJC's membership interests in Phoenix Equity.

Accordingly, base salary, variable revenue-based compensation, bonuses, and commission payment amounts are agreed upon from time to time by our named executive officers and our company and are subject to change, in each case, as determined by our chief executive officer in consultation with or, with respect to Mr. Ferrari, the approval of, LJC. Following this offering, it is expected that our named executive officers' compensation will be determined by our board of directors.

***Compensation Governance and Best Practices***

We are committed to having strong governance standards with respect to our compensation programs, procedures, and practices. Our key compensation practices include the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Pay for performance*. Any compensation paid to our named executive officers, either in terms of base
salary, variable revenue-based compensation, bonuses, or commission payments, will ultimately reduce the future distributions payable to such named executive officer with respect to his or her membership interest in Phoenix Equity (or, for
Mr. Ferrari, payable to LJC). This is intended to align their interests with investors. Mr. Ferrari's variable revenue-based compensation is determined by LJC and directly tied to the performance of our company and its annual revenues
in order to align Mr. Ferrari's interests with our members and investors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *No guaranteed annual salary increases*. Other than with respect to Mr. Ferrari, our named executive
officers' salaries are based on individual evaluations and agreed to from time to time by our named executive officers and our chief executive officer with the input of certain other named executive officers and LJC. Mr. Ferrari's
compensation is determined by LJC and Mr. Ferrari as agreed upon from time to time based on the performance of our company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *No pledging*. We prohibit our members, including our named executive officers, from pledging any membership
interests in Phoenix Equity, except with the prior consent of LJC or as otherwise permitted by the Phoenix Equity Operating Agreement.

Following this offering, we expect that our board of directors will provide the determinations and consents currently provided by LJC and described herein.

***Determination of Compensation and Role of Executive Officers in Determining Executive Compensation***

Our chief executive officer consults with LJC and certain of our named executive officers to make compensation decisions with respect to our named executive officers. Ultimately, our chief executive officer, together with LJC, made 2024 compensation decisions for each of our named executive officers (other than Mr. Ferrari) based on their collective experience and knowledge of the compensation practices in our industry and that of similar companies within our industry. As described above, because any compensation payable to our named executive officers ultimately reduces each named executive officer's future distributions payable with respect to his or her membership interest in Phoenix Equity (or, for Mr. Ferrari, payable to LJC), our named executive officers agree to their annual compensation packages. Mr. Ferrari's 2024 compensation was determined by LJC with input from certain of the named executive officers based on our company's projected performance and an analysis of compensation practices within our industry.

We expect that following this offering our board of directors will make future compensation decisions in its sole discretion with respect to our named executive officers, including Mr. Ferrari. We do not currently have any plans to form a compensation committee or otherwise obtain third-party guidance regarding our compensation program.

------

##### [**Table of Contents**](#toc)
***Elements of Our Executive Compensation Program***

We design the principal components of our executive compensation program to fulfill one or more of the principles and objectives described above. Compensation of any named executive officers consist of the following elements:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• base compensation, either in the form of guaranteed salary or variable revenue-based compensation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• bonuses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• commissions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• equity compensation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• health and welfare benefits and certain perquisites and other benefits generally offered to all employees of our
company.

Our compensation program is designed to be flexible and complementary and to collectively serve all of the executives' compensation objectives described above. Therefore, we do not currently have, and we do not expect to have, formal policies relating to the allocation of total compensation among the various elements of our compensation program.

Each of our named executive officers, other than Mr. Ferrari, is a member in Phoenix Equity and may become entitled to future distributions with respect to their membership interests under the Phoenix Equity Operating Agreement. Under the terms of the Phoenix Equity Operating Agreement, any payments of wages, consulting fees, bonuses, commissions, or other cash compensation for services rendered and the out-of-pocket costs incurred by us for any health, welfare, retirement, fringe, or other similar benefits provided to our members, including our named executive officers, are deemed to be a draw against and will reduce future distributions to the named executive officer with respect to such named executive officer's membership interest in Phoenix Equity (or, for Mr. Ferrari, payable to LJC). Accordingly, base compensation, variable revenue-based compensation, bonuses, and commission payment amounts are agreed upon from time to time by our named executive officers and our chief executive officer, in consultation with or, with respect to Mr. Ferrari, the approval of LJC, and are subject to change. We continue to evaluate the mix of base compensation, bonuses, commissions, and equity-based compensation to appropriately align the interests of our named executive officers with those of our members and investors.

*Base Compensation* 

Certain of our named executive officers receive a base salary determined by our chief executive officer in consultation with LJC and certain other executive officers. Base salary is a visible and stable fixed component of our compensation program. Base salaries for our named executive officers were initially established at the time each executive was hired and may be adjusted from time to time as determined by our chief executive officer based on our company's performance, market conditions, and individual performance and to be competitive within our market and industry.

Messrs. Ferrari and Curtis Allen and Ms. Wilson are entitled to receive variable revenue-based compensation tied to revenue targets of our company set by LJC, in lieu of a base salary. LJC may exercise discretion in determining variable compensation for the named executive officers, and may also approve additional variable or other compensation for the named executive officers as it determines in its discretion, in each case, taking into consideration such factors as LJC determines are appropriate.

------

##### [**Table of Contents**](#toc)
The following table sets forth the base compensation of our named executive officers for 2024:

---

| | |
|:---|:---|
| **Named Executive Officer** | **2024 Annual Base<br>Compensation** |
|  Adam Ferrari | $3135000<sup>(1)</sup> |
|  Curtis Allen | $1567500<sup>(1)</sup> |
|  Sean Goodnight | $455000<sup>(2)</sup> |
|  Brandon Allen | $300000<sup>(2)</sup> |
|  Lindsey Wilson | $399000<sup>(1)</sup> |

---

(1) Represents variable revenue-based compensation.

(2) Represents annual base salary.

The increase in the compensation for Messrs. Ferrari and Curtis Allen for 2024 was determined by LJC based on our significant growth year over year, as evidenced by the fact that our gross revenue more than doubled from 2023 to 2024, our overall operational performance, and an analysis of the compensation of executive officers of similarly sized companies within our industry.

For 2024, variable revenue-based compensation for Messrs. Ferrari and Curtis Allen and Ms. Wilson was tied to a gross revenue target of $285 million set by LJC. No other revenue targets were used to determine the named executive officers' 2024 variable revenue-based compensation. Messrs. Ferrari and Curtis Allen and Ms. Wilson were entitled to 1.10%, 0.55%, and 0.14% of our 2024 gross revenue, respectively, upon achievement of the gross revenue target. Payments were made twice monthly throughout 2024 based on the assumed achievement of our revenue target with a final true-up payment at year end.

Our actual gross revenue for 2024 was $281 million. LJC determined in its discretion that our gross revenue of $281 million for the year substantially satisfied the gross revenue target of $285 million, and Messrs. Ferrari and Curtis Allen and Ms. Wilson accordingly received their full variable compensation amounts (*i.e.*, $3,135,000, $1,567,500, and $399,000, respectively), even though we did not meet our gross revenue target of $285 million upon which variable compensation was contingent under the named executive officers' 2024 employee agreements.

LJC may exercise similar discretion in the future with respect to the variable compensation, and may determine to pay full variable compensation amounts even where our gross revenue falls short of a stated target.

We have not implemented formal agreements, policies, or other arrangements or mechanisms to facilitate recovery of variable revenue-based compensation paid to the named executive officers in the event actual revenue differs from an estimated or assumed level used to calculate the variable revenue-based compensation payments made to our named executive officers throughout the year or otherwise falls below an applicable revenue target. The appropriateness and manner of seeking any such recovery would be within LJC's and (except as to his own compensation) Mr. Ferrari's discretion, taking into account any factors that they determine are appropriate, including that, as discussed elsewhere in this compensation discussion and analysis, all compensation paid to Messrs. Ferrari and Curtis Allen and Ms. Wilson is a draw against, and will reduce, future distributions payable to the member with respect to such member's membership interest in Phoenix Equity (or, for Mr. Ferrari, payable to LJC with respect to LJC's interest in Phoenix Equity). LJC and, for the named executive officers other than himself, Mr. Ferrari, have broad discretion to approve the compensation of our named executive officers on an annual basis and from time to time, and could account for such an event in a number of ways, including, for example, by updating the assumed level of revenue upon which semi-monthly payments are made during a year, or, to the extent any such difference is not reflected in the final true up payment for a given year, considering any overage amount when setting assumed revenue amounts, revenue sharing percentages, or annual discretionary bonuses for future years.

------

##### [**Table of Contents**](#toc)
*Bonuses* 

Our chief executive officer, in consultation with LJC, determined that each of Messrs. Goodnight and Brandon Allen should be eligible to earn discretionary bonuses as part of each such named executive officer's 2024 compensation package based on each such named executive officer's individual performance and the performance of our company.

Mr. Goodnight's bonus earned for 2024 was $205,000 and will be payable in March 2025. Mr. Goodnight received a discretionary additional bonus in the amount of $95,000 in December 2024. Mr. Brandon Allen's bonus earned for 2024 was $225,000 and will be payable in March 2025.

While Ms. Wilson is not expressly entitled to a bonus as part of her 2024 compensation package, our chief executive officer may determine in his discretion to grant her a bonus based on her individual performance and the performance of our company. During 2024, Ms. Wilson received aggregate bonus payments in the amount of $32,000.

*Commissions* 

During 2024, Mr. Goodnight was eligible to receive sales commissions based on a percentage of the adjusted purchase price of mineral interests and interests in oil and gas properties that he is directly responsible for our company acquiring in connection with our operations. Pursuant to the terms of the Commission Agreement by and between Mr. Goodnight and us, effective as of January 16, 2024 (the "***Goodnight Commission Agreement***"), Mr. Goodnight was eligible to earn a commission of 3.5% for closed mineral deals and 3.0% for closed lease deals during 2024. No such commissions were earned during 2024.

*Equity Compensation* 

We view equity-based compensation as a critical component of our total compensation program. Equity-based compensation creates an ownership culture among our employees that provides an incentive to contribute to the continued growth and development of our business and aligns interests of executives with those of our members and investors. We do not currently have any formal policy for determining the number of equity-based awards to grant to named executive officers, but all named executive officers, along with all employees of our company, are eligible for awards under our 2024 Long-Term Incentive Plan.

Each of Mr. Curtis Allen, Mr. Goodnight, and Ms. Wilson was previously granted equity compensation in the form of profits interests in our company, which were exchanged for profits interests in Phoenix Equity effective as of October 18, 2024. The profits interests were designed to align the interests of our named executive officers with the interests of other members of Phoenix Equity and its affiliates and represented interests in the future profits in Phoenix Equity. The profits interests were fully vested at grant, subject to certain repurchase rights in the event of the death or incapacity of the profits interest holder.

On December 4, 2024, except as otherwise described for Mr. Curtis Allen and Ms. Wilson, the profits interests in Phoenix Equity held by our named executive officers (along with all other profits interests in Phoenix Equity) were cancelled in exchange for restricted units in Phoenix Equity. With respect to each of Mr. Curtis Allen and Ms. Wilson, on December 4, 2024, 50% of the vested profits interests in Phoenix Equity held by each of Mr. Curtis Allen and Ms. Wilson was cancelled in exchange for restricted units in Phoenix Equity, and 50% of the vested profits interests held by such named executive officers was cancelled in exchange for vested units in Phoenix Equity (the "***retained units***"). In addition, at the same time, Mr. Brandon Allen was issued restricted units in Phoenix Equity.

The restricted units issued to each of our named executive officers are Class A Units and Class B Units in Phoenix Equity subject to restrictions on transferability as set forth in the Phoenix Equity Operating Agreement.

------

##### [**Table of Contents**](#toc)
In addition, as set forth in the applicable award agreement evidencing the issuance of the restricted units, the restricted units are subject to forfeiture in the event that such named executive officer ceases to be employed with Phoenix Equity and its subsidiaries prior to a change in control of Phoenix Equity. The restricted units are also subject to our repurchase rights under the Phoenix Equity Operating Agreement in the event of the named executive officer's termination of employment for any reason other than upon a "Liquidity Event" (as defined in the Phoenix Equity Operating Agreement), except as set forth in an agreement between us and the named executive officer.

The retained units issued to Mr. Curtis Allen and Ms. Wilson in exchange for 50% of each such named executive officer's vested profits interests in Phoenix Equity are fully vested Class A Units and Class B Units in Phoenix Equity that are not subject to forfeiture upon a termination of the named executive officer's employment. In addition, as set forth in the applicable award agreement evidencing the issuance of the retained units, the retained units are not subject to repurchase by Phoenix Equity, and Phoenix Equity has also agreed that neither Mr. Curtis Allen nor Ms. Wilson will be subject to expulsion as a member of Phoenix Equity.

In connection with the conversion described above and the issuance of restricted units to certain other employees, our named executive officers were issued the following number of Class A Units and Class B Units:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Name** | **Restricted<br>Class A Units** | **Vested<br>Class A Units** | **Restricted<br>Class B Units** | **Vested<br>Class B Units** |
|  Adam Ferrari |  |  |  |  |
|  Curtis Allen | 262505 | 262505 | 96245 | 96245 |
|  Sean Goodnight | 53570 |  | 210930 |  |
|  Brandon Allen | 53570 |  | 176930 |  |
|  Lindsey Wilson | 26785 | 26785 | 153215 | 153215 |

---

In addition to the Class A Units and Class B Units granted to Ms. Wilson, Ms. Wilson was also entitled to receive a cash payment equal to $1,185,300 in lieu of any additional Class A Units or Class B Units she would otherwise have been entitled to as part of the conversion of her profits interests in Phoenix Equity to units in Phoenix Equity. Ms. Wilson received $150,000 of this amount in December 2024 with the remaining portion expected to be paid in 2025.

*Retirement Savings and Health and Welfare Benefits* 

We currently maintain a 401(k) retirement savings plan for our employees, including our named executive officers, who satisfy certain eligibility requirements. Our named executive officers are eligible to participate in the 401(k) plan on the same terms as apply to our other employees generally. The U.S. Internal Revenue Code of 1986, as amended (the "***Code***"), allows eligible participants to defer a portion of their compensation, within prescribed limits, through elective contributions to the 401(k) plan. During the year ended December 31, 2024, we made company contributions to the 401(k) plan equal to 100% of elective contributions made by participants in the 401(k) plan, up to 3% of a participant's eligible compensation.

All of our full-time employees, including our named executive officers, are eligible to participate in our health and welfare plans, including medical, dental, and vision benefits.

*Perquisites and Other Personal Benefits* 

Each of Mr. Ferrari, Mr. Curtis Allen, Mr. Goodnight, and Ms. Wilson received an automobile allowance from January 1, 2024 until March 31, 2024. We ceased to provide this automobile allowance to any of our named executive officers beginning in April 2024.

Other than the automobile allowance provided to certain of our named executive officers, we did not provide any perquisites or special personal benefits to our named executive officers during 2024, but our chief executive

------

##### [**Table of Contents**](#toc)
officer may from time to time approve them in the future when it is determined that such perquisites are necessary or advisable to fairly compensate or incentivize our employees.

***Employment Arrangements***

In November 2023, we entered into an employment letter agreement with Mr. Ferrari that provides that he will be paid approximately $29,167 per month and be eligible to receive company benefits. We entered into a revised employee agreement with Mr. Ferrari, effective January 1, 2024, that provides that he will receive variable compensation based on a percentage of our revenues, and that he is eligible to participate in our employee benefit plans. See "—*Elements of Our Executive Compensation Program*—*Base Compensation*" above for more information regarding Mr. Ferrari's variable compensation.

We entered into an employee agreement with each of Mr. Curtis Allen and Ms. Wilson, effective January 1, 2024, that provides that each such named executive officer will receive variable compensation based on a percentage of our revenues, and that they are eligible to participate in our employee benefit plans. See "—*Elements of Our Executive Compensation Program*—*Base Compensation*" above for more information regarding Mr. Curtis Allen's and Ms. Wilson's variable compensation.

We entered into an offer letter with Mr. Goodnight in June 2020 in connection with his commencement of employment with our company. Mr. Goodnight's offer letter provides that his compensation package will be composed entirely of commission payments. In January 2024 we entered into the Goodnight Commission Agreement outlining the terms of Mr. Goodnight's commission payments, as described above under "—*Elements of Our Executive Compensation Program*—*Commissions*."

We also entered into an offer letter with Mr. Brandon Allen in March 2023 in connection with his commencement of employment with our company. Mr. Brandon Allen's offer letter sets forth the terms of his initial compensation package, including annual base salary, ability to receive additional discretionary bonuses based on our company's performance, and eligibility to participate in our employee benefit plans.

Each of Messrs. Goodnight's and Brandon Allen's compensation arrangements have been adjusted from time to time as determined by our chief executive officer and agreed to by each such named executive officer, based on our company's performance, market conditions, and individual performance and as needed to remain competitive within our market and industry. For 2024, the compensation arrangements for each of Messrs. Goodnight and Brandon Allen were not subject to a written agreement, but included base salaries as described above under "—*Elements of Our Executive Compensation Program*—*Base Compensation*" and discretionary bonuses as described above under "—*Elements of Our Executive Compensation Program*—*Bonuses*."

***Tax Considerations***

As a general matter, our chief executive officer, in consultation with certain other executive officers and outside advisors, reviews and considers the various tax and accounting implications of compensation programs we utilize.

***Compensation Policies***

We do not currently maintain any formal compensation policies due to our governance structure and the nature in which compensation is mutually determined by our named executive officers and our chief executive officer in consultation with LJC. We expect that following this offering that our board of directors will make future decisions on compensation, including with respect to adoption of any formal compensation policies.

***Material Compensation Decisions Following December 31, 2024***

We entered into an employee agreement with each of Mr. Ferrari, Mr. Curtis Allen, and Ms. Wilson, effective January 1, 2025, that provides that each such named executive officer will continue to receive variable

------

##### [**Table of Contents**](#toc)
compensation based on a percentage of our revenue, and continue to be eligible to participate in our employee benefit plans.

LJC determined that 2025 variable revenue-based compensation would again be based only on our gross revenues. No changes were made to the percentage of gross revenue to which each of Messrs. Ferrari and Curtis Allen is entitled in 2025 as compared to 2024, but the percentage of revenue to which Ms. Wilson is entitled in 2025 was reduced from 0.14% to 0.10% of our company's revenue. Subject to the advance to Mr. Ferrari described below, payments will continue to be made twice a month throughout 2025. These payments will be made based on an assumed gross revenue amount for 2025 set by LJC. As of the date of this Offering Circular, the assumed gross revenue amount for 2025 set by LJC for purposes of calculating the twice-a-month payments is $500 million. LJC may revise such assumed gross revenue amount and at its discretion during the course of the year. The total variable compensation may potentially be trued up on December 15, 2025, using annual gross revenue estimates prepared from the books and records of our company as of such date, to the extent LJC determines that additional variable compensation is payable.

Consistent with the terms of our 2025 employment agreement with Mr. Ferrari, we paid Mr. Ferrari $3,000,000 of his total 2025 variable compensation in January 2025. The remaining portion of Mr. Ferrari's variable compensation is payable twice a month through December 31, 2025 as set forth above, but with each such payment reduced to account for the January 2025 advance and with a potential final true up at year end using annual gross revenue estimates prepared from our books and records as of December 15, 2025 to the extent LJC determines that additional variable compensation is payable.

LJC elected this structure for 2025 in the exercise of its business judgement and taking into account factors that included the substantial growth in operations our company experienced under the executive officers' leadership, including our successful and rapid expansion into oil and gas production and execution of our business strategy, as well as, for Mr. Ferrari, LJC's determination that his prior pay was below market-competitive levels.

We have not implemented formal agreements, policies, or other arrangements or mechanisms to facilitate recovery of variable revenue-based compensation paid to the named executive officers in the event revenue differs from an estimated or assumed level used to calculate the variable revenue-based compensation payments made to our named executive officers throughout the year or otherwise falls below an applicable revenue target. For additional information regarding potential recovery of variable revenue-based compensation, refer to the discussion under "*—Elements of Our Executive Compensation Program—Base Compensation*" above.

In addition, in January 2025, we entered into an amendment to Mr. Brandon Allen's offer letter eliminating his ability to receive annual bonuses beginning in 2025 and providing that, effective for our 2025 fiscal year and future years, any salary changes and discretionary bonuses would be payable in the sole discretion of LJC. Mr. Brandon Allen's base salary for 2025 was increased to $575,000. Such amounts were determined by the chief executive officer in consultation with LJC and certain other of our executive officers and were agreed to by Mr. Brandon Allen.

In January 2025, we also increased Mr. Goodnight's base salary to $460,000, as determined by the chief executive officer in consultation with LJC and certain other of our executive officers.

For our 2025 fiscal year, our company has increased the maximum company contributions to the 401(k) plan to an amount equal to up to 4% of the amount eligible participants invest in the 401(k) plan. All named executive officers remain eligible to participate on the same terms as all other employees of our company.

As described above under "*—Details of Our Compensation Program—Executive Compensation Philosophy and Objectives*," the Phoenix Equity Operating Agreement was amended on April 25, 2025 to clarify that any payments of wages, consulting fees, commissions, or other cash compensation for services rendered, and the

------

##### [**Table of Contents**](#toc)
out-of-pocket costs incurred, by us for any health, welfare, retirement, fringe, or other similar benefits provided to Mr. Ferrari, whether such amounts are paid on, prior to, or following April 25, 2025, will reduce future distributions from Phoenix Equity to LJC with respect to LJC's membership interests in Phoenix Equity. Because Mr. Ferrari holds 100% of the economic interests of LJC, the indirect impact of the amendment to the Phoenix Equity Operating Agreement is that any above-described amounts paid by us to Mr. Ferrari ultimately reduce the future distributions by us to LJC, and from LJC to Mr. Ferrari.

**Executive Compensation** 

***2024 Summary Compensation Table***

The following table (the "***Summary Compensation Table***") sets forth information concerning the compensation of our named executive officers for the year ended December 31, 2024:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Name and Principal Position** | **Year** | **Salary<br>($)<sup>(1)</sup>** | **Bonus<br>($)<sup>(2)</sup>** | **Stock<br>Awards<br>($)<sup>(3)</sup>** | **All Other<br>Compensation<br>($)<sup>(4)</sup>** | **Total<br>($)** |
|  Adam Ferrari<br> *Chief Executive Officer* | 2024 | 3135000 |  |  | 19571 | 3154571 |
|  Adam Ferrari<br> *Chief Executive Officer* | 2023 | 408334 |  |  | 48395 | 456729 |
|  Curtis Allen<br> *Chief Financial Officer* | 2024 | 1567500 |  | —<sup>(5)</sup> | 12611 | 1580111 |
|  Curtis Allen<br> *Chief Financial Officer* | 2023 | 360355 |  |  | 29337 | 389692 |
|  Curtis Allen<br> *Chief Financial Officer* | 2022 | 196000 |  |  |  | 196000 |
|  Sean Goodnight<br> *Chief Acquisitions Officer* | 2024 | 455000 | 300000 | —<sup>(5)</sup> | 6218 | 761218 |
|  Sean Goodnight<br> *Chief Acquisitions Officer* | 2023 | 483402 |  |  | 19447 | 502849 |
|  Sean Goodnight<br> *Chief Acquisitions Officer* | 2022 | 364000 |  |  |  | 364000 |
|  Brandon Allen<br> *Chief Operating Officer* | 2024 | 300000 | 225000 |  | 9583 | 534583 |
|  Lindsey Wilson<br> *Chief Business Officer* | 2024 | 399000 | 32000 | —<sup>(5)</sup> | 16189 | 447189 |
|  | 2023 | 300000 |  |  | 38453 | 338453 |
|  | 2022 | 180000 |  |  |  | 180000 |

---

(1) For 2024, the amount shown for Messrs. Ferrari and Curtis Allen and Ms. Wilson represents variable
revenue-based compensation. Under the Phoenix Equity Operating Agreement, all such compensatory payments made to or for the benefit of the named executive officers that are also members of Phoenix Equity are deemed to be a draw against and will
reduce future distributions to such executive with respect to the executive's membership interest in Phoenix Equity. As described above under "*—Material Compensation Decisions Following December 31, 2024*," the Phoenix Equity Operating Agreement was amended on April 25, 2025 to clarify that all such compensatory payments made to Mr. Ferrari will reduce the future distributions to LJC with respect to LJC's membership
interest in Phoenix Equity.

(2) The amounts included for 2024 represent the amount of discretionary annual bonuses paid to each of Messrs.
Goodnight and Brandon Allen and Ms. Wilson for services rendered during 2024. Under the Phoenix Equity Operating Agreement, all such bonuses are deemed to be a draw against and will reduce future distributions to each such named executive
officer with respect to the named executive officer's membership interest in Phoenix Equity.

(3) The amounts included for 2024 represent the grant date fair value of the restricted Class A Units and
restricted Class B Units in Phoenix Equity issued to each of our named executive officers, other than Mr. Ferrari, which will remain unvested until the date of a change in control of Phoenix Equity. The occurrence of a change in control of
Phoenix Equity was deemed improbable such that no compensatory value has been assigned to such units under ASC Topic 718. Assuming a change in control of Phoenix Equity was probable, the grant date fair value of all restricted Class A Units
granted to Messrs. Curtis Allen, Goodnight, and Brandon Allen and Ms. Wilson is $14,632,029, $2,985,992, $2,985,992, and $1,492,996, respectively, and the grant date fair value of all restricted Class B Units granted to each of Messrs.
Curtis Allen, Goodnight, and Brandon Allen and Ms. Wilson is $5,364,697, $11,757,238, $9,862,078, and

------

##### [**Table of Contents**](#toc)
$8,540,204, respectively. See "*—Elements of Our Executive Compensation Program—Equity Compensation*" and "*—Grants of Plan-Based Awards in 2024*" for more information.

(4) Amounts included for 2024 for each of Messrs. Ferrari and Goodnight and Ms. Wilson reflect the total cost
to us of a company-provided automobile allowance for each such named executive officer. The amount included for 2024 for Mr. Curtis Allen reflects $12,611, the cost of a company-provided automobile allowance for such named executive officer,
and company matching 401(k) plan contributions of $2,683. Amounts included for 2024 for Mr. Brandon Allen reflect company matching 401(k) plan contributions. We ceased to provide the named executive officers with a company-provided automobile
allowance in April 2024.

(5) Mr. Curtis Allen, Mr. Goodnight, and Ms. Wilson were previously granted profits interests in our
company, which were exchanged for profits interests in Phoenix Equity effective as of October 18, 2024. On December 4, 2024, 50% of the profits interests in Phoenix Equity held by each of Mr. Curtis Allen and Ms. Wilson and 100%
of the profits interests in Phoenix Equity held by Mr. Goodnight were converted into restricted Class A Units and Class B Units in Phoenix Equity. See "*—Elements of Our Executive Compensation Program—Equity Compensation*" and "*—Grants of Plan-Based Awards in 2024*" for more information.

***Grants of Plan-Based Awards in 2024***

The following table provides supplemental information relating to grants of plan-based awards made during 2024 to help explain information provided above in our Summary Compensation Table. This table presents information regarding all grants of plan-based awards occurring during 2024.

---

| | | | |
|:---|:---|:---|:---|
| **Name** | **Grant Date** | **All Other Stock<br>Awards: Number<br>of Shares of Stock<br>(#)** | **Grant Date<br>Fair value of Stock<br>Awards ($)<sup>(1)</sup>** |
|  Adam Ferrari |  |  | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;— |
|  Curtis Allen | 12/04/2024 | 262505<sup>(2)</sup> | $—<sup>(4)</sup> |
|  | 12/04/2024 | 96245<sup>(3)</sup> | $—<sup>(4)</sup> |
|  Sean Goodnight | 12/04/2024 | 53570<sup>(2)</sup> | $—<sup>(4)</sup> |
|  | 12/04/2024 | 210930<sup>(3)</sup> | $—<sup>(4)</sup> |
|  Brandon Allen | 12/04/2024 | 53570<sup>(2)</sup> | $— |
|  | 12/04/2024 | 176930<sup>(3)</sup> | $— |
|  Lindsey Wilson | 12/04/2024 | 26785<sup>(2)</sup> | $—<sup>(4)</sup> |
|  | 12/04/2024 | 153215<sup>(3)</sup> | $—<sup>(4)</sup> |

---

(1) These amounts represent the grant date fair value of restricted Class A Units and restricted Class B
Units in Phoenix Equity issued to the named executive officers that are subject to forfeiture until the date of a change in control of Phoenix Equity, based on the probable outcome of such performance condition. See note 3 to the Summary
Compensation Table above for more information.

(2) Represents restricted Class A Units granted to each of our named executive officers other than
Mr. Ferrari that are subject to forfeiture upon the named executive officer's termination of employment for any reason prior to a change in control of Phoenix Equity. Such restricted Class A Units will remain unvested until the date
of a change in control of Phoenix Equity.

(3) Represents restricted Class B Units granted to each of our named executive officers other than
Mr. Ferrari that are subject to forfeiture upon the named executive officer's termination of employment for any reason prior to a change in control of Phoenix Equity. Such restricted Class B Units will remain unvested until the date
of a change in control of Phoenix Equity.

(4) Each of Mr. Curtis Allen, Mr. Goodnight, and Ms. Wilson was previously granted equity
compensation in the form of profits interests in our company, which were exchanged for profits interests in Phoenix Equity effective as of October 18, 2024. On December 4, 2024, 50% of the profits interests in Phoenix Equity held by each
of Mr. Curtis Allen and Ms. Wilson and 100% of the profits interests in Phoenix Equity held by

------

##### [**Table of Contents**](#toc)
Mr. Goodnight were converted into restricted Class A Units and Class B Units in Phoenix Equity. See "*—Elements of Our Executive Compensation Program—Equity Compensation*" and "*— 2024 Summary Compensation Table*" for more information.

***Outstanding Equity Awards at 2024 Fiscal Year-End***

The following table sets forth certain information about restricted units granted to our named executive officers outstanding as of December 31, 2024:

---

| | | |
|:---|:---|:---|
|  | **Stock Awards** | **Stock Awards** |
| **Name** | **Number of Shares<br>or Units of Stock<br>that Have Not<br>Vested (#)** | **Market Value of<br>Shares or Units of<br>Stock that Have Not<br>Vested ($)<sup>(1)</sup>** |
|  Adam Ferrari |  | $— |
|  Curtis Allen | 262505<sup>(2)</sup> | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14632029 |
|  | 96245<sup>(3)</sup> | $5364696 |
|  Sean Goodnight | 53570<sup>(2)</sup> | $2985992 |
|  | 210930<sup>(3)</sup> | $11757238 |
|  Brandon Allen | 53570<sup>(2)</sup> | $2985992 |
|  | 176930<sup>(3)</sup> | $9862078 |
|  Lindsey Wilson | 26785<sup>(2)</sup> | $1492996 |
|  | 153215<sup>(3)</sup> | $8540204 |

---

(1) Market value based on $55.74, the fair market value of the Class A Units and Class B Units of Phoenix
Equity on December 31, 2024, based on an independent third-party valuation we received.

(2) Represents the number of restricted Class A Units held by each of our named executive officers (other than
Mr. Ferrari) that are subject to forfeiture upon the named executive officer's termination of employment for any reason prior to a change in control of Phoenix Equity. As discussed above under the heading "— *Elements of Our Executive Compensation Program* — *Equity Compensation*," the profits interests previously held by each of our named executive officers (other than Mr. Ferrari) were exchanged for profits interests in Phoenix Equity effective as
of October 18, 2024, and were subsequently converted into restricted units (and, for Mr. Curtis Allen and Ms. Wilson, retained units) in Phoenix Equity on December 4, 2024. Refer to "— *Elements of Our Executive Compensation Program* — *Equity Compensation*" above for additional information.

(3) Represents the number of restricted Class B units held by each of our named executive officers (other than
Mr. Ferrari) that are subject to forfeiture upon the named executive officer's termination of employment for any reason prior to a change in control of Phoenix Equity. As discussed above under the heading "— *Elements of Our Executive Compensation Program* — *Equity Compensation*," the profits interests previously held by each of our named executive officers (other than Mr. Ferrari) were exchanged for profits interests in Phoenix Equity effective as
of October 18, 2024, and were subsequently converted into restricted units (and, for Mr. Curtis Allen and Ms. Wilson, retained units) in Phoenix Equity on December 4, 2024. Refer to "— *Elements of Our Executive Compensation Program* — *Equity Compensation*" above for additional information.

***Potential Payments Upon Termination or Change in Control***

None of our named executive officers are entitled to cash severance or benefits upon his or her termination of employment for any reason, provided that our company may determine to pay cash severance or grant severance benefits upon a named executive officer's termination of employment in the discretion of our chief executive officer and/or LJC. We do not have a written or formal severance plan or policy that applies to any employees of our company, including any of the named executive officers.

------

##### [**Table of Contents**](#toc)
Upon a "Liquidity Event" (as defined in the Phoenix Equity Operating Agreement) the forfeiture and repurchase provisions applicable to the restricted Class A Units and restricted Class B Units held by any of our named executive officers will lapse.

For purposes of the restricted Class A Units and restricted Class B Units in Phoenix Equity, a "Liquidity Event" generally means the occurrence of one of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a sale or disposition, whether in one transaction or a series of transactions, of all or substantially all of the
equity securities of Phoenix Equity (including by way of merger, consolidation, share exchange, or similar transaction); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a sale or disposition, whether in one transaction or a series of transactions, of all or substantially all of the
assets of Phoenix Equity and its subsidiaries.

Assuming a Liquidity Event occurred as of December 31, 2024, the value received by each of our named executive officers in respect of their restricted Class A Units and restricted Class B Units would be:

---

| | | |
|:---|:---|:---|
| **Name** | **Value of Class A Units<br>for which Forfeiture<br>Restrictions Cease to<br>Apply upon Liquidity<br>Event<sup>(1)</sup>** | **Value of Class B Units<br>for which Forfeiture<br>Restrictions Cease to<br>Apply upon Liquidity<br>Event<sup>(1)</sup>** |
|  Adam Ferrari | $— | $— |
|  Curtis Allen | $14632029 | $5364696 |
|  Sean Goodnight | $2985992 | $11757238 |
|  Brandon Allen | $2985992 | $9862078 |
|  Lindsey Wilson | $1492996 | $8540204 |

---

(1) Market value based on $55.74, the fair market value of the Class A Units and Class B Units of Phoenix
Equity on December 31, 2024, based on an independent third-party valuation.

**Director Compensation** 

Our company is currently managed indirectly by Adam Ferrari, our Chief Executive Officer, who was employed by us during the year ended December 31, 2024, and did not receive any additional compensation from us for his service as a manager of Phoenix Equity or our company.

Following this offering, we will be a manager-managed limited liability company, and our business and affairs will be managed under the direction of a board of directors. As a result, Mr. Ferrari will cease being the manager of the Issuer in connection with this offering. We expect that each of our non-executive directors will receive an annual cash retainer equal to $145,000 for his service on our board of directors. Additionally, each of our directors will be reimbursed for reasonable business expenses incurred in connection with his service on our board of directors. Our directors are not expected to receive any other compensation for their services as members of our board of directors under the planned arrangements.

------

##### [**Table of Contents**](#toc)
**CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS** 

In addition to the compensation arrangements, including employment, termination of employment, and change in control and indemnification arrangements, discussed in the section titled "*Compensation Discussion and Analysis*," the following is a description of each transaction since January 1, 2022 and each currently proposed transaction in which:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we or any subsidiaries have been or will be a participant;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the amount involved exceeded or exceeds $120,000; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any of our executive officers, director nominees or beneficial owners of more than 5% of our capital stock had or
will have a direct or indirect material interest.

**Second Amended and Restated Limited Liability Company Agreement of Phoenix Energy One, LLC** 

We are currently governed by that certain Second Amended and Restated Limited Liability Company Agreement, dated as of January 23, 2025 (the "***Second ARLLCA***"), between ourselves and our sole member, Phoenix Equity.

The Second ARLLCA provides that Phoenix Equity is the sole member of the Issuer, entitled to 100% of any distributions made by the Issuer. The management of the Issuer is exclusively vested in Phoenix Equity and, as such, Phoenix Equity directs our business and operations, including appointment and compensation of our officers. The Second ARLLCA further provides that the managers of Phoenix Equity shall be deemed to be "managers" of the Issuer for all purposes under the DLLCA. LJC controls Phoenix Equity and, therefore, indirectly has control over the Issuer's management. Daniel Ferrari and Charlene Ferrari each own 50% of the voting membership interests in, and are the managers of, LJC. Adam Ferrari, our Chief Executive Officer, the manager of Phoenix Equity, and the son of Daniel and Charlene Ferrari, owns 100% of the economic interests in LJC, but has no voting or managerial interest in LJC. This summary is qualified in its entirety by the full text of the Second ARLLCA, which is included as an exhibit to this Offering Circular.

In connection with this offering, we will amend and restate the Second ARLLCA and enter into the Third ARLLCA. For more information, see the section entitled "*Description of Capital and Preferred Shares—Third Amended and Restated Limited Liability Company Agreement*."

**Consulting Agreement** 

We and Adam Ferrari, our Chief Executive Officer, entered into a consulting agreement (the "***Consulting Agreement***") in November 2021 pursuant to which Mr. Ferrari provided us with petroleum engineering consulting services. The Consulting Agreement terminated commencing with Mr. Ferrari's employment as our Vice President of Engineering in April 2023. We paid Mr. Ferrari $323,000 in consulting fees in 2022 pursuant to the Consulting Agreement.

**Investments in Company Debt** 

From time to time certain of our managers or executive officers and their respective family members may purchase and hold our debt securities.

------

##### [**Table of Contents**](#toc)
The following table sets forth, for the period from January 1, 2022 to May 31, 2025, investments made by such persons in our debt securities where such investments exceeded $120,000:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Related Party<sup>(1)</sup>** | **Debt Security** | **Interest Rate** | **Principal<br>Amount<br>During<br>Period<sup>(2)</sup>** | **Principal<br>Amount<br>Outstanding<br>as of<br>May 31, 2025** | **Principal Paid**<br>**During<br>Period<sup>(2)</sup>** | **Interest Paid<br>During Period** |
|  Adam Ferrari | July 2022 506(c) Bonds | 8.0% -11.0% | $455000 | $— | $455000 | $16433 |
|  Adam Ferrari | December 2022 506(c) Bonds | 9.0% -12.0% | $1143000 | $481000 | $662000 | $189642 |
|  Adam Ferrari | August 2023 506(c) Bonds | 13.0% -14.0% | $3147000 | $1584000 | $1563000 | $344333 |
|  Adam Ferrari | Reg A Bonds | 9.0% | $200000 | $— | $200000 | $14963 |
|  Curtis Allen | December 2022 506(c) Bonds | 12.0% | $386000 | $— | $386000 | $28668 |
|  Curtis Allen | August 2023 506(c) Bonds | 13.0% -14.0% | $3026000 | $1036000 | $1990000 | $219307 |
|  Curtis Allen | Reg A Bonds | 9.0% | $14000 | $— | $14000 | $1928 |
|  Lindsey Wilson | December 2022 506(c) Bonds | 9.0% | $50000 | $— | $50000 | $4690 |
|  Lindsey Wilson | August 2023 506(c) Bonds | 13.0% | $184000 | $184000 | $— | $24448 |
|  Justin Arn | December 2022 506(c) Bonds | 10.0% | $50000 | $— | $50000 | $5236 |
|  Justin Arn | August 2023 506(c) Bonds | 13.0% | $186000 | $186000 | $— | $31241 |
|  Justin Arn | Reg A Bonds | 9.0% | $2000 | $— | $2000 | $540 |
|  David Wheeler | August 2023 506(c) Bonds | 12.0% | $179000 | $179000 | $— | $11012 |
|  Jason Allan Pangracs | August 2023 506(c) Bonds | 10.0% | $200000 | $200000 | $— | $35000 |

---

(1) Includes any debt securities known by such person to be held by any child, stepchild, parent, step-parent,
spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of such person and any person (other than a tenant or employee) sharing the household of such person, except that debt securities owned by Jason Allan Pangracs,
and Adam Ferrari are disclosed separately and are not attributed to each other. Jason Allan Pangracs is the brother-in-law of Adam Ferrari.

(2) Reflects the largest aggregate amount of principal of such debt securities outstanding and paid during the
period from January 1, 2022 to May 31, 2025.

**Discretionary Payments** 

For the year ended December 31, 2024, we paid interest expense of less than $0.2 million to a financial institution on behalf of LJC related to a certain financing agreement between LJC and this financial institution. Such payments were discretionary in nature, and we are under no obligation to continue to make such payments on behalf of LJC. For the year ending December 31, 2025, we expect to make additional payments up to an amount equal to approximately $0.1 million.

**Indemnification of Directors and Officers** 

We have previously and intend to enter into indemnification agreements with each of our directors and executive officers. These agreements require us to indemnify these individuals to the fullest extent permitted

------

##### [**Table of Contents**](#toc)
under the DLLCA against expenses, losses, and liabilities that may arise in connection with actual or threatened proceedings in which they are involved by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified.

The Second ARLLCA provides, and the Third ARLLCA will provide, that we will indemnify our members and executive officers, to the fullest extent permitted by law, from any liability, loss, or damage incurred by any member or officer or by reason of any act performed or omitted to be performed by any member or officer in connection with our business, subject to certain exceptions.

**Related Persons Transaction Policy** 

Prior to the commencement of this offering, we expect to adopt a revised related person transaction policy, to be effective upon the closing of this offering, setting forth the policies and procedures for the review and approval or ratification of related person transactions. We refer to this policy as our "related person policy." This policy will replace our current related person policy, and will cover, with certain exceptions set forth in Item 404 of Regulation S-K under the Securities Act, any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we were or are to be a participant, where the amount involved exceeds $120,000 in any fiscal year and in which a related person had, has or will have a direct or indirect material interest. Our related person policy does not specify the standards to be applied by our board of directors (or the disinterested directors or any committee thereof) in determining whether or not to approve or ratify a related person transaction, and accordingly these determinations will be made in accordance with the principles of Delaware law generally applicable to managers of a Delaware limited liability company and the terms of the Third ARLLCA. All of the transactions described in this section and that have already occurred or completed will have occurred prior to the adoption of this policy.

Pursuant to this revised related person transaction policy, if a member of our board of directors is a party to a transaction to be voted on, he or she will not vote on the approval of the transaction.

Generally, our board of directors will review all transactions, activities, arrangements, circumstances or other matters between or among one or more related parties, on the one hand, and us, on the other hand, including those transactions that are required to be disclosed in our proxy statement or in the notes to our audited financial statements. A "related party" will include any executive officer, director, nominee for director or beneficial holder of more than 5% of our or Phoenix Equity's outstanding membership interests, any immediate family member of those persons and any entity that is owned or controlled by any of the foregoing persons or any entity in which such a person is an executive officer.

Our board of directors will have the power and authority, in its sole discretion, to retain or obtain the advice of any financial advisors, consultants, legal counsel, or other advisors in connection with conducting investigations into or studies of related party transactions. In addition, our board of directors will be able to ask members of management or others to attend its meetings and to provide pertinent information as necessary.

------

##### [**Table of Contents**](#toc)
**SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT** 

We are currently a member-managed limited liability company organized under the laws of the State of Delaware, and do not have a board of directors, board of managers, or similar construct (or any committees thereof). In addition, we are wholly owned and controlled by Phoenix Equity. Phoenix Equity is our sole member and, as such, directs our business and operations, including appointment and compensation of our officers. LJC controls Phoenix Equity and, therefore, indirectly has control over our management. LJC has the power to select or remove Phoenix Equity's managers in its sole discretion pursuant to its limited liability company agreement. No other holders of Phoenix Equity are entitled to appoint managers or otherwise directly participate in Phoenix Equity's management or operations. Following this offering, we will be a manager-managed limited liability company and our business and affairs will be managed under the direction of a board of directors. In addition, Phoenix Equity will hold all of our common shares, representing limited liability company interests, and, as a result, other than under the limited circumstances described in this Offering Circular in which holders of the Preferred Shares have voting rights, we will continue to be controlled by Phoenix Equity.

The table below sets forth, as of the date of this Offering Circular, information regarding the beneficial ownership of Phoenix Equity's outstanding membership interests by: (1) each person who is known to us to be the beneficial owner of 5% or more of Phoenix Equity's outstanding membership interests; (2) each of our director nominees, (3) each of our named executive officers and managers; and (4) all of our executive officers, managers and director nominees as a group. The SEC has defined "beneficial ownership" of a security to mean the possession, directly or indirectly, of sole or shared voting power and/or investment power over such security, including options and warrants that are currently exercisable or exercisable within 60 days.

Unless otherwise indicated, we believe that all persons named in the table below have sole voting and investment power with respect to the voting securities beneficially owned by them. Unless otherwise noted, the business address of the persons listed in the table below is 18575 Jamboree Road, Suite 830 Irvine, California 92612.

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Name of Beneficial Holder** | **Class A<br>Units<sup>(1)</sup>** | **Class A<br>Unit<br>Percentage** | **Class B<br>Units<sup>(2)</sup>** | **Class B<br>Unit<br>Percentage** |
|  *5% Holders* |  |  |  |  |
|  Lion of Judah Capital, LLC<sup>(3)</sup> | 1100000 | 55.0% | 4186100 | 59.8% |
|  *Managers, Director Nominees and Named Executive Officers* |  |  |  |  |
|  Adam Ferrari<sup>(4)</sup> |  | —% |  | —% |
|  Curtis Allen | 525010 | 26.3% | 192490 | 2.7% |
|  Sean Goodnight | 53570 | 2.7% | 210930 | 3.0% |
|  Lindsey Wilson | 53570 | 2.7% | 306430 | 4.4% |
|  Brandon Allen | 53570 | 2.7% | 176930 | 2.5% |
|  Daniel Ferrari<sup>(3)</sup> | 1100000 | 55.0% | 4186100 | 59.8% |
|  Jason Allan Pangracs |  | —% |  | —% |
|  Jason Montgomery Wagner |  | —% |  | —% |
|  All executive officers and managers as a group (seven individuals) | 739290 | 40.0% | 1222210 | 17.5% |

---

(1) Class A Units are entitled to vote on any matter involving Phoenix Equity or its subsidiaries.

(2) Class B Units are not entitled to vote on any matter involving Phoenix Equity or its subsidiaries.

(3) Daniel Ferrari and Charlene Ferrari each own 50% of the voting membership interests in, and are the managers
of, LJC. Their address is 1983 Water Chase Drive, New Lenox, Illinois 60451. Adam Ferrari, the son of Daniel and Charlene Ferrari, owns 100% of the economic interests in LJC, but has no voting or managerial interest in LJC and, therefore, is not a
beneficial owner of our membership interests by virtue of his economic interest ownership in LJC.

------

##### [**Table of Contents**](#toc)
(4) Pursuant to the terms of the Second ARLLCA, because Adam Ferrari is currently the manager of Phoenix Equity, he
is deemed for all purposes of the DLLCA to be the manager of the Issuer. Following this offering, we will be a manager-managed limited liability company and our business and affairs will be managed under the direction of a board of directors. As a
result, Mr. Ferrari will cease being the sole manager of the Issuer in connection with this offering but will be a manager by virtue of being a member of the board of directors under DLLCA.

------

##### [**Table of Contents**](#toc)
**DESCRIPTION OF CAPITAL AND PREFERRED SHARES** 

The following summary describes the material terms and provisions of our common shares and the 10.00% Series A Cumulative Redeemable Preferred Shares and our Third ARLLCA. This summary does not purport to be complete and is qualified in its entirety by references to the relevant provisions of our Third ARLLCA, which is included as an exhibit to this Offering Circular, and the DLLCA.

**Authorized Share Capital** 

Following this offering, pursuant to the Third ARLLCA, our authorized share capital will consist of 100,000,000 common shares, without par value, and 20,000,000 preferred shares, without par value, of which 3,750,000 are designated Series A Cumulative Redeemable Preferred Shares. The Third ARLLCA will authorize our board of directors to, subject to shareholder approval as described therein:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) authorize and issue additional shares of any existing class or series of shares; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) (x) create new classes or series of shares, with such distinctive designations, preferences and other rights (including voting rights), and such qualifications, limitations or restrictions, as set forth in writing creating such new class or series (such writing, a "***Share Designation***") and (y) authorize and issue shares of any such newly created class or series.

**Common Shares** 

Our common shares represent limited liability company interests in the Company, and entitle the holder thereof to such rights, powers and duties with respect to the Company as are provided for in the Third ARLLCA and DLLCA. Following this offering, Phoenix Equity will hold all of our common shares by virtue of being the holder of the equity interest of the Company immediately prior to the effective time of the Third ARLLCA. The rights, powers and duties of the common shares are subject to the preferential rights of any other class or series of shares that we may issue from time to time, including the terms of any Share Designation.

***Voting Rights***

Holders of our common shares will be entitled to one vote per common share held on all matters voted or consented upon by our shareholders.

***Distribution Rights***

Subject to the applicable provisions of the DLLCA and the terms of any applicable Share Designation, distributions of our cash or other assets may be paid to the holders of our common shares out of our assets legally available therefor only when, as and if determined by our board of directors. Any decision to declare and pay distributions in the future will be made at the sole discretion of our board of directors and will depend on, among other things, our financial condition, results of operations, cash requirements, contractual restrictions and other factors that our board of directors may deem relevant.

***Liquidation Rights***

Common shares are entitled to share ratably in our assets legally available for distribution to the holders of such common shares in the event of our liquidation, dissolution or winding up, after payment of or adequate provisions for all of our known debts and liabilities.

***Other Matters***

Holders of our common shares will not have any preemptive, subscription, preferential or similar rights regarding the issuance of our securities, and do not have any appraisal rights except to the limited extent provided with respect to the required redemption or repurchase of shares in connection with an Adverse Consequence (as defined below).

------

##### [**Table of Contents**](#toc)
**Series A Preferred Shares** 

***General***

In connection with this offering, we will create a series of preferred shares representing limited liability interests in the Company designated as the 10.00% Series A Cumulative Redeemable Preferred Shares (the "***Preferred Shares***"). Our board of directors may authorize the issuance and sale of additional shares of Preferred Shares from time to time subject to any requisite shareholder approval set forth in the Third ARLLCA.

***Distributions***

Holders of the Preferred Shares are entitled to receive, when, as, and if, authorized by our board of directors and declared by us, cumulative cash distributions based on the initial stated liquidation preference of $25.00 per Preferred Share at a rate equal to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) from, and including, the date of original issuance to, but excluding, October 15, 2028, at a fixed rate equal to 10.00% (equivalent to $2.50 per annum per Preferred Share),

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) from and including October 15, 2028 to, but excluding, October 15, 2029, at a fixed rate equal to 10.50% (equivalent to $2.625 per annum per Preferred Share), and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) from and including October 15, 2029 at a fixed rate equal to 11.00% (equivalent to $2.75 per annum per Preferred Share).

A "***distribution period***" means the period from, and including, each distribution payment date (as defined below) to, but excluding, the next succeeding distribution payment date, except for the initial distribution period, which will be the period from, and including, the issue date of the Preferred Shares offered hereby to, but excluding the next succeeding distribution payment date. Distributions on the Preferred Shares shall accumulate daily and be cumulative from, and including, the date of original issue and shall be payable quarterly in arrears on the 15<sup>th</sup> day of each April, July, October and January (each, a "***distribution payment date***") (provided that if any distribution payment date is not a business day, then the distribution which would otherwise have been payable on that distribution payment date may be paid on the next succeeding business day and no interest, additional distributions or other sums will accrue on the amount so payable for the period from and after that distribution payment date to that next succeeding business day). The pro-rated first distribution on the Preferred Shares is scheduled to be paid on October 15, 2025 in the amount of approximately $ per Preferred Share, and that distribution will be paid to the persons who are the holders of record of the Preferred Shares at the close of business on the corresponding distribution record date, which will be October 1, 2025. Distributions will be calculated on the basis of a 360-day year consisting of twelve 30-day months.

Distributions will be payable to holders of record as they appear in our transfer records for the Preferred Shares at the close of business on the applicable record date, which shall be the first day of the calendar month, whether or not a business day, in which the applicable distribution payment date falls, except that in the case of payments of distributions in arrears, the record date with respect to a distribution payment date will be such date as may be designated by our board of directors (each, a "***distribution record date***"). The distributions payable on any distribution payment date shall include distributions accumulated to, but not including, such distribution payment date.

So long as the Preferred Shares are held of record by the nominee of the Securities Depositary (as defined below), declared distributions will be paid to the Securities Depositary in same-day funds on each distribution payment date. The Securities Depositary will credit accounts of its participants in accordance with the Securities Depositary's normal procedures. The participants will be responsible for holding or disbursing such payments to beneficial owners of the Preferred Shares in accordance with the instructions of such beneficial owners.

No distributions on the Preferred Shares shall be authorized by our board of directors or paid or set apart for payment by us at any time when the terms and provisions of any agreement of ours, including any agreement

------

##### [**Table of Contents**](#toc)
relating to our indebtedness, prohibit the authorization, payment or setting apart for payment thereof or provide that the authorization, payment or setting apart for payment thereof would constitute a breach of the agreement or a default under the agreement, or if the authorization, payment or setting apart for payment shall be restricted or prohibited by law.

Notwithstanding the foregoing, distributions on the Preferred Shares will accrue whether or not we have earnings, whether there are assets legally available for the payment of such distributions and whether such distributions are authorized or declared. No interest, additional distributions or other sums will be payable in respect of any distribution payment or payments on the Preferred Shares which may be in arrears. Future distributions on our common shares and preferred shares, including the Preferred Shares offered pursuant to this Offering Circular, will be at the discretion of our board of directors and will depend on, among other things, our results of operations, cash flow from operations, financial condition and capital requirements, any debt service requirements and any other factors our board of directors deems relevant. Accordingly, we cannot guarantee that we will be able to make cash distributions or what the actual distributions will be for any future period.

Unless full cumulative distributions on the Preferred Shares and any Parity Securities have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for payment for all past distribution periods, no distributions shall be declared or paid or set aside for payment upon any Junior Securities (other than a distribution payable solely in Junior Securities). Accumulated distributions in arrears for any past distribution period may be declared by our board of directors and paid on any date fixed by the board of directors, whether or not a distribution payment date, to holders of the Preferred Shares on the record date for such payment. To the extent a distribution period applicable to a class of Junior Securities or Parity Securities is shorter than the distribution period applicable to the Preferred Shares (*e.g.*, monthly rather than quarterly), the board of directors may declare and pay regular distributions with respect to such Junior Securities or Parity Securities so long as, at the time of declaration of such distribution, the board of directors expects to have sufficient funds to pay the full distribution in respect of the Preferred Shares on the next distribution payment date.

Subject to the next succeeding sentence, if all accumulated distributions in arrears on all outstanding Preferred Shares and any Parity Securities have not been declared and paid, or sufficient funds for the payment thereof have not been set apart, payment of accumulated distributions in arrears will be made in order of their respective distribution payment dates, commencing with the earliest distribution payment date. If less than all distributions payable with respect to all Preferred Shares and any Parity Securities are paid, any partial payment will be made pro rata with respect to the Preferred Shares and any Parity Securities entitled to a distribution payment at such time in proportion to the aggregate amounts remaining due in respect of such Preferred Shares and Parity Securities at such time. Holders of the Preferred Shares will not be entitled to any distribution in excess of full cumulative distributions described above.

The terms of the Fortress Credit Agreement prohibit us from making payments or distributions with respect to securities, including the Preferred Shares. Under the terms of the Fortress Credit Agreement we may only declare or make a distribution with respect to the Preferred Shares so long as, among others, (i) no default or event of default has occurred and is continuing or would occur as a result of such distribution and (ii) immediately after giving effect to such distribution we remain in compliance with the financial covenants to maintain (a) a maximum total secured leverage ratio, (b) a minimum current ratio, and (c) a minimum asset coverage ratio on a pro forma basis. For a description of the terms of the Fortress Credit Agreement, including these ratios, see "*Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness—Fortress Credit Agreement*" and "*Risk Factors—Risks Related to the Preferred Shares and this Offering—We are not required to accumulate cash for the purpose of meeting our future obligations to holders of the Preferred Shares, which, along with the agreements governing our indebtedness, may limit the cash available to make distributions on the Preferred Shares*."

------

##### [**Table of Contents**](#toc)
***Redemption***

We may, at our option, redeem, in whole or in part, at any time or from time to time, the Preferred Shares for cash at a redemption price of $27.50 per Preferred Share, plus any accumulated and unpaid distributions thereon to, but not including, the date fixed for redemption. We may undertake multiple partial redemptions. Any such redemption would be effected only out of funds legally available for such purpose and would be subject to compliance with the provisions of the instruments governing our outstanding indebtedness.

In the event we elect to redeem any Preferred Shares, we will give notice of any redemption not less than 30 days and not more than 60 days before the scheduled date of redemption, to the holders of any Preferred Shares to be redeemed as such holders' names appear on our transfer records maintained by the transfer agent at the address of such holders shown therein. Such notice shall state: (i) the redemption date, (ii) the number of Preferred Shares to be redeemed and, if less than all outstanding Preferred Shares are to be redeemed, the number of Preferred Shares to be redeemed from such holder, (iii) the redemption price, (iv) the place where any Preferred Shares in certificated form are to be redeemed and shall be presented and surrendered for payment of the redemption price therefor, and (v) that distributions on the Preferred Shares to be redeemed will cease to accumulate from and after such redemption date.

If fewer than all of the outstanding Preferred Shares are to be redeemed, the number of Preferred Shares to be redeemed will be determined by us, and such Preferred Shares will be redeemed by such method of selection as the Securities Depositary (as defined below) shall determine, pro rata or by lot, with adjustments to avoid redemption of fractional units. So long as all Preferred Shares are held of record by the nominee of the Securities Depositary, we will give notice, or cause notice to be given, to the Securities Depositary of the number of Preferred Shares to be redeemed, and the Securities Depositary will determine the number of Preferred Shares to be redeemed from the account of each of its participants holding such Preferred Shares in its participant account. Thereafter, each participant will select the number of Preferred Shares to be redeemed from each beneficial owner for whom it acts (including the participant, to the extent it holds Preferred Shares for its own account). A participant may determine to redeem Preferred Shares from some beneficial owners (including the participant itself) without redeeming Preferred Shares from the accounts of other beneficial owners.

So long as the Preferred Shares are held of record by the nominee of the Securities Depositary, the redemption price will be paid by the Paying Agent (as defined below) to the Securities Depositary on the redemption date. The Securities Depositary's normal procedures provide for it to distribute the amount of the redemption price in same-day funds to its participants who, in turn, are expected to distribute such funds to the persons for whom they are acting as agent.

If we give or cause to be given a notice of redemption, then we will deposit with the Paying Agent funds sufficient to redeem the Preferred Shares as to which notice has been given by 10:00 a.m., New York City time, on the date fixed for redemption, and will give the Paying Agent irrevocable instructions and authority to pay the redemption price to the holder or holders thereof upon surrender or deemed surrender (which will occur automatically if the certificate representing such Preferred Shares is issued in the name of the Securities Depositary or its nominee) of the certificates therefor. If a notice of redemption shall have been given, then from and after the date fixed for redemption, unless we default in providing funds sufficient for such redemption at the time and place specified for payment pursuant to the notice, all distributions on such Preferred Shares will cease to accumulate and all rights of holders of such Preferred Shares as limited partners will cease, except the right to receive the redemption price, including an amount equal to accumulated and unpaid distributions to the date fixed for redemption, whether or not declared. The holders of Preferred Shares will have no claim to the interest income, if any, earned on such funds deposited with the Paying Agent. Any funds deposited with the Paying Agent hereunder by us for any reason, including, but not limited to, redemption of Preferred Shares, that remain unclaimed or unpaid after one year after the applicable redemption date or other payment date, shall be, to the extent permitted by law, repaid to us upon our written request, after which repayment the holders of the Preferred Shares entitled to such redemption or other payment shall have recourse only to us.

------

##### [**Table of Contents**](#toc)
If only a portion of the Preferred Shares represented by a certificate has been called for redemption, upon surrender of the certificate to the Paying Agent (which will occur automatically if the certificate representing such Preferred Shares is registered in the name of the Securities Depositary or its nominee), we will issue and the Paying Agent will deliver to the holder of such Preferred Shares a new certificate (or adjust the applicable book-entry account) representing the number of Preferred Shares represented by the surrendered certificate that have not been called for redemption.

Notwithstanding any notice of redemption, there will be no redemption of any Preferred Shares called for redemption until funds sufficient to pay the full redemption price of such Preferred Shares, including all accumulated and unpaid distributions to, but excluding, the date of redemption, whether or not declared, have been deposited by us with the Paying Agent.

We may from time to time purchase Preferred Shares, subject to compliance with all applicable securities and other laws. We have no obligation, or any present plan or intention, to purchase any Preferred Shares. Any Preferred Shares that we redeem or otherwise acquire will be cancelled.

Notwithstanding the foregoing, in the event that full cumulative distributions on the Preferred Shares and any Parity Securities have not been paid or declared and set apart for payment, we may not repurchase, redeem or otherwise acquire, in whole or in part, any Preferred Shares or Parity Securities except pursuant to a purchase or exchange offer made on the same relative terms to all holders of Preferred Shares and any Parity Securities. Junior Securities may not be redeemed, repurchased or otherwise acquired by us unless full cumulative distributions on the Preferred Shares and any Parity Securities for all prior and the then-ending distribution periods have been paid or declared and set apart for payment.

The terms of the Fortress Credit Agreement prohibit us from redeeming or otherwise repurchasing any of our securities, including the Preferred Shares. Under the terms of the Fortress Credit Agreement we may only redeem the Preferred Shares so long as, among others, (i) no default or event of default has occurred and is continuing or would occur as a result of such redemption and (ii) immediately after giving effect to such redemption we remain in compliance with the financial covenants to maintain (a) a maximum total secured leverage ratio, (b) a minimum current ratio, and (c) a minimum asset coverage ratio on a pro forma basis. For a description of the terms of the Fortress Credit Agreement, including these ratios, see *"Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness—Fortress Credit Agreement*" and "*Risk Factors—Risks Related to the Preferred Shares and this Offering—The Preferred Shares represent perpetual equity interests in us, and investors should not expect us to redeem any Preferred Shares on any particular date following the completion of this offering*.****"*

***Liquidation Preference***

In the event of our voluntary or involuntary liquidation, dissolution or winding up, our shareholders will be entitled to distributions in accordance with their respective positive capital account balances. The holders of Preferred Shares will be allocated items of our gross income and gain in a manner designed to cause such holders to have a positive capital balance equal to the initial liquidation preference of $25.00 per Preferred Share, which liquidation preference will be subject to increase by the per Preferred Share amount of any accumulated and unpaid distributions of Preferred Shares. If the amount of our gross income and gain available to be specially allocated to the holders of Preferred Shares is not sufficient to cause the capital account of a Preferred Share to equal the liquidation preference of the Preferred Shares, then the amount that a holder of Preferred Shares would receive upon liquidation may be less than the liquidation preference of the Preferred Shares. The rights of the holders of Preferred Shares to receive the liquidation preference will be subject to the rights of the holders of any Senior Securities and the proportional rights of holders of Parity Securities.

Holders of Preferred Shares will be entitled to written notice of any such liquidation no fewer than 30 days and no more than 60 days prior to the payment date. After payment of the full amount of the liquidating

------

##### [**Table of Contents**](#toc)
distributions to which they are entitled, the holders of Preferred Shares will have no right or claim to any of our remaining assets.

**No Maturity, Sinking Fund, Mandatory Redemption, Conversion or Preemptive Rights** 

Each Preferred Share has no stated maturity, is not subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless we decide, at our option, to exercise our optional redemption right. The Preferred Shares are not convertible into any other securities or property of the Issuer and no holders of Preferred Shares will have any preemptive rights to purchase or subscribe for our common shares, representing limited liability company interests, or any other security.

**Limited Voting Rights** 

Holders of the Preferred Shares do not have any voting rights, except as specifically set forth in the Third ARLLCA and Share Designation and described below or as otherwise required by law.

Whenever distributions on the Preferred Shares are in arrears for six or more quarterly distribution periods (whether or not consecutive), the number of directors constituting our board of directors will be automatically increased by two and the holders of the Preferred Shares and the holders of all other classes or series of our preferred shares we may issue upon which like voting rights have been conferred and are exercisable and which are entitled to vote as a class with the Preferred Shares in the election referred to below will be entitled to vote for the election of those two additional directors at a special meeting called by us at the request of the holders of record of at least 25% of the outstanding Preferred Shares or by the holders of any other class or series of preferred shares upon which like voting rights have been conferred and are exercisable and which are entitled to vote as a class with the Preferred Shares in the election of those two directors, and at each subsequent annual meeting until all distributions accumulated on the Preferred Shares for all past distribution periods and the then current distribution period shall have been fully paid or declared and a sum sufficient for the payment thereof set aside for payment.

In that case, the right of holders of the Preferred Shares to elect any directors will cease and, unless there are other classes or series of our preferred shares upon which like voting rights have been conferred and are exercisable, the term of office of any directors elected by holders of the Preferred Shares will immediately terminate and the number of directors constituting the board of directors shall be reduced accordingly. In no event shall the holders of Preferred Shares be entitled pursuant to these voting rights to elect a director that would cause us to fail to satisfy a requirement relating to director independence of any national securities exchange or quotation system on which any class or series of our securities is listed or quoted. For the avoidance of doubt, in no event shall the total number of directors elected by holders of the Preferred Shares (voting separately as a class with all other classes or series of preferred shares that we have issued or may issue and upon which like voting rights have been conferred and are exercisable and which are entitled to vote as a class with the Preferred Shares in the election of such directors) pursuant to these voting rights exceed two.

If at any time when the voting rights conferred upon the Preferred Shares (as described above) are exercisable, any vacancy in the office of a director elected pursuant to the procedures described above shall occur, then such vacancy may be filled only by the remaining such director or by the vote of the holders of record of the outstanding Preferred Shares and any other classes or series of preferred shares upon which like voting rights have been conferred and are exercisable and which are entitled to vote as a class with the Preferred Shares in the election of directors (as described above). Any director elected or appointed pursuant to the procedures described above may be removed only by the affirmative vote of holders of the outstanding Preferred Shares and any other classes or series of preferred shares upon which like voting rights have been conferred and are exercisable and which are entitled to vote as a class with the Preferred Shares in the election of directors pursuant to the procedures described above, such removal to be effected by the affirmative vote of a majority of the votes entitled to be cast by the holders of the outstanding Preferred Shares and any such other classes or series of preferred shares, and may not be removed by the holders of our common shares.

------

##### [**Table of Contents**](#toc)
If a special meeting is not called by us within 30 days after request from the holders of Preferred Shares as described above, then the holders of record of at least 25% of the outstanding Preferred Shares may designate a holder to call the meeting at our expense.

On each matter on which holders of Preferred Shares are entitled to vote, each Preferred Share will be entitled to one vote, except that when shares of any other class or series of our preferred shares have the right to vote with the Preferred Shares as a single class on any matter, the Preferred Shares and the shares of each such other class or series will have one vote for share held.

So long as any Preferred Shares remain outstanding, we will not, without the affirmative vote or consent of the holders of at least two-thirds of the shares of the outstanding Preferred Shares, voting as a single class, outstanding at the time, given in person or by proxy, either in writing or at a meeting, amend, alter or repeal the provisions of our Third ARLLCA or the Share Designation for the Preferred Shares so as to materially and adversely affect any preferences, rights, privilege or voting power of the Preferred Shares provided, however, that our issuance of additional equity securities (including, for the avoidance of doubt, Preferred Shares and Parity Securities) (and any amendments to the Third ARLLCA or Share Designation for the Preferred Shares in connection therewith) shall not be deemed to materially and adversely affect any preferences, rights, privilege or voting power of the Preferred Shares, and no amendment of the Third ARLLCA or Share Designation for the Preferred Shares in connection with a merger or other transaction in which the Preferred Shares remain outstanding with the terms thereof materially unchanged in any respect adverse to the holders of the Preferred Shares (as determined by the board of directors) shall be deemed to materially and adversely affect any preferences, rights, powers, and duties of the Preferred Shares. For the avoidance of doubt, the board of directors may increase the authorized amount of Preferred Shares, or create additional Parity Securities, without the vote or consent of the holders of the Preferred Shares.

In addition, we will not, without the affirmative vote or consent of the holders of at least two-thirds of the shares of the outstanding Preferred Shares, voting as a class together with holders of Parity Securities upon which like voting rights have been conferred and are exercisable, given in person or by proxy, either in writing or at a meeting, (x) create or issue any Preferred Shares or Parity Securities if the cumulative distributions payable on the outstanding Preferred Shares (or any Parity Securities, if the holders of such Parity Securities vote as a class together with the holders of the Preferred Shares) are in arrears or (y) create or issue any Senior Securities.

Pursuant to the rules of NYSE American, if proposed amendments to the Third ARLLCA or Share Designation for the Preferred Shares would materially and adversely affect the preferences, rights, privilege or voting powers of the Preferred Shares disproportionately relative to any other class or series of parity preferred shares, the affirmative vote of the holders of at least two-thirds of the outstanding Preferred Shares, voting as a separate class, is also required.

The foregoing voting provisions will not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding Preferred Shares shall have been redeemed or called for redemption upon proper notice and sufficient funds shall have been deposited in trust or with the transfer agent to effect such redemption.

Except as expressly stated in the Third ARLLCA for the Preferred Shares or as may be required by applicable law, the Preferred Shares will not have any relative, participating, optional or other special voting rights or powers and the consent of the holders thereof shall not be required for the taking of any corporate action.

In addition, pursuant to the terms of the Fortress Credit Agreement, we can only amend, modify, waive or otherwise change, consent or agree to any amendment, modification, waiver or other change to the terms of the Preferred Shares with the prior written consent of the administrative agent and majority lenders under the Fortress Credit Agreement.

------

##### [**Table of Contents**](#toc)
**Ranking** 

The Preferred Shares will rank, with respect to rights to the payment of distributions and the distribution of assets upon our liquidation, dissolution or winding-up:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) senior to all classes or series of equity securities issued by us other than equity securities referred to in clauses (2) and (3) ("***Junior Securities***");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) on a parity with all equity securities issued by us with terms specifically providing that those equity securities rank on a parity with the Preferred Shares with respect to rights to the payment of distributions and the distribution of assets upon our liquidation, dissolution or winding up ("***Parity Securities***");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) junior to all equity securities issued by us with terms specifically providing that those equity securities rank senior to the Preferred Shares with respect to rights to the payment of distributions and the distribution of assets upon our liquidation, dissolution or winding up ("***Senior Securities***"); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) junior to all of our existing and future indebtedness and to the indebtedness of our existing subsidiaries and any future subsidiaries.

As of March 31, 2025, after giving effect to the borrowings of additional $50.0 million in aggregate under the Fortress Credit Agreement in April and May 2025, we would have had approximately $1,134.4 million of indebtedness outstanding. In addition, from time to time we may conduct offerings of notes pursuant to Regulation D or Regulation A, or pursuant to our registration statement on Form S-1 (File No. 333-282862) and, as of the date of this Offering Circular, we and our subsidiaries are authorized to issue up to $2.7 billion in additional notes through such offerings.

**Listing** 

Our Preferred Shares are not currently listed or quoted on any exchange. We have applied to list the Preferred Shares on the NYSE American under the symbol "PHXE.P." Although we believe that we currently meet the standards for admission to the NYSE American, we cannot guarantee that the NYSE American will approve our listing application. If the Preferred Shares are not approved for listing on NYSE American, we will not complete this offering. No assurance can be given that our application to list on the NYSE American will be approved or that an active trading market for our Preferred Shares will develop.

**Transfer Agent** 

If we complete this offering, the paying agent, transfer agent and registrar for the Preferred Shares will be Equity Stock Transfer, LLC, 237 W 37th Street, suite 602, New York, New York 10018, (212)-575-5757.

**Book-Entry Procedures** 

The Preferred Shares will be issued in the form of one or more global securities issued to DTC (and its successors or assigns) or any other securities depositary selected by us (the "***Securities Depositary***") and registered in the name of its nominee (initially, Cede & Co.), for credit to an account of a direct or indirect participant in the Securities Depositary. No holder of the Preferred Shares offered hereby will be entitled to receive a certificate evidencing such Preferred Shares unless otherwise required by law or the Securities Depositary gives notice of its intention to resign or is no longer eligible to act as such and we have not selected a substitute Securities Depositary within 60 calendar days thereafter.

Payments and communications made by us to holders of the Preferred Shares will be duly made by making payments to, and communicating with, the Securities Depositary. Accordingly, unless certificates are available to holders of the Preferred Shares, each purchaser of Preferred Shares must rely on (i) the procedures of the

------

##### [**Table of Contents**](#toc)
Securities Depositary and its participants (including, if applicable, Euroclear and Clearstream) to receive distributions, any redemption price, liquidation preference and notices, and to direct the exercise of any voting rights, with respect to such Preferred Shares and (ii) the records of the Securities Depositary and its participants (including, if applicable, Euroclear and Clearstream) to evidence its ownership of such Preferred Shares.

So long as the Securities Depositary (or its nominee) is the sole holder of the Series H Preferred Units, no beneficial holder of the Series H Preferred Units will be deemed to be a holder of Series H Preferred Units. DTC, the initial Securities Depositary, is a New York-chartered limited purpose trust company that performs services for its participants, some of whom (and/or their representatives) own DTC. The Securities Depositary maintains lists of its participants and will maintain the positions (i.e., ownership interests) held by its participants in the Series H Preferred Units, whether as a holder of the Series H Preferred Units for its own account or as a nominee for another holder of the Series H Preferred Units.

**Third Amended and Restated Limited Liability Company Agreement** 

***Purpose***

Under our Third ARLLCA, we are permitted to conduct or engage in, directly or indirectly through subsidiaries, any business, purpose or activity that lawfully may be conducted by a limited liability company formed pursuant to the DLLCA, and to conduct any and all activities related or incidental to the foregoing purposes.

We will continue in full force and effect until dissolved in accordance with the Third ARLLCA and the DLLCA.

***Power of Attorney***

Each shareholder, and each person who acquires a share from a shareholder, by accepting the share, automatically grants to each of our chief executive officer, chief financial officer, secretary, any director and, if appointed, a power of attorney to, among other things, execute and file documents required for our qualification, continuance or dissolution. The power of attorney also grants the authority to amend, and to make consents and waivers under, our Third ARLLCA.

***Board of Directors***

Pursuant to our Third ARLLCA, our business and affairs are managed under the direction of our board of directors, and each director shall constitute a "manager" within the meaning of, and for all purposes of, the DLLCA. The board of directors has the power to appoint our officers and delegate various authorities to such officers. No shareholder, by virtue of its status as such, shall have any power or authority to conduct or manage our business and affairs.

Our board of directors will consist of no fewer than one director and no more than seven directors, and the exact number of our directors will be fixed from time to time by our board of directors. Each director elected to our board of directors will serve for a one-year term or until his or her earlier death, resignation, disqualification or removal. Any vacancy on our board of directors may only be filled by the affirmative vote of a majority of our directors then in office, even if less than a quorum is present, or by a sole remaining director.

The Third ARLLCA provides that any directors may be removed with or without cause by the affirmative vote of the holders of a majority of the voting power of the then outstanding common shares, taken either at a shareholders meeting called for such purpose or by written or electronic consent.

Pursuant to the Share Designation, if we do not pay distributions on the Preferred Shares for six or more quarterly distribution periods (whether or not consecutive), the maximum number of directors will be

------

##### [**Table of Contents**](#toc)
automatically increased by two additional directors to serve on our board of directors until we pay, or declare and set aside funds for the payment of, all distributions that we owe on the Preferred Shares, subject to certain limitations described in the section entitled "*Description of Capital and Preferred Shares—Series A Preferred Shares—Limited Voting Rights*."

***Distributions***

Pursuant to our Third ARLLCA, subject to the applicable provisions of the DLLCA and the terms of any applicable Share Designation, distributions may be paid to the holders of our common shares out of our assets legally available therefor only when, as and if determined by our board of directors. Prior to making any such distributions to the holders of our common shares, the holders of our Preferred Shares are entitled to receive, when, as, and if authorized by our board of directors and declared by us, cumulative quarterly cash distributions. Please see "*Distribution Policy*" and *"—Series A Preferred Shares—Distributions*" above.

Under the DLLCA, a limited liability company may not make a distribution to its shareholders if, after giving effect to the distribution, the liabilities of the limited liability company (other than liabilities to shareholders on account of their limited liability company interests and liabilities for which the recourse of creditors is limited to specified property of the limited liability company) would exceed the fair value of its assets (except that the fair value of property that is subject to a liability for which the recourse of creditors is limited shall be included in the assets of the limited liability company only to the extent that the fair value of that property exceeds that liability).

Except as may be set forth in any Share Designation with respect to any preferred shares, any distributions declared by the board of directors will be paid to the holders of common shares on a pro rata basis. Any additional classes or series of shares created pursuant to a Share Designation may rank senior, equal or junior to the common shares with respect to distributions. The Third ARLLCA authorizes us to withhold from payments or other distributions to the shareholders, and to pay over to any U.S. federal, state or local government or any foreign government, any amounts required to be so withheld pursuant to the Code or any other applicable tax law.

***Share Repurchases and Redemptions***

The Third ARLLCA authorizes us to (i) issue shares that may or are required to be redeemed at the option of the shareholder or at our option and (ii) purchase any class or series of shares from any shareholders, in each case, on such terms and in such manner as our board of directors determines.

If our board of directors determines that any shareholder's ownership of shares will result in any non-de minimis adverse tax, regulatory or legal consequences to us, any of our subsidiaries or any other direct or indirect holder of shares (an "***Adverse Consequence***"), we will have the option, but not the obligation, to (i) redeem, (ii) repurchase, or (iii) assign to a third party the right to purchase the minimum number of shares held by such shareholder as is necessary to eliminate such Adverse Consequence. If the applicable shares (i) are not traded on a national securities exchange, they will be sold for fair market value as determined by the board of directors or (ii) are traded on a national securities exchange, they will be sold for fair market value based on the last sales price per share as of the close of trading of such national securities exchange or, if there is no such last sales price, the average of the bid and ask price per such share, in each case, for the eight (8) trading days prior to such date.

***Share Distributions, Splits, Subdivisions and Combinations; Preemptive Rights; Appraisal Rights***

The Third ARLLCA authorizes the board of directors to declare and pay to the shareholders distributions in the form of additional shares, or effect a split, subdivision or combination of shares of any class or series at any time, subject to the applicable provisions of the DLLCA and any Share Designation.

------

##### [**Table of Contents**](#toc)
The DLLCA does not provide any statutory preemptive rights. Except as may be set forth in any Share Designation, the holders of our common shares do not have preemptive rights to acquire additional securities.

The DLLCA does not provide appraisal rights to members of a limited liability company unless such rights are explicitly included in its limited liability company agreement. The Third ARLLCA does not provide for any appraisal rights except to the limited extent provided with respect to the required redemption or repurchase of shares in connection with an Adverse Consequence.

***Restrictions on Transfer***

The Third ARLLCA authorizes the board of directors to decline, approve or authorize the registration of any transfer of shares in certain circumstances, including if such transfer would result in an Adverse Consequence, including if such transfer would violate applicable law, including U.S. federal or state securities laws or rules and regulations of the SEC or cause us to be treated as an association taxable as corporation or otherwise to be treated as other than a partnership for U.S. federal income tax purposes.

***Information Rights***

The Third ARLLCA provides that the shareholders' rights to information are limited to such information as shall be filed by us with the SEC or included in any annual report or other communications from time to time, and such tax information (if any) we may be required to send to shareholders, and no shareholder shall have the right to obtain or access any other information, including any books and records.

***No Liability for Further Calls or Assessments***

All shares issued pursuant to and in accordance with the Third ARLLCA will be fully paid and non-assessable limited liability company interests, except as such non-assessability may be affected by Sections 18-607 and 18-804 of the DLLCA.

***Shareholder Approvals***

The Third ARLLCA sets forth matters that the holders of our common shares and any other voting securities are entitled to vote on. Other than as expressly set forth in the Third ARLLCA, shareholders have no approval rights with respect to any matter relating to us, including any matter with respect to which members of limited liability companies have default approval rights under the DLLCA. Shareholders may act with respect to, or are otherwise required to approve, among others: (i) the removal of any director from our board of directors, at any time, with or without cause; (ii) compensation to any liquidator that is appointed for services related to a dissolution; (iii) certain amendments to the provisions of the Third ARLLCA; (iv) entering into merger, consolidation, conversion or division, subject to limited exceptions; (v) selling, exchanging or otherwise disposing of all or substantially all of our assets, subject to limited exceptions; (vi) amend, alter or repeal the provisions of the Third ARLLCA so as to materially and adversely affect any preferences, rights, powers and duties of the common shares; and (vii) issue or create any additional shares or securities (including any additional preferred shares pursuant to a Share Designation), including pursuant to any long term incentive plan.

All matters submitted to shareholders for approval may be approved in a meeting or by written or electronic consent. Pursuant to the Third ARLLCA, shareholder approval means approval of any matter by holders of common shares (and any other voting shares), voting together as a single class (unless otherwise provided for in the Third ARLLCA, including in any Share Designation), either (A) at a meeting of shareholders at which a quorum is present, upon the affirmative vote of holders of a majority of the voting power represented by the common shares (and any other voting shares) present at such meeting or (B) by action by consent of the shareholders upon consent of holders of a majority of the voting power represented by all outstanding common shares (and any other voting shares). In the event of a tie vote, the chairman of the board of directors shall be entitled to cast the deciding vote.

------

##### [**Table of Contents**](#toc)
A number of amendments to the provisions of the Third ARLLCA do not require shareholder approval, including amendments to: (i) change our name, registered agent or registered office; (ii) admit, substitute, withdraw or remove shareholders in accordance with the Third ARLLCA; (iii) implement a change that the board of directors determines to be necessary or appropriate to qualify or continue our existence or qualification as a limited liability company under the DLLCA; (iv) a change that the board of directors determines to be necessary or appropriate to address changes in U.S. federal income tax regulations, legislation or interpretation; (v) restrict on the transfer of shares in accordance with the Third ARLLCA; (vi) implement a change that the board of directors determines to be necessary or appropriate for the proper administration of the company as a partnership for U.S. federal income tax purposes, to preserve or achieve uniformity of a class of shares for U.S. federal income tax purposes or to facilitate the preparation and delivery to shareholders of the tax information in accordance with the Third ARLLCA; (vii) implement a change that the board of directors determines to be necessary or appropriate following any change in the classification of the company for U.S. federal income tax purposes under Treasury Regulation Section 301.7701-1, et seq. or Section 7704 of the Code; or (viii) implement a change that the board of directors determines (a) does not materially and adversely affect the shareholders (or the holders of any particular class or series of shares), (b) to be necessary to address changes in any applicable laws, (c) to be necessary or appropriate to facilitate the trading of the shares or comply with any rule, regulation, guideline or requirement of any national securities exchange on which shares are or will be listed for trading, or (d) is required to effect the intent expressed in the Third ARLLCA.

***Dissolution***

Pursuant to the Third ARLLCA, we may be dissolved only upon the approval of our board of directors or if we cease to have any shareholders. Each shareholder will be deemed to have waived any and all right to seek judicial dissolution pursuant to Section 18-802 of the DLLCA or otherwise.

***Limitation of Liability and Indemnification Matters***

The Third ARLLCA provides that, notwithstanding any duties, including any fiduciary duties, otherwise existing at law or in equity, no Indemnitee (as defined below) will have any duties, including any fiduciary duties, to us, any shareholder or any other person, arising out of or, relating to, or in connection with us, the conduct of our business and affairs, or any action or omission taken or omitted to be taken, or consent or approval given or withheld, in each case in such persons capacity as an Indemnitee, whether pursuant to the Third ARLLCA or otherwise, other than those duties (if any) expressly set forth in the Third ARLLCA or any Share Designation and subject to the implied contractual covenant of good faith and fair dealing, to the extent applicable.

The Third ARLLCA provides that whenever the board of directors or an Indemnitee takes any action (or omits to take any action), or is permitted or required to make any decision or determination with respect to us or our business and affairs, whether pursuant to the terms of the Third ARLLCA or otherwise, then, to the fullest extent permitted by law, the board of directors and each Indemnitee will be entitled to take such action (or omit to take such action), or to make such decision or determination, in its sole and absolute discretion, and will be entitled to consider only such interests and factors as it desires, including its own interests, and will have no duty or obligation (fiduciary or otherwise) to give any consideration to any interest of or factors affecting us, any of the shareholders or any other person, and will not be subject to any other or different standards that may otherwise apply under applicable law or in equity.

The Third ARLLCA provides that, Indemnitees will not be liable to us, the shareholders or any other persons for monetary damages for any breach of duties, except in the case of fraud, as determined by a final, non-appealable determination.

Indemnitees will be entitled to indemnification by us to the fullest extent permitted by the DLLCA, against any and all losses, claims, damages, liabilities, expenses (including legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts incurred in connection with, or arising out of, any and all

------

##### [**Table of Contents**](#toc)
threatened, pending or completed claims, demands, actions, suits or proceedings, whether civil, criminal, administrative or investigative (including, without limitation, an action by or in the right of us), and whether formal or informal and including appeals, in which such Indemnitee is, was or may be involved, or is threatened to be involved, as a party, a witness or otherwise, by reason of such person's status as an Indemnitee, whether arising from any act or omission, any consent or approval given or withheld, or otherwise relating to us or our business and affairs, except in the case of fraud, as determined by a final, non-appealable determination.

We will not be required to indemnify an Indemnitee in connection with any claim, demand, action, suit or proceeding commenced by such Indemnitee (unless the commencement of such claim, demand, action, suit or proceeding by such person was authorized by the board of directors) or by us against such person upon the prior approval of the board of directors. Indemnitees will also be entitled to indemnification in connection with any claim, demand, action, suit or proceeding referred to in this paragraph if they are successful on the merits with respect to such claim, demand, action, suit or proceeding pursuant to a final, non-appealable determination.

Indemnitees will be entitled, under the Third ARLLCA, to advancement of expenses (including attorneys' fees) prior to the resolution of any claim, demand, action, suit or proceeding; provided that any such Indemnitee must repay such amounts if it ultimately shall be determined that the Indemnitee is not entitled to be indemnified pursuant to the Third ARLLCA.

An Indemnitee will not be denied indemnification because they had an interest in the transaction with respect to which the indemnification applies, so long as the transaction is not otherwise prohibited under the Third ARLLCA.

We purchase and maintain insurance on behalf of Indemnitees in respect of potential claims, demands, actions, suits or proceedings.

"***Indemnitee***" means each current and former director on our board of directors, officers or other persons that may be designated by the board of directors from time to time as an "Indemnitee" for purposes of the Third ARLLCA, the partnership representative, and any person that the board of directors designates as an "Indemnitee" for purposes of the Third ARLLCA because such person's status, service or relationship exposes such person to potential claims, demands, suits or proceedings relating to our business and affairs.

***Governing Law; Choice of Forum***

The Third ARLLCA is governed by and construed in accordance with the laws of Delaware without regard to principles of conflict of laws.

The seat of arbitration shall be Irvine, California and the arbitration shall be conducted in the English language. The parties to the arbitration will select, within 20 days of delivery by any party of a copy of the

------

##### [**Table of Contents**](#toc)
demand for arbitration, a single individual to serve as a neutral, mutually agreed upon arbitrator. If the parties are unable to agree upon a single individual to serve as arbitrator, then the arbitrator will be selected by JAMS in accordance with the JAMS Procedures. Under such arbitration, each of the parties to the dispute will simultaneously submit a proposed resolution of such dispute, after the conclusion of all testimony, to the arbitrator, who must make a determination by selecting, without modification, one of the resolutions submitted by the parties. In addition to monetary damages, the arbitrator shall be empowered to award equitable relief.

The non-prevailing party (as determined in accordance with the arbitrator's decision) will be responsible for paying the attorneys' fees and disbursements of the other party or parties to such arbitration as well as all costs of the arbitration and fees of the arbitrator.

The decision of the arbitrator will be final and binding, shall not be subject to appeal, and shall be the sole and exclusive remedy between the parties regarding any disputes presented to the arbitrator. The prevailing party will be entitled to seek enforcement of the arbitrator's decision in any court of competent jurisdiction.

All arbitration proceedings under the Third ARLLCA will be confidential, and the parties and their agents agree not to disclose to any third party (i) the existence or status of the arbitration, (ii) all information made known and documents produced in the arbitration not otherwise in the public domain, and (iii) all awards arising from the arbitration, except and to the extent that disclosure is required by applicable law or is required to protect or pursue a legal right.

------

##### [**Table of Contents**](#toc)
**MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF PREFERRED SHARES** 

The tax consequences to you of an investment in our Preferred Shares will depend in part on your own tax circumstances. This section should be read in conjunction with the risk factors included in our annual reports, semi-annual and other reports and information statements that we will file periodically with the SEC, deemed to be incorporated by reference, and under the caption "*Risk Factors — Risks Related to Certain Tax Matters*" in this Offering Circular. The following discussion is limited as described herein. You are urged to consult with your own tax advisor about the federal, state, local and foreign tax consequences particular to your circumstances.

This section is a summary of the material U.S. federal income tax consequences that may be relevant to prospective holders of Preferred Shares who are individual citizens or residents of the United States and, unless otherwise noted in the following discussion, is the opinion of Latham & Watkins LLP, counsel to us, insofar as it relates to legal conclusions with respect to matters of U.S. federal income tax law. This section is based upon current provisions of the Code, existing and proposed Treasury regulations promulgated under the Code (the "***Treasury Regulations***") and current administrative rulings and court decisions, all of which are subject to change. Later changes in these authorities may cause the tax consequences to vary substantially from the consequences described below. Unless the context otherwise requires, references in this section to "us" or "we" are references to Pheonix Energy One, LLC and our subsidiaries.

The following discussion does not comment on all federal income tax matters affecting us or prospective holders of Preferred Shares and does not describe the application of the alternative minimum tax that may be applicable to certain prospective holders of Preferred Shares. Moreover, the discussion focuses on prospective holders of Preferred Shares who are individual citizens or residents of the United States and has only limited application to corporations, estates, entities treated as partnerships for U.S. federal income tax purposes, trusts, nonresident aliens, U.S. expatriates and former citizens or long-term residents of the United States or other shareholders subject to specialized tax treatment, such as banks, insurance companies and other financial institutions, tax-exempt institutions, foreign persons (including, without limitation, controlled foreign corporations, passive foreign investment companies and foreign persons eligible for the benefits of an applicable income tax treaty with the United States), individual retirement accounts (IRAs), real estate investment trusts (REITs) or mutual funds, dealers in securities or currencies, traders in securities, U.S. persons whose "functional currency" is not the U.S. dollar, persons holding their Preferred Shares as part of a "straddle," "hedge," "conversion transaction" or other risk reduction transaction, persons subject to special tax accounting rules as a result of any item of gross income with respect to our shares being taken into account in an applicable financial statement and persons deemed to sell their Preferred Shares under the constructive sale provisions of the Code. In addition, the discussion only comments, to a limited extent, on state, local and foreign tax consequences. Accordingly, we encourage each prospective holder of Preferred Shares to consult his own tax advisor in analyzing the state, local and foreign tax consequences particular to him of the ownership or disposition of Preferred Shares and potential changes in applicable laws.

No ruling has been requested from the IRS regarding our characterization as a partnership for tax purposes. Instead, we will rely on opinions of Latham & Watkins LLP. Unlike a ruling, an opinion of counsel represents only that counsel's best legal judgment and does not bind the IRS or the courts. Accordingly, the opinions and statements made herein may not be sustained by a court if contested by the IRS. Any contest of this sort with the IRS may materially and adversely impact the market for our Preferred Shares, including the prices at which such shares trade. In addition, the costs of any contest with the IRS, principally legal, accounting and related fees, will result in a reduction in cash available for distribution and thus will be borne indirectly by our shareholders (including holders of our Preferred Shares). Furthermore, the tax treatment of us, or of an investment in us, may be significantly modified by future legislative or administrative changes or court decisions. Any modifications may or may not be retroactively applied.

All statements as to matters of U.S. federal income tax law and legal conclusions with respect thereto, but not as to factual matters, contained in this section, unless otherwise noted, are the opinion of Latham & Watkins LLP and are based on the accuracy of the representations made by us.

------

##### [**Table of Contents**](#toc)
Notwithstanding the above, and for the reasons described below, Latham & Watkins LLP has not rendered an opinion with respect to the following specific federal income tax issues: (i) the treatment of a holder Preferred Shares whose Preferred Shares are loaned to a short seller to cover a short sale of Preferred Shares (see "*—Tax Consequences of Preferred Share Ownership—Treatment of Short Sales*"); (ii) whether holders of Preferred Shares will be treated as partners that receive guaranteed payments for the use of capital on their Preferred Shares (see "—Limited Partner Status"); and (iii) whether distributions with respect to the Preferred Shares will be treated as unrelated business taxable income (see "*—Tax-Exempt Organizations and Other Investors*").

**Partnership Status** 

A partnership is not a taxable entity and incurs no federal income tax liability. Instead, each partner of a partnership is required to take into account his share of items of income, gain, loss and deduction of the partnership in computing his federal income tax liability, regardless of whether cash distributions are made to him by the partnership. Distributions by a partnership to a partner are generally not taxable to the partnership or the partner unless the amount of cash distributed to him is in excess of the partner's adjusted basis in his partnership interest.

Section 7704 of the Code provides that publicly traded partnerships will, as a general rule, be taxed as corporations. However, an exception, referred to as the "Qualifying Income Exception," exists with respect to publicly traded partnerships of which 90% or more of the gross income for every taxable year consists of "qualifying income." Qualifying income includes income and gains derived from the exploration, development, mining or production, or processing, refining, transportation and marketing of certain minerals and natural resources, including crude oil, natural gas and other products of a type that are produced in a petroleum refinery or natural gas processing plant, certain related hedging activities, certain activities that are intrinsic to other qualifying activities, and our allocable share of our subsidiaries' income from these sources. Other types of qualifying income include interest (other than from a financial business), dividends, real property rents, gains from the sale of real property and gains from the sale or other disposition of capital assets held for the production of income that otherwise constitutes qualifying income. We estimate that less than 3% of our current gross income is not qualifying income; however, this estimate could change from time to time. Based upon and subject to this estimate, the factual representations made by us and a review of the applicable legal authorities, Latham & Watkins LLP is of the opinion that at least 90% of our current gross income constitutes qualifying income. The portion of our income that is qualifying income may change from time to time.

The IRS has made no determination as to our status or the status of our operating subsidiaries for federal income tax purposes. Instead, we will rely on the opinion of Latham & Watkins LLP on such matters. It is the opinion of Latham & Watkins LLP that, based upon the Code, its regulations, published revenue rulings and court decisions and the representations described below that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We will be classified as a partnership for federal income tax purposes; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Each of our subsidiaries will, except as otherwise identified to Latham & Watkins LLP, be disregarded as
an entity separate from us or will be treated as a partnership for federal income tax purposes.

In rendering its opinion, Latham & Watkins LLP has relied on factual representations made by us. The representations made by us upon which Latham & Watkins LLP has relied include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Neither we nor any of our partnership or limited liability company subsidiaries, other than those identified as
such to Latham & Watkins LLP, have elected or will elect to be treated as a corporation for U.S. federal income tax purposes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• For each taxable year, more than 90% of our gross income has been and will be income of the type that
Latham & Watkins LLP has opined or will opine is "qualifying income" within the meaning of Section 7704(d) of the Code; and

------

##### [**Table of Contents**](#toc)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Each commodity hedging transaction that we treat as resulting in qualifying income has been and will be
appropriately identified as a hedging transaction pursuant to applicable Treasury Regulations, and has been and will be associated with oil, gas or products thereof that are held or to be held by us in activities that Latham & Watkins LLP
has opined or will opine result in qualifying income.

We believe that these representations have been true in the past, are true as of the date hereof and expect that these representations will continue to be true in the future.

If we fail to meet the Qualifying Income Exception, other than a failure that is determined by the IRS to be inadvertent and that is cured within a reasonable time after discovery (in which case the IRS may also require us to make adjustments with respect to our shareholders or pay other amounts), we will be treated as if we had transferred all of our assets, subject to liabilities, to a newly formed corporation, on the first day of the year in which we fail to meet the Qualifying Income Exception, in return for stock in that corporation, and then distributed that stock to the shareholders in liquidation of their interests in us. This deemed contribution and liquidation should be tax-free to shareholders and us so long as we, at that time, do not have liabilities in excess of the tax basis of our assets. Thereafter, we would be treated as a corporation for U.S. federal income tax purposes.

If we were treated as an association taxable as a corporation in any taxable year, either as a result of a failure to meet the Qualifying Income Exception or otherwise, our items of income, gain, loss and deduction would be reflected only on our tax return rather than being passed through to our shareholders, and our net income would be taxed to us at corporate rates. In addition, any distribution made to a shareholder would be treated as taxable dividend income, to the extent of our current and accumulated earnings and profits, or, in the absence of earnings and profits, a nontaxable return of capital, to the extent of the shareholder's tax basis in his Preferred Shares, or taxable capital gain, after the shareholder's tax basis in his Preferred Shares is reduced to zero.

Accordingly, taxation as a corporation would result in a material reduction in a shareholder's cash flow and after-tax return and thus would likely result in a substantial reduction of the value of the Preferred Shares.

**The discussion below is based on Latham & Watkins LLP's opinion that we will be classified as a partnership for U.S. federal income tax purposes.** 

**Limited Partner Status** 

The tax treatment of our Preferred Shares is uncertain. As such, Latham & Watkins LLP is unable to opine as to the tax treatment of the Preferred Shares. Although the IRS may disagree with this treatment, we will treat holders of Preferred Shares as partners entitled to a guaranteed payment for the use of capital on their Preferred Shares. If the Preferred Shares are not partnership interests, they would likely constitute indebtedness for U.S. federal income tax purposes and distributions on the Preferred Shares would constitute ordinary interest income to holders of Preferred Shares. The remainder of this discussion assumes that our Preferred Shares are partnership interests for U.S. federal income tax purposes.

A beneficial owner of Preferred Shares whose Preferred Shares have been transferred to a short seller to complete a short sale would appear to lose his status as a partner with respect to those Preferred Shares for U.S. federal income tax purposes. Please read *"—Tax Consequences of Preferred Share Ownership—Treatment of Short Sales*."

**Tax Consequences of Preferred Share Ownership** 

***Treatment of Distributions on Preferred Shares***

We will treat distributions on the Preferred Shares as guaranteed payments for the use of capital that will generally be taxable to the holders of Preferred Shares as ordinary income and will be deductible by us. Although

------

##### [**Table of Contents**](#toc)
a holder of Preferred Shares will recognize taxable income from the accrual of such a guaranteed payment (even in the absence of a contemporaneous cash distribution), we anticipate accruing and making the guaranteed payment distributions quarterly. Except in the case of our liquidation, the holders of Preferred Shares are generally not anticipated to share in our items of income, gain, loss or deduction, nor will we allocate any share of our nonrecourse liabilities to such holders. See "Description of Preferred Shares—Liquidation Rights."

If the distributions to the Preferred Shares are not respected as guaranteed payments for the use of capital, but the Preferred Shares are treated as partnership interests, holders of Preferred Shares may be treated as receiving an allocable share of our gross income equal to their cash distributions, to the extent we have sufficient gross income to make such allocations of gross income. In the event there is not sufficient gross income to match such distributions, the distributions to the Preferred Shares would reduce the capital accounts of the Preferred Shares, requiring a subsequent allocation of income or gain to provide the Preferred Shares with their liquidation preference, if possible.

***Basis of Preferred Shares***

The tax basis of a holder of Preferred Shares in his Preferred Shares initially will be the amount paid for such Preferred Shares. If the distributions on the Preferred Shares are respected as guaranteed payments for the use of capital, the tax basis of such a holder in his Preferred Shares will, generally, not be affected by distributions made with respect to such Preferred Shares. The IRS has ruled that a partner who acquires interests in a partnership in separate transactions must combine those interests and maintain a single adjusted tax basis for all of those interests.

***Limitations on Deductibility of Losses***

Holders of Preferred Shares will only be allocated loss once the capital accounts of the common shareholders have been reduced to zero. Please read *"—Tax Consequences of Preferred Shares Ownership—Allocation of Income, Gain, Loss and Deduction*." Although it is not anticipated that a holder of Preferred Shares would be allocated loss, the deductibility of any such loss allocation may be limited for various reasons. In the event that you are allocated loss as a holder of Preferred Shares, please consult your tax advisor as to the application of any limitation to the deductibility of that loss.

***Entity-Level Collections***

If we are required or elect under applicable law to pay any federal, state, local or foreign income tax on behalf of any shareholder or any former shareholder, we are authorized to pay those taxes from our funds. That payment, if made, will be treated as an advance on a guaranteed payment to the holder of Preferred Shares on whose behalf the payment was made. If the payment is made on behalf of a person whose identity cannot be determined, we are authorized to treat the payment as a distribution to all current shareholders. We are authorized to amend our partnership agreement in the manner necessary to maintain uniformity of intrinsic tax characteristics of shares and to adjust later distributions, so that after giving effect to these distributions, the priority and characterization of distributions otherwise applicable under our partnership agreement is maintained as nearly as is practicable. Payments by us as described above could give rise to an overpayment of tax on behalf of an individual shareholder in which event the shareholder would be required to file a claim in order to obtain a credit or refund.

***Allocation of Income, Gain, Loss and Deduction***

After giving effect to special allocation provisions with respect to our other classes of shares, our items of income, gain, loss and deduction generally will be allocated amongst our common shareholders in accordance with their percentage interests in us. If the capital accounts of the common shareholders have been reduced to zero, losses will be allocated to the Preferred Shares until the capital accounts of the Preferred Shares are reduced

------

##### [**Table of Contents**](#toc)
to zero. If Preferred Shares are allocated losses in any taxable period, net income or, to the extent necessary, gross income from a subsequent taxable period, if any, would be allocated to the Preferred Shares in a manner designed to provide their liquidation preferences.

Generally, holders of Preferred Shares will have a capital account and an initial tax basis equal to the price paid for such Preferred Shares. To the extent the liquidation preference of a Preferred Share exceeds the a shareholders capital account in respect of such Preferred Share at the time of our dissolution and winding up, we will allocate items of gross income and gain equal to such difference to the preferred shareholders in accordance with their percentage interest in us until the capital account in respect of each outstanding Preferred Share is equal to the liquidation preference of each outstanding Preferred Share.

***Treatment of Short Sales***

A shareholder whose Preferred Shares are loaned to a "short seller" to cover a short sale of Preferred Shares may be considered as having disposed of such shares. If so, he would no longer be treated for tax purposes as a partner with respect to those Preferred Shares during the period of the loan and may recognize gain or loss from the disposition.

Because there is no direct or indirect controlling authority on the issue relating to partnership interests, Latham & Watkins LLP has not rendered an opinion regarding the tax treatment of a shareholder whose Preferred Shares are loaned to a short seller to cover a short sale of Preferred Shares; therefore, holders of Preferred Shares desiring to assure their status as partners and avoid the risk of gain recognition from a loan to a short seller are urged to consult a tax advisor to discuss whether it is advisable to modify any applicable brokerage account agreements to prohibit their brokers from borrowing and loaning their Preferred Shares. The IRS has previously announced that it is studying issues relating to the tax treatment of short sales of partnership interests. Please also read "*—Disposition of Preferred Shares—Recognition of Gain or Loss*."

***Tax Rates***

Currently, the highest marginal U.S. federal income tax rate applicable to ordinary income of individuals is 37.0% and the highest marginal U.S. federal income tax rate applicable to long-term capital gains (generally, capital gains on certain assets held for more than twelve months) of individuals is 20%. Such rates are subject to change by new legislation at any time.

In addition, a 3.8% Medicare tax (NIIT) is imposed on certain net investment income earned by individuals, estates and trusts. For these purposes, net investment income generally includes guaranteed payments, a shareholder's allocable share of our income, if any, and gain realized by a shareholder from a sale of shares. In the case of an individual, the tax will be imposed on the lesser of (i) the shareholder's net investment income or (ii) the amount by which the shareholder's modified adjusted gross income exceeds $250,000 (if the shareholder is married and filing jointly or a surviving spouse), $125,000 (if the shareholder is married and filing separately) or $200,000 (in any other case). In the case of an estate or trust, the tax will be imposed on the lesser of (i) undistributed net investment income, or (ii) the excess adjusted gross income over the dollar amount at which the highest income tax bracket applicable to an estate or trust begins for such taxable year. The U.S. Department of the Treasury and the IRS have issued Treasury Regulations that provide guidance regarding the NIIT. Prospective shareholders are urged to consult with their tax advisors as to the impact of the NIIT on an investment in our Preferred Shares.

For taxable years on or before December 31, 2025, a non-corporate shareholder may be entitled to a deduction equal to 20% of its "qualified business income" attributable to its interest in a partnership, subject to certain limitations. As described above, we will treat distributions on the Preferred Shares as guaranteed payments for the use of capital, and under the applicable Treasury Regulations, a guaranteed payment for the use of capital will not be taken into account for purposes of computing qualified business income. As a result,

------

##### [**Table of Contents**](#toc)
distributions received by the holders of our Preferred Shares will not be eligible for the 20% deduction for qualified business income. Prospective holders of Preferred Shares should consult their tax advisors regarding the availability of the deduction for qualified business income.

**Tax Treatment of Operations** 

***Accounting Method and Taxable Year***

We use the year ending December 31 as our taxable year and the accrual method of accounting for U.S. federal income tax purposes. Each holder of Preferred Shares will be required to include in its tax return its income from our guaranteed payments for each taxable year ending within or with its taxable year. In addition, a holder of Preferred Shares who has a taxable year ending on a date other than December 31 and who disposes of all of his Preferred Shares following the close of our taxable year but before the close of his taxable year will be required to include in income for his taxable year his income from more than one year of guaranteed payments.

**Disposition of Preferred Shares** 

***Recognition of Gain or Loss***

Gain or loss will be recognized on a sale of Preferred Shares equal to the difference between the amount realized and the tax basis of the holder of Preferred Shares for the Preferred Shares sold. Such holder's amount realized will be measured by the sum of the cash and the fair market value of other property received by him.

Generally, gain or loss recognized by a holder of Preferred Shares, other than a "dealer" in Preferred Shares, on the sale or exchange of a Preferred Share will be taxable as capital gain or loss. Capital gain recognized by an individual on the sale of Preferred Shares held for more than twelve months will generally be taxed at the U.S. federal income tax rate applicable to long-term capital gains. Capital losses may offset capital gains and no more than $3,000 of ordinary income, in the case of individuals, and may only be used to offset capital gains in the case of corporations. Both ordinary income and capital gain recognized on a sale of Preferred Shares may be subject to the NIIT in certain circumstances. See *"—Tax Consequences of Preferred Share Ownership—Tax Rates*."

The IRS has ruled that a partner who acquires interests in a partnership in separate transactions must combine those interests and maintain a single adjusted tax basis for all those interests. Upon a sale or other disposition of less than all of those interests, a portion of that tax basis must be allocated to the interests sold using an "equitable apportionment" method, which generally means that the tax basis allocated to the interest sold equals an amount that bears the same relation to the partner's tax basis in his entire interest in the partnership as the value of the interest sold bears to the value of the partner's entire interest in the partnership. Treasury Regulations under Section 1223 of the Code allow a selling shareholder who can identify partnership interests transferred with an ascertainable holding period to elect to use the actual holding period of the partnership interests transferred. Thus, according to the ruling discussed above, a holder of Preferred Shares will be unable to select high or low basis Preferred Shares to sell as would be the case with corporate stock, but, according to the Treasury Regulations, he may designate specific Preferred Shares sold for purposes of determining the holding period of shares transferred. A shareholder electing to use the actual holding period of Preferred Shares transferred must consistently use that identification method for all subsequent sales or exchanges of Preferred Shares. A holder of Preferred Shares considering the purchase of additional partnership interests or a sale of partnership interests purchased in separate transactions is urged to consult his tax advisor as to the possible consequences of this ruling and application of the Treasury Regulations.

------

##### [**Table of Contents**](#toc)
Specific provisions of the Code affect the taxation of some financial products and securities, including partnership interests, by treating a taxpayer as having sold an "appreciated" partnership interest, one in which gain would be recognized if it were sold, assigned or terminated at its fair market value, if the taxpayer or related persons enter(s) into:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a short sale;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an offsetting notional principal contract; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• futures or forward contract;

in each case, with respect to the partnership interest or substantially identical property.

Moreover, if a taxpayer has previously entered into a short sale, an offsetting notional principal contract or a futures or forward contract with respect to the partnership interest, the taxpayer will be treated as having sold that position if the taxpayer or a related person then acquires the partnership interest or substantially identical property. The Secretary of the Treasury is also authorized to issue regulations that treat a taxpayer that enters into transactions or positions that have substantially the same effect as the preceding transactions as having constructively sold the financial position.

***Recognition of Gain or Loss on Redemption***

The receipt by a holder of amounts in redemption of his Preferred Shares generally will result in the recognition of taxable gain to the holder for U.S. federal income tax purposes only if and to the extent the amount of redemption proceeds received exceeds his tax basis in all the shares held by him immediately before the redemption. Any such redemption of Preferred Shares would result in the recognition of taxable loss to the holder for U.S. federal income tax purposes only if the holder does not hold any other shares immediately after the redemption and the holder's tax basis in the redeemed Preferred Shares exceeds the amounts received by the holder in redemption thereof. Any taxable gain or loss recognized under the foregoing rules would be treated in the same manner as taxable gain or loss recognized on a sale of Preferred Shares as described above in "*Disposition of Preferred Shares—Recognition of Gain or Loss on Sale*."

***Allocations Between Transferors and Transferees***

Holders of Preferred Shares owning Preferred Shares as of the applicable record date with respect to a dividend payment date will be entitled to receive the cash dividend with respect to their Preferred Shares on such dividend payment date. Purchasers of Preferred Shares after such applicable record date will therefore not become entitled to receive a cash dividend on their Preferred Shares until the next applicable record date.

***Notification Requirements***

A shareholder who sells any of his Preferred Shares is generally required to notify us in writing of that sale within 30 days after the sale (or, if earlier, January 15 of the year following the sale). A purchaser of shares who purchases shares from another shareholder is also generally required to notify us in writing of that purchase within 30 days after the purchase. Upon receiving such notifications, we are required to notify the IRS of that transaction and to furnish specified information to the transferor and transferee. Failure to notify us of a purchase may, in some cases, lead to the imposition of penalties. However, these reporting requirements do not apply to a sale by an individual who is a citizen of the United States and who effects the sale or exchange through a broker who will satisfy such requirements.

**Tax-Exempt Organizations and Other Investors** 

Ownership of shares by employee benefit plans, other tax-exempt organizations, non-resident aliens, foreign corporations and other foreign persons raises issues unique to those investors and, as described below to a limited extent, may have substantially adverse tax consequences to them. If you are a tax-exempt entity or a foreign person, you should consult your tax advisor before investing in our Preferred Shares.

------

##### [**Table of Contents**](#toc)
Employee benefit plans and most other organizations exempt from U.S. federal income tax, including IRAs and other retirement plans, are subject to U.S. federal income tax on unrelated business taxable income ("***UBTI***"). We will treat distributions on the Preferred Shares as guaranteed payments for the use of capital. The treatment of guaranteed payments for the use of capital to tax-exempt investors is not certain. Such payments may be treated as UBTI for U.S. federal income tax purposes, and Latham & Watkins LLP is unable to opine with respect to whether such payments constitute UBTI for U.S. federal income tax purposes. If you are a tax-exempt entity, you should consult your tax advisor with respect to the consequences of owning our Preferred Shares.

Non-resident aliens and foreign corporations, trusts or estates that own shares may be considered to be engaged in business in the United States because of the ownership of Preferred Shares. As a consequence, they will be required to file federal tax returns to report their income from guaranteed payments and pay U.S. federal income tax on such income in a manner similar to a taxable U.S. holder. Moreover, under rules applicable to publicly traded partnerships, distributions to foreign shareholders are subject to withholding at the highest applicable effective tax rate. Each foreign holder of Preferred Shares must obtain a taxpayer identification number from the IRS and submit that number to our Registrar and Transfer Agent on a Form W-8BEN, W-8BEN-E or applicable substitute form in order to obtain credit for these withholding taxes. A change in applicable law may require us to change these procedures.

In addition, because a foreign corporation that owns Preferred Shares will be treated as engaged in a U.S. trade or business, that corporation may be subject to the U.S. branch profits tax at a rate of 30%, in addition to regular U.S. federal income tax, on its share of our earnings and profits, as adjusted for changes in the foreign corporation's "U.S. net equity," that is effectively connected with the conduct of a U.S. trade or business. That tax may be reduced or eliminated by an income tax treaty between the United States and the country in which the foreign corporate shareholder is a "qualified resident." In addition, this type of holder is subject to special information reporting requirements under Section 6038C of the Code.

A foreign shareholder who sells or otherwise disposes of a Preferred Share will be subject to U.S. federal income tax on gain realized from the sale or disposition of that share to the extent the gain is effectively connected with a U.S. trade or business of the foreign shareholder. Gain on the sale or disposition of a Preferred Share will be treated as effectively connected with a U.S. trade or business to the extent that a foreign shareholder would recognize gain effectively connected with a U.S. trade or business upon the hypothetical sale of our assets at fair market value on the date of the sale or exchange of that Preferred Share. Such gain shall be reduced by certain amounts treated as effectively connected with a U.S. trade or business attributable to certain real property interests, as set forth in the following paragraph.

Under the Foreign Investment in Real Property Tax Act, a foreign holder of Preferred Shares (other than certain "qualified foreign pension funds" (or an entity all of the interests of which are held by such a qualified foreign pension fund), which generally are entities or arrangements that are established and regulated by foreign law to provide retirement or other pension benefits to employees, do not have a single participant or beneficiary that is entitled to more than 5% of the assets or income of the entity or arrangement and are subject to certain preferential tax treatment under the laws of the applicable foreign country), generally will be subject to U.S. federal income tax upon the sale or disposition of a Preferred Share if (i) he owned (directly or constructively applying certain attribution rules) more than 5% of our Preferred Shares at any time during the five-year period ending on the date of such disposition and (ii) 50% or more of the fair market value of all of our assets consisted of U.S. real property interests at any time during the shorter of the period during which such shareholder held Preferred Shares or the five-year period ending on the date of disposition. Currently, more than 50% of our assets consist of U.S. real property interests and we do not expect that to change in the foreseeable future. Therefore, foreign holders of Preferred Shares may be subject to U.S. federal income tax on gain from the sale or disposition of their shares.

Upon the sale, exchange or other disposition of a Preferred Share by a foreign shareholder, the transferee is generally required to withhold 10% of the amount realized on such sale, exchange or other disposition if any

------

##### [**Table of Contents**](#toc)
portion of the gain on such sale, exchange or other disposition would be treated as effectively connected with a U.S. trade or business. The U.S. Department of the Treasury and the IRS have issued final regulations providing guidance on the application of these rules for transfers of certain publicly traded partnership interests, including transfers of the Preferred Shares. Under these regulations, the "amount realized" on a transfer of a Preferred Share will generally be the amount of gross proceeds paid to the broker effecting the applicable transfer on behalf of the transferor, and such broker will generally be responsible for the relevant withholding obligations. Distributions made to a holder of a Preferred Share may also be subject to withholding under these rules to the extent a portion of a distribution is attributable to an amount in excess of our cumulative net income that has not previously been distributed. Prospective foreign holders of Preferred Shares should consult their tax advisors regarding the impact of these rules on an investment in Preferred Shares.

Additional withholding requirements may also affect certain foreign shareholders. Please read "*—Administrative Matters—Additional Withholding Requirements*."

**Administrative Matters** 

***Information Returns and Audit Procedures***

We intend to furnish to each shareholder, within 90 days after the close of each calendar year, specific tax information, including a Schedule K-1, which describes his share of our income, gain, loss and deduction for our preceding taxable year. In preparing this information, which will not be reviewed by counsel, we will take various accounting and reporting positions, some of which have been mentioned earlier, to determine each shareholder's share of income, gain, loss and deduction. We cannot assure you that those positions will yield a result that conforms to the requirements of the Code, Treasury Regulations or administrative interpretations of the IRS. Neither we nor Latham & Watkins LLP can assure prospective holders of Preferred Shares that the IRS will not successfully contend in court that those positions are impermissible. Any challenge by the IRS could negatively affect the value of the Preferred Shares.

The IRS may audit our U.S. federal income tax information returns. Adjustments resulting from an IRS audit may require each shareholder to adjust a prior year's tax liability, and possibly may result in an audit of his return. Any audit of a shareholder's return could result in adjustments not related to our returns as well as those related to our returns.

Partnerships generally are treated as separate entities for purposes of federal tax audits, judicial review of administrative adjustments by the IRS and tax settlement proceedings. The tax treatment of partnership items of income, gain, loss and deduction are determined in a partnership proceeding rather than in separate proceedings with the partners.

Pursuant to the Bipartisan Budget Act of 2015, if the IRS makes audit adjustments to our income tax returns, it may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustment directly from us. Similarly, for such taxable years, if the IRS makes audit adjustments to income tax returns filed by an entity in which we are a member or partner, it may assess and collect any taxes (including penalties and interest) resulting from such audit adjustment directly from such entity. Generally, we expect to elect to have our shareholders and former shareholders take any such audit adjustment into account in accordance with their interests in us during the tax year under audit, but there can be no assurance that such election will be effective in all circumstances. If we are unable to have shareholders and former shareholders take such audit adjustment into account in accordance with their interests in us during the tax year under audit, our current shareholders may bear some or all of the tax liability resulting from such audit adjustment, even if such shareholders did not own our shares during the tax year under audit. If, as a result of any such audit adjustment, we are required to make payments of taxes, penalties, and interest, our cash available for distribution to holders of our Preferred Shares might be substantially reduced.

Additionally, pursuant to the Bipartisan Budget Act of 2015, we are required to designate a partner, or other person, with a substantial presence in the United States as the partnership representative ("***Partnership***

------

##### [**Table of Contents**](#toc)
 ***Representative***"). The Partnership Representative has the sole authority to act on our behalf for purposes of, among other things, U.S. federal income tax audits and judicial review of administrative adjustments by the IRS. As of the closing of this offering, we will designate Curtis Allen, our chief financial officer, as our Partnership Representative. Further, any actions taken by us or by the Partnership Representative on our behalf with respect to, among other things, U.S. federal income tax audits and judicial review of administrative adjustments by the IRS, will be binding on us and all of our shareholders.

***Additional Withholding Requirements***

Subject to the proposed Treasury Regulations discussed below, withholding taxes may apply to certain types of payments made to "foreign financial institutions" (as specially defined in the Code) and certain other foreign entities. Specifically, a 30% withholding tax may be imposed on interest, dividends and other fixed or determinable annual or periodical gains, profits and income from sources within the United States ("***FDAP Income***"), or gross proceeds from the sale or other disposition of any property of a type that can produce interest or dividends from sources within the United States ("***Gross Proceeds***"), paid to a foreign financial institution or to a "non-financial foreign entity" (as specially defined in the Code), unless (i) the foreign financial institution undertakes certain diligence and reporting, (ii) the non-financial foreign entity either certifies it does not have any substantial U.S. owners or furnishes identifying information regarding each substantial U.S. owner or (iii) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules. If the payee is a foreign financial institution and is subject to the diligence and reporting requirements in clause (i) above, it must enter into an agreement with the U.S. Department of the Treasury requiring, among other things, that it undertake to identify accounts held by certain U.S. persons or U.S.-owned foreign entities, annually report certain information about such accounts, and withhold 30% on payments to noncompliant foreign financial institutions and certain other account holders. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing these requirements may be subject to different rules.

These rules generally apply to payments of FDAP Income currently and, while these rules generally would have applied to payments of relevant Gross Proceeds made on or after January 1, 2019, proposed Treasury Regulations eliminate these withholding taxes on payments of Gross Proceeds entirely. Shareholders generally may rely on these proposed Treasury Regulations until the Final Treasury Regulations are issued. Thus, to the extent we have FDAP Income that is not treated as effectively connected with a U.S. trade or business (please read "*—Tax-Exempt Organizations and Other Investors*"), shareholders who are foreign financial institutions or certain other foreign entities, or persons that hold their Preferred Shares through such foreign entities, may be subject to withholding on distributions they receive from us, or their distributive share of our income, pursuant to the rules described above.

Prospective shareholders should consult their own tax advisors regarding the potential application of these withholding provisions to their investment in our Preferred Shares.

***Nominee Reporting***

Persons who hold an interest in us as a nominee for another person are required to furnish to us:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the name, address and taxpayer identification number of the beneficial owner and the nominee;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• whether the beneficial owner is:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a person that is not a U.S. person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a foreign government, an international organization or any wholly owned agency or instrumentality of either of
the foregoing; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a tax-exempt entity;

------

##### [**Table of Contents**](#toc)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the amount and description of shares held, acquired or transferred for the beneficial owner; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• specific information including the dates of acquisitions and transfers, means of acquisitions and transfers, and
acquisition cost for purchases, as well as the amount of net proceeds from dispositions.

Brokers and financial institutions are required to furnish additional information, including whether they are U.S. persons and specific information on shares they acquire, hold or transfer for their own account. A penalty per failure, with a significant penalty per calendar year, is imposed by the Code for failure to report that information to us. The nominee is required to supply the beneficial owner of the shares with the information furnished to us.

***Accuracy-Related Penalties***

Certain penalties may be imposed on taxpayers as a result of an underpayment of tax that is attributable to one or more specified causes, including: (i) negligence or disregard of rules or regulations, (ii) substantial understatements of income tax, (iii) substantial valuation misstatements and (iv) the disallowance of claimed tax benefits by reason of a transaction lacking economic substance or failing to meet the requirements of any similar rule of law. Except with respect to the disallowance of claimed tax benefits by reason of a transaction lacking economic substance or failing to meet the requirements of any similar rule of law, however, no penalty will be imposed for any portion of any such underpayment if it is shown that there was a reasonable cause for the underpayment of that portion and that the taxpayer acted in good faith regarding the underpayment of that portion.

With respect to substantial understatements of income tax, the amount of any understatement subject to penalty generally is reduced by that portion of the understatement which is attributable to a position adopted on the return (A) for which there is, or was, "substantial authority" or (B) as to which there is a reasonable basis and the relevant facts of that position are adequately disclosed on the return.

If any item of income, gain, loss or deduction included in the distributive shares of shareholders might result in that kind of an "understatement" of income for which no "substantial authority" exists, we must adequately disclose the relevant facts on our return. In addition, we will make a reasonable effort to furnish sufficient information for shareholders to make adequate disclosure on their returns and to take other actions as may be appropriate to permit shareholders to avoid liability for this penalty.

**Recent Legislative Developments** 

The present U.S. federal income tax treatment of publicly traded partnerships, including us, or an investment in our Preferred Shares may be modified by administrative, legislative or judicial interpretation at any time. For example, from time to time, members of Congress and the President propose and consider substantive changes to the existing U.S. federal income tax laws that affect the tax treatment of publicly traded partnerships, as well as reducing or eliminating certain key U.S. federal income tax incentives currently available to oil and natural gas exploration and production companies. Any modification to the U.S. federal income tax laws and interpretations thereof may or may not be retroactively applied and could make it more difficult or impossible to meet the exception for us to be treated as a partnership for U.S. federal income tax purposes. Please read "—Partnership Status." We are unable to predict whether any such changes will ultimately be enacted. However, it is possible that a change in law could affect us, and any such changes could negatively impact the value of an investment in our Preferred Shares.

**State, Local, Foreign and Other Tax Considerations** 

In addition to U.S. federal income taxes, you will likely be subject to other taxes, such as state, local and foreign income taxes, unincorporated business taxes, and estate, inheritance or intangible taxes that may be imposed by the various jurisdictions in which we do business or own property or in which you are a resident. Although an analysis of those various taxes is not presented here, each prospective shareholder should consider

------

##### [**Table of Contents**](#toc)
their potential impact on his investment in us. We currently own property or do business in several states, including Montana, Utah, Wyoming, Texas, North Dakota and Colorado. Some of these states impose a personal income tax on individuals; certain of these states also impose an income tax on corporations and other entities. We may also own property or do business in other jurisdictions in the future. Although you may not be required to file a return and pay taxes in some jurisdictions because your income from that jurisdiction falls below the filing and payment requirement, you will be required to file income tax returns and to pay income taxes in many of these jurisdictions in which we do business or own property and may be subject to penalties for failure to comply with those requirements. In some jurisdictions, tax losses may not produce a tax benefit in the year incurred and may not be available to offset income in subsequent taxable years. Some of the jurisdictions may require us, or we may elect, to withhold a percentage of income from amounts to be distributed to a shareholder who is not a resident of the jurisdiction. Withholding, the amount of which may be greater or less than a particular shareholder's income tax liability to the jurisdiction, generally does not relieve a nonresident shareholder from the obligation to file an income tax return. Amounts withheld will be treated as if distributed to shareholders for purposes of determining the amounts distributed by us. Please read "*—Tax Consequences of Preferred Share Ownership—Entity-Level Collections*."

**It is the responsibility of each holder of Preferred Shares to investigate the legal and tax consequences, under the laws of pertinent states, localities and foreign jurisdictions, of his investment in us. Accordingly, each prospective holder of Preferred Shares is urged to consult his own tax counsel or other advisor with regard to those matters. Further, it is the responsibility of each holder of Preferred Shares to file all state, local and foreign, as well as U.S. federal tax returns, that may be required of him. Latham & Watkins LLP has not rendered an opinion on the state tax, local tax, alternative minimum tax or foreign tax consequences of an investment in us.** 

------

##### [**Table of Contents**](#toc)
**ERISA CONSIDERATIONS** 

The following is a summary of certain considerations associated with the purchase and, in certain instances, holding of the Preferred Shares, or any interest therein, by (i) "employee benefit plans" within the meaning of Section 3(3) of ERISA that are subject to Title I of the Employee Retirement Income Security Act of 1974, as amended ("***ERISA***"), (ii) plans described in Section 4975 of the Code that are subject to Section 4975 of the Code (including an individual retirement account ("***IRA***")) or provisions under other U.S. or non-U.S. federal, state, local, or other applicable laws or regulations that are similar to the fiduciary responsibility or prohibited transaction provisions of Title I of ERISA or Section 4975 of the Code (collectively, "***Similar Laws***"), and (iii) entities whose underlying assets are considered to include "plan assets" of any such plan, account, or arrangement (each of clauses (i), (ii) and (iii), a "***Plan***").

**General Fiduciary Matters** 

ERISA and the Code impose certain duties on persons who are fiduciaries of a Plan subject to Title I of ERISA or Section 4975 of the Code (each, a "***Covered Plan***") and prohibit certain transactions involving the assets of a Covered Plan and its fiduciaries or other interested parties. Under ERISA and the Code, any person who exercises discretionary authority or control over the administration of a Covered Plan or the management or disposition of the assets of a Covered Plan, or who renders investment advice for a fee or other compensation to a Covered Plan, is generally considered to be a fiduciary of the Covered Plan.

When considering an investment in the Preferred Shares, or any interest therein, with the assets of any Plan, a fiduciary or any other person investing the assets of such purchaser or holder (a "***Plan Fiduciary***") should determine whether the investment is in accordance with the documents and instruments governing the Plan and the applicable provisions of ERISA, the Code, and any Similar Laws relating to a Plan Fiduciary's duties to the Plan including, without limitation, the prudence, diversification, delegation of control, and prohibited transaction provisions of ERISA, the Code, and any applicable Similar Laws. A Plan Fiduciary should consider the Plan's particular circumstances and all of the facts and circumstances of the investment, including, but not limited to, the matters discussed above under "*Risk Factors*," in determining whether an investment in the Preferred Shares satisfies these requirements.

Each Plan Fiduciary should consider the fact that neither we nor any of our affiliates (the "***Transaction Parties***") is acting, or will act, as a fiduciary to any Plan with respect to the decision to purchase and/or hold the Preferred Shares, or any interest therein. The Transaction Parties are not undertaking to provide impartial investment advice or advice based on any particular investment need, or to give advice or recommendation, including, without limitation, in a fiduciary capacity, with respect to such decision to purchase the Preferred Shares, or any interest therein. The decision to purchase or hold the Preferred Shares must be made by each prospective Plan purchaser on an arm's length basis.

**Prohibited Transaction Issues** 

Section 406 of ERISA and Section 4975 of the Code prohibit Covered Plans from engaging in specified transactions involving plan assets (including plan assets of a Covered Plan that is not subject to ERISA but which are subject to Section 4975 of the Code, such as IRAs, or an entity deemed to hold the assets of a Covered Plan) with persons or entities who are "parties in interest," within the meaning of Section 3(14) of ERISA, or "disqualified persons," within the meaning of Section 4975 of the Code, unless an exemption is available. Those sections further prohibit a fiduciary from engaging in transactions in which a conflict of interest is deemed present. A party in interest or disqualified person (including a fiduciary) who engages in a non-exempt prohibited transaction, or the fiduciaries of the Covered Plan engaged in such transaction, may be subject to excise taxes and other penalties and liabilities under ERISA and the Code and may result in the disqualification of an IRA. In addition, the fiduciary of the Covered Plan that engages in such a non-exempt prohibited transaction may be subject to penalties and liabilities under ERISA and/or the Code.

------

##### [**Table of Contents**](#toc)
The acquisition, holding and/or disposition of the Preferred Shares, or any interest in therein, by a Covered Plan with respect to which a Transaction Party is considered a party in interest or a disqualified person may constitute or result in a direct or indirect prohibited transaction under Section 406 of ERISA and/or Section 4975 of the Code, unless the investment is acquired and is held in accordance with an applicable statutory, class, or individual prohibited transaction exemption. Included among these statutory exemptions are Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Code, which exempt certain transactions (including, without limitation, a sale and purchase of securities) between a Covered Plan and a party in interest so long as (i) such party in interest is treated as such solely by reason of providing services to the Covered Plan, (ii) such party in interest is not a fiduciary that renders investment advice, or has or exercises discretionary authority or control, with respect to the plan assets involved in such transaction, or an affiliate of any such person, and (iii) the Covered Plan neither receives less than nor pays more than "adequate consideration" (as defined in such Sections) in connection with such transaction. In addition, the U.S. Department of Labor has issued prohibited transaction class exemptions ("***PTCEs***") that may apply to the acquisition and holding of the Preferred Shares. These class exemptions include, without limitation, PTCE 84-14 respecting transactions determined by independent qualified professional asset managers, PTCE 90-1 respecting insurance company pooled separate accounts, PTCE 91-38 respecting bank collective investment funds, PTCE 95-60 respecting life insurance company general accounts, and PTCE 96-23 respecting transactions determined by in-house asset managers. Each of the above-noted exemptions contains conditions and limitations on its application. Fiduciaries of Covered Plans considering acquiring and/or holding the Preferred Shares in reliance on these or any other exemption should carefully review the exemption to assure it is applicable. There can be no, and we do not provide any, assurance that all of the conditions of any such exemptions will be satisfied. Even if the conditions specified in one or more exemptions are met, the scope of the relief provided by an exemption may not cover all aspects with respect to a particular transaction.

Government plans, foreign plans, and certain church plans, while not subject to the prohibited transaction provisions of Section 406 of ERISA or Section 4975 of the Code, may nevertheless be subject to Similar Laws. Fiduciaries of such Plans should consult with their counsel before acquiring the Preferred Shares, or any interest in the Preferred Shares.

Because of the foregoing, the Preferred Shares, or any interest in the Preferred Shares, should not be purchased or held by any person investing "plan assets" of any Plan, unless such purchase and holding will not constitute a nonexempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or a similar violation of any applicable Similar Laws.

The foregoing discussion is general in nature and is not intended to be all-inclusive. Due to the complexity of these rules and the penalties that may be imposed upon persons involved in non-exempt prohibited transactions, it is particularly important that fiduciaries or other persons considering purchasing and/or holding of the Preferred Shares, or any interest therein, on behalf of, or with the assets of, any Plan, consult with their counsel regarding the potential applicability of ERISA, Section 4975 of the Code, or any Similar Law and whether an exemption would be applicable to the purchase and holding of the Preferred Shares. Neither this discussion nor anything provided in this prospectus is, or is intended to be, investment advice directed at any potential Plan purchasers, or at Plan purchasers generally, and such purchasers of the Preferred Shares should consult and rely on their own counsel and advisers as to whether an investment in the Preferred Shares, or any interest therein, is suitable for the Plan.

Purchasers of the Preferred Shares have the exclusive responsibility for ensuring that their purchase and holding of the Preferred Shares complies with the fiduciary responsibility rules of ERISA and applicable Similar Laws and does not violate the prohibited transaction rules of ERISA, the Code or applicable Similar Laws. Neither this discussion nor anything provided in this offering memorandum is, or is intended to be, investment advice directed at any potential Plan purchasers, or at Plan purchasers generally, and such purchasers of the Preferred Shares should consult and rely on their own counsel and advisers as to whether an investment in the Preferred Shares is suitable for the Plan. We make no representation as to whether an investment in the Preferred

------

##### [**Table of Contents**](#toc)
Shares is appropriate for any Plan in general or whether such investment is appropriate for any particular Plan or arrangement.

**Representation** 

Accordingly, by its acquisition of a Preferred Share, or any interest therein, each purchaser and holder of a Preferred Share, or interest therein, and any subsequent transferee of a Preferred Share, or any interest therein, will be deemed to have represented and warranted that (a) either (i) such purchaser or subsequent transferee is not, and is not using the assets of, a Plan to acquire or hold the Preferred Shares, or any interest therein, or (ii) the purchase and holding of a Preferred Share, or any interest therein, by such purchaser or transferee does not, and will not, constitute a non-exempt prohibited transaction under Section 406 of ERISA and/or Section 4975 of the Code or a similar violation under any applicable Similar Laws and (b) none of the Transaction Parties is acting, or will act, as a fiduciary to any Plan with respect to the decision to purchase or hold the Preferred Shares or is undertaking to provide impartial investment advice or give advice in a fiduciary capacity with respect to the decision to purchase or hold the Preferred Shares.

------

##### [**Table of Contents**](#toc)
**PLAN OF DISTRIBUTION** 

We are offering up to 3,750,000 shares of our Preferred Shares on a "best efforts" basis at a price of $20.00 per share. There is no minimum number of shares of Preferred Shares that we must sell in order to conduct a closing in this offering. The minimum subscription per investor is $1,000.00, or 50 Preferred Shares, and any additional purchases must be made in increments of at least $20.00.

We intend to market the shares in this offering through both online and offline means. Online marketing may take the form of contacting potential investors through electronic media and posting this Offering Circular. This Offering Circular will be furnished to prospective investors and is available for download on our website (*https://invest.phoenixenergy.com*) on a landing page that relates to this offering.

This offering will terminate at the earliest of (i) the date at which the maximum offering amount has been sold, (ii) one year from the date upon which the SEC qualifies the offering statement of which this Offering Circular forms a part, or (iii) the date at which this offering is earlier terminated by us, in our sole discretion.

The Company intends to complete one closing for this offering. After the closing, funds tendered by investors will be available to the Company.

**Engagement Agreement with Digital Offering** 

We are currently party to an engagement agreement, dated May 14, 2025, with Digital Offering. Digital Offering has agreed to act as our lead managing selling agent for the offering. Digital Offering has made no commitment to purchase all or any part of the Preferred Shares being offered but has agreed to use its best efforts to sell such shares in the offering. As such, Digital Offering is an "underwriter" within the meaning of Section 2(a)(11) of the Securities Act. Digital Offering is under no obligation to purchase any of the Preferred Shares or arrange for the sale of any specific number or dollar amount of shares of Preferred Shares. The term of the engagement agreement began on May 14, 2025 and will continue until the earliest to occur of: (a) the date that either party gives the other at least 10 days written notice of the termination of the engagement agreement, which termination may occur with or without cause, (b) May 31, 2026, and (c) the date that the offering is closed. The engagement agreement provides that Digital Offering may engage other Financial Industry Regulatory Authority ("***FINRA***") member broker-dealers that are registered with the SEC to participate as soliciting dealers for this offering. We refer to these other broker-dealers as "***soliciting dealers***" or "***members of the selling group***." Digital Offering will be permitted to apportion all or part of its fees and expense allowance to members of the selling group. Members of the selling group will also be entitled to receive the benefits of our engagement agreement with Digital Offering, including the indemnification rights arising under the engagement agreement upon their execution of a soliciting dealer agreement with Digital Offering that confirms that such soliciting dealer is so entitled.

As of the date hereof, we have been advised that Digital Offering has retained AOS Inc. dba MyIPO, Dalmore Group, LLC ("***Dalmore Group***") and RF Lafferty to participate in this offering as soliciting dealers. We will not be responsible for paying any placement agency fees, commissions or expense reimbursements to any soliciting dealers retained by Digital Offering. None of the soliciting dealers is purchasing any of the Preferred Shares in this offering or is required to sell any specific number or dollar amount of Preferred Shares, but will instead arrange for the sale of Preferred Shares to investors on a best efforts basis, meaning that they need only use their best efforts to sell the Preferred Shares. In addition to the engagement agreement, we plan to enter into a definitive selling agency agreement with Digital Offering (the "***Selling Agency Agreement***") prior to the commencement of the offering.

**Offering Expenses** 

We are responsible for all offering fees and expenses, including the following: (i) fees and disbursements of our legal counsel, accountants, and other professionals we engage; (ii) fees and expenses incurred in the

------

##### [**Table of Contents**](#toc)
production of offering documents, including design, printing, photograph, and written material procurement costs; (iii) all filing fees, including those charged by FINRA; (iv) all of the legal fees related to FINRA clearance; and (v) $25,000 in accountable expenses of Digital Offering, including for travel expenses associated with site visits, tech fees and other related fees. This $25,000 has already been paid to Digital Offering by us. We have agreed to reimburse Digital Offering for its reasonable and documented legal costs up to a maximum of $100,000. Notwithstanding the foregoing, the two advances received by Digital Offering and discussed above will be reimbursed to us to the extent not actually incurred in compliance with FINRA Rule 5110(g)(4)(a).

***Reimbursable Expenses in the Event of Termination***

In the event the offering does not close or the Selling Agency Agreement is terminated for any reason, we have agreed to reimburse Digital Offering for its legal fees in an amount not to exceed $100,000.

***Other Expenses of the Offering***

In addition, we have engaged EquiDeFi, Ltd ("***EquiDeFi***") to create and maintain the online subscription processing platform for the offering. After the offering statement is qualified by the SEC, the offering will be conducted, in part, using EquiDeFi's online subscription processing platform through our website at *https://invest.phoenixenergy.com*, whereby investors will receive, review, execute and deliver subscription agreements electronically as well as make purchase price payments through a third-party processor by ACH debit transfer, wire transfer or credit card to an account we designate.

Digital Offering will pay EquiDeFi an advance of $6,000. Starting once the offering is open to accepting investors, Digital Offering will also pay EquiDeFi $2,500 monthly in account maintenance fees (up to a maximum of $12,000 during the duration of the offering). In addition, we will pay EquiDeFi credit card processing fees (4.0% + $0.30 per swipe) plus any charge back fees or expenses and .50% + $5.00 for each ACH transfer fee to all purchasers in lieu of charges to investors.

***Selling Agents' Commission***

Pursuant to the Selling Agency Agreement, we will pay a commission of 7.75% of the gross offering proceeds, which shall be initially paid to Digital Offering and allocated by Digital Offering to members of the selling group and soliciting dealers in its sole discretion (collectively, Digital Offering and such members and dealers, the "***Selling Agents***"); *provided* that, subject to certain requirements, Dalmore Group will be entitled to receive an allocation from Digital Offering of 2.4% of the gross offering proceeds.

Certain of our non-executive personnel, including Matthew Willer, our Managing Director, Capital Markets, are registered representatives of Dalmore Group, and will be paid a sales commission of 2.0% by Dalmore Group as compensation for the sale of Preferred Shares, which will be paid out of the allocation of commission provided to Dalmore Group by Digital Offering. Such non-executive personnel are paid a base salary of $60,000 and are entitled to participate in the benefits we provide to all of our employees, including 401(k) contributions, medical-insurance options, and programs to encourage and support the employees' development. Additionally, such non-executive personnel are eligible to receive sales commissions with respect to the sales of our Notes and Adamantium Bonds, once the commissions they would have earned in such year (pursuant to any of our securities offerings) are in excess of their base salary.

------

##### [**Table of Contents**](#toc)
The following table shows the total commissions payable to Selling Agents on a per-share basis in connection with this offering.

---

| | |
|:---|:---|
|  | **Per Share** |
|  Public offering price | $20.00 |
|  Selling Agents commission (7.75%)\* | $1.55 |
|  Proceeds, before expenses, to us | $18.45 |

---

\* Assuming a fully subscribed offering, the Selling Agents would receive, in aggregate, total commissions of $5,812,500. 

Any registered representative engaged in the sale of the Preferred Shares in this offering, and compensated on a commissions basis, including our non-executive personnel, who are registered representatives of Dalmore Group, may have potential conflicts of interest, including, but not limited to, incentives to recommend the Preferred Shares based on the compensation they will receive, rather than solely on the investment merits of the Preferred Shares. Dalmore Group has taken steps to ensure that all such sales activities comply with applicable securities laws and FINRA rules, including the disclosure of such potential conflicts of interest.

**Lock-Up** 

Provided that our Preferred Shares are listed on the NYSE American, we have agreed that, subject to certain exceptions, including with respect to pledges made in connection with the Fortress Credit Agreement we will not permit Phoenix Equity to, directly or indirectly, during the period ending 180 days following the closing of this offering, offer, pledge, assign, encumber, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right, or warrant to purchase, lend, or otherwise transfer or dispose of any shares of our limited liability company interests or any securities convertible into or exchangeable or exercisable for such interests without the prior written consent of Digital Offering.

**Exchange Listing** 

We have applied to list the Preferred Shares on the NYSE American under the symbol "PHXE.P." Although we believe that we currently meet the NYSE American initial listing standards, neither we nor Digital Offering can guarantee that the NYSE American will approve our listing application. If our Preferred Shares are not approved for listing on the NYSE American, we will not complete the offering. Our Preferred Shares will not commence trading on the NYSE American until each of the following conditions is met: (i) this offering is terminated; (ii) we have filed a post-qualification amendment to the offering statement, which post-qualification amendment is qualified by the SEC; and (iii) we have filed a registration statement on Form 8-A, which Form 8-A has been declared effective by the SEC. Pursuant to applicable rules under Regulation A, the Form 8-A will not become effective until the SEC qualifies the post-qualification amendment. We intend to file the post-qualification amendment and request its qualification immediately prior to the termination of this offering in order that the Form 8-A may become effective as soon as practicable thereafter. Even if we meet the minimum requirements for listing on the NYSE American, we may wait before terminating this offering and commencing the trading of our Preferred Shares on the NYSE American in order to raise additional proceeds. As a result, you may experience a delay between your purchase of Preferred Shares and the commencement of trading of our Preferred Shares on the NYSE American. No assurance can be given, however, that our application to list on the NYSE American will be approved or that an active trading market for our Preferred Shares will develop.

**Pricing of the Offering** 

Prior to the offering, there has been no public market for the Preferred Shares. The initial public offering price has been determined by negotiation between us and Digital Offering. The principal factors considered in determining the initial public offering price include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the information set forth in this Offering Circular and otherwise available to Digital Offering;

------

##### [**Table of Contents**](#toc)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our history and prospects and the history of and prospects for the industry in which we compete;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our past and present financial performance;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our prospects for future earnings and the present state of our development;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an assessment of our management;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the general condition of the securities markets at the time of this offering;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the recent market prices of, and demand for, publicly traded securities of generally comparable companies; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• other factors deemed relevant by Digital Offering and us.

We intend to price the offering prior to its qualification pursuant to Rule 253(b).

**Indemnification** 

We have agreed to indemnify the lead selling agent, its affiliates and controlling persons and members of the selling group against certain liabilities, including liabilities under the Securities Act. If we are unable to provide this indemnification, we will contribute to the payments the lead selling agent, its affiliates and controlling persons as may be required to make in respect of these liabilities.

**Our Relationship with the Lead Selling Agent** 

The lead selling agent and its affiliates are engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. The lead selling agent and its affiliates may in the future perform various financial advisory and investment banking services for us, for which they will receive customary fees and expenses.

In the ordinary course of their various business activities, Digital Offering and its affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities activities may involve our securities and/or instruments. Digital Offering and its affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or instruments, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

**Direct Participation Plan Requirements** 

Because FINRA views the Preferred Shares offered hereby as interests in a direct participation program, the offering is being made in compliance with FINRA Rule 2310. Investor suitability with respect to the Preferred Shares should be judged similarly to the suitability with respect to other securities that are listed for trading on a national securities exchange.

**Investment Limitations if We Do Not Obtain a Listing on a National Securities Exchange** 

As set forth in Title IV of the JOBS Act, there would be no limit on how many shares an investor may purchase if this offering results in a listing of our Preferred Shares on the NYSE American or other national securities exchange. However, our Preferred Shares will not be listed on the NYSE American upon the initial qualification of our offering statement by the SEC. Additionally, we cannot provide any assurance that our application to list on the NYSE American will be approved.

------

##### [**Table of Contents**](#toc)
For individuals who are not Accredited Investors (as defined below), if we are not listed on the NYSE American, no sale may be made to you in this offering if the aggregate purchase price you pay is more than 10% of the greater of your annual income or net worth (please see "*— Procedures for Subscribing — How to Calculate Net Worth*" below). Different rules apply to Accredited Investors and non-natural persons. Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A. For general information on investing, we encourage you to refer to *www.investor.gov*.

Because this is a Tier 2, Regulation A offering, most investors in the case of trading on the over-the-counter markets must comply with the 10% limitation on investment in this offering. The only investors in this offering exempt from this limitation, if our Preferred Shares are not listed on the NYSE American, are "accredited investors" as defined under Rule 501 of Regulation D under the Securities Act (each, an "***Accredited Investor***"). If you meet one of the following tests you should qualify as an Accredited Investor:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) You are a natural person who has had individual income in excess of $200,000 in each of the two most recent years, or joint income with your spouse in excess of $300,000 in each of these years, and have a reasonable expectation of reaching the same income level in the current year;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) You are a natural person and your individual net worth, or joint net worth with your spouse, exceeds $1,000,000 at the time you purchase Preferred Shares (please see "*— How to Calculate Net Wort*h" below);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) You are an executive officer or general partner of the issuer or a director, executive officer or general partner of the general partner of the issuer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) You are a holder in good standing of the General Securities Representative license (Series 7), the Private Securities Offerings Representative license (Series 82), and the Licensed Investment Adviser Representative (Series 65), each as issued by FINRA;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) You are a corporation, limited liability company, partnership or are an organization described in Section 501(c)(3) of the Code, a corporation or similar business trust or a partnership, not formed for the specific purpose of acquiring the Preferred Shares, with total assets in excess of $5,000,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) You are a bank or a savings and loan association or other institution as defined in the Securities Act, a broker or dealer registered pursuant to Section 15 of the Exchange Act, an insurance company as defined by the Securities Act, an investment company registered under the Investment Company Act of 1940, or a business development company as defined in that act, any Small Business Investment Company licensed by the Small Business Investment Act of 1958 or a private business development company as defined in the U.S. Investment Advisers Act of 1940, as amended;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) You are an entity (including an Individual Retirement Account trust) in which each equity owner is an Accredited Investor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) You are a trust with total assets in excess of $5,000,000, your purchase of Preferred Shares is directed by a person who either alone or with his purchaser representative(s) (as defined in Regulation D promulgated under the Securities Act) has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment, and you were not formed for the specific purpose of investing in the Preferred Shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) You are a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has assets in excess of $5,000,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) You are a SEC or state-registered investment adviser or a federally exempt reporting adviser;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) You are a Rural Business Investment Company as defined in section 384A of the Consolidated Farm and Rural Development Act;

------

##### [**Table of Contents**](#toc)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii) You are an entity not listed above that owns "investments," in excess of $5,000,000 and that was not formed for the specific purpose of investing in the securities offered; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiii) You are an Investor certifies that (A) it is a "family office" as defined in Rule 202(a)(11)(G)-1 under the U.S. Investment Advisers Act of 1940, as amended, (i) with at least $5 million in assets under management, (ii) not formed for the specific purpose of acquiring the securities offered and (iii) whose investment is directed by a person who has such knowledge and experience in financial and business matters that such family office is capable of evaluating the merits and risks of the prospective investment or (B) that it is a "family client" as defined in Rule 202(a)(11)(G)-1, of a family office meeting the criteria specified above.

This offering will start on or after the date that the offering statement is qualified by the SEC and will terminate on the earliest of (i) the date at which the maximum offering amount has been sold, (ii) one year from the date upon which the SEC qualifies the offering statement of which this Offering Circular forms a part, or (iii) the date at which this offering is earlier terminated by us, in our sole discretion.

**Procedures for Subscribing** 

***Escrow Account***

Investors will be required to deposit their funds to an escrow account held at Wilmington Trust (such escrow account, the "***Wilmington Trust Escrow Account***"). Any such funds that Wilmington Trust receives shall be held in escrow until the closing of the offering takes place or such other time as mutually agreed between us and Digital Offering, and then used to complete securities purchases, or returned if this offering fails to close. We or our agents will instruct all investors to transfer funds by wire or ACH transfer directly to the escrow account established for this offering.

***Other Procedures for Subscribing***

Our transfer agent will be Equity Stock Transfer, LLC ("***Equity Stock Transfer***"). Our transfer agent will record and maintain records of the Preferred Shares issued of record by us, including shares issued of record to the Depositary Trust Corporation, which we refer to as the DTC, or its nominee, Cede & Co., for the benefit of broker-dealers. In the event that we do not qualify or list on the NYSE American, the offering will not close and subscription funds will be returned to investors from the Wilmington Trust Escrow Account, without interest or deduction. Investors that participate through the Wilmington Trust Escrow Account shall have their shares held at Equity Stock Transfer in digital book entry. Such shares may be transferred to the investor's outside brokerage account by requesting their outside broker dealer to effect such transfer. Request for transfer may only be made by the outside broker dealer of the investor.

Prospective investors investing through MyIPO or members of the selling group will acquire our Preferred Shares through book-entry order by opening an account with MyIPO or a member of the selling group, or by utilizing an existing MyIPO account or account with a member of the selling group. In each such case, the account will be an account owned by the investor and held at the clearing firm of such member of the selling group, as the clearing firm for the exclusive benefit of such investor.

You may not subscribe to this offering prior to the date that the offering statement is qualified by the SEC, which we refer to as the qualification date. Before the qualification date, you may only make non-binding indications of your interest to purchase securities in the offering. For any subscription agreements received after the qualification date, we have the right to review and accept or reject the subscription in whole or in part, for any reason or for no reason. If a closing doesn't occur or a subscription is rejected, the subscription will be cancelled and we will return all funds to the rejected investor within ten business days. If accepted, the funds will remain in the Wilmington Trust Escrow Account until we determine to have the closing of the offering and the funds in escrow will then be transferred into our general account.

------

##### [**Table of Contents**](#toc)
Non-U.S. investors may participate in this offering by depositing their funds in the Wilmington Trust Escrow Account; any such funds that Wilmington Trust receives shall be held in escrow until the closing of this offering or such other time as mutually agreed between us and the Selling Agents, and then used to complete securities purchases, or returned if this offering fails to close.

***How to Purchase Securities***

Investors may subscribe through *https://invest.phoenixenergy.com* by tendering funds by wire, credit, or debit card or ACH transfer to the escrow account to be set up at Wilmington Trust, the escrow agent. Tendered funds will remain in escrow until the closing occurs. At closing, funds tendered by investors will be made available to us for our use. We will not cover credit card fees on behalf of investors.

***Procedures for subscribing directly through our website***

The subscription procedure is summarized as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Go to the *https://invest.phoenixenergy.com* website and click on the "Invest Now" button;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Complete the online investment form;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Deliver funds directly by wire, debit card, credit card or electronic funds transfer via ACH to the specified
escrow account;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Once funds or documentation are received an automated Anti Money Laundering ("  ***AML*** ")
check will be performed to verify the identity and status of the investor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. Once an AML check is completed, the investor will electronically receive, review, execute and deliver to us a
subscription agreement. Investors will be required to complete a subscription agreement in order to invest. The subscription agreement will include a representation by the investor to the effect that, if the investor is not an Accredited Investor,
the investor is investing an amount that does not exceed the greater of 10% of the investor's annual income or 10% of the investor's net worth (excluding the investor's principal residence).

***Right to Reject Subscriptions***

After we receive your complete, executed subscription agreement (forms of which are attached as <u>Exhibits 4.1 and 4.2</u> hereto) and the funds required under the subscription agreement have been transferred to the Wilmington Trust Escrow Account or such other selected dealer designated escrow account, we have the right to review and accept or reject your subscription in whole or in part, for any reason or for no reason. We will return all monies from rejected subscriptions immediately to you, without interest or deduction.

***Acceptance of Subscriptions***

Upon our acceptance of a subscription agreement, we will countersign the subscription agreement and issue the Preferred Shares subscribed for at closing. Once you submit the subscription agreement and it is accepted, you may not revoke or change your subscription or request your subscription funds. All accepted subscription agreements are irrevocable.

Under Rule 251 of Regulation A, unless a company's offered securities are listed on a national securities exchange, non-accredited, non-natural person investors are subject to the investment limitation and may only invest funds which do not exceed 10% of the greater of the purchaser's revenue or net assets (as of the purchaser's most recent fiscal year end). As a result, for so long as our Preferred Shares are not listed on the NYSE American, non-accredited, natural person may only invest funds in our Preferred Shares which do not exceed 10% of the greater of the purchaser's annual income or net worth (please see below on how to calculate your net worth).

------

##### [**Table of Contents**](#toc)
**How to Calculate Net Worth** 

For the purposes of calculating your net worth, it is defined as the difference between total assets and total liabilities. This calculation must exclude the value of your primary residence and may exclude any indebtedness secured by your primary residence (up to an amount equal to the value of your primary residence). In the case of fiduciary accounts, net worth and/or income suitability requirements may be satisfied by the beneficiary of the account or by the fiduciary, if the fiduciary directly or indirectly provides funds for the purchase of the Preferred Shares.

In order to purchase the Preferred Shares and prior to the acceptance of any funds from an investor, for so long as our Preferred Shares are not listed on the NYSE American, an investor in our Preferred Shares will be required to represent, to our satisfaction, that he or she is either an Accredited Investor or is in compliance with the 10% of net worth or annual income limitation on investment in this offering.

**No Minimum Offering Amount** 

There is no minimum offering amount in this offering and we may close on any funds that we receive. Potential investors should be aware that there can be no assurance that any other funds will be invested in this offering other than their own funds.

**No Selling Security Holders** 

No securities are being sold for the account of security holders; all net proceeds of this offering will go to us**.**

**Transfer Agent and Registrar** 

We have engaged Equity Stock Transfer, a registered transfer agent with the SEC, who will serve as transfer agent to maintain stockholder information on a book-entry basis with respect to the Preferred Shares.

**Provisions of Note in our Subscription Agreement** 

***Forum Selection Provision***

------

##### [**Table of Contents**](#toc)
***Jury Trial Waiver***

The subscription agreement that investors will execute in connection with this offering provides that investors waive the right to a jury trial of any claim they may have against us arising out of or relating to the agreement, other than claims arising under federal securities laws. If we opposed a jury trial demand based on the waiver, a court would determine whether the waiver was enforceable given the facts and circumstances of that case in accordance with applicable case law. In addition, by agreeing to the provision, investors will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations promulgated thereunder.

***Offer Restrictions Outside the United States***

Other than in the United States, no action has been taken by us or the lead selling agent that would permit a public offering of the securities offered by this Offering Circular in any jurisdiction where action for that purpose is required. The securities offered by this Offering Circular may not be offered or sold, directly or indirectly, nor may this Offering Circular or any other offering material or advertisements in connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this Offering Circular comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this Offering Circular. This Offering Circular does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this Offering Circular in any jurisdiction in which such an offer or a solicitation is unlawful.

------

##### [**Table of Contents**](#toc)
**LEGAL MATTERS** 

The validity of the Preferred Shares offered hereby will be passed upon for us by Latham & Watkins LLP, Washington, District of Columbia.

**EXPERTS** 

The consolidated financial statements of Phoenix Energy One, LLC as of December 31, 2024, 2023, and 2022 and for the years then ended included in this Offering Circular have been so included in reliance on the report of Ramirez Jimenez International CPAs, an independent registered public accounting firm, given upon the authority of such firm as experts in accounting and auditing.

------

##### [**Table of Contents**](#toc)
**WHERE YOU CAN FIND ADDITIONAL INFORMATION** 

We have filed with the SEC an offering statement on Form 1-A under the Securities Act with respect to the Preferred Shares that we are offering. This Offering Circular, which is part of the offering statement, does not contain all the information set forth in the offering statement or the exhibits related thereto filed with the SEC. Whenever a reference is made in this Offering Circular to any of our contracts, agreements or other documents, the reference may not be complete and you should refer to the exhibits that are a part of the offering statement. We file annual, quarterly and special reports, proxy statements and other information with the SEC. The SEC maintains a website that contains reports, proxy statements and other information about issuers, such as us, who file electronically with the SEC. The address of that website is http://www.sec.gov. Our public filings are also available to the public on our website.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC** 

**INDEX TO FINANCIAL STATEMENTS** 

---

| | |
|:---|:---|
|  **Audited Consolidated Financial Statements** |  |
|  [Report of Independent Registered Public Accounting Firm](#fin72530_1) | F-2 |
|  [Consolidated Balance Sheets](#fin72530_2) | F-4 |
|  [Consolidated Statements of Operations](#fin72530_3) | F-5 |
|  [Consolidated Statements of Members' Equity (Deficit)](#fin72530_4) | F-6 |
|  [Consolidated Statements of Cash Flows](#fin72530_5) | F-7 |
|  [Notes to the Consolidated Financial Statements](#fin72530_6) | F-8 |
|  **Unaudited Consolidated Financial Statements** |  |
|  [Condensed Consolidated Balance Sheets](#fin72530_7) | F-45 |
|  [Condensed Consolidated Statements of Operations](#fin72530_8) | F-46 |
|  [Condensed Consolidated Statements of Members' Equity (Deficit)](#fin72530_9) | F-47 |
|  [Condensed Consolidated Statements of Cash Flows](#fin72530_10) | F-48 |
|  [Notes to the Condensed Consolidated Financial Statements](#fin72530_11) | F-49 |

---

------

##### [**Table of Contents**](#toc)

---

| | |
|:---|:---|
| ![LOGO](g72530g01a01.jpg) | 18012 Sky Park Circle, Suite 100<br> Irvine, California 92614<br> tel 949-852-1600<br> fax 949-852-1606<br> www.rjicpas.com |

---

***Report of Independent Registered Public Accounting Firm***

To the Members of Phoenix Energy One, LLC

Irvine, California

***Opinion on the Consolidated Financial Statements***

We have audited the accompanying consolidated balance sheets of Phoenix Energy One, LLC and Subsidiaries (the Company) as of December 31, 2024, 2023 and 2022, and the related consolidated statements of operations, changes in equity (deficit) and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively referred to as the "financial statements"). In our opinion, the 2024, 2023 and 2022 consolidated financial statements present fairly, in all material respects, the financial position of Phoenix Energy One, LLC and Subsidiaries as of December 31, 2024, 2023 and 2022, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

***Restatement of 2023 and 2022 Financial Statements***

As discussed in Note 3 to the consolidated financial statements, the 2023 and 2022 financial statements have been restated to correct misstatements. The 2022 financial statements of Phoenix Energy One, LLC before the adjustments described in Note 3 were audited by another auditor whose report, dated May 1, 2023, expressed an unqualified opinion on those financial statements. We have audited the 2022 and 2023 financial statements, as restated, as of and for the years ended December 31, 2023 and 2022, including the adjustments described in Note 3 that were applied to restate the 2023 and 2022 financial statements. In our opinion, such adjustments are appropriate and have been properly applied.

***Basis for Opinion***

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to Phoenix Energy One, LLC in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Phoenix Energy One, LLC is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

------

##### [**Table of Contents**](#toc)
***Critical Audit Matters***

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the Audit Committee (those charged with governance) of the Board of Directors/Members and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts and disclosures to which they relate.

***Estimation and Valuation of Proven Reserves***

The estimation and valuation of proven reserves is identified as a critical audit matter. The valuation of these reserves is highly subjective due to the complexities involved in estimating the reserves, and the significant judgment required in determining the valuation assumptions, such as future commodity prices, production rates, and capital expenditures. The estimation of volumes and future revenues of the Company's proved reserves could have a significant impact on the measurement of depletion expense or impairment expense.

The following are the primary procedures we performed to address this critical audit matter. We performed the following audit procedures in relation to the evaluation of proved reserves:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. We sampled additions and disposals of reserve assets during the year to test the accuracy and completeness of
the recording processes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. We gained an understanding of the Company's process for estimating reserve quantities and valuing the
reserves.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. We validated the mathematical accuracy, formulas, and inputs used in the depletion reserve calculations to
ensure the reserve expense calculation was appropriate for the type of reserves reported.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. We performed reasonability tests to confirm whether the proved reserve balances for oil and gas properties were
within expected ranges, based on historical data.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. We tested the completeness and accuracy of data for selected wells to verify that the Company's system was
pulling accurate and relevant well data.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. We reviewed the third-party reserve engineer's report to assess the reasonableness and appropriateness of
the Company's approach and methodology in calculating their reserve estimates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. We assessed the knowledge, skills and expertise of the third-party reserve engineer involved in testing the
reasonableness and approach to the reserve estimates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. We obtained and evaluated the third-party legal opinion from a title attorney concerning the Company's
ownership percentages of sampled wells, to validate the accuracy of these percentages.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. We compared the estimated pricing and pricing differentials used in the reserve report to realized prices
related to revenue transactions recorded in the current year for the pricing differentials.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. Assessed the reasonableness of forecasted capital expenditures by comparing drilling forecasts applied in the
reserve report to recent drilling costs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. Obtained evidence supporting the amount of development of proved undeveloped properties reflected in the
reserve report and compared with forecasted drilling plans and budgets.

We have served as the Company's auditors since 2023.

![LOGO](g72530g02a02.jpg)

Irvine, California

March 26, 2025, except for Note 17, as to which the date is April 23, 2025

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Consolidated Balance Sheets** 

*(in thousands)* 

---

| | | | |
|:---|:---|:---|:---|
|  | **December 31,** | **December 31,** | **December 31,** |
|  | **2024** | **2023**<br>**(As Restated)** | **2022**<br>**(As Restated)** |
| **ASSETS** |  |  |  |
|  Current assets |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | $120814 | $5428 | $4607 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable | 28218 | 32822 | 4013 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Earnest payments | 154 | 25387 | 794 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other current assets | 7528 | 647 | 376 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total current assets | 156714 | 64284 | 9790 |
| Oil and gas properties | 1006221 | 478339 | 165390 |
| Accumulated depletion and impairment | (140376) | (54671) | (20635) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net oil and gas properties | 865845 | 423668 | 144755 |
| Right-of-use assets, net | 6010 | 4542 | 1798 |
| Other noncurrent assets | 501 | 673 | 677 |
|  **Total Assets** | $1029070 | $493167 | $157020 |
| **LIABILITIES AND MEMBER'S EQUITY (DEFICIT)** |  |  |  |
| Current liabilities |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable | $41824 | $47272 | $19438 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Short-term debt |  | 25819 | 6818 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current portion of long-term debt | 103240 | 87038 | 46039 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current portion of deferred closings | 7189 | 10196 | 5696 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Escrow account | 16356 | 6491 | 701 |
|  Current operating lease liabilities | 656 | 567 | 305 |
| Accrued and other liabilities | 57346 | 6388 | 2236 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total current liabilities | 226611 | 183771 | 81233 |
| Long-term debt, net of current portion | 795215 | 295167 | 59481 |
| Accrued interest | 26079 | 6369 | 291 |
| Deferred closings | 3324 | 7884 | 5533 |
| Operating lease liabilities | 5860 | 4225 | 1597 |
| Asset retirement obligations | 1181 | 585 | 212 |
| Other noncurrent liabilities | 4858 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities | 1063128 | 498001 | 148347 |
| Member's equity (deficit) |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Member's equity | 434 | 4865 | 2183 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Retained earnings (accumulated deficit) | (34492) | (9699) | 6490 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total member's equity (deficit) | (34058) | (4834) | 8673 |
|  **Total Liabilities and Member's Equity (Deficit)** | $1029070 | $493167 | $157020 |

---

The accompanying notes are an integral part of these consolidated financial statements.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Consolidated Statements of Operations** 

*(in thousands)* 

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2024** | **2023**<br>**(As Restated)** | **2022**<br>**(As Restated)** |
| **REVENUES** |  |  |  |
| Mineral and royalty revenues | $152999 | $118088 | $54554 |
| Product sales | 125649 |  |  |
| Water services | 2478 |  |  |
| Other revenues | 101 | 17 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total revenues | 281227 | 118105 | 54554 |
| **OPERATING EXPENSES** |  |  |  |
| Cost of sales | 63947 | 19733 | 9573 |
| Depreciation, depletion, amortization and accretion | 85977 | 34228 | 12144 |
| Selling, general and administrative | 29167 | 14314 | 5563 |
| Payroll and payroll-related expenses | 27934 | 12733 | 6023 |
| Advertising and marketing | 679 | 4136 | 1353 |
| Loss on sale of assets | 564 |  |  |
| Impairment expense | 564 | 974 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total operating expenses | 208832 | 86118 | 34656 |
| Income from operations | 72395 | 31987 | 19898 |
| **OTHER INCOME (EXPENSE)** |  |  |  |
| Interest income | 705 | 66 |  |
| Interest expense | (90210) | (47882) | (11893) |
| Loss on derivatives | (5986) | (32) | (2239) |
| Loss on debt extinguishment | (1697) | (328) | (92) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other expenses | (97188) | (48176) | (14224) |
|  **NET INCOME (LOSS)** | $(24793) | $(16189) | $5674 |

---

The accompanying notes are an integral part of these consolidated financial statements.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Consolidated Statements of Changes in Equity (Deficit)** 

*(in thousands)* 

---

| | | | |
|:---|:---|:---|:---|
|  | **Member's<br>Equity** | **Retained<br>Earnings<br>(Accumulated<br>Deficit)** | **Total Member's<br>Equity (Deficit)** |
| Balance, December 31, 2021 (As Restated) | $2088 | $816 | $2904 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contributions | 200 |  | 200 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Distributions | (105) |  | (105) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income (As Restated) |  | 5674 | 5674 |
| Balance, December 31, 2022 (As Restated) | 2183 | 6490 | 8673 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contributions | 10150 |  | 10150 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Distributions | (7468) |  | (7468) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loss (As Restated) |  | (16189) | (16189) |
| Balance, December 31, 2023 (As Restated) | 4865 | (9699) | (4834) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contributions | 325 |  | 325 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Distributions | (4756) |  | (4756) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loss |  | (24793) | (24793) |
|  Balance, December 31, 2024 | $434 | $(34492) | $(34058) |

---

The accompanying notes are an integral part of these consolidated financial statements.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Consolidated Statements of Cash Flows** 

*(in thousands)* 

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2024** | **2023**<br>**(As Restated)** | **2022**<br>**(As Restated)** |
| **CASH FLOWS FROM OPERATING ACTIVITIES** |  |  |  |
|  Net income (loss) | $(24793) | $(16189) | $5674 |
|  Adjustments to reconcile net income (loss) to net cash flows from operating activities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation, depletion, amortization, and accretion | 85977 | 34228 | 12144 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Impairment expense | 564 | 974 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of right-of-use assets | 643 | 422 | 104 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of debt discount and debt issuance costs | 16621 | 13753 | 940 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unrealized loss (gain) on derivatives | 7518 | 32 | (46) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on sale of assets | 564 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on debt extinguishment | 1697 | 328 | 92 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in operating assets and liabilities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable | 4605 | (28809) | (2731) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Earnest payments | (22639) | (24593) | (788) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable | (10967) | 2832 | 344 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued and other liabilities | 13020 | 4058 | 1870 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Escrow account | 9865 | 5790 | 701 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest | 19829 | 6078 | 291 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | (7265) | (730) | 47 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash (used in) provided by operating activities | 95239 | (1826) | 18642 |
| **CASH FLOWS FROM INVESTING ACTIVITIES** |  |  |  |
|  Additions to oil and gas properties and leases | (443820) | (278661) | (91263) |
|  Proceeds from sale of assets | 6200 |  |  |
|  Additions to equipment and other property | (83) |  | (625) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in investing activities | (437703) | (278661) | (91888) |
| **CASH FLOWS FROM FINANCING ACTIVITIES** |  |  |  |
|  Proceeds from issuances of debt, net of discount | 864003 | 464541 | 80499 |
|  Payments of debt issuance costs | (63723) | (43441) | (5351) |
|  Repayments of debt | (328167) | (139494) | 2687 |
|  Members' contributions | 325 | 10150 | 200 |
|  Members' distributions | (4756) | (7468) | (105) |
|  Payments of deferred closings | (9832) | (2980) | (437) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by financing activities | 457850 | 281308 | 77493 |
| Net change in cash and cash equivalents | 115386 | 821 | 4247 |
| Cash and cash equivalents at beginning of year | 5428 | 4607 | 360 |
| Cash and cash equivalents at end of year | $120814 | $5428 | $4607 |

---

The accompanying notes are an integral part of these consolidated financial statements.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

**Note 1 – Business** 

Phoenix Energy One, LLC ("Phoenix Energy"), formerly known as Phoenix Capital Group Holdings, LLC ("Phoenix Capital"), is a Delaware limited liability company focused on oil and gas operations primarily in the Williston Basin, North Dakota/Montana, the Uinta Basin, Utah, the Permian Basin, Texas, the Denver-Julesburg Basin, Colorado/Wyoming and the Powder River Basin, Wyoming. The Company was formed in April 2019 and changed its name to Phoenix Energy in January 2025. As used in these consolidated financial statements, unless the context otherwise requires, references to the "Company," "we," "us," and "our" refer to Phoenix Energy and its consolidated subsidiaries.

The Company's strategy involves the acquisition of royalty assets, acquisition of non-operated working interests and direct drilling operations of operated working interests conducted through its wholly-owned subsidiaries, Phoenix Operating, LLC ("PhoenixOp") and Firebird Services LLC ("Firebird"). PhoenixOp is a Delaware limited liability company formed in January 2022 to drill, complete and operate wells in the United States. Firebird is a Delaware limited liability company formed in October 2023 to perform saltwater disposal services on wells operated by PhoenixOp.

Phoenix Energy has also formed several financing entities, including Phoenix Capital Group Holdings I, LLC ("PCGH I") in November 2022 and Adamantium Capital LLC ("Adamantium") in June 2023, to undertake financing efforts and raise debt capital through unregistered and registered debt offerings to retail investors.

The Company operates as a limited liability company for which Lion of Judah Capital, LLC ("Lion of Judah") was the majority profit-share owner and exclusive equity contributor until October 2024. In October 2024, as part of a reorganization of the Company, all the then-existing interests of the Company's profit-share partners, including Lion of Judah who had previously held a 60.18% interest in Phoenix Energy, were exchanged for interests in Phoenix Equity Holdings, LLC ("Phoenix Equity"), a Delaware limited liability company and the sole member of Phoenix Energy following the transaction. Lion of Judah remains the majority equity owner and controlling member of Phoenix Equity.

**Note 2 – Significant Accounting Policies** 

**Basis of preparation and principles of consolidation** 

The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The consolidated financial statements include the accounts of Phoenix Energy and its wholly-owned subsidiaries. All intercompany accounts and transactions with and between Phoenix Energy and its wholly-owned subsidiaries have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to current period presentation.

**Liquidity risk and management's plans** 

Liquidity risk is the risk that the Company's cash flows from operations will not be sufficient for the Company to continue operating and discharge its liabilities in the normal course of operations. The Company is exposed to liquidity risk as its continued operation is dependent upon its ability to continue to obtain financing, either in the form of debt or equity, or by achieving profitable operations in order to satisfy its liabilities as they come due.

As of December 31, 2024, the Company had negative working capital of approximately $69.9 million and a member's deficit of approximately $34.1 million. The Company expects to repay its financial liabilities in the

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

normal course of operations and to fund future operational and capital requirements through operating cash flows and through issuances of additional debt. As of March 26, 2025, after the balance sheet date, the Company had raised an additional $141.5 million of notes through its investor program (see [Note 8 – Debt](#otv72530_1) and [Note 18 – Subsequent Events](#otv72530_2)). Management believes its capital raises through its bond offerings will continue at or above this current pace.

The Company may need to conduct asset sales, which is not a planned course of action, and/or issuances of debt and/or equity if liquidity risk increases in any given period. The Company believes it has sufficient funds to meet foreseeable obligations by actively monitoring its credit facilities through use of the loans, asset sales, cost reductions and coordinating payment and revenue cycles.

The Company is required to evaluate whether or not its current financial condition, including its sources of liquidity at the date that the consolidated financial statements are issued, will enable the Company to meet its obligations as they come due within one year of the date of the issuance of these consolidated financial statements and to make a determination as to whether or not it is probable, under the application of this accounting guidance, that the Company will be able to continue as a going concern. In applying applicable accounting guidance, we considered the Company's current financial condition and liquidity sources, including current funds available, forecasted future cash flows, the Company's obligations due over the next twelve months as well as the Company's recurring business operating expenses, and believe to have sufficient financial resources to operate beyond the next twelve months following the date these consolidated financial statements are issued.

**Use of estimates** 

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the applicable reporting period of such statements. Accordingly, actual results could differ materially from these estimates.

The accompanying consolidated financial statements are based on a number of significant estimates including quantities of oil, natural gas and natural gas liquids ("NGL") reserves that are the basis for the calculations of depreciation, depletion, amortization, and determinations of impairment of oil and natural gas properties. Reservoir engineering is a subjective process of estimating underground accumulations of oil and natural gas and there are numerous uncertainties inherent in estimating quantities of proved oil and natural gas reserves. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment along with estimated selling prices. As a result, reserve estimates may materially differ from the quantities of oil and natural gas that are ultimately recovered.

**Segment information** 

The Company's Chief Executive Officer, who is our Chief Operating Decision Maker (the "CODM"), previously reviewed the Company's operating results on a consolidated basis and managed our operations as a single operating segment: Phoenix Capital. The objective of Phoenix Capital was to acquire mineral interests and non-operated working interests in oil and gas properties and once acquired, to share in the proceeds of the natural resources extracted and sold by the operator. The Company's financing activities and capital raise programs were also conducted under the Phoenix Capital segment.

In 2023, the Company began operating as two segments: Phoenix Capital and a new segment, PhoenixOp, which was formed to drill, extract and operate producing wells. The Company's performance was evaluated based on the operating profit of the respective segments.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

During the first quarter of 2024, the Company's activities associated with its debt securities offerings met the criteria specified in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 280 Segments to be classified as an operating segment, resulting in a change to the composition of the Company's reportable segments. The segment previously described as "Phoenix Capital" was split into two components: Mineral and Non-operating and Securities, and the segment previously described as "PhoenixOp" was renamed to the Operating segment. The Company began reporting these three segments during the first quarter of 2024 to align with the manner in which the CODM manages the business and allocates resources within the Company. The Company acquires mineral interests and non-operated working interests in oil and gas properties under the Mineral and Non-operating segment; drills, extracts and operates wells under the Operating segment; and conducts activities associated with its debt securities offerings under the Securities segment. All of the Company's operations are conducted in the United States.

Segment financial information as of and for the years ended December 31, 2023 and 2022 have been recast to reflect this change (See [Note 17 – Segments](#otv72530_3)).

**Cash and cash equivalents** 

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company maintains its cash and cash equivalents at financial institutions. The balances may exceed the Federal Deposit Insurance Corporation ("FDIC") insurance coverage and, as a result, there may be a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage.

**Asset retirement obligations** 

The fair value of a liability for an asset's retirement obligations is recognized in the period in which it is incurred if a reasonable estimate of fair value can be made, and the corresponding cost is capitalized as part of the carrying amount of the related long-lived asset. Over time, the liability is accreted for the change in its present value and the capitalized cost is depreciated over the useful life of the related asset. Asset retirement obligations ("ARO") are periodically adjusted to reflect changes in the estimated present value of the obligation resulting from revisions to the estimated timing or amount of the expected future cash flows. Upon settlement of the obligation, the Company eliminates the liability and, based on the actual cost to retire, may incur a gain or loss.

**Escrow account** 

Proceeds from investors who intend to purchase the Company's bonds but have not yet closed the transaction are classified as escrow account on the consolidated balance sheets. Amounts are reclassified to debt upon the execution of the subscription agreement and, where applicable, the satisfactory verification of the bondholder's accreditation.

**Accounts receivable** 

Accounts receivable consists of uncollateralized mineral and royalty income due from third party operators for oil and gas sales to purchasers and receipts from the Company's mineral and non-operated working interest ownership. It also consists of receivables from crude oil, natural gas and NGL purchasers and joint interest owners on properties operated by PhoenixOp.

In circumstances where the receivables relate to the Company's mineral and non-operated working interests, purchasers remit payment for production to the operator and the operator, in turn, remits payment to Phoenix Energy for the agreed-to royalties. Receivables are estimated in circumstances where the Company has not

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

received actual information, either due to timing delays or due to the unavailability of data at the time when revenues are recognized. Volume estimates for wells with available historical actual data are based on (i) the historical actual data for months where the data is available or (ii) engineering estimates for months where the historical actual data is not available. Pricing estimates are based upon actual prices realized in an area by adjusting the market price for the average basis differential from market on a basin-by-basin basis.

For receivables from joint interest owners on properties operated by PhoenixOp, the Company typically has the ability to withhold future revenue disbursements to recover non-payment of joint interest billings. Generally, receivables due to PhoenixOp are collected within two months.

The Company routinely reviews outstanding balances, assesses the financial strength of its customers, and if applicable, would record a reserve for credit losses for amounts not expected to be fully recovered. There was no credit loss reserve as of December 31, 2024, 2023, and 2022.

**Credit risk** 

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents, accounts receivable, revenues and derivative instruments. Revenues are concentrated among operators and purchasers engaged in the energy industry within the United States. By using derivative instruments to economically limit exposure to changes in commodity prices, the Company exposes itself to credit risk and market risk. When the fair value of a derivative contract is positive, the counterparty owes the Company, which creates credit risk. The Company's counterparties have been determined to have an acceptable credit risk for the size of derivative position placed; therefore, the Company does not require collateral from its counterparties. Management periodically assesses the financial condition of these entities and institutions and considers any possible credit risk to be minimal.

**Joint interest** 

The majority of the Company's oil and gas exploration, development, and production activities are conducted jointly with other entities and, accordingly, the consolidated financial statements reflect only the Company's proportionate interest in such activities.

**Earnest payments** 

Earnest payments are deposits paid to oil and gas property owners upon the execution of a purchase and sale agreement or a lease agreement for the acquisition of their interests. These deposits are generally refundable and reclassified to oil and gas properties on the consolidated balance sheets upon successful completion of title review and closing of the transaction, or expensed in the event the transaction is not consummated. Earnest payments expensed for the year ended December 31, 2024 was less than $0.1 million and no earnest payments were expensed for the years ended December 31, 2023 and 2022.

**Oil and gas properties** 

The Company invests in crude oil and natural gas properties, including mineral interests and working interests as a non-operator and operator. Exploration and production activities are accounted for in accordance with the successful-efforts method of accounting. Under this method, costs of acquiring proved mineral interests in crude oil and natural gas properties, development wells, related plant and equipment, and related ARO assets are capitalized. Costs of proved but undeveloped wells are initially capitalized to wells-in-progress until the well becomes productive. Once the well is productive, accumulated capitalized costs are reclassified as proved and

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

producing properties and accounted for following the successful efforts method of accounting. Costs are also capitalized for unevaluated wells that have found crude oil and natural gas reserves even if the reserves cannot be classified as proved when the drilling is completed, provided the unevaluated well has found a sufficient quality of reserves to justify its completion as an economically and operationally viable producing well. If proved reserves are not found, unevaluated well costs are expensed as dry holes. All other unevaluated wells and costs, and all general and administrative costs unrelated to acquisitions are expensed as incurred.

Depletion of capitalized costs is recorded using the units-of-production method based on proved reserves. The depletion rate is determined by dividing the cumulative recovered barrels of oil equivalent by the estimated ultimate recovery by well and averaged amongst all wells within the pooled unit. This rate is multiplied by the original cost basis and reduced by depletion taken in prior periods. The cost basis remaining represents the percentage of the asset remaining to be recovered by the wells within the pooled unit.

**Capitalized interest** 

The Company capitalizes interest on expenditures made in connection with exploration and development projects that are not yet subject to depletion. The amount capitalized is determined by multiplying the weighted-average cost of borrowings by the average amount of eligible accumulated capital expenditures and is limited to actual interest costs incurred during the period. Interest is capitalized only for the period that activities are in process to bring the projects to their intended use. The Company capitalized interest costs of $11.8 million and $2.1 million for the years ended December 31, 2024 and December 31, 2023, respectively. No interest cost was capitalized for the year ended December 31, 2022. Once an asset subject to interest capitalization is completed and placed in service, the associated capitalized interest is expensed through depletion.

**Equipment and other property** 

Equipment and other property are stated at cost. Depreciation is calculated using the straight-line method over the estimated useful lives (ranging from 3 to 7 years) of the respective assets. The costs of normal maintenance and repairs are charged to expense as incurred. Material expenditures that increase the life of an asset are capitalized and depreciated over the estimated remaining useful life of the asset. The cost of equipment and other property sold or otherwise disposed of, and the related accumulated depreciation, are removed from the consolidated balance sheet and any gain or loss is reflected in current earnings. These amounts are included in other noncurrent assets on the consolidated balance sheets.

**Impairment of long-lived assets** 

The Company follows the provisions of FASB ASC 360, *Property, Plant, and Equipment* ("ASC 360"). ASC 360 requires that long-lived assets be assessed for potential impairment of their carrying values whenever events or changes in circumstances indicate such impairment may have occurred. Proved oil and natural gas properties are evaluated by geologic basin for potential impairment. In accordance with the successful efforts method of accounting, impairment on proved properties is recognized when the estimated undiscounted projected future net cash flows, or evaluation value using expected future prices of a geologic basin are less than its carrying value. If impairment occurs, the carrying value of the impaired geologic basin is reduced to its estimated fair value.

Unproved oil and natural gas properties do not have producing properties and are valued on acquisition by management, with the assistance of an independent expert when necessary. As reserves are proved through the successful completion of exploratory wells, the cost is transferred to proved properties. The cost of the remaining unproved basis is periodically evaluated by management to assess whether the value of a property has

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

diminished. To do this assessment, management considers, (i) estimated potential reserves and future net revenues from an independent expert, (ii) its history in exploring the area, (iii) its future drilling plans per its capital drilling program prepared by its reservoir engineers and operations management, and (iv) other factors associated with the area. Impairment is taken on the unproved property value if it is determined that the costs are not likely to be recoverable. The valuation of unproved oil and gas properties is subjective and requires management to make estimates and assumptions which, with the passage of time, may prove to be materially different from actual results.

**Revenue from contracts with customers** 

The Company recognizes its revenues following ASC Topic 606*, Revenue from Contracts with Customers*, ("ASC 606"). The Company's revenues are primarily derived from its interests in the sale of oil and natural gas production. Oil, natural gas, and NGL sales revenues are generally recognized when control of the product is transferred to the customer, the performance obligations under the terms of the contracts with customers are satisfied and collectability is reasonably assured. In circumstances where the Company is the non-operator or mineral right owner, the Company does not consider itself to have control of the product, and revenues are recognized net of post-production expenses. The performance obligations for the Company's contracts with customers are satisfied as of a point in time through the delivery of oil and natural gas to its customers. Given the inherent time lag between when oil, natural gas, NGL production and sales occur, and when operators or purchasers often make disbursements to royalty interest owners and due to the large potential fluctuations of both production and sale price, a significant portion of the Company's revenue may represent accrued revenue based on estimated net sales volumes and estimated selling prices of the commodities.

For crude oil and natural gas produced by PhoenixOp, each delivery order is treated as a separate performance obligation. Revenue is recognized when the performance obligation is satisfied, which typically occurs at the point in time control of the product transfers to the customer. Revenue is measured as the amount the Company expects to receive in exchange for transferring commodities to the customer. The Company's commodity sales are typically based on prevailing market-based prices. When deliveries contain multiple products, an observable standalone selling price is generally used to measure revenue for each product. Revenues from product sales are presented separately from post-production expenses, including transportation costs, as the Company controls the operated production prior to its transfer to customers.

The Company, through Firebird, provides water disposal services to PhoenixOp and third parties with respect to oil and gas production from wells in which it is the operator. Pricing for such services represents a fixed rate fee based on the quantity of water volume processed. Intercompany charges associated with PhoenixOp's net interests are eliminated upon consolidation. The proportionate share of fees allocable to third party working interest owners are recognized as revenues over the course of time, as services are performed. Revenues from water services are recognized only when it is probable the Company will collect the consideration it is entitled to in exchange for the services transferred to the customer.

**Allocation of transaction price to remaining performance obligations** 

As the Company has determined that each unit of product generally represents a separate performance obligation, future volumes are wholly unsatisfied and disclosure of the transaction price allocated to remaining performance obligations is not required. The Company has utilized the practical expedient in ASC 606, which permits the Company to allocate variable consideration to one or more but not all performance obligations in the contract if the terms of the variable payment related specifically to the Company's efforts to satisfy that performance obligation and allocating the variable amount to the performance obligation is consistent with the allocation objective under ASC 606. Additionally, the Company will not disclose variable consideration subject to this practical expedient.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

**Equity-based compensation** 

The Company accounts for equity-based compensation using the fair value method. The grant-date fair value attributable to the equity awards is calculated based on a combination of an income approach based on the present value of estimated future cash flows, and a market approach based on market data of comparable businesses. Equity awards are granted by Phoenix Equity, the Company's parent, and are measured at fair value on the date of grant. The Company records equity-based compensation expense and a capital contribution from Phoenix Equity if the requisite service period is deemed to have been rendered and the performance-based condition, if applicable, is probable to be satisfied. Forfeitures are recognized as they occur. For further discussion, see [Note 11 – Equity-Based Compensation](#otv72530_4).

**Fair value measurements** 

The Company follows ASC 820, *Fair Value Measurements and Disclosures* ("ASC 820"). This standard defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 does not require any new fair value measurements but applies to assets and liabilities that are required to be recorded at fair value under other accounting standards. ASC 820 characterizes inputs used in determining fair value according to a hierarchy that prioritizes those inputs based upon the degree to which they are observable.

The three levels of the fair value measurement hierarchy are as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Measured based on prices or valuation models that required inputs that are both significant to the fair value measurement and less observable for objective sources (i.e., supported by little or no market activity).

The carrying values of the Company's current financial instruments, which include cash and cash equivalents, accounts receivable, accounts payable and accrued and other liabilities, approximated their fair values at December 31, 2024, 2023 and 2022 because of the short-term nature of these instruments. The estimated fair values of the Company's debt and operating lease liabilities approximated their carrying values using Level 2 fair value inputs as of December 31, 2024, 2023 and 2022. For a discussion of fair value measurements on the Company's derivatives and asset retirement obligations, refer to [Note 6 – Derivatives](#otv72530_5) and [Note 7 – Asset Retirement Obligations](#otv72530_6).

**Deferred debt issuance costs** 

Deferred debt issuance costs represent fees and other direct incremental costs incurred in connection with the Company's borrowings and offerings of the Company's debt securities. Upon issuance of the debt, the associated debt issuance costs are reclassified as a discount on the outstanding debt and amortized into interest expense, net of capitalized interest, over the term of the debt using the effective interest method.

**Income taxes** 

The Company is a limited liability company and has elected to be treated as a partnership for income tax purposes. The pro rata share of taxable income or loss is ultimately included in the individual income tax returns of the members of Phoenix Equity, the Company's parent. Consequently, no provision for incomes taxes is made in the accompanying consolidated financial statements.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

The Company remains subject to examination of its U.S. federal partnership tax returns for the tax years ended 2021 through 2024 and its state partnership tax returns for the tax years ended 2020 through 2024. Penalties and interest are classified as selling, general and administrative expense on the consolidated statements of operations.

**Recently adopted accounting standards** 

In November 2023, the FASB issued Accounting Standards Update ("ASU") 2023-07, *Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures* ("ASU 2023-07"). ASU 2023-07 requires companies to disclose significant segment expenses, and becomes effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company adopted ASU 2023-07 for the year ended December 31, 2024, and included additional disclosures as required in [Note 17 – Segments](#otv72530_7). There was no impact on our financial position and/or results of operations.

In March 2024, the FASB issued ASU 2024-01, *Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards* ("ASU 2024-01"). ASU 2024-01 provides guidance on how to apply the scope guidance to determine whether profits interests and similar awards should be accounted for as share-based payments arrangements, and becomes effective for fiscal years beginning after December 15, 2024, and interim periods within those annual periods. The Company early adopted ASU 2024-01 effective December 31, 2024 and the adoption did not have a material impact on the Company's consolidated financial statements. See [Note 11 – Equity-Based Compensation](#otv72530_8) for additional information.

**Recent accounting standards not yet adopted** 

In November 2024, the FASB issued ASU 2024-03, *Income Statement—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses* ("ASU 2024-03"). ASU 2024-03 requires companies to provide more detailed disclosures about the disaggregation of income statement expenses. The ASU aims to enhance the transparency and usefulness of financial statements by providing better insight into the components of expense line items, and becomes effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating the impact of the standard on our financial statements and disclosures.

Accounting pronouncements not listed above were assessed and determined to not have a material impact to the Company's consolidated financial statements.

**Note 3 – Restatement of Prior Year Financial Statements** 

In December 2023, the Company engaged its current independent registered public accounting firm, Ramirez Jimenez International CPAs, to audit the consolidated financial statements as of and for the year ended December 31, 2022 (the "2022 consolidated financial statements") in accordance with the standards of the Public Company Accounting Oversight Board (the "PCAOB"). Previously, the 2022 consolidated financial statements were audited by the Company's former auditor, Cherry Bekaert LLP, in accordance with generally accepted auditing standards in the United States ("GAAS") (the "2022 GAAS Financials"), as permitted for financial statements to be included in an offering circular for a Tier 2 offering pursuant to Regulation A under the U.S. Securities Act of 1933, as amended. Although Form 1-K permits an issuer to include in such form financial statements audited in accordance with GAAS, the Company was permitted, and elected, under Regulation A to file the 2022 consolidated financial statements audited in accordance with the PCAOB standards (the "2022 PCAOB Financials"). In connection with this audit, the Company and the current auditor determined that there were errors in the 2022 GAAS Financials, primarily due to the calculation of depletion expense resulting from

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

information becoming available subsequent to the issuance of the 2022 GAAS Financials, that are being corrected in the comparative periods of these consolidated financial statements as of and for the year ended December 31, 2024.

Subsequently, the Company restated its 2022 and 2023 consolidated financial statements to correct the accounting treatment for debt issuance costs incurred in connection with the Company's unregistered bond offerings and capitalized interest. Debt issuance costs were previously expensed immediately and interest costs were not capitalized. The Company corrected these errors in the comparative periods of these consolidated financial statements as of and for the year ended December 31, 2024, such that debt issuance costs associated with the Company's unregistered bond offerings are deferred and amortized over the weighted average debt term using the effective interest method. Further, interest incurred on expenditures made in connection with the Company's exploration and development projects not currently subject to depletion are capitalized and subsequently depleted in the same manner as the underlying assets.

The effects of the changes on the Company's consolidated financial statements as of and for the years ended December 31, 2023 and 2022 are summarized below.

**Description of Misstatements** 

The Company identified the following misstatements in the 2022 GAAS Financials:

*Oil and gas properties and asset retirement obligations*. The Company identified an error in the calculation of the Company's estimated retirement costs, which understated the Company's oil and gas properties (asset additions) and asset retirement obligation liability of $0.1 million and $0.2 million, respectively, as of December 31, 2022.

*Accumulated depletion and impairment.* The Company identified an error in the timing of the recognition of depletion expense, which overstated accumulated depletion and impairment by $2.2 million as of December 31, 2022. See discussion of depreciation, depletion, amortization, and accretion below.

*Right-of-use assets and operating lease liabilities*. The Company adjusted its right-of-use assets to reflect the adoption of ASC 842 *Leases* ("ASC 842") for public companies. The right-of-use assets amount was previously based on the Company's adoption of ASC 842 for non-public companies. The adjustment reduced the right-of-use asset by $0.4 million with a corresponding reduction to current operating lease liabilities and operating lease liabilities of $0.1 million and $0.3 million, respectively.

*Accounts payable*. The Company identified errors related to the recognition of certain invoices in the proper accounting period, which understated accounts payable by $0.9 million as of December 31, 2022.

*Escrow account.* The Company identified an error related to the misclassification of the escrow account liability, which was previously classified as a component of long-term debt as of December 31, 2022. See discussion of long-term debt, net of current portion below.

*Accrued and other liabilities.* The Company identified an error in the calculation of accrued interest, which overstated accrued and other liabilities by $0.9 million as of December 31, 2022, partially offset by a $0.2 million understatement relating to year-end performance bonuses which were not previously accrued.

*Long-term debt, net of current portion.* See discussion of escrow account above. The remaining difference relates to the classification of bond discount accretion, which was previously classified as a component of accrued interest and accretion in the 2022 GAAS Financials. The Company corrected the classification of unamortized debt discount to be in the same line item as the debt liability.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

*Members' equity.* The correction of the Company's misstatements on the consolidated statement of operations for the year ended December 31, 2022 resulted in an increase to members' equity. See discussion below.

*Revenues.* The Company identified an error relating to the classification of royalty owner deductions of $3.0 million as an operating expense for the year ended December 31, 2022. The reclassification from operating expense to contra-revenue is a result of the Company's conclusion that it is acting as the agent under its contracts with customers, and therefore must recognize revenue on a net basis in accordance with ASC 606, *Revenue from Contracts with Customers*.

*Depreciation, depletion, amortization, and accretion*: The Company identified an error in the calculation of the depletion expense, which previously excluded NGL reserves. The addition of NGL reserves decreased the depletion rate from 12.4% to 10.4%, which decreased the Company's depletion expense by $2.2 million.

*Payroll and payroll-related expense.* The Company had previously not accrued year-end performance bonuses, which resulted in understated payroll and payroll-related expense of $0.2 million for the year ended December 31, 2022. In addition, the Company reclassified $3.8 million of guaranteed payments previously classified as selling, general, and administrative expense to payroll and payroll-related expense on the consolidated statement of operations.

In addition to the items noted herein, the Company identified immaterial errors in periods prior to the year ended December 31, 2022, the impact of which is reflected as an adjustment to beginning member's equity of less than $0.1 million. The remainder of the notes to the Company's consolidated financial statements have been updated and restated, as applicable, to reflect the impacts of the restatement described above.

Subsequently, the Company identified the following misstatements in the 2022 and 2023 consolidated financial statements during the first quarter of 2025:

*Debt issuance costs.* The Company had previously immediately expensed debt issuance costs related to its unregistered bond offerings rather than amortizing them over the weighted-average term of the bonds, which resulted in overstated advertising and marketing expense, selling, general and administrative expense, and payroll and payroll-related expense, and understated interest expense and loss on debt extinguishment on the consolidated statements of operations for the years ended December 31, 2023 and 2022. Long-term debt, net of current portion was overstated by $34.4 million and $4.3 million on the consolidated balance sheets as of December 31, 2023 and 2022, respectively.

*Capitalized interest*. The Company had previously expensed all interest costs, rather than capitalizing interest incurred on expenditures made in connection with the Company's exploration and development projects as permitted under ASC 835-20, *Capitalized Interest.* This resulted in overstated interest expense on the consolidated statement of operations for the year ended December 31, 2023, and a corresponding understatement of oil and gas properties on the consolidated balance sheet as of December 31, 2023. There was no impact to the 2022 consolidated financial statements for capitalized interest.

The following tables present a reconciliation from the figures as previously reported to the restated amounts for the Company's consolidated balance sheets, statements of operations, statements of cash flows, and statements of changes in equity as of and for the years ended December 31, 2023 and 2022.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

**Corrected Consolidated Balance Sheets** 

---

| | | | |
|:---|:---|:---|:---|
|  | **December 31, 2023** | **December 31, 2023** | **December 31, 2023** |
| *(in thousands)* | **As Previously<br>Reported** | **Debt Issuance<br>Costs,<br>Capitalized<br>Interest and<br>Other<br>Corrections** | **As Restated** |
|  Oil and gas properties | $476264 | $2075 | $478339 |
|  Net oil and gas properties | 421593 | 2075 | 423668 |
|  Total assets | 491092 | 2075 | 493167 |
|  Long-term debt, net of current portion | 329519 | (34352) | 295167 |
|  Total liabilities | 532353 | (34352) | 498001 |
|  Member's equity (deficit) | (41261) | 36427 | (4834) |
|  Total liabilities and member's equity (deficit) | 491092 | 2075 | 493167 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
| *(in thousands)* | **As Previously<br>Reported** | **Misstatement<br>Corrections to<br>2022 GAAS<br>Financials** | **Debt Issuance<br>Costs,<br>Capitalized<br>Interest and<br>Other<br>Corrections** | **As Restated** |
|  Oil and gas properties | $165252 | $138 | $— | $165390 |
|  Accumulated depletion and impairment | (22839) | 2204 |  | (20635) |
|  Net oil and gas properties | 142413 | 2342 |  | 144755 |
|  Right-of-use assets | 2152 | (354) |  | 1798 |
|  Total assets | 155013 | 2007 |  | 157020 |
|  Accounts payable | 18583 | 855 |  | 19438 |
|  Escrow account |  | 701 |  | 701 |
|  Current operating lease liabilities | 413 | (108) |  | 305 |
|  Accrued and other liabilities | 2908 | (672) |  | 2236 |
|  Total current liabilities | 80457 | 776 |  | 81233 |
|  Long-term debt, net of current portion | 64501 | (684) | (4336) | 59481 |
|  Accrued interest | 306 | (15) |  | 291 |
|  Operating lease liabilities | 1853 | (256) |  | 1597 |
|  Asset retirement obligations | 62 | 150 |  | 212 |
|  Total liabilities | 152712 | (29) | (4336) | 148347 |
|  Member's equity | 2301 | 2036 | 4336 | 8673 |
|  Total liabilities and member's equity (deficit) | 155013 | 2007 |  | 157020 |

---

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

**Corrected Consolidated Statements of Operations** 

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31, 2023** | **Year ended December 31, 2023** | **Year ended December 31, 2023** |
| *(in thousands)* | **As Previously<br>Reported** | **Debt Issuance<br>Costs,<br>Capitalized<br>Interest and<br>Other<br>Corrections** | **As Restated** |
|  Advertising and marketing | $36696 | $(32560) | $4136 |
|  Selling, general and administrative | 19112 | (4798) | 14314 |
|  Payroll and payroll-related | 18817 | (6084) | 12733 |
|  Total operating expenses | 129560 | (43442) | 86118 |
|  Income (loss) from operations | (11455) | 43442 | 31987 |
|  Interest expense | (36859) | (11023) | (47882) |
|  Loss on debt extinguishment |  | (328) | (328) |
|  Total other expenses | (36825) | (11351) | (48176) |
|  Net income (loss) | (48280) | 32091 | (16189) |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year ended December 31, 2022** | **Year ended December 31, 2022** | **Year ended December 31, 2022** | **Year ended December 31, 2022** |
| *(in thousands)* | **As Previously<br>Reported** | **Misstatement<br>Corrections to<br>2022 GAAS<br>Financials** | **Debt Issuance<br>Costs,<br>Capitalized<br>Interest and<br>Other<br>Corrections** | **As Restated** |
|  Mineral and royalty revenues | $57563 | $(3009) | $— | $54554 |
|  Total revenues | 57563 | (3009) |  | 54554 |
|  Cost of sales | 12582 | (3009) |  | 9573 |
|  Depreciation, depletion, amortization, and accretion | 14337 | (2193) |  | 12144 |
|  Advertising and marketing | 5350 |  | (3997) | 1353 |
|  Selling, general, and administrative | 9356 | (3793) |  | 5563 |
|  Payroll and payroll-related expenses | 3412 | 3965 | (1354) | 6023 |
|  Total operating expenses | 45037 | (5030) | (5351) | 34656 |
|  Income from operations | 12526 | 2021 | 5351 | 19898 |
|  Interest expense | (10990) | 20 | (923) | (11893) |
|  Loss on debt extinguishment |  |  | (92) | (92) |
|  Total other expenses | (13229) | 20 | (1015) | (14224) |
|  Net income (loss) | (703) | 2041 | 4336 | 5674 |

---

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

**Corrected Consolidated Statements of Changes in Equity** 

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in thousands)* | **As Previously<br>Reported** | **Misstatement<br>Corrections to<br>2022 GAAS<br>Financials** | **Debt Issuance<br>Costs,<br>Capitalized<br>Interest and<br>Other<br>Corrections** | **As Restated** |
|  Balance at December 31, 2021 (As Restated) | $2908 | $(4) | $— | $2904 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contributions | 200 |  |  | 200 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Distributions | (105) |  |  | (105) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loss (As Restated) | (703) | 2041 | 4336 | 5674 |
|  Balance at December 31, 2022 (As Restated) | $2300 | $2037 | $4336 | $8673 |
|  Balance at December 31, 2022 (As Restated) | 4337 |  | 4336 | 8673 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contributions | 10150 |  |  | 10150 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Distributions | (7468) |  |  | (7468) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income (As Restated) | (48280) |  | 32091 | (16189) |
|  Balance at December 31, 2023 (As Restated) | $(41261) | $— | $36427 | $(4834) |

---

**Corrected Consolidated Statements of Cash Flows** 

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31, 2023** | **Year ended December 31, 2023** | **Year ended December 31, 2023** |
| *(in thousands)* | **As Previously<br>Reported** | **Debt Issuance<br>Costs,<br>Capitalized<br>Interest and<br>Other<br>Corrections** | **As Restated** |
|  Net loss | $(48280) | $32091 | $(16189) |
|  Adjustments to reconcile net loss to net cash used in operating activities: |  |  |  |
|  Amortization of debt discount and debt issuance costs | 656 | 13097 | 13753 |
|  Loss on debt extinguishment |  | 328 | 328 |
|  Net cash (used in) provided by operating activities | (47342) | 45516 | (1826) |
|  Additions to oil and gas properties and leases | (286417) | 7756 | (278661) |
|  Payments of debt issuance costs |  | (43441) | (43441) |
|  Payments of deferred closings | 6851 | (9831) | (2980) |
|  Net cash provided by financing activities | 334580 | (53272) | 281308 |

---

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year ended December 31, 2022** | **Year ended December 31, 2022** | **Year ended December 31, 2022** | **Year ended December 31, 2022** |
| *(in thousands)* | **As Previously<br>Reported** | **Misstatement<br>Corrections to<br>2022 GAAS<br>Financials** | **Debt Issuance<br>Costs,<br>Capitalized<br>Interest and<br>Other<br>Corrections** | **As Restated** |
|  Net income (loss) | $(703) | $2041 | $4336 | $5674 |
|  Adjustments to reconcile net income (loss) to net cash used in operating activities: |  |  |  |  |
|  Depreciation, depletion, amortization, and accretion | 14337 | (2193) |  | 12144 |
|  Amortization of right-of-use assets | 114 | (10) |  | 104 |
|  Amortization of debt discount and debt issuance costs | 1004 | (987) | 923 | 940 |
|  Unrealized loss (gain) on derivatives |  | (46) |  | (46) |
|  Loss on debt extinguishment |  |  | 92 | 92 |
|  Changes in operating assets and liabilities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Earnest payments |  | (788) |  | (788) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable | 321 | 23 |  | 344 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued and other liabilities | 1006 | 864 |  | 1870 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Escrow account |  | 701 |  | 701 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest | 868 | (577) |  | 291 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | (658) | 705 |  | 47 |
|  Net cash provided by operating activities | 13559 | (268) | 5351 | 18642 |
|  Additions to oil and gas properties and leases | (100224) | 17 | 8944 | (91263) |
|  Net cash used in investing activities | (100849) | 17 | 8944 | (91888) |
|  Proceeds from issuances of debt, net of discount | 85136 | (4388) | (249) | 80499 |
|  Payments of debt issuance costs |  |  | (5351) | (5351) |
|  Repayments of debt | (1000) | 3687 |  | 2687 |
|  Payments of deferred closings | 7653 | 605 | (8695) | (437) |
|  Net cash flows provided by financing activities | 91884 | (96) | (14295) | 77493 |

---

**Note 4 – Oil and Gas Properties** 

Oil and gas properties, net consist of the following:

---

| | | | |
|:---|:---|:---|:---|
|  | **December 31,** | **December 31,** | **December 31,** |
| *(in thousands)* | **2024** | **2023** | **2022** |
|  Proved oil and natural gas properties<sup>(a)</sup> | $687366 | $371625 | $123527 |
|  Unproved oil and natural gas properties | 318855 | 106714 | 41863 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total oil and gas properties | 1006221 | 478339 | 165390 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Accumulated depletion and impairment | (140376) | (54671) | (20635) |
|  Oil and gas properties, net | $865845 | $423668 | $144755 |

---

(a) Represents proved and undeveloped (i.e., wells in progress) and proved and producing properties.

The Company considers a property proved when geological and engineering data can demonstrate with reasonable certainty that estimated quantities of oil, natural gas, and NGLs can be recoverable from known reservoirs in future periods under the economic and operating conditions (i.e., prices and costs) that exist at the time the estimates are made.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

A property is unproved when there are currently no producing wells pooling the property. For the majority of the value of the unproven properties in 2024, the Company has analyzed the wells within a 10-mile radius of the property to conclude the property is economically viable for oil extraction and has the potential to be drilled and become proved reserves.

Depletion on oil and gas properties was $84.8 million, $34.0 million, and $12.0 million for the years ended December 31, 2024, 2023, and 2022, respectively.

Depreciation expense on the Company's equipment and other property was $0.1 million for the years ended December 31, 2024, 2023, and 2022, respectively.

**Impairment** 

When the Company performs its annual impairment test or circumstances indicate that the proved oil and gas properties may be impaired, the Company compares expected undiscounted future cash flows to the assets' carrying value grouped by geologic basin. If the undiscounted future cash flows, based on the Company's estimate of significant Level 3 inputs, including futures prices, anticipated production from proved reserves and other relevant data, are lower than the assets' carrying value, the carrying value is reduced to fair value. Impairment expense also includes write-offs associated with title defects and lease expirations of the Company's oil and gas properties, which totaled $0.6 million for the year ended December 31, 2024. In 2023, the Company's proved natural gas properties with a carrying value of approximately $2.0 million were written down to their fair value of approximately $1.0 million due to a decline in the Henry Hubs future price. Impairment expense of approximately $1.0 million was recognized for the year ended December 31, 2023.

**Note 5 – Revenue** 

Revenue from contracts with customers is presented as mineral and royalty revenues and product sales on the consolidated statements of operations. The Company is paid mineral and royalty revenue monthly by the various operators and working interest owners within the pooled units that the Company owns, and PhoenixOp is paid revenue monthly for the commodities it extracts and delivers to purchasers. Mineral and royalty revenues within the mineral and non-operating segment are presented net of post-production costs charged by the operator, whereas product sales revenue within the operating segment are presented separately from post-production costs, including transportation costs, on the consolidated statements of operations. Other costs, including severance taxes and lease operating expenses are presented as cost of sales on the consolidated statements of operations for both the mineral and non-operating and operating segments.

In 2024, the Company began generating revenues from performing saltwater disposal services on wells in which it is the operator. Revenues are driven primarily by the volumes of produced water and flowback water the Company injects into its saltwater disposal facilities and the fees the Company charges for these services. Fees are charged on a per-barrel basis and are recognized as revenues in accordance with ASC 606.

Other revenue is comprised of redemption fees that are charged to investors, generally upon the early redemption of their investments. For the securities segment, other revenue also includes intersegment interest revenue earned from the mineral and non-operating and operating segments that is eliminated in the consolidated statements of operations.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

The following table presents the Company's revenue from contracts with customers and other revenue for the years ended December 31, 2024, 2023, and 2022 by segment:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** |
| *(in thousands)* | **Mineral and<br>Non-Operating** | **Operating** | **Securities** | **Eliminations** | **Total** |
|  Revenue from customers | $152999 | $128127 | $— | $— | $281126 |
|  Other revenue |  |  | 101 |  | 101 |
|  Intersegment revenue | 136 |  | 102030 | (102166) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $153135 | $128127 | $102131 | $(102166) | $281227 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31, 2023** | **Year Ended December 31, 2023** | **Year Ended December 31, 2023** | **Year Ended December 31, 2023** | **Year Ended December 31, 2023** |
| *(in thousands)* | **Mineral and<br>Non-Operating** | **Operating** | **Securities** | **Eliminations** | **Total** |
|  Revenue from customers | $116863 | $1225 | $— | $— | $118088 |
|  Other revenue |  |  | 17 |  | 17 |
|  Intersegment revenue | 39 |  | 40492 | (40531) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $116902 | $1225 | $40509 | $(40531) | $118105 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31, 2022** | **Year Ended December 31, 2022** | **Year Ended December 31, 2022** | **Year Ended December 31, 2022** | **Year Ended December 31, 2022** |
| *(in thousands)* | **Mineral and<br>Non-Operating** | **Operating** | **Securities** | **Eliminations** | **Total** |
|  Revenue from customers | $54554 | $— | $— | $— | $54554 |
|  Intersegment revenue |  |  | 4991 | (4991) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $54554 | $— | $4991 | $(4991) | $54554 |

---

The following tables present the Company's revenue from contracts with customers disaggregated by product type for the periods presented:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** |
| *(in thousands)* | **Mineral and<br>Non-Operating** | **Operating** | **Securities** | **Eliminations** | **Total** |
|  Crude oil | $138640 | $123340 | $— | $— | $261980 |
|  Natural gas sales | 5424 | 315 |  |  | 5739 |
|  NGL | 8935 | 1994 |  |  | 10929 |
|  Water services |  | 2478 |  |  | 2478 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $152999 | $128127 | $— | $— | $281126 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31, 2023** | **Year Ended December 31, 2023** | **Year Ended December 31, 2023** | **Year Ended December 31, 2023** | **Year Ended December 31, 2023** |
| *(in thousands)* | **Mineral and<br>Non-Operating** | **Operating** | **Securities** | **Eliminations** | **Total** |
|  Crude oil | $104631 | $1140 | $— | $— | $105771 |
|  Natural gas sales | 6776 | 14 |  |  | 6790 |
|  NGL | 5456 | 71 |  |  | 5527 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $116863 | $1225 | $— | $— | $118088 |

---

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31, 2022** | **Year Ended December 31, 2022** | **Year Ended December 31, 2022** | **Year Ended December 31, 2022** | **Year Ended December 31, 2022** |
| *(in thousands)* | **Mineral and<br>Non-operating** | **Operating** | **Securities** | **Eliminations** | **Total** |
|  Crude oil | $47493 | $— | $— | $— | $47493 |
|  Natural gas sales | 7061 |  |  |  | 7061 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $54554 | $— | $— | $— | $54554 |

---

The following table summarizes major customers that make up 10% or more of accounts receivable as of December 31, 2024, 2023, and 2022:

---

| | | | |
|:---|:---|:---|:---|
|  | **December 31,** | **December 31,** | **December 31,** |
|  | **2024** | **2023** | **2022** |
|  Customer A | 17% | —% | 34% |
|  Customer B | 15% | —% | —% |
|  Customer C | 13% | —% | —% |
|  Customer D | —% | 26% | —% |
|  Customer E | —% | 14% | —% |
|  Customer F | —% | —% | 10% |

---

The following table summarizes major customers that make up 10% or more of revenue for the years ended December 31, 2024, 2023, and 2022:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2024** | **2023** | **2022** |
|  Customer A | 21% | —% | —% |
|  Customer B | —% | 11% | 14% |
|  Customer C | —% | —% | 16% |
|  Customer D | —% | —% | 16% |
|  Customer E | —% | —% | 15% |

---

**Note 6 – Derivatives** 

The Company periodically enters into commodity derivative contracts to manage its exposure to crude oil price risk. Additionally, the Company is required to hedge a portion of anticipated crude oil production for future periods pursuant to its debt covenants under the Fortress Credit Agreement, as further described in [Note 8 – Debt](#otv72530_9). The Company does not enter into derivative contracts for speculative trading purposes.

When the Company utilizes crude oil commodity derivative contracts, it expects to enter into put/call collars, fixed swaps or put options to hedge a portion of its anticipated future production. A collar contract establishes a floor and ceiling price on contracted volumes and provides payment to the Company if the index price falls below the floor or requires payment by the Company if the index price rises above the ceiling. A fixed swap contract sets a fixed price and provides payment to the Company if the index price is below the fixed price or requires payment by the Company if the index price is above the fixed price. A put arrangement gives the Company the right to sell the underlying crude oil commodity at a strike price and provides payment to the Company if the index price falls below the strike price. No payment or receipt occurs if the index price is higher than the strike price. As of December 31, 2024, the Company's derivatives were comprised of crude oil commodity derivative contacts indexed to the U.S. New York Mercantile Exchange West Texas Intermediate ("WTI"). The Company has not designated its derivative contracts for hedge accounting and, as a result, records the net change in the

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

mark-to-market valuation of the derivative contracts and all payments and receipts on settled derivative contracts in its consolidated statements of operations. All derivative contracts are recorded at fair market value and included in the consolidated balance sheets as assets or liabilities. Derivative assets and liabilities are presented net on the consolidated balance sheets when a legally enforceable master netting arrangement exists with the counterparty.

As of December 31, 2024, the Company's open crude oil derivative contracts consisted of the following:

---

| | | | |
|:---|:---|:---|:---|
|  | **Settlement Period** | **Settlement Period** | **Settlement Period** |
| *(volumes in Bbl and prices in $/Bbl)* | **2025** | **2026** | **2027** |
|  **Two-Way Collars** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Notional Volumes | 624900 | 367700 | 259000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Weighted Average Ceiling Price | $76.02 | $71.69 | $69.86 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Weighted Average Floor Price | $59.35 | $56.01 | $57.42 |
|  **Swaps** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Notional Volumes | 2174200 | 1260000 | 894000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Weighted Average Contract Price | $68.86 | $64.62 | $63.07 |

---

The following table summarizes the gains and losses on derivative instruments included on the consolidated statements of operations and the net cash payments thereto for the periods presented. Cash flows associated with these non-hedge designated derivatives are reported within operating activities on the consolidated statements of cash flows.

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| *(in thousands)* | **2024** | **2023** | **2022** |
|  Loss on derivative instruments | $(5986) | $(32) | $(2239) |
|  Net cash receipts (payments) on derivatives | 1532 | 100 | (1328) |

---

Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement.

Certain assets and liabilities are reported at fair value on a recurring basis, including the Company's derivative instruments. The fair values of the Company's derivative contracts are measured internally using established commodity futures price strips for the underlying commodity provided by a reputable third party, the contracted notional volumes, and time to maturity. These valuations are Level 2 inputs.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

The following table provides (i) fair value measurement information for financial assets and liabilities measured at fair value on a recurring basis, (ii) the gross amounts of recognized derivative assets and liabilities, (iii) the amounts offset under master netting arrangements with counterparties, and (iv) the resulting net amounts presented in the Company's consolidated balance sheets as of December 31, 2024, 2023 and 2022. The net amounts are classified as current or noncurrent based on their anticipated settlement dates. Current derivative assets are presented as other current assets and current derivative liabilities are presented as a component of accrued and other liabilities on the consolidated balance sheets.

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
| *(in thousands)* | **Balance Sheet Location** | **Level 1** | **Level 2** | **Level 3** | **Total Gross<br>Fair Value** | **Gross<br>Amounts<br>Offset in<br>Balance<br>Sheet** | **Net Fair<br>Value<br>Presented<br>in Balance<br>Sheet** |
|  **Assets** |  |  |  |  |  |  |  |
|  Commodity derivatives | Other current assets | $— | $2138 | $— | $2138 | $(2037) | $101 |
|  Commodity derivatives | Other noncurrent assets |  | 3000 |  | 3000 | (3000) |  |
|  |  | $— | $5138 | $— | $5138 | $(5037) | $101 |
|  **Liabilities** |  |  |  |  |  |  |  |
|  Commodity derivatives | Accrued and other liabilities | $— | $(4574) | $— | $(4574) | $2037 | $(2537) |
|  Commodity derivatives | Other noncurrent liabilities |  | (7858) |  | (7858) | 3000 | (4858) |
|  |  | $— | $(12432) | $— | $(12432) | $5037 | $(7395) |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2023** | **December 31, 2023** | **December 31, 2023** | **December 31, 2023** | **December 31, 2023** | **December 31, 2023** | **December 31, 2023** |
| *(in thousands)* | **Balance Sheet Location** | **Level 1** | **Level 2** | **Level 3** | **Total Gross<br>Fair Value** | **Gross<br>Amounts<br>Offset in<br>Balance<br>Sheet** | **Net Fair<br>Value<br>Presented<br>in Balance<br>Sheet** |
|  **Assets** |  |  |  |  |  |  |  |
|  Commodity derivatives | Other current assets | $— | $71 | $— | $71 | $— | $71 |
|  |  | $— | $71 | $— | $71 | $— | $71 |
|  **Liabilities** |  |  |  |  |  |  |  |
|  Commodity derivatives | Accrued and other liabilities | $— | $— | $— | $— | $— | $— |
|  |  | $— | $— | $— | $— | $— | $— |

---

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
| *(in thousands)* | **Balance Sheet Location** | **Level 1** | **Level 2** | **Level 3** | **Total Gross<br>Fair Value** | **Gross<br>Amounts<br>Offset in<br>Balance<br>Sheet** | **Net Fair<br>Value<br>Presented<br>in Balance<br>Sheet** |
|  **Assets** |  |  |  |  |  |  |  |
|  Commodity derivatives | Other current assets | $— | $18 | $— | $18 | $(18) | $— |
|  |  | $— | $18 | $— | $18 | $(18) | $— |
|  **Liabilities** |  |  |  |  |  |  |  |
|  Commodity derivatives | Accrued and other liabilities | $— | $(20) | $— | $(20) | $18 | $(2) |
|  |  | $— | $(20) | $— | $(20) | $18 | $(2) |

---

**Note 7 – Asset Retirement Obligations** 

The Company's asset retirement obligations relate to the future plugging and abandonment of wells and related facilities. As of December 31, 2024, 2023 and 2022, the net present value of the total ARO was estimated to be $1.3 million, $0.6 million and $0.2 million, respectively, with the undiscounted value being $12.9 million, $7.7 million and $2.7 million, respectively. Total ARO shown in the table below consists of amounts for future plugging and abandonment liabilities on wellbores in which the Company has a working interest or are operated by the Company, adjusted for inflation at a rate of 2.56%, 2.50% and 2.55% per annum as of December 31, 2024, 2023 and 2022, respectively. These values are discounted to present value using a rate of 10.0% per annum for the years ended December 31, 2024, 2023 and 2022.

The following table summarizes the changes in the ARO for the periods presented:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| *(in thousands)* | **2024** | **2023** | **2022** |
|  Asset retirement obligations at beginning of period | $697 | $212 | $40 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additions | 1430 | 430 | 155 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derecognition | (975) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accretion | 180 | 55 | 17 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Revisions in estimated cash flows | 15 |  |  |
|  Asset retirement obligations at end of period<sup>(a)</sup> | $1347 | $697 | $212 |

---

(a) Current ARO is classified as a component of accrued and other liabilities and noncurrent ARO is classified as
asset retirement obligations on the consolidated balance sheets. As of December 31, 2024 and 2023, current ARO was approximately $0.2 million and $0.1 million, respectively, and noncurrent ARO was approximately $1.2 million and
$0.6 million, respectively.

ARO is measured using primarily Level 3 inputs. The significant unobservable inputs to this fair value measurement include estimates of plugging costs, remediation costs, inflation rate, and well life. The inputs are calculated based on historical data as well as current estimated costs.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

**Note 8 – Debt** 

**Short-Term Debt** 

*Amarillo National Bank Credit Agreement* 

In July 2023, the Company entered into a one-year credit agreement with Amarillo National Bank ("ANB") for a $30.0 million revolving line of credit (the "ANB Credit Agreement"). The Company fully repaid the ANB Credit Agreement in August 2024 with proceeds received from the Fortress Term Loan, as further described below. The ANB Credit Agreement bore interest at the Wall Street Journal's prime rate plus 3.0% per annum, with a floor of 9.0% per annum. Interest expense of $2.1 million and $1.5 million was attributable to the ANB Credit Agreement for the years ended December 31, 2024 and 2023, respectively. There was no outstanding balance under the ANB Credit Agreement as of December 31, 2024. As of December 31, 2023, the outstanding balance of the ANB Credit Agreement was $19.1 million.

*Merchant Cash Advances* 

In December 2024, Phoenix Energy fully repaid its outstanding balances under the merchant cash advance agreements it had entered into with several financial institutions. The Company sold its future receivables for cash advances under these agreements, which were short-term and required the Company to repay the advances on a weekly or bi-weekly basis. Repayment amounts incorporated factor rates, which indicate the percentage of the loan amount that is to be repaid, ranging from 1.17 to 1.23 for merchant cash advances outstanding of $6.7 million as of December 31, 2023, and 1.15 to 1.33 for merchant cash advances outstanding of $6.8 million as of December 31, 2022. Interest expense attributable to the merchant cash advances was $3.0 million, $2.5 million, and $2.9 million for the years ended December 31, 2024, 2023 and 2022, respectively.

**Long-Term Debt** 

The following table summarizes the Company's long-term debt for the periods presented:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Maturity Date** | **Maturity Date** | | **December 31,** | **December 31,** | **December 31,** |
| *(in thousands)* | **Earliest**<br>**Date** | **Latest Date** | **Interest Rate<sup>(a)</sup>** | **2024** | **2023** | **2022** |
|  Unsecured debt - Regulation D | 1/10/2025 | 12/10/2035 | 5.0% to 15.0% | $497823 | $313681 | $46979 |
|  Unsecured debt - Regulation A | 1/10/2025 | 8/10/2027 | 9.0% | 104884 | 85250 | 35868 |
|  Adamantium Securities | 1/10/2029 | 12/10/2035 | 13.0% to 16.5% | 135180 | 22824 |  |
|  Fortress Term Loan |  | 12/18/2027 | Term SOFR + 7.10% | 250000 |  |  |
|  Cortland Line of Credit |  |  | — % |  |  | 23000 |
|  Cortland Term Loan |  |  | — % |  |  | 3833 |
|  Other |  |  |  |  | 289 | 369 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total outstanding debt |  |  |  | 987887 | 422044 | 110049 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Unamortized debt discount and issuance costs<sup>(b)</sup> |  |  |  | (89432) | (39839) | (4529) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Current portion of long-term debt |  |  |  | (103240) | (87038) | (46039) |
|  Total long-term debt, net of current portion |  |  |  | $795215 | $295167 | $59481 |

---

(a) Represents the contractual interest rate as of December 31, 2024.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

(b) Amortized into interest expense using the effective interest method. Write-offs of debt issuance costs
associated with the redemption of bonds issued under the Company's unregistered debt offerings are classified as loss on debt extinguishment in the consolidated statements of operations.

The following table summarizes the aggregate contractual annual maturities for the Company's long-term debt outstanding as of December 31, 2024, excluding unamortized debt discount and issuance costs:

---

| | |
|:---|:---|
|  *(in thousands)* |  |
| **Year Ending December 31,** | **Amount** |
| 2025 | $103319 |
| 2026 | 203279 |
| 2027 | 212976 |
| 2028 | 14724 |
| 2029 | 43700 |
|  Thereafter | 409889 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $987887 |

---

*Unsecured Debt* 

Phoenix Energy has several bond offerings issued under Regulation A and Rule 506(c) of Regulation D of federal securities law. Under the federal securities laws, any offer or sale of a security must be registered with the Securities Exchange Commission ("SEC") or qualify for an exemption. Regulation A and Regulation D provide certain exemptions from the registration requirements, which allow companies to offer and sell their securities without having to register the offering with the SEC. The Company first commenced its bond offerings pursuant to Regulation D in July 2020, and subsequently Regulation A in December 2021, and have since issued a cumulative combined total of $948.5 million of debt to investors from inception through December 31, 2024. The bonds have terms ranging from one to eleven years. In instances where interest is compounded, interest is accrued monthly. Interest expense attributable to these bonds totaled $60.7 million, $29.5 million, and $4.1 million for the years ended December 31, 2024, 2023, and 2022 respectively.

In March 2024, the Company filed an amendment to the Form 1-A that was originally qualified by the SEC in December 2021 (as amended) to update the maximum offering available for sale of the Company's 9.0% unsecured bonds. This amendment offered up to $31.7 million of the Company's bonds, which, under Regulation A, represented the maximum that could be offered out of the $75.0 million limit on securities the Company was authorized to issue over a rolling twelve-month period. The Company issued $31.6 million of Regulation A bonds during the year ended December 31, 2024, of which $1.8 million was subsequently early redeemed.

*Adamantium Securities* 

In September 2023, the Company, through its wholly-owned subsidiary, Adamantium, commenced an offering of bonds exempt from registration pursuant to Rule 506(c) of Regulation D (the "Adamantium Bonds"). The Adamantium Bonds offer high net worth individuals a debt instrument that is unsecured but structurally senior to other bonds sold by the Company under Regulation A and Regulation D. The Adamantium Bonds have maturity terms that range from five to eleven years and bear interest ranging from 13.0% to 16.5% per annum. In November 2024, Adamantium issued a $7.0 million seven-year promissory note to an investor bearing interest at 16.5% per annum (the "Adamantium Secured Note," and together with the Adamantium Bonds, "the Adamantium Securities"). The Adamantium Securities contain customary events of default and may be redeemed at the option of Adamantium at any time without premium or penalty. The holders of Adamantium Bonds also have a right to request redemption of their bonds in certain circumstances at a discount to par, subject to a limit of

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

10% of the then-outstanding principal amount of Adamantium Bonds in any given calendar year. The holder of the Adamantium Secured Note has the right to request redemption of its note at par, subject to a limit of $5.0 million in aggregate principal amount of the Adamantium Secured Note in any 12-month period.

*Cortland Credit Line of Credit and Term Loan* 

In October 2021, the Company obtained a $23.0 million revolving line of credit with Cortland Credit Lending Corporation ("Cortland") due in October 2023 (the "Cortland Line of Credit"). The Cortland Line of Credit accrued interest at a variable rate per annum equal to the greater of (a) 10.50% or (b) the TD Bank US Prime Rate plus 7.25% and was payable monthly. Subsequently, in October 2022, the Company issued a $5.0 million five-year term loan with Cortland bearing the same interest rate as the Cortland Line of Credit, plus an additional fixed fee of $83,333 per month.

In April 2023, the Company agreed to a "term out" of its existing obligations with Cortland and converted the line of credit and term loan into a $26.8 million term loan maturing in January 2024 (the "Cortland Term Loan"). The Company was required to repay the Cortland Term Loan in ten equal payments of $2.7 million per month, plus interest. There were no changes to the interest rate terms resulting from the term out conversion. In July 2023, the Company fully repaid the Cortland Term Loan with the proceeds of the ANB Credit Agreement (as defined above). Interest expense attributable to Cortland of $2.1 million and $3.3 million was recognized for the years ended December 31, 2023 and 2022, respectively. Prior to the repayment, our obligations under the credit agreements with Cortland were collateralized by the Company's oil and gas properties.

*Fortress Credit Agreement* 

In August 2024, the Company entered into a secured credit agreement (the "Fortress Credit Agreement") with Fortress Credit Corp. ("Fortress") for a $100.0 million term loan facility (the "Fortress Term Loan"), borrowed in full upon closing, and a $35.0 million delayed draw term loan facility (the "DDTL Facility") that was subsequently drawn in October 2024. In December 2024, the Company entered into an amendment with Fortress which provided for a new tranche of term loans in an aggregate principal amount of $115.0 million (the "Fortress Tranche C Loan" and, together with the Fortress Term Loan and the DDTL Facility, the "Fortress Loans") that was borrowed in full immediately upon closing. The proceeds from the Fortress Loans were used, in part, to pay all amounts owed under the ANB Credit Agreement. The remaining proceeds are being used for the development of the Company's oil and gas properties in accordance with the approved plan of development provided in the Fortress Credit Agreement. Debt issuance costs of $4.3 million, together with the $7.5 million debt discount associated with the Fortress Loans, are amortized to interest expense over the term of the loan.

The Fortress Loans bear interest at a rate per annum equal to Term Secured Overnight Financing Rate ("SOFR") plus a margin of 7.1%, which is due and payable at the last day of each fiscal quarter. As of December 31, 2024, the all-in interest rate was 11.7%. The amendment the Company entered into December 2024 extended the maturity date from August 2027 to December 2027 and revised the repayment schedule such that at least $125.0 million of the outstanding principal is to be repaid by December 2026, with the remainder due upon maturity. Additionally, in connection with any payment in full of the Fortress Loans, the Company is required to pay a repayment premium in an amount that achieves a multiple on invested capital of 1.18, as defined in the Fortress Credit Agreement.

The Fortress Credit Agreement also includes an $8.5 million tranche of loans (the "Tranche B Loan"), which represents a contingent principal obligation that is only due and payable (together with accrued interest thereon) upon certain conditions occurring, including payment defaults under the Fortress Credit Agreement or a bankruptcy filing by the Company. No value was attributed to this embedded feature as this feature was determined to be triggered by events with only a remote probability of occurrence.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

Loans under the Fortress Credit Agreement are secured by substantially all of the assets of Phoenix Energy, PhoenixOp and certain of the Company's other wholly-owned subsidiaries. The Fortress Credit Agreement also contains various customary affirmative and negative covenants, including financial covenants that require the Company to maintain (a) a maximum total secured leverage ratio as of the last day of any fiscal quarter ending on or before December 31, 2025 of less than or equal to 2.00 to 1.00 (commencing with the fiscal quarter ending December 31, 2024) and (i) as of the last day of any fiscal quarter ending on or after March 31, 2026 of less than or equal to 1.50 to 1.00, (b) a minimum current ratio as of the last day of each calendar month of (i) 0.90 to 1.00 from September 30, 2024 through October 31, 2024, (ii) 0.80 to 1.00 from November 30, 2024 through November 30, 2025, (iii) 0.90 to 1.00 from December 31, 2025 through December 31, 2026 and (iv) 1.00 to 1.00 for each calendar month ending thereafter and (c) a minimum asset coverage ratio as of the last day of any fiscal quarter of at least 2.00 to 1.00. Additionally, the Fortress Credit Agreement requires the Company to enter into and maintain through September 30, 2025, hedges covering at least 75% of the initially anticipated monthly production of crude oil from the Company's proved developed reserves for a 36-month period. See [Note 6 – Derivatives](#otv72530_10). As of December 31, 2024, we were in compliance with all covenants contained in the Fortress Credit Agreement.

**Interest Expense on Debt** 

The following table presents the total interest expense incurred on the Company's debt:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| *(in thousands)* | **2024** | **2023** | **2022** |
|  Stated interest | $85409 | $36204 | $10953 |
|  Amortization of debt discount and debt issuance costs | 16621 | 13753 | 940 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest cost | 102030 | 49957 | 11893 |
|  Capitalized interest | (11820) | (2075) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest expense, net | $90210 | $47882 | $11893 |

---

**Note 9 – Accrued and Other Liabilities** 

The following table summarizes the Company's accrued and other liabilities for the periods presented:

---

| | | | |
|:---|:---|:---|:---|
|  | **December 31,** | **December 31,** | **December 31,** |
| *(in thousands)* | **2024** | **2023** | **2022** |
|  Accrued capital expenditures and lease operating expenses | $37150 | $1373 | $959 |
|  Revenue payables | 4441 | 383 |  |
|  Accrued personnel costs | 4316 | 803 | 161 |
|  Advances from joint interest partners | 4105 | 1785 |  |
|  Current derivative liabilities | 2537 |  | 2 |
|  Accrued interest | 1746 | 1873 | 108 |
|  Unredeemed matured bonds | 1338 |  |  |
|  Asset retirement obligations | 165 | 112 |  |
|  Other | 1549 | 59 | 1006 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $57346 | $6388 | $2236 |

---

Accrued capital expenditures and lease operating expenses are primarily associated with drilling, completion and operating activities on wells operated by PhoenixOp. As of December 31, 2024, PhoenixOp had placed 32 wells into production and had an additional 39 wells in various stages of development.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

In circumstances where the Company serves as the operator, the Company receives production proceeds from the purchaser and distributes the amounts to other royalty owners based on their respective ownership interests. Production proceeds that the Company has not yet distributed to these owners are reflected as revenue payables and classified as a component of accrued and other liabilities in the consolidated balance sheets. The Company recognizes revenue for only its net revenue interest in oil and natural gas properties.

**Note 10 – Deferred Closings** 

Deferred closings represent agreements entered into by the Company with mineral interest owners that provide for the acquisition price to be paid in installments. Deferred closing arrangements have terms ranging from 11 to 48 months and interest rates ranging from 8.0% to 15.0% per annum. Interest is accrued on a quarterly basis.

The following table summarizes the aggregate annual contractual settlements for the Company's deferred closing arrangements as of December 31, 2024:

---

| | |
|:---|:---|
| *(in thousands)* |  |
| **Year Ending December 31,** | **Amount** |
| 2025 | $7189 |
| 2026 | 3260 |
| 2027 | 64 |
| 2028 |  |
| 2029 |  |
|  Thereafter |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $10513 |

---

**Note 11 – Equity-Based Compensation** 

In December 2024, the Company adopted the 2024 Long-Term Incentive Plan (the "2024 Incentive Plan"). Under the 2024 Incentive Plan, Phoenix Equity, the Company's parent, may grant awards to service providers of the Company, which may be paid in units, cash, or other property, as determined by each individual award agreement. Unit awards may be granted with performance conditions and service conditions, depending on the individual award, and may be subject to vesting or other terms. Performance conditions are contingent on the specified condition being met, whereby service conditions depend solely on the employee rendering service to the Company for the requisite service period as defined within each individual award agreement. The 2024 Incentive Plan provides for the issuance of Class A Units, Class B Units and Phantom Units of Phoenix Equity's interests to service providers of the Company, including employees and independent contractors. Each of the Class A, B and Phantom Units are entitled to distributions to the extent such distributions are declared by Phoenix Equity. No distributions have been declared or paid to date. As of December 31, 2024, 0.9 million of Class A Units and 2.8 million of Class B Units were authorized and issued to employees, and 1.0 million Phantom Units were authorized but not yet issued.

The 2024 Incentive Plan superseded and replaced all prior incentive plans, and resulted in the cancellation and termination of any previously outstanding awards, wherein 2.4 million previously granted unit awards to 10 grantees were canceled and regranted. Regranted unit awards included updated terms and conditions, including updated performance and service vesting conditions. However, with respect to 289,290 Class A units and 249,460 Class B units, no new vesting conditions were added, and upon the cancellation and regrant, the Company recognized no additional equity-based compensation expense for these vested unit awards for the year ended December 31, 2024.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

A summary of the activity under the 2024 Incentive Plan as of December 31, 2024, and changes during the year then ended, is presented below.

---

| | | |
|:---|:---|:---|
|  | **Number of<br>Units** | **Weighted<br>Average Per<br>Share Grant<br>Date Fair Value** |
|  Nonvested at December 31, 2023 |  | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Granted - Class A Units | 610710 | 55.74 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Granted - Class B Units | 2564440 | 55.74 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Vested |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Forfeited |  |  |
|  Nonvested at December 31, 2024 | 3175150 |  |

---

During the year ended December 31, 2024, Phoenix Equity granted 0.6 million Class A unit awards and 2.6 million Class B unit awards contingent on the achievement of a performance condition (the "performance unit awards"), all of which will only vest upon the Company undergoing a liquidity event (e.g., change in control). No compensation cost will be recognized for the performance unit awards until a liquidity event occurs. The Company has elected to account for forfeitures as they occur.

As of December 31, 2024, there was $177.0 million of total unrecognized compensation cost related to nonvested performance unit awards granted under the 2024 Incentive Plan, measured based on the fair value of the awards; that cost is expected to be recognized at the time a liquidity event occurs.

The fair value of each unit granted under the 2024 Incentive Plan was valued on the date of grant under an independent third-party valuation, which included a combination of an income approach, based on the present value of estimated future cash flows, and a market approach based on market data of comparable businesses. The weighted-average assumptions used in the valuation of performance unit awards granted for the year ended December 31, 2024, are presented in the table below:

---

| | |
|:---|:---|
|  | **2024** |
|  Dividend yield<sup>(a)</sup> | —% |
|  Risk-free interest rate<sup>(b)</sup> | 4.38% |
|  Expected volatility<sup>(c)</sup> | 57.50% |
|  Expected term (in years)<sup>(d)</sup> | 5.00 |
|  Discount for lack of marketability<sup>(e)</sup> | 30.00% |

---

(a) The Company has no history or expectation of paying cash dividends on its awards.

(b) The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected life of
the awards in effect at the time of grant.

(c) Volatility was estimated based on the different interests being appraised, leveraging historical volatility for
comparable publicly traded organizations within its industry. The Company lacks company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly
traded set of peer companies within the industry with characteristics similar to the Company.

(d) The expected term represents the estimated period, in years, until a liquidity event occurs.

(e) Discount for lack of marketability was determined using the Restricted Stock Studies, Chaffee Put Option,
Finnerty's Put Option, and Qualitative Mandelbaum Factor approaches.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

**Note 12 – Related Parties** 

**Debt Offerings** 

Certain of the Company's executives and their family members participate in the Company's unregistered debt offerings. During the years ended December 31, 2024, 2023, and 2022, these officers and their family members purchased, in aggregate, 4,458, 2,847 and 924 of the combined Regulation A+ and Regulation D bonds, respectively, for a total purchase price of $4.4 million, $2.8 million and $0.9 million. Interest expense attributable to these securities was $0.5 million, $0.2 million, and less than $1.0 million for the years ended December 31, 2024, 2023, and 2022, respectively. As of December 31, 2024, 2023, and 2022, there were 2,860, 2,055, and 759 of bonds outstanding with carrying values of $2.9 million, $2.0 million, and $0.8 million, respectively.

**Lion of Judah** 

The Company paid interest expense of less than $0.2 million to a financial institution on behalf of Lion of Judah related to a certain financing agreement between Lion of Judah and the financial institution for the year ended December 31, 2024. No such payments were made in the prior periods. Interest payments made by the Company on behalf of Lion of Judah are discretionary in nature.

**Note 13 – Leases** 

The Company leases its office facilities under noncancelable multi-year operating lease agreements. The Company determines whether a contract contains a lease at inception by determining if the contract conveys the right to control the use of identified office space for a period of time in exchange for consideration. The Company's lease agreements contain lease and non-lease components, which are generally accounted for separately with amounts allocated to the lease and non-lease components based on relative stand-alone prices.

Right of use ("ROU") assets and lease liabilities are recognized at the commencement date based on the present value of the future minimum lease payments over the lease term. Renewal and termination clauses that are factored into the determination of the lease term if it is reasonably certain that these options would be exercised by the Company. Lease assets are amortized over the lease term unless there is a transfer of title or purchase option reasonably certain of exercise, in which case the asset life is used. The Company's lease agreements include variable payments. Variable lease payments not dependent on an index or rate primarily consist of common area maintenance charges and are not included in the calculation of the ROU asset and lease liability and are expensed as incurred. In order to determine the present value of lease payments, the Company uses the implicit rate when it is readily determinable or the Company's incremental borrowing rate based on the Company's existing line of credit facilities.

The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. As of December 31, 2024, the Company does not have leases where it is involved with the construction or design of an underlying asset, has no material obligation for leases signed but not yet commenced and does not have any material sublease activities.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

The following table summarizes the Company's future minimum lease payments as of December 31, 2024:

---

| | |
|:---|:---|
| *(in thousands)* |  |
| **Year Ending December 31,** | **Amount** |
| 2025 | $1293 |
| 2026 | 1328 |
| 2027 | 1329 |
| 2028 | 1262 |
| 2029 | 1218 |
|  Thereafter | 3047 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total lease payments | 9477 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: interest | (2961) |
|  Present value of lease liabilities | $6516 |

---

The following table shows the line item classification of our right-of-use assets and lease liabilities on the Company's consolidated balance sheets:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | **December 31,** | **December 31,** | **December 31,** |
| *(in thousands)* | **Line item** | **2024** | **2023** | **2022** |
|  Right-of-use assets – operating | Right of use assets, net | $6010 | $4542 | $1798 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total right-of-use assets |  | $6010 | $4542 | $1798 |
|  Current operating lease liabilities | Current operating lease liabilities | $656 | $567 | $305 |
|  Noncurrent operating lease liabilities | Operating lease liabilities | 5860 | 4225 | 1597 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total lease liabilities |  | $6516 | $4792 | $1902 |
|  Weighted average remaining lease term (in years) |  | 7.16 | 6.29 | 5.43 |
|  Weighted average discount rate |  | 10.29% | 9.16% | 9.16% |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| *(in thousands)* | **2024** | **2023** | **2022** |
|  Operating leases<sup>(a)</sup> | $1393 | $1168 | $211 |
|  Short-term leases<sup>(a)</sup> |  | 138 | 232 |
|  Variable lease payments<sup>(a)</sup> | 83 | 20 | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net operating lease cost | $1476 | $1326 | $445 |

---

(a) Expenses are classified within selling, general and administrative expense on the consolidated statements of
operations.

**Note 14 – Defined Contribution Plan** 

The Company has a 401(k) defined contribution plan which permits participating employees to defer up to a maximum of 100% of their compensation, subject to limitations established by the Internal Revenue Service. In January 2024, the Company began providing matching contributions of up to 3.0% of the employees' compensation which vest ratably over a three-year period. The Company recognized compensation cost of $0.2 million related to its contributions to the plan for the year ended December 31, 2024.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

**Note 15 – Commitments and Contingencies** 

For a summary of the Company's lease obligations, see [Note 13 – Leases](#otv72530_11).

**Litigation** 

From time to time, the Company may become involved in other legal proceedings or be subject to claims arising in the ordinary course of business. Although the results of ordinary course litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these ordinary course matters will not have a material adverse effect on its business, financial condition, results of operations or cash flows. Regardless of the outcome, litigation can have an adverse impact because of defense and settlement costs, diversion of management resources and other factors.

**Drilling Rig Contracts** 

The Company has entered into drilling rig contracts to procure drilling services for wells operated by PhoenixOp. The contracts are short-term and provide a daily operating rate as consideration for services performed by the third-party provider. As of December 31, 2024, the Company was subject to $8.4 million of commitments under these contracts.

**Crude Oil Delivery Commitments** 

The Company, through PhoenixOp, is subject to an arrangement pursuant to which it has committed to provide a total of 3.65 million barrels of crude oil, with a yearly minimum of 730,000 barrels of crude oil, from January 2024 to December 2028. The Company is subject to a shortfall fee in the event it fails to meet this commitment. No shortfalls have occurred to date. As a part of this arrangement, PhoenixOp has dedicated to the counterparty certain rights to all oil extracted from its wells in certain properties in North Dakota. The Company delivered 2.3 million barrels of crude oil during the year ended December 31, 2024, and the remaining aggregate commitment under the contract as of December 31, 2024 is approximately 1.4 million barrels of crude oil.

**Note 16 – Supplemental Information to Consolidated Statements of Cash Flows** 

The following table summarizes supplemental information to the consolidated statements of cash flows for the periods presented:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| *(in thousands)* | **2024** | **2023** | **2022** |
|  Supplemental disclosure of cash flow information: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash interest paid, net of capitalized interest | $42700 | $23802 | $9723 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash paid for operating leases | 927 | 569 | 188 |
|  Supplemental disclosure of non-cash transactions: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Capital expenditures in accounts payable and accrued and other liabilities | $29895 | $25002 | $15746 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Modification of right-of-use asset and lease liability | 1608 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Right-of-use asset obtained in exchange for lease liability | 503 | 3166 | 1902 |

---

**Note 17 – Segments** 

Segment operating profit is used as a performance metric by the CODM in determining how to allocate resources and assess performance as this measure provides insight into the segments' operations and overall

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

success of a segment for a given period. Segment operating profit is calculated as total segment revenue less operating costs attributable to the segment, which includes allocated corporate costs that are overhead in nature and not directly associated with the segments, such as certain general and administrative expenses, executive or shared-function payroll costs and certain limited marketing activities. Corporate costs are allocated to the segments based on usage and headcount, as appropriate. Segment operating profit excludes other income and expense, such as interest expense, interest income, gain (loss) on derivatives, loss on debt extinguishment, even though these amounts are allocated to the segments and provided to the CODM. Transactions between segments are accounted for on an accrual basis and are eliminated upon consolidation. Interest expense is allocated to the segments based on the carrying value of the oil and gas properties owned by the respective segment at the balance sheet date, and interest income and gain (loss) on derivatives are allocated using the same basis as corporate costs.

The following table summarizes segment operating profit (loss) and reconciliation to net income (loss) for the periods presented:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| *(in thousands)* | **2024** | **2023** | **2022** |
|  Segment operating profit |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mineral and Non-operating | $43499 | $49018 | $23248 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating | 44145 | (5500) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Securities | 86781 | 28961 | 1641 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Eliminations | (102030) | (40492) | (4991) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total segment operating profit | 72395 | 31987 | 19898 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income | 705 | 66 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense | (90210) | (47882) | (11893) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on derivatives | (5986) | (32) | (2239) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on debt extinguishment | (1697) | (328) | (92) |
|  Net income (loss) | $(24793) | $(16189) | $5674 |

---

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

The following tables present financial information by segment as of and for the years ended December 31, 2024, 2023, and 2022.

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| *(in thousands)* | **2024** | **2023** | **2022** |
|  Significant expenses |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mineral and Non-Operating |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cost of sales | $30236 | $19265 | $9573 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation, depletion, amortization and accretion | 50607 | 34193 | 12144 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Selling, general and administrative | 14362 | 6813 | 3712 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payroll and payroll-related | 13303 | 6399 | 5296 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other segment items<sup>(a)</sup> | 1128 | 1214 | 581 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cost of sales | $33847 | $507 | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation, depletion, amortization and accretion | 35370 | 35 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Selling, general and administrative | 6215 | 2786 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payroll and payroll-related | 8550 | 3157 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other segment item<sup>(b)</sup> |  | 240 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Securities |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Advertising and marketing | $679 | $3656 | $772 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Selling, general and administrative | 8590 | 4715 | 1851 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payroll and payroll-related | 6081 | 3177 | 727 |
|  Interest expense |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mineral and non-operating | $63782 | $40688 | $11893 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating | 26428 | 7194 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Securities | 102030 | 40492 | 4991 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Eliminations | (102030) | (40492) | (4991) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest expense | $90210 | $47882 | $11893 |
|  Capital expenditures |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mineral and non-operating | $352358 | $231285 | $91888 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating | 252074 | 47376 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Eliminations | (166729) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total capital expenditures | $437703 | $278661 | $91888 |

---

(a) Other segment items include advertising and marketing expense, loss on sale of assets, and impairment expense.

(b) Other segment item includes advertising and marketing expense.

---

| | | | |
|:---|:---|:---|:---|
|  | **December 31,** | **December 31,** | **December 31,** |
| *(in thousands)* | **2024** | **2023** | **2022** |
|  Assets |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mineral and Non-operating | $898300 | $469185 | $157020 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating | 332721 | 68821 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Securities | 6918 | 29448 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Eliminations | (208869) | (74287) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total assets | $1029070 | $493167 | $157020 |

---

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

The following table summarizes the Company's oil and natural properties by proved and unproved properties, location and by segment (before accumulated depletion):

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
| *(in thousands)* | **Mineral and<br>Non-Operating** | **Operating** | **Securities** | **Eliminations** | **Consolidated<br>Total** |
|  Oil and natural gas properties, proved |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Williston Basin | $184740 | $351864 | $— | $— | $536604 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Powder River Basin | 47780 |  |  |  | 47780 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Denver-Julesburg | 45193 |  |  |  | 45193 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Permian Basin | 20050 |  |  |  | 20050 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Marcellus | 1306 |  |  |  | 1306 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Uinta Basin | 34731 |  |  |  | 34731 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 1702 |  |  |  | 1702 |
|  Total proved properties | $335502 | $351864 | $— | $— | $687366 |
|  Oil and natural gas properties, unproved |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Williston Basin | $209437 | $7300 | $— | $— | $216737 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Powder River Basin | 29853 |  |  |  | 29853 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Denver-Julesburg | 35619 |  |  |  | 35619 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Permian Basin | 6752 |  |  |  | 6752 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Uinta Basin | 28045 |  |  |  | 28045 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 1849 |  |  |  | 1849 |
|  Total unproved properties | $311555 | $7300 | $— | $— | $318855 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2023** | **December 31, 2023** | **December 31, 2023** | **December 31, 2023** | **December 31, 2023** |
| *(in thousands)* | **Mineral and<br>Non-Operating** | **Operating** | **Securities** | **Eliminations** | **Consolidated<br>Total** |
|  Oil and natural gas properties, proved |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Williston Basin | $189651 | $60372 | $— | $— | $250023 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Powder River Basin | 38536 |  |  |  | 38536 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Denver-Julesburg | 46781 |  |  |  | 46781 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Permian Basin | 25375 |  |  |  | 25375 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Uinta Basin | 7959 |  |  |  | 7959 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 2951 |  |  |  | 2951 |
|  Total proved properties | $311253 | $60372 | $— | $— | $371625 |
|  Oil and natural gas properties, unproved |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Williston Basin | $40599 | $5120 | $— | $— | $45719 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Powder River Basin | 28922 |  |  |  | 28922 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Denver-Julesburg | 22231 |  |  |  | 22231 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Permian Basin | 1001 |  |  |  | 1001 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Uinta Basin | 8379 |  |  |  | 8379 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 462 |  |  |  | 462 |
|  Total unproved properties | $101594 | $5120 | $— | $— | $106714 |

---

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
| *(in thousands)* | **Mineral and<br>Non-Operating** | **Operating** | **Securities** | **Eliminations** | **Consolidated<br>Total** |
|  Oil and natural gas properties, proved |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Williston Basin | $70794 | $— | $— | $— | $70794 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Powder River Basin | 27569 |  |  |  | 27569 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Denver-Julesburg | 15536 |  |  |  | 15536 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Permian Basin | 9618 |  |  |  | 9618 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 10 |  |  |  | 10 |
|  Total proved properties | $123527 | $— | $— | $— | $123527 |
|  Oil and natural gas properties, unproved |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Williston Basin | $14269 | $— | $— | $— | $14269 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Powder River Basin | 1336 |  |  |  | 1336 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Denver-Julesburg | 14755 |  |  |  | 14755 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Permian Basin | 8911 |  |  |  | 8911 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 2592 |  |  |  | 2592 |
|  Total unproved properties | $41863 | $— | $— | $— | $41863 |

---

**Note 18 – Subsequent Events** 

Management has evaluated subsequent events through March 26, 2025, in connection with the preparation of these consolidated financial statements, which is the date the consolidated financial statements were available to be issued. The Company has determined that there were no material such events that warrant disclosure or recognition in the consolidated financial statements, except for the following:

In January 2025, Phoenix Capital Group Holdings, LLC changed its name to Phoenix Energy One, LLC.

The Company is continuing to raise debt capital under its exempt debt offerings. Since the balance sheet date and through March 26, 2025, the Company issued approximately $107.6 million and $33.9 million of its Regulation D and Adamantium bonds, respectively, under the same terms and conditions as the existing securities.

**Note 19 – Supplemental Information on Oil and Natural Gas Operations (unaudited)** 

**Geographic Area of Operations** 

All of the Company's proved reserves are located within the continental United States, with the majority concentrated in North Dakota, Montana, Utah, Texas, Colorado and Wyoming.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

**Costs Incurred in Oil and Natural Gas Property Acquisitions and Development Activities** 

Costs incurred in oil and natural gas property acquisition and development, whether capitalized or expensed, are presented below:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| *(in thousands)* | **2024** | **2023** | **2022** |
|  Acquisition Costs of Properties |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proved | $202725 | $100282 | $35998 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unproved | 311555 | 83432 | 43359 |
|  Development Costs | 418493 | 70933 | 37691 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $932773 | $254647 | $117048 |

---

Property acquisition costs include costs incurred to purchase, lease or otherwise acquire a property. Development costs include costs incurred to gain access to and prepare development well locations for drilling, to drill and equip development wells, and to provide facilities to extract, treat and gather natural gas.

**Oil and Natural Gas Capitalized Costs** 

Aggregate capitalized costs related to oil and natural gas production activities with applicable accumulated depreciation, depletion and amortization including impairments, are presented below:

---

| | | | |
|:---|:---|:---|:---|
|  | **December 31,** | **December 31,** | **December 31,** |
| *(in thousands)* | **2024** | **2023** | **2022** |
|  Proved oil and natural gas properties | $687366 | $371625 | $123527 |
|  Unproved oil and natural gas properties | 318855 | 106714 | 41863 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total oil and gas properties | 1006221 | 478339 | 165390 |
|  Less: Accumulated depletion and impairment | (140376) | (54671) | (20635) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Oil and gas properties, net | $865845 | $423668 | $144755 |

---

**Oil and Natural Gas Reserve Information** 

The following table sets forth estimated net quantities of the Company's proved developed oil and natural gas reserves. Estimated reserves for the periods presented are based on the unweighted average of first-day-of-the-month commodity prices over the period January through December for the year in accordance with definitions and guidelines set forth by the SEC and the FASB. For estimates of oil reserves, the average WTI spot oil prices used were $76.32, $78.21, and $94.14 per barrel as of December 31, 2024, 2023 and 2022, respectively. These average prices are adjusted for quality, transportation fees, and market differentials. For estimates of natural gas reserves, the average Henry Hub prices used were $2.130, $2.637, and $6.357 per MMBtu as of December 31, 2024, 2023 and 2022, respectively. These average prices are adjusted for energy content, transportation fees, and market differentials.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

Reserve estimates do not include any value for probable or possible reserves that may exist, nor do they include any value for undeveloped acreage. The reserve estimates represent the Company's net revenue interest in its properties. Although the Company believes these estimates are reasonable, actual future production, cash flows, taxes, development expenditures, production costs and quantities of recoverable oil and natural gas reserves may vary substantially from these estimates.

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Proved Developed and Undeveloped Reserves:** | **Oil**<br>**(Bbls)** | **Natural Gas**<br>**(Mcf)** | **Natural Gas<br>Liquids**<br>**(Bbls)** | **Total**<br>**(BOE)<sup>(a)</sup>** |
|  **As of December 31, 2021** | 2105157 | 3972925 |  | 2767311 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Production | (523416) | (1058506) |  | (699834) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Divestitures |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of reserves in place | 1165585 | 2331222 |  | 1554122 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Extensions and discoveries | 58367 | 101435 |  | 75273 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Revisions of previous estimates | 886029 | 2277136 |  | 1265552 |
|  **As of December 31, 2022** | 3691722 | 7624212 |  | 4962424 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Production | (1446928) | (2152939) | (201454) | (2007205) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Divestitures |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of reserves in place | 1078682 | 1077933 | 168207 | 1426545 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Extensions and discoveries | 28697688 | 25945687 | 7407103 | 40429072 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Revisions of previous estimates | 28871 | (678800) | 789652 | 705390 |
|  **As of December 31, 2023** | 32050035 | 31816093 | 8163508 | 45516225 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Production | (3830461) | (2979341) | (415363) | (4742381) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Divestitures | (66654) | (9186) | (3702) | (71887) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of reserves in place | 580118 | 1922022 | 147354 | 1047809 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Extensions and discoveries | 20123921 | 13465004 | 2108197 | 24476286 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Revisions of previous estimates | 965595 | (5903628) | (2398383) | (2416726) |
|  **As of December 31, 2024** | 49822554 | 38310963 | 7601611 | 63809326 |
|  **Proved Developed Reserves** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; December 31, 2021 | 2105157 | 3972925 |  | 2767311 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; December 31, 2022 | 3691722 | 7624212 |  | 4962424 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; December 31, 2023 | 7124194 | 12250285 | 1514761 | 10680669 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; December 31, 2024 | 18624758 | 20819874 | 2848355 | 24943092 |
|  **Proved Undeveloped Reserves<sup>(b)</sup>** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; December 31, 2021 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; December 31, 2022 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; December 31, 2023 | 24925841 | 19565808 | 6648747 | 34835556 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; December 31, 2024 | 31197795 | 17491089 | 4753257 | 38866233 |

---

(a) Estimated proved reserves are presented on an oil-equivalent basis
using a conversion of six Mcf per barrel of "oil equivalent." This conversion is based on energy equivalence and not price or value equivalence. If a price equivalent conversion based on the twelve-month average prices for the year ended
December 31, 2024 was used, the conversion factor would be approximately 35.8 Mcf per Bbl of oil.

(b) In early 2023, PhoenixOp was established with the intention that certain leaseholds held by Phoenix Energy
would be developed by PhoenixOp. PhoenixOp executed a contract for a drilling rig with Patterson-UTI Drilling Company in June 2023, which allowed for previously unbooked reserves to be estimated and booked as
proved undeveloped in accordance with SEC guidelines for reserves categorization and estimation and in adherence to the five-year rule as set forth by the SEC.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

At December 31, 2024, total estimated proved reserves were approximately 63,809,326 Boe, a 18,293,101 Boe net increase from the previous year end's estimate of 45,516,225 Boe. Proved developed reserves of 24,943,092 Boe increased approximately 14,262,423 Boe from December 31, 2023 as a result of proved developed reserves acquisitions of 1,047,809 Boe, extensions of 3,268,997 Boe, and total positive revisions of previous estimates of 14,759,886 Boe, offset by divestitures of 71,887 Boe and production from proved developed reserves of 4,742,381 Boe. The total positive revisions of previous estimates comprised: (i) positive price revisions of 1,263 Boe; (ii) positive transfer of 14,871,911 Boe from proved undeveloped to proved developed reserves; (iii) negative well performance revisions of (481,161) Boe; (iv) positive revisions of 715,795 Boe due to interest changes; and (v) negative revisions of (347,922) Boe due to changes in lifting cost. Proved undeveloped reserves of 38,866,233 Boe increased approximately 4,030,677 Boe from December 31, 2023 as a result of proved undeveloped reserves extensions of 21,207,289 and total negative revisions of previous estimates of 17,176,612 Boe. The total negative revisions of previous estimates comprised: (i) positive price revisions of 48,935 Boe; (ii) negative transfer of (14,871,911) Boe from proved undeveloped to proved developed reserves; and (iii) negative well performance revisions of (2,353,636) Boe due to asset development reconfiguration and type curve adjustments. During the year ended December 31, 2024, approximately $450.0 million in capital expenditures went toward the acquisition and development of proved developed reserves, which includes drilling, completion, and other facility costs associated with acquiring and developing wells. For the year ended December 31, 2024, approximately $87.4 million in capital expenditures were related to the conversion of proved undeveloped reserves to proved developed reserves. All proved undeveloped reserves disclosed as of December 31, 2024 are scheduled to be converted to proved developed status within five years of initial disclosure.

At December 31, 2023, total estimated proved reserves were approximately 45,516,225 Boe, a 40,553,802 Boe net increase from the previous year end's estimate of 4,962,424 Boe. Proved developed reserves of 10,680,669 Boe increased approximately 5,718,245 Boe from December 31, 2022 as a result of proved developed reserves acquisitions of 1,426,545 Boe, extensions of 5,682,894 Boe, and total positive revisions of previous estimates of 616,010 Boe, offset by production from proved developed reserves of 2,007,205 Boe. The total positive revisions of previous estimates comprised: (i) negative price revisions of (13,622) Boe, (ii) transfer of (89,378) Boe from proved developed to proved undeveloped due to previous misclassifications of reserve, (iii) positive well performance revisions of 515,938 Boe, and (iv) positive revisions of 203,072 Boe due to changes in lifting cost. Proved undeveloped reserves of 34,835,556 Boe increased approximately 34,835,556 Boe from December 31, 2022 as a result of revisions due to previous misclassification of 89,378 Boe of reserves as proved developed reserves and due to the addition of 34,746,179 Boe of operated proved undeveloped reserves stemming from the signing of a drilling rig contract in June 2023. During the year ended December 31, 2023, approximately $171.2 million in capital expenditures went toward the acquisition and development of proved developed reserves, which includes drilling, completion, and other facility costs associated with acquiring and developing wells. At December 31, 2022, there were no proved undeveloped reserves. Therefore, no capital expenditures for the year ended December 31, 2023 were related to the conversion of proved undeveloped reserves to proved developed reserves.

At December 31, 2022, total estimated proved reserves were approximately 4,962,424 Boe, a 2,195,112 Boe net increase from the previous year end's estimate of 2,767,312 Boe at December 31, 2021. Proved developed reserves of 4,962,424 Boe represented an increase of approximately 2,195,112 Boe from December 31, 2021 as a result of proved developed reserves acquisitions of 1,554,122 Boe, extensions of 75,272 Boe, and total positive revisions of previous estimates of 1,265,552 Boe, offset by production of 699,834 Boe. The total positive revisions of previous estimates comprised (i) positive price revisions of 524,667 Boe and (ii) positive well performance revisions of 740,885 Boe. During the year ended December 31, 2022, approximately $117.1 million in capital expenditures went toward the acquisition and development of proved reserves, which includes drilling, completion, and other facility costs associated with acquiring and developing wells. At December 31, 2021, there

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Consolidated Financial Statements** 

were no proved undeveloped reserves. Therefore, no capital expenditures for the year ended December 31, 2022 were related to the conversion of proved undeveloped reserves to proved developed reserves.

**Standardized Measure of Discounted Future Net Cash Flows** 

Future cash inflows represent expected revenues from production of period-end quantities of proved reserves based on the 12-month unweighted average of first-day-of-the-month commodity prices for the periods presented. All prices are adjusted by field for quality, transportation fees, energy content and regional price differentials. Future cash inflows are computed by applying applicable prices relating to the Company's proved reserves to the year-end quantities of those reserves. Future production, development, site restoration and abandonment costs are derived based on current costs assuming continuation of existing economic conditions.

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| *(in thousands)* | **2024** | **2023** | **2022** |
|  Future cash inflows | $3626615 | $2427554 | $381493 |
|  Future development costs | (779533) | (619680) |  |
|  Future production costs | (998851) | (681730) | (74897) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Future net cash flows | 1848231 | 1126144 | 306596 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less 10% annual discount to reflect timing of cash flows | (779539) | (578863) | (116711) |
|  Standard measure of discounted future net cash flows | $1068692 | $547281 | $189885 |

---

**Changes in the Standardized Measure for Discounted Cash Flows** 

---

| | | | |
|:---|:---|:---|:---|
| *(in thousands)* | **2024** | **2023** | **2022** |
|  Beginning of the year | $547281 | $189885 | $96636 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net change in sales and transfer prices and in production (lifting) costs related to future production | 13353 | (49785) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in the estimated future development costs |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Sales and transfers of oil and gas produced during the period | (289138) | (118105) | (57563) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net change due to extensions, discoveries, and improved recovery | 261832 | 416822 | 3134 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net change due to purchases and sales of minerals in place | 26301 | 36562 | 57622 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net change due to revisions in quantity estimates | 189962 | 2519 | 83101 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Previously estimated development costs incurred during the period | 106214 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accretion of discount | 212886 | 69383 | 6955 |
|  End of the year | $1068692 | $547281 | $189885 |

---

The data presented in this note should not be viewed as representing the expected cash flow from, or current value of, existing proved reserves since the computations are based on a significant amount of estimations and assumptions. The required projection of production and related expenditures overtime requires further estimates with respect to pipeline availability, rates of demand and governmental control. Actual future prices and costs are likely to be substantially different from historical prices and costs utilized in the computation of reported amounts. Any analysis or evaluation of the reported amounts should give specific recognition to the computational methods utilized and the limitations inherent therein.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Condensed Consolidated Balance Sheets** 

*(in thousands)* 

---

| | | |
|:---|:---|:---|
|  | **March 31,<br>2025** | **December 31,<br>2024** |
|  | (unaudited) | |
|  **ASSETS** |  |  |
|  Current assets |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | $35366 | $120814 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable | 44718 | 28218 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Earnest payments | 10606 | 154 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other current assets | 10630 | 7528 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total current assets | 101320 | 156714 |
|  Oil and gas properties | 1194086 | 1006221 |
|  Accumulated depletion | (171634) | (140376) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net oil and gas properties | 1022452 | 865845 |
|  Right-of-use assets, net | 9931 | 6010 |
|  Other noncurrent assets | 969 | 501 |
|  **Total Assets** | $1134672 | $1029070 |
|  **LIABILITIES AND MEMBER'S EQUITY (DEFICIT)** |  |  |
|  Current liabilities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable | $43455 | $41824 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current portion of long-term debt | 132864 | 103240 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current portion of deferred closings | 7242 | 7189 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Escrow account | 7127 | 16356 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current operating lease liabilities | 343 | 656 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued and other liabilities | 67581 | 57346 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total current liabilities | 258612 | 226611 |
|  Long-term debt, net of current portion | 853507 | 795215 |
|  Accrued interest | 33395 | 26079 |
|  Deferred closings | 3508 | 3324 |
|  Operating lease liabilities | 10234 | 5860 |
|  Asset retirement obligations | 1505 | 1181 |
|  Other noncurrent liabilities | 2370 | 4858 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities | 1163131 | 1063128 |
|  Commitments and contingencies (Note 12) |  |  |
|  Member's equity (deficit) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Member's equity | 434 | 434 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated deficit | (28893) | (34492) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total member's deficit | (28459) | (34058) |
|  **Total Liabilities and Member's Equity (Deficit)** | $1134672 | $1029070 |

---

The accompanying notes are an integral part of these condensed consolidated financial statements.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Condensed Consolidated Statements of Operations** 

**(unaudited)** 

*(in thousands)* 

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended<br>March 31,** | **Three Months Ended<br>March 31,** |
|  | **2025** | **2024**<br>**(As Restated)** |
|  **REVENUES** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mineral and royalty revenues | $29886 | $33984 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Product sales | 84269 | 6678 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Water services | 1503 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other revenues | 89 | 18 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total revenues | 115747 | 40680 |
|  **OPERATING EXPENSES** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cost of sales | 27083 | 7982 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation, depletion, amortization, and accretion | 31225 | 13405 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Selling, general, and administrative | 9514 | 5250 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payroll and payroll-related | 7929 | 4825 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Advertising and marketing | 320 | 17 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on sale of assets |  | 564 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Impairment expense | 516 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total operating expenses | 76587 | 32043 |
|  Income from operations | 39160 | 8637 |
|  **OTHER INCOME (EXPENSE)** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income | 689 | 22 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense, net | (35849) | (16921) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain (loss) on derivatives | 1920 | (67) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on debt extinguishment | (321) | (76) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other expenses | (33561) | (17042) |
|  **NET INCOME (LOSS)** | $5599 | $(8405) |

---

The accompanying notes are an integral part of these condensed consolidated financial statements.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Condensed Consolidated Statements of Changes in Equity (Deficit)** 

**(unaudited)** 

*(in thousands)* 

---

| | | | |
|:---|:---|:---|:---|
|  | **Member's<br>Equity** | **Accumulated<br>Deficit** | **Total Member's<br>Deficit** |
|  Balance, January 1, 2025 | $434 | $(34492) | $(34058) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income |  | 5599 | 5599 |
|  Balance, March 31, 2025 | $434 | $(28893) | $(28459) |
|  Balance, January 1, 2024 (As Restated) | $4865 | $(9699) | $(4834) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contributions | 325 |  | 325 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loss (As Restated) |  | (8405) | (8405) |
|  Balance, March 31, 2024 | $5190 | $(18104) | $(12914) |

---

The accompanying notes are an integral part of these condensed consolidated financial statements.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Condensed Consolidated Statements of Cash Flows** 

**(unaudited)** 

*(in thousands)* 

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended<br>March 31,** | **Three Months Ended<br>March 31,** |
|  | **2025** | **2024**<br>**(As Restated)** |
|  **CASH FLOWS FROM OPERATING ACTIVITIES** |  |  |
|  Net income (loss) | $5599 | $(8405) |
|  Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation, depletion, amortization, and accretion | 31225 | 13405 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of right-of-use assets | 259 | 145 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of debt discount and debt issuance costs | 5166 | 3939 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Impairment expense | 516 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unrealized (gain) loss on derivatives | (2823) | 67 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on sale of assets |  | 564 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on debt extinguishment | 321 | 76 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable | (16500) | (4090) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Earnest payments | (10874) | (2275) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable | (1127) | 5097 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued and other liabilities | 9644 | 5292 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Escrow account | (9229) | (4778) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest | 7322 | 3878 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | (3634) | (1667) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by operating activities | 15865 | 11248 |
|  **CASH FLOWS FROM INVESTING ACTIVITIES** |  |  |
|  Additions to oil and gas properties and leases | (182252) | (94708) |
|  Proceeds from sale of assets |  | 6200 |
|  Additions to equipment and other property | (23) | (55) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in investing activities | (182275) | (88563) |
|  **CASH FLOWS FROM FINANCING ACTIVITIES** |  |  |
|  Proceeds from issuances of debt, net of discount | 168506 | 157280 |
|  Repayments of debt | (71534) | (68995) |
|  Payments of debt issuance costs | (14543) | (12012) |
|  Members' contributions |  | 325 |
|  Payments of deferred closings | (1467) | (2247) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by financing activities | 80962 | 74351 |
|  Net change in cash and cash equivalents | (85448) | (2964) |
|  Cash and cash equivalents at beginning of year | 120814 | 5428 |
|  Cash and cash equivalents at end of year | $35366 | $2464 |

---

The accompanying notes are an integral part of these condensed consolidated financial statements.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Condensed Consolidated Financial Statements** 

**(unaudited)** 

**Note 1 – Business** 

Phoenix Energy One, LLC ("Phoenix Energy"), formerly known as Phoenix Capital Group Holdings, LLC ("Phoenix Capital"), is a Delaware limited liability company focused on oil and gas operations primarily in the Williston Basin, North Dakota/Montana, the Uinta Basin, Utah, the Permian Basin, Texas, the Denver-Julesburg Basin, Colorado/Wyoming and the Powder River Basin, Wyoming. The Company was formed in April 2019 and changed its name to Phoenix Energy in January 2025. As used in these condensed consolidated financial statements, unless the context otherwise requires, references to the "Company," "we," "us," and "our" refer to Phoenix Energy and its consolidated subsidiaries.

**Interim financial presentation** 

The accompanying condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information. Accordingly, they do not include all of the information and notes required by U.S. GAAP for annual financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments considered necessary for fair presentation, have been included. Interim results are not necessarily indicative of results for a full year. The accompanying condensed consolidated financial statements are unaudited and should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2024 (the "2024 annual financial statements").

**Note 2 – Significant Accounting Policies** 

**Basis of preparation and principles of consolidation** 

The condensed consolidated financial statements include the accounts of Phoenix Energy and its wholly-owned subsidiaries. All intercompany accounts and transactions with and between Phoenix Energy and its wholly-owned subsidiaries have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to current period presentation.

**Liquidity risk and management's plans** 

Liquidity risk is the risk that the Company's cash flows from operations will not be sufficient for the Company to continue operating and discharge its liabilities in the normal course of operations. The Company is exposed to liquidity risk as its continued operation is dependent upon its ability to continue to obtain financing, either in the form of debt or equity, or by achieving profitable operations in order to satisfy its liabilities as they come due.

As of March 31, 2025, the Company had negative working capital of approximately $157.3 million and a member's deficit of approximately $28.5 million. The Company expects to repay its financial liabilities in the normal course of operations and to fund future operational and capital requirements through operating cash flows and through issuances of additional debt. Since the balance sheet date and through the date of the filing of these condensed consolidated financial statements, the Company had raised an additional $74.7 million of notes through its investor program (see [Note 7 – Debt](#txb72530_100) and [Note 15 – Subsequent Events](#txb72530_101)). Management believes its capital raises through its bond offerings will continue at or above this current pace.

**Use of estimates** 

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and the

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Condensed Consolidated Financial Statements** 

**(unaudited)** 

disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the applicable reporting period of such statements. Accordingly, actual results could differ materially from these estimates.

The accompanying condensed consolidated financial statements are based on a number of significant estimates including quantities of oil, natural gas and natural gas liquids ("NGL") reserves that are the basis for the calculations of depreciation, depletion, amortization, and determinations of impairment of oil and natural gas properties. Reservoir engineering is a subjective process of estimating underground accumulations of oil and natural gas and there are numerous uncertainties inherent in estimating quantities of proved oil and natural gas reserves. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment along with estimated selling prices. As a result, reserve estimates may materially differ from the quantities of oil and natural gas that are ultimately recovered.

**Recent accounting standards not yet adopted** 

In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2024-03, *Income Statement—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses* ("ASU 2024-03"). ASU 2024-03 requires companies to provide more detailed disclosures about the disaggregation of income statement expenses. The ASU aims to enhance the transparency and usefulness of financial statements by providing better insight into the components of expense line items, and becomes effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating the impact of the standard on its financial statements and disclosures.

Accounting pronouncements not listed above were assessed and determined to not have a material impact to the Company's condensed consolidated financial statements.

**Note 3 – Restatement of Comparative Financial Statements** 

The Company restated its condensed consolidated financial statements for the three months ended March 31, 2024 (the "first quarter 2024 financial statements") to correct the accounting treatment for debt issuance costs incurred in connection with the Company's unregistered bond offerings and capitalized interest. Debt issuance costs were previously expensed immediately and interest costs were not capitalized. The Company corrected these errors in the comparative periods of these condensed consolidated financial statements as of and for the three months ended March 31, 2025, such that debt issuance costs associated with the Company unregistered bond offerings are deferred and amortized over the weighted average debt term using the effective interest method. Further, interest incurred on expenditures made in connection with the Company's exploration and development projects not currently subject to depletion are capitalized and subsequently depleted in the same manner as the underlying assets.

The effects of the changes on the first quarter 2024 financial statements are summarized below.

**Description of Misstatements** 

The Company identified the following misstatements in the first quarter 2024 financial statements:

*Debt issuance costs*. The Company had previously immediately expensed debt issuance costs related to its unregistered bond offerings rather than capitalizing and amortizing them over the weighted-average term of the

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Condensed Consolidated Financial Statements** 

**(unaudited)** 

bonds, which resulted in overstated advertising and marketing expense, selling, general, and administrative expense, and payroll and payroll-related expense, and understated interest expense and loss on debt extinguishment on the condensed consolidated statement of operations for the three months ended March 31, 2024.

*Capitalized interest*. The Company had previously expensed all interest costs, rather than capitalizing interest incurred on expenditures made in connection with the Company's exploration and development projects as permitted under ASC 835-20, Capitalized Interest. This resulted in overstated interest expense on the condensed consolidated statement of operations for the three months ended March 31, 2024.

The following tables present a reconciliation from the figures as previously reported to the restated amounts for the Company's condensed consolidated statement of operations, statement of cash flows, and statement of changes in deficit for the three months ended March 31, 2024.

**Corrected Condensed Consolidated Statement of Operations** 

---

| | | | |
|:---|:---|:---|:---|
|  | **Three Months Ended March 31, 2024** | **Three Months Ended March 31, 2024** | **Three Months Ended March 31, 2024** |
| *(in thousands)* | **As Previously<br>Reported** | **Debt Issuance,<br>Capitalized<br>Interest and<br>Other<br>Corrections** | **As Restated** |
|  Depreciation, depletion, amortization, and accretion | $13368 | $37 | $13405 |
|  Advertising and marketing | 8355 | (8338) | 17 |
|  Selling, general, and administrative | 7014 | (1764) | 5250 |
|  Payroll and payroll-related | 6892 | (2067) | 4825 |
|  Total operating expenses | 44175 | (12132) | 32043 |
|  Income (loss) from operations | (3495) | 12132 | 8637 |
|  Interest expense, net | (15217) | (1704) | (16921) |
|  Loss on debt extinguishment |  | (76) | (76) |
|  Total other expenses | (15262) | (1780) | (17042) |
|  Net loss | (18757) | 10352 | (8405) |

---

**Corrected Condensed Consolidated Statement of Changes in Deficit** 

---

| | | | |
|:---|:---|:---|:---|
|  | **Three Months Ended March 31, 2024** | **Three Months Ended March 31, 2024** | **Three Months Ended March 31, 2024** |
| *(in thousands)* | **As Previously<br>Reported** | **Debt Issuance,<br>Capitalized<br>Interest and<br>Other<br>Corrections** | **As Restated** |
|  Balance, January 1, 2024 | $(41261) | $36427 | $(4834) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contributions | 325 |  | 325 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loss | (18757) | 10352 | (8405) |
|  Balance, March 31, 2024 | $(59693) | $46779 | $(12914) |

---

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Condensed Consolidated Financial Statements** 

**(unaudited)** 

**Corrected Condensed Consolidated Statement of Cash Flows** 

---

| | | | |
|:---|:---|:---|:---|
|  | **Three Months Ended March 31, 2024** | **Three Months Ended March 31, 2024** | **Three Months Ended March 31, 2024** |
| *(in thousands)* | **As Previously<br>Reported** | **Debt Issuance,<br>Capitalized<br>Interest and<br>Other<br>Corrections** | **As Restated** |
|  Net loss | $(18757) | $10352 | $(8405) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation, depletion, amortization, and accretion | 13368 | 37 | 13405 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of debt discount and debt issuance costs | 133 | 3806 | 3939 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on sale of assets |  | 564 | 564 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on debt extinguishment |  | 76 | 76 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | (1510) | (157) | (1667) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by (used in) operating activities | (3430) | 14678 | 11248 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additions to oil and gas properties and leases | (92459) | (2249) | (94708) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in investing activities | (86314) | (2249) | (88563) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payments of debt issuance costs |  | (12012) | (12012) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payments of deferred closings | (1830) | (417) | (2247) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by financing activities | 86780 | (12429) | 74351 |

---

**Note 4 – Oil and Gas Properties** 

Oil and gas properties, net consist of the following:

---

| | | |
|:---|:---|:---|
| *(in thousands)* | **March 31,<br>2025** | **December 31,<br>2024** |
|  Proved oil and natural gas properties<sup>(a)</sup> | $800805 | $687366 |
|  Unproved oil and natural gas properties | 393281 | 318855 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total oil and gas properties | 1194086 | 1006221 |
|  Less: Accumulated depletion | (171634) | (140376) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Oil and gas properties, net | $1022452 | $865845 |

---

(a) Represents proved and undeveloped (i.e., wells in progress) and proved and producing properties.

The Company uses the successful efforts method of accounting for its oil and gas properties. Property acquisition costs are depleted on a units-of-production basis over total proved reserves, while costs of wells and related equipment and facilities are depleted on a units-of-production basis over proved developed reserves.

Depletion on oil and gas properties was $31.3 million and $13.3 million for the three months ended March 31, 2025 and 2024, respectively.

Depreciation expense on the Company's equipment and other property was less than $0.1 million for both the three months ended March 31, 2025 and 2024.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Condensed Consolidated Financial Statements** 

**(unaudited)** 

**Note 5 – Revenue** 

The following tables present the Company's revenue from contracts with customers and other revenue for the three months ended March 31, 2025, and 2024 by segment:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** |
| *(in thousands)* | **Mineral and<br>Non-Operating** | **Operating** | **Securities** | **Eliminations** | **Total** |
|  Revenue from customers | $29886 | $85772 | $— | $— | $115658 |
|  Other revenue |  |  | 89 |  | 89 |
|  Intersegment revenue | 38 |  | 29752 | (29790) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $29924 | $85772 | $29841 | $(29790) | $115747 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended March 31, 2024** | **Three Months Ended March 31, 2024** | **Three Months Ended March 31, 2024** | **Three Months Ended March 31, 2024** | **Three Months Ended March 31, 2024** |
| *(in thousands)* | **Mineral and<br>Non-Operating** | **Operating** | **Securities** | **Eliminations** | **Total** |
|  Revenue from customers | $33984 | $6678 | $— | $— | $40662 |
|  Other revenue |  |  | 18 |  | 18 |
|  Intersegment revenue | 11 |  | 15543 | (15554) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $33995 | $6678 | $15561 | $(15554) | $40680 |

---

The following tables present the Company's revenue from contracts with customers disaggregated by product type for the periods presented:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** |
| *(in thousands)* | **Mineral and<br>Non-Operating** | **Operating** | **Securities** | **Eliminations** | **Total** |
|  Crude oil | $26263 | $83202 | $— | $— | $109465 |
|  Natural gas sales | 1803 | 428 |  |  | 2231 |
|  NGL | 1820 | 639 |  |  | 2459 |
|  Water services |  | 1503 |  |  | 1503 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total revenue | $29886 | $85772 | $— | $— | $115658 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended March 31, 2024** | **Three Months Ended March 31, 2024** | **Three Months Ended March 31, 2024** | **Three Months Ended March 31, 2024** | **Three Months Ended March 31, 2024** |
| *(in thousands)* | **Mineral and<br>Non-Operating** | **Operating** | **Securities** | **Eliminations** | **Total** |
|  Crude oil | $30760 | $6554 | $— | $— | $37314 |
|  Natural gas sales | 1366 | 15 |  |  | 1381 |
|  NGL | 1858 | 109 |  |  | 1967 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total revenue | $33984 | $6678 | $— | $— | $40662 |

---

**Note 6 – Derivatives** 

The Company periodically enters into commodity derivative contracts to manage its exposure to crude oil price risk. Additionally, the Company is required to hedge a portion of anticipated crude oil production for future periods pursuant to its debt covenants under the Fortress Credit Agreement, as further described in [Note 7 – Debt](#txb72530_100). The Company does not enter into derivative contracts for speculative trading purposes.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Condensed Consolidated Financial Statements** 

**(unaudited)** 

When the Company utilizes crude oil commodity derivative contracts, it expects to enter into put/call collars, fixed swaps or put options to hedge a portion of its anticipated future production. A collar contract establishes a floor and ceiling price on contracted volumes and provides payment to the Company if the index price falls below the floor or requires payment by the Company if the index price rises above the ceiling. A fixed swap contract sets a fixed price and provides payment to the Company if the index price is below the fixed price or requires payment by the Company if the index price is above the fixed price. A put arrangement gives the Company the right to sell the underlying crude oil commodity at a strike price and provides payment to the Company if the index price falls below the strike price. No payment or receipt occurs if the index price is higher than the strike price. As of March 31, 2025, the Company's derivatives were comprised of crude oil commodity derivative contacts indexed to the U.S. New York Mercantile Exchange West Texas Intermediate ("WTI"). The Company has not designated its derivative contracts for hedge accounting and, as a result, records the net change in the mark-to-market valuation of the derivative contracts and all payments and receipts on settled derivative contracts in its condensed consolidated statements of operations. All derivative contracts are recorded at fair market value and included in the condensed consolidated balance sheets as assets or liabilities. Derivative assets and liabilities are presented net on the condensed consolidated balance sheets when a legally enforceable master netting arrangement exists with the counterparty.

As of March 31, 2025, the Company's open crude oil derivative contracts consisted of the following:

---

| | | | |
|:---|:---|:---|:---|
|  | **Settlement Period** | **Settlement Period** | **Settlement Period** |
| *(volumes in Bbl and prices in $/Bbl)* | **2025** | **2026** | **2027** |
|  **Two-Way Collars** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Notional Volumes | 411000 | 367000 | 259000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Weighted Average Ceiling Price | $75.55 | $71.69 | $69.86 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Weighted Average Floor Price | $58.91 | $56.01 | $54.76 |
|  **Swaps** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Notional Volumes | 1423000 | 1260000 | 894000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Weighted Average Contract Price | $67.86 | $64.62 | $63.07 |

---

The following table summarizes the gains and losses on derivative instruments included on the condensed consolidated statements of operations and the net cash payments related thereto for the periods presented. Cash flows associated with these non-hedge designated derivatives are reported within operating activities on the condensed consolidated statements of cash flows.

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended<br>March 31,** | **Three Months Ended<br>March 31,** |
| *(in thousands)* | **2025** | **2024** |
|  Gain (loss) on derivative instruments | $1920 | $(67) |
|  Net cash payments on derivatives | (903) |  |

---

Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement.

Certain assets and liabilities are reported at fair value on a recurring basis, including the Company's derivative instruments. The fair values of the Company's derivative contracts are measured internally using established commodity futures price strips for the underlying commodity provided by a reputable third party, the contracted notional volumes, and time to maturity. These valuations are Level 2 inputs.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Condensed Consolidated Financial Statements** 

**(unaudited)** 

The following table provides (i) fair value measurement information for financial assets and liabilities measured at fair value on a recurring basis, (ii) the gross amounts of recognized derivative assets and liabilities, (iii) the amounts offset under master netting arrangements with counterparties, and (iv) the resulting net amounts presented in the Company's condensed consolidated balance sheets as of March 31, 2025 and December 31, 2024. The net amounts are classified as current or noncurrent based on their anticipated settlement dates.

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **March 31, 2025** | **March 31, 2025** | **March 31, 2025** | **March 31, 2025** | **March 31, 2025** | **March 31, 2025** | **March 31, 2025** |
| *(in thousands)* | **Balance Sheet Location** | **Level 1** | **Level 2** | **Level 3** | **Total Gross<br>Fair Value** | **Gross<br>Amounts<br>Offset in<br>Balance<br>Sheet** | **Net Fair<br>Value<br>Presented<br>in Balance<br>Sheet** |
|  **Assets** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commodity derivatives | Other current assets | $— | $1596 | $— | $1596 | $(1495) | $101 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commodity derivatives | Other noncurrent assets |  | 2346 |  | 2346 | (2346) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total assets |  | $— | $3942 | $— | $3942 | $(3841) | $101 |
|  **Liabilities** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commodity derivatives | Accrued and other liabilities | $— | (3697) |  | (3697) | 1495 | (2202) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commodity derivatives | Other noncurrent liabilities |  | (4716) |  | (4716) | 2346 | (2370) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities |  | $— | $(8413) | $— | $(8413) | $3841 | $(4572) |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
| **(in thousands)** | **Balance Sheet Location** | **Level 1** | **Level 2** | **Level 3** | **Total Gross<br>Fair Value** | **Gross<br>Amounts<br>Offset in<br>Balance<br>Sheet** | **Net Fair<br>Value<br>Presented<br>in Balance<br>Sheet** |
|  **Assets** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commodity derivatives | Other current assets | $— | $2138 | $— | $2138 | $(2037) | $101 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commodity derivatives | Other noncurrent assets |  | 3000 |  | 3000 | (3000) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total assets |  | $— | $5138 | $— | $5138 | $(5037) | $101 |
|  **Liabilities** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commodity derivatives | Accrued and other liabilities | $— | $(4574) | $— | $(4574) | $2037 | $(2537) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commodity derivatives | Other noncurrent liabilities |  | (7858) |  | (7858) | 3000 | (4858) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities |  | $— | $(12432) | $— | $(12432) | $5037 | $(7395) |

---

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Condensed Consolidated Financial Statements** 

**(unaudited)** 

**Note 7 – Debt** 

**Long-Term Debt** 

The following table summarizes the Company's long-term debt for the periods presented:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Maturity Date** | **Maturity Date** | | | |
| *(in thousands)* | **Earliest<br>Date** | **Latest**<br>**Date** | **Interest**<br>**Rate<sup>(a)</sup>** | **March 31,<br>2025** | **December 31,<br>2024** |
|  Unsecured debt - Regulation D | 4/10/2025 | 3/10/2036 | 5.0% to 15.0% | $571713 | $497823 |
|  Unsecured debt - Regulation A | 4/10/2025 | 8/10/2027 | 9.0% | 99577 | 104884 |
|  Adamantium Securities | 1/10/2029 | 3/10/2036 | 13.0% to 16.5% | 163048 | 135180 |
|  Fortress Term Loans |  | 12/18/2027 | Term SOFR + 7.10% | 250000 | 250000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total outstanding debt |  |  |  | 1084338 | 987887 |
|  Less: Unamortized debt discount and issuance costs<sup>(b)</sup> |  |  |  | (97967) | (89432) |
|  Less: Current portion of long-term debt |  |  |  | (132864) | (103240) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total long-term debt, net of current portion |  |  |  | $853507 | $795215 |

---

(a) Represents the contractual interest rate as of March 31, 2025.

(b) Amortized into interest expense using the effective interest method. Write-offs of debt issuance costs
associated with the redemption of bonds issued under the Company's unregistered debt offerings are classified as loss on debt extinguishment in the condensed consolidated statements of operations.

*Fortress Credit Agreement* 

As of March 31, 2025 and December 31, 2024, the Company had $250.0 million of aggregate principal outstanding (the "Fortress Term Loans") under the secured credit agreement with Fortress Credit Corp. (the "Fortress Credit Agreement"). The all-in interest rate for the Fortress Term Loans was 11.4% at March 31, 2025. The Fortress Credit Agreement contains various customary covenants, including financial covenants that require the Company to maintain ratios around its maximum total secured leverage, minimum asset coverage, and working capital as of the last day of each calendar month or fiscal quarter, as the case may be. The Company has also entered into hedges covering at least 75% of the initially anticipated monthly production of crude oil from the Company's proved developed reserves for a 36-month period, pursuant to the terms of the Fortress Credit Agreement. See [Note 6 – Derivatives](#txb72530_103). The Company was in compliance with all debt covenants as of March 31, 2025.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Condensed Consolidated Financial Statements** 

**(unaudited)** 

**Interest Expense on Debt** 

The following table summarizes the total interest costs incurred on the Company's debt:

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended<br>March 31,** | **Three Months Ended<br>March 31,** |
| *(in thousands)* | **2025** | **2024** |
|  Stated interest | $33008 | $15083 |
|  Amortization of debt discount and debt issuance costs | 5166 | 3939 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest cost | 38174 | 19022 |
|  Capitalized interest | (2325) | (2101) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest expense, net | $35849 | $16921 |

---

**Note 8 – Accrued and Other Liabilities** 

The following table summarizes the Company's accrued and other liabilities for the periods presented:

---

| | | |
|:---|:---|:---|
| *(in thousands)* | **March 31,<br>2025** | **December 31,<br>2024** |
|  Accrued capital expenditures and lease operating expenses | $39290 | $37150 |
|  Advances from joint interest partners | 12117 | 4105 |
|  Revenue payables | 7284 | 4441 |
|  Accrued interest | 2610 | 1746 |
|  Current derivative liabilities | 2202 | 2537 |
|  Unredeemed matured bonds | 1756 | 1338 |
|  Accrued personnel costs | 1351 | 4316 |
|  Asset retirement obligations | 148 | 165 |
|  Other | 823 | 1548 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $67581 | $57346 |

---

Accrued capital expenditures and lease operating expenses are primarily associated with drilling, completion and operating activities on wells operated by the Company's wholly-owned subsidiary, Phoenix Operating, LLC ("PhoenixOp"). As of March 31, 2025, PhoenixOp had placed 37 wells into production and had an additional 41 wells in various stages of development.

In circumstances where the Company serves as the operator, the Company receives production proceeds from the purchaser and distributes the amounts to other royalty owners and joint interest partners based on their respective ownership interests. Production proceeds that the Company has not yet distributed are reflected as revenue payables and classified as a component of accrued and other liabilities in the condensed consolidated balance sheets. Additionally, joint interest partners who participate in our wells may elect to prepay a portion of the estimated drilling and completion costs. For such advances, a liability is recorded and subsequently reduced as the associated work is performed and billed to the joint interest partners.

**Note 9 – Equity-Based Compensation** 

The Company's parent, Phoenix Equity Holdings, LLC ("Phoenix Equity"), has granted equity awards to employees of the Company under the 2024 Long-Term Incentive Plan (the "2024 Incentive Plan"). The 2024

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Condensed Consolidated Financial Statements** 

**(unaudited)** 

Incentive Plan provides for the issuance of 900,000 Class A Units, 2,813,900 Class B Units and 1,000,000 Phantom Units. As of March 31, 2025, Phoenix Equity had issued all authorized Class A Units and Class B Units and 30,000 Phantom Units under the 2024 Incentive Plan.

A summary of the activity under the 2024 Incentive Plan for the three months ended March 31, 2025 is presented below.

---

| | | |
|:---|:---|:---|
|  | **Number of<br>Units** | **Weighted<br>Average Per<br>Share Grant<br>Date Fair Value** |
|  Nonvested at December 31, 2024 | 3175150 | $55.74 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Granted - Phantom Units | 30000 | 55.74 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Vested |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Forfeited |  |  |
|  Nonvested at March 31, 2025 | 3205150 | $55.74 |

---

During the three months ended March 31, 2025, Phoenix Equity granted 30,000 Phantom Unit awards contingent on the achievement of a performance condition, all of which will vest only upon the Company undergoing a liquidity event (e.g., change in control). No compensation cost will be recognized for the Phantom Unit awards until a liquidity event occurs. The Company has elected to account for forfeitures as they occur.

As of March 31, 2025, there was $178.7 million of total unrecognized compensation cost related to nonvested equity awards granted under the 2024 Incentive Plan, measured based on the fair value of the awards; that cost is expected to be recognized at the time a liquidity event occurs.

The fair value of each unit granted under the 2024 Incentive Plan was valued on the date of grant under an independent third-party valuation, which included a combination of an income approach, based on the present value of estimated future cash flows, and a market approach based on market data of comparable businesses. The weighted-average assumptions used in the valuation of performance unit awards granted for the three months ended March 31, 2025, are presented in the table below:

---

| | |
|:---|:---|
|  | **2025** |
|  Dividend yield<sup>(a)</sup> | —% |
|  Risk-free interest rate<sup>(b)</sup> | 4.38% |
|  Expected volatility<sup>(c)</sup> | 57.50% |
|  Expected term (in years)<sup>(d)</sup> | 5.0 |
|  Discount for lack of marketability<sup>(e)</sup> | 30.00% |

---

(a) The Company has no history or expectation of paying cash dividends on its awards.

(b) The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected life of
the awards in effect at the time of grant.

(c) Volatility was estimated based on the different interests being appraised, leveraging historical volatility for
comparable publicly traded organizations within its industry. The Company lacks company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly
traded set of peer companies within the industry with characteristics similar to the Company.

(d) The expected term represents the estimated period, in years, until a liquidity event occurs.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Condensed Consolidated Financial Statements** 

**(unaudited)** 

(e) Discount for lack of marketability was determined using the Restricted Stock Studies, Chaffee Put Option,
Finnerty's Put Option, and Qualitative Mandelbaum Factor approaches.

**Note 10 – Related Parties** 

**Debt Offerings** 

Certain of the Company's officers and their family members participate in the Company's unregistered debt offerings. During the three months ended March 31, 2025 and 2024, these officers and their family members purchased, in aggregate, 1,104 and 1,562 of the combined Regulation A+ and Regulation D bonds for a total purchase price of $1.1 million and $1.5 million, respectively. As of March 31, 2025 and December 31, 2024, there were 3,960 and 2,860 of bonds outstanding with carrying values of $4.0 million and $2.9 million, respectively. Interest expense attributable to these securities was less than $0.1 million for both the three months ended March 31, 2025 and 2024, respectively.

**Lion of Judah** 

The Company paid interest expense of less than $0.1 million to a financial institution on behalf of Lion of Judah related to a certain financing agreement between Lion of Judah and the financial institution for both the three months ended March 31, 2025 and 2024. Interest payments made by the Company on behalf of Lion of Judah are discretionary in nature.

**Note 11 – Leases** 

The Company leases its office facilities under noncancelable multi-year operating lease agreements.

The following table shows the line item classification of the Company's right-of-use assets and lease liabilities on the Company's condensed consolidated balance sheets:

---

| | | | |
|:---|:---|:---|:---|
| *(in thousands)* | **Line item** | **March 31,<br>2025** | **December 31,<br>2024** |
|  Right-of-use assets – operating | Right of use assets, net | $9931 | $6010 |
|  Total right-of-use assets |  | $9931 | $6010 |
|  Current operating lease liabilities | Current operating lease liabilities | $343 | $656 |
|  Noncurrent operating lease liabilities | Operating lease liabilities | 10234 | 5860 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total lease liabilities |  | $10577 | $6516 |

---

Operating lease cost of $0.6 million and $0.3 million for the three months ended March 31, 2025 and 2024, respectively, was classified as a component of selling, general, and administrative expense on the condensed consolidated statements of operations.

**Note 12 – Commitments and Contingencies** 

For a summary of the Company's lease obligations, see [Note 11 – Leases](#txb72530_102).

**Litigation** 

From time to time, the Company may become involved in other legal proceedings or be subject to claims arising in the ordinary course of business. Although the results of ordinary course litigation and claims cannot be

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Condensed Consolidated Financial Statements** 

**(unaudited)** 

predicted with certainty, the Company currently believes that the final outcome of these ordinary course matters will not have a material adverse effect on its business, financial condition, results of operations or cash flows. Regardless of the outcome, litigation can have an adverse impact because of defense and settlement costs, diversion of management resources and other factors.

**Drilling Rig Contracts** 

The Company has entered into drilling rig contracts to procure drilling services for wells operated by PhoenixOp. The contracts are short-term and provide a daily operating rate as consideration for services performed by the third-party provider. As of March 31, 2025, the Company was subject to $12.7 million of commitments under these contracts.

**Note 13 – Supplemental Cash Flow Information** 

The following table summarizes supplemental information to the condensed consolidated statements of cash flows for the periods presented:

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended<br>March 31,** | **Three Months Ended<br>March 31,** |
| *(in thousands)* | **2025** | **2024** |
|  Supplemental disclosure of cash flow information: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash interest paid, net of capitalized interest | $19930 | $7893 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash paid for operating leases | 372 | 242 |
|  Supplemental disclosure of non-cash transactions: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Capital expenditures in accounts payable and accrued and other liabilities | $68497 | $33999 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Modification of right-of-use asset and lease liability | 1985 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Right-of-use asset obtained in exchange for lease liability | 2195 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unpaid property acquisition costs in deferred closings | 1704 | 417 |

---

**Note 14 – Segments** 

Segment operating profit is used as a performance metric by the Chief Operating Decision Maker ("CODM") in determining how to allocate resources and assess performance as this measure provides insight into the segments' operations and overall success of a segment for a given period. Segment operating profit is calculated as total segment revenue less operating costs attributable to the segment, which includes allocated corporate costs that are overhead in nature and not directly associated with the segments, such as certain general and administrative expenses, executive or shared-function payroll costs and certain limited marketing activities. Corporate costs are allocated to the segments based on usage and headcount, as appropriate. Segment operating profit excludes other income and expense, such as interest expense, interest income, gain (loss) on derivatives, loss on debt extinguishment, even though these amounts are allocated to the segments and provided to the CODM. Transactions between segments are accounted for on an accrual basis and are eliminated upon consolidation. Interest expense is allocated to the segments based on the carrying value of the oil and gas properties owned by the respective segment at the balance sheet date, and interest income and gain (loss) on derivatives are allocated using the same basis as corporate costs.

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Condensed Consolidated Financial Statements** 

**(unaudited)** 

The following table summarizes segment operating profit and reconciliation to net income (loss) for the periods presented:

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| *(in thousands)* | **2025** | **2024** |
|  Segment operating profit |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mineral and Non-operating | $7658 | $10491 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating | 36257 | 902 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Securities | 24997 | 12787 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Eliminations | (29752) | (15543) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total segment operating profit | 39160 | 8637 |
|  Interest income | 689 | 22 |
|  Interest expense, net | (35849) | (16921) |
|  Gain (loss) on derivatives | 1920 | (67) |
|  Loss on debt extinguishment | (321) | (76) |
|  Net income (loss) | $5599 | $(8405) |

---

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Condensed Consolidated Financial Statements** 

**(unaudited)** 

The following tables present financial information by segment for the three months ended March 31, 2025 and 2024 and as of March 31, 2025 and December 31, 2024.

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| *(in thousands)* | **2025** | **2024** |
|  Significant expenses |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mineral and Non-operating |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cost of sales | $4582 | $6391 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation, depletion, amortization, and accretion | 8265 | 11595 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Selling, general, and administrative | 4944 | 2335 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payroll and payroll-related | 3959 | 2613 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other segment items<sup>(a)</sup> | 516 | 570 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cost of sales | $22539 | $1602 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation, depletion, amortization, and accretion | 22960 | 1810 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Selling, general, and administrative | 1997 | 1301 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payroll and payroll-related | 2019 | 1057 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other segment item<sup>(b)</sup> |  | 6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Securities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Advertising and marketing | $320 | $5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Selling, general, and administrative | 2573 | 1614 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payroll and payroll-related | 1951 | 1155 |
|  Interest expense |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mineral and Non-operating | $23290 | $12987 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating | 12559 | 3934 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Securities | (29752) | (15543) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Eliminations | 29752 | 15543 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest expense, net | $35849 | $16921 |
|  Capital expenditures |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mineral and Non-operating | $89319 | $48104 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating | 96150 | 48731 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Eliminations | (3194) | (2072) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total capital expenditures | $182275 | $94763 |

---

(a) Other segment items include advertising and marketing expense, loss on sale of assets, and impairment expense.

(b) Other segment item includes advertising and marketing expense.

---

| | | |
|:---|:---|:---|
| *(in thousands)* | **March 31,<br>2025** | **December 31,<br>2024** |
|  Assets |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mineral and Non-operating | $949292 | $898300 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating | 420264 | 332721 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Securities | 2899 | 6918 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Eliminations | (237783) | (208869) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total assets | $1134672 | $1029070 |

---

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Condensed Consolidated Financial Statements** 

**(unaudited)** 

The following tables summarize the Company's oil and natural properties by proved and unproved properties, location and by segment (before accumulated depletion):

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **March 31, 2025** | **March 31, 2025** | **March 31, 2025** | **March 31, 2025** | **March 31, 2025** |
| *(in thousands)* | **Mineral and<br>Non-Operating** | **Operating** | **Securities** | **Eliminations** | **Consolidated<br>Total** |
|  Oil and natural gas properties, proved |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Williston Basin | $196909 | $450018 | $— | $— | $646927 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Powder River Basin | 49386 |  |  |  | 49386 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Denver-Julesburg | 45565 |  |  |  | 45565 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Permian Basin | 20050 |  |  |  | 20050 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Marcellus | 1306 |  |  |  | 1306 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Uinta Basin | 35869 |  |  |  | 35869 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 1702 |  |  |  | 1702 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total proved properties | $350787 | $450018 | $— | $— | $800805 |
|  Oil and natural gas properties, unproved |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Williston Basin | $273216 | $7870 | $— | $— | $281086 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Powder River Basin | 29869 |  |  |  | 29869 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Denver-Julesburg | 35639 |  |  |  | 35639 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Permian Basin | 6752 |  |  |  | 6752 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Uinta Basin | 38086 |  |  |  | 38086 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 1849 |  |  |  | 1849 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total unproved properties | $385411 | $7870 | $— | $— | $393281 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
| *(in thousands)* | **Mineral and<br>Non-Operating** | **Operating** | **Securities** | **Eliminations** | **Consolidated<br>Total** |
|  Oil and natural gas properties, proved |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Williston Basin | $184740 | $351864 | $— | $— | $536604 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Powder River Basin | 47780 |  |  |  | 47780 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Denver-Julesburg | 45193 |  |  |  | 45193 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Permian Basin | 20050 |  |  |  | 20050 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Marcellus | 1306 |  |  |  | 1306 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Uinta Basin | 34731 |  |  |  | 34731 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 1702 |  |  |  | 1702 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total proved properties | $335502 | $351864 | $— | $— | $687366 |
|  Oil and natural gas properties, unproved |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Williston Basin | $209437 | $7300 | $— | $— | $216737 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Powder River Basin | 29853 |  |  |  | 29853 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Denver-Julesburg | 35619 |  |  |  | 35619 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Permian Basin | 6752 |  |  |  | 6752 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Uinta Basin | 28045 |  |  |  | 28045 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 1849 |  |  |  | 1849 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total unproved properties | $311555 | $7300 | $— | $— | $318855 |

---

------

##### [**Table of Contents**](#toc)
**PHOENIX ENERGY ONE, LLC AND SUBSIDIARIES** 

**Notes to the Condensed Consolidated Financial Statements** 

**(unaudited)** 

**Note 15 – Subsequent Events** 

In April 2025, the Company amended the Fortress Credit Agreement (the "Amendment") and established a new tranche of term loans in an aggregate principal amount of $50.0 million, with $25.0 million borrowed upon closing and $25.0 million borrowed in May 2025. The Amendment also revised the mandatory repayment schedule such that $150.0 million of the outstanding principal amount of the Fortress Term Loans is due by December 2026, with the remainder due upon maturity. The new tranche of the Fortress Term Loans will bear interest at a rate per annum equal to Term SOFR plus a margin of 7.10%. Proceeds will be used to finance the development of the Company's oil and gas properties in accordance with the approved plan of development provided in the Fortress Credit Agreement.

In May 2025, the Company entered into additional fixed swap contracts for a total volume of 1.8 million Bbls at a weighted average contract price of $58.93 with settlement dates through December 2027, pursuant to its debt covenants under the amended Fortress Credit Agreement.

In October 2024, the Company filed a Registration Statement on Form S-1 with the Securities Exchange Commission (the "SEC") (File No. 333-282862), which relates to the issuance of up to an aggregate principal amount of $750.0 million of debt securities that the Company intends to offer on a continuous basis. The debt securities are comprised of notes with maturities of three, five, seven, and/or eleven years with interest rates ranging from 9%, to 12% per annum, and consist of either cash interest or compound interest on such notes. On May 14, 2025, the SEC declared the registration statement effective, and the Company filed a final prospectus describing the terms of the offering.

On May 14, 2025, the Company approved an increase to the maximum offering amount of the August 2023 506(c) Bonds from $750.0 million to $1,500.0 million. The August 2023 506(c) Bonds are unsecured bonds offered and sold pursuant to an offering rule under Rule 506(c) of Regulation D that commenced in August 2023 with maturity dates ranging from one to eleven years from the issue date and interest rates ranging from 9.0% to 14.0% per annum.

On May 15, 2025, the Company entered into an indenture pursuant to which it intends to issue from time to time to holders of its unsecured three-year 9.0% bonds offered and sold pursuant to an offering under Regulation A promulgated under the Securities Act that commenced in December 2021 and terminated in December 2024 (the "Reg A Bonds") unsecured senior subordinated obligations in an offering exempt from registration under Section 3(a)(9) and/or 4(a)(2) of the Securities Act (the "Exchange Notes"). The Exchange Notes will have maturities of three, five, seven, and/or eleven years and interest rates ranging from 9.0% to 12.0% per annum.

The Company is continuing to raise debt capital under its exempt debt offerings. Since the balance sheet date and through the date of filing of these condensed consolidated financial statements, the Company issued approximately $54.4 million and $20.3 million of its Regulation D and Adamantium bonds, respectively, under the same terms and conditions as the existing securities.

------

##### [**Table of Contents**](#toc)
![LOGO](g72530g01n97.jpg)

**PHOENIX ENERGY ONE, LLC** 

**Up to 3,750,000 Shares of** 

**10.00% Series A Cumulative Redeemable Preferred Shares** 

**OFFERING CIRCULAR**![LOGO](g72530g01n04.jpg)

------

##### [**Table of Contents**](#toc)
**Part III** 

**EXHIBIT INDEX** 

---

| | | | | |
|:---|:---|:---|:---|:---|
| | | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** |
| <br>**Exhibit<br>Number** | <br>**Description** | **Form** | **Date of First<br>Filing** | **Exhibit<br>Number** |
| 1.1<sup>++</sup> | [Form of Selling Agency Agreement, by and between Phoenix Energy One, LLC and Digital Offering LLC.](d72530daddexhb.htm) |  |  |  |
| 2.1 | [Certificate of Formation of Phoenix Capital Group Holdings, LLC, dated as of April 16, 2019.](http://www.sec.gov/Archives/edgar/data/0001818643/000119312524246121/d835594dex31.htm) | S-1 | 10/29/2024 | 3.1 |
| 2.2 | [Certificate of Amendment to the Certificate of Formation of Phoenix Energy One, LLC, dated as of January 23, 2025.](http://www.sec.gov/Archives/edgar/data/1818643/000119312525067203/d835594dex32.htm) | S-1/A | 03/28/2025 | 3.2 |
| 2.3 | [Second Amended and Restated Limited Liability Company Agreement of Phoenix Energy One, LLC, dated as of January 23, 2025.](http://www.sec.gov/Archives/edgar/data/1818643/000119312525067203/d835594dex33.htm) | S-1/A | 03/28/2025 | 3.3 |
| 2.4 | [Form of Third Amended and Restated Limited Liability Company Agreement of Phoenix Energy One, LLC.](d72530daddexhb1.htm) |  |  |  |
| 3.1 | [Form of Phoenix Energy One, LLC Share Designation with respect to the Series A Cumulative Redeemable Preferred Shares.](d72530daddexhb2.htm) |  |  |  |
| 3.2 | [Indenture, by and between Phoenix Energy One, LLC and UMB Bank, N.A., as trustee, dated May 14, 2025, governing the Registered Notes.](http://www.sec.gov/Archives/edgar/data/1818643/000119312525121729/d916055dex41.htm) | 10-Q | 05/16/2025 | 4.1 |
| 3.3 | [Form of Cash Interest Note (included in Exhibit 3.2)](http://www.sec.gov/Archives/edgar/data/1818643/000119312525121729/d916055dex41.htm) | 10-Q | 05/16/2025 | 4.2 |
| 3.4 | [Form of Compound Interest Note (included in Exhibit 3.2)](http://www.sec.gov/Archives/edgar/data/1818643/000119312525121729/d916055dex41.htm) | 10-Q | 05/16/2025 | 4.3 |
| 3.5 | [Indenture, by and between Phoenix Capital Group Holdings, LLC and UMB Bank, N.A., as trustee, dated as of January 12, 2022, governing the Reg A Bonds.](http://www.sec.gov/Archives/edgar/data/1818643/000119312524246121/d835594dex44.htm) | S-1 | 10/29/2024 | 4.4 |
| 3.6 | [First Supplemental Indenture, by and between Phoenix Capital Group Holdings, LLC and UMB Bank, N.A., as trustee, dated as of February 1, 2022.](http://www.sec.gov/Archives/edgar/data/1818643/000119312524246121/d835594dex45.htm) | S-1 | 10/29/2024 | 4.5 |
| 3.7 | [Second Supplemental Indenture, by and between Phoenix Capital Group Holdings, LLC and UMB Bank, N.A., as trustee, dated as of July 18, 2022.](http://www.sec.gov/Archives/edgar/data/0001818643/000119312524246121/d835594dex46.htm) | S-1 | 10/29/2024 | 4.6 |
| 3.8 | [Third Supplemental Indenture, by and between Phoenix Capital Group Holdings, LLC and UMB Bank, N.A., as trustee, dated as of May 25, 2023.](http://www.sec.gov/Archives/edgar/data/0001818643/000119312524246121/d835594dex47.htm) | S-1 | 10/29/2024 | 4.7 |
| 3.9 | [Form of Reg A Bond.](http://www.sec.gov/Archives/edgar/data/0001818643/000119312524246121/d835594dex48.htm) | S-1 | 10/29/2024 | 4.8 |
| 3.10 | [Form of Adamantium Bond.](http://www.sec.gov/Archives/edgar/data/0001818643/000119312524246121/d835594dex49.htm) | S-1 | 10/29/2024 | 4.9 |
| 3.11 | [Form of 2020 506(b) Bond and 2020 506(c) Bond.](http://www.sec.gov/Archives/edgar/data/0001818643/000119312524246121/d835594dex410.htm) | S-1 | 10/29/2024 | 4.10 |
| 3.12 | [Form of July 2022 506(c) Bond.](http://www.sec.gov/Archives/edgar/data/0001818643/000119312524246121/d835594dex411.htm) | S-1 | 10/29/2024 | 4.11 |
| 3.13 | [Form of December 2022 506(c) Bond (Series AAA through Series D-1).](http://www.sec.gov/Archives/edgar/data/0001818643/000119312524246121/d835594dex412.htm) | S-1 | 10/29/2024 | 4.12 |

---

------

##### [**Table of Contents**](#toc)

---

| | | | | |
|:---|:---|:---|:---|:---|
| | | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** |
| <br>**Exhibit<br>Number** | <br>**Description** | **Form** | **Date of First<br>Filing** | **Exhibit<br>Number** |
| 3.14 | [Indenture, by and between Phoenix Capital Group Holdings, LLC and UMB Bank, N.A., as trustee, dated as of August 25, 2023, governing the August 2023 506(c) Bonds.](http://www.sec.gov/Archives/edgar/data/0001818643/000119312524246121/d835594dex413.htm) | S-1 | 10/29/2024 | 4.13 |
| 3.15 | [Form of August 2023 506(c) Bond (Series U through Series Z-1).](http://www.sec.gov/Archives/edgar/data/0001818643/000119312524246121/d835594dex414.htm) | S-1 | 10/29/2024 | 4.14 |
| 3.16 | [First Supplemental Indenture, by and between Phoenix Capital Group Holdings, LLC and UMB Bank, N.A., as trustee, dated as of August 20, 2024.](http://www.sec.gov/Archives/edgar/data/0001818643/000119312524246121/d835594dex415.htm) | S-1 | 10/29/2024 | 4.15 |
| 3.17 | [Form of August 2023 506(c) Bond (Series AA through Series JJ-1) (included in Exhibit 4.15).](http://www.sec.gov/Archives/edgar/data/0001818643/000119312524246121/d835594dex415.htm) | S-1 | 10/29/2024 | 4.16 |
| 3.18 | [Second Supplemental Indenture, by and between Phoenix Capital Group Holdings, LLC and UMB Bank, N.A., as trustee, dated as of October 17, 2024.](http://www.sec.gov/Archives/edgar/data/0001818643/000119312524246121/d835594dex417.htm) | S-1 | 10/29/2024 | 4.17 |
| 3.19 | [Third Supplemental Indenture, by and between Phoenix Energy One, LLC and UMB Bank, N.A., as trustee, dated as of May 14, 2025, governing the August 2023 506(c) Bonds.](http://www.sec.gov/Archives/edgar/data/1818643/000119312525121729/d916055dex418.htm) | 10-Q | 05/16/2025 | 4.18 |
| 3.20 | [Indenture, by and between Phoenix Energy One, LLC and UMB Bank, N.A., as trustee, dated as of May 15, 2025, governing the Exchange Notes.](http://www.sec.gov/Archives/edgar/data/1818643/000119312525121729/d916055dex419.htm) | 10-Q | 05/16/2025 | 4.19 |
| 3.21 | [Form of Cash Interest Note (included in Exhibit 3.20)](http://www.sec.gov/Archives/edgar/data/1818643/000119312525121729/d916055dex419.htm) | 10-Q | 05/16/2025 | 4.20 |
| 3.22 | [Form of Compound Interest Note (included in Exhibit 3.20)](http://www.sec.gov/Archives/edgar/data/1818643/000119312525121729/d916055dex419.htm) | 10-Q | 05/16/2025 | 4.21 |
| 4.1 | [Form of Subscription Agreement for purchase of Preferred Shares.](d72530dex1a4subsagmt.htm) |  |  |  |
| 4.2 | [Form of Subscription Agreement for purchase of Preferred Shares through AOS Inc.'s, My IPO platform.](d72530dex1a4subsagmt1.htm) |  |  |  |
| 6.1 | [Commercial Credit Agreement, by and among Phoenix Capital Group Holdings, LLC, Phoenix Operating LLC, and Amarillo National Bank, dated as of July 24, 2023.](http://www.sec.gov/Archives/edgar/data/0001818643/000119312524246121/d835594dex101.htm) | S-1 | 10/29/2024 | 10.1 |
| 6.2 | [Security Agreement, by and between Phoenix Capital Group Holdings, LLC and Amarillo National Bank, LLC, dated as of July 24, 2023.](http://www.sec.gov/Archives/edgar/data/0001818643/000119312524246121/d835594dex102.htm) | S-1 | 10/29/2024 | 10.2 |
| 6.3†<sup>++</sup> | [Second Amended and Restated Limited Liability Company Agreement of Phoenix Equity Holdings, LLC, dated as of December 4, 2024.](http://www.sec.gov/Archives/edgar/data/1818643/000119312524286101/d835594dex104.htm) | S-1/A | 12/30/2024 | 10.4 |
| 6.4†<sup>++</sup> | [First Amendment to the Second Amended and Restated Limited Liability Company Agreement of Phoenix Equity Holdings, LLC, dated as of April 25, 2025.](http://www.sec.gov/Archives/edgar/data/1818643/000119312525097152/d835594dex1030.htm) | S-1/A | 04/25/2025 | 10.30 |
| 6.6†<sup>++</sup> | [Unit Award Agreement, by and between Phoenix Equity Holdings, LLC and Curtis Allen, dated as of December 4, 2024.](http://www.sec.gov/Archives/edgar/data/1818643/000119312524286101/d835594dex105.htm) | S-1/A | 12/30/2024 | 10.5 |
| 6.7†<sup>++</sup> | [Employee Offer Letter, by and between Phoenix Capital Group Holdings, LLC and Sean Goodnight, dated as of June 12, 2020.](http://www.sec.gov/Archives/edgar/data/1818643/000119312525067203/d835594dex107.htm) | S-1/A | 03/28/2025 | 10.7 |
| 6.8† | [Employee Agreement, by and between Phoenix Equity Holdings, LLC and Adam Ferrari, effective as of January 1, 2025.](http://www.sec.gov/Archives/edgar/data/1818643/000119312525067203/d835594dex108.htm) | S-1/A | 03/28/2025 | 10.8 |

---

------

##### [**Table of Contents**](#toc)

---

| | | | | |
|:---|:---|:---|:---|:---|
| | | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** |
| <br>**Exhibit<br>Number** | <br>**Description** | **Form** | **Date of First<br>Filing** | **Exhibit<br>Number** |
| 6.9† | [Employee Agreement, by and between Phoenix Equity Holdings, LLC and Curtis Allen, effective as of January 1, 2025.](http://www.sec.gov/Archives/edgar/data/1818643/000119312525116847/d835594dex109.htm) | S-1/A | 05/09/2025 | 10.9 |
| 6.10† | [Employee Agreement, by and between Phoenix Equity Holdings, LLC and Lindsey Wilson, effective as of January 1, 2025.](http://www.sec.gov/Archives/edgar/data/1818643/000119312525116847/d835594dex1010.htm) | S-1/A | 05/09/2025 | 10.10 |
| 6.11† | [Employee Offer Letter, by and between Phoenix Operating LLC and Brandon Allen, dated as of March 2, 2023.](http://www.sec.gov/Archives/edgar/data/1818643/000119312525067203/d835594dex1011.htm) | S-1/A | 03/28/2025 | 10.11 |
| 6.12† | [Performance Bonus Amendment, by and among Phoenix Operating LLC, Phoenix Capital Group Holdings, LLC, and Brandon Allen, dated as of January 22, 2025.](http://www.sec.gov/Archives/edgar/data/1818643/000119312525067203/d835594dex1012.htm) | S-1/A | 03/28/2025 | 10.12 |
| 6.13† | [Commission Agreement, by and between by and between Phoenix Capital Group Holdings, LLC and Sean Goodnight, dated as of January 16, 2024.](http://www.sec.gov/Archives/edgar/data/1818643/000119312525097152/d835594dex1013.htm) | S-1/A | 03/28/2025 | 10.13 |
| 6.14 | [Loan Agreement, by and between Adamantium Capital LLC and Phoenix Capital Group Holdings, LLC, dated as of September 14, 2023.](http://www.sec.gov/Archives/edgar/data/0001818643/000119312524246121/d835594dex1010.htm) | S-1 | 10/29/2024 | 10.10 |
| 6.15 | [Loan Agreement Amendment and Note Modification Agreement, by and among Phoenix Capital Group Holdings, LLC, Phoenix Operating LLC, and Adamantium Capital LLC, dated as of October 30, 2023.](http://www.sec.gov/Archives/edgar/data/0001818643/000119312524246121/d835594dex1011.htm) | S-1 | 10/29/2024 | 10.11 |
| 6.16 | [Promissory Note, by and among Phoenix Capital Group Holdings, LLC, Phoenix Operating LLC, and Amarillo National Bank, LLC, dated as of July 24, 2023.](http://www.sec.gov/Archives/edgar/data/1818643/000119312524246121/d835594dex103.htm) | S-1 | 10/29/2024 | 10.3 |
| 6.17 | [Modification of Promissory Note, by and among Phoenix Capital Group Holdings, LLC, Phoenix Operating, LLC, and Amarillo National Bank, dated as of July 24, 2024.](http://www.sec.gov/Archives/edgar/data/0001818643/000119312524246121/d835594dex1013.htm) | S-1 | 10/29/2024 | 10.13 |
| 6.18<sup>++</sup> | [Amended and Restated Senior Credit Agreement, by and among Phoenix Capital Group Holdings, LLC, Phoenix Operating LLC, each of the lenders from time to time party thereto, and Fortress Credit Corp., dated as of August 12, 2024.](http://www.sec.gov/Archives/edgar/data/0001818643/000119312524246121/d835594dex1014.htm) | S-1 | 10/29/2024 | 10.14 |
| 6.19 | [Assignment of Loans and Liens, by and among Phoenix Capital Group Holdings, LLC, Phoenix Operating LLC, Amarillo National Bank, and Fortress Credit Corp., as administrative agent, collateral agent, and lender, dated as of August 12, 2024.](http://www.sec.gov/Archives/edgar/data/0001818643/000119312524246121/d835594dex1015.htm) | S-1 | 10/29/2024 | 10.15 |
| 6.20 | [Limited Waiver and Amendment No. 1 to Amended and Restated Senior Credit Agreement, by and among Phoenix Capital Group Holdings, LLC, Phoenix Operating LLC, each of the lenders from time to time party thereto, and Fortress Credit Corp., dated as of October 25, 2024.](http://www.sec.gov/Archives/edgar/data/1818643/000119312524286101/d835594dex1016.htm) | S-1/A | 12/30/2024 | 10.16 |
| 6.21 | [Amendment No. 2 to Amended and Restated Senior Credit Agreement, by and among Phoenix Capital Group Holdings, LLC, Phoenix Operating LLC, each of the lenders from time to time party thereto, and Fortress Credit Corp., dated as of November 1, 2024.](http://www.sec.gov/Archives/edgar/data/1818643/000119312524286101/d835594dex1017.htm) | S-1/A | 12/30/2024 | 10.17 |

---

------

##### [**Table of Contents**](#toc)

---

| | | | | |
|:---|:---|:---|:---|:---|
| | | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** |
| <br>**Exhibit<br>Number** | <br>**Description** | **Form** | **Date of First<br>Filing** | **Exhibit<br>Number** |
| 6.22<sup>++</sup> | [Amendment No. 3 to Amended and Restated Senior Credit Agreement, by and among Phoenix Capital Group Holdings, LLC, Phoenix Operating LLC, each of the lenders from time to time party thereto, and Fortress Credit Corp., dated as of December 18, 2024.](http://www.sec.gov/Archives/edgar/data/1818643/000119312524286101/d835594dex1018.htm) | S-1/A | 12/30/2024 | 10.18 |
| 6.23 | [Second Amendment to Loan Agreement, by and among Phoenix Capital Group Holdings, LLC, Phoenix Operating LLC, and Adamantium Capital LLC, dated as of December 12, 2024.](http://www.sec.gov/Archives/edgar/data/1818643/000119312524286101/d835594dex1019.htm) | S-1/A | 12/30/2024 | 10.19 |
| 6.24† | [2024 Long-Term Incentive Plan of Phoenix Equity Holdings, LLC.](http://www.sec.gov/Archives/edgar/data/1818643/000119312524286101/d835594dex1020.htm) | S-1/A | 12/30/2024 | 10.20 |
| 6.25† | [Form of Unit Award Agreement of Phoenix Equity Holdings, LLC.](http://www.sec.gov/Archives/edgar/data/1818643/000119312524286101/d835594dex1021.htm) | S-1/A | 12/30/2024 | 10.21 |
| 6.26† | [Form of Phantom Unit Award Agreement of Phoenix Equity Holdings, LLC.](http://www.sec.gov/Archives/edgar/data/1818643/000119312524286101/d835594dex1022.htm) | S-1/A | 12/30/2024 | 10.22 |
| 6.27 | [Third Amendment to Loan Agreement, by and among Phoenix Capital Group Holdings, LLC, Phoenix Operating LLC, and Adamantium Capital LLC, dated as of January 3, 2025.](http://www.sec.gov/Archives/edgar/data/1818643/000119312525067203/d835594dex1027.htm) | S-1/A | 03/29/2025 | 10.27 |
| 6.28 | [Fourth Amendment to Loan Agreement, by and among Phoenix Energy One, LLC, Phoenix Operating LLC, and Adamantium Capital LLC, dated as of January 24, 2025.](http://www.sec.gov/Archives/edgar/data/1818643/000119312525067203/d835594dex1028.htm) | S-1/A | 03/29/2025 | 10.28 |
| 6.29++ | [Limited Waiver and Amendment No. 4 to Amended and Restated Senior Credit Agreement, by and among Phoenix Energy One, LLC, Phoenix Operating LLC, each of the lenders from time to time party thereto, and Fortress Credit Corp., dated as of April 16, 2025.](http://www.sec.gov/Archives/edgar/data/1818643/000119312525097152/d835594dex1029.htm) | S-1/A | 04/25/2025 | 10.29 |
| 6.30† | [First Amendment to the Second Amended and Restated Limited Liability Company Agreement of Phoenix Equity Holdings, LLC, dated as of April 25, 2025.](http://www.sec.gov/Archives/edgar/data/1818643/000119312525097152/d835594dex1030.htm) | S-1/A | 04/25/2025 | 10.30 |
| 6.31†<sup>++</sup> | [Unit Award Agreement, by and between Phoenix Equity Holdings, LLC and Sean Goodnight, dated as of December 4, 2024.](http://www.sec.gov/Archives/edgar/data/1818643/000119312524286101/d835594dex106.htm) | S-1/A | 12/30/2024 | 10.6 |
| 6.32 | [Form of Indemnification Agreement.](d72530dex1a6matctrct.htm) |  |  |  |
| 6.33† | [Form of Non-Executive Director Offer Letter.](d72530dex1a6matctrct1.htm) |  |  |  |
| 6.34<sup>++</sup> | [Amendment No. 5 to Amended and Restated Senior Credit Agreement, by and among Phoenix Energy One, LLC, Phoenix Operating LLC, each of the lenders from time to time party thereto, and Fortress Credit Corp., dated as of June 26, 2025.](d72530dex1a6matctrct2.htm) |  |  |  |
| 8.1 | [Escrow Agreement, by and among Phoenix Energy One, LLC, Digital Offering, LLC and Wilmington Trust, National Association, dated as of June 8, 2025.](d72530dex1a8escwagmt.htm) |  |  |  |
| 10.1 | [Power of Attorney (included on the signature pages to the initial filing of this offering statement).](d72530dpartiiandiii.htm#sig) |  |  |  |
| 11.1 | [Consent of Ramirez Jimenez International CPAs.](d72530dex1a11consent.htm) |  |  |  |
| 11.2 | [Consent of Latham & Watkins LLP (included in Exhibit 12.1).](d72530dex1a12opncnsl.htm) |  |  |  |

---

------

##### [**Table of Contents**](#toc)

---

| | | | | |
|:---|:---|:---|:---|:---|
| | | **Incorporated by<br>Reference** | **Incorporated by<br>Reference** | **Incorporated by<br>Reference** |
| <br>**Exhibit<br>Number** | <br>**Description** | **Form** | **Date<br>of<br>First<br>Filing** | **Exhibit<br>Number** |
| 12.1 | [Opinion of Latham & Watkins LLP regarding legality of the Preferred Shares.](d72530dex1a12opncnsl.htm) |  |  |  |
| 99.1 | [Consent of Daniel Ferrari to be Named as a Director Nominee](d72530daddexhb3.htm) |  |  |  |
| 99.2 | [Consent of Jason Allan Pangracs to be Named as a Director Nominee](d72530daddexhb4.htm) |  |  |  |
| 99.3 | [Consent of Jason Montgomery Wagner to be Named as a Director Nominee](d72530daddexhb5.htm) |  |  |  |
| 99.4 | [Consent of Adam Ferrari to be Named as a Director Nominee](d72530daddexhb6.htm) |  |  |  |
| 99.5 | [Consent of Curtis Allen to be Named as a Director Nominee](d72530daddexhb7.htm) |  |  |  |

---

++ Certain annexes, schedules, and exhibits to this Exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company hereby agrees to furnish supplementally a copy of any omitted annex, schedule, or exhibit to the U.S. Securities and Exchange Commission upon request.

† Management contract or compensatory plan or arrangement.

------

##### [**Table of Contents**](#toc)
**SIGNATURES** 

Pursuant to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this offering statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Irvine, State of California, on June 26, 2025.

---

| | |
|:---|:---|
| **PHOENIX ENERGY ONE, LLC** | **PHOENIX ENERGY ONE, LLC** |
| By: | /s/ Curtis Allen |
| Name: | Curtis Allen |
| Title: | Chief Financial Officer |

---

**POWER OF ATTORNEY** 

Each person whose signature appears below constitutes and appoints Adam Ferrari and Curtis Allen, and each of them singly, as such person's true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for such person and in such person's name, place, and stead, in any and all capacities, to sign, or cause to be electronically signed, this offering statement on Form 1-A and any and all amendments (including post-effective amendments) to this offering statement, and to file the same, with all exhibits thereto and all other

documents in connection therewith, with the U.S. Securities and Exchange Commission, granting unto said

attorneys-in-fact and agents, and each of them singly, full power and authority to do and perform any and all acts

and things necessary or desirable to be done in and about the premises, as fully and for all intents and purposes as

such person might or could do in person, hereby ratifying and confirming all that each such said attorneys-in-fact and agent or any of them, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of Regulation A, this offering statement has been signed by the following persons in the capacities and on the dates indicated.

---

| |
|:---|
| **Signature** |
|  /s/ Adam Ferrari<br> Name: Adam Ferrari |
| Title: Chief Executive Officer and Principal Executive Officer |
| Date: June 26, 2025 |
|  /s/ Curtis Allen<br> Name: Curtis Allen |
| Title: Principal Financial Officer and Principal Accounting Officer |
| Date: June 26, 2025 |

---

## Add

**Exhibit 1.1** 

**PHOENIX ENERGY ONE, LLC** 

**UP TO 3,750,000 SERIES A PREFERRED SHARES** 

**SELLING AGENCY AGREEMENT** 

[ ⚫ ], 20[ ⚫ ]

Digital Offering, LLC

1461 Glenneyre Street, Suite D

Laguna Beach, CA 92651

Dear Ladies and Gentlemen:

Phoenix Energy One, LLC, a Delaware limited liability company (the "**Company**"), proposes, subject to the terms and conditions contained in this Selling Agency Agreement (this "**Agreement**"), to issue and sell up to a maximum of 3,750,000 Series A Cumulative Redeemable Preferred Shares representing membership interests in the Company (the "**Series A Preferred Shares**"), to investors (each, an "**Investor**," and, collectively, the "**Investors**"), at a purchase price of $20.00 per share (the "**Purchase Price**"), in an offering (the "**Offering**") exempt from registration pursuant to Tier II of Regulation A ("**Regulation A**") as promulgated under the U.S. Securities Act of 1933, as amended (the "**Securities Act**"), by the U.S. Securities and Exchange Commission (the "**Commission**") and the other applicable rules, orders and regulations of the Commission (collectively referred to as the "**Rules and Regulations**") and under the various state securities laws through Digital Offering LLC (the "**Selling Agent**"), acting on a best efforts basis only, in connection with such sales. The Series A Preferred Shares to be sold in this offering are referred to herein as the "**Shares**." The Shares are more fully described in the Offering Statement (as hereinafter defined).

The Company hereby confirms its agreement with the Selling Agent concerning the offering, purchase, and sale of the Shares as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Agreement to Act as Selling Agent</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Best Efforts Basis</u>. On the basis of the representations, warranties, and agreements of the Company herein contained and subject to all the terms and conditions of this Agreement, the Selling Agent agrees to act on a best efforts basis only in connection with the issuance and sale by the Company of the Shares to the Investors. Under no circumstances will the Selling Agent be obligated to underwrite or purchase any of the Shares for its own account or otherwise provide any financing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Selling Agent's Commissions</u>. The Company will pay to the Selling Agent a cash commission equal to 7.75% of the gross offering proceeds received by the Company from the sale of the Shares (the "**Cash Fee**"), which shall be allocated by the Selling Agent to Dealers (as hereinafter defined) participating in the Offering, in its sole discretion (subject to <u>Section</u> <u>1(c)</u>).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Selected Dealer Agreements</u>. The Selling Agent shall have the right to enter into selected dealer agreements, substantially in the form attached hereto as <u>Exhibit A</u> (collectively, the "**Selected Dealer Agreements**" and each, a "**Selected Dealer Agreement**"), with other broker-dealers that are members of the Financial Industry Regulatory Authority, Inc. ("**FINRA**"), in each case after good faith consultation with the Company regarding such proposed dealer (each dealer being referred to herein as a "**Dealer**," and said dealers being collectively referred to herein as the "**Dealers**"); *provided, however*, that, subject to entry into a Selected Dealer Agreement, Dalmore Group LLC shall be entitled to receive a cash commission

------

equal to 2.4% of the gross offering proceeds received by the Company from the sale of Shares by registered representatives of Dalmore Group LLC, and such amount shall be payable by the Selling Agent in accordance with this <u>Section</u> <u>1(c)</u> out of the Cash Fee. The Cash Fee shall otherwise be re-allowable, in whole or in part, to the Dealers. The Company will not be liable or responsible for direct payment of compensation to any Dealer, including Dalmore Group LLC, it being the sole and exclusive responsibility of the Selling Agent. The Selling Agent acknowledges that certain of the registered representatives of Dalmore Group LLC that will participate in the Offering are non-executive personnel of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Delivery and Payment</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) On or after the date of this Agreement, the Company, the Selling Agent, AOS Inc. dba My IPO, and Wilmington Trust, N.A. (the "**Escrow Agent**") will enter into an Escrow Agreement substantially in the form included as an exhibit to the Offering Statement (the "**Escrow Agreement"**), pursuant to which an escrow account will be established, at the Company's expense, for Investors that participate in the Offering (the "**Escrow Account**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Prior to the Closing Date (as hereinafter defined) of the Offering: (i) each applicable Investor will execute and deliver to the Company, pursuant to the instructions provided in the Offering Statement, and the Company will make available to the Selling Agent and the Escrow Agent copies of, a subscription agreement substantially in the form included as an exhibit to the Offering Statement (each, a "**Subscription Agreement**"); (ii) each Investor will transfer to the Escrow Account funds in an amount equal to the Purchase Price per Share as shown on the cover page of the Final Offering Circular (as hereinafter defined) multiplied by the number of Shares subscribed by such Investor; (iii) subscription funds received from any Investor will be promptly transmitted to the Escrow Account in compliance with Rule 15c2-4 of the U.S. Securities Exchange Act of 1934, as amended (the "**Exchange Act**"), and (iv) the Escrow Agent will notify the Company and the Selling Agent in writing as to the balance of the collected funds in the Escrow Account.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Notwithstanding the foregoing <u>Section</u> <u>2(b)</u>, Investors that maintain an account with a participating Dealer may subscribe for Shares pursuant to the procedures in <u>Section</u> <u>2(b)</u> without depositing funds with the Escrow Agent; *provided* that each such Investor maintains sufficient funds in their account with such participating Dealer. At the Closing (as hereinafter defined), any amounts subscribed for and Shares delivered will be settled broker-to-broker and credited to the Company's account.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) If the Escrow Agent shall have received written notice from the Company and the Selling Agent on or before 4:00 p.m., New York City time, on any date on or before [ ⚫ ], 20[ ⚫ ], or at such other time on such other date thereafter as may be agreed upon by the Company and the Selling Agent (such date, the "**Closing Date**"), the Escrow Agent will release the balance of the Escrow Account for collection by the Company and the Selling Agent as provided in the Escrow Agreement. and the Company shall deliver the Shares purchased by the Investors to the Investors on the Closing Date, which delivery may be made through the facilities of the Depository Trust Company ("**DTC**") or via book entry with the Company's securities registrar and transfer agent, Equity Stock Transfer, LLC (the "**Transfer Agent**"). The closing of the Offering (the "**Closing**") shall take place at the office of the Selling Agent or such other location as the Selling Agent and the Company shall mutually agree. All actions taken at the Closing shall be deemed to have occurred simultaneously on the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The Company reserves the right in its sole discretion to reject any Subscription Agreement in whole or in part. It is understood that no sale of Shares shall be regarded as effective unless and until accepted by the Company. If the Company, in its sole discretion, determines that the Offering will not proceed with respect to one or more Investors, then the Escrow Agent will promptly return the funds to such Investors without interest.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Offering Statement</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company has filed with the Commission an offering statement on Form 1-A (File No. 024-[ ⚫ ]) (as amended as of the Qualification Date (as defined below), and including all exhibits thereto, the "**Offering Statement**") relating to the Shares pursuant to Regulation A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) As used in this Agreement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) "**Applicable Time**" means 9:00 am (Eastern time) on the date of this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) "**Final Offering Circular**" means the final offering circular relating to the Offering, including any supplements or amendments thereto, as filed with the Commission pursuant to Regulation A;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) "**Preliminary Offering Circular**" means the preliminary offering circular relating to the Shares included in the Offering Statement at the time of qualification on the Qualification Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) "**Qualification Date**" means the date as of which the Offering Statement was qualified with the Commission pursuant to Regulation A, the Securities Act and the related Rules and Regulations; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) "**Testing-the-Waters Communication**" means any oral or written communication with potential investors undertaken in reliance on Rule 255 of the Rules and Regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Representations and Warranties of the Company</u>. The Company hereby represents and warrants and covenants to the Selling Agent that, as of the date hereof (or, as applicable with respect to a representation or warranty set forth in this <u>Section</u> <u>4</u>, as of such other date as may be expressly set forth therein):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Offering Statement has been filed with the Commission in accordance with Regulation A; no stop order of the Commission preventing or suspending the qualification or use of the Offering Statement, or any amendment thereto, has been issued, and no proceedings for such purpose have been instituted or, to the Company's knowledge, threatened by the Commission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Offering Statement, at the time it became qualified, as of the date hereof, and as of the Closing Date, conformed and will conform in all material respects to the requirements of Regulation A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Offering Statement, as of the date hereof and as of the Closing Date, did not and will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; *provided, however*, that the Company makes no representation or warranty with respect to any statements or omissions in the Offering Statement made in reliance upon and in conformity with information provided by the Selling Agent expressly for use therein as described in <u>Section</u> <u>9(ii)</u> herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Preliminary Offering Circular did not, as of its date, include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; *provided, however*, that the Company makes no representation or warranty with respect to any statements or omissions in the Preliminary Offering Circular made in reliance upon and in conformity with information provided by the Selling Agent expressly for use therein as described in <u>Section</u> <u>9(ii)</u> herein.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The Final Offering Circular will not, as of its date and on the Closing Date, include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; *provided*, *however*, that the Company makes no representation or warranty with respect to any statements or omissions in the Final Offering Circular made in reliance upon and in conformity with information provided by the Selling Agent expressly for use therein as described in <u>Section</u> <u>9(ii)</u> herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The Company is duly organized and validly existing as a limited liability company in good standing under the laws of the State of Delaware. The Company (i) has all limited liability company power and authority to conduct its business as presently conducted and as described in the Offering Statement, the Preliminary Offering Circular and the Final Offering Circular and (ii) is duly licensed or qualified to do business and in good standing as a foreign organization in all jurisdictions in which the nature of the activities conducted by it or the character of the assets owned or leased by it makes such licensing or qualification necessary, except, in each case of <u>clauses (i)</u> and <u>(ii)</u>, where the failure to have such power or be so qualified or in good standing or have such power or authority would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the business, properties, management, financial position, stockholders' equity, or results of operations of the Company and its subsidiaries, taken as a whole (a "**Material Adverse Effect**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) The Company does not have any "significant subsidiaries" (within the meaning of Rule 1-02 of Regulation S-X promulgated under the Exchange Act) except as set forth in the Final Offering Circular.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) The Company's principal place of business is in the United States. The Company is not a development stage company that either has no specific business plan or purpose or has indicated that its business plan is to merge with or acquire an unidentified company or companies. The Company is not and, after giving effect to the offering and sale of the Shares and the application of the proceeds thereof as described in the Offering Statement, the Preliminary Offering Circular and the Final Offering Circular, will not be registered or required to be registered as an "investment company" within the meaning of the Investment Company Act of 1940, as amended (the "**Investment Company Act**"), or a "business development company" as defined in Section 2(a)(48) of the Investment Company Act. The Company is not an issuer of fractional undivided interests in oil or gas rights or similar interests in other mineral rights. The Company is not, and has not been, subject to an order by the Commission pursuant to Section 12(j) of the Exchange Act that was entered within five years preceding the date the Offering Statement was originally filed with the Commission. The Company has filed during the two-year period preceding the date the Offering Statement was originally filed with the Commission all reports required to be filed pursuant to Rule 257 of the Rules and Regulations or pursuant to Section 13 or 15(d) of the Exchange Act. None of (i) the Company, (ii) any predecessor of the Company, (iii) any "affiliated issuer" (as defined in Rule 261(a) of the Rules and Regulations) of the Company, (iv) any director, executive officer, other officer participating in the Offering, general partner, or managing member of the Company, (v) any beneficial owner of 20% or more of the Company's outstanding voting equity securities, calculated on the basis of voting power, or (vi) any promoter connected with the Company in any capacity at the time of filing, any offer after qualification, or such sale is subject to the disqualification provisions of Rule 262 of the Rules and Regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Company has full limited liability company right, power, and authority to execute and deliver this Agreement and the Escrow Agreement and to perform its obligations hereunder and thereunder. This Agreement and the Escrow Agreement have each been authorized and validly executed and delivered by the Company and the Escrow Agreement is a legal, valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, subject to the effect of applicable bankruptcy, insolvency, or similar laws affecting creditors' rights generally and equitable principles of general applicability and except for limitations on enforceability of indemnity provisions under federal and state laws.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) Following the execution of the Third Amended and Restated Limited Liability Company Agreement of the Company (the "**A&R LLCA**") on or prior to the Closing Date, the issuance and sale of the Shares will have been duly authorized by the Company, and, when issued, delivered and paid for in accordance with this Agreement, the Shares will be validly issued and will not be subject to preemptive or similar rights other than those that have been disclosed in the Final Offering Circular. The terms of the Shares, when issued, will conform in all material respects to the description thereof contained in the section entitled "Description of Capital and Preferred Shares" in the Final Offering Circular.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) Except as set forth herein or in the Final Offering Circular or as otherwise contemplated by this Agreement (including other Dealers pursuant to Selected Dealer Agreements), no brokerage or finder's fees or commissions are or will be payable by the Company to any broker, financial advisor, consultant, finder, placement agent, investment banker, bank, or other person with respect to the Offering. Except as disclosed in the Final Offering Circular, to the Company's knowledge, there are no other arrangements, agreements, or understandings of the Company or, to the Company's knowledge, any of its members that may affect the Selling Agent's compensation, as determined by FINRA. Notwithstanding the foregoing, certain employees of the Company are also registered representatives of a registered broker-dealer that is a member of the selling group for this Offering. These employees, in their capacity as registered representatives, will be actively engaged in the offer and sale of the Shares and will receive commissions for sales of the Shares. The registered broker-dealer with whom these Company employees are registered is not an affiliate of the Company. The participation of these employees as both employees of the Company and registered representatives of a selling group member may give rise to potential conflicts of interest, including, but not limited to, the possibility that such employees may have an incentive to recommend the Shares based on the compensation they will receive, rather than solely on the investment merits of the Shares. The Company has taken steps to ensure that all such sales activities comply with applicable securities laws and FINRA rules, including the disclosure of such potential conflicts of interest. To the Company's knowledge, except as disclosed herein and in the Final Offering Circular, no (i) manager or officer of the Company, (ii) member holding 5% or more of the Company's outstanding equity interests, or (iii) member holding any amount of the Company's equity interests acquired within the 180-day period prior to the date hereof, has any direct or indirect affiliation or association with any FINRA member. The Company will advise the Selling Agents and their respective counsel if it becomes aware that any manager, officer, or member of the Company is or becomes an affiliate or associated person of a FINRA member participating in the Offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) The Company has not authorized anyone to engage in Testing-the-Waters Communications and has not distributed any Testing-the-Waters Communications.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) The consolidated financial statements and the related notes of the Company and its subsidiaries included in the Offering Statement and the Final Offering Circular comply in all material respects with the applicable requirements of the Securities Act and the applicable Rules and Regulations and present fairly, in all material respects, the financial condition of the Company as of the dates thereof and the results of operations and cash flows at the dates and for the periods covered thereby in conformity with U.S. generally accepted accounting principles ("**GAAP**"), except as may be stated in the related notes thereto. No other financial statements or schedules of the Company, any subsidiary, or any other entity are required by the Securities Act or the Rules and Regulations to be included in the Offering Statement or the Final Offering Circular.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) Ramirez Jimenez International CPAs, who have reported on certain financial statements of the Company and its subsidiaries, are registered independent public accountants with respect to the Company as required by the Securities Act and the applicable Rules and Regulations and by the rules of the Public Company Accounting Oversight Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) Since the date of the most recent financial statements of the Company included in the Offering Statement and the Final Offering Circular, other than as described in or contemplated by the Offering Statement or the Final Offering Circular, (A) there has not been any material change in the capital stock of the Company or any material change in the long-term debt of the Company (other than as a result of ordinary course repayments, repurchases, and redemptions of debt, amortization payments required by the Fortress Credit Agreement (as defined in the Final Offering Circular), the accretion or amortization of discounts and issuance costs related to such long-term debt, or intercompany debt) or any dividend or distribution of any kind declared, set aside for payment, paid or made by the Company on any class of capital stock or equity interests (other than with respect to ordinary course tax or other payments as described in the Offering Statement and the Final Offering Circular), or any material adverse change in the business, properties, management, financial position, stockholders' equity, or results of operations of the Company (a "**Material Adverse Change**"), (B) the Company has not sustained any material loss or interference with its business from fire, explosion, flood, or other calamity, whether or not covered by insurance, or from any labor disturbance or dispute or any action, order, or decree of any court or arbitrator or governmental or regulatory authority, and (C) the Company has not entered into any transaction or agreement, not in the ordinary course of business, that is material to the Company and its subsidiaries, taken as a whole, and has not incurred any liability or obligation, direct or contingent, not in the ordinary course of business, that is material to the Company and its subsidiaries, taken as a whole.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) The Company and its subsidiaries good and valid title in fee simple to, or have valid rights to lease or otherwise use, all items of real and personal property that are material to the business of the Company and its subsidiaries, taken as a whole, in each case free and clear of all liens, encumbrances, and claims (excluding any liens, encumbrances, or claims created pursuant to the Fortress Credit Agreement, the Adamantium Debt, and the other secured debt of the Company and its subsidiaries described in the Final Offering Circular) except those that (1) do not materially interfere with the use made and proposed to be made of such property by the Company and its subsidiaries or (2) would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) Except as described in or contemplated by the Final Offering Circular, there are no legal, governmental, or regulatory actions, suits, or proceedings pending, either domestic or foreign, to which the Company is a party or to which any property of the Company is the subject ("**Actions**"), nor are there, to the Company's knowledge, any threatened Actions, in each case, that, individually or in the aggregate, if determined adversely to the Company, would reasonably be expected to have a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) Except as described in the Final Offering Circular or as would not reasonably be expected to have a Material Adverse Effect, the Company (i) possesses all governmental licenses, permits, consents, orders, approvals, and other authorizations necessary to carry on its business as presently conducted, (ii) is not in default under any indenture, mortgage, deed of trust, voting trust agreement, loan agreement, bond, debenture, note agreement, lease, contract, or other agreement or instrument to which it is a party or by which any material part of its property is bound, and (iii) in not violation of any applicable law or statute or any judgment, order, rule, or regulation of any court or arbitrator or governmental or regulatory authority having jurisdiction over the Company and its subsidiaries. The Company is not in violation of any provision of its certificate of formation or limited liability company agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) The Company has obtained all authorizations, approvals, consents, licenses, orders, registrations, exemptions, qualifications, or decrees of any court or governmental authority or agency or any sub-division thereof that is required for the performance by the Company of its obligations hereunder, the issuance or sale of the Shares under this Agreement, or the consummation of the transactions contemplated by this Agreement, except for the execution of the A&R LLCA, the registration of the Shares under the Securities Act, and such authorizations, approvals, consents, licenses, orders, registrations, exemptions, qualifications, or decrees (i) as may be required by FINRA, (ii) as may be required by the securities or Blue Sky laws of the various states or foreign jurisdictions in connection with the offer and sale of the Shares, (iii) as may be required by the NYSE American LLC (the "**NYSE American**") in connection with the listing thereon of the Shares, or (iv) as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) None of the execution of this Agreement, the issuance, offering, and sale of the Shares, or the consummation of any of the transactions contemplated hereby (i) will conflict with or result in a breach of any of the terms and provisions of, constitute a default under, or result in the creation or imposition of any lien, charge, or encumbrance upon any property or assets of the Company pursuant to, any indenture, mortgage, deed of trust, voting trust agreement, loan agreement, bond, debenture, note agreement, lease, contract, or other agreement or instrument to which the Company is a party or by which any material part of its property is bound, (ii) will result in any violation of the provisions of the certificate of formation or limited liability company agreement of the Company (as in effect on the Closing Date), or (iii) result in the violation of any applicable statute or any order, rule, or regulation applicable to the Company or of any applicable court or federal, state, or other regulatory authority or other government body having jurisdiction over the Company or any subsidiary of the Company, except, in each case, with respect to <u>clauses (i)</u> and <u>(iii)</u> above, as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) The Company has not taken, directly or indirectly, any action intended, or which might reasonably be expected, to cause or result in stabilization or manipulation of the price of the Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) No holder of securities of the Company has rights to the registration of any securities of the Company as a result of the filing of the Offering Statement or the transactions contemplated by this Agreement, except for such rights as have been waived or as are described in the Offering Statement or the Final Offering Circular.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w) No labor dispute with the employees of the Company exists or, to the knowledge of the Company, is threatened, and the Company is not aware of any existing or threatened labor disturbance by the employees of any of its principal suppliers, manufacturers, customers, or contractors, except, in each case, as would not be reasonably expected to have a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) Except as would not reasonably be expected to have a Material Adverse Effect, (i) the Company is in compliance with all applicable federal, state, and local laws, ordinances, rules, or regulations relating to occupational health and safety (to the extent relating to exposure to Hazardous Materials (as defined below), pollution, or the protection of the environment (including ambient air, surface water, groundwater, or land), including those relating to (1) emissions, discharges, or releases of pollutants, contaminants, or hazardous or toxic substances, materials, or wastes (collectively, "**Hazardous Materials**"), or (2) the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of Hazardous Materials ("**Environmental Laws**"); (ii) there are no judicial or administrative agency or regulatory decrees, awards, judgments, or orders pending or, to the Company's knowledge, threatened in writing against the Company under any Environmental Law; and (iii) the Company has not received any written notice from any governmental agency alleging any violation of or liability under any Environmental Law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y) The Company owns possesses, licenses, or has or can obtain other adequate rights to use, on reasonable terms, all patents, patent applications, trade and service marks, trade and service mark registrations, trade names, copyrights, licenses, inventions, trade secrets, technology, know-how and other intellectual property necessary for the conduct of the Company's business as now conducted (collectively, the "**Intellectual Property**"), except to the extent such failure to own, possess, or have other rights to use such Intellectual Property would not reasonably be expected to have a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z) Except as described in the Final Offering Circular or as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) the Company has timely filed all federal, state, provincial, local, and foreign tax returns that are required to be filed by it through the date hereof or has received timely extensions for the filing thereof, (ii) the Company has paid all taxes due from the Company on such returns other than (1) any such amounts being contested in good faith and by appropriate proceedings and for which adequate reserves have been provided in accordance with GAAP or (2) any such amounts currently payable without penalty or interest, and (iii) there is no tax deficiency that has been, or could reasonably be expected to be, asserted against the Company or any of its respective properties or assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aa) Except as described in the Final Offering Circular or as would not reasonably be expected to have a Material Adverse Effect, the Company has insurance covering its properties, operations, personnel, and businesses as is customary in its industries, which insurance is in amounts and insures against such losses and risks as are customarily deemed adequate to protect the Company and the Company (A) has not received written notice from any insurer or agent of such insurer that capital improvements or other expenditures are required or necessary to be made in order to continue such insurance and (B) does not have any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage at reasonable cost from similar insurers as may be necessary to continue its business as described in the Final Offering Circular.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bb) Neither the Company nor, to the knowledge of the Company, any director, officer, agent, or employee of the Company has directly or indirectly, (i) made any unlawful payment to any federal, state, local, and foreign governmental officer or official, or other person charged with similar public duties, or (ii) violated or is in violation of any provisions of the U.S. Foreign Corrupt Practices Act of 1977, as amended,, except, in each case, with respect to <u>clauses (i)</u> and <u>(2)</u> above, as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(cc) The operations of the Company are and during the past five years have been conducted in compliance in all material respects with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions in which the Company currently operates, the rules and regulations thereunder, and any related or similar rules, regulations, or guidelines, issued, administered, or enforced by any relevant governmental agency (collectively, the "**Money Laundering Laws**"), and no material action, suit, or proceeding by or before any court or governmental agency, authority, or body or any arbitrator involving the Company with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(dd) Neither the Company nor, to the knowledge of the Company, any director, officer, agent, or employee of the Company is currently subject to any U.S. blocking or asset-freezing sanctions (the "**Sanctions Regulations**") administered by the Office of Foreign Assets Control of the U.S. Treasury Department ("**OFAC**"), and the Company will not directly or knowingly indirectly (i) use the net proceeds of the Offering or (ii) lend, contribute, or otherwise make available such net proceeds to any subsidiary, joint venture partner, or other person or entity for the purpose of financing the activities of any person currently subject to any U.S. blocking or asset-freezing sanctions administered by OFAC or listed on the OFAC Specially Designated Nationals and Blocked Persons List, except to the extent authorized by OFAC or otherwise permissible under Sanctions Regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ee) Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) each employee benefit plan, within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("**ERISA**"), and all stock purchase, stock option, stock-based severance, employment, change-in-control, medical, disability, fringe benefit, bonus, incentive, deferred compensation, employee loan, and all other employee benefit plans, agreements, programs, policies, or other arrangements, whether or not subject to ERISA, that is maintained, administered, or contributed to by the Company or any of its affiliates for employees or former employees, directors, or independent contractors of the Company, or under which the Company has had or has any present or future obligation or liability, has been maintained in compliance with its terms and the requirements of any applicable federal, state, local, and foreign laws, statutes, orders, rules, and regulations, including, but not limited to, ERISA and the U.S. Internal Revenue Code of 1986, as amended (the "**Code**"); (ii) no prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code, has occurred with respect to any such plan, excluding transactions effected pursuant to a statutory or administrative exemption; (iii) no event has occurred (including a "reportable event" as such term is defined in Section 4043 of ERISA) and no condition exists that would subject the Company to any tax, fine, lien, penalty, or liability imposed by ERISA, the Code, or other applicable law; and (iv) for each such plan that is subject to the funding rules of Section 412 of the Code or Section 302 of ERISA, no "accumulated funding deficiency" as defined in Section 412 of the Code has been incurred, whether or not waived, and the fair market value of the assets of each such plan (excluding for these purposes accrued but unpaid contributions) exceeds the present value of all benefits accrued under such plan determined using reasonable actuarial assumptions.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ff) The Company has not sold or issued any securities that would be integrated with the offering of the Shares contemplated by this Agreement pursuant to the Securities Act, the Rules and Regulations, or the interpretations thereof by the Commission in a manner that would require registration of the Shares under the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Agreements of the Company</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Offering Statement has become qualified, and the Company will file the Final Offering Circular pursuant to Rule 253 of the Rules and Regulations and Regulation A, within the prescribed time period, and if requested will provide a copy of such filing to the Selling Agent promptly following such filing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company will not, during such period as the Final Offering Circular would be required by law to be delivered in connection with sales of the Shares by an underwriter or dealer in connection with the offering contemplated by this Agreement (whether physically or through compliance with Rules 251 and 254 of the Rules and Regulations or any similar rule(s)), file any amendment or supplement to the Offering Statement or the Final Offering Circular unless a copy thereof shall first have been submitted to the Selling Agent within a reasonable period of time prior to the filing thereof and the Selling Agent shall not have reasonably objected thereto in good faith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Company will notify the Selling Agent promptly, and will, if requested, confirm such notification in writing: (i) when any amendment to the Offering Statement is filed; (ii) of any request by the Commission for any amendments to the Offering Statement or any amendments or supplements to the Final Offering Circular or for additional information; (iii) of the issuance by the Commission of any stop order preventing or suspending the qualification of the Offering Statement or the Final Offering Circular, or the initiation of any proceedings for that purpose or the threat thereof; (iv) of becoming aware of the occurrence of any event that in the judgment of the Company makes any statement made in the Offering Statement or the Final Offering Circular untrue in any material respect, or that requires the making of any changes in the Offering Statement or the Final Offering Circular in order to make the statements therein, in light of the circumstances in which they are made, not misleading; and (v) of receipt by the Company of any notification with respect to any suspension of the qualification of the Offering Statement or exemption from registration of the Shares for offer and sale under the Securities Act. If at any time the Commission shall issue any order suspending the qualification of the Offering Statement in connection with the offering contemplated hereby or in connection with sales of Shares pursuant to market-making activities by the Selling Agent, the Company will use commercially reasonable efforts to obtain the withdrawal of any such order at the earliest possible moment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) If, at any time when the Final Offering Circular relating to the Shares is required to be delivered under the Securities Act, the Company becomes aware of the occurrence of any event as a result of which the Offering Statement or the Final Offering Circular, in each case as then amended or supplemented, would, in the reasonable judgment of counsel to the Company, include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if for any other reason it is necessary, in the reasonable judgment of counsel to the Company, at any time to amend or supplement the Offering Statement or the Final Offering Circular to comply with the Securities Act or the Rules and Regulations, the Company will promptly notify the Selling Agent and will promptly prepare and file with the Commission, at the Company's expense, an amendment to the Offering Statement and/or an amendment or supplement to the Final Offering Circular that corrects such statement and/or omission or effects such compliance and will deliver to the Selling Agent, without charge, such number of copies thereof as the Selling Agent may reasonably request.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The Company will furnish to the Selling Agent and their counsel, upon request and without charge, (i) one conformed copy of the Offering Statement as originally filed with the Commission and each amendment thereto, including financial statements and schedules, and all exhibits thereto, and (ii) so long as an offering circular relating to the Shares is required to be delivered under the Securities Act or the Rules and Regulations, as many copies of the Final Offering Circular or any amendment or supplement thereto as the Selling Agent may reasonably request in a typeset electronic version.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Prior to the sale of the Shares to the Investors, the Company will cooperate with the Selling Agent and its counsel in connection with the registration or qualification, or exemption therefrom, of the Shares for offer and sale under the state securities or Blue Sky laws of such jurisdictions as the Selling Agent may reasonably request; *provided* that in no event shall the Company be obligated to (i) qualify to do business in any jurisdiction where it is not now so qualified, (ii) take any action which would subject it to general service of process in any jurisdiction where it is not now so subject, or (iii) subject itself to taxation in any such jurisdiction if it is not otherwise so subject.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) The Company will apply the net proceeds from the offering and sale of the Shares in the manner set forth in the Final Offering Circular under the caption "Use of Proceeds."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) The Company will use its commercially reasonable efforts to ensure that the Shares are listed for trading on the NYSE American upon approval of the listing application filed with the NYSE American.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) The Company will not take, directly or indirectly, any action intended, or which might reasonably be expected, to cause or result in stabilization or manipulation of the price of the Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) During the period commencing on the date of this Agreement and ending at 12:01 a.m. on the date that is 180 days following the date of this Agreement (the "**Lock-Up Period**"), the Company will not, directly or indirectly, without the Selling Agent's prior written consent, permit Phoenix Equity Holdings, LLC, a Delaware limited liability company and the direct parent and sole member of the Company ("**Phoenix Equity**"), to (i) offer, pledge, assign, encumber, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right, or warrant to purchase, lend, or otherwise transfer or dispose of, any Series A Preferred Shares, the common units of the Company (the "**Common Units**"), or any other securities of the Company directly or indirectly convertible into or exercisable or exchangeable for Series A Preferred Shares or Common Units owned, either of record or beneficially (as defined in the Exchange Act), by Phoenix Equity on the date hereof or hereafter acquired or (ii) enter into any swap or other agreement or arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the Series A Preferred Shares or the Common Units, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Series A Preferred Shares or Common Units or such other securities, in cash or otherwise, or publicly announce an intention to do any of the foregoing. The foregoing shall not apply to: (i) any equity pledge by Phoenix Equity pursuant to the Fortress Credit Agreement or any other indebtedness of Phoenix Equity and/or its subsidiaries; (ii) any foreclosure by the creditors under such indebtedness described in clause (ii); (iii) any transfer in connection with a change of control of Phoenix Equity or the Company; (iv) with respect to any Series A Preferred Shares acquired by Phoenix Equity after the date of this Agreement; or (v) in connection with the transactions contemplated hereby. Notwithstanding the foregoing, if the Offering is abandoned or does not close by [ ⚫ ], 2026, or if this Agreement is terminated, the Lock-Up Period shall terminate on such date.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>Representations and Warranties of the Selling Agent; Agreements of the Selling Agent</u>. The Selling Agent hereby represents and warrants and covenants to the Company that, as of the date hereof and as of the Closing Date (or, as applicable with respect to a representation or warranty set forth in this <u>Section 6</u>, as of such other date as may be expressly set forth therein):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Selling Agent is duly organized and validly existing as a limited liability company in good standing under the laws of the State of Delaware. The Selling Agent has full power and authority to conduct all the activities conducted by it, to own and lease all the assets owned and leased by it, and to conduct its business as presently conducted, and the Selling Agent is duly licensed or qualified to do business and in good standing as a foreign organization in all jurisdictions in which the nature of the activities conducted by it or the character of the assets owned or leased by it makes such licensing or qualification necessary, except, in each case, where the failure to have such power or authority or be so qualified or in good standing, as the case may be, would not, individually or in the aggregate, reasonably be expected to materially impair the Selling Agent's ability to timely perform its obligations under this Agreement or the Escrow Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Selling Agent has full legal right, power, and authority to enter into this Agreement and the Escrow Agreements and perform the transactions contemplated hereby and thereby. This Agreement and the Escrow Agreements have each been authorized and validly executed and delivered by the Selling Agent and are each a legal, valid, and binding agreement of the Selling Agent enforceable against the Selling Agent in accordance with its terms, subject to the effect of applicable bankruptcy, insolvency, or similar laws affecting creditors' rights generally and equitable principles of general applicability and except for limitations on enforceability of indemnity provisions under federal and state laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Selling Agent agrees that it has not and will not engage in any Testing-the-Waters Communications without the prior written consent of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) None of the Selling Agent nor any Dealer, any general partner or managing member of the Selling Agent or any Dealer, any director or executive officer of the Selling Agent or any Dealer, or any other officer of the Selling Agent or any Dealer or any such general partner or managing member participating in the Offering is subject to the disqualification provisions of Rule 262 of the Rules and Regulations. No registered representative of the Selling Agent or any Dealer, or any other person being compensated by or through the Selling Agent or any Dealer for the solicitation of Investors, is subject to the disqualification provisions of Rule 262 of the Rules and Regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The Selling Agent and each Dealer is a member of FINRA and each of them and their respective employees and representatives have all required licenses and registrations to act under this Agreement, and each shall remain a member or duly licensed, as the case may be, during the Offering. The Selling Agent and each Dealer is a broker or dealer duly registered as such in any state where offers are made by the Selling Agent or such Dealer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Except for Selected Dealer Agreements (which may not be modified, amended, or supplemented from the form attached hereto without the Selling Agent's prior good faith consultation with the Company), no agreement will be made by the Selling Agent with any person permitting the resale, repurchase, or distribution of any Shares purchased by such person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Except as otherwise consented to by the Company, the Selling Agent has not and will not use or distribute any written offering materials other than the Final Offering Circular, and shall only distribute the most current Final Offering Circular as of the date of such distribution. The Selling Agent has not and will not use any "broker-dealer use only" materials with members of the public and has not and will not make any unauthorized verbal representations or verbal representations that contradict or are inconsistent with the statements made in the most current Final Offering Circular as of the date of such verbal representations in connection with offers or sales of the Shares.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) The Selling Agent will comply in all material respects with the "Plan of Distribution" set forth in the Offering Statement and the Final Offering Circular, and will complete all steps necessary to permit the Selling Agent to perform its obligations under this Agreement in compliance with applicable federal and state laws, including conducting all solicitation and sales efforts in conformity with Regulation A, the Rules and Regulations, the rules of FINRA, and applicable state law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Selling Agent will furnish to the Company upon request a complete list of all persons who have executed a Subscription Agreement or purchased any Shares and such persons' places of residence, and will notify the Company promptly of any Subscription Agreements it receives.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) The Selling Agent will immediately bring to the attention of the Company any circumstance or fact that causes the Selling Agent to believe the Offering Statement, any Preliminary Offering Circular, the Final Offering Circular, or any other literature distributed pursuant to the Offering, or any information supplied by prospective Investors in their purchase materials, may be inaccurate or misleading.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) The Selling Agent will terminate the Offering upon request of the Company at any time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) The Selling Agent is not subject to any pending proceeding under Section 8A of the Securities Act with respect to the Offering (and will promptly notify the Company if any such proceeding against it is initiated).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <u>Expenses</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company has agreed to pay the Selling Agent an accountable due diligence fee of $25,000, which was already paid to the Selling Agent on the signing of the initial engagement letter dated May 14, 2025 (the "**Engagement Letter**"). This payment shall be reimbursed to the Company to the extent not actually incurred, in compliance with FINRA Rule 5110(g)(4)(a). The Company shall be responsible for and pay all costs and expenses incident to the performance of the obligations of the Company under this Agreement, including, but not limited to, costs and expenses of or relating to (i) the preparation, printing, and filing (as applicable) of the Offering Statement (including each and every amendment thereto) and exhibits thereto, each Preliminary Offering Circular, and the Final Offering Circular and any amendments or supplements thereto, including all fees, disbursements, and other charges of counsel and accountants to the Company, (ii) the preparation and delivery of certificates representing the Shares (if any), (iii) furnishing (including costs of shipping and mailing) such copies of the Offering Statement (including each and every amendment thereto), each Preliminary Offering Circular, the Final Offering Circular, and all amendments and supplements thereto, as may be reasonably requested by the Selling Agent pursuant to the terms of this Agreement for use in connection with the direct placement of the Shares and market-making activities of the Selling Agent, (iv) any filings required to be made by the Selling Agent with FINRA, and the reasonable and documented fees, disbursements, and other charges in connection therewith (other than fees of the Selling Agent's counsel, subject to <u>clause (vii)</u> below), and in connection with any required review by FINRA, (v) the registration or qualification of the Shares for offer and sale under the securities or Blue Sky laws of such jurisdictions designated pursuant to <u>Section</u> <u>5(f)</u>, including the fees, disbursements, and other charges of counsel in connection therewith (other than fees of the Selling Agent's counsel, subject to <u>clause (vii)</u> below), and the preparation and printing of preliminary, supplemental, and final Blue Sky memoranda, (vi) all reasonable and documented fees, expenses, and disbursements relating to background checks of the Company's officers and directors by a background search firm acceptable to the Selling Agent, (vii) the reasonable and documented fees of counsel to the Selling Agent in connection with the Offering up to a

------

maximum of $100,000, $25,000 of which was paid upon the signing of the Engagement Letter, (viii) all transfer taxes, if any, with respect to the sale and delivery of the Shares by the Company to the Investors, (ix) fees and disbursements of the Company's accountants incurred in delivering the letter(s) described in <u>Section</u> <u>8(e)</u> of this Agreement, and (x) the reasonable and documented fees and expenses of the Escrow Agent. The $25,000 advance payment fees of counsel of the Selling Agent shall be reimbursed to the Company to the extent not actually incurred, in compliance with FINRA Rule 5110(g)(4)(a).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Selling Agent has agreed to pay EquiDeFi, Ltd., pursuant to an agreement dated [\*] 2025, a one-time platform setup, hosting, and maintenance fee of $6,000, due at signing. Starting once the Offering is open to accepting investors, Digital Offering will also pay EquiDeFi, Ltd. $2,500 monthly in account maintenance fees until 30 days after the termination of the Offering. In addition, the Company will pay EquiDeFi, Ltd. credit card processing fees (4.0% + $0.30 per swipe) plus any charge back fees or expenses and 0.50% + $5.00 for each ACH transfer fee to all purchasers in lieu of charges to Investors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) It is further understood, however, that, except as provided in this <u>Section 7</u>, the Selling Agent will pay all of its costs and expenses, including fees and disbursements of its counsel, stock transfer taxes payable on the resale of any of the Shares held by them, and any advertising expenses connected with any offers they may make and lodging expenses incurred by them in connection with any "road show," as applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. <u>Conditions to the Obligations of the Selling Agent</u>. The obligations of the Selling Agent hereunder to purchase the Shares from the Company are subject to the following conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) (i) No stop order suspending the qualification of the Offering Statement shall have been issued, and no proceedings for that purpose shall be pending or threatened by the Commission, (ii) any request for additional information on the part of the Commission shall have been complied with to the reasonable satisfaction of the Selling Agent, and (iii) the Final Offering Circular shall have been filed with the Commission under the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) There shall not have been a Material Adverse Change, other than as set forth in or contemplated by the Offering Statement and the Final Offering Circular the effect of which, in the reasonable judgment of the Selling Agent, is so material and adverse as to make it impracticable or inadvisable to consummate the sale and delivery of the Shares to Investors as contemplated hereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Each of the representations and warranties of the Company contained herein shall be true and correct as of the Closing Date in all respects for those representations and warranties qualified by materiality and in all material respects for those representations and warranties that are not qualified by materiality, as if made on such date, and all covenants and agreements herein contained to be performed on the part of the Company and all conditions herein contained to be fulfilled or complied with by the Company at or prior to the Closing Date shall have been duly performed, fulfilled, or complied with in all material respects.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) On the Closing Date, Latham & Watkins LLP, as legal counsel to the Company, shall have furnished to the Selling Agent, at the request of the Company, an opinion and a negative assurance letter in form and substance reasonably acceptable to the Selling Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) On the Closing Date, Ramirez Jimenez International CPAs shall have furnished to the Selling Agent, at the request of the Company, a letter, dated as of the Closing Date, addressed to the Selling Agent and in form and substance reasonably satisfactory to the Selling Agent containing statements and information of the type ordinarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information contained in the Offering Statement and the Final Offering Circular.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) On the Closing Date, there shall be furnished to the Selling Agent a certificate, dated as of the Closing Date, signed by an executive officer of the Company, in form and substance reasonably satisfactory to the Selling Agent, to the effect that the signer has carefully examined the Offering Statement and the Final Offering Circular, and that to such person's knowledge, as of the Closing Date, (i) the representations set forth in <u>Sections 4(c)</u> and <u>4(e)</u> hereof are true and correct and (ii) each of the conditions in Sections <u>8(a)</u>, <u>8(b)</u>, and <u>8(c)</u> have been complied with.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) The Shares shall have been approved for listing upon notice of issuance on the NYSE American.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) The Company shall have furnished or caused to be furnished to the Selling Agent on the Closing Date satisfactory evidence of the good standing of the Company in its jurisdiction of organization and its good standing as a foreign entity in such other jurisdictions where the Company is registered or qualified to do business as the Selling Agent may reasonably request, in each case in writing or any standard form of telecommunication from the appropriate governmental authorities of such jurisdictions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. <u>Indemnification</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company shall indemnify, defend, and hold harmless the Selling Agent and each of the Dealers and each of their respective affiliates, directors, and officers and each person, if any, who controls the Selling Agent (or a Dealer, as the case may be) within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (each a "**Selling Agent Indemnified Party**") from and against any and all losses, claims, liabilities, expenses, and damages (including any and all reasonable and documented investigative, legal, and other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action, suit, or proceeding or any claim asserted (whether or not such Selling Agent Indemnified Party is a party thereto)) to which any of them may become subject under the Securities Act or other federal or state statutory law or regulation, at common law, or otherwise, insofar as such losses, claims, liabilities, expenses, or damages arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in the Offering Statement or the Final Offering Circular or any amendment or supplement thereto necessary to make the statements therein, in light of the circumstances in which they were made, not misleading or (ii) the omission or alleged omission to state in the Offering Statement or the Final Offering Circular or any amendment or supplement thereto a material fact necessary to make the statements therein, in light of the circumstances in which they were made, not misleading; *provided, however*, that the Company will not be liable to the extent that such loss, claim, liability, expense, or damage arises from the sale of the Shares in the Offering to any person or entity and is based solely on an untrue statement or omission or alleged untrue statement or omission made in reliance on and in conformity with written information furnished to the Company by any Selling Agent Indemnified Party through the Selling Agent expressly for inclusion in the Offering Statement or the Final Offering Circular or in any amendment or supplement thereto, it being understood and agreed that the only such information furnished by any Selling Agent Indemnified Party consists of the information described as such in <u>Section</u> <u>9(b)</u>. The indemnification obligations under this <u>Section 9(a)</u> are not exclusive and will be in addition to any liability that the Company might otherwise have and shall not limit any rights or remedies that may otherwise be available at law or in equity to each Selling Agent Indemnified Party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Selling Agent will indemnify, defend, and hold harmless the Company, its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (each a "**Company Indemnified Party**") to the same extent as the indemnity set forth in <u>Section</u> <u>9(a)</u> above, insofar as such losses, claims, liabilities, expenses, and damages (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in the Offering Statement or the Final Offering Circular or any amendment or supplement thereto necessary to make the

------

statements therein, in light of the circumstances in which they were made, not misleading or (ii) the omission or alleged omission to state in the Offering Statement or the Final Offering Circular or any amendment or supplement thereto a material fact necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, but only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Offering Statement or the Final Offering Circular or any amendment or supplement thereto in reliance upon and in conformity with written information furnished to the Company by any Selling Agent Indemnified Party through the Selling Agent expressly for use therein; and will reimburse the Company for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending any such action or claim as such expenses are incurred. The Company acknowledges that, for all purposes under this Agreement, the statements set forth in the paragraphs under the caption "Plan of Distribution" in the Offering Statement and the Final Offering Circular constitute the only information relating to the Selling Agent Indemnified Parties furnished in writing to the Company by the Selling Agent expressly for inclusion in the Offering Statement, any Preliminary Offering Circular, or the Final Offering Circular. In no event shall the Selling Agent indemnify the Company for any amounts in excess of the fees actually received by the Selling Agent pursuant to the terms of this Agreement (which fees shall be deemed to include any portion of the Cash Fee provided to Dealers).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Promptly after receipt by an indemnified party under <u>Section</u> <u>9(a)</u> or <u>9(b)</u> above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; *provided* that the omission so to notify the indemnifying party shall not relieve it from any liability that it may have to any indemnified party otherwise than under such Section. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such Section for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable and documented costs of investigation. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent (which shall not be unreasonably withheld, delayed, or conditioned). No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise, or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability, or a failure to act by or on behalf of any indemnified party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) If the indemnification provided for in this <u>Section</u> <u>9</u> is unavailable or insufficient to hold harmless an indemnified party under <u>Section</u> <u>9(a)</u> or <u>9(b)</u> above in respect of any losses, claims, damages, or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Selling Agent and the Dealers, on the other hand, from the offering of the Shares. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party failed to give the notice required under <u>Section</u> <u>9(c)</u> above, then each indemnifying party shall contribute to such amount paid or payable by such

------

indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company, on the one hand, and the Selling Agent and the Dealers, on the other hand, in connection with the statements or omissions that resulted in such losses, claims, damages, or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Selling Agent and the Dealers, on the other hand, shall be deemed to be in the same proportion as the total net proceeds from the Offering (before deducting expenses) received by the Company bears to the Cash Fee and other amounts received by the Selling Agent (inclusive of any amount of the Cash Fee or other amounts paid to the Dealers). The relative fault shall be determined, to the extent applicable, by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, on the one hand, or the Selling Agent or Dealers, on the other hand, and the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. The Company and the Selling Agent agree that it would not be just and equitable if contribution pursuant to this <u>Section</u> <u>9(d)</u> were determined by *pro rata* allocation or by any other method of allocation that does not take account of the equitable considerations referred to above in this this <u>Section</u> <u>9(d)</u>. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, or liabilities (or actions in respect thereof) referred to above in this this <u>Section</u> <u>9(d)</u> shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this this <u>Section</u> <u>9(d)</u>, the Selling Agent will not be required to contribute any amount in excess of the amounts received by the Selling Agent pursuant to this Agreement (inclusive of any amount of the Cash Fee or other amounts paid to the Dealers). No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Notwithstanding anything to the contrary in this Agreement, the applicable indemnifying party shall not be obligated to indemnify any indemnified party to the extent that any liabilities, claims, causes of action, losses, damages, penalties, fines, expenses, or damages were a result of fraud, willful misconduct, or bad faith of the indemnified party (in each case as determined by a court of competent jurisdiction in a final, non-appealable judgment).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. <u>Termination</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The obligations of the Selling Agent under this Agreement may be terminated at any time prior to the Closing Date, by notice to the Company from the Selling Agent, without liability on the part of the Selling Agent to the Company if, prior to delivery and payment for the Shares, in the sole judgment of the Selling Agent: (i) there has occurred any outbreak of hostilities or escalation thereof or other calamity or crisis or any change or development involving a prospective change in national or international political, financial, or economic conditions, including, without limitation, as a result of terrorist activities, such as to make it, in the reasonable judgment of the Selling Agent, inadvisable or impracticable to market the Shares or enforce contracts for the sale of the Shares; (ii) trading in the Shares or any securities of the Company has been suspended or materially limited; (iii) trading generally on the NYSE American has been suspended or materially limited by the NYSE American or by order of the Commission, FINRA, or any other applicable governmental or regulatory authority; or (iv) a general banking moratorium has been declared by U.S. federal or New York State authorities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If this Agreement is terminated pursuant to this <u>Section</u> <u>10</u>, such termination shall be without the liability of any party to any other party except as provided in <u>Section</u> <u>7</u> hereof.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. <u>Notices</u>. Notice given pursuant to any of the provisions of this Agreement shall be in writing and, unless otherwise specified, shall be mailed or delivered or transmitted and confirmed by any standard form of telecommunication (a) if to the Company, at Phoenix Energy One, LLC, 18575 Jamboree Road, Suite 830, Irvine, CA 92612, Attention: Adam Ferrari, Chief Executive Officer, with copies to, Latham & Watkins LLP, 555 Eleventh Street, NW, Suite 1000, Washington, DC 20004, Attention: Ross McAloon and Christopher Clark, or (b) if to the Selling Agent, at the office of Digital Offering LLC, 1461 Glenneyre Street, Suite D, Laguna Beach, CA 92651, Attention: Gordon McBean, with copies to Bevilacqua PLLC, 1050 Connecticut Avenue, N.W., Suite 500, Washington, DC 20036, Attention: Lou Bevilacqua, Esq. Any such notice shall be effective only upon receipt.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. <u>Survival</u>. The respective representations, warranties, agreements, covenants, indemnities, and other statements of the Company and the Selling Agent set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement shall remain in full force and effect, regardless of (a) any investigation made by or on behalf of the Company, the Selling Agent, or any of their respective affiliates, officers, directors, or controlling person referred to in <u>Section</u> <u>9</u> hereof and (b) delivery of and payment for the Shares. The respective agreements, covenants, indemnities, and other statements set forth in Sections 7, 9, 10, 11, 12, 14, and 17 hereof shall remain in full force and effect, regardless of any termination or cancellation of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13. <u>Successors and Assigns</u>. This Agreement shall inure to the benefit of and shall be binding upon the Selling Agent, the Company, and their respective successors and permitted assigns, and nothing expressed or mentioned in this Agreement is intended or shall be construed to give any other person or entity any legal or equitable right, remedy, or claim under or in respect of this Agreement, or any provisions herein contained, this Agreement and all conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of the Selling Agent, the Company, and their respective successors and permitted assigns and for the benefit of no other person or entity except that (i) the indemnification and contribution contained in <u>Sections 9(a)</u> and <u>(d)</u> of this Agreement shall also be for the benefit of the Selling Agent Indemnified Parties and (ii) the indemnification and contribution contained in <u>Sections 9(b)</u> and <u>(d)</u> of this Agreement shall also be for the benefit of the Company Indemnified Parties. No purchaser of Shares shall be deemed a successor because of such purchase. Neither party to this Agreement may assign any of its rights or obligations hereunder without the prior written consent of the other party to this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14. <u>Governing Law Provisions</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) This Agreement, and the validity and interpretations of this Agreement and the terms and conditions set forth herein, shall be governed by and construed in accordance with the internal laws of the State of New York applicable to agreements made and to be performed in such state (without giving effect to any provisions relating to conflicts of laws). Any legal suit, action, or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby ("**Related Proceedings**") may be instituted in the New York courts, and each party irrevocably submits to the exclusive jurisdiction (except for proceedings instituted in regard to the enforcement of a judgment of any such court (a "**Related Judgment**"), as to which such jurisdiction is non-exclusive) of such courts in any such suit, action, or proceeding. Service of any process, summons, notice, or document by mail to such party's address set forth above shall be effective service of process for any suit, action, or other proceeding brought in any such court. The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action, or other proceeding in the New York courts and irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such suit, action, or other proceeding brought in any such court has been brought in an inconvenient forum.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) With respect to any Related Proceeding, each party irrevocably waives, to the fullest extent permitted by applicable law, all immunity (whether on the basis of sovereignty or otherwise) from jurisdiction, service of process, attachment (both before and after judgment), and execution to which it might otherwise be entitled in the New York courts, and, with respect to any Related Judgment, each party waives any such immunity in the New York courts or any other court of competent jurisdiction, and will not raise or claim or cause to be pleaded any such immunity at or in respect of any such Related Proceeding or Related Judgment, including, without limitation, any immunity pursuant to the United States Foreign Sovereign Immunities Act of 1976, as amended.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15. <u>Acknowledgement</u>. The Company acknowledges and agrees that the Selling Agent is acting solely in the capacity of an arm's-length contractual counterparty to the Company with respect to the offering of Shares contemplated hereby. Additionally, the Selling Agent is not advising the Company or any other person as to any legal, tax, investment, accounting, or regulatory matters in any jurisdiction with respect to the Offering or the process leading thereto (irrespective of whether the Selling Agent has advised or is advising the Company on other matters). The Company has conferred with its own advisors concerning such matters and shall be responsible for making its own independent investigation and appraisal of the transactions contemplated hereby, and the Selling Agent shall have no responsibility or liability to the Company or any other person with respect thereto. The Selling Agent advises that it and its affiliates are engaged in a broad range of securities and financial services and that it or its affiliates may have business relationships or enter into contractual relationships with purchasers or potential purchasers of the Company's securities. Any review by the Selling Agent of the Company, the transactions contemplated hereby, or other matters relating to such transactions will be performed solely for the benefit of the Selling Agent and shall not be on behalf of, or for the benefit of, the Company. The Selling Agent shall disclose to the Company in writing any conflict or potential conflict of interest of the Selling Agent that arises or would be expected to arise in the course of the Selling Agent's performance of its duties hereunder or otherwise in connection with the Offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16. <u>Counterparts</u>. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Such execution of counterparts may occur by manual signature, electronic signature, facsimile signature, manual signature transmitted by means of facsimile transmission, or manual signature contained in an imaged document attached to an email transmission, and any such execution that is not by manual signature shall have the same legal effect, validity, and enforceability as a manual signature.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17. <u>Entire Agreement</u>. This Agreement constitutes the entire understanding between the parties hereto as to the matters covered hereby and supersedes all prior understandings, written or oral, relating to such subject matter.

[*Signature Pages Follow*]

------

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above.

---

| | |
|:---|:---|
| **PHOENIX ENERGY ONE, LLC** | **PHOENIX ENERGY ONE, LLC** |
| By: |  |
| Name: | Adam Ferrari |
| Title: | Chief Executive Officer |
| **DIGITAL OFFERING LLC** | **DIGITAL OFFERING LLC** |
| By: |  |
| Name: | Gordon McBean |
| Title: | Chief Executive Officer |

---

[*Signature Page to Selling Agency Agreement*]

------

**<u>EXHIBIT A</u>**

**FORM OF SELECTED DEALER AGREEMENT**

## Add

**Exhibit 2.4** 

**THIRD AMENDED AND RESTATED** 

**LIMITED LIABILITY COMPANY AGREEMENT** 

**OF** 

**PHOENIX ENERGY ONE, LLC** 

This THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this "***Agreement***") of PHOENIX ENERGY ONE, LLC (the "***Company***"), is effective as of the Effective Time, among each Person who is or becomes a Shareholder of the Company from time-to-time. Capitalized terms used and not otherwise defined herein shall have the respective meanings ascribed thereto in <u>Section 1.1</u>.

**RECITALS** 

**WHEREAS**, the Company is currently governed by the Second Amended and Restated Limited Liability Company Agreement of the Company, dated as of January 23, 2025 (as amended or supplemented prior to the date hereof, the "***Second Amended and Restated LLC Agreement***"); ****

**WHEREAS**, pursuant to the Second Amended and Restated LLC Agreement and immediately prior to the effectiveness of this Agreement, Phoenix Equity Holdings, LLC, a limited liability company organized and existing under the laws of the State of Delaware (the "***Phoenix Holdings***"), is the sole member of the Company and owns 100% of the limited liability company interests in the Company; and ****

**WHEREAS**, all requirements and conditions to amend and restate the Second Amended and Restated LLC Agreement have been satisfied and fulfilled, and Phoenix Holdings desires to amend and restate the Second Amended and Restated LLC Agreement in its entirety on the terms set forth herein.

**NOW, THEREFORE**, in consideration of the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Second Amended and Restated LLC Agreement is hereby amended and restated in its entirety as follows:

**ARTICLE I** 

**DEFINITIONS** 

Section 1.1 <u>Definitions</u>. The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Agreement.

"***Adjusted Capital Account***" means, with respect to any Shareholder, the Capital Account maintained for such Shareholder as of the end of the applicable fiscal year of the Company after giving effect to the following adjustments: (a) credit to such Capital Account any amounts that such Shareholder is obligated to restore under the standards set by Treasury Regulations Section 1.704-1(b)(2)(ii)(c) or (y) or deemed obligated to restore pursuant to the penultimate sentences of Treasury Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5); and (b) debit to such Capital Account such Shareholder's share of the items described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6). This definition of Adjusted Capital Account is intended to comply

------

with the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith. The Adjusted Capital Account of a Shareholder in respect of any Company Interest shall be the amount that such Adjusted Capital Account would be if such Company Interest were the only interest in the Company held by such Shareholder from and after the date on which such Company Interest was first issued.

"***Adjusted Property***" means any property the Carrying Value of which has been adjusted pursuant to <u>Section 4.1(d)</u>.

"***Adverse Consequence***" has the meaning assigned to such term in <u>Section 3.6(a)</u>.

"***Affiliate***" means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the Person in question. As used herein, the term "***control***" means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise. ****

"***Agreed Value***" of (a) Contributed Property means the fair market value of such property or other consideration at the time of contribution and (b) an Adjusted Property means the fair market value of such Adjusted Property on the date of the Revaluation Event, in each case determined by the Board of Directors. The Board of Directors shall use such method as it determines to be appropriate to allocate the aggregate Agreed Value of Contributed Properties contributed to the Company in a single or integrated transaction among each separate property on a basis proportional to the fair market value of each Contributed Property. ****

"***Agreement***" means this Third Amended and Restated Limited Liability Company Agreement of the Company, including all exhibits hereto and each Share Designation, as it may be amended, supplemented or restated from time to time. ****

"***Appraised Value***" means, with respect to any Common Share(s) as of any specified date, the fair market value of such Common Share(s) as of such date, as determined by an independent, third-party appraisal firm selected by the Board and retained by the Company pursuant to <u>Section 3.7</u>. ****

"***Attorney***" has the meaning assigned to such term in <u>Section 5.13</u>.

"***Attorney-in-Fact***" has the meaning assigned to such term in <u>Section 2.7(a)</u>.

"***Authorized Signatory***" has the meaning assigned to such term in <u>Section 5.13</u>.

"***Board of Directors***" or "***Board***" has the meaning assigned to such term in <u>Section 5.1(a)</u>.

"***Book-Tax Disparity***" means with respect to any item of Contributed Property or Adjusted Property, as of the date of any determination, the difference between the Carrying Value of such Contributed Property or Adjusted Property and the adjusted basis thereof for U.S. federal income tax purposes as of such date. A Shareholder's share of the Company's Book-Tax Disparities in all of its Contributed Property and Adjusted Property will be reflected by the difference between such Shareholder's Capital Account balance as maintained pursuant to <u>Section 4.1</u> and the hypothetical balance of such Shareholder's Capital Account computed as if it had been maintained strictly in accordance with federal income tax accounting principles.

------

"***Business Day***" means Monday through Friday of each week, except that a legal holiday recognized as such by the government of the United States of America or the State of California shall not be regarded as a Business Day. ****

"***Capital Account***" means the capital account maintained for a Shareholder pursuant to <u>Section 4.1</u>. The "Capital Account" of a Shareholder in respect of any Company Interest shall be the amount that such Capital Account would be if such Company Interest were the only interests in the Company held by such Shareholder from and after the date on which such Company Interest was first issued. ****

"***Capital Contribution***" means any cash, cash equivalents or the Net Agreed Value of Contributed Property that a Shareholder contributes to the Company, with the approval of the Board of Directors, pursuant to this Agreement. ****

"***Carrying Value***" means (a) with respect to a Contributed Property or Adjusted Property, the Agreed Value of such property reduced (but not below zero) by all depreciation, Simulated Depletion, amortization and other cost recovery deductions charged to the Shareholders' Capital Accounts in respect of such property and (b) with respect to any other Company property, the adjusted basis of such property for U.S. federal income tax purposes, all as of the time of determination. In the case of any oil and gas property (as defined in Section 614 of the Code), adjusted basis shall be determined pursuant to Treasury Regulations Section 1.613A-3(e)(3)(iii)(C). The Carrying Value of any property shall be adjusted from time to time in accordance with <u>Section 4.1(d)</u> and to reflect changes, additions or other adjustments to the Carrying Value for dispositions and acquisitions of Company properties, as deemed appropriate by the Board of Directors. ****

"***Certificate***" means a certificate (a) in global form in accordance with the rules and regulations of the Depositary or (b) in such other form as may be adopted by the Board of Directors, issued by the Company evidencing ownership of one or more Shares; provided, however, that the Shares shall not be certificated unless otherwise determined by the Board of Directors. ****

"***Certificate of Formation***" means the Certificate of Formation of the Company filed with the Secretary of State of the State of Delaware as referenced in <u>Section 2.6</u>, as such Certificate of Formation may be amended, supplemented or restated from time to time. ****

"***Chairman of the Board***" has the meaning assigned to such term in <u>Section 5.2(c)</u>.

"***Code***" means the United States Internal Revenue Code of 1986, as amended and in effect from time to time. Any reference herein to a specific section or sections of the Code shall be deemed to include a reference to any corresponding provision of any successor Law. ****

"***Commission***" means the United States Securities and Exchange Commission.

"***Common Shares***" means any Shares that are not Preferred Shares.

------

"***Company***" means Phoenix Energy One, LLC, a Delaware limited liability company.

"***Company Group***" means the Company and each Subsidiary of the Company. For the avoidance of doubt, Phoenix Holdings is not part of the Company Group. ****

"***Company Minimum Gain***" means that amount determined in accordance with the principles of Treasury Regulation Section 1.704-2(d). ****

"***Company Interest***" means any class or series of limited liability company interest in the Company (but excluding any Derivative Securities), including without limitation, Common Shares and Series A Preferred Shares. ****

"***Conflict Matter***" has the meaning assigned to such term in <u>Section 5.17</u>.

"***Contributed Property***" means each property or other asset, in such form as may be permitted by the Delaware Act, but excluding cash, contributed to the Company. Once the Carrying Value of a Contributed Property is adjusted pursuant to <u>Section 4.1(d)</u>, such property or other asset shall no longer constitute a Contributed Property, but shall be deemed an Adjusted Property. ****

"***Curative Allocation***" means any allocation of an item of income, gain, deduction, loss or credit pursuant to the provisions of <u>Section 4.2(d)(ix)</u>. ****

"***Delaware Act***" means the Delaware Limited Liability Company Act, 6 Del. C. Section 18-101, et seq., as amended, supplemented or restated from time to time, and any successor to such statute. ****

"***Depositary***" means, with respect to any Shares issued in global form, The Depository Trust Company (and its successors or assigns) or any other securities depositary selected by the Board of Directors. ****

"***Derivative Securities***" means any options, rights, warrants, appreciation rights or other securities whose value is derived, directly or indirectly, from Shares. ****

"***Designated Individual***" has the meaning assigned to such term in <u>Section 7.4(a)</u>.

"***Director***" means a member of the Board of Directors of the Company; and Directors shall constitute "managers" of the Company within the meaning of, and for all purposes of, the Delaware Act. ****

"***Economic Risk of Loss***" has the meaning set forth in Treasury Regulation Section 1.752-2(a).

"***Effective Time***" means [●], 2025, the date upon which this Agreement became effective and amended and restated the Second Amended and Restated LLC Agreement. ****

"***Exchange Act***" means the Securities Exchange Act of 1934, as amended, supplemented or restated from time to time, and any successor to such statute, and the rules and regulations promulgated thereunder.

------

"***Fair Value***" means, with respect to any Shares (or fraction thereof) as of a specified date, (a) if such Shares are not traded on any National Securities Exchange, the fair market value per Share as determined by the Board of Directors or (b) if such Shares are traded on any National Securities Exchange, the last sales price per Share as of the close of trading of such National Securities Exchange or, if there is no such last sales price, the average of the bid and ask price per such Share, in each case, for the eight (8) trading days prior to such date. ****

"***Fraud***" means, with respect to any Person, an intentional misrepresentation of material facts or an intentional omission or concealment of material facts by such Person, in each case (i) where such misrepresentation, omission or concealment is made by such Person with (x) actual knowledge or belief that such representation was materially false or such omission or concealment was material (i.e., scienter) and (y) the intention to induce another Person to act or refrain from acting, and (ii) where such other Person acted or failed to act in justifiable reliance upon such misrepresentation, omission or concealment, resulting in material damage to such other Person. ****

"***Governmental Entity***" means any court, administrative agency, regulatory body, commission or other governmental authority, board, bureau or instrumentality, domestic or foreign and any subdivision thereof. ****

"***Gross Liability Value***" means, with respect to any Liability of the Company described in Treasury Regulations Section 1.752-7(b)(3)(i), the amount of cash that a willing assignor would pay to a willing assignee to assume such Liability in an arm's-length transaction. ****

"***Group Member***" means a member of the Company Group.

"***Indemnitee***" means (i) each current and former Director, (ii) each current and former Officer, (iii) any or other Person that may be designated by the Board of Directors from time to time as an "Indemnitee" for purposes of this Agreement, (iv) the current and any former Partnership Representative (and, if applicable, any Designated Individual), and (v) any Person that the Board designates as an "Indemnitee" for purposes of this Agreement because such Person's status, service or relationship exposes such Person to potential claims, demands, suits or proceedings relating to the Company Group's business and affairs. ****

"***Law***" means any federal, state, local, non-U.S. or other law (including common law), statute, code, ordinance, rule or regulation or other requirement enacted, promulgated, issued, entered or put into effect by a Governmental Entity. ****

"***Liability***" means any liability or obligation of any nature, whether accrued, contingent or otherwise.

"***Liquidation Preference***" means a liquidation preference for each Series A Preferred Share initially equal to $25.00 per Series A Preferred Share (subject to adjustment for any splits, combinations or similar adjustments to the Series A Preferred Shares), which liquidation preference shall be subject to increase by the per Series A Preferred Share amount of any accumulated and unpaid distributions with respect to the Series A Preferred Shares (whether or not such distributions shall have been declared). ****

------

"***Liquidator" means the Board of Directors, or such other Person or Persons selected and appointed by the Board of Directors to act as a liquidating trustee of the Company and perform the functions described in <u>Section 8.3</u> in connection with the winding up of the Company.***

"***Loan Document***" has the meaning given to such term in the Senior Secured Credit Agreement.

"***National Securities Exchange***" means the NYSE American LLC, or such other securities exchange registered with the Commission under the Exchange Act on which any of the Company's Shares are listed for trading from time to time. ****

"***Net Agreed Value***" means, (a) in the case of any Contributed Property, the Agreed Value of such property or other consideration reduced by any Liabilities either assumed by the Company upon such contribution or to which such property or other consideration is subject when contributed and (b) in the case of any property distributed to a Shareholder by the Company, the Company's Carrying Value of such property (as adjusted pursuant to <u>Section 4.1(d)(ii)</u>) at the time such property is distributed, reduced by any Liabilities either assumed by such Shareholder upon such distribution or to which such property is subject at the time of distribution, in either case as determined and required by the Treasury Regulations promulgated under Section 704(b) of the Code.

"***Net Income***" means, for any taxable period, the excess, if any, of the Company's items of income and gain for such taxable period over the Company's items of loss and deduction for such taxable period. The items included in the calculation of Net Income shall be determined in accordance with <u>Section 4.1(b)</u> and shall include Simulated Gain (as provided in <u>Section 4.2(e)(iii)</u>, but shall not include Simulated Depletion, Simulated Loss or any items specially allocated under <u>Section 4.2(d)</u>.

"***Net Loss***" means, for any taxable period, the excess, if any, of the Company's items of loss and deduction for such taxable period over the Company's items of income and gain for such taxable period. The items included in the calculation of Net Loss shall be determined in accordance with <u>Section 4.1(b)</u> and shall include Simulated Gain (as provided in <u>Section 4.2(e)(iii)</u>), but shall not include Simulated Depletion, Simulated Loss or any items specially allocated under <u>Section 4.2(d)</u>.

"***Nonrecourse Built-in Gain***" means with respect to any Contributed Properties or Adjusted Properties that are subject to a mortgage or pledge securing a Nonrecourse Liability, the amount of any taxable gain that would be allocated to the Shareholders pursuant to <u>Section 4.2(c)</u> if such properties were disposed of in a taxable transaction in full satisfaction of such liabilities and for no other consideration. ****

"***Noncompensatory Option***" has the meaning set forth in Treasury Regulations Section 1.721-2(f).

"***Nonrecourse Deductions***" means any and all items of loss, deduction, or expenditure (including any expenditure described in Section 705(a)(2)(B) of the Code) that, in accordance with the principles of Treasury Regulation Section 1.704-2(b), are attributable to a Nonrecourse Liability. ****

"***Nonrecourse Liability***" has the meaning set forth in Treasury Regulation Section 1.752-1(a)(2).

------

"***Officers***" has the meaning assigned to such term in <u>Section 5.19(a)</u>.

"***Outstanding***" means, with respect to any Shares, as of any date, all of such Shares that are issued by the Company and reflected as outstanding in the records of the Transfer Agent or the Company, as applicable, as of such date. ****

"***Partnership Representative***" has the meaning assigned to such term in <u>Section 7.4(a)</u>.

"***Percentage Interest***" means as of any date of determination as to any Shareholder or assignee holding Common Shares, the quotient obtained by dividing (A) the number of Common Shares held by such Shareholder or assignee by (B) the total number of all Outstanding Common Shares. The Percentage Interest with respect to a Series A Preferred Share shall at all times be zero. ****

"***Pro Rata***" means (a) when modifying Shares or any class thereof (including Series A Preferred Shares), apportioned equally among all such designated Shares in accordance with their relative Percentage Interests, (b) when modifying Shareholders and assignees (other than Series A Preferred Shareholders), apportioned among all Shareholders and assignees in accordance with their relative Percentage Interests, and (c) solely when modifying Series A Preferred Shareholders, apportioned equally among all Series A Shareholders in accordance with the relative number or percentage of Series A Preferred Shares held by each such Series A Preferred Shareholder. ****

"***Person***" means any individual, corporation, firm, partnership (including a limited partnership), joint venture, limited liability company, estate, trust, association, organization, custodian, nominee, Governmental Entity or other entity (or series thereof). ****

"***Phoenix Holdings***" has the meaning assigned to such term in the Recitals.

"***Preferred Shares***" means a class or series of Shares that entitles the holders thereof to a preference or priority over Common Shares with respect to (a) the right to share in Company distributions, or (b) rights upon dissolution or liquidation of the Company. ****

"***Purchase Notice***" means a notice of a determination of the Board of Directors to either (i) cause the Company to redeem a Shareholder's Shares, or (ii) require a Shareholder to sell Shares to the Company or such other Person as the Board of Directors shall determine, in each case, pursuant to <u>Section 3.7</u>, which notice shall specify the date on which any such Shares are to be redeemed or purchased and the price at which such Shares are to be redeemed or purchased (which price shall be the Fair Value of such Shares). ****

"***Recapture Income***" means any gain recognized by the Company (computed without regard to any adjustment required by Section 734 or Section 743 of the Code) upon the disposition of any property or asset of the Company, which gain is characterized as ordinary income because it represents the recapture of deductions previously taken with respect to such property or asset. ****

"***Record Date***" means the date established by the Board of Directors for determining (a) the identity of the Record Holders of Shares entitled to (i) notice of, attend and vote at any meeting of Shareholders, (ii) act by consent of Shareholders, (iii) receive any distribution of cash or other assets that may be declared by the Board of Directors or (iv) participate in any subdivision, combination, split recapitalization or any offer to holders of such Shares or (b) the identity of the Record Holders for any other purpose.

------

"***Record Holder***" or "***holder***" means (a) with respect to any Common Share, the Person in whose name such Share is registered on the books of the Company or Transfer Agent, as applicable, as of the opening of business on a particular Business Day, and (b) with respect to any Share of any other class or series, the Person in whose name such Share is registered on the books that the Company has caused to be kept as of the opening of business on a particular Business Day. ****

"***Required Allocations***" means (a) any limitation imposed on any allocation of Net Loss under <u>Section 4.2(a)</u> and (b) any allocation of an item of income, gain, loss or deduction pursuant to <u>Sections 4.2(d)(i)</u>, <u>4.2(d)(ii)</u>, <u>4.2(d)(iii)</u>, <u>4.2(d)(vi)</u> , <u>4.2(d)(v)</u>, <u>4.2(d)(vi)</u> or <u>4.2(d)(viii)</u>. ****

"***Required Sale***" has the meaning set forth in <u>Section 3.7(c)</u>.

"***Required Seller***" has the meaning set forth in <u>Section 3.7(b)</u>.

"***Revaluation Event***" means an event that results in adjustment of the Carrying Value of each Company property pursuant to <u>Section 4.1(d)</u>. ****

"***Revised Audit Rules***" means the revised partnership audit rules under the United States Bipartisan Budget Act of 2015 and any sections of the Code or Treasury Regulations promulgated thereunder and with respect thereto, each as amended from time to time, and any similar state and local rules and regulations. ****

"***Second Amended and Restated LLC Agreement***" has the meaning assigned to such term in the Recitals.

"***Securities Act***" means the Securities Act of 1933, as amended, supplemented or restated from time to time, and any successor to such statute, and the rules and regulations promulgated thereunder. ****

"***Senior Secured Credit Agreement***" means that certain Amended and Restated Senior Secured Credit Agreement, dated as of August 12, 2024, among the Company, Phoenix Operating LLC, a Delaware limited liability company, as borrower, each of the lenders from time to time party thereto and Fortress Credit Corp., as administrative agent for the lenders, as amended, restated, amended and restated, supplemented or otherwise modified from time to time.

"***Series A Preferred Share Designation***" means the Share Designation with respect to the Series A Preferred Shares, attached hereto as <u>Exhibit A</u>. ****

"***Series A Preferred Shares***" has the meaning assigned to such term in <u>Section 3.2(b)</u>.

"***Series A Preferred Shareholder***" means a Shareholder of Series A Preferred Shares.

"***Share***" means any Company Interest designated as a "share" issued by the Company, and shall include Common Shares and Preferred Shares, that evidences a Shareholder's rights, powers (including voting power), preferences, limitations, restrictions, qualifications, duties and obligations with respect to the Company pursuant to this Agreement. The Shares of the Company shall constitute "limited liability company interests" of the Company within the meaning of, and for all purposes of, the Delaware Act. Shares may be issued in different classes or series. ****

"***Share Designation***" has the meaning assigned to such term in <u>Section 3.2(f)</u> and, for the avoidance of doubt, includes the Series A Preferred Share Designation. ****

------

"***Shareholder***" means each Record Holder of a Share. The Shareholders shall constitute "members" the Company within the meaning of, and for all purposes of, the Delaware Act. ****

"***Shareholder Approval***" means approval of any matter by holders of Common Shares (and any other Voting Shares), voting together as a single class (unless otherwise provided for herein, including in any Share Designation), either (A) at a meeting of Shareholders at which a quorum is present, upon the affirmative vote of holders of a majority of the voting power represented by the Common Shares (and any other Voting Shares) present at such meeting or (B) by action by consent of the Shareholders, acting pursuant to <u>Section 11.10</u>, upon consent of holders of a majority of the voting power represented by all Outstanding Common Shares (and any other Voting Shares). ****

"***Shareholder Nonrecourse Debt***" has the meaning of "partner nonrecourse debt" as set forth in Treasury Regulation Section 1.704-2(b)(4). ****

"***Shareholder Nonrecourse Debt Minimum Gain***" has the meaning of "partner nonrecourse debt minimum gain" as set forth in Treasury Regulation Section 1.704-2(i)(2). ****

"***Shareholder Nonrecourse Deductions***" means any and all items of loss, deduction or expenditure (including any expenditure described in Section 705(a)(2)(B) of the Code) that, in accordance with the principles of Treasury Regulation Section 1.704-2(i), are attributable to a Shareholder Nonrecourse Debt. ****

"***Simulated Basis***" means the Carrying Value of any oil and gas property (as defined in Section 614 of the Code).

"***Simulated Depletion***" means, with respect to an oil and gas property (as defined in Section 614 of the Code), a depletion allowance computed in accordance with U.S. federal income tax principles set forth in Treasury Regulations Section 1.611-2(a)(1) (as if the Simulated Basis of the property was its adjusted tax basis) and in the manner specified in Treasury Regulations Section 1.704-1(b) (2)(iv)(k)(2), applying the cost depletion method. For purposes of computing Simulated Depletion with respect to any oil and gas property (as defined in Section 614 of the Code), the Simulated Basis of such property shall be deemed to be the Carrying Value of such property, and in no event shall such allowance for Simulated Depletion, in the aggregate, exceed such Simulated Basis. If the Carrying Value of an oil and gas property is adjusted pursuant to <u>Section 4.1</u> during a taxable period, following such adjustment Simulated Depletion shall thereafter be calculated under the foregoing provisions based upon such adjusted Carrying Value.

"***Simulated Gain***" means the excess, if any, of the amount realized from the sale or other disposition of an oil or gas property (as defined in Section 614 of the Code) over the Carrying Value of such property and determined pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(k)(2). ****

"***Simulated Loss***" means the excess, if any, of the Carrying Value of an oil or gas property (as defined in Section 614 of the Code) over the amount realized from the sale or other disposition of such property and determined pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(k)(2). ****

"***Subsidiary***" means, with respect to any Person, as of any date of determination, any other Person as to which such Person (i) holds or otherwise controls the voting of, directly or indirectly,  ****

------

more than fifty percent (50%) of the outstanding voting equity interests of such Person or (ii) is or has the power, by contract or otherwise, directly or indirectly, to designate the sole general partner, the sole manager, the managing member or a majority of the other governing body of such Person.

"***transfer***" means, with respect to a Share, a transaction by which the Record Holder of a Share assigns such Share to another Person, and includes a sale, assignment, gift, exchange or any other disposition by Law or otherwise, including any transfer upon foreclosure of any pledge, encumbrance, hypothecation or mortgage. ****

"***Transfer Agent***" means, with respect to Common Shares (or any other class or series of Shares issued after the Effective Time that are listed on a National Securities Exchange), such bank, trust company or other Person (including the Company or one of its Affiliates) as shall be appointed from time to time by the Company to act as registrar and transfer agent for such class or series of Shares; provided that, if no Transfer Agent is specifically designated for such class or series of Shares, the Company shall act in such capacity for such class or series. As of the Effective Time, the Company shall act in the capacity of the Transfer Agent with respect to the Common Shares until otherwise determined by the Board of Directors. ****

"***Treasury Regulations***" means one or more United States Department of Treasury regulations promulgated under the Code, whether such regulations are in proposed, temporary or final form, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations). ****

"***Unrealized Gain***" attributable to any item of Company property means, as of any date of determination, the excess, if any, of (a) the fair market value of such property as of such date (as determined under <u>Section 4.1(d)</u>) over (b) the Carrying Value of such property as of such date (prior to any adjustment to be made pursuant to <u>Section 4.1(d)</u> as of such date). ****

"***Unrealized Loss***" attributable to any item of Company property means, as of any date of determination, the excess, if any, of (a) the Carrying Value of such property as of such date (prior to any adjustment to be made pursuant to <u>Section 4.1(d)</u> as of such date) over (b) the fair market value of such property as of such date (as determined under <u>Section 4.1(d)</u>). ****

"***Voting Shares***" means the Common Shares and any other class or series of Shares issued after the Effective Time that entitles the Record Holder thereof to vote on any matter submitted for consent or approval of Shareholders under this Agreement. ****

Section 1.2 <u>Construction</u>. Unless the context requires otherwise: (a) any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa; (b) references to "Articles" and "Sections" refer to Articles and Sections of this Agreement; (c) the term "include" or "includes" means includes, without limitation, and "including" means including, without limitation; (d) the terms "herein," "hereof" and "hereunder" (and terms of similar import) are references to this Agreement in its entirety, and not to any particular provision; (e) the word "may" shall be construed as permissive and the word "shall" shall be construed as imperative; and (f) the terms "in writing," "written communications," "written notice," and words of similar import shall be deemed satisfied under this Agreement by use of email and other forms of electronic communication or transmission.

------

**ARTICLE II** 

**ORGANIZATION** 

Section 2.1 <u>Formation</u>. The Company has been formed as a limited liability company pursuant to the provisions of the Delaware Act. The rights, powers (including voting power), limitations, restrictions, duties and obligations of the Shareholders, in their capacity as such (including with respect to their interest in the Company and the Shares), and the governance, management and internal affairs of the Company, shall be governed exclusively by this Agreement. Unless expressly set forth in this Agreement, no Shareholder Approval shall be required with respect to any matter relating to the Company, including any matter with respect to which members of limited liability companies have default approval rights under the Delaware Act. All Shares shall constitute personal property of the owner thereof for all purposes, and no Shareholder shall have any interest in any Company property.

Section 2.2 <u>Name</u>. The name of the Company is "Phoenix Energy One, LLC" and the Company's business shall be conducted under such name and any other names as may be determined by the Board of Directors from time to time. The Board of Directors may change the name of the Company at any time and from time to time, without the approval of Shareholders, by filing an amendment to the Certificate of Formation (and upon such filing, this Agreement shall be deemed automatically amended to change the name of the Company) and shall notify the Shareholders of such change.

Section 2.3 <u>Registered Office; Registered Agent; Other Offices</u>. The registered office of the Company in the State of Delaware is located at 251 Little Falls Drive, Wilmington, DE 19808, and the name of the registered agent for service of process on the Company in the State of Delaware at such registered office is The Corporation Service Company, unless and until changed by the Board of Directors by filing an amendment to the Certificate of Formation (and upon such filing, this Agreement shall be deemed automatically amended to change the registered office and registered agent of the Company). The Company may maintain offices at such other place or places within or outside the State of Delaware as the Board of Directors determines to be necessary or appropriate.

Section 2.4 <u>Purposes</u>. The purposes of the Company shall be to (a) conduct or engage in, directly or indirectly through subsidiaries, any business, purpose or activity that lawfully may be conducted by a limited liability company formed pursuant to the Delaware Act, and (b) conduct any and all activities related or incidental to the foregoing purposes.

Section 2.5 <u>Powers</u>. The Company shall be empowered to do any and all acts and things necessary, appropriate, proper, advisable, incidental to or convenient for the furtherance and accomplishment of the purposes and business described in <u>Section 2.4</u> and for the protection and benefit of the Company.

Section 2.6 <u>Certificate of Formation</u>. The Certificate of Formation has been filed with the Secretary of State of the State of Delaware as required by the Delaware Act, such filing being hereby confirmed, ratified and approved in all respects. To the extent that the Board of Directors

------

determines that any filing or other action is necessary or appropriate for the Company's continuation, qualification and operation as a limited liability company in the State of Delaware or any other state in which the Company may elect to do business or own property, the Board of Directors shall direct the appropriate Officers to make such filings or take such other actions that are necessary or appropriate, and any such Officer so directed shall be an "authorized person" of the Company within the meaning of the Delaware Act for purposes of filing any such certificate with the Secretary of State of the State of Delaware. The Company shall not be required, before or after filing, to deliver or mail a copy of the Certificate of Formation, any qualification document or any amendment thereto to any Shareholder.

Section 2.7 <u>Power of Attorney</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Each Shareholder hereby constitutes and appoints each of the Chief Executive Officer of the Company, the Chief Financial Officer of the Company, the Secretary of the Company, any Director and, if a Liquidator shall have been appointed pursuant to <u>Section 8.2</u>, the Liquidator (and any successor to the Liquidator by merger, division, transfer, assignment, election or otherwise) (each, an "***Attorney-in-Fact***") and each of their authorized officers and attorneys-in-fact, as the case may be, with full power of substitution, as such Shareholder's true and lawful agent and attorney-in-fact, with full power and authority in such Shareholder's name, place and stead, to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) execute, swear to, acknowledge, deliver, file and record in the appropriate public offices:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) all certificates, documents and other instruments (including this Agreement and the Certificate of Formation and all amendments and restatements hereof or thereof) relating to the admission, withdrawal, resignation, removal or substitution of any Shareholder pursuant to, or other events described in, this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) all certificates, documents and other instruments (including this Agreement and the Certificate of Formation and all amendments or restatements hereof or thereof) that such Attorney-in-Fact determines to be necessary or appropriate to form, qualify or continue the existence or qualification of the Company as a limited liability company in the State of Delaware and in all other jurisdictions in which the Company may conduct business or own property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) all certificates, documents and other instruments that such Attorney-in-Fact determines to be necessary or appropriate to reflect, in accordance with its terms, any amendment, change, modification or restatement of this Agreement, subject to the provisions of <u>Article IX</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) all certificates, documents and other instruments (including conveyances and a certificate of cancellation) that such Attorney-in-Fact determines to be necessary or appropriate to reflect the dissolution, liquidation and termination of the Company pursuant to the terms of this Agreement;

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) all certificates, documents and other instruments relating to the determination of the rights, preferences and privileges of any class or series of Shares issued pursuant to <u>Section 3.2</u>; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) all certificates, documents and other instruments (including agreements and a certificate of merger, division, conversion or consolidation) relating to a merger, division, consolidation or conversion of the Company pursuant to <u>Article X</u>; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) execute, swear to, acknowledge, deliver, file and record all ballots, consents, approvals, waivers, certificates, documents and other instruments that the Board of Directors or the Liquidator determines to be necessary or appropriate to (1) make, evidence, give, confirm or ratify any vote, consent, approval, agreement or other action that is made or given by the Shareholders hereunder or is consistent with the terms of this Agreement or (2) effectuate the terms or intent of this Agreement; provided, that when any provision of this Agreement requires the Shareholders of any class or series to take any action, an Attorney-in-Fact may exercise the power of attorney made in this <u>Section 2.7(a)(ii)</u> to take such action, only after the necessary vote, consent, approval, agreement or other action of the Shareholders or of the Shareholders of such class or series, as applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The foregoing power of attorney is hereby declared to be irrevocable and a power coupled with an interest, and it shall survive and, to the maximum extent permitted by Law, not be affected by the subsequent death, incompetency, disability, incapacity, dissolution, bankruptcy or termination of any Shareholder and the transfer of all or any portion of such Shareholder's Shares and shall extend to such Shareholder's heirs, successors, assigns and personal representatives. Each Shareholder hereby agrees to be bound by any representation made by any Attorney-in-Fact, acting pursuant to such power of attorney; and each Shareholder, to the maximum extent permitted by law, hereby waives any and all defenses that may be available to contest, negate or disaffirm the action of any Attorney-in-Fact, taken under such power of attorney in accordance with this <u>Section 2.7</u>. Each Shareholder shall execute and deliver to an Attorney-in-Fact, within fifteen (15) days after receipt of the request therefor, such further designation, powers of attorney and other instruments as any such Attorney-in-Fact determines to be necessary or appropriate to effectuate this Agreement and the purposes of the Company.

Section 2.8 <u>Term</u>. The Company's term shall be perpetual, unless and until the Company is dissolved in accordance with the provisions of <u>Article VIII</u>. The existence of the Company as a separate legal entity shall continue until the cancellation of the Certificate of Formation as provided in the Delaware Act.

Section 2.9 <u>Title to the Company's Assets</u>. Title to the Company's assets, whether real, personal or mixed and whether tangible or intangible, shall be owned by the Company as an entity, and no Shareholder, Director or Officer, individually or collectively, shall have any ownership interest in any of the Company's assets or any portion thereof. Title to any or all of the Company's assets may be held in the name of the Company, any Subsidiary of the Company or one or more nominees, as the Board of Directors may determine. All of the Company's assets shall be recorded as the property of the Company (either directly or indirectly through any of its Subsidiaries) in the books and records of the Company Group, irrespective of the name in which record title to such assets is held.

------

**ARTICLE III** 

**SHAREHOLDERS AND SHARES** 

Section 3.1 <u>Shareholders</u>. A Person shall be admitted as a Shareholder and shall automatically become bound by the terms, restrictions, duties, obligations and conditions of this Agreement immediately upon such Person's purchase or other acquisition of any Share in accordance with the terms and conditions of this Agreement and the registration of such Person's ownership in the register of the Company, without any requirement that such Person execute this Agreement. A Person may become a Shareholder without the consent or approval of any of the Shareholders. A Person may not become a Shareholder without acquiring a Share.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The name and address (including email address) of each Shareholder shall be listed on the books and records of the Company or the Transfer Agent, as applicable, maintained for such purpose. The Secretary of the Company or the Transfer Agent, as applicable, shall update such books and records from time to time as necessary to reflect accurately the information contained therein. The Company shall be entitled to obtain such other information about each Shareholder (and each beneficial owner of Shares) as shall be necessary or appropriate in connection with such Shareholder's ownership of Shares and in order to permit the Company to carry out its obligations hereunder, including pursuant to <u>Section 7.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Except as otherwise required by the Delaware Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and no Shareholder shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Shareholder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Except to the extent expressly provided in this Agreement (including any Share Designation), a Shareholder shall not have any right to resign or withdraw from the Company; provided, that when a Shareholder transfers its Shares, such Shareholder shall cease to have any rights with respect to such Shares transferred and, upon any transfer by a Shareholder of all of its Shares, such transferring Shareholder shall cease to be a member of the Company and shall have no further rights as a Shareholder or otherwise under this Agreement from and after the effective date of such transfer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Except to the extent expressly provided in this Agreement (including any Share Designation), (i) no Shareholder shall be entitled to the withdrawal or return of any Capital Contribution, except to the extent, if any, that distributions made pursuant to this Agreement or upon dissolution of the Company may be considered as such by Law and then only to the extent provided for in this Agreement; (ii) no Shareholder shall have priority over any other Shareholder either as to profits, losses or distributions or upon dissolution of the Company; (iii) no interest shall be paid by the Company on any Capital Contributions; and (iv) no Shareholder, in its capacity as such, shall participate in the conduct, management or control of the Company's business, transact any business in the Company's name or have the power to execute documents for or otherwise bind the Company by reason of being a Shareholder.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Any Shareholder shall be entitled to and may have business interests and engage in business activities in addition to those relating to the Company, including business interests and activities in direct competition with the Company Group, and none of the same shall constitute a breach of this Agreement or of any duty to the Company or any other Shareholder that may be otherwise existing at Law or in equity. Neither the Company nor any of the other Shareholders shall have any rights by virtue of this Agreement in any such business interests or activities of any Shareholder. No Shareholder, in its capacity as such, shall owe fiduciary duties to the Company or any other Shareholder; provided, however, that the foregoing shall not eliminate the implied contractual covenant of good faith and fair dealing.

Section 3.2 <u>Shares.</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company is authorized to issue, and the Board of Directors shall have the authority to cause the Company to issue, Shares, for any purpose at any time and from time to time, to such Persons and for such consideration (which may be cash, property, services or any other consideration) or for no consideration, and on such terms and conditions as the Board of Directors shall determine, whether or not greater consideration could be received upon the issue or sale of (i) the same number of Shares of such class or series to another Person or (ii) the same number of Shares of another class or series. Each Share shall be governed by the provisions set forth in this Agreement (including any Share Designation). For the avoidance of doubt, this Agreement, including each Share Designation, shall constitute the limited liability company agreement of the Company for all purposes of the Delaware Act and otherwise. Except to the extent expressly provided in any Share Designation, no Share shall entitle any Shareholder to any preemptive, subscription, preferential or similar rights with respect to the issuance of Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) As of the Effective Time, the authorized classes of Shares consist of: Common Shares and Preferred Shares. The authorized number of (i) Common Shares is 100,000,000, and (ii) Preferred Shares is 20,000,000, of which 3,750,000 are designated as a series of Preferred Shares denominated Series A Cumulative Redeemable Preferred Shares ("***Series A Preferred Shares***") with the terms of the Series A Preferred Shares set forth in the Series A Preferred Share Designation attached hereto as <u>Exhibit A</u>, which, for the avoidance of doubt, is the Share Designation for the Series A Preferred Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) As of the Effective Time, the limited liability company interests of the Company held by Phoenix Holdings in accordance with the Second Amended and Restated LLC Agreement shall be, and hereby are, automatically converted into 100,000,000 Common Shares and Phoenix Holdings is the only Shareholder holding Common Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Except to the extent expressly provided otherwise in this Agreement, on all matters voted or consented upon by Shareholders, each Common Share shall entitle the Record Holder thereof to cast one (1) vote for such Common Share held as of the applicable Record Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) [Reserved]

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Subject to <u>Section 11.15</u>, the Board of Directors shall have the authority to create and issue additional Shares, including Preferred Shares or additional classes or series of Common Shares, in one or more classes or series, with such voting powers, full or limited, or no

------

voting powers, and such distinctive designations, preferences and relative, participating, optional or other special rights, powers and duties (which may be junior to, equivalent to, or senior or superior to, any existing classes or series of Shares) and such qualifications, limitations or restrictions thereof, as shall be determined by the Board of Directors and reflected in a document approved by the Board of Directors in compliance with <u>Section 5.1</u> (each, a "***Share Designation***"). Without limiting the generality of the foregoing, a Share Designation of any class or series of Shares may provide for: (i) the distinctive designation of such class or series and the number of Shares which shall constitute such class or series; (ii) the rights to distributions of such Shares and the preferences with respect thereto (if any), the distribution payment dates, the periods in respect of which distribution are payable, whether such distribution shall be cumulative and, if cumulative, the date or dates from which distribution shall accumulate, and whether such distributions may be payable in cash or in kind; (iii) the voting rights (if any) of such Shares, including the number of votes per Share, the matters upon which such Shares are entitled to vote and any restrictions or limitations upon any voting rights of such Shares; (iv) the terms, if any, on which Shares of such class or series may be redeemed, including, without limitation, the redemption price or prices for such class or series, which may consist of a redemption price or scale of redemption prices applicable only to redemption in connection with a sinking fund (which term as used herein shall include any fund or requirement for the periodic purchase or redemption of Shares), and the same or a different redemption price or scale of redemption prices applicable to any other redemption; (v) the terms and amount of any sinking fund provided for the purchase or redemption of Shares of such class or series; (vi) the amount or amounts which shall be paid to the holders of Shares of such class or series upon the liquidation, dissolution or winding up of the Company; (vii) the terms, if any, upon which the holders of Shares of such class or series may convert or exchange such Shares into Shares of any other class or series of Shares or into other securities; (viii) whether or not the holders of such class or series of Shares, in such capacity, shall have any preemptive or preferential rights to subscribe for or purchase Shares of any class or series of the Company, whether now or hereafter authorized, or any securities convertible into, or warrant or other evidences of optional rights to purchase or subscribe for, Shares of any class or series of the Company, whether now or hereafter authorized; and (ix) whether or not the issuance of additional Shares of such class or series, or of any Shares of any other class or series, shall be subject to restrictions as to issuance, or as to the preferences, rights and qualifications thereof. ****

A Share Designation (or any resolution of the Board of Directors amending any Share Designation) shall be effective when a duly executed original of the same is delivered to the Secretary of the Company for inclusion among the permanent records of the Company, and shall be annexed to, and constitute part of, this Agreement. Unless otherwise provided in the applicable Share Designation, the Board of Directors may at any time increase or decrease the number of Shares of any class or series, but not below the number of Shares of such class or series then outstanding. The Board of Directors is authorized to change the voting powers, designations, preferences and other rights, as well as the qualifications, limitations and restrictions, of any class or series of Shares created pursuant to a Share Designation if no Shares authorized and created pursuant to such Share Designation are outstanding. The rights conferred upon the holders of existing Shares shall be deemed not to be varied, amended or modified by the creation and issuance of any additional class or series of Shares in accordance with this <u>Section 3.2(f)</u>. Notwithstanding any other provision of this Agreement, the Series A Preferred Share Designation is effective at the Effective Time. In the case of any conflict between the terms of this Agreement and the terms of a Share Designation, the terms of such Share Designation shall control.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Subject to <u>Section 11.15</u>, the Board of Directors shall have the authority to cause the Company to issue any Derivative Securities at any time and from time to time, to any Person or Persons (including any Shareholder) for such consideration (or no consideration) as the Board of Directors shall determine, and any such Derivative Securities shall have such rights, powers, restrictions, qualifications and limitations as shall be determined by the Board, including, without limitation, the terms and conditions, if any, upon which such Derivative Securities may be exercised, exchanged or converted into Shares of any class or series.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) Subject to the requirements of applicable Law (including, without limitation, Sections 18-607 and 18-804 of the Delaware Act), the Company shall have the power to (i) issue Shares on terms that they may be redeemed, or are required to be redeemed, at the option of the Company or the holder of such Shares, on such terms and in such manner as the Board of Directors may determine and (ii) purchase Shares of any class or series (including redeemable Shares) from such Persons, and for such consideration, as the Board of Directors shall from time to time, in its discretion, determine, whether or not less consideration could be paid upon the purchase of (1) the same number of Shares of such class or series from another Person or (2) the same number of Shares of another class or series, and as otherwise permitted by Law. Any Share in respect of which notice of redemption has been given shall not be entitled to participate in the profits of the Company, receive distributions or vote or consent upon any matter from and after the date specified as the date of redemption in the notice of redemption.

Section 3.3 <u>Certificates</u>. Unless otherwise determined by the Board, all Shares shall be uncertificated and no Shareholder shall be entitled to a Certificate for any or all of such Person's Shares. In the event that a Share is represented by a Certificate, no such Certificate shall be valid for any purpose until it has been countersigned by, and registered on the books of, the Transfer Agent; provided, however, that if the Board of Directors elects to issue Shares in global form, the Certificates representing such Shares shall be valid upon receipt of a certificate from the Transfer Agent certifying that such Shares have been duly registered in accordance with the directions of the Company. Any or all of the signatures required on the Certificate may be by facsimile or other electronic signature or electronic transmission. The Board of Directors shall have the power and authority to make all rules and regulations concerning the issue, transfer and registration or the replacement of Certificates.

Section 3.4 <u>Record Holders</u>. The Company shall be entitled to recognize the Record Holder as the owner of a Share and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such Share on the part of any other Person, regardless of whether the Company shall have actual notice or other notice thereof, except as otherwise provided by Law or any rule, regulation, guideline or requirement of any National Securities Exchange on which such Shares are listed for trading. Without limiting the foregoing, when a Person (such as a broker, dealer, bank, trust company or clearing corporation or an agent of any of the foregoing) is acting as nominee, agent or in some other representative capacity for another Person in acquiring or holding Shares, as between the Company, on the one hand, and such other Person, on the other, such representative Person shall be deemed the Record Holder of such Shares.

Section 3.5 <u>Registration and Transfer of Shares</u>.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Subject to the terms of this Agreement (including <u>Section 3.6</u>), Shares are freely transferable. The Officers shall keep or cause to be kept on behalf of the Company a register that will provide for the registration and transfer of Shares; provided, that the Company may from time to time appoint a Transfer Agent for the purpose of registering Shares. In the absence of manifest error, the register kept by or on behalf of the Company shall be conclusive as to the identity of the holders of Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company shall not recognize any transfer of Shares, and the transferor shall be deemed to remain the holder of the Shares being transferred, until the transfer is registered on the books of the Company or the Transfer Agent, as applicable; provided, that in the event that any Shares are represented by Certificates, no distributions shall be paid in respect of any such transferred certificated Shares until the Certificates evidencing such Shares are surrendered to the Transfer Agent. No charge shall be imposed by the Company for such transfer; provided, that as a condition to the registration of any transfer, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed with respect thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) No transfer of a Share shall entitle the transferee to receive distributions or to any other rights to which the transferor was entitled until the transferee becomes a Shareholder pursuant to this Article III.

Section 3.6 <u>Restrictions on Transfer</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Board of Directors may decline to recognize, approve or authorize the registration of any transfer of Shares if the Board of Directors shall determine that any non-*de minimis* adverse tax, regulatory or legal consequences to the Company, any other Group Member, or any other direct or indirect holder of Shares, or their respective Affiliates, would result from such transfer (an "***Adverse Consequence***"), including if such transfer would:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) violate applicable Law, including U.S. federal or state securities laws or rules and regulations of the Commission, any state securities commission or any other applicable Laws of any Governmental Entity with jurisdiction over the Company Group or such transfer, or have the effect of rendering unavailable any exemption under applicable Laws (including securities Laws) relied upon for a prior transfer of Shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) terminate the existence or qualification of the Company under the laws of the jurisdiction of its formation or any other jurisdiction in which the Company, directly or indirectly, conducts business or owns assets; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) cause the Company to be treated as an association taxable as a corporation or otherwise to be treated as other than a partnership for U.S. federal income tax purposes, in either case, to the extent the Company is not already so treated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Board of Directors (i) may decline to recognize, approve or authorize the registration of any transfer of any Share unless: (x) such transfer has been registered under the Securities Act or (y) an opinion from counsel acceptable to the Board of Directors shall have been delivered to the Company to the effect that registration of such transfer under the Securities Act is not required and (ii) shall decline to recognize, approve or authorize the registration of any transfer of any Share if such transfer shall not have been approved by applicable Governmental Entities if

------

such approval is required; provided, that nothing contained in this Agreement shall preclude the settlement of any transactions involving Shares entered into through the facilities of any National Securities Exchange on which such Shares are listed for trading.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Board of Directors may impose additional restrictions on the transfer of Shares other than those set forth in this Agreement if, on the opinion of counsel, such restrictions are necessary or advisable to avoid a significant risk of the Company becoming treated as an association taxable as a corporation or otherwise to be treated as other than a partnership for U.S. federal income tax purposes. The Board of Directors may impose such restrictions by amending this Agreement without the approval of the Shareholders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Board of Directors shall have the authority to request from any direct or indirect holder of Shares, and such holder shall provide, such information as the Board of Directors may request for the purpose of determining whether to decline to recognize, approve or authorize the registration of any transfer of Shares in accordance with this <u>Section 3.6</u>. If such information is not provided to the Board's satisfaction, the Board of Directors may decline to recognize, approve or authorize the registration of such transfer. Any purported transfer of any Shares in violation of this Agreement shall, to the fullest extent permitted by law, be null and void *ab initio* and of no force or effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) If the Board of Directors refuses to recognize, approve or authorize the registration of any transfer, it shall, within ten (10) Business Days after the date on which the transfer request was lodged with the Company, send to the transferor and the transferee notice of such refusal.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Notwithstanding anything to the contrary in this Agreement, for so long as the Senior Secured Credit Agreement remains in effect, the restrictions on transfers and the requirement that the Board of Directors recognize any such transfer as provided for under this Section 3.6 shall not apply to the transfer of any Common Share to or by any Person receiving or having received such Common Shares upon the foreclosure of the pledges of any such Common Share made in connection with the Senior Secured Credit Agreement and the other Loan Documents.

Section 3.7 <u>Required Sale of Shares</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) If the Board of Directors determines at any time that any Shareholder's ownership of Shares would result in an Adverse Consequence, the Company shall have the option, but not the obligation, to (i) redeem, (ii) repurchase, or (iii) assign to a third party the right to purchase the minimum number of Shares held by such Person that is necessary to eliminate such Adverse Consequence, in each case at a price equal to the Fair Value of such Shares. For the avoidance of doubt, the Board of Directors shall have full power and authority, without any requirement for approval or consent of any Shareholders, to make determinations under this <u>Section 3.7</u> and no action by any Shareholder shall be required to effect any redemption, repurchase or assignment of Shares pursuant to this <u>Section 3.7</u>. Any Shares redeemed or repurchased in accordance with this <u>Section 3.7</u> shall be cancelled upon tender of the purchase price to the applicable Shareholder in accordance with this <u>Section 3.7</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If the Board of Directors determines, pursuant to this <u>Section 3.7</u>, to redeem, repurchase or assign to a third party the right to purchase Shares of any Shareholder (such Shareholder, in such capacity, a "***Required Seller***"), the Company shall provide a Purchase Notice to such Required Seller. The Company may revoke the Purchase Notice at any time prior to the closing of such sale or redemption.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The closing of a sale or redemption of Shares pursuant to this <u>Section 3.7</u> (a "***Required Sale***") shall take place at a location and date selected by the Company and set forth in

------

the Purchase Notice, which shall be delivered at least five (5) Business Days prior to the closing date specified therein; provided, however, that such closing date shall be no earlier than the later of: (i) five (5) Business Days after a Purchase Notice is given with respect to such Required Sale; and (ii) in the event that a Shareholder objects to the Board's determination of Fair Value contained in a Purchase Notice pursuant to <u>Section 3.7(d)</u>, five (5) Business Days after the date of determination of Appraised Value. Payment of the purchase price for such Required Sale shall be by wire transfer at such closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) If the Required Seller objects to the Board's determination of the Fair Value of the Shares to be sold in a Required Sale, the Company shall retain an independent appraisal firm to determine the Appraised Value of such Shares, and the decision of such appraisal firm making such determination of Appraised Value shall be final and binding on the Company and the Required Seller. Such Appraised Value shall be determined as a pro rata portion of the value of the Company taken as a whole, based on the higher of: (a) the value derived from a hypothetical sale of the Company as a going concern by a willing seller to a willing buyer (neither under any compulsion); and (b) the liquidation value of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Notwithstanding anything to the contrary in this Agreement, for so long as the Senior Secured Credit Agreement remains in effect, the provisions of this Section 3.7 shall not apply to the any Common Share held by any Person having received such Common Share upon the foreclosure of the pledges of any such Common Share made in connection with the Senior Secured Credit Agreement and the other Loan Documents.

Section 3.8 <u>Transmission of Shares</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Any Person becoming entitled to a Share in consequence of the death or bankruptcy of a holder thereof shall, upon such evidence being produced as may from time to time be required by the Board of Directors, have the right either to be registered as a Shareholder in respect of the Share or, instead of being so registered, to make such transfer of the Share as the deceased or bankrupt Person could have made, subject to <u>Section 3.6</u> and <u>Section 3.7</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) A Person becoming entitled to a Share by reason of the death or bankruptcy of a holder thereof shall be entitled to the same distributions and other advantages to which such Person would be entitled if it were the registered Shareholder holding such Share notwithstanding that such holder is not a Shareholder, except that such Person shall not, before being registered as a Shareholder in respect of the Share, be entitled to exercise any voting rights or other rights conferred by ownership of such Share in relation to meetings of the Company.

Section 3.9 <u>Splits and Combinations</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Subject to <u>Section 11.15</u>, the Board of Directors may cause the Company to make a *pro rata* distribution of Shares of any class or series to all Record Holders of such class or series of Shares, or may effect a split, subdivision or combination of Shares of any class or series.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Whenever such a distribution, split, subdivision or combination of Shares is declared, the Board of Directors shall select a Record Date for determining the holders of Shares entitled to receive such distribution or have their Shares be subject to such split, subdivision or combination, and a date as of which the distribution, split, subdivision or combination shall be effective. Notice of a distribution, split, subdivision or combination of Shares shall be given promptly, and in accordance with the rules of any National Securities Exchange on which Shares are then listed for trading, to each Record Holder as of such date selected by the Board of Directors. The Board of Directors also may cause a firm of independent public accountants selected by it to calculate the number of Shares to be held by each Record Holder after giving effect to such distribution, split, subdivision or combination. The Board of Directors shall be entitled to rely on any certificate provided by such firm as conclusive evidence of the accuracy of such calculation.

------

Section 3.10 <u>Fractional Shares</u>. Subject to <u>Section 11.15</u>, the Board of Directors may cause the Company to issue fractions of a Share and, if so issued, a fraction of a Share shall be subject to, and carry the corresponding fraction of, the rights, powers (including voting power), preferences, qualifications, limitations, restrictions, obligations, duties and other attributes of a whole Share. If more than one fraction of a Share of the same class or series is issued to or acquired by the same holder, such fractions shall be accumulated. Notwithstanding the foregoing, if any Share distribution or forward or reverse Share split would otherwise result in the issuance of fractional Shares, the Board of Directors may decide to (i) round each such fractional Share to the nearest whole Share (and a 0.5 Share shall be rounded to the next higher Share), (ii) pay cash in lieu of such fractional Shares equal to the Fair Value of such fractional Shares or (iii) cause all such fractional shares to be aggregated and sold on a National Securities Exchange and distribute the proceeds thereof *pro rata* to the Shareholders otherwise entitled to receive such fractional Shares.

Section 3.11 <u>Fully Paid and Non-Assessable Nature of Shares</u>. All Shares issued pursuant to, and in accordance with the requirements of, this <u>Article III</u> shall represent validly issued, fully paid and non-assessable limited liability company interests in the Company, except as such non-assessability may be affected by Sections 18-607 or 18-804 of the Delaware Act.

**ARTICLE IV** 

**ALLOCATIONS AND DISTRIBUTIONS** 

Section 4.1 <u>Establishment and Maintenance of Capital Accounts</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) There shall be established for each Shareholder (or a beneficial owner of Company Interests held by a nominee in any case in which the nominee has furnished the identity of such owner to the Company in accordance with Section 6031(c) of the Code or any other method acceptable to the Board of Directors) on the books of the Company owning a Company Interest as of the date such Shareholder becomes a Shareholder, a capital account (each, a "***Capital Account***"). Such Capital Account shall be increased by (i) the amount of all Capital Contributions made to the Company with respect to such Company Interest and, if any, on the date such Capital Contribution is made to the Company, (ii) such Shareholder's allocable share of any Net Income (or items thereof) of the Company (including, without limitation, income and gain exempt from tax) computed in accordance with <u>Section 4.1(b)</u>, and allocated with respect to such Company Interest pursuant to <u>Section 4.2</u>, and (iii) the portion of any amount realized from the disposition of an oil and gas property that constitutes Simulated Gains allocated with respect to such Company Interest in accordance with <u>Section 4.2(e)(iii)</u>. Such Capital Account shall be decreased by (x) the amount of cash or Net Agreed Value of all actual and deemed distributions of cash or property made with respect to such Company Interest (provided that the Capital Account of a Series A Preferred Shareholder will not be reduced by any distributions with respect to the Series A Preferred Shares), (y) all items of Company deduction and loss computed in accordance with <u>Section 4.1(b)</u> and allocated with respect to such Company Interest pursuant to <u>Section 4.2</u>, and (z) Simulated Depletion and Simulated Loss in accordance with <u>Section 4.1(e)(ii)</u>. The initial Capital Account balance in respect of each Series A Preferred Share on the issue date of such Series A Preferred Share shall be equal to the amount paid for such Series A Preferred Share.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) For purposes of computing the amount of any item of income, gain, loss, deduction, Simulated Depletion, Simulated Gain or Simulated Loss that is to be allocated pursuant to <u>Section 4.2</u> and is to be reflected in the Shareholders' Capital Accounts, the determination, recognition and classification of any such item shall be the same as its determination, recognition and classification for U.S. federal income tax purposes (including any method of depreciation, cost recovery or amortization used for that purpose), provided, however, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Solely for purposes of this <u>Section 4.1</u> and except as otherwise determined by the Board of Directors, the Company shall be treated as owning directly its proportionate share of all property owned by (x) any other Group Member that is classified as a partnership for U.S. federal income tax purposes and (y) any other partnership, limited liability company, unincorporated business or other entity classified as a partnership for U.S. federal income tax purposes of which a Group Member is, directly or indirectly, a partner, member or other equity holder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) All fees and other expenses incurred by the Company to promote the sale of (or to sell) a Company Interest that can neither be deducted nor amortized under Section 709 of the Code, if any, shall, for purposes of Capital Account maintenance, be treated as an item of deduction at the time such fees and other expenses are incurred and shall be allocated among the Shareholders pursuant to <u>Section 4.2</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The computation of all items of income, gain, loss, deduction, Simulated Depletion, Simulated Gain and Simulated Loss shall be made (x) except as otherwise provided in Treasury Regulations Section 1.704-1(b)(2)(iv)(m), without regard to any election under Section 754 of the Code that may be made by the Company and (y) as to those items described in Section 705(a)(1)(B) or 705(a)(2)(B) of the Code, without regard to the fact that such items are not includable in gross income or are neither currently deductible nor capitalized for U.S. federal income tax purposes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Section 734(b) or Section 743(b) of the Code (including pursuant to Treasury Regulations Section 1.734-2(b)(1)) is required, pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment in the Capital Accounts shall be treated as an item of gain or loss.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Any income, gain, loss, Simulated Gain or Simulated Loss attributable to the taxable disposition of any Company property shall be determined as if the adjusted basis of such property as of such date of disposition were equal in amount to the Company's Carrying Value with respect to such property as of such date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) In accordance with the requirements of Section 704(b) of the Code, any deductions for depreciation, cost recovery or amortization attributable to any Contributed Property shall be determined as if the adjusted tax basis of such property on the date it was acquired by the Company were equal to the Agreed Value of such property. Upon an

------

adjustment pursuant to <u>Section 4.1(d)</u> to the Carrying Value of any Company property subject to depreciation, cost recovery or amortization, any further deductions for such depreciation, cost recovery or amortization attributable to such property shall be determined under the rules prescribed by Treasury Regulations Section 1.704-3(d)(2) as if the adjusted basis of such property were equal to the Carrying Value of such property immediately following such adjustment. Simulated Depletion shall be computed in accordance with the provisions of the definition of Simulated Depletion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) The Gross Liability Value of each Liability of the Company described in Treasury Regulations Section 1.752-7(b)(3)(i) shall be adjusted at such times as provided in this Agreement for an adjustment to Carrying Values. The amount of any such adjustment shall be treated for purposes hereof as an item of loss (if the adjustment increases the Carrying Value of such Liability of the Company) or an item of gain (if the adjustment decreases the Carrying Value of such Liability of the Company).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Except as otherwise provided in this Section 4.1(c), a transferee of a Company Interest shall succeed to a Pro Rata portion of the Capital Account of the transferor relating to the Company Interest so transferred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Issuance of Additional Company Interests</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) In accordance with Treasury Regulations Sections 1.704-1(b)(2)(iv)(f) and 1.704-1(b)(2)(iv)(h)(2), on an issuance of additional Company Interests for cash or Contributed Property, the issuance of a Noncompensatory Option, the issuance of Company Interests as consideration for the provision of services (including upon the lapse of a "substantial risk of forfeiture" with respect to a Share), the Carrying Value of each Company property immediately prior to such issuance shall be adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable to such Company property; provided, however, that in the event of the issuance of a Company Interest pursuant to the exercise of a Noncompensatory Option where the right to share in Company capital represented by such Company Interest differs from the consideration paid to acquire and exercise such option, the Carrying Value of each Company property immediately after the issuance of such Company Interest shall be adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable to such Company property and the Capital Accounts of the Shareholders shall be adjusted in a manner consistent with Treasury Regulations Section 1.704-1(b)(2)(iv)(s); provided further, that in the event of an issuance of Company Interests for a de minimis amount of cash or Contributed Property, in the event of an issuance of a Noncompensatory Option to acquire a de minimis Company Interest or in the event of an issuance of a de minimis amount of Company Interests as consideration for the provision of services, the Board of Directors may determine that such adjustments are unnecessary for the proper administration of the Company. In determining such Unrealized Gain or Unrealized Loss, the fair market value of all Company property (including cash or cash equivalents) immediately prior to the issuance of additional Company Interests (or, in the case of a Revaluation Event resulting from the exercise of a Noncompensatory Option, immediately after the issuance of the Company Interest acquired pursuant to the exercise of such Noncompensatory Option) shall be determined by the Board of Directors using such method of valuation as it may adopt.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) In accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(f), immediately prior to any actual distribution to a Shareholder of any Company property (other than a distribution of cash that is not in redemption or retirement of a Company Interest), the Capital Accounts of all Shareholders and the Carrying Value of all Company property shall be adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable to such Company property; provided, however, that in the event of a distribution to a Shareholder of a de minimis amount of Company property, the Board of Directors determine that such an adjustment is unnecessary for the proper administration of the Company. In determining such Unrealized Gain or Unrealized Loss the fair market value of all Company property (including cash or cash equivalents) immediately prior to a distribution shall (A) in the case of a distribution other than one made pursuant to <u>Section 12.4</u>, be determined in the same manner as that provided in <u>Section 4.1(d)(i)</u> or (B) in the case of a liquidating distribution pursuant to Section 8.3, be determined by the Liquidator using such method of valuation as it may adopt.

Section 4.2 <u>Allocations</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Allocations for Capital Account Purposes. For purposes of maintaining the Capital Accounts and in determining the rights of the Shareholders among themselves, the Shareholder's items of income, gain, loss, deduction and Simulated Gain (computed in accordance with <u>Section 4.1(b)</u>) for each taxable period shall be allocated among the Shareholders, and the Capital Accounts of the Shareholders shall be adjusted for Simulated Depletion and Simulated Loss, as provided herein below. Except as explicitly provided in <u>Section 4.2(b)</u> and <u>Section 4.2(c)</u>, no allocations pursuant to <u>Section 4.2</u> shall be allocated to Series A Preferred Shareholders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Net Income</u>. After giving effect to the special allocations set forth in <u>Section 4.2(d)</u> and Capital Account adjustments pursuant to <u>Section 4.2(e)(ii)</u>, Net Income for each taxable period and all items of income, gain, loss and deduction and, to the extent provided in <u>Section 4.2(e)(iii)</u>, Simulated Gain, taken into account in computing Net Income for such taxable period shall be allocated as followed:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) First, 100% Pro Rata to the Shareholders (other than Series A Preferred Shareholders), in proportion to, and to the extent of Net Loss allocated to such Shareholders pursuant to <u>Section 4.2(c)(iv)</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Second, to all Series A Preferred Shareholders, in proportion to, and to the extent of the Net Loss allocated to such Series A Preferred Shareholders pursuant to <u>Section 4.2(c)(iii)</u> for all previous taxable years, until the aggregate amount of Net Income allocated to such Series A Preferred Shareholder pursuant to this <u>Section 4.2(b)(ii)</u> for the current and all previous taxable years is equal to the aggregate Net Loss allocated to such Series A Preferred Shareholders pursuant to <u>Section 4.2(c)(iii)</u> for all previous taxable years; provided, that in no event shall Net Income be allocated to any such Series A Preferred Shareholder to cause its Capital Account in respect of a Series A Preferred Share to exceed the Liquidation Preference in respect of such Series A Preferred Shares;

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Third, to the Shareholders (other than Series A Preferred Shareholders), in in accordance with their respective Percentage Interests, until the aggregate Net Income allocated to such Shareholders pursuant to this <u>Section 4.2(b)(iii)</u> for the current taxable year and all previous taxable years is equal to the aggregate Net Losses allocated to such Shareholders pursuant to <u>Section 4.2(c)(ii)</u> for all previous taxable years; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Fourth, the balance, if any, 100% Pro Rata to the Shareholders (other than Series A Preferred Shareholders) in accordance with their respective Percentage Interests.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Net Loss</u>. After giving effect to the special allocations set forth in <u>Section 4.2(d)</u> and Capital Account adjustments pursuant to <u>Section 4.2(e)(ii)</u>, Net Loss for each taxable period and all items of income, gain, loss and deduction and, to the extent provided in <u>Section 4.2(e)(iii)</u>, Simulated Gain, taken into account in computing Net Loss for such taxable period shall be allocated as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) First, to the Shareholders (other than Series A Preferred Shareholders), Pro Rata in accordance with their respective Percentage Interests, until the aggregate Net Losses allocated pursuant to this <u>Section 4.2(c)(i)</u> for the current taxable year and all previous taxable years is equal to the aggregate Net Income allocated to such Shareholders pursuant to <u>Section 4.2(b)(iv)</u> for all previous taxable years, provided, that the Net Losses shall be allocated pursuant to this <u>Section 4.2(c)(i)</u> to the extent of, the positive balances in the Shareholders respective Adjusted Capital Accounts at the end of such taxable year;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Second, 100% to the Shareholders (other than Series A Preferred Shareholders) in accordance with their respective Percentage Interests; provided, that Net Losses shall be allocated pursuant to this <u>Section 4.2(c)(ii)</u> to the extent of, the positive balances in the Shareholders (other than Series A Preferred Shareholders) respective Adjusted Capital Accounts (other than Series A Preferred Shareholders) at the end of such taxable year;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Third, to all Series A Preferred Shareholders, in proportion to their respective positive Adjusted Capital Account balances, until the Adjusted Capital Account in respect of each Series A Preferred Share then Outstanding has been reduced to zero;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Fourth, the balance, if any, 100% Pro Rata to the Shareholders (other than Series A Preferred Shareholders) in accordance with their respective Percentage Interests.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Regulatory Allocations</u>. Notwithstanding any other provision of this <u>Section 4.2</u>, the following special allocations shall be made for each taxable period:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Company Minimum Gain Chargeback</u>. Notwithstanding any other provision of this <u>Section 4.2</u>, if there is a net decrease in Company Minimum Gain during any Company taxable period, each Shareholder shall be allocated items of Company income and gain for such period (and, if necessary, subsequent periods) in the manner and amounts provided in Treasury Regulation Sections 1.704-2(f)(6), 1.704-2(g)(2) and 1.704-2(j)(2)(i),

------

or any successor provision. For purposes of this <u>Section 4.2(d)</u>, each Shareholder's Adjusted Capital Account balance shall be determined, and the allocation of income and gain required hereunder shall be effected, prior to the application of any other allocations pursuant to this <u>Section 4.2(d)</u> with respect to such taxable period (other than an allocation pursuant to <u>Sections 4.2(d)(v)</u> and <u>4.2(d)(vi)</u>). This <u>Section 4.2(d)(i)</u> is intended to comply with the Company Minimum Gain chargeback requirement in Treasury Regulation Section 1.704-2(f) and shall be interpreted consistently therewith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Chargeback of Shareholder Nonrecourse Debt Minimum Gain</u>. Notwithstanding the other provisions of this <u>Section 4.2</u> (other than <u>Section 4.2(d)(i)</u>), except as provided in Treasury Regulation Section 1.704-2(i)(4), if there is a net decrease in Shareholder Nonrecourse Debt Minimum Gain during any Company taxable period, any Shareholder with a share of Shareholder Nonrecourse Debt Minimum Gain at the beginning of such taxable period shall be allocated items of Company income and gain for such period (and, if necessary, subsequent periods) in the manner and amounts provided in Treasury Regulation Sections 1.704-2(i)(4) and 1.704-2(j)(2)(ii), or any successor provisions. For purposes of this <u>Section 4.2(d)</u>, each Shareholder's Adjusted Capital Account balance shall be determined, and the allocation of income and gain required hereunder shall be effected, prior to the application of any other allocations pursuant to this <u>Section 4.2(d)</u>, other than <u>Section 4.2(d)(i)</u> and other than an allocation pursuant to <u>Sections 4.2(d)(v)</u> and <u>4.2(d)(vi)</u>, with respect to such taxable period. This <u>Section 4.2(d)(ii)</u> is intended to comply with the chargeback of items of income and gain requirement in Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted consistently therewith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <u>Qualified Income Offset</u>. In the event any Shareholder unexpectedly receives any adjustments, allocations, or distributions described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5), or (6), items of Company income and gain shall be specially allocated to such Shareholder in an amount and manner sufficient to eliminate, to the extent required by Treasury Regulation, any deficit in the Adjusted Capital Account as quickly as possible; provided, however, that an allocation pursuant to this <u>Section 4.2(d)(iii)</u> shall be made only if and to the extent that such Shareholder would have a deficit in its Adjusted Capital Account after all other allocations provided for in this <u>Section 4.2</u> have been tentatively made as if this <u>Section 4.2(d)(iii)</u> were not in this Agreement. This <u>Section 4.2(d)(iii)</u> is intended to comply with the qualified income offset provision in Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted and applied consistently therewith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) <u>Gross Income Allocations</u>. In the event any Shareholder has a deficit balance in its Capital Account at the end of any Company taxable period in excess of the sum of (A) the amount such Shareholder is required to restore pursuant to the provisions of this Agreement and (B) the amount such Shareholder is deemed obligated to restore pursuant to Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5), such Shareholder shall be specially allocated items of Company gross income and gain in the amount of such excess as quickly as possible; provided, that an allocation pursuant to this <u>Section 4.2(d)(iv)</u> shall be made only if and to the extent that such Shareholder would have a deficit balance in its Capital Account as adjusted after all other allocations provided for in this <u>Section 4.2</u> have been tentatively made as if this <u>Section 4.2(d)(iv)</u> were not in this Agreement.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) <u>Nonrecourse Deductions</u>. Nonrecourse Deductions for any taxable period shall be allocated to the Shareholders Pro Rata. If the Board of Directors determines that the Company's Nonrecourse Deductions should be allocated in a different ratio to satisfy the safe harbor requirements of the Treasury Regulations promulgated under Section 704(b) of the Code, the Board of Directors is authorized, upon notice to the other Shareholders, to revise the prescribed ratio to the numerically closest ratio that does satisfy such requirements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) <u>Shareholder Nonrecourse Deductions</u>. Shareholder Nonrecourse Deductions for any taxable period shall be allocated 100% to the Shareholder that bears the Economic Risk of Loss with respect to the Shareholder Nonrecourse Debt to which such Shareholder Nonrecourse Deductions are attributable in accordance with Treasury Regulation Section 1.704-2(i). If more than one Shareholder bears the Economic Risk of Loss with respect to a Shareholder Nonrecourse Debt, such Shareholder Nonrecourse Deductions attributable thereto shall be allocated between or among such Shareholders in accordance with the ratios in which they share such Economic Risk of Loss.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) <u>Nonrecourse Liabilities</u>. For purposes of Treasury Regulations Section 1.752-3(a)(3), the Shareholders agree that Nonrecourse Liabilities of the Company in excess of the sum of (1) the amount of Company Minimum Gain and (2) the total amount of Nonrecourse Built-in Gain shall be allocated among the Shareholders Pro Rata.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) <u>Code Section 754 Adjustments</u>. To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Section 734(b) or 743(b) of the Code is required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis), and such item of gain or loss shall be specially allocated to the Shareholders in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such Section of the Treasury Regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) <u>Curative Allocation</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Required Allocations are intended to comply with certain requirements of the Treasury Regulations. It is the intent of the Shareholders that, to the extent possible, all Required Allocations shall be offset either with other Required Allocations or with special allocations of other items of Company income, gain, loss or deduction pursuant to this <u>Section 4.2(d)(ix)</u>. Therefore, notwithstanding any other provision of this <u>Article IV</u> (other than the Required Allocations), the Board of Directors shall make such offsetting special allocations of Company income, gain, loss or deduction in whatever manner it determines appropriate so that, after such offsetting allocations are made, each Shareholder's Capital Account balance is, to the extent possible, equal to the Capital Account

------

balance such Shareholder would have had if the Required Allocations were not part of this Agreement and all Company items were allocated pursuant to the economic agreement among the Shareholders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The Board of Directors shall, with respect to each taxable period, (A) apply the provisions of <u>Section 4.2(d)(ix)(1)</u> in whatever order is most likely to minimize the economic distortions that might otherwise result from the Required Allocations, and (B) divide all allocations pursuant to <u>Section 4.2(d)(ix)(1)</u> among the Shareholders in a manner that is likely to minimize such economic distortions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Simulated Basis; Simulated Depletion and Simulated Loss; Simulated Gain</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Simulated Basis. For purposes of determining and maintaining the Shareholder' Capital Accounts, (i) the initial Simulated Basis of each oil and gas property (as defined in Section 614 of the Code) of the Company shall be allocated among the Shareholders Pro Rata and (ii) if the Carrying Value of an oil and gas property (as defined in Section 614 of the Code) is adjusted pursuant to <u>Section 4.1</u>, the Simulated Basis of such property (as adjusted to reflect the adjustment to the Carrying Value of such property), shall to the Shareholders Pro Rata.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Simulated Depletion and Simulated Loss. For purposes of applying clause (z) of <u>Section 4.1(a)</u>, Simulated Depletion and Simulated Loss with respect to each oil and gas property (as defined in Section 614 of the Code) of the Company shall reduce each Shareholder's Capital Account in proportion to the manner in which the Simulated Basis of such property is allocated among the Partners pursuant to <u>Section 4.2(e)(i)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Simulated Gain. For purposes of applying clause (iii) of <u>Section 4.2(e)</u>, Simulated Gain for any taxable period shall be treated as included in either Net Income or Net Loss and allocated pursuant to <u>Section 4.2(b)</u> or <u>Section 4.2(c)</u>, as appropriate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) For the proper administration of the Company and for the preservation of uniformity of the Shares (or any class or series thereof), the Board of Directors, as it determines in its sole discretion is necessary or appropriate to execute the provisions of this Agreement and to comply with federal, state and local tax law, may (i) adopt such conventions as it deems appropriate in determining the amount of depreciation, amortization and cost recovery deductions; (ii) make special allocations for U.S. federal income tax purposes of income (including gross income) or deductions; (iii) amend the provisions of this Agreement as appropriate (x) to reflect the proposal or promulgation of Treasury Regulations under Section 704(b) or Section 704(c) of the Code or (y) otherwise to preserve or achieve uniformity of the Shares (or any class or classes thereof); and (iv) adopt and employ methods for (A) the maintenance of Capital Accounts for book and tax purposes, (B) the determination and allocation of adjustments, if any, under Sections 704(c), 734 and 743 of the Code, (C) the determination and allocation of taxable income, tax loss and items thereof under this Agreement and pursuant to the Code, (D) the determination of the identities and tax classification of Shareholders, (E) the provision of tax information and reports to the Shareholders, (F) the adoption of reasonable conventions and methods for the valuation of assets and the determination of tax basis, (G) the allocation of asset values and tax basis, (H) the adoption and maintenance of accounting methods, (I) the recognition of the transfer of Shares and (J) tax

------

compliance and other tax-related requirements, including the use of computer software, and to use filing and reporting procedures similar to those employed by publicly-traded partnerships and limited liability companies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) The Board of Directors may adopt and employ such conventions and methods as it determines in its sole discretion to be appropriate for the determination for federal income tax purposes of each item of Company income, gain, loss, and deduction and the allocation of such items among Shareholders and between transferors and transferees under this Agreement and pursuant to the Code (including Section 706 of the Code) and the regulations or rulings promulgated thereunder. The Board of Directors may revise, alter or otherwise modify such methods of allocation to the extent permitted or required by Section 706 of the Code and the regulations or rulings promulgated thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) The Board of Directors shall determine all matters concerning allocations for tax purposes not expressly provided for herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Allocations that would otherwise be made to a Shareholder under the provisions of this <u>Section 4.2</u> shall instead be made to the beneficial owner of Shares held by a nominee in any case in which the nominee has furnished the identity of such owner to the Company in accordance with Section 6031(c) of the Code or any other method determined by the Board of Directors.

Section 4.3 <u>Allocations for Tax Purposes</u>. Except as otherwise provided herein, for U.S. federal income tax purposes, each item of income, gain, loss, deduction and amount realized shall be allocated among the Shareholders in the same manner as its correlative item of "book" income, gain, loss, deduction or amount realized is allocated pursuant to <u>Section 4.2</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The deduction for depletion with respect to each separate oil and gas property (as defined in Section 614 of the Code) shall be computed for U.S. federal income tax purposes separately by the Shareholders rather than by the Company in accordance with Section 613A(c)(7)(D) of the Code. Except as provided in <u>Section 4.3(c)</u>, for purposes of such computation (before taking into account any adjustments resulting from an election made by the Company under Section 754 of the Code), the adjusted tax basis of each oil and gas property (as defined in Section 614 of the Code) that is (i) a Contributed Property shall initially be allocated among the non-contributing Shareholders, Pro Rata, but not in excess of any such Shareholder's share of Simulated Basis as determined pursuant to <u>Section 4.2(e)(i)</u>, and (ii) not a Contributed Property or an Adjusted Property shall initially be allocated to the Shareholders in proportion to each such Shareholder's share of Simulated Basis as determined pursuant to <u>Section 4.2(e)(i)</u>. Further, for purposes of Treasury Regulations Sections 1.704-1(b)(2)(iv)(k)(2) and 1.704-1(b) (4)(iii), the amount realized on the disposition of any oil and gas property (as defined in Section 614 of the Code) of the Company shall be allocated (i) first to the Shareholders in an amount equal to the remaining Simulated Basis of such property in the same proportions as the Simulated Basis of such property was allocated among the Shareholders pursuant to <u>Section 4.2(e)(i)</u>, and (ii) any remaining amount realized shall be allocated to the Shareholders in the same ratio as Simulated Gain from the disposition of such oil and gas property is allocated pursuant to <u>Section 4.2(b)</u> or <u>Section 4.2(c)</u>.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Each Shareholder shall separately keep records of his, her or its share of the adjusted tax basis in each oil and gas property, allocated as provided above, adjust such share of the adjusted tax basis for any cost or percentage depletion allowable with respect to such property, and use such adjusted tax basis in the computation of its cost depletion or in the computation of his, her or its gain or loss on the disposition of such property by the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In an attempt to eliminate Book-Tax Disparities attributable to a Contributed Property or Adjusted Property, items of income, gain, loss, depreciation, amortization and cost recovery deductions shall be allocated for U.S. federal income tax purposes among the Shareholders in the manner provided under Section 704(c) of the Code, and the Treasury Regulations promulgated under Section 704(b) and 704(c) of the Code, as determined to be appropriate by the Board of Directors; provided, however, that the Board of Directors shall apply "remedial allocation method" in accordance with the principles of Treasury Regulations Section 1.704-3(d) in all events. For purposes of applying the "remedial allocation method" to oil and gas properties (i) the amount by which any Shareholder's Capital Account is adjusted for Simulated Depletion shall be treated as an amount of book depletion allocated to such Partner and (ii) the amount of cost depletion computed by such Shareholder under Section 613A(c)(7)(D) of the Code shall be treated as an amount of tax depletion allocated to such Partner.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Board of Directors may determine to depreciate or amortize the portion of an adjustment under Section 743(b) of the Code attributable to unrealized appreciation in any Adjusted Property (to the extent of the unamortized Book-Tax Disparity) using a predetermined rate derived from the depreciation or amortization method and useful life applied to the unamortized Book-Tax Disparity of such property, despite any inconsistency of such approach with Treasury Regulations Section 1.167(c)-l(a)(6) or any successor regulations thereto. If the Board of Directors determines that such reporting position cannot reasonably be taken, the Board of Directors may adopt depreciation and amortization conventions under which all purchasers acquiring Company Interests in the same month would receive depreciation and amortization deductions, based upon the same applicable rate as if they had purchased a direct interest in the Company's property. If the Board of Directors chooses not to utilize such aggregate method, the Board of Directors may use any other depreciation and amortization conventions to preserve the uniformity of the intrinsic tax characteristics of any Company Interests, so long as such conventions would not have a material adverse effect on the Shareholders or the Record Holders of any class or classes of Company Interests.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) In accordance with Treasury Regulations Sections 1.1245-1(e) and 1.1250-1(f), any gain allocated to the Shareholders upon the sale or other taxable disposition of any Company asset shall, to the extent possible, after taking into account other required allocations of gain pursuant to this <u>Section 4.3</u>, be characterized as Recapture Income in the same proportions and to the same extent as such Partners (or their predecessors in interest) have been allocated any deductions directly or indirectly giving rise to the treatment of such gains as Recapture Income.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) All items of income, gain, loss, deduction and credit recognized by the Company for U.S. federal income tax purposes and allocated to the Shareholders in accordance

------

with the provisions hereof shall be determined without regard to any election under Section 754 of the Code that may be made by the Company; provided, however, that such allocations, once made, shall be adjusted (in the manner determined by the Board of Directors) to take into account those adjustments permitted or required by Sections 734 and 743 of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Each item of Company income, gain, loss and deduction, for U.S. federal income tax purposes, shall be determined for each taxable period and prorated on a monthly basis and shall be allocated to the Shareholders as of the opening of the National Securities Exchange on which the Company Interests are listed or admitted to trading on the first Business Day of each month; provided, however, that gain or loss on a sale or other disposition of any assets of the Company or any other extraordinary item of income or loss realized and recognized other than in the ordinary course of business, as determined by the Board of Directors, shall be allocated to the Shareholders as of the opening of the National Securities Exchange on which the Company Interests are listed or admitted to trading on the first Business Day of the month in which such gain or loss is recognized for U.S. federal income tax purposes. The Board of Directors may revise, alter or otherwise modify such methods of allocation to the extent permitted or required by Section 706 of the Code and the regulations or rulings promulgated thereunder, and the Shareholders hereby agree that any such methods selected by the Board of Directors are made by the "agreement of the Partners" within the meaning of Treasury Regulations Section 1.706-4(f).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) Allocations that would otherwise be made to a Shareholder under the provisions of this Article IV shall instead be made to the beneficial owner of Company Interests held by a nominee, agent or representative in any case in which such nominee, agent or representative has furnished the identity of such owner to the Company in accordance with Section 6031(c) of the Code or any other method determined by the Board of Directors.

Section 4.4 <u>Distributions to Record Holders</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Subject to the applicable provisions of the Delaware Act and the terms of any Share Designation, distributions of cash or other assets of the Company may be paid to the Shareholders out of the Company's assets legally available therefor only when, as and if determined by the Board of Directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Distributions shall be declared and paid to holders of Preferred Shares in accordance with the terms of the applicable Share Designation, and, with respect to any distributions that may be declared by the Board of Directors with respect to Common Shares shall be paid to the holders of Common Shares on a Pro Rata basis.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Notwithstanding this <u>Section 4.3</u>, following the dissolution of the Company, all distributions shall be made in accordance with, and subject to the terms and conditions of, <u>Section 8.3(a)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Pursuant to <u>Section 7.3</u>, the Company is authorized to withhold from payments or other distributions to the Shareholders, and to pay over to any U.S. federal, state or local government or any foreign government, any amounts required to be so withheld pursuant to the Code or any other Law. All amounts withheld with respect to any payment or other distribution by the Company to the Shareholders and paid over to any

------

U.S., federal, state or local government or any non-U.S. taxing authority shall be treated as amounts paid to the Shareholders with respect to which such amounts were withheld pursuant to this <u>Section 4.3(b)</u> or <u>Section 8.3</u> for all purposes under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) No distribution shall bear interest.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Notwithstanding anything to the contrary in this Agreement, each distribution in respect of any Shares shall be made by the Company, directly or through the Transfer Agent or through any other Person, only to the Record Holder of such Shares as of the Record Date set for such distribution. Any distribution in accordance with the foregoing shall constitute full payment and satisfaction of any liability that the Company might have in respect of such distribution, regardless of any claim of any Person who may have an interest in such distribution by reason of an assignment or otherwise.

**ARTICLE V** 

**MANAGEMENT AND OPERATION OF BUSINESS** 

Section 5.1 <u>Power and Authority of Board of Directors</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Except as set forth in <u>Section 11.1(e)</u> and for such other matters that, pursuant to the express provisions of this Agreement, require Shareholder Approval, the Company shall be exclusively managed by or under the direction of a board of directors (the "***Board of Directors***" or "***Board***"), which shall have the power and authority to manage and oversee the conduct of the Company's business and affairs. As provided in <u>Section 1.1</u>, the Directors shall constitute "managers" of the Company within the meaning of, and for all purposes of, the Delaware Act; provided, however, that notwithstanding the last sentence of Section 18-402 of the Delaware Act, no Director, in his or her capacity as such, shall have the authority to bind the Company except with the approval of the Board of Directors. As provided in <u>Section 5.19(a)</u>, the Board of Directors shall have the power and authority to appoint the Officers and delegate such power and authority to Officers as shall be determined by the Board of Directors. No Shareholder, by virtue of its status as such, shall have any power or authority to conduct or manage the business and affairs of the Company. No resolution passed by the Company at a meeting of Shareholders shall invalidate any prior act of the Board of Directors that would have been valid if such resolution had not been passed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Except as otherwise expressly provided in this Agreement, in addition to the powers that now or hereafter can be granted to managers under the Delaware Act and all other powers granted under any other provision of this Agreement, the Board of Directors shall have full power and authority, without any requirement for approval or consent of any Shareholders, to take all actions, and direct the Officers to take all actions, as it determines to be necessary or appropriate to conduct the business of the Company, to exercise all powers set forth in <u>Section 2.5</u> and to effectuate the purposes set forth in <u>Section 2.4</u>, including, without limitation, the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the making of any expenditures, the lending or borrowing of money, the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness, including indebtedness that is convertible into Shares, and the incurring of any other obligations;

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the Company or its assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the assets of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) the use of the assets of the Company (including cash on hand) for any purpose consistent with the Company's purposes (as set forth in <u>Section 2.4</u>), including the financing of the conduct of the operations of the Company and its Subsidiaries; the lending of funds to other Persons (including other Group Members); the repayment of obligations of the Company and its Subsidiaries; and the making of capital contributions to any Shareholder of the Company or any of its Subsidiaries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) the negotiation, execution and performance of any contracts, conveyances or other instruments (including instruments that limit the liability of the Company under contractual arrangements to all or particular assets of the Company);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) the declaration and payment of distributions of cash or other assets to the Shareholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) the selection and dismissal of any Officer, employee, agent, outside attorney, accountant, advisor, consultant and contractor and the determination of their compensation and other terms of employment or engagement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) the creation and operation of employee benefit plans, employee programs and employee practices;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) the maintenance of insurance for the benefit of the Company Group and the Indemnitees, including any long term incentive plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) the formation of, or acquisition or disposition of an interest in, and the contribution of property and the making of loans to, any limited or general partnership, joint venture, corporation, limited liability company or other entity (or series thereof) or arrangement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) the control of any matters affecting the rights and obligations of the Company, including the bringing and defending of actions at law or in equity and otherwise engaging in the conduct of litigation, arbitration or remediation, and the incurring of legal expense and the settlement of claims and litigation;

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii) the indemnification of any Person against liabilities and contingencies to the extent permitted by Law;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Shares from, or requesting that trading be suspended on, any such National Securities Exchange;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiv) the issuance, sale or other disposition, and the purchase or other acquisition, of any Shares or Derivative Securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xv) the undertaking of any action in connection with the Company's interest or participation in any Group Member;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvi) the undertaking of any merger, division, consolidation or other similar transaction involving the Company with or into another Person, or the conversion of the Company into a corporation or other entity (except to the extent set forth in <u>Article X</u>); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvii) the execution and delivery of agreements with Affiliates of the Company to render services to a Group Member.

Section 5.2 <u>Number, Qualification, Term and Election of Directors</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Board of Directors shall consist of not less than one (1) nor more than seven (7) Directors, the exact number of which shall be determined from time to time by the Board of Directors, subject to the terms of any Share Designation

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) As of the Effective Time, the size of the Board of Directors is fixed at five (5) Directors. As of the Effective Time, each individual nominated to serve as a Director will serve in accordance with the terms of this Agreement until their successors have been duly elected or their earlier death, resignation, disqualification or removal.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Board of Directors may, from time to time, elect a Director to serve as the chairman of the Board of Directors (such Director, in such capacity, the "***Chairman of the Board***"), who shall have such power and authority, in his capacity as Chairman of the Board, as set forth in this Agreement. The Board of Directors may also from time-to-time delegate to the Chairman of the Board such other power and authority as shall be determined by the Board of Directors from time to time. As of the Effective Time, the Chairman of the Board is Daniel Ferrari. Notwithstanding anything to the contrary contained in this Agreement, the Chairman of the Board shall have the power and authority to delegate any right, power or authority contained in this Agreement delegated to the Chairman of the Board to the Chief Executive Officer of the Company provided that the Chief Executive Officer is a Director at the time of such delegation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Each Director shall serve a one (1) year term of office, and shall be elected annually at each annual meeting of Shareholders (or any special meeting of Shareholders called for the purpose of electing Directors), in accordance with the terms of this Agreement. A Director need not be a Shareholder to serve in such capacity.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Subject to such rights as may be provided in any Share Designation with respect to the right of Shareholders of any class or series of Shares to nominate and elect a specified number of Directors in certain circumstances, individuals nominated for election as Directors in accordance with <u>Section 5.9</u> or <u>Section 11.14</u>, if applicable, shall be elected to serve on the Board of Directors by a plurality of the voting power of the Outstanding Voting Shares present in person or represented by proxy and entitled to vote on the election of Directors at any annual or special meeting of the Shareholders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Except as may be permitted by applicable Law or any applicable rule, regulation, guideline or requirement of any National Securities Exchange on which any of the Company's Shares are listed for trading (including, for the avoidance of doubt, any cure periods provided for therein), the Board of Directors (and each committee thereof) shall at all times that the Company has Shares listed for trading on a National Securities Exchange contain a sufficient number of independent Directors such that the Board of Directors complies with the requirements of the National Securities Exchange on which the Company's Shares are then listed as well as the requirements of the Exchange Act and any other applicable Law relating to "independent directors," in each case, unless an exception or exemption thereto applies to the Company (in which case the Board of Directors shall at all times contain at least that number of "independent directors" that is required for companies for whom such exception or exemption applies).

Section 5.3 <u>[Reserved</u>]

Section 5.4 <u>Resignations and Removals of Directors</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Any Director may resign from the Board of Directors (or any committee thereof) at any time, by delivering notice thereof to the Chairman of the Board, if there be one, or to the Chief Executive Officer or the Secretary of the Company and, in the case of a Board committee, to the chairman of such committee, if there be one. Such resignation shall take effect at the time therein specified or, if no time is specified, immediately. Unless otherwise specified in such notice of resignation, the acceptance of such resignation by the Board of Directors, the Company or otherwise shall not be required to make such resignation effective. Upon the effectiveness of any Director's resignation from the Board of Directors, such Director shall automatically cease to be a member of any and all Board committees.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Subject to any rights provided in any Share Designation with respect to the removal of Directors elected by any holders of any class or series of Shares, any Director may be removed from office at any time, with or without cause, with Shareholder Approval.

Section 5.5 <u>Vacancies</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Any vacancy on the Board of Directors that results from an increase in the number of Directors may be filled by a majority of the Directors then in office, even if less than a quorum, or by a sole remaining Director.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Subject to such rights as may be provided in any Share Designation with respect to the rights of Shareholders of any class or series of Shares to nominate and elect a specified number of Directors in certain circumstances, any vacancies resulting from the death, resignation or removal of a Director shall be filled by a majority of the Directors then in office, even if less than a quorum, or by a sole remaining Director.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Any Director elected to fill a vacancy shall hold office until the next annual meeting of Shareholders, and until such Director's successor is duly elected and qualified, or until such Director's earlier death, resignation or removal.

Section 5.6 <u>Meetings</u>. The Board of Directors and any committee thereof may hold meetings, both regular and special, either within or without the State of Delaware, and may adjourn and otherwise regulate their meetings and procedures as they shall determine. The act of a majority of the Directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, with each Director entitled to one (1) vote on all matters; provided, that in the event of a tie vote, the Chairman of the Board shall be entitled to cast the deciding vote. Regular meetings of the Board of Directors or any committee thereof may be held at such time and at such place as may from time to time be determined by the Board of Directors or such committee, respectively; provided however, that the Board of Directors shall at least meet once per calendar quarter or as more frequently as required by any applicable law or regulation of any National Securities Exchange. Special meetings of the Board of Directors may be called by the Chairman of the Board, if there be one, or by a majority of the Directors. Special meetings of any committee of the Board of Directors may be called by the chairman of such committee, if there be one, by a Director that is also the Chief Executive Officer of the Company, if applicable, or a majority of the Directors serving on such committee. Notice of any regular or special meeting stating the place, date and hour of the meeting and the general nature of the business to be considered at such meeting shall be given to each Director (or, in the case of a committee, to each member of such committee) not less than twenty-four (24) hours before the date of the meeting, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate under the circumstances; provided, that such notice requirements shall be waived by any Director who actually attends such meeting.

Section 5.7 <u>Organization</u>. At each meeting of the Board of Directors or any committee thereof, the Chairman of the Board or the chairman of such committee, as the case may be, or, in

------

his or her absence or if there be none, a Director chosen by a majority of the Directors present, shall act as chairman of such meeting. Except as provided below, the Secretary of the Company shall act as secretary at each meeting of the Board of Directors and of each committee thereof unless otherwise determined by the Chairman of the Board or the chairman of such committee, as the case may be. In case the Secretary of the Company shall be absent from any meeting of the Board of Directors or of any committee thereof, an Assistant Secretary shall perform the duties of secretary at such meeting; and in the absence from any such meeting of the Secretary of the Company and all the Assistant Secretaries of the Company, the chairman of the meeting may appoint any Person to act as secretary of the meeting. Notwithstanding the foregoing, the members of each committee of the Board of Directors may appoint any Person to act as secretary of any meeting of such committee and the Secretary or any Assistant Secretary of the Company may, but need not if such committee so elects, serve in such capacity.

Section 5.8 <u>Quorum</u>. Except as otherwise required by applicable Law or any rule, regulation, guideline or requirement of any National Securities Exchange on which Shares are listed for trading, at all meetings of the Board of Directors or any committee thereof, a majority of the Directors in office or a majority of the Directors constituting such committee, as the case may be, shall constitute a quorum for the transaction of business. If a quorum shall not be present at any meeting of the Board of Directors or any committee thereof, the Directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting of the time and place of the adjourned meeting, until a quorum shall be present. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of Directors, if any action taken is approved by a majority of the required quorum for that meeting.

Section 5.9 <u>Nomination of Directors</u>. Except as may be otherwise provided in any Share Designation with respect to the right of Shareholders of any class or series of Shares to nominate and elect a specified number of Directors in certain circumstances, only persons who are nominated for election to the Board of Directors (i) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (ii) by Shareholders meeting the requirements, and in accordance with the procedures, set forth in <u>Section 11.14</u>, shall be eligible for election as Directors of the Company.

Section 5.10 <u>Actions of the Board by Consent</u>. Any action required or permitted to be taken at any meeting by the Board of Directors or any committee thereof, as the case may be, may be taken without a meeting if a majority of the Directors then in office, or a majority of the members then serving on such committee, as the case may be, execute and deliver one or more consents thereto, and such consent is recorded with the minutes of proceedings of the Board of Directors or such committee. For the avoidance of doubt, any such consent may be executed by a Director by electronic signature, which consent may be delivered to the Company by electronic transmission.

Section 5.11 <u>Remote Meetings</u>. Members of the Board of Directors, or any committee thereof, may participate in a meeting of the Board of Directors or such committee by means of telephone, video, electronic or similar communication by way of which all Persons participating in such meeting can communicate with each other simultaneously, and participation in a meeting pursuant to this <u>Section 5.11</u> shall constitute presence in person at such meeting.

------

Section 5.12 <u>Committees</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Board of Directors may, by resolution from time to time, designate one (1) or more committees of the Board, with each committee to consist of one (1) or more Directors of the Company. Members of each Board committee shall be selected by the Board of Directors from time to time. Notwithstanding the foregoing, each member of a committee must be a Director meeting the requirements for membership on such committee, if any, imposed by applicable Law and any rule, regulation, guideline or requirement of any National Securities Exchange on which Shares are listed for trading.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Board of Directors may designate one (1) or more Directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of any such committee. Subject to applicable Law and any rule, regulation, guideline or requirement of any National Securities Exchange on which Shares are listed for trading, in the absence or disqualification of a member of a committee, and in the absence of a designation by the Board of Directors, of an alternate member to replace the absent or disqualified member, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another qualified member of the Board of Directors to act at the meeting in the place of any absent or disqualified member.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) [Reserved]

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Any committee, to the extent permitted by applicable Law and provided in the resolution establishing such committee, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Company. Subject to any requirements or procedures set forth in the resolution of the Board of Directors establishing such committee, matters arising at any meeting of a committee shall be determined by a majority of the votes of the committee members present and voting; provided, that in the event of a tie vote, the chairman of such committee shall be entitled to cast the deciding vote. Each committee may meet and adjourn as it determines, and shall keep regular minutes of its meetings and proceedings and report the same to the Board of Directors when required. Notwithstanding anything to the contrary contained in this <u>Article V</u>, the resolution of the Board of Directors establishing any committee of the Board of Directors or the charter of any such committee may establish requirements or procedures relating to the governance or operation of such committee that are different from, or in addition to, those set forth in this Agreement and, to the extent that there is any inconsistency between this Agreement and any such resolution or charter, the terms of such resolution or charter shall be controlling.

Section 5.13 <u>Attorneys; Authorized Signatories</u>. The Board of Directors may, from time to time and at any time, by power of attorney or otherwise, appoint any Person or body of Persons, whether nominated directly or indirectly by the Board of Directors, to be the attorney or attorneys (each, an "***Attorney***") or authorized signatory or authorized signatories (each, an "***Authorized Signatory***") of the Company for such purposes and with such powers, authorities and discretion

------

(not exceeding those vested in or exercisable by the Board of Directors under this Agreement) and for such period and subject to such conditions as the Board of Directors may determine, and any such power of attorney or other appointment may contain such provisions for the protection and convenience of Persons dealing with any such Attorney or Authorized Signatory as the Directors may determine, and may also authorize any such Attorney or Authorized Signatory to delegate all or any of the powers, authorities and discretion vested in such Person.

Section 5.14 <u>Compensation</u>. The Directors may be reimbursed or advanced their expenses incurred in connection with or relating to their services on the Board of Directors or any committee thereof, and may be paid a fixed sum for attendance at each meeting of the Board of Directors or any committee thereof or a stated annual salary or such other compensation for service as a Director, payable in cash or securities, as may be determined by the Board of Directors (or a duly authorized committee thereof) at any time and from time to time by resolution. No such payment shall preclude any Director from serving the Company in any other capacity and receiving compensation therefor. Chairpersons or members of special or standing committees may be allowed like compensation for such services.

Section 5.15 <u>Elimination of Fiduciary Duties; Standard of Conduct</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Notwithstanding any duties, including any fiduciary duties, otherwise existing at Law or in equity, no Indemnitee shall have any duties, including any fiduciary duties, to the Company, any Shareholder, any other holder of a Share or any other Person bound by this Agreement, arising out of, relating to, or in connection with the Company, the conduct of the Company's business and affairs, or any action or omission taken or omitted to be taken, or consent or approval given or withheld, in each case, in such Person's capacity as an Indemnitee, whether pursuant to this Agreement or otherwise, other than those duties (if any) expressly set forth in this Agreement. Each Shareholder shall be deemed to have notice of and to have consented to the provisions of this <u>Section 5.15(a)</u> and to the elimination of duties set forth herein, and renounces any and all rights such Shareholder or other holder of a Share may have to challenge any action (or inaction) by any Indemnitee on the basis of any duty eliminated pursuant to this <u>Section 5.15(a)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Notwithstanding any other provision of this Agreement, any applicable provision of Law or in equity or any duties, including any fiduciary duties, that may exist at Law or in equity, whenever the Board of Directors or any Indemnitee takes any action (or omits to take any action), or is permitted or required to make any decision or determination with respect to the Company or its business and affairs, whether pursuant to the terms of this Agreement or otherwise, then, to the fullest extent permitted by Law, the Board of Directors and each Indemnitee shall be entitled to take such action (or omit to take such action), or to make such decision or determination, in its sole and absolute discretion, and shall be entitled to consider only such interests and factors as it desires, including its own interests, may take actions that may adversely affect the Company, and shall have no duty or obligation (fiduciary or otherwise) to give any consideration to any interest of or factors affecting the Company, any of the Shareholders, any of their respective Affiliates or any other Person, and shall not be subject to any other or different standards that may otherwise apply under applicable Law or in equity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Board of Directors shall have the right to exercise any of the powers granted to it by this Agreement and perform any of the duties imposed upon it hereunder either

------

directly or by or through the duly authorized Officers, consultants, advisors and agents of the Company, and the Board of Directors shall not be responsible for the misconduct or negligence on the part of any such Officer, consultant, advisor, or agent.

Section 5.16 <u>Exculpation and Indemnification</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) To the fullest extent permitted by law, no Indemnitee, shall be liable to the Company, any Shareholder, any other holder of a Share or any other Person (including any Person who holds any Derivative Securities) bound by this Agreement for monetary damages for breach of duties (including fiduciary duties, which, for the avoidance of doubt, shall not apply, as provided in <u>Section 5.15</u>), except if and to the extent that there has been a final, non-appealable determination, in a proceeding brought in accordance with <u>Section 12.10</u>, that, in connection with the matter in question, such Indemnitee engaged in Fraud.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) To the fullest extent permitted by law, each Indemnitee shall be indemnified and held harmless by the Company from and against any and all losses, claims, damages, liabilities, expenses (including legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts incurred in connection with, or arising out of, any and all threatened, pending or completed claims, demands, actions, suits or proceedings, whether civil, criminal, administrative or investigative (including, without limitation, an action by or in the right of the Company), and whether formal or informal and including appeals, in which such Indemnitee is, was or may be involved, or is threatened to be involved, as a party, a witness or otherwise, by reason of such Person's status as an Indemnitee, whether arising from any act or omission, any consent or approval given or withheld, or otherwise relating to the Company or its business and affairs; provided, however, that no Indemnitee shall be indemnified or held harmless if and to the extent that there has been a final, non-appealable determination, in a proceeding brought in accordance with <u>Section 12.10</u>, that, in respect of the matter for which the Indemnitee is seeking indemnification pursuant to this <u>Section 5.16</u>, the Indemnitee engaged in Fraud. Notwithstanding the foregoing, except as otherwise provided in <u>Section 5.16(d)</u>, the Company shall not be required to indemnify an Indemnitee in connection with any claim, demand, action, suit or proceeding commenced (i) by such Person, unless the commencement of such claim, demand, action, suit or proceeding by such Person was authorized by the Board of Directors or (ii) by the Company against such Person upon the prior approval of the Board of Directors, in each case, except if and to the extent that, in a proceeding brought in accordance with <u>Section 12.10</u>, there is a final, non-appealable determination that such Indemnitee is successful on the merits.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Expenses (including reasonable legal fees and expenses) incurred by an Indemnitee in connection with any claim, demand, action, suit or proceeding that may be subject to indemnification pursuant to <u>Section 5.16(b)</u> shall, from time to time and to the fullest extent permitted by law, be advanced by the Company within thirty (30) days after a written request therefor, prior to a final and non-appealable determination that the Indemnitee is not entitled to be indemnified, upon receipt by the Company of an undertaking by or on behalf of the Indemnitee to repay such amount if it ultimately shall be determined that the Indemnitee is not entitled to be indemnified pursuant to this <u>Section 5.16</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) If a claim for indemnification or advancement of expenses under this <u>Section 5.16</u> is not paid in full within thirty (30) days after a written claim therefor by an

------

Indemnitee has been received by the Company, such Indemnitee may file a claim, in a proceeding brought in accordance with <u>Section 12.10</u>, to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expenses of prosecuting such claim, including reasonable attorneys' fees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The indemnification and advancement of expenses provided by or granted pursuant to this <u>Section 5.16</u> shall not be deemed exclusive of, nor be deemed in limitation of, any other rights to which any Indemnitee may be entitled under this Agreement, or any other agreement, vote of Shareholders or disinterested Directors or otherwise, and such indemnification and advancement of expenses shall continue as to an Indemnitee who has ceased to serve in such capacity. For the avoidance of doubt, and without limiting the generality of the foregoing, to the fullest extent now or hereafter permitted by applicable Law, the Company may enter into one or more agreements with any Person that provide for indemnification greater than or different than that provided pursuant to this <u>Section 5.16</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The Company may, but shall not be obligated to, purchase and maintain insurance on behalf of any Indemnitee or any other Person against any liability asserted against such Person and incurred by such Person in any capacity in connection with the Company or its business and affairs, or arising out of an Indemnitee's status as such, whether or not the Company would have the power or the obligation to indemnify such Person against such liability under the provisions of this <u>Section 5.16</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) This <u>Section 5.16</u> shall not limit the right of the Company, to the fullest extent and in the manner permitted by applicable Law, to indemnify and to advance expenses to, and purchase and maintain insurance on behalf of, Persons other than Indemnitees (including, for the avoidance of doubt, any employee or agent of the Company or any director, manager, officer, partner, employee, consultant or agent of any Group Member).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) Each Indemnitee shall, in the performance of his or her duties, or in taking any action (or omitting to take any action) or in connection with any consent or approval given or withheld, or otherwise relating to the Company or its business and affairs, be fully protected in relying in good faith upon the records of the Company and upon such information, opinions, reports or statements presented to the Company by any of the Officers or employees of the Company, or committees of the Board of Directors, or by any other Person (including legal counsel, accountants, appraisers, management consultants, investment bankers and other consultants and advisors) as to matters that the Indemnitee reasonably believes are within such Person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Company. Any action taken or omitted to be taken in reliance upon the opinion or advice (including an opinion of counsel) of such Persons shall be conclusively presumed to have been taken or omitted in good faith. Each Indemnitee may rely, and shall be fully protected in acting or refraining from acting, upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture or other paper or document presented to the Board of Directors or such other Indemnitee and believed by such Director or other Indemnitee to be genuine and to have been signed or presented by the appropriate party or parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) An Indemnitee shall not be denied indemnification in whole or in part under this <u>Section 5.16</u> because the Indemnitee had an interest in the transaction with respect to which the indemnification applies if the transaction was not otherwise prohibited by the terms of this Agreement.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) The provisions of this <u>Section 5.16</u> are for the benefit of the Indemnitees and their heirs, successors, assigns, executors and administrators and shall not be deemed to create any rights for the benefit of any other Persons.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) Any liabilities which an Indemnitee incurs as a result of acting on behalf of the Company (whether as a fiduciary or otherwise) in connection with the operation, administration or maintenance of an employee benefit plan, any related trust or funding mechanism (whether such liabilities are in the form of excise taxes assessed by the IRS, penalties assessed by the United States Department of Labor, restitutions to such plan, trust or other funding mechanism or to a participant or beneficiary of such plan, trust or other funding mechanism, or otherwise) shall be treated as liabilities indemnifiable under this <u>Section 5.16</u>, to the maximum extent permitted by Law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) Any indemnification pursuant to this <u>Section 5.16</u> shall be made only out of the assets of the Company. In no event shall any of the Shareholders or any other Indemnitee be subject to personal liability by reason of any claim for indemnification by any Person, whether pursuant to the indemnification provisions set forth in this Agreement or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) The provisions of this <u>Section 5.16</u> shall be deemed to be a contract between the Company and each Indemnitee for so long as this <u>Section 5.16</u> and the relevant provisions of applicable Law remain in effect, and, to the fullest extent permitted by law, no amendment, modification or repeal of this <u>Section 5.16</u> or any other provision hereof shall in any manner terminate, reduce or impair the right of any past, present or future Indemnitee to receive indemnification and advancement of expenses from the Company, nor the obligations of the Company to indemnify, or advance the expenses of, any such Indemnitee under and in accordance with the provisions of this <u>Section 5.16</u> as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted, and provided such Person became an Indemnitee hereunder prior to such amendment, modification or repeal. In the event that the Company or any of its successors or assigns (i) consolidates with or merges into any other Person and is not the continuing or surviving company or entity of such consolidation or merger, (ii) transfers or conveys all or substantially all of its properties and assets to any Person or (iii) is dissolved, then, in each such case, proper provision shall be made so that the successors and assigns of the Company shall assume all of the obligations of the Company set forth in this <u>Section 5.16</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) If this <u>Section 5.16</u> or any portion of this <u>Section 5.16</u> shall be invalidated on any ground by a final, non-appealable determination, in a proceeding brought in accordance with <u>Section 12.10</u>, the Company shall nevertheless indemnify each Indemnitee, to the fullest extent permitted by any applicable portion of this <u>Section 5.16</u> that shall not have been invalidated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) The provisions of this Agreement shall supersede, to the fullest extent permitted by law, the duties (fiduciary or otherwise) and liabilities of an Indemnitee to the Company and/or any Shareholder otherwise existing at law or in equity. Further, the provisions

------

of this <u>Section 5.16</u>, any policy, practice or procedure established pursuant to <u>Section 5.17</u> and any other exculpation or indemnification provisions of this Agreement do not restore or create, whether in contract or otherwise, any such duties or liabilities of an Indemnitee.

Section 5.17 <u>Resolution of Conflicts of Interest</u>. The Board of Directors shall establish a policy, practice or procedure to review actual or potential conflicts of interests in connection with any transaction, activity, arrangement, circumstance or other matter between one or more Shareholders, Officers or Directors, or any of their respective Affiliates, on the one hand, and the Company or any Group Member, on the other hand (each, a "***Conflict Matter***"). For the avoidance of doubt, unless otherwise required by applicable Law or to comply with any applicable rule, regulation, guideline or requirement of any National Securities Exchange on which any of the Company's Shares are listed for trading, matters regarding executive compensation shall not be Conflict Matters.

Section 5.18 <u>Loans and Contributions Between Group Members</u>. Notwithstanding any duty, including any fiduciary duty, that may exist at Law or in equity, any Group Member may lend or contribute funds to any other Group Member, and any Group Member may borrow funds from any other Group Member, in each case, on terms and conditions approved by the Board of Directors. The foregoing authority shall be exercised by the Board of Directors and shall not create any right or benefit in favor of any Group Member or any other Person.

Section 5.19 <u>Officers</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Board of Directors or any duly authorized committee thereof shall have the power and authority to appoint from time to time any Person, whether or not a Director, to hold such office in the Company as the Board of Directors or such committee deems necessary for the administration of the Company, including a Chief Executive Officer, Chief Financial Officer, and any number of Chiefs, Executive Vice Presidents, Vice Presidents, Secretaries or Assistant Secretaries as the Board of Directors or such committee shall determine. The Board of Directors, or any such duly authorized committee, may from time-to-time delegate to the Chief Executive Officer the power and authority to appoint any Officers, and to prescribe their respective powers, authorities and duties. Such Persons so appointed by the Board of Directors or any duly authorized committee thereof (or by the Chief Executive Officer, as applicable) shall be referred to as "***Officers***." Any number of offices may be held by the same Person, unless otherwise prohibited by the Delaware Act or this Agreement. The Officers need not be Shareholders nor Directors of the Company. For the avoidance of doubt, the Board of Directors shall have the power and authority to delegate any power and authority as it determines to be necessary or appropriate with respect to the conduct of the business of the Company on a day-to-day basis to the Chief Executive Officer or other Officers of the Company, including the delegation of any such powers set forth in <u>Section 5.1(b)</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Each Officer shall have such title, power, authority and duties as determined from time to time by the Board of Directors (or any duly authorized committee thereof) or (other than with respect to Chief Executive Officer) by the Chief Executive Officer. Unless the Board (or any duly authorized committee thereof) or (other than with respect to Chief Executive Officer) the Chief Executive Officer decides otherwise; provided that, and notwithstanding <u>Section 5.1(b)</u>, if the title assigned to an Officer is one commonly used for officers of a business corporation formed

------

under the General Corporation Law of the State of Delaware, the assignment of such title to an Officer shall constitute the delegation to such person appointed to such office of the rights, power and duties that are normally associated with that office. The Chairman of the Board, if there be one, shall preside at all meetings of Shareholders and meetings of the Board of Directors; provided however, if the Chief Executive Officer of the Company is a Director, the Chairman of the Board may delegate such right to the Chief Executive Officer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Officers shall hold their offices for such terms as shall be determined from time to time by the Board of Directors (or any duly authorized committee thereof) or (other than with respect to Chief Executive Officer) by the Chief Executive Officer. Each Officer shall hold office until such Officer's successor is elected and qualified, or until such Officer's earlier death, resignation or removal. Any Officer may resign at any time upon delivery of notice to the Company. Any Officer, agent or employee of the Company may be removed at any time with or without cause by the Board of Directors (or duly authorized committee thereof) or (other than with respect to Chief Executive Officer) by the Chief Executive Officer. The appointment of any Director to the office of Chairman of the Board shall ipso facto terminate if such Chairman of the Board ceases for any reason to be a Director. Any vacancy occurring in any office of the Company shall be filled by the Board of Directors (or duly authorized committee thereof) or (other than with respect to Chief Executive Officer) by the Chief Executive Officer. The compensation (whether by way of salary, commission, participation in profits, any combination of the foregoing or otherwise) of all Officers shall be fixed (i) by the Board of Directors (or a duly authorized committee thereof) or (ii), other than with respect to the Chief Executive Officer or any other Officer(s) of the Company to whom such authority has been delegated by the Board of Directors (or a duly authorized committee thereof), the Chief Executive Officer. As of the Effective Time, the Officers of the Company shall be the same as the persons currently serving in such capacity as an officer of the Company immediately prior to the Effective Time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Powers of attorney, proxies, waivers of notice of meeting, consents and other instruments relating to securities owned by the Company may be executed in the name of and on behalf of the Company by any Officer authorized to do so by the Board of Directors, and any such Officer may, in the name of and on behalf of the Company, take all such action as any such Officer may deem advisable to vote in person or by proxy at any meeting of securityholders of any corporation or other entity in which the Company may own securities and at any such meeting shall possess and may exercise any and all rights and power incident to the ownership of such securities and which, as the owner thereof, the Company might have exercised and possessed if present. Each of the foregoing instruments may be executed by electronic signature and may be delivered by electronic transmission. The Board of Directors may, by resolution, from time to time, confer like powers upon any other Person or Persons.

Section 5.20 <u>Business Opportunities</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company and each Shareholder recognizes and anticipates that, notwithstanding any duties, including any fiduciary duties, otherwise existing at Law or in equity, Shareholders and Directors who are not Officers or employees of the Company or any other Group Member (***"Non-Employee Directors"***) and the Affiliates of such Shareholders and Non-Employee Directors may now engage and may continue to engage in the same or similar activities or related lines of business as those in which the Company or any other Group Member, directly or indirectly,

------

may engage or other business activities that overlap with or compete with those in which the Company or any other Group Member, directly or indirectly, may engage, except to the extent otherwise set forth in a binding agreement entered into between a Shareholder or Non-Employee Director, on one hand, and the Company or any other Group Member, on the other hand.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Notwithstanding any duties, including any fiduciary duties, otherwise existing at Law or in equity, none of the Shareholders or Non-Employee Directors, nor any of their respective Affiliates (collectively, the "***Identified Persons***" and, individually, an "***Identified Person***"), shall have any obligation or duty to refrain from, directly or indirectly, (i) engaging in the same or similar business activities or lines of business in which the Company or any of its Affiliates now engages or proposes to engage or (ii) otherwise competing with the Company or any of its Affiliates, except to the extent otherwise set forth in a binding agreement entered into between an Identified Person, on one hand, and the Company or any other Group Member, on the other hand. Notwithstanding any duties, including any fiduciary duties, otherwise existing at Law or in equity, the Company and each Shareholder hereby renounce any interest or expectancy in, or right to be offered an opportunity to participate in, any business opportunity which may be available to an Identified Person and the Company or any of its Affiliates, except as provided in <u>Section 5.20(c)</u>. Subject to <u>Section 5.20(c)</u>, in the event that any Identified Person acquires knowledge of a potential transaction or other business opportunity which may be available to it, her or him and the Company or any of its Affiliates, such Identified Person shall, notwithstanding any duties, including any fiduciary duties, otherwise existing at Law or in equity, have no duty to communicate or offer such transaction or other business opportunity to the Company or any of its Affiliates. ****

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Notwithstanding the foregoing provisions of this <u>Section 5.20</u> or any other provision of this Agreement, the Company and the Shareholders do not renounce any interest in any business opportunity offered to any Non-Employee Director if such opportunity is expressly offered to such Person solely in his or her capacity as a Director, and the provisions of <u>Section 5.20(b)</u> shall not apply to any such business opportunity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Except as set forth in <u>Section 5.20(c)</u> and except to the extent otherwise set forth in a binding agreement entered into between a Shareholder or Non-Employee Director, on one hand, and the Company or any other Group Member, on the other hand, and notwithstanding any duties, including any fiduciary duties, otherwise existing at Law or in equity, (i) each Identified Person shall have the right to engage in businesses of every type and description and other activities for profit and to engage in and possess an interest in other business ventures of any and every type or description, whether in businesses engaged in or anticipated to be engaged in by the Company or any Group Member, independently or with others, including business interests and activities in direct competition with the business and activities of the Company or any Group Member, and none of the same shall constitute a breach of this Agreement or any duty otherwise existing at Law, in equity or otherwise to the Company, any Group Member or any Shareholder; (ii) the Identified Persons shall have no obligation under this Agreement or as a result of any duty otherwise existing at Law, in equity or otherwise to present business opportunities to the Company or any Group Member; and (iii) neither the doctrine of "corporate opportunity" nor any analogous doctrine shall apply to any Identified Person.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Each Shareholder shall be deemed to have notice of and to have consented to the provisions of this <u>Section 5.20</u>.

Section 5.21 <u>Reliance by Third Parties</u>. Notwithstanding anything to the contrary in this Agreement, any Person dealing with the Company shall be entitled to assume that the Board of Directors (or any duly authorized committee thereof, acting within the scope of its authority granted pursuant to <u>Section 5.12</u>) and any Officer authorized in accordance with this Agreement to act on behalf of and in the name of the Company, has full power and authority to encumber, sell or otherwise use in any manner any and all assets of the Company and to enter into any authorized contracts on behalf of the Company, and such Person shall be entitled to deal with the Board of Directors (or such committee) or any Officer as if the Board of Directors (or such committee) or the Officer were the Company's sole party in interest, both legally and beneficially. Each Shareholder hereby irrevocably waives, to the fullest extent permitted by Law, any and all defenses or other remedies that may be available against any Person to contest, negate or disaffirm any action of the Board of Directors (or any duly authorized committee thereof, acting within the scope of its authority granted pursuant to <u>Section 5.12</u>) or any Officer in connection with any dealing. In no event shall any Person dealing with the Board of Directors (or any duly authorized committee thereof, acting within the scope of its authority granted pursuant to <u>Section 5.12</u>) or any Officer be obligated to ascertain that the terms of this Agreement have been complied with or to inquire into the necessity or expediency of any act or action of the Board of Directors (or such committee) or any Officer. Each and every certificate, document or other instrument executed on behalf of the Company by the Board of Directors (or any duly authorized committee thereof, acting within the scope of its authority granted pursuant to <u>Section 5.12</u>) or any Officer, each of which may be so executed by electronic signature and delivered by electronic transmission, shall be conclusive evidence in favor of any and every Person relying thereon or claiming thereunder that (a) at the time of the execution and delivery of such certificate, document or instrument, this Agreement was in full force and effect, (b) the Person executing and delivering such certificate, document or instrument was duly authorized and empowered to do so for and on behalf of the Company and (c) such certificate, document or instrument was duly executed and delivered in accordance with the terms and provisions of this Agreement and is binding upon the Company.

**ARTICLE VI** 

**BOOKS, RECORDS, ACCOUNTING AND REPORTS** 

Section 6.1 <u>Records and Accounting</u>. The Board of Directors shall cause to be kept appropriate books and records with respect to the Company's business and affairs. Any books and records maintained by or on behalf of the Company in the regular course of its business, including the record of the Shareholders, books of account and records of Company proceedings, may be kept on, or be in the form of, computer disks, hard drives, punch cards, magnetic tape, photographs, micrographics or any other information storage device.

------

Section 6.2 <u>Fiscal Year</u>. The fiscal year for tax and financial reporting purposes of the Company shall be a calendar year ending December 31, unless otherwise required by the Code or determined by the Board of Directors, as permitted by Law.

Section 6.3 <u>Reports; Confidential Information</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Shareholders' rights to information shall be limited to such information as shall be included in reports and other documents filed by the Company with the Commission from time to time, and such tax information (if any) required to be provided by the Company to its Shareholders, and no Shareholder shall have any right to obtain or access any other information, including any books and records, of the Company or the other Group Members. Each Shareholder is deemed to have notice of and to have consented to the restrictions set forth in this <u>Section 6.3</u> and pursuant to Section 18-305(g) of the Delaware Act, the rights to information granted in this <u>Section 6.3</u> shall replace, to the fullest extent permitted by Law, any rights to information provided for in Section 18-305(a) of the Delaware Act or otherwise provided under applicable Law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company may keep confidential from the Shareholders, for such period of time as the Company determines, (i) any information that the Company reasonably believes to be in the nature of trade secrets or (ii) other information the disclosure of which the Company believes (A) is not in the best interests of the Company Group, (B) could damage the Company Group or its business or (C) that any Group Member is required by Law or by agreement with any third party to keep confidential. The Company may, in its sole discretion, require any Shareholder to execute a confidentiality agreement prior to sharing any confidential information of any Group Member with such Shareholder.

**ARTICLE VII** 

**TAX MATTERS** 

Section 7.1 <u>Tax Returns and Information</u>. The Company shall use commercially reasonable efforts to timely file all returns of the Company that are required for U.S. federal, state and local income tax purposes. The Officers shall use commercially reasonable efforts to furnish to all Shareholders necessary tax information as promptly as possible after the end of the fiscal year of the Company; *provided*, *however*, that delivery of such tax information may be subject to delay as a result of the late receipt of any necessary tax information from an entity in which the Company directly or indirectly holds an interest. Each Shareholder hereby agrees that, to the fullest extent permitted by applicable Law, none of the Company, the Directors, the Officers, or the Indemnitees shall have any liability to any Shareholder for any errors, omissions, inaccuracies, mis-statements, delays, failures, or any other faults with respect to any tax information with respect to the Company delivered, or failed to be delivered, to any Shareholder (including, for the avoidance of doubt, any IRS Schedule K-1). Each Shareholder agrees to file all U.S. federal, state and local tax returns required to be filed by it in a manner consistent with the information provided to it by the Company. The classification, realization and recognition of income, gain, losses and deductions and other items shall be on the accrual method of accounting for U.S. federal, state and local income tax purposes.

------

Section 7.2 <u>Tax Elections</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company shall make the election under Section 754 of the Code in accordance with applicable Treasury Regulations thereunder, subject to the reservation of the right to seek to revoke any such election upon the Board of Director's determination that such revocation is in the best interests of the Shareholders. Notwithstanding any other provision herein contained, for the purposes of computing the adjustments under Section 743(b) of the Code, the Board of Directors shall be authorized (but not required) to adopt a convention whereby the price paid by a transferee of a Company Interest will be deemed to be the lowest quoted closing price of the Company Interests on any National Securities Exchange on which such Company Interests are listed or admitted to trading during the calendar month in which such transfer is deemed to occur pursuant to <u>Section 4.2(i)</u> without regard to the actual price paid by such transferee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Except as otherwise provided herein, the Board of Directors shall determine whether the Company should make any other elections permitted by the Code.

Section 7.3 <u>Withholding</u>. Notwithstanding any other provision of this Agreement, the Board of Directors is authorized to take any action that may be required, necessary or appropriate to cause the Company to comply with any withholding requirements established under the Code or any other U.S. federal, state, local or non-U.S. Law, including pursuant to Sections 1441, 1442, 1445, 1446 and 3406 of the Code. To the extent that the Company is required or elects to withhold and pay over to any taxing authority any amount resulting from the allocation or distribution to any Shareholder (including by reason of Section 1446 of the Code), the Board of Directors may treat the amount withheld as a distribution of cash pursuant to <u>Sections 4.3</u> or <u>8.3</u> in the amount of such withholding from or with respect to such Shareholder or the amounts paid over as an expense of the Company to be borne by Shareholders generally.

Section 7.4 <u>Partnership Representative</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) For each taxable year of the Company, the Board of Directors shall cause the Company to appoint a "partnership representative" of the Company within the meaning of Section 6223 of the Code (the "***Partnership Representative***"). For each taxable year, the Tax Representative shall designate a "designated individual" within the meaning of Treasury Regulations Section 301.6223-1(b)(3) (the "***Designated Individual***"). The Tax Representative and the Designated Individual shall have, in their sole discretion, any and all authority as the "partnership representative" and "designated individual," as the case may be, under the Code to act on behalf of the Company in any audit or tax-related examinations or administrative and judicial proceedings brought by taxing authorities, including, without limitation, (i) binding the Company and the Shareholders with respect to tax matters and (ii) determining whether to make any available election under Section 6226 of the Code. The Company and the Shareholders shall be bound by the actions taken by the Tax Representative or the Designated Individual in such capacity. ****

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Partnership Representative is authorized to take any actions specified under the Revised Audit Rules or any applicable state or local law, and the Company shall comply with any requirements necessary to effect such designation. The Partnership Representative's representation of the Company shall be at the Company's expense, and the Partnership Representative is authorized to expend Company funds for professional services and costs associated therewith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Partnership Representative shall employ experienced tax counsel to represent the Company in connection with any audit or investigation of the Company by the IRS or any other tax authority and in connection with all subsequent administrative and judicial proceedings arising out of such audit. Each Shareholder agrees to cooperate with the Partnership Representative and to do or refrain from doing any or all things reasonably required by the Partnership Representative to conduct such proceedings. Notwithstanding the foregoing, it shall be the responsibility of the Board of Directors and of each Shareholder, at their expense, to employ tax counsel to represent their respective separate interests.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Company shall reimburse the Tax Representative and the Designated Individual for expenses incurred in connection with such Person's discharge of its obligations as Tax Representative or Designated Individual, as appropriate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Each Shareholder agrees to (i) timely provide the Tax Representative or the Designated Individual with any information, statements or executed Internal Revenue Service forms reasonably requested by the Tax Representative or the Designated Individual and (ii) cooperate with the Tax Representative or the Designated Individual and to do or refrain from doing any or all things reasonably requested by the Tax Representative or Designated Individual (including paying any and all resulting taxes, additions to tax, penalties and interest in a timely fashion) in connection with any examination of the Partnership's affairs by any federal, state or local tax authorities, including resulting administrative and judicial proceedings.

Section 7.5 <u>Relief from Inadvertent Terminations as a Partnership</u>. In the event that the Board of Directors determines that the Company should seek relief pursuant to Section 7704(e) of the Code to preserve the status of the Company as a partnership for U.S. federal (and applicable state) income tax purposes, then the Company and each Shareholder shall agree to any adjustments required by the tax authorities, and the Company shall pay any such amounts as may be required by the applicable tax authorities, to preserve the status of the Company as a partnership for U.S. federal (and applicable state) income tax purposes.

------

**ARTICLE VIII** 

**DISSOLUTION AND LIQUIDATION** 

Section 8.1 <u>Dissolution</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company shall not be dissolved by the admission of substitute or additional Shareholders. The Company shall dissolve, and its affairs shall be wound up, only:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) upon the approval of the Board of Directors to dissolve the Company; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) at any time when there are no remaining Shareholders of the Company, unless the business of the Company is continued in accordance with the Delaware Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) To the fullest extent permitted by law, each Shareholder hereby waives any and all right to seek judicial dissolution of the Company pursuant to Section 18-802 of the Delaware Act or otherwise.

Section 8.2 <u>Liquidator</u>. Upon dissolution of the Company, the Board of Directors (or any duly authorized committee thereof) shall select one or more Persons (which may be the Board of Directors (or any committee thereof) or a Shareholder (or any Affiliate of a Shareholder)) to act as Liquidator. The Liquidator (if other than the Board of Directors or any committee thereof) shall be entitled to receive such compensation for its services as may be approved by Shareholder Approval. The Liquidator (if other than the Board of Directors or any committee thereof) shall be permitted to resign at any time, but only after providing the Company with twenty (20) Business Days' prior written notice thereof, and may be removed at any time, with or without cause, by the Board of Directors. Upon the dissolution, death, incapacity, removal or resignation of the Liquidator, a successor and substitute Liquidator (who shall have and succeed to all rights, powers and duties of the original Liquidator) shall thereafter be appointed by the Board of Directors (or any duly authorized committee thereof). The right to approve a successor or substitute Liquidator in the manner provided herein shall be deemed to refer also to any such successor or substitute Liquidator approved in the manner herein provided. Except as expressly provided in this <u>Article VIII</u>, the Liquidator approved in the manner provided herein shall have and may exercise, without further authorization or consent of any of the parties hereto, all of the powers conferred upon the Board of Directors under the terms of this Agreement (but subject to all of the applicable limitations, contractual and otherwise, upon the exercise of such powers) necessary or appropriate to carry out the duties and functions of the Liquidator hereunder for and during the period of time required to complete the winding up and liquidation of the Company as provided for herein.

Section 8.3 <u>Liquidation</u>. Following the dissolution of the Company the Liquidator shall proceed to dispose of the assets of the Company, discharge its liabilities and otherwise wind up its affairs in such manner and over such period as determined by the Liquidator, subject to Section 18-804 of the Delaware Act and the following:

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Subject to <u>Section 8.3(c)</u>, the assets may be disposed of by public or private sale or by distribution in kind to one or more Shareholders on such terms as the Liquidator and such Shareholder or Shareholders may agree. If any property is distributed in kind, the Shareholder receiving the property shall be deemed for purposes of <u>Section 8.3(c)</u> to have received cash equal to its fair market value as determined by the Board of Directors or the Liquidator, in its sole discretion, and contemporaneously therewith, appropriate cash distributions must be made to the other Shareholders. Notwithstanding anything to the contrary contained in this Agreement, the Shareholders understand and acknowledge that a Shareholder may be compelled to accept a distribution of any asset in kind from the Company despite the fact that the percentage of the asset distributed to such Shareholder exceeds the percentage of that asset which is equal to the percentage in which such Shareholder shares in distributions from the Company. The Liquidator may defer distribution of the Company's assets for a reasonable period of time if it determines that an immediate sale or distribution of all or some of the Company's assets would be impractical or would cause undue loss to the Shareholders. The Liquidator may distribute the Company's assets, in whole or in part, in kind if it determines that a sale would be impractical or would cause undue loss to the Shareholders; provided, that no Shareholder shall be compelled to accept any assets whereon there is any liability.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Liabilities of the Company include amounts owed to the Liquidator as compensation for serving in such capacity (subject to the terms of <u>Section 8.2</u>) and amounts owed to Shareholders other than in respect of their distribution rights under Article IV. With respect to any liability that is contingent, conditional or unmatured or is otherwise not yet due and payable, the Liquidator shall either settle such claim for such amount as it deems appropriate or establish a reserve of cash or other assets to provide for its payment. When paid, any unused portion of the reserve shall be applied to other liabilities or distributed as additional liquidation proceeds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Subject to the terms of any Share Designation, all property and all cash in excess of that required to discharge liabilities as provided in <u>Section 8.3(b)</u> and that are required to satisfy the Liquidation Preference provided for under Section 8 of the Series A Preferred Share Designation shall be distributed to the Shareholders in accordance with, and to the extent of, the positive balances in their respective Capital Accounts, as determined after taking into account all Capital Account adjustments (other than those made by reason of distributions pursuant to this <u>Section 8.3(c)</u>) for the taxable period of the Company during which the liquidation of the Company occurs (with such date of occurrence being determined pursuant to Treasury Regulations Section 1.704-1(b)(2)(ii)(g)), and such distribution shall be made by the end of such taxable period (or, if later, within 90 calendar days after said date of such occurrence).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Subject to the terms of any Share Designation, if the assets of the Company distributable among the holders of any one or more classes or series of Preferred Shares that (i) are entitled to a preference over the holders of the Common Shares upon the dissolution of the Company and (ii) rank equally in connection with any such distribution, are insufficient to pay in full the preferential amount to which such holders of Preferred Shares are entitled, then such assets, or the proceeds thereof, shall be distributed among the holders of such applicable classes or series of Preferred Shares ratably in accordance with the amounts that would otherwise have been payable upon such distribution if all sums payable were discharged in full.

------

Section 8.4 <u>Cancellation of Certificate of Formation</u>. Upon the completion of the distribution of the Company's cash and property as provided in <u>Section 8.3</u> in connection with the winding up of the Company, the Certificate of Formation and all qualifications of the Company as a foreign limited liability company in jurisdictions other than the State of Delaware shall be cancelled and such other actions as may be necessary to terminate the Company shall be taken.

Section 8.5 <u>No Right to Return of Contributions</u>. Neither any Director nor any Officer (nor any of their respective Affiliates) shall be personally liable for, or have any obligation to contribute or loan any monies or property to the Company to enable it to effectuate, the return of any Capital Contributions of the Shareholders, or any portion thereof, it being expressly understood that any such return shall be made solely from Company assets.

Section 8.6 <u>Waiver of Partition</u>. To the maximum extent permitted by Law, each Shareholder hereby waives any right to partition of the Company property.

Section 8.7 <u>Capital Account Restoration</u>. No Shareholder shall have any obligation to restore any negative balance in its Capital Account upon liquidation or dissolution of the Company.

**ARTICLE IX** 

**AMENDMENT OF AGREEMENT** 

Section 9.1 <u>General</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Any and all amendments to this Agreement, including any amendments in connection with any merger or division, by operation of law or otherwise, shall require the prior approval of, and may be proposed only by, the Board of Directors (except to the extent provided otherwise in any Share Designation); *provided*, *however*, that the Board of Directors shall have no duty or obligation whatsoever, at any time, to propose any amendment to this Agreement. If any Shareholder or other Person shall request the Board to propose any amendment to this Agreement, the Board of Directors may decline to do so, free of any duty or obligation whatsoever to the Company or any Shareholder or other Person and, in declining to propose any amendment, to the fullest extent permitted by applicable Law, shall not be required to act pursuant to any standard. 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If the Board of Directors desires to amend any provision of this Agreement, including any amendments in connection with any merger or division, by operation of law or otherwise, the Board shall (i) adopt a resolution setting forth the amendment proposed and declaring its advisability, and (ii) unless approval of or consent to such amendment by the Shareholders is not required pursuant to <u>Section 9.2</u>, submit such proposed amendment to the Shareholders for their approval or disapproval by either (x) calling a special meeting of the Shareholders entitled to vote in respect thereof for the consideration of such proposed amendment, (y) directing that the proposed amendment be considered at the next annual meeting of the Shareholders or (z) seeking the consent of the Shareholders to such proposed amendment. Any such special or annual meeting shall be called and held upon notice in accordance with Article XI of this Agreement, which notice shall set forth the text of such amendment in full and a summary

------

of the changes to be effected thereby. A proposed amendment, whether by merger, division, operation of law or otherwise, that requires approval or consent of the Shareholders shall be effective upon Shareholder Approval thereof, unless a different standard for obtaining the approval or consent of Shareholders (or any class or series of Shareholders) is required under <u>Section 9.3</u> or pursuant to any Share Designation.

Section 9.2 <u>Amendments to be Adopted Solely by the Board of Directors</u>. Notwithstanding <u>Section 9.1</u>, each Shareholder agrees that the Board of Directors, without the approval of any Shareholder or any other Person, may amend any provision of this Agreement, and execute, swear to, acknowledge, deliver, file and record any documents that may be required in connection therewith, to reflect:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) a change in the name of the Company, the registered agent of the Company or the registered office of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the admission, substitution, withdrawal or removal of Shareholders in accordance with this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) a change that the Board of Directors determines to be necessary or appropriate to qualify or continue the existence or qualification of the Company as a limited liability company under the laws of the jurisdiction in which the Company is formed or any jurisdiction in which the Company conducts business or owns or operates assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) a change that the Board of Directors determines to be necessary or appropriate to address changes in U.S. federal income tax regulations, legislation or interpretation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) a restriction on the transfer of Shares pursuant to <u>Section 3.6(c)</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) a change that the Board of Directors determines to be necessary or appropriate for the proper administration of the Company as a partnership for U.S. federal income tax purposes, to preserve or achieve uniformity of a class of Shares for U.S. federal income tax purposes or to facilitate the preparation and delivery to Shareholders of the tax information pursuant to <u>Section 7.1</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) a change that the Board of Directors determines to be necessary or appropriate following any change in the classification of the Company for U.S. federal income tax purposes under Treasury Regulation Section 301.7701-1, et seq. or Section 7704 of the Code;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) a change that the Board of Directors determines (i) does not materially and adversely affect the Shareholders (or the holders of any particular class or series of Shares), (ii) to be necessary to address changes in any applicable Laws, (iii) to be necessary or appropriate to facilitate the trading of the Shares or comply with any rule, regulation, guideline or requirement of any National Securities Exchange on which Shares are or will be listed for trading, (iv) to be necessary or appropriate in connection with action taken by the Board of Directors pursuant to <u>Section 3.9</u> or (v) is required to effect the intent expressed in this Agreement;

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) a change in the fiscal year or taxable year of the Company and any other changes that the Board of Directors determines to be necessary or appropriate as a result of a change in the fiscal year or taxable year of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) an amendment that the Board of Directors determines, based on the advice of counsel, to be necessary or appropriate to prevent the Company or its Directors, Officers, representatives or agents from having a material risk of, in any manner, being subjected to the provisions of the Investment Company Act of 1940, as amended, the Investment Advisers Act of 1940, as amended, or "plan asset" regulations adopted under the Employee Retirement Income Security Act of 1974, as amended, regardless of whether such are substantially similar to plan asset regulations currently applied or proposed by the United States Department of Labor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) an amendment that the Board of Directors determines to be necessary or appropriate in connection with the creation, authorization or issuance of any class or series of Shares, or Derivative Securities, pursuant to <u>Section 3.2</u> (including an amendment pursuant to a Share Designation);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) an amendment expressly permitted in this Agreement to be made by the Board of Directors, acting alone;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) an amendment effected, necessitated or contemplated by an Agreement and Plan of Merger or Consolidation adopted in accordance with <u>Section 10.2</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) a merger, division, conversion or conveyance pursuant to <u>Section 10.2(b)</u>, including any amendment permitted pursuant to <u>Section 10.3</u>; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) any other amendments substantially similar to the foregoing.

Section 9.3 <u>Additional Amendment Requirements</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Notwithstanding the provisions of <u>Sections 9.1</u> and <u>9.2</u>, no provision of this Agreement that provides Shareholders with the right to approve or consent to any action shall be amended, altered, changed, repealed or rescinded, whether by merger, operation of law or otherwise, in any respect that would have the effect of eliminating or reducing such approval or consent right unless such amendment is approved by the consent or the affirmative vote of the Shareholders whose aggregate Outstanding Voting Shares constitute not less than the consent or voting requirements necessary to approve such action.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Notwithstanding the provisions of <u>Sections 9.1</u> and <u>9.2</u>, no amendment to this Agreement, including any amendments in connection with any merger or division, by operation of law or otherwise, may impose personal liability or a Capital Contribution obligation on any Shareholder without such Shareholder's consent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In addition to any other vote required by this Agreement (including <u>Section 11.15</u>) or by applicable Law, if any amendment to this Agreement, including any amendments in connection with any merger or division, by operation of law or otherwise, would materially and adversely alter or change the rights, powers (including voting power) preferences, qualifications, limitations or restrictions of the Shares of any class or series in a manner that is disproportionate

------

to the effect of such amendment on other classes or series of Shares, then such amendment shall not take effect unless approved by the holders of a majority of the Outstanding Shares of such adversely affected class or series of Shares. For the avoidance of doubt, (i) the issuance by the Company of Shares having rights superior to those of any class or series of Outstanding Shares, (ii) the issuance of Shares having a dilutive effect on any class or series of Outstanding Shares, or (iii) the issuance of Shares having any particular rights, powers (including voting power) preferences, qualifications, limitations or restrictions set forth in a duly adopted Share Designation, shall not be deemed to adversely affect the rights, preferences, qualifications, limitations or restrictions of, and shall not require the approval of, any such class or series of Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) For the avoidance of doubt, no provision of this <u>Article IX</u> shall be amended, including any amendments in connection with any merger or division, by operation of law or otherwise, without approval of the Board of Directors and Shareholder Approval.

**ARTICLE X** 

**MERGER, CONSOLIDATION, CONVERSION OR DIVISION; SALE OF ASSETS** 

Section 10.1 <u>Authority</u>. The Company may merge or consolidate with one or more limited liability companies or "other business entities" as defined in Section 18-209 of the Delaware Act, convert into any such other business entity, whether such entity is formed under the laws of the State of Delaware or any other jurisdiction, or divide into two (2) or more Delaware limited liability companies (or to the extent permitted by applicable Law, any other business entities), pursuant to an agreement and plan of merger or consolidation (an "***Agreement and Plan of Merger or Consolidation***"), a plan of conversion (a "***Plan of Conversion***"), or a plan of division (a "***Plan of Division***"), respectively, in accordance with the Delaware Act and this <u>Article X</u>. ****

Section 10.2 <u>Approval of Merger, Consolidation, Conversion, Division or Sale of All or Substantially All of the Company's Assets</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Except as provided in <u>Section 10.2(b)</u>, the Agreement and Plan of Merger or Consolidation, Plan of Conversion or Plan of Division, and the merger, consolidation, conversion or division contemplated thereby, shall require approval of the Board of Directors and Shareholder Approval, subject to the terms of any Share Designation that shall require the additional approval of any class or series of Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Notwithstanding anything else contained in this <u>Article X</u> or in this Agreement, the Board of Directors is hereby authorized, upon approval by the Board of Directors and without Shareholder Approval (or approval of any other Person), to (i) convert the Company into a different limited liability entity (which may include a limited liability partnership, a corporation or any other limited liability entity), (ii) merge the Company into, or convey all of the Company's assets to, another limited liability entity (which may include a limited liability partnership, a corporation or any other limited liability entity), if (A) such entity, in the case of a merger or conveyance under clause (ii), shall be newly formed and shall have no material assets, liabilities or operations immediately prior to the effective time of such merger or conveyance, and (B) the primary purpose of such conversion, merger, or conveyance is to effect a mere change in the legal form of the Company into another limited liability entity (which may include a limited liability partnership, a corporation or any other limited liability entity) and/or a change in the

------

jurisdiction of formation of the Company or (iii) divide the Company into two (2) or more limited liability entities in accordance with the Delaware Act, in which all of the issued and outstanding equity interests in each resulting limited liability entity shall be issued to the Shareholders on a pro rata basis in accordance with their ownership of Outstanding Shares; provided, however, that, in each case of clauses (i), (ii) and (iii) that such conversion, merger, conveyance or division, as the case may be, shall not result in the loss of the limited liability of any Shareholder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In no event shall Shareholders be entitled to any appraisal rights, dissenters' rights or similar rights, whether in connection with any merger, consolidation, conversion, division, sale of all or substantially all of the assets of the Company or the Company's Subsidiaries, or in connection with any other transaction or event.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Company shall not sell, exchange or otherwise dispose of all or substantially all of its assets, in one transaction or a series of related transactions, to any Person (other than a wholly owned Subsidiary of the Company), without first obtaining Shareholder Approval; *provided*, *however*, that the foregoing will not limit the ability of the Board of Directors to authorize, without the approval of any Shareholders, the Company to mortgage, pledge, hypothecate or grant a security interest in all or substantially all of the assets of the Company in respect of any indebtedness or other obligations of the Company. For purposes of this <u>Section 10.2</u>, "substantially all" means assets having a net book value (after taking into account any liabilities to which such assets are subject) equal to or greater than eighty percent (80%) of the total Shareholders' equity of the Company, as set forth on the latest annual or quarterly consolidated balance sheet of the Company filed with the Commission.

Section 10.3 <u>Amendment of Agreement</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Pursuant to Section 18-209(f) of the Delaware Act, and notwithstanding <u>Article IX</u> hereof, an agreement of merger or consolidation approved in accordance with this <u>Article X</u>, including a merger or consolidation approved by the Board of Directors in accordance with <u>Section 10.2(b)</u>, may (a) effect any amendment to this Agreement or (b) effect the adoption of a new limited liability company agreement for a limited liability company if it is the business entity that is to survive the proposed merger or consolidation, in each case, only upon Shareholder Approval. Any such amendment or adoption made pursuant to this <u>Section 10.3(a)</u> shall be effective at the effective time or date of the merger or consolidation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Pursuant to Section 18-217(f) of the Delaware Act, and notwithstanding <u>Article IX</u> hereof, a plan of division approved in accordance with this <u>Article X</u>, including a division approved by the Board of Directors in accordance with <u>Section 10.2(b)</u>, may (a) effect any amendment to this Agreement if it is a surviving company in the division or (b) effect the adoption of a new limited liability company agreement for the Company if it is a surviving company in the division, in each case, only upon Shareholder Approval. Any such amendment or adoption made pursuant to this <u>Section 10.3(b)</u> shall be effective at the effective time or date of the division.

------

**ARTICLE XI** 

**SHAREHOLDER MEETINGS** 

Section 11.1 <u>Shareholder Meetings</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All acts of Shareholders to be taken at a meeting of Shareholders shall be taken in the manner provided in this <u>Article XI</u>. Meetings of the Shareholders for the election of Directors or for any other purpose shall be held at such time and place, either within or without the State of Delaware, as shall be designated from time to time by the Board of Directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) An annual meeting of Shareholders for the election of Directors and for the transaction of such other business as may properly come before the meeting shall be held at such time and place as the Board of Directors shall specify. If and to the extent authorized by the Board of Directors in connection with any annual meeting, and subject to such guidelines and procedures as the Board of Directors may adopt, Shareholders and proxyholders not physically present at a meeting of Shareholders may, by means of remote communication, participate in such meeting and be deemed present in person and vote at such meeting, and any meeting of Shareholders may be held solely by means of remote communication; provided, that the Company shall implement reasonable measures to (i) verify that each Person deemed present and permitted to vote at any such meeting by means of remote communication is a Shareholder or proxyholder, (ii) provide such Shareholders or proxyholders a reasonable opportunity to participate in the meeting and (iii) record the votes or other action made by such Shareholders or proxyholders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) A failure to hold the annual meeting of Shareholders at the designated time or to elect a sufficient number of Directors to conduct the business of the Company shall not affect otherwise valid acts of the Company or cause a forfeiture or dissolution of the Company. If the annual meeting for election of Directors is not held on the date designated therefor, the Directors shall cause the meeting to be held as soon as is convenient.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Board of Directors, in its discretion, or the Officer presiding at a meeting of Shareholders, in such Officer's discretion, may require that any votes cast at such meeting shall be cast by written ballots.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Unless otherwise required by Law, special meetings of Shareholders, for any purpose or purposes, may be called by either the Chairman of the Board or, in the absence of the Chairman of the Board, the Board of Directors, and shall be called by any Officer at the request of Shareholders holding at least sixty six and two-thirds percent (66.67%) of the voting power represented by the Outstanding Voting Shares, taken together as a single class. Such request shall be delivered to the Secretary of the Company and the Board, and shall state the purpose or purposes of the proposed meeting. At a special meeting of Shareholders, only such business shall be conducted as shall be specified in the notice of meeting (or any supplement thereto authorized by the Board). Upon the receipt by the Company of a request to call a special meeting of Shareholders, the Board of Directors shall determine the Record Date for such meeting and the date on which such meeting will be held, which meeting date shall be held as promptly as practicable after the date of receipt of such request, taking into account the requirement to prepare and deliver to the Shareholders any proxy materials and other information required in connection therewith.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The Board of Directors may cancel, postpone or adjourn any declared meeting of Shareholders (provided, that the Board of Directors shall not be permitted to cancel any special meeting of Shareholders requested by Shareholders pursuant to <u>Section 11.1(e)</u>), for any reason or for no reason, at any time prior to the time for holding such meeting or the time for holding such adjourned meeting. The Board of Directors shall notify Shareholders (which may be effected by way of a filing with the Commission) before the time of such meeting of any such cancellation or postponement thereof. A postponement may be for a stated period of any length or indefinitely as the Board of Directors may determine.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Directors shall be entitled, notwithstanding that they are not Shareholders, to attend and speak at any meeting of Shareholders and at any separate meeting of the holders of any class of series of Shares of the Company.

Section 11.2 <u>Notice of Meetings</u>. Whenever Shareholders are required or permitted to take any action at a meeting, a notice of the meeting (which shall be given in accordance with <u>Section 12.1</u>) shall be given, which shall state the place, date and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Unless otherwise required by Law, notice of any meeting shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each Shareholder entitled to notice of and to vote at such meeting.

Section 11.3 <u>Adjournments</u>. Any meeting of Shareholders may be adjourned from time to time by the chairman of the meeting to reconvene at the same or some other place. No business shall be transacted at an adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. Notice need not be given of any such adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken.

Section 11.4 <u>Quorum</u>. Unless otherwise required by applicable Law, the holders of a majority of the votes entitled to be cast by the Outstanding Voting Shares at a meeting of Shareholders, taken together as a single class, present in person or represented by proxy, shall constitute a quorum at all meetings of Shareholders for the transaction of business. A quorum, once established, shall not be broken by the withdrawal of enough votes to leave less than a quorum. If, however, such quorum shall not be present or represented at any meeting of Shareholders, the chairman of the meeting shall have power to adjourn the meeting from time to time, in the manner provided in <u>Section 11.3</u>, until a quorum shall be present or represented. No business shall be transacted at any meeting unless a quorum is present at the time when the meeting proceeds to business.

Section 11.5 <u>Voting</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All matters submitted to the Shareholders at a meeting of Shareholders for approval shall be determined by Shareholder Approval, at a meeting at which a quorum is present, unless a greater percentage is required with respect to such matter under any rule, regulation, guideline or requirement of any National Securities Exchange on which Shares are listed for trading, or under the provisions of this Agreement, in which case the approval of Shareholders holding Outstanding Voting Shares that in the aggregate represent at least such greater percentage shall be required. Such votes may be cast in person or by proxy as provided in <u>Section 11.6</u>. The

------

Board of Directors, or the Chairman of the Board or other Officer of the Company presiding at a meeting of Shareholders, in such Officer's discretion, may require that any votes cast at such meeting shall be cast by written ballot.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In the case of a tie, the chairman of the meeting shall be entitled, but not required, to cast the deciding vote.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) [Reserved].

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) At each annual or special meeting of Shareholders, each Record Holder of Common Shares on the relevant Record Date shall be entitled to cast one (1) vote in person or by proxy for each Common Share standing in such holder's name on the register of the Company. Each Record Holder of any other class or series of Shares shall be entitled to cast that number of votes, if any, in person or by proxy with respect to such Shares as may be set forth in the Share Designation authorizing the creation and issuance of such Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Notwithstanding anything else contained in this Agreement, no Shareholder shall have a right to vote on or approve a conversion, merger or conveyance approved by the Board of Directors pursuant to <u>Section 10.2(b)</u>, unless the Board of Directors elects to submit the matter to the Shareholders for their approval.

Section 11.6 <u>Proxies</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Each Shareholder entitled to vote at a meeting of Shareholders may authorize another Person or Persons to act for such Shareholder as proxy, including to attend, speak and vote on such Shareholder's behalf at any meeting of Shareholders, but no such proxy shall be voted upon after three (3) years from its date, unless such proxy expressly provides for a longer period. A proxy need not be a Shareholder of the Company. The appointment of a proxy shall be in any form and manner which the Board of Directors may approve, and, if required by the Company, shall be signed by or on behalf of the appointer. Without limiting the manner in which a Shareholder may authorize another person or persons to act for such Shareholder as a proxy, the following shall constitute a valid means by which a Shareholder may grant such authority:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) A Shareholder may execute a document authorizing another Person or Persons to act for such Shareholder as proxy. Execution may be accomplished by electronic signature by the Shareholder or such Shareholder's authorized officer, director, employee or agent signing such document or causing such person's signature to be affixed to such document by any reasonable means.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) A Shareholder may appoint a proxy by means of a telephonic, electronic or internet communication; *provided*, that the Board of Directors may prescribe the method of determining the time at which any such telephonic, electronic or internet communication is to be treated as received by the Company and procedures that are reasonably designed to verify that such instructions have been authorized by such Shareholder. The Board of Directors may treat any such telephonic, electronic or internet communication which purports to be or is expressed to be sent on behalf of a Shareholder as sufficient evidence of the authority of the Person sending that instruction to send it on behalf of such Shareholder. 

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any copy, PDF or other reliable reproduction of the document or transmission authorizing another person or persons to act as proxy for a Shareholder may be substituted or used in lieu of the original document or transmission for any and all purposes for which the original document or transmission could be used; provided, however, that such copy, PDF or other reproduction shall be a complete reproduction of the entire original document or transmission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The instrument appointing a proxy shall, if applicable, be deposited with the Company or with such other Person as is specified for that purpose in the notice convening the meeting no later than the time for holding the meeting or, if the meeting is adjourned, the time for holding such adjourned meeting.

Section 11.7 <u>List of Shareholders Entitled to Vote</u>. The Officer who has charge of the register of the Company shall prepare and make, at least ten (10) days before every meeting of Shareholders, a complete list of Shareholders entitled to vote at the meeting, arranged in alphabetical order for each class or series of Shares and showing the address of each such Shareholder and the number of Outstanding Voting Shares registered in the name of such Shareholder. Such list shall be open to the examination of any Shareholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days before the meeting (a) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (b) during ordinary business hours, at the principal place of business of the Company. In the event that the Company determines to make the list available on an electronic network, the Company may take reasonable steps to ensure that such information is available only to Shareholders. If the meeting is to be held at a place, then the list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any Shareholder who is present.

Section 11.8 <u>Record Date</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) In order that the Company may determine the Shareholders entitled to receive notice of or to attend or vote at any meeting of Shareholders or any adjournment thereof, the Board of Directors may fix a Record Date, which Record Date shall not precede the date upon which the resolution fixing the Record Date is adopted by the Board of Directors, and which Record Date shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If no Record Date is fixed by the Board of Directors, the Record Date for determining Shareholders entitled to notice of or to vote at a meeting of Shareholder shall be at the close of business on the day immediately preceding the day on which notice is given, or, if notice is waived, at the close of business on the day immediately preceding the day on which the meeting is held. A determination of Record Holders entitled to notice of or to vote at a meeting of Shareholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new Record Date for the adjourned meeting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Only those Record Holders of Outstanding Voting Shares on the Record Date fixed pursuant to this <u>Section 11.8</u> shall be entitled to receive notice of, attend and vote at a meeting of Shareholders or to act with respect to matters as to which the holders of the Outstanding Voting Shares have the right to vote or to act. All references in this Agreement to votes of, or other acts that may be taken by, the Outstanding Voting Shares shall be deemed to be references to the votes or acts of the Record Holders of such Outstanding Voting Shares on such Record Date.

------

Section 11.9 <u>Register</u>. The register shall be the only evidence as to who are the Shareholders entitled to examine the list required by <u>Section 11.7</u>, or to vote in person or by proxy at any meeting of the Shareholders.

Section 11.10 <u>Actions of the Shareholders By Consent</u>. Any action required or permitted to be taken at any meeting of the Shareholders may be taken without a meeting if the holders of the required number of Voting Shares necessary to approve such action execute and deliver one or more consents thereto, and such consent is recorded with the minutes of proceedings of the Shareholders. For the avoidance of doubt, any such consent may be executed by the Shareholders by electronic signature, and may be delivered to the Company by electronic transmission.

Section 11.11 <u>Conduct of Meetings</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Board of Directors may adopt, by resolution from time to time, such rules and regulations for the conduct of any meeting of Shareholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the chairman of any meeting of Shareholders shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) the determination of when the polls shall open and close for any given matter to be voted on at the meeting; (iii) rules and procedures for maintaining order at the meeting and the safety of those present; (iv) limitations on attendance at or participation in the meeting to Record Holders, their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (v) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (vi) limitations on the time allotted to questions or comments by participants.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If the Board of Directors so provides in its rules and regulations for the conduct of any meeting of Shareholders, a Shareholder may participate in a meeting of Shareholders by means of a telephone, video, electronic or similar communication equipment by way of which all Persons participating in such meeting can communicate with each other simultaneously and instantaneously, and participation in a meeting pursuant to this <u>Section 11.11(b)</u> shall constitute presence in person at such meeting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) At each meeting of Shareholders, the Chairman of the Board or, in his or her absence or if there be none, such other Officer or Person that the Board of Directors shall designate, shall preside as chairman at such meeting; provided further that the Chairman of the Board may designate the Chief Executive Officer to preside as chairman. If at any meeting of Shareholders the Chairman of the Board (or other Person designated by the Board of Directors as the chairman of such meeting, including if applicable, the Chief Executive Officer) is not present within fifteen (15) minutes after the time appointed for holding the meeting or is unwilling to act as chairman of such meeting, any other Director or Person nominated by the Board of Directors shall preside as chairman at such meeting, failing which the Shareholders present in person or by proxy shall choose any Person present to be chairman of such meeting.

------

Section 11.12 <u>Inspectors of Election</u>. In advance of any meeting of Shareholders, the Board of Directors, by resolution, the Chairman of the Board or the Chief Executive Officer shall appoint one or more inspectors to act at the meeting and make a written report thereof. One or more other Persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of Shareholders, the chairman of the meeting shall appoint one or more inspectors to act at the meeting. Unless otherwise required by applicable Law, inspectors may be Officers, employees or agents of the Company. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath to faithfully execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspector shall have the duties prescribed by Law and shall take charge of the polls and, when the vote is completed, shall make a certificate of the result of the vote taken and of such other facts as may be required by applicable Law.

Section 11.13 <u>Nature of Business at Meeting of Shareholders</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Only such business (other than nominations for election to the Board of Directors, which must comply with the provisions of <u>Section 11.14</u>) may be transacted at an annual meeting of Shareholders as is either (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (ii) otherwise properly brought before the annual meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof), or (iii) otherwise properly brought before the annual meeting by any Shareholder (A) who (x) has been, for the entirety of the two (2) year period immediately preceding the date of the giving of the notice provided for in this <u>Section 11.13</u>, and (y) is, on the date of the giving of the notice provided for in this <u>Section 11.13</u> and on the Record Date for the determination of Shareholders entitled to notice of and to vote at such annual meeting, a Record Holder of Common Shares representing at least one percent (1%) of the voting power represented by the Outstanding Voting Shares and (B) who complies with the notice procedures set forth in this <u>Section 11.13</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a Shareholder, such Shareholder must have given timely notice thereof in proper written form to the Secretary of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) To be timely, a Shareholder's notice to the Secretary of the Company must be delivered to or be mailed and received at the principal offices of the Company not less than one hundred and twenty (120) days nor more than one hundred and fifty (150) days prior to the anniversary date of the immediately preceding annual meeting of Shareholders; *provided*, *however*, that in the event that the annual meeting is called for a date that is not within twenty five (25) days before or after such anniversary date, notice by the Shareholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which notice of the date of the annual meeting was mailed or public disclosure of the date of the annual meeting was made, whichever first occurs. In no event shall the adjournment or postponement of an annual meeting, or the public announcement of such an adjournment or postponement, commence a new time period (or extend any time period) for the giving of a Shareholder's notice as described above. 

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) To be in proper written form, a Shareholder's notice to the Secretary of the Company must set forth the following information: (i) as to each matter such Shareholder proposes to bring before the annual meeting, a brief description of the business desired to be brought before the annual meeting and the proposed text of any proposal regarding such business (including the text of any resolutions proposed for consideration and, if such business includes a proposal to amend this Agreement, the text of the proposed amendment), and the reasons for conducting such business at the annual meeting, and (ii) as to the Shareholder giving notice and the beneficial owner, if any, on whose behalf the proposal is being made, (A) the name and address of such Person; (B) (1) the class or series and number of all Shares which are owned beneficially or of record by such Person, or any Affiliates or associates of such Person, (2) the name of each nominee holder of Shares owned beneficially but not of record by such Person or any Affiliates or associates of such Person, and the number of such Shares held by each such nominee holder, (3) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or profit interest or other transaction has been entered into by or on behalf of such Person, or any Affiliates or associates of such Person, with respect to Shares and (4) whether and the extent to which any other transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of Shares) has been made by or on behalf of such Person, or any Affiliates or associates of such Person, the effect or intent of any of the foregoing being to mitigate loss to, or to manage risk or benefit of Share price changes for, such Person, or any Affiliates or associates of such Person, or to increase or decrease the voting power or pecuniary or economic interest of such Person, or any Affiliates or associates of such Person, with respect to Shares; (C) a description of all agreements, arrangements, or understandings (whether written or oral) between or among such Person, or any Affiliates or associates of such Person, and any other Person or Persons (including their names) in connection with or relating to (1) the Company or (2) the proposal, including any material interest in, or anticipated benefit from the proposal to such Person, or any Affiliates or associates of such Person; (D) a representation that the Shareholder giving notice intends to appear in Person or by proxy at the annual meeting to bring such business before the meeting; and (E) any other information relating to such Person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with the solicitation of proxies by such Person with respect to the proposed business to be brought by such Person before the annual meeting pursuant to Section 14 of the Exchange Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) A Shareholder providing notice of business proposed to be brought before an annual meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this <u>Section 11.13</u> shall be true and correct as of the Record Date for determining the Shareholders entitled to receive notice of the annual meeting, and such update and supplement shall be delivered to or be mailed and received by the Secretary of the Company at the principal offices of the Company not later than five (5) Business Days after the Record Date for determining the Shareholders entitled to receive notice of the annual meeting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) No business shall be conducted at the annual meeting of Shareholders except business brought before the annual meeting in accordance with the procedures set forth in this <u>Section 11.13</u>; *provided*, *however*, that, once business has been properly brought before the

------

annual meeting in accordance with such procedures, nothing in this <u>Section 11.13</u> shall be deemed to preclude discussion by any Shareholder of any such business. If the chairman of an annual meeting determines that business was not properly brought before the annual meeting in accordance with the foregoing procedures, the chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Nothing contained in this <u>Section 11.13</u> shall be deemed to affect any rights of Shareholders to request inclusion of proposals in the Company's proxy statement pursuant to Rule 14a-8 under the Exchange Act (or any successor provision of Law).

Section 11.14 <u>Nomination of Directors by Shareholders</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Nominations of Persons for election to the Board of Directors may be made at any annual meeting of Shareholders, or at any special meeting of Shareholders called for the purpose of electing Directors, by any Shareholder (A) who (x) has been, for the entirety of the two (2) year period immediately preceding the date of the giving of the notice provided for in this <u>Section 11.14</u>, and (y) is, on the date of the giving of the notice provided for in this <u>Section 11.14</u> and on the Record Date for the determination of Shareholders entitled to notice of and to vote at such annual meeting or special meeting of Shareholders, a Record Holder of Common Shares representing at least one percent (1%) of the voting power represented by the Outstanding Voting Shares and (B) who complies with the notice procedures set forth in this <u>Section 11.14</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In addition to any other applicable requirements, for a nomination to be made by a Shareholder, such Shareholder must have given timely notice thereof in proper written form to the Secretary of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) To be timely, a Shareholder's notice to the Secretary of the Company must be delivered to or be mailed and received at the principal offices of the Company (i) in the case of an annual meeting, not less than one hundred and twenty (120) days nor more than one hundred and fifty (150) days prior to the anniversary date of the immediately preceding annual meeting of Shareholders; provided, however, that in the event that the annual meeting is called for a date that is not within twenty five (25) days before or after such anniversary date, notice by the Shareholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs; and (ii) in the case of a special meeting of Shareholders called for the purpose of electing Directors, not later than the close of business on the tenth (10th) day following the day on which notice of the date of the special meeting was mailed or public disclosure of the date of the special meeting was made, whichever first occurs. In no event shall the adjournment or postponement of an annual meeting or a special meeting called for the purpose of electing Directors, or the public announcement of such an adjournment or postponement, commence a new time period (or extend any time period) for the giving of a Shareholder's notice as described above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) To be in proper written form, a Shareholder's notice to the Secretary of the Company must set forth the following information: (i) as to each Person whom the Shareholder proposes to nominate for election as a Director (A) the name, age, business address and residence address of such Person, (B) the principal occupation or employment of such Person, (C) (1) the

------

class or series and number of all Shares which are owned beneficially or of record by such Person, or any Affiliates or associates of such Person, (2) the name of each nominee holder of Shares owned beneficially but not of record by such Person, or any Affiliates or associates of such Person, and the number of such Shares held by each such nominee holder, (3) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or profit interest or other transaction has been entered into by or on behalf of such Person, or any Affiliates or associates of such Person, with respect to Shares and (4) whether and the extent to which any other transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of Shares) has been made by or on behalf of such Person, or any Affiliates or associates of such Person, the effect or intent of any of the foregoing being to mitigate loss to, or to manage risk or benefit of Share price changes for, such Person, or any Affiliates or associates of such Person, or to increase or decrease the voting power or pecuniary or economic interest of such Person, or any Affiliates or associates of such Person, with respect to Shares, (D) such Person's written representation and agreement that such Person (1) is not and will not become a party to any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any Person or entity as to how such Person, if elected as a Director, will act or vote on any issue or question, (2) is not and will not become a party to any agreement, arrangement or understanding with any Person or entity other than the Company with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a Director that has not been disclosed to the Company in such representation and agreement and (3) in such Person's individual capacity, would be in compliance, if elected as a Director, and will comply with, all applicable publicly disclosed confidentiality, corporate governance, conflict of interest, Regulation FD, code of conduct and ethics, and Share ownership and trading policies and guidelines of the Company and (E) any other information relating to such Person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of Directors pursuant to Section 14 of the Exchange Act; and (ii) as to the Shareholder giving the notice, and the beneficial owner, if any, on whose behalf the nomination is being made, (A) the name and record address of the Shareholder giving the notice and the name and principal place of business of such beneficial owner; (B) (1) the class or series and number of all Shares which are owned beneficially or of record by such Person, or any Affiliates or associates of such Person, (2) the name of each nominee holder of Shares owned beneficially but not of record by such Person or any Affiliates or associates of such Person, and the number of Shares held by each such nominee holder, (3) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or profit interest or other transaction has been entered into by or on behalf of such Person, or any Affiliates or associates of such Person, with respect to Shares and (4) whether and the extent to which any other transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of Shares) has been made by or on behalf of such Person, or any Affiliates or associates of such Person, the effect or intent of any of the foregoing being to mitigate loss to, or to manage risk or benefit of Share price changes for, such Person, or any Affiliates or associates of such Person, or to increase or decrease the voting power or pecuniary or economic interest of such Person, or any Affiliates or associates of such Person, with respect to Shares; (C) a description of (1) all agreements, arrangements, or understandings (whether written or oral) between such Person, or any Affiliates or associates of such Person, and any proposed nominee for election as a Director, or any Affiliates or associates of such proposed nominee, (2) all agreements, arrangements, or understandings (whether written or oral) between such Person, or any Affiliates or associates of

------

such Person, and any other Person or Persons (including their names) pursuant to which the nomination(s) are being made by such Person, or otherwise relating to the Company or their ownership of Shares, and (3) any material interest of such Person, or any Affiliates or associates of such Person, in such nomination, including any anticipated benefit therefrom to such Person, or any Affiliates or associates of such Person; (D) a representation that the Shareholder giving notice intends to appear in person or by proxy at the annual meeting or special meeting to nominate the Persons named in its notice; and (E) any other information relating to such Person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with the solicitation of proxies for election of Directors pursuant to Section 14 of the Exchange Act. Such notice must be accompanied by a consent of each proposed nominee to being named as a nominee and to serve as a Director if elected.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) A Shareholder providing notice of any nomination proposed to be made at an annual meeting or special meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this <u>Section 11.14</u> shall be true and correct as of the Record Date for determining the Shareholders entitled to receive notice of the annual meeting or special meeting, and such update and supplement shall be delivered to or be mailed and received by the Secretary of the Company at the principal offices of the Company not later than five (5) Business Days after the Record Date for determining the Shareholders entitled to receive notice of such annual meeting or special meeting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) No Person shall be eligible for election as a Director unless nominated in accordance with the procedures set forth in this <u>Section 11.14</u>. If the chairman of the meeting determines that a nomination was not made in accordance with the foregoing procedures, the chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded.

Section 11.15 <u>Special Voting Matters Requiring Shareholder Approval</u>. Notwithstanding anything to the contrary herein, without Shareholder Approval, neither the Company nor the Board of Directors will:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) amend, alter or repeal the provisions of the LLC Agreement so as to materially and adversely affect any preferences, rights, powers, and duties of the Common Shares; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) issue or create any additional Shares or Derivative Securities (including any additional Preferred Shares pursuant to a Share Designation), including pursuant to any long term incentive plan adopted by the Company.

**ARTICLE XII** 

**GENERAL PROVISIONS** 

Section 12.1 <u>Notices</u>. Any notice, demand, request, report, proxy materials, information statement or other document required or permitted to be given or delivered to any Shareholder or Director (including any member of a committee of the Board) under this Agreement, the Delaware Act, the rules of any National Securities Exchange or otherwise may be set forth in a written document or in an electronic transmission delivered by mail or by electronic transmission

------

(including by email), addressed to such Shareholder or Director (including any member of a committee of the Board) to such Person's address (including email address) as it appears on the records of the Transfer Agent or as shown on the records of the Company (with postage thereon prepaid, if given or made by mail), and shall be deemed to be given or made at the time when the same shall be deposited in the United States mail or at the time electronically transmitted, respectively. Any notice, demand, request, report, proxy materials, information statement or other document to be given or made to a Shareholder hereunder shall be deemed conclusively to have been given or made, and the obligation to give or make such notice, demand, request, report, proxy materials, information statement or other document shall be deemed conclusively to have been fully satisfied, upon the sending thereof to the Record Holder of such Shares at the address (including email address) of such Record Holder as shown on the records of the Transfer Agent or as otherwise shown on the records of the Company, regardless of any claim of any Person who may have an interest in such Shares by reason of any assignment or otherwise. An affidavit or certificate of the making or giving of any notice, demand, request, report, proxy materials, information statement or other document in accordance with the provisions of this <u>Section 12.1</u> executed by the Company, the Transfer Agent or the mailing organization, which may be so executed by electronic signature and delivered by electronic transmission, shall be prima facie evidence of the giving or making of such notice, demand, request, report, proxy materials, information statement or other document. If any notice, demand, request, report, proxy materials, information statement or other document addressed to a Record Holder at the address (including email address) of such Record Holder appearing on the books and records of the Transfer Agent or the Company is returned marked to indicate that such notice, demand, request, report, proxy materials, information statement or other document was unable to be delivered, then such notice, demand, request, report, proxy materials, information statement or other document, and any subsequent notice, demand, request, report, proxy materials, information statement or other document, shall be deemed to have been duly given or made without further mailing (until a reasonable period after such time as such Record Holder or another Person notifies the Transfer Agent or the Company of a change in his, her or its address) if they are available for the Shareholder at the principal office of the Company for a period of one (1) year from the date of the giving or making thereof to the other Shareholders. Without limiting the manner by which notice otherwise may be given effectively to Shareholders, if the rules of the Commission shall permit any notice, demand, request, report, proxy materials, information statement or other document to be delivered electronically or made available via the Internet, any such notice, demand, request, report, proxy materials, information statement or other document shall be deemed given or made when delivered or made available via such mode of delivery. Notice given by electronic transmission, as described above, shall, if given by a posting on an electronic network, together with separate notice to the Shareholder of such specific posting, be deemed given upon the later of (A) such posting and (B) the giving of such separate notice. Notice to Directors (including any member of a committee of the Board) or the Company may be given personally or by telegram, telex, cable or by means of electronic transmission. Any notice to the Company shall be deemed given if received by the Secretary of the Company (or other designated Officer) at the principal office of the Company. The Board of Directors and any Officer may rely and shall be protected in relying on any notice or other document from a Shareholder or other Person if believed by the Board of Directors or such Officer to be genuine. Notwithstanding anything to the contrary set forth in this Agreement, the Company may give notice of any meeting of Shareholders in accordance with the procedures embodied in Rule 14a-16 of the Exchange Act.

------

Any Shareholder present, either personally or by proxy, at any meeting of Shareholders, shall for all purposes be deemed to have received due notice of such meeting and, where required, due notice of the purposes for which such meeting was convened.

Section 12.2 <u>Entities Acting by Representatives at Meetings</u>. For the avoidance of doubt, any Shareholder that is not an individual may, by resolution of its directors or other governing body, authorize such Person as it thinks fit to act as its representative at any meeting of Shareholders, including any meeting of the holders of a specific class or series of Shares, and the Person so authorized shall be entitled to exercise the same powers on behalf of such Shareholder which he or she represents as that Person could exercise if it were an individual Shareholder.

Section 12.3 <u>Further Action</u>. The parties shall execute and deliver all documents, provide all information and take (or omit to take) any action as may be necessary or appropriate to achieve the purposes of this Agreement.

Section 12.4 <u>Binding Effect</u>. This Agreement shall be binding upon and inure to the benefit of the Company, the Shareholders and their respective estates, heirs, executors, administrators, successors, legal representatives and permitted transferees and assigns, and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity, any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement; provided, that the Indemnitees and their respective estates, heirs, executors, administrators, successors, and legal representatives, shall be entitled to receive the benefits upon such Persons pursuant to <u>Section 5.16</u> of this Agreement. Each Shareholder, and any of its estates, heirs, executors, administrators, successors, permitted transferees and assigns, are bound by the terms of this Agreement by virtue of being a Shareholder and without any execution of this Agreement or any joinder to this Agreement.

Section 12.5 <u>Integration</u>. This Agreement, including all Share Designations and any exhibits, annexes and schedules hereto, constitutes the limited liability company agreement (as such term is defined in the Delaware Act) of the Company and supersedes all prior written, oral or implied statements, agreements and understandings as to the Company's affairs and the conduct of its business.

Section 12.6 <u>Creditors</u>. None of the provisions of this Agreement shall be for the benefit of or enforceable by any creditor of the Company or by any creditor of any of the Shareholders.

Section 12.7 <u>Waiver</u>. To the fullest extent permitted by law, no failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute waiver of any such breach of any other covenant, duty, agreement or condition. To the fullest extent permitted by law the waiver by any Shareholder or Director of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other or subsequent breach hereunder.

Section 12.8 <u>Counterparts</u>. This Agreement may be executed, including by electronic signature and electronic transmission, in counterparts, all of which together shall constitute an agreement binding on all the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart. Each party shall become bound by this Agreement

------

immediately upon affixing its signature hereto. Any Person who acquires a Share shall be bound by this Agreement without execution hereof and without any execution of any joinder to this Agreement simply by becoming the record holder of such Share.

Section 12.9 <u>Applicable Law</u>. This Agreement shall be construed in accordance with and governed by the laws of the State of Delaware without regard to principles of conflict of laws.

Section 12.10 <u>Arbitration</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Any dispute, controversy, or claim arising out of or relating to this Agreement (and any subsequent amendments hereof), or any breach, termination, or the validity thereof, the Company's internal affairs, the ownership, transfer or rights or obligations of or with respect to, any Shares, or any action or inaction arising out of or relating to any of the foregoing, and any question of the arbitrator's jurisdiction or the existence, scope or validity of this <u>Section 12.10</u> (each a "***Dispute***"), shall be submitted, upon notice delivered by any party to such claim, to confidential, final and binding arbitration administered by Judicial Arbitration and Mediation Services, Inc. ("***JAMS***") in accordance with its Comprehensive Arbitration Rules and Procedures in effect at the time (the "***Rules***"), except to the extent such procedures are modified herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The seat of arbitration shall be Irvine, California, and the arbitration shall be conducted in the English language.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) There shall be one arbitrator who shall be agreed upon by the parties to such Dispute within twenty (20) days of delivery by any party to such Dispute of a copy of the demand for arbitration. If the parties do not agree upon an arbitrator within this time limit, such arbitrator shall be appointed by the JAMS in accordance with the Rules.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) This <u>Section 12.10</u> and the arbitration of Disputes shall be subject to and governed by the Federal Arbitration Act (9 U.S.C. § 1 et seq.).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) After the conclusion of all testimony, at a time designated by the arbitrator, each party shall simultaneously submit to the arbitrator and exchange with the other party its final proposed award. In rendering the final award, the arbitrator shall be limited to choosing an award proposed by a party without modification; *provided*, *however*, that in no event shall the arbitrator award any damages prohibited by this Agreement or make any award that is otherwise inconsistent with this Agreement or applicable Law. 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) In addition to monetary damages, the arbitrator shall be empowered to award equitable relief, including, but not limited to, an injunction and specific performance of any obligation under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) By agreeing to arbitration, the parties do not intend to deprive any court of its jurisdiction to issue a pre-arbitral injunction, pre-arbitral attachment or other order in aid of arbitration proceedings. Without prejudice to such provisional remedies that may be granted by a court, the arbitrator shall have full authority to grant provisional remedies, to order a party to request that a court modify or vacate any temporary or preliminary relief issued by such court, and to award damages for the failure of any party to respect the arbitrator's orders to that effect.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) The parties consent and submit to the non-exclusive jurisdiction of any federal court located in the State of California or, where such court does not have jurisdiction, any California state court, in either case located in Orange County, California ("***California Court***") for the enforcement of any arbitral award rendered hereunder and to compel arbitration or for interim or provisional remedies in aid of arbitration. In any such action: (i) each party irrevocably waives, to the fullest extent it may effectively do so, any objection, including any objection to the laying of venue or based on the grounds of forum non conveniens or any right of objection to jurisdiction on account of its place of incorporation or domicile, which it may now or hereafter have to the bringing of any such action or proceeding in any California Court; (ii) each party irrevocably consents to service of process sent by a national courier service (with confirmation of receipt) to its address pursuant to <u>Section 12.1</u> or in any other manner permitted by applicable Law; and (iii) each party waives any right to trial by jury in any court. ****

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) The award of the arbitrator shall be final and binding upon the parties thereto, shall not be subject to appeal, and shall be the sole and exclusive remedy between the parties regarding any Disputes presented to the arbitrator. Judgment upon any award may be entered in any court having jurisdiction over any party or any of its assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) Any arbitration hereunder shall be confidential, and the parties and their agents agree not to disclose to any third party (i) the existence or status of the arbitration, (ii) all information made known and documents produced in the arbitration not otherwise in the public domain, and (iii) all awards arising from the arbitration, except and to the extent that disclosure is required by applicable Law or is required to protect or pursue a legal right.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) The arbitrator shall award the prevailing party its attorneys' fees and costs reasonably incurred in the arbitration, including the prevailing party's share of the arbitrator fees and JAMS administrative costs.

Section 12.11 <u>Invalidity of Provisions</u>. It is the desire and intent of the parties that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. If any provision of this Agreement is adjudicated by an arbitrator or a court of competent jurisdiction, in each case, in accordance with <u>Section 12.10</u>, to be or otherwise becomes invalid, illegal or unenforceable in any respect, in whole or in part, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby. Notwithstanding the foregoing, if such provision (or portion thereof) could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be deemed to be so narrowly drawn, without invalidating any of the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

------

Section 12.12 <u>Consent of Shareholders</u>. Whenever in this Agreement it is specified that an action may be taken by the Board of Directors or upon the affirmative vote of less than all of the Shareholders, such action may be so taken by the Board of Directors or upon the concurrence of less than all of the Shareholders, and each Shareholder shall be bound by the results of such action and deemed to consent to such action.

Section 12.13 <u>Headings</u>. The headings and subheadings in this Agreement are included for convenience and identification only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof.

Section 12.14 <u>Confidentiality</u>. Each Shareholder expressly agrees, whether or not at the time a Shareholder of the Company or providing services to the Company or any of its Subsidiaries, to maintain the confidentiality of, and not disclose to any person other than the Company, its officers or any financial, legal or other advisor to the Company, any non-public information provided by or on behalf of the Company relating to the business, clients, affairs or financial structure, position or results of the Company or its affiliates (including any Affiliate) or any dispute that shall not be generally known to the public or the securities industry; *provided* that such Shareholder may disclose any such information (a) to the extent required by any applicable law, rule or regulation in the opinion of counsel or by the order of any National Securities Exchange, banking supervisory authority or other governmental or self- regulatory organization of competent jurisdiction (provided, that such Shareholder notifies the Company of such requirement prior to making such disclosure and cooperates with the Company in seeking to prevent or minimize such disclosure), (b) to his, her or its legal counsel and financial advisers (who shall agree to abide by the terms of this <u>Section 12.14</u>), or (c) with the prior consent of the Company. Nothing contained in this Section 12.14 shall limit any duty of confidentiality any Shareholder owes to the Company pursuant to any separate confidentiality agreement entered into by such Shareholder and a member of the Company Group, either before or after the Effective Time.

[*Signature Page Follows*] 

------

**IN WITNESS WHEREOF**, the undersigned has caused this Third Amended and Restated Limited Liability Company Agreement to be duly executed as of the date first set forth above.

---

| |
|:---|
| **SOLE MEMBER:**<br>**PHOENIX EQUITY HOLDINGS, LLC** |
| By: |
| Name: Adam Ferrari<br> Title: Manager |

---

SIGNATURE PAGE TO

THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF

PHOENIX ENERGY ONE, LLC

------

**<u>Exhibit A</u>**

**PHOENIX ENERGY ONE, LLC** 

**SHARE DESIGNATION** 

**WITH RESPECT TO THE** 

**SERIES A CUMULATIVE REDEEMABLE PREFERRED SHARES**

## Add

**Exhibit 3.1** 

**PHOENIX ENERGY ONE, LLC** 

**SHARE DESIGNATION** 

**WITH RESPECT TO THE** 

**SERIES A CUMULATIVE REDEEMABLE PREFERRED SHARES** 

This SHARE DESIGNATION (this "***Share Designation***") with respect to the Series A Preferred Shares (as defined below) of PHOENIX ENERGY ONE, LLC, a Delaware limited liability company (the "***Company***"), is effective as of the Effective Time (as defined below).

**RECITALS** 

**WHEREAS**, under the power contained in Article III of the Third Amended and Restated Limited Liability Company Agreement of the Company, dated as of the Effective Date, as it may be amended, supplemented or restated from time to time (the "***LLC Agreement***") and the Delaware Act, the Board of Directors of the Company classified, designated and dominated, from the 20,000,000 authorized but unissued Preferred Shares, 3,750,000 of such Preferred Shares as the Series A Cumulative Redeemable Preferred Shares ("***Series A Preferred Shares***"), with the preferences, rights, powers, and duties set forth in this Share Designation, and to the extent applicable, the LLC Agreement.

**NOW, THEREFORE, BE IT RESOLVED**, that the LLC Agreement is hereby amended, supplemented and modified to establish and designate the Series A Preferred Shares of the Company and to establish and fix and herein state and express the preferences, rights, powers, and duties of such Series A Preferred Shares.

Section 1. <u>Designation and Amount</u>. A series of Preferred Shares of the Company designated as "Series A Cumulative Redeemable Preferred Shares" is hereby established and designated. The total number of authorized Series A Preferred Shares shall be 3,750,000 as set forth in Section 3.2(b) of the LLC Agreement.

Section 2. <u>Construction; Defined Terms</u>. Unless otherwise expressly stated, all section references in this Share Designation shall be to sections of this Share Designation. Unless defined in this <u>Section</u> <u>2</u> or otherwise specified or defined herein, capitalized terms used herein shall have the meanings assigned to them in the LLC Agreement. The following terms shall have the following meanings:

"***Applicable Series A Distribution Rate***" means:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) from, and including, the date of original issuance to, but excluding, October 15, 2028, at a fixed rate
equal to 10.00% per annum of the initial $25.00 liquidation preference per Series A Preferred Share (equivalent to $2.50 per annum per Series A Preferred Share),

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) from and including October 15, 2028 to, but excluding, October 15, 2029, at a fixed rate equal to
10.50% per annum of the initial $25.00 liquidation preference per Series A Preferred Share (equivalent to $2.625 per annum per Series A Preferred Share), and

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) from and including October 15, 2029 at a fixed rate equal to 11.00% per annum of the initial $25.00
liquidation preference per Series A Preferred Share (equivalent to $2.75 per annum per Series A Preferred Share).

"***Arrears***" means, for distributions with respect to the Series A Preferred Shares, the full cumulative distributions with respect to the Series A Preferred Shares through the most recent Series A Distribution Payment Date that have not been paid on all Outstanding Series A Preferred Shares.

"***Capital Account***" has the meaning set forth in <u>Section</u> <u>4</u>.

"***Code***" means the United States Internal Revenue Code of 1986, as amended and in effect from time to time. Any reference herein to a specific section or sections of the Code shall be deemed to include a reference to any corresponding provision of any successor Law.

"***Company***" has the meaning set forth in the Preamble.

"***Depositary***" has the meaning set forth in <u>Section</u> <u>11.1</u>.

"***Effective Time***" shall have the meaning set forth in the LLC Agreement.

"***Governmental Entity***" means any court, administrative agency, regulatory body, commission or other governmental authority, board, bureau or instrumentality, domestic or foreign and any subdivision thereof.

"***Initial Issuance Date***" means [●], 2025.

"***Law***" means any federal, state, local, non-U.S. or other law (including common law), statute, code, ordinance, rule or regulation or other requirement enacted, promulgated, issued, entered or put into effect by a Governmental Entity.

"***Liquidation Preference***" means a liquidation preference for each Series A Preferred Share initially equal to $25.00 per Series A Preferred Share (subject to adjustment for any splits, combinations or similar adjustments to the Series A Preferred Shares), which liquidation preference shall be subject to increase by the per Series A Preferred Share amount of any accumulated and unpaid distributions with respect to the Series A Preferred Shares (whether or not such distributions shall have been declared).

"***LLC Agreement***" has the meaning set forth in the Preamble.

"***Nonpayment Event***" has the meaning set forth in <u>Section</u> <u>9.6(a)</u>.

"***Outstanding***" means, with respect to any Series A Preferred Shares, as of any date, all of such Series A Preferred Shares that are issued by the Company and reflected as outstanding in the records of the Transfer Agent or the Company as of such date.

"***Preferred Shares Directors***" has the meaning set forth in <u>Section</u> <u>9.6(a)</u>.

------

"***Redemption Date***" has the meaning set forth in <u>Section</u> <u>7.1</u>.

"***Redemption Notice***" has the meaning set forth in <u>Section</u> <u>7.2(a)</u>.

"***Series A Distribution Payment Date***" means the 15th day of each April, July, October and January of each year (except that the Series A Distribution Payment Date for the initial Series A Distribution Period shall be October 15, 2025); provided, however, that if any Series A Distribution Payment Date would otherwise occur on a day that is not a Business Day, such Series A Distribution Payment Date shall instead be on the immediately succeeding Business Day.

"***Series A Distribution Period***" means a period from, and including, each Series A Distribution Payment Date (except that the initial Series A Distribution Period, which shall commence on and include the Initial Issuance Date) to, but excluding, the next succeeding Series A Distribution Payment Date.

"***Series A Distribution Record Date***" has the meaning given such term in Section 5.1.

"***Series A Junior Securities***" means any class or series of equity securities of the Company that, with respect to the payment of distributions and distributions upon liquidation, dissolution or winding-up of the Company, ranks junior to the Series A Preferred Shares, including but not limited to the Common Shares, but excluding any Series A Parity Securities and Series A Senior Securities.

"***Series A Parity Securities***" means any other class or series of equity securities of the Company established after the Initial Issuance Date by the Board of Directors, the terms of which class or series expressly provide that it ranks on parity with the Series A Preferred Shares as to the payment of distributions and distributions upon liquidation, dissolution or winding-up of the Company.

"***Series A Preferred Shares***" has the meaning set forth in the Recitals.

"***Series A Redemption Price***" has the meaning set forth in <u>Section</u> <u>7.1</u>.

"***Series A Senior Securities***" means any class or series of equity securities of the Company established after the Initial Issuance Date by the Board of Directors, the terms of which class or series expressly provide that it ranks senior to the Series A Preferred Shares as to the payment of distributions and distributions upon liquidation, dissolution or winding-up of the Company.

"***Share Designation***" has the meaning set forth in the Preamble.

Section 3. <u>Ranking.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1 For all purposes with respect to the payment of distributions and the distribution of assets upon liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, unless otherwise expressly set forth in this Share Designation, the Series A Preferred Shares shall rank (subject to receipt of any requisite consents prior to any such issuance):

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) senior to any Series A Junior Securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) on a parity with any Series A Parity Securities; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) junior to any Series A Senior Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2 For the avoidance of doubt, the Series A Preferred Shares represent limited liability company interests in the Company and all rights of the holders of Series A Preferred Shares shall be subject and subordinated to the obligations of the Company with respect to any existing or future indebtedness of the Company, and may be contractually subordinated in right of payment to all obligations of the Company with respect to any such indebtedness (including any debt securities). The Series A Preferred Shares shall not represent any interest in any Subsidiary of the Company and may be structurally subordinated in right of payment to all obligations of such Subsidiaries, including all existing and future indebtedness obligations of such Subsidiaries.

Section 4. <u>Capital Accounts</u>. In accordance with the terms of the LLC Agreement, the Company shall maintain a separate capital account (a "***Capital Account"***) for each holder of Series A Preferred Shares (or a beneficial owner of such Series A Preferred Shares held by a nominee in any case in which the nominee has furnished the identity of such owner to the Company in accordance with Section 6031(c) of the Code or any other method acceptable to the Board of Directors in its sole discretion). The initial Capital Account balance in respect of each Series A Preferred Share on the issue date of such Series A Preferred Share shall be equal to the amount paid for such Series A Preferred Share.

Section 5. <u>Distributions</u>. Notwithstanding <u>Section</u> <u>4.4</u> of the LLC Agreement but subject to the applicable provisions of the Delaware Act:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1 Distributions on each Outstanding Series A Preferred Share shall be cumulative and shall accumulate at the Applicable Series A Distribution Rate from and including the Initial Issuance Date (or, for any subsequently issued and newly Outstanding Series A Preferred Shares, from and including the Series A Distribution Payment Date immediately preceding the issue date of such Series A Preferred Shares) until such time as the Company pays the distributions with respect to the Series A Preferred Shares or redeems such Series A Preferred Shares in accordance with <u>Section</u> <u>7</u>, whether or not such distributions shall have been declared. Holders of Series A Preferred Shares shall be entitled to receive cash distributions with respect to the Series A Preferred Shares from time to time out of any assets of the Company legally available for the payment of distributions at the Applicable Series A Distribution Rate per Series A Preferred Share when, as, and, if declared by the Board of Directors. Distributions with respect to the Series A Preferred Shares, to the extent declared by the Board of Directors to be paid by the Company in accordance with this <u>Section</u> <u>5.1</u>, shall be paid, in Arrears, on each Series A Distribution Payment Date (other than the initial Series A Distribution, which shall be paid on October 15, 2025). Distributions with respect to the Series A Preferred Shares shall accumulate in each Series A Distribution Period from and including the preceding Series A Distribution Payment Date (other than the initial Series A Distribution Period, which shall commence on and include the Initial Issuance Date), to, but excluding, the next Series A Distribution Payment Date for such Series A Distribution Period. No interest, additional distributions or other sums will be payable in respect of any distribution with respect to the Series A Preferred Shares which may be in Arrears. If any

------

Series A Distribution Payment Date otherwise would occur on a date that is not a Business Day, declared distributions with respect to the Series A Preferred Shares shall be paid on the immediately succeeding Business Day without the accumulation of interest, additional distributions or other sums. All distributions with respect to the Series A Preferred Shares that are (1) accumulated and unpaid or (2) payable by the Company pursuant to this <u>Section</u> <u>5.1</u> shall be payable without regard to income of the Company and shall be treated for federal income tax purposes as guaranteed payments for the use of capital under Section 707(c) of the Code. The guaranteed payment with respect to any Series A Distribution Period shall be for the account of the holders of Series A Preferred Shares as of the applicable Series A Distribution Record Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2 Not later than 5:00 p.m., New York City time, on each Series A Distribution Payment Date, the Company shall pay the distributions with respect to the Series A Preferred Shares, if any, that shall have been declared by the Board of Directors to holders of the Series A Preferred Shares on the record date for the applicable distribution. The record date (the "***Series A Distribution Record Date***") for the payment of any distributions with respect to the Series A Preferred Shares shall be as of the close of business on the first Business Day of the month of the applicable Series A Distribution Payment Date, except that in the case of payments of distributions with respect to the Series A Preferred Shares in Arrears, the Series A Distribution Record Date with respect to a Series A Distribution Payment Date shall be such date as may be designated by the Board of Directors in accordance with this <u>Section</u> <u>5</u>. So long as any Series A Preferred Shares are Outstanding, no distribution shall be declared or paid or set aside for payment on any Series A Junior Securities (other than a distribution payable solely in Series A Junior Securities) unless full cumulative distributions with respect to the Series A Preferred Shares have been or contemporaneously are being paid or set apart for payment on all Outstanding Series A Preferred Shares (and distributions on any other Series A Parity Securities) through the most recent respective Series A Distribution Payment Date (and distribution payment date with respect to such Series A Parity Securities, if any); provided, however, notwithstanding anything to the contrary in this <u>Section</u> <u>5.2</u>, if a distribution period with respect to a class of Series A Junior Securities or Series A Parity Securities is shorter than the Series A Distribution Period, the Board of Directors may declare and pay regular distributions with respect to such Series A Junior Securities or Series A Parity Securities, so long as, at the time of declaration of such distribution, (i) there are no distributions with respect to the Series A Preferred Shares in Arrears, and (ii) the Board of Directors expects to have sufficient funds to pay the full distribution in respect of the Series A Preferred Shares on the next successive Series A Distribution Payment Date. Accumulated distributions with respect to the Series A Preferred Shares in Arrears for any past Series A Distribution Period may be declared by the Board of Directors and paid on any date fixed by the Board of Directors, whether or not a Series A Distribution Payment Date, to holders of Series A Preferred Shares on the record date for such payment, which may not be less than 10 calendar days before such payment date. Subject to the next succeeding sentence, if all accumulated distributions with respect to the Series A Preferred Shares in Arrears on all Outstanding Series A Preferred Shares and all accumulated distributions in arrears on any Series A Parity Securities shall not have been declared and paid, or if sufficient funds for the payment thereof shall not have been set apart, payment of accumulated distributions in Arrears on the Series A Preferred Shares and accumulated distributions in arrears on any such Series A Parity Securities shall be made in order of their respective distribution payment dates, commencing with the earliest distribution payment date. If less than all distributions payable with respect to all Series A Preferred Shares and any other Series A Parity Securities are paid, any partial payment shall be made pro rata with respect to the Series

------

A Preferred Shares and any such other Series A Parity Securities entitled to a distribution payment at such time in proportion to the aggregate distribution amounts remaining due in respect of such Series A Preferred Shares and such other Series A Parity Securities at such time. Subject to the liquidation preferences set forth herein and in the LLC Agreement, holders of Series A Preferred Shares shall not be entitled to any distribution, whether payable in cash, property or securities of the Company, in excess of full cumulative distributions with respect to the Series A Preferred Shares. So long as the Series A Preferred Shares are held of record by the Depositary or its nominee, declared distributions with respect to the Series A Preferred Shares shall be paid to the Depositary in same-day funds on each Series A Distribution Payment Date or other distribution payment date in the case of payments for distributions with respect to the Series A Preferred Shares in Arrears.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3 With respect to Series A Preferred Shares that are redeemed or repurchased by the Company in accordance with the terms of this Share Designation, distributions on such Series A Preferred Shares shall cease to accrue after the applicable Redemption Date, unless the Company defaults on the payment of the Series A Redemption Price of any such Series A Preferred Shares called for redemption.

Section 6. <u>Allocations</u>. Net Income or Net Loss (including items of income, gain, loss, deduction and credit thereof) of the Company for each fiscal year shall be allocated to each Shareholder in accordance with the provisions of Section 4.2 and Section 8.3 of the LLC Agreement.

Section 7. <u>Optional Redemption</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1 The Series A Preferred Shares shall be redeemable at the Company's option as determined by the Board of Directors, which redemption may be in whole or in part, from time to time. The Company shall effect any such redemption by paying cash for each Series A Preferred Share to be redeemed equal to the sum of (x) any accumulated and unpaid distributions on the Series A Preferred Shares (regardless of whether previously declared) calculated up to, but not including the date set by the Board of Directors for redemption (the "***Redemption Date***") plus (y) a redemption price of $27.50 per Series A Preferred Share (the "***Series A Redemption Price***"). Notwithstanding anything to the contrary, so long as the Series A Preferred Shares to be redeemed are held of record by the Depositary or the nominee of the Depositary, the Series A Redemption Price shall be paid by the Transfer Agent, in its capacity as paying agent for the Series A Preferred Shares, to the Depositary on the Redemption Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2 Any redemption of Series A Preferred Shares by the Company permitted under <u>Section</u> <u>7.1</u> shall be conducted in accordance with this <u>Section</u> <u>7.2</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company shall, not less than thirty (30) calendar days and not more than sixty (60) calendar days before the scheduled Redemption Date, give notice of redemption to the holders of any Series A Preferred Shares to be redeemed as such holders' names appear on the books of the Transfer Agent and at the address of such holders shown therein (a "***Redemption Notice***"). The Redemption Notice shall specify, as applicable, (i) the Redemption Date, (ii) the number of Series A Preferred Shares to be redeemed and, if less than all Outstanding Series A Preferred Shares are to be redeemed, the number of Series A Preferred Shares to be

------

redeemed from such holder, (iii) the Series A Redemption Price, (iv) the place where any Series A Preferred Shares in certificated form are to be redeemed and shall be presented and surrendered for payment of the Series A Redemption Price therefor (which shall occur automatically if the certificate representing such Series A Preferred Shares is issued in the name of the Depositary or its nominee), and (v) that distributions on the Series A Preferred Shares to be redeemed will cease to accumulate from and after such Redemption Date. Notwithstanding the foregoing, no Redemption Notice will be required where the Company elects to redeem, repurchase or assign to a third party the right to purchase Series A Preferred Shares pursuant to Section 3.7 of the LLC Agreement in order to eliminate an Adverse Consequence.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If the Company elects to redeem less than all of the Outstanding Series A Preferred Shares, the number of Series A Preferred Shares to be redeemed shall be determined by the Board of Directors, and such Series A Preferred Shares shall be redeemed by such method of selection as the Depositary shall determine, either Pro Rata or by lot, with adjustments to avoid redemption of fractional Series A Preferred Shares. The aggregate Series A Redemption Price for any such partial redemption of the Outstanding Series A Preferred Shares shall be allocated correspondingly among the redeemed Series A Preferred Shares. The Series A Preferred Shares not redeemed shall remain Outstanding and entitled to all the preferences, rights, powers, and duties provided in this Share Designation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If the Company gives or causes to be given a Redemption Notice, the Company shall deposit with the Transfer Agent, in its capacity as paying agent for the Series A Preferred Shares, funds sufficient to redeem the Series A Preferred Shares as to which such Redemption Notice shall have been given, no later than 10:00 a.m. New York City time on the Redemption Date, and shall give the Transfer Agent irrevocable instructions and authority to pay the Series A Redemption Price to each holder of Series A Preferred Shares whose Series A Preferred Shares are to be redeemed upon surrender or deemed surrender (which shall occur automatically if the certificate representing such Series A Preferred Shares is issued in the name of the Depositary or its nominee) of the certificates therefor as set forth in the Redemption Notice. If a Redemption Notice shall have been given, from and after the Redemption Date, unless the Company defaults in providing funds sufficient for such redemption at the time and place specified for payment pursuant to the Redemption Notice, all distributions on such Series A Preferred Shares to be redeemed shall cease to accumulate and all rights of holders of such Series A Preferred Shares with respect to such Series A Preferred Shares to be redeemed shall cease, except the right to receive the Series A Redemption Price, and such Series A Preferred Shares shall not thereafter be transferred on the books of the Transfer Agent or be deemed to be Outstanding for any purpose whatsoever. The holders of Series A Preferred Shares shall have no claim to the interest income, if any, earned on funds deposited with the Transfer Agent. Any funds deposited with the Transfer Agent hereunder by the Company for any reason, including redemption of Series A Preferred Shares, that remain unclaimed or unpaid after one year after the applicable Redemption Date or other payment date, as applicable, shall be, to the extent permitted by law, repaid to the Company upon its written request, after which repayment the holders of the Series A Preferred Shares entitled to such redemption or other payment shall have recourse only to the Company. Notwithstanding any Redemption Notice, there shall be no redemption of any Series A Preferred Shares called for redemption until funds sufficient to pay the full Series A Redemption Price of such Series A Preferred Shares shall have been deposited by the Company with the Transfer Agent.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Any Series A Preferred Shares that are redeemed or otherwise acquired by the Company shall be cancelled. If only a portion of the Series A Preferred Shares represented by a certificate shall have been called for redemption, upon surrender of the certificate to the Transfer Agent (which shall occur automatically if the certificate representing such Series A Preferred Shares is registered in the name of the Depositary or its nominee), the Company shall issue and the Transfer Agent shall deliver to the holders of such Series A Preferred Shares a new certificate (or adjust the applicable book-entry account) representing the number of Series A Preferred Shares represented by the surrendered certificate that have not been called for redemption.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Notwithstanding anything to the contrary in this <u>Section</u> <u>7</u>, in the event that full cumulative distributions on the Series A Preferred Shares and any Series A Parity Securities shall not have been paid or declared and set aside for payment, the Company shall not be permitted to repurchase, redeem or otherwise acquire, in whole or in part, any Series A Preferred Shares or Series A Parity Securities except pursuant to a purchase or exchange offer made on the same relative terms to all holders of Series A Preferred Shares and holders of any Series A Parity Securities. Subject to Section 3.7 of the LLC Agreement, so long as any Series A Preferred Shares are Outstanding, the Company shall not be permitted to redeem, repurchase or otherwise acquire any Common Shares or any other Series A Junior Securities unless full cumulative distributions on the Series A Preferred Shares and any Series A Parity Securities for all prior and the then-ending Series A Distribution Periods, with respect to the Series A Preferred Shares, and all prior and then ending distribution periods, with respect to any such Series A Parity Securities, shall have been paid or declared and set aside for payment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) All redemptions pursuant to this <u>Section</u> <u>7</u> shall be subject to Sections 18-607 and 18-804 of the Delaware Act.

Section 8. <u>Liquidation Rights.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1 All property and all cash in excess of that required to discharge liabilities as provided in Section 8.3(b) of the LLC Agreement and that are required to satisfy the Liquidation Preference shall be distributed to the Shareholders with, and to the extent of, the positive balances in their respective Capital Accounts, as determined after taking into account all Capital Account adjustments (other than those made by reason of Section 8.3 of the LLC Agreement or this <u>Section</u> <u>8.1</u>) for the taxable year of the Company during which the liquidation of the Partnership occurs (with such date of occurrence being determined pursuant to Treasury Regulations Section 1.704-1(b)(2)(ii)(g)), and such distribution shall be made by the end of such taxable period (or, if later, within 90 calendar days after said date of such occurrence).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2 Liquidating distributions to holders of Series A Preferred Shares shall be made only to the extent that the Company's assets are available after satisfaction of all liabilities to creditors and subject to the rights of holders of any Series A Senior Securities and any Series A Parity Securities. If in the year of liquidation, dissolution and winding up, or sale, exchange or other disposition of all or substantially all of the assets of the Company, any holder's Capital Account in respect of such Series A Preferred Shares is less than the aggregate Liquidation Preference of such Series A Preferred Shares, then, notwithstanding anything to the contrary contained in this Agreement, and prior to any other allocation pursuant to the LLC Agreement or

------

this Share Designation for such year and any distribution pursuant to the preceding sentence, items of gross income and gain shall be allocated to all Shareholders then holding Series A Preferred Shares, Pro Rata, until the Capital Account in respect of each Outstanding Series A Preferred Share is equal to the Liquidation Preference (and no other allocation pursuant to this Agreement shall reverse the effect of such allocation). If in the year of liquidation, dissolution and winding up, or sale, exchange or other disposition of all or substantially all of the assets of the Company, any holder's Capital Account in respect of such Series A Preferred Shares is less than the aggregate Liquidation Preference of such Series A Preferred Shares after the application of the preceding sentence, then to the extent permitted by applicable law, but otherwise notwithstanding anything to the contrary contained in the LLC Agreement or this Share Designation, items of gross income and gain for any preceding taxable year(s) with respect to which IRS Form 1065 Schedules K-1 have not been filed by the Company shall be reallocated to all Shareholders then holding Series A Preferred Units, Pro Rata, until the Capital Account in respect of each such Outstanding Series A Preferred Unit after making allocations pursuant to this and the immediately preceding sentence is equal to the Liquidation Preference (and no other allocation pursuant to this Agreement shall reverse the effect of such allocation). After such liquidating distributions have been made to the Outstanding Series A Preferred Shares and any Series A Parity Securities, as applicable, any remaining assets will be distributed to the holders of Series A Junior Securities, including the Common Shares, as the case may be.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.3 For purposes of this Share Designation, the Company's merger or consolidation with or into any other entity or by another entity with or into the Company, or the sale, lease, exchange or other transfer of all or substantially all of the Company's assets (for cash, securities or other consideration) shall not be deemed a liquidation, dissolution or winding up of the Company. If the Company enters into any merger or consolidation transaction with or into any other entity and the Company is not the surviving entity in such transaction, then the Board of Directors shall determine whether the Series A Preferred Shares (a) will be converted into equity interests of the surviving or successor entity or the direct or indirect parent of the surviving or successor entity having terms identical to the terms of the Series A Preferred Shares or (b) subject to the liquidation rights set forth in this <u>Section</u> <u>8</u>.

Section 9. <u>Limited Voting Rights; Director Appointment and Other Rights.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1 Except as otherwise expressly set forth in this Share Designation or as otherwise required under any rule, regulation, guideline or requirement of any National Securities Exchange on which the Series A Preferred Shares are listed for trading, the Series A Preferred Shares shall not have any voting rights or rights to consent or approve any action or matter, including with respect to any merger, consolidation, conversion, division or similar transaction involving the Company, any dissolution or winding up of the affairs of the Company and any amendment to this Share Designation, the LLC Agreement (including, for the avoidance of doubt, under Article X thereof) or the Certificate of Formation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2 Notwithstanding anything to the contrary herein, without the affirmative vote or consent of the holders of at least 66.67% of the Outstanding Series A Preferred Shares, voting as a single class, given in person or by proxy, either in writing or at a meeting, the Company will not amend, alter or repeal the provisions of the LLC Agreement or this Share Designation so as to materially and adversely affect any preferences, rights, powers, and duties of the Series A

------

Preferred Shares; provided, however, that (i) subject to <u>Section</u> <u>9.3</u>, the issuance of additional equity securities of the Company (including, for the avoidance of doubt, Series A Preferred Shares and Series A Parity Securities) (and any amendment to LLC Agreement or this Share Designation in connection therewith) shall not be deemed to materially and adversely affect any preferences, rights, powers, and duties of the Series A Preferred Shares for purposes of this <u>Section</u> <u>9.2</u> and (ii) for purposes of this <u>Section</u> <u>9.2</u>, no amendment of LLC Agreement or this Share Designation in connection with a merger or other transaction in which the Series A Preferred Shares remain Outstanding with the terms thereof materially unchanged in any respect adverse to the holders of the Series A Preferred Shares (as determined by the Board of Directors) shall be deemed to materially and adversely affect any preferences, rights, powers, and duties of the Series A Preferred Shares for purposes of this <u>Section</u> <u>9.2</u>. For the avoidance of doubt, the Board of Directors may increase the authorized number of Preferred Shares and Series A Preferred Shares, or create additional Series A Parity Securities, without the vote or consent of the holders of the Series A Preferred Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.3 Notwithstanding anything to the contrary herein, without the affirmative vote or consent of the holders of at least 66.67% of the Outstanding Series A Preferred Shares, voting as a class together with holders of any Series A Parity Securities upon which like voting rights have been conferred and are exercisable, given in person or by proxy, either in writing or at a meeting, the Company will not (x) create or issue any Series A Parity Securities (including any additional Series A Preferred Shares) if the cumulative distributions payable on Outstanding Series A Preferred Shares (or any Series A Parity Securities, if the holders of such Series A Parity Securities vote as a class together with the holders of the Series A Preferred Shares) are in Arrears or (y) create or issue any Series A Senior Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.4 For any matter described in this <u>Section</u> <u>9</u> in which the holders of Series A Preferred Shares are entitled to vote as a class (whether separately or together with the holders of any Series A Parity Securities), such holders of Series A Preferred Shares shall be entitled to one vote per Series A Preferred Share.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.5 Notwithstanding anything to the contrary herein, no vote of the holders of Series A Preferred Shares shall be required if, at or prior to the time when such action is to take effect, provision is made for the redemption of all Series A Preferred Shares at the time Outstanding. In any such event, proper notice shall have been made and sufficient funds shall have been deposited in trust or with the Transfer Agent to affect such redemption pursuant to <u>Section</u> <u>7</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.6 <u>Board Designation Right</u>s.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Notwithstanding <u>Section</u> <u>9.1</u>, whenever the distributions with respect to any Series A Preferred Shares are in Arrears for six (6) or more Series A Distribution Periods, whether or not such Series A Distribution Periods occur consecutively (a "***Nonpayment Event***"), the number of directors constituting the Board of Directors will be automatically increased by two (2) additional directors (the "***Preferred Shares Directors***") and the holders of the Series A Preferred Shares (voting together as a single class with all other classes or series of Preferred Shares that the Company may issue upon which like voting rights have been conferred and are exercisable and which are entitled to vote as a class with the Series A Preferred Shares in

------

the election of those two directors) will be entitled to vote for the election of those two additional directors at a special meeting called by the Company at the request of the holders of record of at least 25% of the Outstanding Series A Preferred Shares or by the holders of any other class or series of Preferred Shares upon which like voting rights have been conferred and are exercisable and which are entitled to vote as a class with the Series A Preferred Shares in the election of those two directors, and at each subsequent annual meeting until all distributions accumulated on the Series A Preferred Shares for all past Series A Distribution Periods and the then current Series A Distribution Period will have been fully paid or declared and a sum sufficient for the payment thereof set aside for payment. In that case, the right of holders of the Series A Preferred Shares to elect any directors will cease and, unless there are other classes or series of Preferred Shares upon which like voting rights have been conferred and are exercisable, the term of office of any directors elected by holders of the Series A Preferred Shares will immediately terminate and the number of directors constituting the Board of Directors will be reduced accordingly. In no event shall the holders of Series A Preferred Shares be entitled under the voting rights under this <u>Section</u> <u>9.6</u> to elect a director that would cause the Company to fail to satisfy a requirement relating to director independence of any National Securities Exchange on which the Series A Preferred Shares or any class or series of the securities of the Company are listed for trading For the avoidance of doubt, in no event will the total number of directors elected by holders of the Series A Preferred Shares (voting together as a single class with all other classes or series of Preferred Shares that the Company may issue upon which like voting rights have been conferred and are exercisable and which are entitled to vote as a class with the Series A Preferred Shares in the election of such directors) pursuant to the voting rights under this <u>Section</u> <u>9.6</u> exceed two.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If a special meeting is not called by the Company within 30 days after request from the holders of Series A Preferred Shares as described in <u>Section</u> <u>9.6(a)</u>, then the holders of record of at least 25% of the Outstanding Series A Preferred Shares may designate a holder to call the meeting at the expense of the Company and such meeting may be called by the holder so designated in accordance with the procedures required for calling a special meeting of Shareholders, as set forth in Article XI of the LLC Agreement, and shall be held at the place designated by the holder calling such meeting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If at any time following a Nonpayment Event, when the voting rights conferred upon the Series A Preferred Shares pursuant to <u>Section</u> <u>9(a)</u> are exercisable, any vacancy in the office of a director elected pursuant to <u>Section</u> <u>9(a)</u> shall occur, then such vacancy may be filled only by the remaining such director or by vote of the holders of record of the Outstanding Series A Preferred Shares and any other classes or series of Preferred Shares upon which like voting rights have been conferred and are exercisable and which are entitled to vote as a class with the Series A Preferred Shares in the election of directors pursuant to <u>Section</u> <u>9(a)</u>. Any director elected or appointed pursuant to <u>Section</u> <u>9(a)</u> may be removed only by the affirmative vote of holders of the Outstanding Series A Preferred Shares and any other classes or series of Preferred Shares upon which like voting rights have been conferred and are exercisable and which classes or series of Preferred Shares are entitled to vote as a class with the Series A Preferred Shares in the election of directors pursuant to <u>Section</u> <u>9(a)</u>, such removal to be effected by the affirmative vote of a majority of the votes entitled to be cast by the holders of the Outstanding Series A Preferred Shares and any such other classes or series of Preferred Shares, and may not be removed by the holders of the Common Shares.

------

Section 10. <u>Other Terms Applicable to Shares; No Other Rights</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.1 <u>No Sinking Fund</u>. The Series A Preferred Shares shall not have the benefit of any sinking fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.2 <u>Conversion</u>. The Series A Preferred Shares are not convertible into or exchangeable for any other securities or property of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.3 <u>Record Holders</u>. To the fullest extent permitted by applicable law, the Board of Directors, the Company, and the Transfer Agent may deem and treat any holder of Series A Preferred Shares as the true, lawful, and absolute owner of the applicable Series A Preferred Shares for all purposes, and none of the Directors, the Company, or the Transfer Agent shall be affected by any notice to the contrary, except as otherwise provided by law or any applicable rule, regulation, guideline or requirement of any National Securities Exchange on which the Series A Preferred Shares may be listed or admitted to trading, if any.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.4 <u>Notices</u>*.* All notices or other communications in respect of holders of the Series A Preferred Shares shall be sufficiently given (i) if given in writing and either delivered in person or by first class mail, postage prepaid, or (ii) if given in such other manner as may be permitted in the LLC Agreement, this Share Designation or by applicable law. Any notice or other communication given to a holder of a Series A Preferred Share in book-entry form may be given in the manner prescribed by the Depositary, notwithstanding any contrary indication herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.5 <u>Special Provisions Related to Preferred Holders</u>. Notwithstanding anything to the contrary set forth in the LLC Agreement or this Share Designation, the holders of the Series A Preferred Shares, (i) shall (a) possess the rights and obligations provided in the LLC Agreement with respect to a Shareholder and (b) have a Capital Account as a Shareholder pursuant to Section 4.1 of the LLC Agreement and all other provisions related thereto and (ii) shall not (a) be entitled to vote on any matters requiring the approval or vote of the holders of Outstanding Shares, except as required by this Share Designation, or (b) be entitled to any distributions other than as provided in <u>Section</u> <u>5</u>, <u>Section</u> <u>6</u>, <u>Section</u> <u>7</u>, or <u>Section</u> <u>8</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.6 <u>Other Rights; Fiduciary Duties</u>. For the avoidance of doubt, the Series A Preferred Shares constitute Shares, and the holders of Series A Preferred Shares constitute Shareholders, for all purposes of the LLC Agreement and, to the extent not otherwise set forth in this Share Designation, the rights, restrictions and obligations with respect to Shares and Shareholders set forth in the LLC Agreement shall apply to the Series A Preferred Shares and the holders thereof. The Series A Preferred Shares shall not have any designations, preferences, rights, powers or duties except as set forth in the LLC Agreement or this Share Designation, or as otherwise required by applicable Law. Notwithstanding anything to the contrary in the LLC Agreement or this Share Designation or any duty (including any fiduciary duty) otherwise existing at law, in equity or otherwise, to the fullest extent permitted by applicable law, neither the Board of Directors nor any other Indemnitee shall owe any duties, including fiduciary duties, or have any liabilities to holders of the Series A Preferred Shares, other than the implied contractual covenant of good faith and fair dealing.

Section 11. <u>Miscellaneous.</u>

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.1 <u>Certificates</u>. The Series A Preferred Shares shall be represented by one or more global securities issued to The Depository Trust Company (and its successors or assigns) or any other securities depositary selected by the Board of Directors (the "***Depositary***") and registered in the name of its nominee. No holder of Series A Preferred Shares shall be entitled to receive a certificate evidencing its Series A Preferred Shares unless otherwise required by law or the Depositary gives notice of its intention to resign or is no longer eligible to act as such and Board of Directors shall not have selected a substitute Depositary within 60 calendar days thereafter. So long as the Depositary shall have been appointed and is serving with respect to the Series A Preferred Shares, payments and communications made by the Company to holders of the Series A Preferred Shares shall be made by making payments to, and communicating with, the Depositary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.2 <u>Amendments; Successors and Assigns</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Any and all amendments to this Share Designation shall require the prior approval of, and may be proposed only by, the Board of Directors. Unless otherwise specified herein, any such amendment that would require the approval of holders of the Series A Preferred Shares shall require the affirmative vote or consent of the holders of a majority of the aggregate Outstanding Series A Preferred Shares. Any such vote or consent can be taken at any meeting of the holders of Series A Preferred Shares or may be taken without a meeting if the holders of the required number of Outstanding Series A Preferred Shares necessary to approve such action execute and deliver one or more consents thereto, and such consent is recorded with the minutes of proceedings of the holders of the Series A Preferred Shares. For the avoidance of doubt, any such consent may be executed by the holders of the Series A Preferred Shares by electronic signature, and may be delivered to the Company by electronic transmission. For the avoidance of doubt, the Board of Directors, without the approval of any holder of the Series A Preferred Shares, may amend any provision of this Share Designation, and execute, swear to, acknowledge, deliver, file and record any documents that may be required in connection therewith, to reflect any matter set forth in Section 9.2 of the LLC Agreement, to the extent that any such matter relates to the Series A Preferred Shares or the terms of this Share Designation, other than as set forth in <u>Section</u> <u>9</u> of this Share Designation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) This Share Designation shall inure to the benefit of and be binding upon the holders of the Series A Preferred Shares and their respective successors, assigns, representatives, executors, beneficiaries, administrators, heirs, and agents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.3 <u>Inconsistencies</u>. This Share Designation, any other Share Designations (as defined in the LLC Agreement) and the LLC Agreement together constitute the "limited liability company agreement" of the Company. To the extent that any provision of this Share Designation conflicts with or is inconsistent with the LLC Agreement, this Share Designation shall control and this Share Designation shall be deemed, for all purposes, to amend, supplement and modify the LLC Agreement in accordance with the terms hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.4 <u>Severability</u>(c) . If any provision of this Share Designation is held to be invalid or unenforceable for any reason, such provision shall be ineffective to the extent of such invalidity or unenforceability; provided, however, that the remaining provisions will continue in full force without being impaired or invalidated in any way unless such invalid or unenforceable provision or clause shall be so significant as to materially affect the expectations of the Shareholders

------

regarding this Share Designation. Otherwise, any invalid or unenforceable provision shall be replaced by the Shareholders with a valid provision which most closely approximates the intent and economic effect of the invalid or unenforceable provision.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.5 <u>Governing Law; Disputes</u>. This Shares Designation shall be governed by and construed in accordance with the laws of the State of Delaware without regard to conflict of law principles. All Disputes shall be subject to Section 12.10 of the LLC Agreement.

## Ex1A-4

**Exhibit 4.1** 

**<u>PUBLIC OFFERING SUBSCRIPTION AGREEMENT</u>**

**10.00% Series A Cumulative Redeemable Preferred Shares** 

**of** 

**Phoenix Energy One, LLC** 

This Subscription Agreement (this "<u>Agreement</u>") relates to the agreement of the undersigned (the "<u>Investor</u>") to purchase ____________ newly issued 10.00% Series A Cumulative Redeemable Preferred Shares, representing limited liability company interests without par value, (collectively, the "<u>Shares</u>" and each a "Share"), of Phoenix Energy One, LLC, a Delaware limited liability company (the "<u>Company</u>"), for a purchase price of $20.00 per Share, for a total purchase price of $_________ ("<u>Subscription Price</u>"), subject to the terms, conditions, acknowledgments, representations and warranties stated herein and in the final offering circular for the sale of the Shares, dated [ ], 2025, contained in the offering statement on Form 1-A qualified by the Securities and Exchange Commission (the "<u>SEC</u>") on [ ], 2025 (the "<u>Offering Circular</u>"). Any capitalized terms used but not defined herein shall have the meanings given to them in the Offering Circular.

The Investor understands that, if it wishes to purchase the Shares, the Investor must complete this Agreement and submit the Subscription Price as set forth herein. There is a minimum initial investment amount per investor of $1,000.00 for the Shares and any additional purchases must be made in increments of at least $20.00. Subscription funds will be held in an escrow account by and at an FDIC insured bank in compliance with SEC Rule 15c2-4, with funds released to the Company at the closing of the public offering, as described in the Offering Circular. The escrow account will be maintained by Wilmington Trust, National Association ("<u>Wilmington Trust</u>") as the escrow agent pursuant to that certain Escrow Agreement dated June 8, 2025 by and among the Company, Digital Offering, LLC (the lead selling agent as described in the Offering Circular) and Wilmington Trust. In the event that the Company's public offering fails to close, then the Shares will not be sold to the Investor pursuant to this Agreement, all funds paid by the Investor into the escrow account will be returned to the Investor by the escrow agent without interest or offset and, upon the return of the funds by the escrow agent, this Agreement shall terminate automatically (provided that <u>Sections 11-19</u> shall survive such termination).

In order to induce the Company to accept this Agreement for the Shares and as further consideration for such acceptance, the Investor hereby makes, adopts, confirms and agrees to all of the following covenants, acknowledgments, representations and warranties with the full knowledge that the Company and its affiliates will expressly rely thereon in making a decision to accept or reject this Agreement:

1. **Type of Ownership**.

☐ Individual ☐ Joint ☐ Institution

2. **Investor Information**. (Note that the Investor must include a permanent street address even if his, her
or its mailing address is a P.O. Box.)

---

| | |
|:---|:---|
| **Individual/Beneficial Owner:** | **Joint-Owner/Minor:** (If applicable.) |
| Name: | Name: |
| Social Security/Tax ID Number: | Social Security/Tax ID Number: |
| Street Address: | Street Address: |
| City: | City: |
| State: | State: |
| Postal Code: | Postal Code: |
| Country: | Country: |
| Phone Number: | Phone Number: |
| Email Address: | Email Address: |

---

------

3. **Investor Eligibility Certifications**.

The Investor understands that, to purchase Shares, the Investor must either (a) be an "accredited investor" as such term is defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933 (the "Act") or (b) unless the securities issued in the offering initially trade on a national securities exchange, limit its investment in the Shares to a maximum of: (i) 10% of its net worth or annual income, whichever is greater, if the Investor is a natural person; or (ii) 10% of its revenues or net assets, whichever is greater, for its most recently completed fiscal year, if the Investor is a non-natural person. The Investor understands that if the Investor is a natural person, the Investor should determine his or her net worth for purposes of these representations by calculating the difference between his or her total assets and total liabilities. The Investor understands this calculation must exclude the value of his or her primary residence and may exclude any indebtedness secured by his or her primary residence (up to an amount equal to the value of his or her primary residence). In the case of fiduciary accounts, net worth and/or income suitability requirements may be satisfied by the beneficiary of the account or by the fiduciary, if the fiduciary directly or indirectly provides funds for the purchase of the Shares.

The Investor hereby represents and warrants that the Investor meets the qualifications to purchase Shares because:

☐ If the Investor is a natural person, the aggregate purchase price for the Shares the Investor is purchasing in the offering does not exceed 10% of the Investor's net worth or annual income, whichever is greater.

☐ If the Investor is a non-natural person, the aggregate purchase price for the Shares the Investor is purchasing in the offering does not exceed 10% of its revenues or net assets, whichever is greater, for its most recently completed fiscal year.

☐ The Investor is an accredited investor.

Are you an affiliate of a broker-dealer? ☐ Yes ☐ No If yes, you are not eligible to participate under Financial Industry Regulatory Authority ("<u>FINRA</u>") Rule 5130.

The Investor recognizes that the Shares are interests in a direct participation program as defined in FINRA Rule 2310. The Investor (i) represents and warrants that the Investor has received, read, and fully understand the Offering Circular, including the section titled "*Plan of Distribution—Investment Limitations if We Do Not Obtain a Listing on a National Securities Exchange*" and (ii) confirms that the Investor has reviewed the following disclosed facts related to the offering:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) items of compensation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) physical properties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) tax aspects;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) financial stability and experience of the sponsor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) the program's conflict and risk factors; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) appraisals and other pertinent reports.

The Investor is basing the Investor's decision to purchase the Shares solely on the information contained in the Offering Circular and has relied only on the information contained in the Offering Circular and has not relied on any representations made by any other person.

------

The Investor further represent that the Investor has such knowledge of, and experience in, financial and business matters as to be capable of (1) evaluating the merits and risks of, and bearing the economic risks entailed by, an investment in the Shares and (2) protecting the Investor's interests in connection with that investment. The Investor acknowledge that an investment in the Shares involves a high degree of risk and have read the "*Risk Factors*" section of the Offering Circular.

4. **Acceptance or Rejection of Subscription**. The Investor understands that the Company reserves the right
to, in its sole discretion, accept or reject this subscription, in whole or in part, for any reason whatsoever, and to the extent not accepted, unused funds held at the escrow agent shall be returned to the Investor in full, without any interest
accrued thereon or deduction, and, upon the rejection of the subscription, this Agreement shall be terminated (provided that <u>Sections 11-19</u> shall survive such termination).

5. **Offering Circular**. The Investor hereby confirms that the Investor has received the Offering Circular.

6. **Third ARLLCA**. The Investor hereby confirms that the Investor accepts the terms of the Company's
Third Amended and Restated Limited Liability Company Agreement (the " <u>Third ARLLCA</u> "), substantially in the form as attached to the Offering Circular, to be entered into in connection with the offering. The Investor agrees that the
Investor's rights and responsibilities relative to the Investor's ownership of the Shares will be governed by the Third ARLLCA, as it may be amended, restated or otherwise modified from time to time, in accordance with its terms, and to
the extent that any provision of this Agreement conflicts with the terms of the Third ARLLCA, the terms of the Third ARLLCA shall govern and be controlling.

7. **Purchase for Investor's Own Account**. The Investor hereby confirms that the Investor is purchasing
the Shares for the Investor's own account.

8. **Compliance with Laws**. The Investor hereby represents and warrants that the Investor is not on, and is
not acting as an agent, representative, intermediary or nominee for any person identified on, the list of blocked persons maintained by the Office of Foreign Assets Control, U.S. Department of Treasury. In addition, the Investor has complied with
all applicable U.S. laws, regulations, directives, and executive orders relating to anti-money laundering, including but not limited to the following laws: (1) the Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56; and (2) Executive Order 13224 (Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support
Terrorism) of September 23, 2001.

**By making the foregoing representations, the Investor has not waived any right of action the Investor may have under federal or state securities law. Any such waiver would be unenforceable. The Company will assert the Investor's representations as a defense in any subsequent litigation where such assertion would be relevant.** 

9. **Electronic Signatures**. Digital or electronic signatures, often referred to as an "e-signature", enable paperless contracts and help speed up business transactions. The Electronic Signatures in Global and National Commerce Act was meant to ease the adoption of electronic signatures. The
mechanics of this Agreement's electronic signature include the Investor signing this Agreement below by typing in the Investor's name, with the underlying software recording the Investor's IP address, browser identification, the
timestamp, and a securities hash within an SSL encrypted environment. This electronically signed Agreement will be available to both the Investor and the Company, as well as any

------

associated brokers, so they can store and access it at any time, and it will be stored by and accessible from Digital Offering servers. The Investor and the Company each hereby consent and agree that electronically signing this Agreement constitutes the Investor's signature, acceptance and agreement as if actually signed by the Investor in writing. Further, all parties agree that no certification, authority or other third-party verification is necessary to validate any electronic signature; and that the lack of such certification or third-party verification will not in any way affect the enforceability of the Investor's signature or resulting contract between the Investor and the Company. The Investor understands and agrees that his, her or its e-signature executed in conjunction with the electronic submission of this Agreement shall be legally binding and such transaction shall be considered authorized by the Investor. The Investor agrees that his, her or its electronic signature is the legal equivalent of his, her or its manual signature on this Agreement and the Investor consents to be legally bound by this Agreement's terms and conditions. Furthermore, the Investor and the Company each hereby agree that all current and future notices, confirmations and other communications regarding this Agreement specifically, and future communications in general between the parties, may be made by email, sent to the email address of record as set forth in this Agreement or as otherwise from time to time changed or updated and disclosed to the other party, without necessity of confirmation of receipt, delivery, or reading, and such form of electronic communication is sufficient for all matters regarding the relationship between the parties. If any such electronically sent communication fails to be received for any reason, including, but not limited to, such communications being diverted to the recipient's spam filters by the recipient's email service provider, or due to a recipient's change of address, or due to technology issues by the recipient's service provider, the parties agree that the burden of such failure to receive is on the recipient and not the sender, and that the sender is under no obligation to resend communications via any other means, including, but not limited to, postal service or overnight courier, and that such communications shall for all purposes, including legal and regulatory, be deemed to have been delivered and received. No physical, paper documents will be sent to the Investor, and if the Investor desires physical documents then the Investor agrees to be satisfied by directly and personally printing, at the Investor's own expense, the electronically sent communication(s) and maintaining such physical records in any manner or form that the Investor desires.

10. **Delivery Instructions**. All Shares will be retained at the Company's transfer agent in digital book
entry. Upon closing, the Investor will receive a notice of his, her or its holdings delivered to the address of record above. Equity Stock Transfer, LLC will be the transfer agent and registrar for the offering as described in the Offering Circular.
Such shares may be transferred to the Investor's outside brokerage account by requesting their outside broker dealer to affect such transfer. Request for transfer may only be made by the outside broker dealer of the Investor.

11. **Jury Trial Waiver**. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED IN CONTRACT, TORT BUT NOT INCLUDING CLAIMS UNDER THE FEDERAL SECURITIES LAWS) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS
OF EITHER PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF. EACH OF THE PARTIES HERETO ALSO WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF SUCH PARTY. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED
AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. BY AGREEING TO THIS WAIVER, THE INVESTOR IS NOT DEEMED TO WAIVE THE COMPANY'S COMPLIANCE WITH THE FEDERAL SECURITIES LAWS AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER.

------

12. **Governing Law; Exclusive Jurisdiction**. This Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York. Any legal suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby may be instituted in the federal courts of the United States or the courts of
the State of New York, and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action
or any proceeding in such courts and irrevocably waive and agree not to plead or claim in any such court that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

13. **Severability**. In case any one or more of the provisions contained in this Agreement is for any reason
held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and such invalid, illegal, or unenforceable provision shall be reformed and
construed so that it will be valid, legal, and enforceable to the maximum extent permitted by law.

14. **Successors and Assigns**. The terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and permitted assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assigns any
rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. The Investor may not assign any of its rights or obligations under this Agreement without the prior written consent of
the Company, and any such purported assignment without such consent shall be null and void *ab initio*.

15. **Amendments**. This Agreement may be amended or otherwise modified only by a written instrument executed by
the Investor and the Company.

16. **Delays or Omissions**. No delay or omission to exercise any right, power or remedy accruing to any party
under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, of or in any similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement,
or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or
otherwise afforded to any party, shall be cumulative and not alternative.

17. **Specific Performance**. In addition to any and all other remedies that may be available at law in the
event of any breach of this Agreement, the Company shall be entitled to specific performance of the agreements and obligations of the Investor hereunder and to such other injunction or other equitable relief as may be granted by a court of competent
jurisdiction, without posting a bond or undertaking and without proof of damages and this being in addition to any other remedy to which the Company may be entitled at law or in equity.

------

18. **No Strict Construction**. In the event an ambiguity or question of intent or interpretation arises, this
Agreement will be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof will arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.

19. **Fees and Expenses**. Each party will pay its own fees and expenses in connection with this Agreement and
transactions contemplated hereby.

Digital Offering, LLC is registered with the SEC as a broker-dealer. This Client Relationship Summary provides details about our brokerage and advisory services, fees, and other important information. Please review the information prior to submitting this subscription at <u>https://www.digitaloffering.com/_files/ugd/99208b_d8863d2146894a828d4fb744e5f96fd5.pdf</u> (digitaloffering.com). Digital Offering has retained AOS Inc. dba My IPO, Dalmore Group, LLC ("<u>Dalmore Group</u>") and R.F. Lafferty & Co., Inc. to participate in the offering as soliciting dealers. Certain non-executive personnel of the Company are registered representatives of Dalmore Group and will be paid a sales commission by Dalmore Group as compensation for sale of the Shares sold by such representatives. Please refer to the section of the Offering Circular titled "*Plan of Distribution—Selling Agents' Commission*" for further disclosure related to commissions payable the Selling Agents in connection with the sale of the Shares in the offering.

The Investor acknowledges that the Investor has reviewed the client relationship summary link provided above and the disclosure in the Offering Circular related to Digital Offering and the other Selling Agents.

<u>The Investor's Consent is Hereby Given</u>: By signing this Agreement electronically, the Investor is explicitly agreeing to receive documents electronically including a copy of this signed Agreement as well as ongoing disclosures, communications and notices.

SIGNATURES:

IF THE INVESTOR SET FORTH BELOW IS AN ENTITY, THE UNDERSIGNED HAS THE AUTHORITY TO ENTER INTO THIS AGREEMENT ON BEHALF OF THE ENTITY.

---

| | |
|:---|:---|
| **Investor:**<br>**[•]** | **Issuer:**<br>**Phoenix Energy One, LLC** |
| **Name:**<br> **Title (if applicable):**<br> **Email:**<br> **Date:** | **Name:** Lindsey Wilson<br> **Title:** Chief Business Officer |

---

## Ex1A-4

**Exhibit 4.2** 

**<u>PUBLIC OFFERING SUBSCRIPTION AGREEMENT</u>**

**10.00% Series A Cumulative Redeemable Preferred Shares** 

**of** 

**Phoenix Energy One, LLC** 

This Subscription Agreement (this "<u>Agreement</u>") relates to the agreement of the undersigned (the "<u>Investor</u>") to purchase ____________ newly issued 10.00% Series A Cumulative Redeemable Preferred Shares, representing limited liability company interests without par value, (collectively, the "<u>Shares</u>" and each a "Share"), of Phoenix Energy One, LLC, a Delaware limited liability company (the "<u>Company</u>"), for a purchase price of $20.00 per Share, for a total purchase price of $_________ ("<u>Subscription Price</u>"), subject to the terms, conditions, acknowledgments, representations and warranties stated herein and in the final offering circular for the sale of the Shares, dated [ ], 2025, contained in the offering statement on Form 1-A qualified by the Securities and Exchange Commission (the "<u>SEC</u>") on [ ], 2025 (the "<u>Offering Circular</u>"). Any capitalized terms used but not defined herein shall have the meanings given to them in the Offering Circular.

Simultaneously with or subsequent to the execution and delivery of this Agreement, (a) if the Investor has an account with My IPO ("<u>My IPO</u>"), the online offering platform division of AOS Inc., or, the "<u>Selling Agent</u>"), the Investor is authorizing the Selling Agent to debit, or cause to be debited, funds equal to the amount of the Subscription Price from the Investor's account at My IPO in the amount of the Subscription Price, *provided that* if the Investor's broker-dealer or the Selling Agent has arranged to facilitate the funding of the Subscription Price to the escrow account (as described below) or through a clearing agent, then the Investor agrees to deliver the funds for the Subscription Price pursuant to the instructions provided by such clearing agent, such broker-dealer or the Selling Agent.

The Investor understands that, if it wishes to purchase the Shares, the Investor must complete this Agreement and, if the Investor has an account with My IPO, have sufficient funds in the Investor's account at the time of the execution and delivery of this Agreement; or, if the Investor does not maintain an account with My IPO, submit the applicable Subscription Price as set forth herein. There is a minimum initial investment amount per investor of $1,000.00 for the Shares and any additional purchases must be made in increments of at least $20.00. Subscription funds submitted by Investors who do not have an account with My IPO will be held in an escrow account by and at an FDIC insured bank in compliance with SEC Rule 15c2-4, with funds released to the Company at the closing of the public offering, as described in the Offering Circular. The escrow account will be maintained by Wilmington Trust, National Association ("<u>Wilmington Trust</u>") as the escrow agent pursuant to that certain Escrow Agreement dated June 8, 2025 by and among the Company, Digital Offering, LLC (the lead selling agent as described in the Offering Circular) and Wilmington Trust. In the event that the Company's public offering fails to close, then the Shares will not be sold to the Investor pursuant to this Agreement, all funds paid by the Investor into the escrow account will be returned to the Investor by the escrow agent without interest or offset and, upon the return of the funds by the escrow agent, this Agreement shall terminate automatically (provided that <u>Sections 11-19</u> shall survive such termination). If any portion of the Shares is not sold in the public offering, any funds paid by the Investor for such unsold portion of the Shares will be returned to the Investor by the escrow agent, without interest or offset, or, if the Investor has an account with My IPO, funds for such unsold Shares that have not been deposited in the escrow account will not be debited from the Investor's account with My IPO at the closing of the Company's public offering.

In order to induce the Company to accept this Agreement for the Shares and as further consideration for such acceptance, the Investor hereby makes, adopts, confirms and agrees to all of the following covenants, acknowledgments, representations and warranties with the full knowledge that the Company and its affiliates will expressly rely thereon in making a decision to accept or reject this Agreement:

1. **Type of Ownership** 

☐ Individual ☐ Joint ☐ Institution

2. **Investor Information** (Note that the Investor must include a permanent street address even if his, her or
its mailing address is a P.O. Box.)

---

| | |
|:---|:---|
| **Individual/Beneficial Owner:** | **Joint-Owner/Minor:** (If applicable.) |
| Name: | Name: |
| Social Security/Tax ID Number: | Social Security/Tax ID Number: |
| Street Address: | Street Address: |
| City: | City: |
| State: | State: |
| Postal Code: | Postal Code: |
| Country: | Country: |
| Phone Number: | Phone Number: |
| Email Address: | Email Address: |

---

------

**3.** **Investor Eligibility Certifications.** 

The Investor understands that, to purchase Shares, the Investor must either (a) be an "accredited investor" as such term is defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933 (the "Act") or (b) unless the securities issued in the offering initially trade on a national securities exchange, limit its investment in the Shares to a maximum of: (i) 10% of its net worth or annual income, whichever is greater, if the Investor is a natural person; or (ii) 10% of its revenues or net assets, whichever is greater, for its most recently completed fiscal year, if the Investor is a non-natural person. The Investor understands that if the Investor is a natural person, the Investor should determine his or her net worth for purposes of these representations by calculating the difference between his or her total assets and total liabilities. The Investor understands this calculation must exclude the value of his or her primary residence and may exclude any indebtedness secured by his or her primary residence (up to an amount equal to the value of his or her primary residence). In the case of fiduciary accounts, net worth and/or income suitability requirements may be satisfied by the beneficiary of the account or by the fiduciary, if the fiduciary directly or indirectly provides funds for the purchase of the Shares.

The Investor hereby represents and warrants that the Investor meets the qualifications to purchase Shares because:

☐ If the Investor is a natural person, the aggregate purchase price for the Shares the Investor is purchasing in the offering does not exceed 10% of the Investor's net worth or annual income, whichever is greater.

☐ If the Investor is a non-natural person, the aggregate purchase price for the Shares the Investor is purchasing in the offering does not exceed 10% of its revenues or net assets, whichever is greater, for its most recently completed fiscal year.

☐ The Investor is an accredited investor.

Are you an affiliate of a broker-dealer? ☐ Yes ☐ No If yes, you are not eligible to participate under Financial Industry Regulatory Authority ("<u>FINRA</u>") Rule 5130.

The Investor recognizes that the Shares are interests in a direct participation program as defined in FINRA Rule 2310. The Investor (i) represents and warrants that the Investor has received, read, and fully understand the Offering Circular, including the section titled "*Plan of Distribution—Investment Limitations if We Do Not Obtain a Listing on a National Securities Exchange*" and (ii) confirms that the Investor has reviewed the following disclosed facts related to the offering:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) items of compensation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) physical properties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) tax aspects;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) financial stability and experience of the sponsor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) the program's conflict and risk factors; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) appraisals and other pertinent reports.

The Investor is basing the Investor's decision to purchase the Shares solely on the information contained in the Offering Circular and has relied only on the information contained in the Offering Circular and has not relied on any representations made by any other person. The Investor recognized that the Shares are interests in a direct participation program as defined in FINRA Rule 2310.

The Investor further represent that the Investor has such knowledge of, and experience in, financial and business matters as to be capable of (1) evaluating the merits and risks of, and bearing the economic risks entailed by, an investment in the Shares and (2) protecting the Investor's interests in connection with that investment. The Investor acknowledge that an investment in the Shares involves a high degree of risk and have read the "*Risk Factors*" section of the Offering Circular.

4. **Acceptance or Rejection of Subscription**. The Investor understands that the Company reserves the right
to, in its sole discretion, accept or reject this subscription, in whole or in part, for any reason whatsoever, and to the extent not accepted, unused funds maintained in the Investor's account at My IPO or paid by the Investor into the escrow
account established by the Selling Agent shall either not be debited from the Investor's account at My IPO or be returned to the Investor by the escrow agent in full, without any interest accrued thereon or deduction, and, upon the rejection of
the subscription (and, if applicable, the refund of the amount paid by the Investor into the escrow account), this Agreement shall be terminated (provided that <u>Sections 11-19</u> shall survive such
termination).

5. **Offering Circular**. The Investor hereby confirms that the Investor has received the Offering Circular.

6. **Third ARLLCA**. The Investor hereby confirms that the Investor accepts the terms of the Company's
Third Amended and Restated Limited Liability Company Agreement (the " <u>Third ARLLCA</u> "), substantially in the form as attached to the Offering Circular, to be entered into in connection with the offering. The Investor agrees that the
Investor's rights and responsibilities relative to the Investor's ownership of the Shares will be governed by the Third ARLLCA, as it may be amended, restated or otherwise modified from time to time, in accordance with its terms, and to
the extent that any provision of this Agreement conflicts with the terms of the Third ARLLCA, the terms of the Third ARLLCA shall govern and be controlling.

------

7. **Purchase for Investor's Own Account**. The Investor hereby confirms that the Investor is purchasing
the Shares for the Investor's own account.

8. **Compliance with Laws**. The Investor hereby represents and warrants that the Investor is not on, and is
not acting as an agent, representative, intermediary or nominee for any person identified on, the list of blocked persons maintained by the Office of Foreign Assets Control, U.S. Department of Treasury. In addition, the Investor has complied with
all applicable U.S. laws, regulations, directives, and executive orders relating to anti-money laundering, including but not limited to the following laws: (1) the Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56; and (2) Executive Order 13224 (Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support
Terrorism) of September 23, 2001.

**By making the foregoing representations, the Investor has not waived any right of action the Investor may have under federal or state securities law. Any such waiver would be unenforceable. The Company will assert the Investor's representations as a defense in any subsequent litigation where such assertion would be relevant.** 

9. **Electronic Signatures**. Digital or electronic signatures, often referred to as an "e-signature", enable paperless contracts and help speed up business transactions. The Electronic Signatures in Global and National Commerce Act was meant to ease the adoption of electronic signatures. The
mechanics of this Agreement's electronic signature include the Investor signing this Agreement below by typing in the Investor's name, with the underlying software recording the Investor's IP address, browser identification, the
timestamp, and a securities hash within an SSL encrypted environment. This electronically signed Agreement will be available to both the Investor and the Company, as well as any associated brokers, so they can store and access it at any time, and it
will be stored by and accessible from Digital Offering servers. The Investor and the Company each hereby consent and agree that electronically signing this Agreement constitutes the Investor's signature, acceptance and agreement as if actually
signed by the Investor in writing. Further, all parties agree that no certification, authority or other third-party verification is necessary to validate any electronic signature; and that the lack of such certification or third-party verification
will not in any way affect the enforceability of the Investor's signature or resulting contract between the Investor and the Company. The Investor understands and agrees that his, her or its e-signature executed in conjunction with the electronic submission of this Agreement shall be legally binding and such transaction shall be considered authorized by the Investor. The Investor agrees that his, her or its electronic signature is the legal
equivalent of his, her or its manual signature on this Agreement and the Investor consents to be legally bound by this Agreement's terms and conditions. Furthermore, the Investor and the Company each hereby agree that all current and future
notices, confirmations and other communications regarding this Agreement specifically, and future communications in general between the parties, may be made by email, sent to the email address of record as set forth in this Agreement or as otherwise
from time to time changed or updated and disclosed to the other party, without necessity of confirmation of receipt, delivery, or reading, and such form of electronic communication is sufficient for all matters regarding the relationship between the
parties. If any such electronically sent communication fails to be received for any reason, including, but not limited to, such communications being diverted to the recipient's spam filters by the recipient's email service provider, or due
to a recipient's change of address, or due to technology issues by the recipient's service provider, the parties agree that the burden of such failure to receive is on the recipient and not the sender, and that the sender is under no
obligation to resend communications via any other means, including, but not limited to, postal service or overnight courier, and that such communications shall for all purposes, including legal and regulatory, be deemed to have been delivered and
received. No physical, paper documents will be sent to the Investor, and if the Investor desires physical documents then the Investor agrees to be satisfied by directly and personally printing, at the Investor's own expense, the electronically
sent communication(s) and maintaining such physical records in any manner or form that the Investor desires.

10. **Delivery Instructions**. All Shares will be retained at the Company's transfer agent in digital book
entry. Upon closing, the Investor will receive a notice of his, her or its holdings delivered to the address of record above. Equity Stock Transfer, LLC will be the transfer agent and registrar for the offering as described in the Offering Circular.
Such shares may be transferred to the Investor's outside brokerage account by requesting their outside broker dealer to affect such transfer. Request for transfer may only be made by the outside broker dealer of the Investor.

11. **Jury Trial Waiver**. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED IN CONTRACT, TORT BUT NOT INCLUDING CLAIMS UNDER THE FEDERAL SECURITIES LAWS) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS
OF EITHER PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF. EACH OF THE PARTIES HERETO ALSO WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF SUCH PARTY. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,

------

RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. BY AGREEING TO THIS WAIVER, THE INVESTOR IS NOT DEEMED TO WAIVE THE COMPANY'S COMPLIANCE WITH THE FEDERAL SECURITIES LAWS AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER.

12. **Governing Law**; **Exclusive Jurisdiction**. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York. Any legal suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby may be instituted in the federal courts of the United States or the
courts of the State of New York, and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. The parties irrevocably and unconditionally waive any objection to the laying of venue of any
suit, action or any proceeding in such courts and irrevocably waive and agree not to plead or claim in any such court that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

13. **Severability**. In case any one or more of the provisions contained in this Agreement is for any reason
held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and such invalid, illegal, or unenforceable provision shall be reformed and
construed so that it will be valid, legal, and enforceable to the maximum extent permitted by law.

14. **Successors and Assigns**. The terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and permitted assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assigns any
rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. The Investor may not assign any of its rights or obligations under this Agreement without the prior written consent of
the Company, and any such purported assignment without such consent shall be null and void *ab initio*.

15. **Amendments**. This Agreement may be amended or otherwise modified only by a written instrument executed by
the Investor and the Company.

16. **Delays or Omissions**. No delay or omission to exercise any right, power or remedy accruing to any party
under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, of or in any similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement,
or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or
otherwise afforded to any party, shall be cumulative and not alternative.

17. **Specific Performance**. In addition to any and all other remedies that may be available at law in the
event of any breach of this Agreement, the Company shall be entitled to specific performance of the agreements and obligations of the Investor hereunder and to such other injunction or other equitable relief as may be granted by a court of competent
jurisdiction, without posting a bond or undertaking and without proof of damages and this being in addition to any other remedy to which the Company may be entitled at law or in equity.

18. **No Strict Construction**. In the event an ambiguity or question of intent or interpretation arises, this
Agreement will be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof will arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.

19. **Fees and Expenses**. Each party will pay its own fees and expenses in connection with this Agreement and
transactions contemplated hereby.

Digital Offering, LLC, the managing broker dealer, and Trading Block, as selling agent, are registered with the Securities and Exchange Commission ("<u>SEC</u>") as broker-dealers. Brokerage and investment advisory services and fees differ, and it is important for the Investor to understand the differences. The Client Relationship Summary provides details about brokerage and advisory services, fees, and other important information. For My IPO and Trading Block, please review the information prior to submitting this indication. For My IPO, the Client Relationship Summary can be found at <u>https://legacy.tradingblock.com/Docs/Agreements/tb/AOS_MyIPO_Form_CRS.pdf</u>. For Trading Block, the Client Relationship Summary can be found at Trading Block Reg BI Disclosure <u>https://legacy.tradingblock.com/Docs/Agreements/tb/AOS_TradingBlock_Form_CRS.pdf</u>. For Digital Offering, please review the information prior to submitting this indication at Digital Offering Reg BI Disclosure https://www.digitaloffering.com/_files/ugd/99208b_2ab07abb4aa7436eb44000e6aad67200.pdf.Digital Offering has retained AOS Inc. dba MyIPO, Dalmore Group, LLC ("<u>Dalmore Group</u>") and R.F. Lafferty & Co., Inc. to participate in the offering as soliciting dealers. Certain non-executive personnel of the Company are registered representatives of Dalmore Group and will be paid a sales commission by Dalmore Group as compensation for sale of the Shares sold by such representatives. Please refer to the section of the Offering Circular titled "*Plan of Distribution—Selling Agents' Commission*" for further disclosure related to commissions payable the Selling Agents in connection with the sale of the Shares in the offering.

------

The Investor acknowledges that the Investor has reviewed the client relationship summary link provided above and the disclosure in the Offering Circular related to Digital Offering and the other Selling Agents.

<u>The Investor's Consent is Hereby Given</u>: By signing this Agreement electronically, the Investor is explicitly agreeing to receive documents electronically including a copy of this signed Agreement as well as ongoing disclosures, communications and notices.

SIGNATURES:

IF THE INVESTOR SET FORTH BELOW IS AN ENTITY, THE UNDERSIGNED HAS THE AUTHORITY TO ENTER INTO THIS AGREEMENT ON BEHALF OF THE ENTITY.

---

| | |
|:---|:---|
| **Investor:**<br>**[•]** | **Issuer:**<br>**Phoenix Energy One, LLC** |
| **Name:**<br> **Title (if applicable):**<br> **Email:**<br> **Date:** | **Name:** Lindsey Wilson<br> **Title:** Chief Business Officer |

---

## Ex1A-6

**Exhibit 6.32** 

**<u>INDEMNIFICATION AND ADVANCEMENT AGREEMENT</u>**

This Indemnification and Advancement Agreement ("Agreement") is made as of ________ __, 20__ by and between Phoenix Energy One, LLC, a Delaware limited liability company (the "Company"), and ______________, [a member of the Board of Directors/an officer/an employee/an agent] of the Company ("Indemnitee"). This Agreement supersedes and replaces any and all previous Agreements between the Company and Indemnitee covering indemnification and advancement of expenses.

**RECITALS** 

WHEREAS, the Board of Directors of the Company (the "Board") believes that highly competent persons have become more reluctant to serve publicly companies as directors, officers, or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification and advancement of expenses against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the company.

WHEREAS, the Board has determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities. Although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations, limited liability companies and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions. At the same time, directors, officers, and other persons in service to corporations, limited liability companies or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself.

WHEREAS, the Company's Third Amended and Restated Limited Liability Company Agreement, dated [ ● ], 2025 (the "Third ARLLCA"), provides for indemnification of, among others, the officers and directors of the Company. The indemnification provisions set forth in the Third ARLLCA are not exclusive, and contemplate that contracts may be entered into between the Company and its directors, officers, and other persons with respect to indemnification and advancement of expenses;

WHEREAS, the uncertainties relating to such insurance, to indemnification, and to advancement of expenses may increase the difficulty of attracting and retaining such persons.

WHEREAS, the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company and its Shareholders (as defined in the Third ARLLCA) and that the Company should act to assure such persons that there will be increased certainty of such protection in the future.

WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified.

------

WHEREAS, this Agreement is a supplement to, and in furtherance of, the Third ARLLCA and any resolutions adopted pursuant thereto, as well as any rights of Indemnitee under any directors' and officers' liability insurance policy, and is not a substitute therefor, and does not diminish or abrogate any rights of Indemnitee thereunder.

WHEREAS, Indemnitee does not regard the protection available under the Third ARLLCA, and available insurance as adequate in the present circumstances, and may not be willing to serve or continue to serve as a/an [officer/directors/employee/agent] without adequate additional protection, and the Company desires Indemnitee to serve or continue to serve in such capacity. Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that Indemnitee be so indemnified and be advanced expenses.

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

Section 1. <u>Services to the Company.</u> Indemnitee agrees to serve as [a/an] [director/officer/employee/agent] of the Company. Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or any obligation imposed by operation of law). This Agreement does not create any obligation on the Company to continue Indemnitee in such position and is not an employment contract between the Company (or any of its subsidiaries or any Enterprise) and Indemnitee.

Section 2. <u>Definitions.</u> As used in this Agreement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) "Agent" means any person who is authorized by the Company or an Enterprise to act for or represent the interests of the Company or an Enterprise, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) A "Change in Control" occurs upon the earliest to occur after the date of this Agreement of any of the following events:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. Acquisition of Shares by Third Party. Any Person (as defined below) is or becomes the Beneficial Owner (as defined below), directly or indirectly, of securities of the Company representing fifteen percent (15%) or more of the combined voting power of the Company's then outstanding equity securities unless the change in relative beneficial ownership of the Company's securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securities entitled to vote generally in the election of directors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. Change in Board of Directors. During any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in Sections 2(b)(i), 2(b)(iii) or 2(b)(iv) of this Agreement) whose election by the Board or nomination for election by the Company's Shareholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the members of the Board;

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii. Corporate Transactions. The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv. Liquidation. The approval by the Shareholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;v. Other Events. There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;vi. For purposes of this Section 2(b), the following terms have the following meanings:

---

| | |
|:---|:---|
| 1 | "Person" has the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person excludes (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any entity owned, directly or indirectly, by the Shareholders of the Company in substantially the same proportions as their ownership of equity securities of the Company.  |

---

2 "Beneficial Owner" has the meaning given to such term in Rule 13d-3 under the Exchange Act; provided, however, that Beneficial Owner excludes any Person otherwise becoming a Beneficial Owner by reason of the Shareholders of the Company approving a merger of the Company with another entity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) "Corporate Status" describes the status of a person who is or was acting as a director, officer, employee, or Agent of the Company or an Enterprise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) "Disinterested Director" means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) "Enterprise" means any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other entity for which Indemnitee is or was serving at the request of the Company as a director, officer, employee, or Agent, including, for the avoidance of doubt, any direct or indirect subsidiary, and any affiliate (as defined by the Securities Act of 1933, as amended), including Phoenix Equity Holdings, LLC, of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) "Expenses" includes all reasonable attorneys' fees, retainers, court costs, transcript costs, fees and other costs of experts and other professionals, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, excise taxes and penalties under the Employee Retirement Income Security Act of 1974, as amended, and all other disbursements, obligations, or expenses of the types customarily incurred in connection with preparing for or participating in a Proceeding. Expenses also include (i) Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent, and (ii) for purposes of Section 14(d) of this Agreement only, Expenses incurred by Indemnitee in connection with the interpretation, enforcement or defense of Indemnitee's rights under this Agreement, by litigation or otherwise. The parties agree that for the purposes of any advancement of Expenses for which Indemnitee has made written demand to the Company in accordance with this Agreement, all Expenses included in such demand that are certified by affidavit of Indemnitee's counsel as being reasonable in the good faith judgment of such counsel will be presumed conclusively to be reasonable. Expenses, however, do not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) "Independent Counsel" means a law firm, or a member of a law firm, that is experienced in matters of corporate law and neither presently is, nor in the five years prior to its selection or appointment has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements) or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term "Independent Counsel" does not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee's rights under this Agreement. The Company agrees to pay the reasonable fees and expenses of the Independent Counsel.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) "Proceeding" includes any threatened, pending or completed action, suit, claim, counterclaim, cross claim, arbitration, mediation, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing, or any other actual, threatened or completed proceeding, whether brought in the right of the Company or otherwise and whether of a civil, criminal, administrative, legislative, regulatory, or investigative (formal or informal) nature, including any appeal therefrom, in which Indemnitee was, is, or will be involved as a party, potential party, non-party witness, or otherwise by reason of Indemnitee's Corporate Status or by reason of any action taken by Indemnitee (or a failure to take action by Indemnitee) or of any action (or failure to act) on Indemnitee's part while acting pursuant to Indemnitee's Corporate Status, in each case whether or not serving in such capacity at the time any liability or Expense is incurred for which indemnification, reimbursement, or advancement of Expenses can be provided under this Agreement. A Proceeding also includes a situation the Indemnitee believes in good faith may lead to, or culminate in, the institution of a Proceeding.

------

Section 3. <u>Indemnity in Third-Party Proceedings.</u> The Company will indemnify Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 3, the Company will indemnify Indemnitee to the fullest extent permitted by applicable law against all Expenses, judgments, fines and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with, or in respect of, such Expenses, judgments, fines and amounts paid in settlement) actually and reasonably incurred by Indemnitee or on Indemnitee's behalf in connection with such Proceeding or any claim, issue, or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and, in the case of a criminal Proceeding, had no reasonable cause to believe that Indemnitee's conduct was unlawful.

Section 4. <u>Indemnity in Proceedings by or in the Right of the Company.</u> The Company will indemnify Indemnitee in accordance with the provisions of this Section 4 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 4, the Company will indemnify Indemnitee to the fullest extent permitted by applicable law against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee's behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Company. The Company will not indemnify Indemnitee for Expenses under this Section 4 related to any claim, issue, or matter in a Proceeding for which Indemnitee has been finally adjudged by a court to be liable to the Company, unless, and only to the extent that, the Court of Chancery of the state of Delaware (the "Delaware Court") or any court in which the Proceeding was brought determines upon application by Indemnitee that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification.

Section 5. <u>Indemnification for Expenses of a Party Who is Wholly or Partly Successful.</u> To the fullest extent permitted by applicable law, the Company will indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection with any Proceeding to the extent that Indemnitee is successful, on the merits or otherwise. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues, or matters in such Proceeding, the Company will indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee's behalf in connection with or related to each successfully resolved claim, issue or matter to the fullest extent permitted by law. For purposes of this Section 5 and without limitation, the termination of any claim, issue, or matter in such a Proceeding by dismissal, with or without prejudice, will be deemed to be a successful result as to such claim, issue, or matter.

------

Section 6. <u>Indemnification for Expenses of a Witness.</u> To the fullest extent permitted by applicable law, the Company will indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee's behalf in connection with any Proceeding to which Indemnitee is not a party but to which Indemnitee is a witness, deponent, interviewee, or otherwise asked to participate or provide information.

Section 7. <u>Partial Indemnification.</u> If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses, but not, however, for the total amount thereof, the Company will indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.

Section 8. <u>Additional Indemnification.</u> Notwithstanding any limitation in Sections 3, 4, or 5 of this Agreement, the Company will indemnify Indemnitee to the fullest extent permitted by the Third ARLLCA and by applicable law (including but not limited to, the DLLCA and any amendments to or replacements of the DLLCA adopted after the date of this Agreement that expand the Company's ability to indemnify its officers, directors, employees or Agents) if Indemnitee is a party to, or threatened to be made a party to, any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor).

Section 9. <u>Exclusions.</u> Notwithstanding any provision in this Agreement, the Company is not obligated under this Agreement to indemnify Indemnitee for:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) for any amount actually paid to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except to the extent provided in Section 15(b) of this Agreement and except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act or similar provisions of state statutory law or common law;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) reimbursement of the Company by the Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by the Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) reimbursement of the Company by Indemnitee of any compensation pursuant to any compensation recoupment or clawback policy adopted by the Board or the compensation committee of the Board (if any such compensation committee is established), including but not limited to any such policy adopted to comply with stock exchange listing requirements implementing Section 10D of the Exchange Act; or

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) any Proceeding initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Proceeding or part of any Proceeding is to enforce Indemnitee's rights to indemnification or advancement, of Expenses, including a Proceeding (or any part of any Proceeding) initiated pursuant to Section 14 of this Agreement, (ii) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (iii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law.

Section 10. <u>Advances of Expenses.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company will advance, to the extent not prohibited by law, the Expenses incurred by Indemnitee in connection with:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. any Proceeding (or any part of any Proceeding) not initiated by Indemnitee; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. any Proceeding (or any part of any Proceeding) initiated by Indemnitee if

1 the Proceeding or part of any Proceeding is to enforce Indemnitee's rights to obtain indemnification or advancement of Expenses from the Company or Enterprise, including a proceeding initiated pursuant to Section 14 of this Agreement, or

2 the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company will advance the Expenses within thirty (30) days after the receipt by the Company of a statement or statements requesting such advances from time to time, whether prior to or after final disposition of any Proceeding eligible for advancement of expenses.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Advances will be unsecured and interest free. Indemnitee hereby undertakes to repay any amounts so advanced (without interest) to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company, thus Indemnitee qualifies for advances upon the execution of this Agreement and delivery to the Company. No other form of undertaking is required other than the execution of this Agreement. The Company will make advances without regard to Indemnitee's ability to repay the Expenses and without regard to Indemnitee's ultimate entitlement to indemnification under the other provisions of this Agreement.

Section 11. <u>Procedure for Notification of Claim for Indemnification or Advancement.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Indemnitee will notify the Company in writing of any Proceeding with respect to which Indemnitee intends to seek indemnification or advancement of Expenses hereunder as soon as reasonably practicable following the receipt by Indemnitee of written notice thereof. Indemnitee will include in the written notification to the Company a description of the nature of the Proceeding and the facts underlying the Proceeding and provide such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine

------

whether and to what extent Indemnitee is entitled to indemnification following the final disposition of such Proceeding. Indemnitee's failure to notify the Company will not relieve the Company from any obligation it may have to Indemnitee under this Agreement, and any delay in so notifying the Company will not constitute a waiver by Indemnitee of any rights under this Agreement. The Secretary of the Company will, promptly upon receipt of such a request for indemnification or advancement, advise the Board in writing that Indemnitee has requested indemnification or advancement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company will be entitled to participate in the Proceeding at its own expense.

Section 12. <u>Procedure Upon Application for Indemnification.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Unless a Change of Control has occurred, the determination of Indemnitee's entitlement to indemnification will be made:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. by a majority vote of the Disinterested Directors, even though less than a quorum of the Board;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum of the Board;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii. if there are no such Disinterested Directors or, if such Disinterested Directors so direct, by written opinion provided by Independent Counsel selected by the Board; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv. if so directed by the Board, by the Shareholders of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If a Change in Control has occurred, the determination of Indemnitee's entitlement to indemnification will be made by written opinion provided by Independent Counsel selected by Indemnitee (unless Indemnitee requests such selection be made by the Board)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The party selecting Independent Counsel pursuant to subsection (a)(iii) or (b) of this Section 12 will provide written notice of the selection to the other party. The notified party may, within ten (10) days after receiving written notice of the selection of Independent Counsel, deliver to the selecting party a written objection to such selection; <u>provided</u>, <u>however</u>, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of "Independent Counsel" as defined in Section 2 of this Agreement, and the objection will set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected will act as Independent Counsel. If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or the Delaware Court has determined that such objection is without merit. If, within thirty (30) days after the later of submission by Indemnitee of a written request for indemnification pursuant to Section 11(a) of this Agreement and the final disposition of the Proceeding, Independent Counsel has not been selected or, if selected, any objection to such selection has not been resolved, either the Company or Indemnitee may petition the Delaware Court for resolution of any objection made by the Company or Indemnitee to the other's selection of Independent Counsel and/or for the appointment

------

as Independent Counsel of a person selected by such court or by such other person as such court designates. Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 14(a) of this Agreement, Independent Counsel will be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Indemnitee will cooperate with the person, persons or entity making the determination with respect to Indemnitee's entitlement to indemnification, including providing to such person, persons, or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. The Company will advance and pay any Expenses incurred by Indemnitee in so cooperating with the person, persons or entity making the indemnification determination irrespective of the determination as to Indemnitee's entitlement to indemnification and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom. The Company promptly will advise Indemnitee in writing of the determination that Indemnitee is or is not entitled to indemnification, including a description of any reason or basis for which indemnification has been denied and providing a copy of any written opinion provided to the Board by Independent Counsel.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) If it is determined that Indemnitee is entitled to indemnification, the Company will make payment to Indemnitee within thirty (30) days after such determination.

Section 13. <u>Presumptions and Effect of Certain Proceedings.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) In making a determination with respect to entitlement to indemnification under this Agreement, the person, persons, or entity making such determination will, to the fullest extent not prohibited by law, presume Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 11(a) of this Agreement, and the Company will, to the fullest extent not prohibited by law, have the burden of proof to overcome that presumption. Neither the failure of the Company (including by its directors or Independent Counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper under the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or Independent Counsel) that Indemnitee has not met such applicable standard of conduct, will be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If the determination of the Indemnitee's entitlement to indemnification has not been made pursuant to Section 12 of this Agreement within sixty (60) days after the later of (i) receipt by the Company of Indemnitee's request for indemnification pursuant to Section 11(a) of this Agreement and (ii) the final disposition of the Proceeding for which Indemnitee requested Indemnification (the "Determination Period"), the requisite determination of entitlement to indemnification will, to the fullest extent not prohibited by law, be deemed to have been made and Indemnitee will be entitled to such indemnification absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee's statement not materially misleading, in connection with the request for indemnification or (ii) a prohibition of

------

such indemnification under applicable law. The Determination Period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto; and provided, further, the Determination Period will not apply (i) if the determination of entitlement to indemnification is to be made by the Shareholders pursuant to Section 12(a)(iv) of this Agreement and if (A) within fifteen (15) days after receipt by the Company of the request for such determination the Board has resolved to submit such determination to the Shareholders for their consideration at an annual meeting thereof to be held within seventy-five (75) days after such receipt and such determination is made thereat, or (B) a special meeting of Shareholders is called within fifteen (15) days after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty (60) days after having been so called and such determination is made thereat, or (ii) if the determination of entitlement to indemnification is to be made by Independent Counsel.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The termination of any Proceeding or of any claim, issue, or matter therein by judgment, order, settlement or conviction, or upon a plea of <u>nolo</u> <u>contendere</u> or its equivalent, will not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee's conduct was unlawful.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) For purposes of any determination of good faith, Indemnitee will be deemed to have acted in good faith if Indemnitee acted based on (i) the records or books of account of the Company, its subsidiaries, or an Enterprise, including financial statements, (ii) information supplied to Indemnitee by the directors or officers of the Company, its subsidiaries, or an Enterprise in the course of their duties, (iii) the advice of legal counsel for the Company, its subsidiaries, or an Enterprise or (iv) information or records given or reports made to the Company or an Enterprise by an independent certified public accountant or by an appraiser, financial advisor or other expert selected with reasonable care by or on behalf of the Company, its subsidiaries, or an Enterprise. Further, Indemnitee will be deemed to have acted in a manner "not opposed to the best interests of the Company," as referred to in this Agreement if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan. The provisions of this Section 13(d) are not exclusive and do not limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The knowledge and/or actions, or failure to act, of any other person affiliated with the Company or an Enterprise (including, but not limited to, a director, officer, trustee, partner, managing member, Agent or employee) may not be imputed to Indemnitee for purposes of determining Indemnitee's right to indemnification under this Agreement.

------

Section 14. <u>Remedies of Indemnitee.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Indemnitee may commence litigation against the Company in the Delaware Court to obtain indemnification or advancement of Expenses provided by this Agreement in the event that (i) a determination is made pursuant to Section 12 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) the Company does not advance Expenses pursuant to Section 10 of this Agreement, (iii) the determination of entitlement to indemnification is not made pursuant to Section 12 of this Agreement within the Determination Period, (iv) the Company does not indemnify Indemnitee pursuant to Section 5 or 6 or the second to last sentence of Section 12(d) of this Agreement within thirty (30) days after receipt by the Company of a written request therefor, (v) the Company does not indemnify Indemnitee pursuant to Section 3, 4, 7, or 8 of this Agreement within thirty (30) days after a determination has been made that Indemnitee is entitled to indemnification, or (vi) in the event that the Company or any other person takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or Proceeding designed to deny, or to recover from, the Indemnitee the benefits provided or intended to be provided to the Indemnitee hereunder. Alternatively, Indemnitee, at Indemnitee's option, , or the Company, at the Company's option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Indemnitee, or the Company, as applicable, must commence such Proceeding seeking an adjudication or an award in arbitration within one hundred and eighty (180) days following the date on which Indemnitee first has the right to commence such Proceeding pursuant to this Section 14(a); <u>provided</u>, <u>however</u>, that the foregoing clause does not apply in respect of a Proceeding brought by Indemnitee to enforce Indemnitee's rights under Section 5 of this Agreement. The Company will not oppose Indemnitee's right, and Indemnitee will not oppose the Company's right, to seek any such adjudication or award in arbitration.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If a determination is made pursuant to Section 12 of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 14 will be conducted in all respects as a *de novo* trial or arbitration on the merits and Indemnitee may not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced pursuant to this Section 14 the Company will have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be, and will not introduce evidence of the determination made pursuant to Section 12 of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If a determination is made pursuant to Section 12 of this Agreement that Indemnitee is entitled to indemnification, the Company will be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 14 unless (i) a made of a material fact, or an omission of a material fact necessary to make Indemnitee's statement not materially misleading, in connection with Indemnitees' request for indemnification, or (ii) the Company is prohibited from indemnifying Indemnitee under applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Company is, to the fullest extent not prohibited by law, precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 14 that the procedures and presumptions of this Agreement are not valid, binding, or enforceable and will stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) It is the intent of the Company that, to the fullest extent permitted by law, the Indemnitee not be required to incur legal fees or other Expenses associated with the interpretation, enforcement, or defense of Indemnitee's rights under this Agreement, by litigation or otherwise, because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Indemnitee under this Agreement. The Company, to the fullest extent permitted by law, will (within thirty (30) days after receipt by the Company of a written request therefor) advance to Indemnitee such Expenses which are incurred by Indemnitee in connection with a Proceeding concerning this Agreement, Indemnitee's other rights to indemnification or advancement of Expenses from the Company, or concerning any directors' and officers' liability insurance policies maintained by the Company, and will indemnify Indemnitee against any and all such Expenses unless the court determines that Indemnitee's claims in such action were made in bad faith or frivolous, or that the Company is prohibited by law from indemnifying Indemnitee for such Expenses.

Section 15. <u>Non-exclusivity; Survival of Rights; Insurance; Subrogation.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The indemnification and advancement of Expenses provided by this Agreement are not exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Third ARLLCA, any agreement, a vote of Shareholders, a resolution of the board of directors, or otherwise. The indemnification and advancement of Expenses provided by this Agreement may not be limited or restricted by any amendment, alteration or repeal of this Agreement in any way with respect to any action taken or omitted by Indemnitee in Indemnitee's Corporate Status occurring prior to any amendment, alteration or repeal of this Agreement. To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Third ARLLCA or this Agreement, it is the intent of the parties hereto that Indemnitee enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy is cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, will not prevent the concurrent assertion or employment of any other right or remedy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company hereby acknowledges that Indemnitee may have certain rights to indemnification, advancement of Expenses and/or insurance provided by one or more other Persons with whom or which Indemnitee may be associated. The relationship between the Company and such other Persons, other than an Enterprise, with respect to Indemnitee's rights to indemnification, advancement of Expenses, and insurance is described by this subsection, subject to the provisions of subsection (d) of this Section 15 with respect to a Proceeding concerning Indemnitee's Corporate Status with an Enterprise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. The Company hereby acknowledges and agrees:

1) the Company's obligations to Indemnitee are primary and any obligation of any other Persons, other than an Enterprise, are secondary (i.e., the Company is the indemnitor of first resort) with respect to any request for indemnification or advancement of Expenses made pursuant to this Agreement concerning any Proceeding;

------

3) any obligation of any other Persons with whom or which Indemnitee may be associated to indemnify Indemnitee and/or advance Expenses to Indemnitee in respect of any proceeding are secondary to the Company's obligations; and

4) the Company will indemnify Indemnitee and advance Expenses to Indemnitee hereunder to the fullest extent provided herein without regard to any rights Indemnitee may have against any other Person with whom or which Indemnitee may be associated or an insurer of any such Person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. the Company irrevocably waives, relinquishes and releases (A) any other Person with whom or which Indemnitee may be associated from any claim of contribution, subrogation, reimbursement, exoneration or indemnification, or any other recovery of any kind in respect of amounts paid by the Company to Indemnitee pursuant to this Agreement and (B) any right to participate in any claim or remedy of Indemnitee against any Person whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from any Person, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii. In the event any other Person with whom or which Indemnitee may be associated or their insurers advances or extinguishes any liability or loss for Indemnitee, the payor has a right of subrogation against the Company or its insurers for all amounts so paid which would otherwise be payable by the Company or its insurers under this Agreement. In no event will payment by any other Person with whom or which Indemnitee may be associated or their insurers affect the obligations of the Company hereunder or shift primary liability for the Company's obligation to indemnify or advance Expenses to any other Person with whom or which Indemnitee may be associated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv. Any indemnification or advancement of Expenses provided by any other Person with whom or which Indemnitee may be associated is specifically in excess over the Company's obligation to indemnify and advance Expenses or any valid and collectible insurance (including but not limited to any malpractice insurance or professional errors and omissions insurance) provided by the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or Agents of the Company, the Company will obtain a policy or policies covering Indemnitee to the maximum extent of the coverage available for any such director, officer, employee or Agent under such policy or policies, including coverage in the event the Company does not or cannot, for any reason, indemnify or

------

advance Expenses to Indemnitee as required by this Agreement. If, at the time of the receipt of a notice of a claim pursuant to this Agreement, the Company has director and officer liability insurance in effect, the Company will give prompt notice of such claim or of the commencement of a Proceeding, as the case may be, to the insurers in accordance with the procedures set forth in the respective policies. The Company will thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies. Indemnitee agrees to assist the Company's efforts to cause the insurers to pay such amounts and will comply with the terms of such policies, including selection of approved panel counsel, if required.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Company's obligation to indemnify or advance Expenses hereunder to Indemnitee for any Proceeding concerning Indemnitee's Corporate Status with an Enterprise will be reduced by any amount Indemnitee has actually received as indemnification or advancement of Expenses from such Enterprise. The Company and Indemnitee intend that any such Enterprise (and its insurers) be the indemnitor of first resort with respect to indemnification and advancement of Expenses for any Proceeding related to or arising from Indemnitee's Corporate Status with such Enterprise. The Company's obligation to indemnify and advance Expenses to Indemnitee is secondary to the obligations the Enterprise or its insurers owe to Indemnitee. Indemnitee agrees to take all reasonably necessary and desirable action to obtain from an Enterprise indemnification and advancement of Expenses for any Proceeding related to, or arising from, Indemnitee's Corporate Status with such Enterprise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) In the event of any payment made by the Company under this Agreement, the Company will be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee from any Enterprise or its insurance carrier. Indemnitee will execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

Section 16. <u>Duration of Agreement.</u> The indemnification and advancement of Expenses rights provided by or granted pursuant to this Agreement are (i) binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), (ii) continue as to an Indemnitee who has ceased to be a director, officer, employee or Agent of the Company or of any other Enterprise, and (iii) inure to the benefit of Indemnitee and Indemnitee's spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.

Section 17. <u>Severability.</u> If any provision or provisions of this Agreement is held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) will not in any way be affected or impaired thereby and will remain enforceable to the fullest extent permitted by law; (b) such provision or provisions will be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) will be construed so as to give effect to the intent manifested thereby.

------

Section 18. <u>Interpretation</u>. Any ambiguity in the terms of this Agreement will be resolved in favor of Indemnitee and in a manner to provide the maximum indemnification and advancement of Expenses permitted by law. The Company and Indemnitee intend that this Agreement provide to the fullest extent permitted by law for indemnification and advancement of Expenses in excess of that expressly provided, without limitation, by the Third ARLLCA, vote of the Company's Shareholders or disinterested directors, or applicable law.

Section 19. <u>Enforcement.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director, officer, employee, or Agent of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving or continuing to serve as director, officer, employee, or Agent of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof; provided, however, that this Agreement is a supplement to and in furtherance of the Third ARLLCA, any directors' and officers' insurance maintained by the Company, and applicable law, is not a substitute therefor, and does not diminish or abrogate any rights of Indemnitee thereunder.

Section 20. <u>Modification and Waiver.</u> No supplement, modification or amendment of this Agreement is binding unless executed in writing by the parties hereto. No waiver of any of the provisions of this Agreement will be valid unless executed in writing by the party entitled to enforce the provision to be waived and any such waiver will not be deemed or constitutes a waiver of any other provisions of this Agreement nor will any waiver constitute a continuing waiver.

Section 21. <u>Notice by Indemnitee.</u> Indemnitee agrees to promptly notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder. The failure of Indemnitee to so notify the Company does not relieve the Company of any obligation which it may have to the Indemnitee under this Agreement or otherwise.

Section 22. <u>Notices.</u> All notices, requests, demands and other communications under this Agreement will be in writing and will be deemed to have been duly given if (a) delivered by hand to the other party, (b) sent by reputable overnight courier to the other party or (c) sent by facsimile transmission or electronic mail, with receipt of oral confirmation that such communication has been received:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) If to Indemnitee, at the address indicated on the signature page of this Agreement, or such other address as Indemnitee provides to the Company.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If to the Company to:

Phoenix Energy One, LLC

18575 Jamboree Road, Suite 830

Irvine, California 92612

Attention: David Wheeler and Curtis Allen

Email: <u>dwheeler@phoenixenergy.com</u>;

<u>ca@phoenixenergy.com</u>

with a copy (which shall not constitute notice) to:

Latham & Watkins LLP

650 Town Center Drive, 20th Floor

Costa Mesa, CA 92626-1925

Attention: Chris Clark and Ross McAloon

Email: <u>christopher.j.clark@lw.com</u>; <u>ross.mcaloon@lw.com</u>

or to any other address as may have been furnished to Indemnitee by the Company.

Section 23. <u>Contribution.</u> To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, will contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (a) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (b) the relative fault of the Company (and its directors, officers, employees and Agents) and Indemnitee in connection with such event(s) and/or transaction(s).

Section 24. <u>Applicable Law and Consent to Jurisdiction.</u> This Agreement and the legal relations among the parties are governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. Except with respect to any arbitration commenced by Indemnitee or the Company, as applicable, pursuant to Section 14(a) of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (a) agree that any action, claim, or proceeding between the parties arising out of or in connection with this Agreement may be brought only in the Delaware Court and not in any other state or federal court in the United States of America or any court in any other country, (b) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action, claim, or proceeding arising out of or in connection with this Agreement, (c) waive any objection to the laying of venue of any such action, claim, or proceeding in the Delaware Court, and (d) waive, and agree not to plead or to make, any claim that any such action, claim, or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.

------

Section 25. <u>Identical Counterparts.</u> This Agreement may be executed in one or more counterparts, each of which will for all purposes be deemed to be an original but all of which together constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

Section 26. <u>Headings.</u> The headings of this Agreement are inserted for convenience only and do not constitute part of this Agreement or affect the construction thereof.

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year first above written.

---

| | |
|:---|:---|
| COMPANY | INDEMNITEE |
| By: |  |
| Name: | Name: |
| Office: | Address: |

---

## Ex1A-6

**Exhibit 6.33**![LOGO](g72530dsp1.jpg)

____________ __, 2025

[Name of Director Candidate]

[Address]

[Address]

Dear [________]:

On behalf of the shareholders and employees of Phoenix Energy One, LLC (the "Company"), I am pleased to offer you the opportunity to serve as a member of the Board of Directors (the "Board") of Phoenix Energy One, LLC (the "Company"), subject to a formal nomination and shareholder approval process, as applicable. Set forth below is a summary of the standard compensation and terms of service for our non-employee directors.

As a member of the Board (a "Director") you will be an independent service provider of the Company and will have such customary responsibilities, duties and authority associated with such position, including attendance and participation in meetings of the Board in person or by phone or other electronic means, in accordance with the policies of the Board as in effect from time to time, and availability for consultation with officers and/or other Directors of the Company as necessary. [It is contemplated that you will serve as the Chairman of the Board.] [It is contemplated that you will serve on the audit committee of the Board and be the chair of such committee.]

In consideration for your service as a Director, during the Term (as defined below), you will receive a quarterly retainer in an amount equal to $36,250 in cash, which will be payable in arrears and prorated for any partial period of service as a Director. Payments will typically occur on or around the regularly scheduled quarterly meeting of the Board.

You will be reimbursed for all reasonable out-of-pocket expenses incurred in connection with fulfilling your responsibilities as a Director, including reasonable travel and other expenses, in accordance with the Company's expense reimbursement policies, as in effect from time to time. In addition, the Company will indemnify you in your capacity as a Director in accordance with the terms of a Director Indemnification Agreement that will be separately provided to you.

Your service as a Director will begin on [ ⚫ ] (the "Effective Date") and will continue for an indefinite period of time, subject to your reelection by our shareholders, as applicable. The period of time during which you serve as a Director is referred to herein as the "Term." By countersigning below, you agree that your service as a Director may be terminated at any time in accordance with applicable policies and procedures, including as set forth in the Limited Liability Company Agreement of the Company and other organizational documents of the Company, as such may be amended. In addition, you will be free to resign your position as a Director at any time.

![LOGO](g72530dsp1a.jpg)

------

During the Term, you agree not to serve as a member of the board of directors of any oil and gas producer operating in the same areas as the Company.

As a Director, you will have access to confidential information, the ownership and confidential status of which are highly important to the Company, and you agree to comply with all policies and procedures of the Company for the protection of such confidential information.

Without limiting the foregoing, by countersigning a copy of this letter you agree that all confidential or proprietary information regarding the Company or its affiliates, including, but not limited to, trade secrets, information, customer lists, marketing research or plans, pricing strategies, Company data, or any other proprietary information, is and shall continue to be the exclusive property of the Company.

You acknowledge and agree that all confidential information is and shall continue to be the exclusive property of the Company, whether or not conceived, discovered or developed, in whole or in part, by you and whether or not disclosed or entrusted to you in connection with your retention by the Company.

Except for disclosure of confidential information to other Directors, employees and consultants of the Company on a "need to know" basis in the course of performing your services as a Director for the Company, you agree not to disclose, use or exploit confidential information at any time during or after your service with the Company unless (i) the Company consents in writing to such use, or (ii) the Company or a court of lawful jurisdiction directs otherwise. You agree that any request or attempt to subpoena confidential information shall be reported directly to the Company as soon as possible after receipt.

Nothing in this letter shall prohibit or limit your use of information (i) that was known by you previous to you beginning service as a Director (which information shall remain subject to any confidentiality restrictions in effect at the time of your receipt of such information), (ii) that you lawfully obtained from a third party that is not under an obligation to the Company not to disclose such information, or (iii) that is or becomes publicly available or generally known in the industry or trade in which the Company operates through no action or omission by you.

This letter shall be governed by and construed under the laws of the State of Delaware, without regards to any conflicts of law principles.

[*Signatures on next page*]

------

![LOGO](g72530dsp1.jpg)

We are excited about your proposed service as a non-employee Director and believe that your service will add value to the Company. If you are in agreement with the terms and conditions described in this letter, please sign the enclosed copy and return it to our offices within five days.

---

| |
|:---|
| Sincerely, |
| [Name] |
| [Title] |
| [Date] |

---

---

| | |
|:---|:---|
| I accept the terms and conditions set forth above. | I accept the terms and conditions set forth above. |
| Dated this ___ day of _____________, 2025. | Dated this ___ day of _____________, 2025. |
| By: |  |
|  | Adam Ferrari, Chief Executive Officer |

---

![LOGO](g72530dsp1a.jpg)

## Ex1A-6

**Exhibit 6.34** 

***Execution Version***

**AMENDMENT NO. 5 TO AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT** 

This AMENDMENT NO. 5 TO AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT (this "<u>Amendment</u>") is entered into as of June 26, 2025, by and among PHOENIX ENERGY ONE, LLC, a Delaware limited liability company and formerly known as PHOENIX CAPITAL GROUP HOLDINGS, LLC (the "<u>Company</u>"), PHOENIX OPERATING LLC, a Delaware limited liability company (the "<u>Borrower</u>"), the Guarantors party hereto, the Specified Additional Guarantors party hereto, the Lenders party hereto and FORTRESS CREDIT CORP., as Administrative Agent. Capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Credit Agreement and the Guarantee and Collateral Agreement, as applicable, referenced below.

<u>RECITALS</u> 

This Amendment is entered into in reference to the following facts:

WHEREAS, the Company, the Borrower, the Lenders from time to time party thereto and the Administrative Agent are parties to that certain Amended and Restated Senior Secured Credit Agreement, dated as of August 12, 2024 (as amended by that certain Limited Waiver and Amendment No. 1 to Amended and Restated Senior Secured Credit Agreement, dated as of October 25, 2024, that certain Amendment No. 2 to Amended and Restated Senior Secured Credit Agreement, dated as of November 1, 2024, that certain Limited Waiver, Amendment No. 3 to Amended and Restated Senior Secured Credit Agreement, dated as of December 18, 2024, that certain Limited Waiver and Amendment No. 4 to Amended and Restated Senior Secured Credit Agreement, dated as of April 16, 2025 and as further amended, supplemented or otherwise modified prior to the date hereof, the "<u>Existing Credit Agreement</u>", and the Existing Credit Agreement, as further amended by this Amendment, the "<u>Credit Agreement</u>"); and

WHEREAS, the Borrower has requested, and the Lenders and the Administrative Agent have agreed, to amend the Existing Credit Agreement as provided in this Amendment.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto hereby agree as follows:

<u>ARTICLE 1 – AMENDMENT TO EXISTING CREDIT AGREEMENT</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 <u>Amendments</u>. In reliance upon the representations and warranties set forth in <u>Section 3.1</u> below and upon satisfaction of the conditions to effectiveness set forth in <u>Section 2.1</u> below:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Existing Credit Agreement (excluding the schedules and exhibits thereto) is hereby amended by deleting the
stricken text (indicated textually in the same manner as the following example: **stricken text**) and by inserting the double-underlined text (indicated textually in the same manner as the following
example:  **<u>double-underlined text</u>**) as set forth in the pages of the document attached hereto as <u>Exhibit A</u>.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) A new Exhibit I (Form of Specified Preferred Equity Share Designation) is hereby added to the Credit Agreement
in the form attached hereto as <u>Exhibit B</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) A new Exhibit J (Form of Third A&R LLC Agreement) is hereby added to the Credit Agreement in the form
attached hereto as Exhibit C.

<u>ARTICLE 2 – CONDITIONS</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 <u>Conditions Precedent</u>. The effectiveness of this Amendment shall be subject to the satisfaction of the following conditions, in each case, in form and substance reasonably satisfactory to the Administrative Agent (such date on which the Amendment becomes effective, the "<u>Amendment No. 5 Effective Date</u>"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the Administrative Agent shall have received duly executed counterparts (in such number as may be requested by
the Administrative Agent) of this Amendment from the Company, the Borrower, the Guarantors, the Specified Additional Guarantors and the Lenders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the Administrative Agent shall have received a certificate of a Responsible Officer in form and substance
reasonably satisfactory to the Administrative Agent certifying that (i) the conditions set forth in clauses (d) and (f) of this <u>Section 2.1</u> have been satisfied and (ii) that the resolutions of the board of directors
or other appropriate governing body delivered to the Administrative Agent on the Amendment No. 4 Effective Date and attached hereto on Schedule 1 have not been amended or changed in any way, are still in full force and effect and authorize the
entry into, and performance by the Credit Parties of their respective obligations under, Amendment No. 5;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) immediately prior to and after giving effect to this Amendment, no Event of Default or Default shall have
occurred and be continuing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the Administrative Agent and the Lenders shall have received all fees and amounts due and payable on or prior
to the Amendment No. 5 Effective Date, including, to the extent invoiced by 11:00 am CDT on the Amendment No. 5 Effective Date (or such shorter time as the Borrower may agree in its sole discretion), reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by the Borrower pursuant to Section 12.03 of the Credit Agreement; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) the representations and warranties contained in <u>Article 3</u> hereof shall be true and correct in all
material respects (or, with respect to any representation and warranty qualified by materiality or a material adverse change or material adverse effect standard, in all respects) on and as of the date hereof as though made on and as of the date
hereof (although any representations and warranties which expressly relate to an earlier date shall be true and correct in all material respects (or, with respect to any representation and warranty qualified by materiality or a material adverse
change or material adverse effect standard, in all respects) as of the specified earlier date).

------

For purposes of determining whether the conditions set forth in this <u>Section 2.1</u> have been satisfied, by releasing its signature page hereto, the Administrative Agent and each Lender shall be deemed to have consented to, approved, accepted or be satisfied with each document or other matter required hereunder to be consented to or approved by, or acceptable or satisfactory to, the Administrative Agent or such Lender, as the case may be.

<u>ARTICLE 3 – REPRESENTATIONS AND WARRANTIES</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1 <u>Credit Party Representations and Warranties</u>. In order to induce the Administrative Agent and the Lenders to enter into this Amendment, each Credit Party party hereto represents and warrants to the Administrative Agent and the Lenders that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the execution, delivery and performance by such Credit Party (other than the Specified Additional Guarantors)
of this Amendment (i) are within such Credit Party's limited liability company powers, (ii) have been duly authorized by all necessary limited liability company action, (iii) do not require any consent or approval of,
registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect other than those approvals or consents which, if not made or obtained, would not cause a
Default under the Credit Agreement, could not reasonably be expected to have a Material Adverse Effect or do not have an adverse effect on the enforceability of this Amendment or the other Loan Documents, (iv) will not violate any applicable
law or regulation that is material or the charter, bylaws or other organizational documents of such Credit Party or any material order of any Governmental Authority, (v) will not violate or result in a default under any indenture or other
material instrument or agreement binding upon such Credit Party, or give rise to a right thereunder to require any payment to be made by such Credit Party and (vi) will not result in the creation or imposition of any Lien on any Property of
such Credit Party (other than Liens securing the Secured Obligations);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) this Amendment constitutes the valid and binding obligation of such Credit Party, enforceable against such
Credit Party in accordance with its terms;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) as of the Amendment No. 5 Effective Date, to the knowledge of the Company, the information included in the
Beneficial Ownership Certification provided on or prior to the Amendment No. 5 Effective Date to any Lender in connection with this Amendment is true and correct in all respects;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) after giving effect to this Amendment, such Credit Party's representations and warranties contained in the
Credit Agreement and the other Loan Documents are true and correct in all material respects (or, with respect to any representation and warranty qualified by materiality or a material adverse change or material adverse effect standard, in all
respects) on and as of the date hereof as though made on and as of the date hereof (although any representations and warranties which expressly relate to an earlier date are true and correct in material respects (or, with respect to any
representation and warranty qualified by materiality or a material adverse change or material adverse effect standard, in all respects) as of the specified earlier date); and

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) after giving effect to this Amendment, no Default or Event of Default has occurred and is continuing as of the date hereof.

<u>ARTICLE 4 – GENERAL PROVISIONS</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 <u>Reaffirmation of Loan Documents</u>. By its signature below, each Credit Party hereby acknowledges and agrees that any and all of the terms and provisions of the Credit Agreement, the Security Instruments and the other Loan Documents shall, except as amended and modified hereby, remain in full force and effect and such Credit Party has no defense to its performance obligations or other obligations (contingent or otherwise) to pay the Secured Obligations when due. Each Credit Party hereby agrees that the amendments and modifications herein contained shall not limit or impair any Liens securing the Secured Obligations or such Credit Party's obligation (contingent or otherwise) to pay the Secured Obligations when due, each of which is hereby ratified and affirmed in all respects. Each Credit Party hereby (i) ratifies and reaffirms all of its payment and performance obligations, contingent or otherwise, under each of the Loan Documents to which it is a party, (ii) ratifies and reaffirms each grant of a lien on, or security interest in, its property made pursuant to the Loan Documents (including, without limitation, the grant of security made by such Credit Party pursuant to the Guarantee and Collateral Agreement) and confirms that such liens and security interests continue to secure the Secured Obligations under the Loan Documents, and (iii) in the case of the Guarantors and the Specified Additional Guarantors, ratifies and reaffirms its guaranty of the Secured Obligations pursuant to the Loan Documents (including, for the avoidance of doubt, the Specified Additional Guarantee Agreements).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2 <u>Full Force and Effect</u>. Except as expressly set forth herein, this Amendment does not constitute an amendment, waiver or modification of any other provision of the Credit Agreement or any other Loan Document, does not constitute a waiver of timely compliance with the provisions of the Credit Agreement or any provision of any other Loan Document, does not constitute a waiver of any Default or Event of Default (other than the Specified Defaults) whether or not known to the Administrative Agent or the Lenders, and does not entitle the Credit Parties to any amendment, waiver or modification of any provision of the Credit Agreement or any other Loan Document, or to a consent to any transaction, in the future in similar or dissimilar circumstances. Except as expressly amended hereby, the Credit Agreement and the other Loan Documents shall continue in full force and effect in accordance with the provisions thereof on the date hereof and are hereby ratified and confirmed in all respects. As used in the Credit Agreement, the terms "Agreement," "this Agreement," "this Credit Agreement," "herein," "hereafter," "hereto," "hereof" and words of similar import, shall, unless the context otherwise requires, mean the Credit Agreement as amended hereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3 <u>Counterparts</u>. This Amendment may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Amendment by telecopy, emailed pdf. or any other electronic means that reproduces an image of the actual executed signature page shall be effective as delivery of a manually executed counterpart of this Amendment. The words "execution," "signed," "signature,"

------

"delivery," and words of like import in or relating to any document to be signed in connection with this Amendment and the transactions contemplated hereby shall be deemed to include Electronic Signatures, deliveries 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, physical delivery thereof 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; provided that nothing herein shall require the Administrative Agent to accept electronic signatures in any form or format without its prior written consent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4 <u>Final Agreement</u>. This Amendment is intended by the Credit Parties, the Administrative Agent and the Lenders to be the final, complete, and exclusive expression of the agreement between them relating to the subject matter hereof. The terms of this Amendment supersede any and all prior oral or written agreements relating to the subject matter hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.5 <u>Headings</u>. Section headings used in this Amendment are for convenience of reference only, are not part of this Amendment and shall not affect the construction of, or be taken into consideration in interpreting, this Amendment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.6 <u>Governing Law; Jurisdiction; Consent to Service of Process; Waiver of Jury Trial</u>. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. Section 12.09(b) through (d) of the Credit Agreement shall apply to this Amendment *mutatis mutandis*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.7 <u>Severability</u>. Any provision of this Amendment held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof or thereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.8 <u>Loan Document</u>. This Amendment shall constitute a Loan Document (as defined in the Existing Credit Agreement and Credit Agreement), and all the terms and provisions of the Existing Credit Agreement and Credit Agreement relating to Loan Documents shall apply hereto.

[*signatures on next page*]

------

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the day and year first above written.

---

| | |
|:---|:---|
| **COMPANY:** | **COMPANY:** |
| PHOENIX ENERGY ONE, LLC | PHOENIX ENERGY ONE, LLC |
| By: | /s/ Adam Ferrari |
| Name: Adam Ferrari | Name: Adam Ferrari |
| Title: Chief Executive Officer | Title: Chief Executive Officer |
| **BORROWER:** | **BORROWER:** |
| PHOENIX OPERATING LLC | PHOENIX OPERATING LLC |
| By: | /s/ Adam Ferrari |
| Name: Adam Ferrari | Name: Adam Ferrari |
| Title: Chief Executive Officer | Title: Chief Executive Officer |

---

Signature Page to Amendment No. 5 to Amended and Restated Senior Secured Credit Agreement

------

---

| | |
|:---|:---|
| **GUARANTORS:** | **GUARANTORS:** |
| PHOENIX EQUITY HOLDINGS, LLC | PHOENIX EQUITY HOLDINGS, LLC |
| By: | /s/ Adam Ferrari |
| Name: | Adam Ferrari |
| Title: | Chief Executive Officer |
| PHOENIX CAPITAL GROUP HOLDINGS I LLC | PHOENIX CAPITAL GROUP HOLDINGS I LLC |
| ADAMANTIUM CAPITAL LLC | ADAMANTIUM CAPITAL LLC |
| PHOENIX CAPITAL GROUP HOLDINGS, LLC | PHOENIX CAPITAL GROUP HOLDINGS, LLC |
| FIREBIRD MARKETING, LLC | FIREBIRD MARKETING, LLC |
| By: Phoenix Energy One, LLC, its Sole Member | By: Phoenix Energy One, LLC, its Sole Member |
| By: | /s/ Adam Ferrari |
| Name: | Adam Ferrari |
| Title: | Chief Executive Officer |
| FIREBIRD SERVICES, LLC | FIREBIRD SERVICES, LLC |
| By: Phoenix Operating LLC, its Sole Member | By: Phoenix Operating LLC, its Sole Member |
| By: | /s/ Adam Ferrari |
| Name: | Adam Ferrari |
| Title: | Chief Executive Officer |

---

Signature Page to Amendment No. 5 to Amended and Restated Senior Secured Credit Agreement

------

**SPECIFIED ADDITIONAL GUARANTORS:** 

---

| | |
|:---|:---|
| ADAM FERRARI | ADAM FERRARI |
| By: | /s/ Adam Ferrari |
| Name: Adam Ferrari | Name: Adam Ferrari |
| BRYNN FERRARI | BRYNN FERRARI |
| By: | /s/ Brynn Ferrari |
| Name: Brynn Ferrari | Name: Brynn Ferrari |
| CURTIS ALLEN | CURTIS ALLEN |
| By: | /s/ Curtis Allen |
| Name: Curtis Allen | Name: Curtis Allen |
| LINDSEY WILSON | LINDSEY WILSON |
| By: | /s/ Lindsey Wilson |
| Name: Lindsey Wilson | Name: Lindsey Wilson |

---

Signature Page to Amendment No. 5 to Amended and Restated Senior Secured Credit Agreement

------

---

| | |
|:---|:---|
| **ADMINISTRATIVE AGENT:** | **ADMINISTRATIVE AGENT:** |
| FORTRESS CREDIT CORP. | FORTRESS CREDIT CORP. |
| By: | /s/ Vincent Randazzo |
| Name: Vincent Randazzo | Name: Vincent Randazzo |
| Title: Authorized Signatory | Title: Authorized Signatory |

---

Signature Page to Amendment No. 5 to Amended and Restated Senior Secured Credit Agreement

------

---

| | |
|:---|:---|
| **LENDERS:** | **LENDERS:** |
| FLF III GMS HOLDINGS FINANCE L.P. | FLF III GMS HOLDINGS FINANCE L.P. |
| By: FLF III GMS Holdings Finance CM LLC, as servicer | By: FLF III GMS Holdings Finance CM LLC, as servicer |
| By: Fortress Lending III Holdings L.P., its sole member | By: Fortress Lending III Holdings L.P., its sole member |
| By: Fortress Lending Advisors III LLC, its investment manager | By: Fortress Lending Advisors III LLC, its investment manager |
| By: | /s/ Vincent Randazzo |
| Name: Vincent Randazzo | Name: Vincent Randazzo |
| Title: Authorized Signatory | Title: Authorized Signatory |
| FLF III HOLDINGS FINANCE L.P. | FLF III HOLDINGS FINANCE L.P. |
| By: FLF III Holdings Finance CM LLC, as Servicer | By: FLF III Holdings Finance CM LLC, as Servicer |
| By: Fortress Lending III Holdings L.P., its sole member | By: Fortress Lending III Holdings L.P., its sole member |
| By: Fortress Lending Advisors III LLC, its investment manager | By: Fortress Lending Advisors III LLC, its investment manager |
| By: | /s/ Vincent Randazzo |
| Name: | Vincent Randazzo |
| Title: | Authorized Signatory |
| FLF III-IV MA-CRPTF HOLDINGS | FLF III-IV MA-CRPTF HOLDINGS |
| FINANCE L.P. | FINANCE L.P. |
| By: FLF III-IV MA-CRPTF Holdings Finance | By: FLF III-IV MA-CRPTF Holdings Finance |
| CM LLC, as Servicer | CM LLC, as Servicer |
| By: Fortress Lending Fund III-IV MA-CRPTF | By: Fortress Lending Fund III-IV MA-CRPTF |
| LP, its Sole Member | LP, its Sole Member |
| By: FLF III-IV MA-CRPTF Advisors LLC, its collateral manager | By: FLF III-IV MA-CRPTF Advisors LLC, its collateral manager |
| By: | /s/ Vincent Randazzo |
| Name: | Vincent Randazzo |
| Title: | Authorized Signatory |

---

Signature Page to Amendment No. 5 to Amended and Restated Senior Secured Credit Agreement

------

---

| | |
|:---|:---|
| FLF IV HOLDINGS FINANCE L.P. | FLF IV HOLDINGS FINANCE L.P. |
| By: FLF IV Holdings Finance CM LLC, as | By: FLF IV Holdings Finance CM LLC, as |
| Servicer | Servicer |
| By: Fortress Lending IV Holdings L.P., its sole member | By: Fortress Lending IV Holdings L.P., its sole member |
| By: Fortress Lending Advisors IV LLC, its investment manager | By: Fortress Lending Advisors IV LLC, its investment manager |
| By: | /s/ Vincent Randazzo |
| Name: | Vincent Randazzo |
| Title: | Authorized Signatory |
| FORTRESS CREDIT OPPORTUNITIES IX | FORTRESS CREDIT OPPORTUNITIES IX |
| CLO LIMITED | CLO LIMITED |
| By: FCOD CLO Management LLC, its collateral manager | By: FCOD CLO Management LLC, its collateral manager |
| By: | /s/ Vincent Randazzo |
| Name: | Vincent Randazzo |
| Title: | Deputy Chief Financial Officer |
| FORTRESS CREDIT OPPORTUNITIES XIX | FORTRESS CREDIT OPPORTUNITIES XIX |
| CLO LLC | CLO LLC |
| By: FCOD CLO Management LLC, its collateral manager | By: FCOD CLO Management LLC, its collateral manager |
| By: | /s/ Vincent Randazzo |
| Name: | Vincent Randazzo |
| Title: | Deputy Chief Financial Officer |
| FORTRESS CREDIT OPPORTUNITIES XXI | FORTRESS CREDIT OPPORTUNITIES XXI |
| CLO LLC | CLO LLC |
| By: FCOD CLO Management LLC, its collateral manager | By: FCOD CLO Management LLC, its collateral manager |
| By: | /s/ Vincent Randazzo |
| Name: | Vincent Randazzo |
| Title: | Deputy Chief Financial Officer |

---

Signature Page to Amendment No. 5 to Amended and Restated Senior Secured Credit Agreement

------

---

| | |
|:---|:---|
| FORTRESS CREDIT OPPORTUNITIES | FORTRESS CREDIT OPPORTUNITIES |
| XXIII CLO LLC | XXIII CLO LLC |
| By: FCOD CLO Management LLC, its collateral manager | By: FCOD CLO Management LLC, its collateral manager |
| By: | /s/ Vincent Randazzo |
| Name: | Vincent Randazzo |
| Title: | Deputy Chief Financial Officer |
| FORTRESS CREDIT OPPORTUNITIES | FORTRESS CREDIT OPPORTUNITIES |
| XXV CLO LLC | XXV CLO LLC |
| By: FCOD CLO Management LLC, its collateral manager | By: FCOD CLO Management LLC, its collateral manager |
| By: | /s/ Vincent Randazzo |
| Name: | Vincent Randazzo |
| Title: | Deputy Chief Financial Officer |
| FORTRESS LENDING IV HOLDINGS L.P. | FORTRESS LENDING IV HOLDINGS L.P. |
| By: Fortress Lending Advisors IV LLC, its investment manager | By: Fortress Lending Advisors IV LLC, its investment manager |
| By: | /s/ Vincent Randazzo |
| Name: | Vincent Randazzo |
| Title: | Authorized Signatory |
| FLF III AB HOLDINGS FINANCE L.P. By: | FLF III AB HOLDINGS FINANCE L.P. By: |
| FLF III AB Holdings Finance CM LLC, as | FLF III AB Holdings Finance CM LLC, as |
| Servicer | Servicer |
| By: Fortress Lending III Holdings L.P., its | By: Fortress Lending III Holdings L.P., its |
| Sole Member | Sole Member |
| By: Fortress Lending Advisors III LLC, its investment manager | By: Fortress Lending Advisors III LLC, its investment manager |
| By: | /s/ Vincent Randazzo |
| Name: | Vincent Randazzo |
| Title: | Authorized Signatory |

---

Signature Page to Amendment No. 5 to Amended and Restated Senior Secured Credit Agreement

------

---

| | |
|:---|:---|
| FORTRESS LENDING III HOLDINGS L.P. | FORTRESS LENDING III HOLDINGS L.P. |
| By: Fortress Lending Advisors III LLC, its investment manager | By: Fortress Lending Advisors III LLC, its investment manager |
| By: | /s/ Vincent Randazzo |
| Name: | Vincent Randazzo |
| Title: | Authorized Signatory |
| FORTRESS LENDING FUND III-IV MA-CRPTF LP | FORTRESS LENDING FUND III-IV MA-CRPTF LP |
| By: FLF III-IV MA-CRPTF Advisors LLC, its investment advisor | By: FLF III-IV MA-CRPTF Advisors LLC, its investment advisor |
| By: | /s/ Vincent Randazzo |
| Name: | Vincent Randazzo |
| Title: | Authorized Signatory |
| FLF IV GMS HOLDINGS FINANCE L.P. | FLF IV GMS HOLDINGS FINANCE L.P. |
| By: FLF IV GMS Holdings Finance CM LLC,as Servicer | By: FLF IV GMS Holdings Finance CM LLC,as Servicer |
| By: Fortress Lending IV Holdings L.P., its sole member | By: Fortress Lending IV Holdings L.P., its sole member |
| By: Fortress Lending Advisors IV LLC, itsinvestment manager | By: Fortress Lending Advisors IV LLC, itsinvestment manager |
| By: | /s/ Vincent Randazzo |
| Name: | Vincent Randazzo |
| Title: | Authorized Signatory |
| FORTRESS CREDIT OPPORTUNITIES | FORTRESS CREDIT OPPORTUNITIES |
| XXVII CLO B LLC | XXVII CLO B LLC |
| By: Fortress CLO Manager B LLC, its collateral manager | By: Fortress CLO Manager B LLC, its collateral manager |
| By: | /s/ Vincent Randazzo |
| Name: | Vincent Randazzo |
| Title: | Authorized Signatory |

---

Signature Page to Amendment No. 5 to Amended and Restated Senior Secured Credit Agreement

------

---

| | |
|:---|:---|
| FORTRESS PRIVATE LENDING FUND | FORTRESS PRIVATE LENDING FUND |
| By: | /s/ David Sims |
| Name: | David Sims |
| Title: | Trustee Administrator |

---

Signature Page to Amendment No. 5 to Amended and Restated Senior Secured Credit Agreement

------

**Schedule 1** 

[see attached]

Schedule 1 to Amendment No. 5 to Amended and Restated Senior Secured Credit Agreement

------

**<u>Exhibit A</u>** 

<u>Credit Agreement</u> 

(attached)

Exhibit A Amendment No. 5 to Amended and Restated Senior Secured Credit Agreement

------

**<u>Exhibit B</u>** 

<u>Form of Specified Preferred Equity Share Designation</u> 

(attached)

Exhibit B Amendment No. 5 to Amended and Restated Senior Secured Credit Agreement

------

**<u>Exhibit C</u>**

<u>Form of Third Amended and Restated Limited Liability Company Agreement of the Company</u> 

(attached)

Exhibit C Amendment No. 5 to Amended and Restated Senior Secured Credit Agreement

------

***Conformed through Limited Waiver and***

***<u>Conformed through</u> Amendment No. 4<u>5</u> to Amended and Restated Senior Secured <u>to Credit</u>***

***<u>Agreement, dated as of June 26, 2025</u>***

***Credit Agreement, dated as of April 16, 2025***

**AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT** 

**dated as of** 

**August 12, 2024** 

**among** 

**PHOENIX ENERGY ONE, LLC,** 

**as Company,** 

**PHOENIX OPERATING LLC,** 

**as Borrower,** 

**FORTRESS CREDIT CORP.,** 

**as Administrative Agent,** 

**and** 

**The Lenders Party Hereto** 

**FORTRESS CREDIT CORP.,** 

**as Sole Lead Arranger** 

------

<u>**TABLE OF CONTENTS**</u> 

---

| | | |
|:---|:---|:---|
|  |  | Page |
|  ARTICLE I DEFINITIONS AND ACCOUNTING MATTERS | ARTICLE I DEFINITIONS AND ACCOUNTING MATTERS | 6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 1.01 | Terms Defined Above | 6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 1.02 | Certain Defined Terms | 6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 1.03 | Terms Generally; Rules of Construction | 57 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 1.04 | Accounting Terms and Determinations; GAAP | 57<u>58</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 1.05 | Interest Rates | 58<u>59</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 1.06 | Divisions | 59 |
|  ARTICLE II The Credits | ARTICLE II The Credits | 59 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 2.01 | Commitments | 59 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 2.02 | Loans and Borrowings | 60<u>61</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 2.03 | Requests for Borrowings | 61<u>62</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 2.04 | Evidence of Debt | 62 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 2.05 | Scheduled Termination of Commitments; Optional Termination, Reduction of Delayed Draw Term Loan Commitments and Reduction of Amendment No. 4 Delayed Draw Term Loan Commitments | 62<u>63</u> |
|  ARTICLE III Payments of Principal and Interest; Prepayments; Fees | ARTICLE III Payments of Principal and Interest; Prepayments; Fees | 63<u>64</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 3.01 | Repayment of Loans; Repayment Premium | 63<u>64</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 3.02 | Interest | 66 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 3.03 | Alternate Rate of Interest | 67 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 3.04 | Prepayments | 69 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 3.05 | Fees | 71 |
|  ARTICLE IV Payments; Pro Rata Treatment; Sharing of Set-offs | ARTICLE IV Payments; Pro Rata Treatment; Sharing of Set-offs | 71<u>72</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 4.01 | Payments Generally; Pro Rata Treatment; Sharing of Set-offs | 71<u>72</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 4.02 | Presumption of Payment by the Borrower | 72<u>73</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 4.03 | Disposition of Proceeds | 72<u>73</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 4.04 | Payments and Deductions to a Defaulting Lender | 73 |
|  ARTICLE V Increased Costs; Break Funding Payments; Taxes | ARTICLE V Increased Costs; Break Funding Payments; Taxes | 74<u>75</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 5.01 | Increased Costs | 74<u>75</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 5.02 | Break Funding Payments | 76 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 5.03 | Taxes | 76 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 5.04 | Mitigation Obligations; Replacement of Lenders | 79<u>80</u> |
|  ARTICLE VI Conditions Precedent | ARTICLE VI Conditions Precedent | 81<u>82</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 6.01 | Closing Date | 81<u>82</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 6.02 | Each Delayed Draw Term Loan Borrowing | 86<u>87</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 6.03 | Each Amendment No. 4 Delayed Draw Term Loan Borrowing | 87 |
|  ARTICLE VII Representations and Warranties | ARTICLE VII Representations and Warranties | 87<u>88</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.01 | Organization; Powers | 87<u>88</u> |

---

i

------

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.02 | Authority; Enforceability | 88 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.03 | Approvals; No Conflicts | 89 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.04 | Financial Condition; No Material Adverse Effect | 88<u>89</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.05 | Litigation | 89 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.06 | Environmental Matters | 89<u>90</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.07 | Compliance with Laws and Agreements; No Defaults | 90<u>91</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.08 | Investment Company Act | 90<u>91</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.09 | Taxes | 90<u>91</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.10 | ERISA | 91 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.11 | Disclosure; No Material Misstatements | 91<u>92</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.12 | Insurance | 92<u>93</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.13 | Restriction on Liens | 92<u>93</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.14 | Subsidiaries | 92<u>93</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.15 | Location of Business and Offices | 93<u>94</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.16 | Properties; Titles, Etc | 93<u>94</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.17 | Maintenance of Properties | 93<u>94</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.18 | Gas Imbalances, Prepayments | 94<u>95</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.19 | Marketing of Production | 94<u>95</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.20 | Swap Agreements | 94<u>95</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.21 | Use of Loans | 95 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.22 | Solvency | 95 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.23 | Anti-Money Laundering | 95<u>96</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.24 | Anti-Corruption Laws | 95<u>96</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.25 | Anti-Corruption Laws; Sanctions; OFAC | 96 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.26 | EEA Financial Institutions | 96<u>97</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.27 | Senior Debt Status | 96<u>97</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.28 | Material Contracts | 96<u>97</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.29 | Outbound Investment Rules | 97 |
|  ARTICLE VIII Affirmative Covenants | ARTICLE VIII Affirmative Covenants | 97<u>98</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 8.01 | Financial Statements; Other Information | 97<u>98</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 8.02 | Notices of Material Events | 102<u>103</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 8.03 | Existence; Conduct of Business | 103 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 8.04 | Payment of Obligations | 103<u>104</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 8.05 | Performance of Obligations under Loan Documents | 103<u>104</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 8.06 | Operation and Maintenance of Properties | 103<u>104</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 8.07 | Insurance | 104<u>105</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 8.08 | Books and Records; Inspection Rights | 104<u>105</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 8.09 | Compliance with Laws and Material Contractual Obligations | 105 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 8.10 | Environmental Matters | 105<u>106</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 8.11 | Further Assurances | 106<u>107</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 8.12 | Reserve Reports | 107 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 8.13 | Title Information | 108<u>109</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 8.14 | Additional Collateral; Additional Guarantors | 109<u>110</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 8.15 | ERISA Compliance | 111 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 8.16 | Account Control Agreements; Location of Proceeds of Loans | 111<u>112</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 8.17 | Marketing Activities | 111<u>112</u> |

---

ii

------

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 8.18 | Keepwell | 111<u>112</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 8.19 | Required Swap Agreements | 112 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 8.20 | APOD | 113<u>114</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 8.21 | Post-Closing Covenants. | 114<u>115</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 8.22 | Senior Debt Status | 114<u>115</u> |
|  ARTICLE IX Negative Covenants | ARTICLE IX Negative Covenants | 115 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 9.01 | Financial Covenants | 115 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 9.02 | Indebtedness | 115<u>116</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 9.03 | Liens | 116 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 9.04 | Restricted Payments; Repayment of Specified Indebtedness; Restrictions on Amendments of Specified Indebtedness | 117 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 9.05 | Investments, Loans and Advances | 118<u>119</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 9.06 | Nature of Business | 118<u>119</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 9.07 | Amendments to Material Documents; Fiscal Year End | 118<u>119</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 9.08 | Proceeds of Loans | 119<u>120</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 9.09 | ERISA Compliance | 119<u>121</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 9.10 | Sale or Discount of Receivables | 120<u>121</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 9.11 | Merger, Etc | 120<u>121</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 9.12 | Sale of Properties; Unwinds of Swap Agreements | 121<u>122</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 9.13 | Environmental Matters | 123<u>125</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 9.14 | Transactions with Affiliates | 123<u>125</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 9.15 | Negative Pledge Agreements; Dividend Restrictions | 124<u>125</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 9.16 | Gas Imbalances, Take-or-Pay or Other Prepayments | 124<u>125</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 9.17 | Swap Agreements | 124<u>126</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 9.18 | G&A Expenses; Specified Financing Costs | 127<u>128</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 9.19 | Capital Expenditures and other Asset Acquisitions | 127<u>129</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 9.20 | Minimum Volume Commitments; Well Service Contracts | 127<u>129</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 9.21 | Subsidiaries | 128<u>129</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 9.22 | Drilling and Completion Activities | 128<u>129</u> |
|  ARTICLE X Events of Default; Remedies | ARTICLE X Events of Default; Remedies | 128<u>130</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 10.01 | Events of Default | 128<u>130</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 10.02 | Remedies | 130<u>132</u> |
|  ARTICLE XI The Agents | ARTICLE XI The Agents | 132<u>133</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 11.01 | Appointment; Powers | 132<u>133</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 11.02 | Duties and Obligations of the Agents | 132<u>134</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 11.03 | Action by Agents | 133<u>135</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 11.04 | Reliance by Agents | 134<u>135</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 11.05 | Subagents | 134<u>136</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 11.06 | Resignation of an Agent | 135<u>136</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 11.07 | Agent as a Lender | 135<u>137</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 11.08 | No Reliance | 136<u>137</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 11.09 | Administrative Agent May File Proofs of Claim | 136<u>138</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 11.10 | Authority of Administrative Agent to Release Collateral and Liens | 137<u>138</u> |

---

iii

------

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 11.11 | Certain ERISA Matters | 137<u>139</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 11.12 | The Arranger | 138<u>140</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 11.13 | Credit Bidding | 139<u>140</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 11.14 | Posting of Communications | 140<u>141</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 11.15 | No Third Party Beneficiaries | 141<u>142</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 11.16 | Erroneous Payments | 141<u>143</u> |
|  ARTICLE XII Miscellaneous | ARTICLE XII Miscellaneous | 145<u>146</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.01 | Notices | 145<u>146</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.02 | Waivers; Amendments | 146<u>147</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.03 | Expenses, Indemnity; Damage Waiver | 148<u>149</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.04 | Successors and Assigns | 151<u>152</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.05 | Survival; Revival; Reinstatement | 155<u>157</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.06 | Counterparts; Integration; Effectiveness | 156<u>157</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.07 | Severability | 156<u>158</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.08 | Right of Setoff | 157<u>158</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.09 | GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS; WAIVER OF JURY TRIAL | 157<u>159</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.10 | Headings | 159<u>160</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.11 | Confidentiality | 159<u>160</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.12 | Interest Rate Limitation | 159<u>161</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.13 | EXCULPATION PROVISIONS | 160<u>162</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.14 | Collateral Matters; Swap Agreements; Swap Intercreditor Agreement | 161<u>162</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.15 | No Third Party Beneficiaries | 161<u>163</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.16 | USA Patriot Act Notice | 161<u>163</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.17 | Flood Insurance Provisions | 162<u>163</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.18 | No Fiduciary Duty | 162<u>163</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.19 | Releases | 162<u>164</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.20 | Material Non-Public Information | 163<u>165</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.21 | Independence of Covenants | 164<u>165</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.22 | Acknowledgement and Consent to Bail-In of Affected Financial Institutions | 164<u>165</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.23 | Acknowledgement Regarding Any Supported QFCs | 164<u>166</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.24 | Intercreditor Agreement and Specified Additional Guarantee Agreements. | 165<u>167</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.25 | Existing Credit Agreement | 165<u>167</u> |

---

iv

------

**EXHIBITS AND SCHEDULES** 

---

| | |
|:---|:---|
| Exhibit A-1 | Form of Initial Term Loan Note |
| Exhibit A-2<br> Exhibit A-3 | Form of Delayed Draw Term Loan Note<br> Form of Tranche B Loan Note |
| Exhibit A-4 | Form of Tranche C Loan Note |
| Exhibit A-5 | Form of Amendment No. 4 Term Loan Note |
| Exhibit A-6 | Form of Amendment No. 4 Delayed Draw Term Loan Note |
| Exhibit B | Form of Borrowing Request |
| Exhibit C | Form of Compliance Certificate |
| Exhibit D | Security Instruments |
| Exhibit E | Form of Assignment and Assumption |
| Exhibit F-1 | Form of U.S. Tax Compliance Certificate<br> (Foreign Lenders; not partnerships) |
| Exhibit F-2 | Form of U.S. Tax Compliance Certificate<br> (Foreign Participants; not partnerships) |
| Exhibit F-3 | Form of U.S. Tax Compliance Certificate<br> (Foreign Participants; partnerships) |
| Exhibit F-4 | Form of U.S. Tax Compliance Certificate<br> (Foreign Lenders; partnerships) |
| Exhibit G | Form of Solvency Certificate |
| Exhibit H | Form of Reserve Report Certificate |
| <u>Exhibit I</u> | <u>Form of Specified Preferred Equity Share Designation</u> |
| <u>Exhibit J</u> | <u>Form of Third A&R LLC Agreement</u> |
| Schedule 1.02(a) | APOD |
| Schedule 1.02(b) | Commitments |
| Schedule 1.02(c) | Existing Swap Agreements |
| Schedule 1.02(d) | Tranche C Commitments |
| Schedule 7.05 | Litigation |
| Schedule 7.14 | Subsidiaries and Partnerships |
| Schedule 7.18 | Gas Imbalances |
| Schedule 7.19 | Marketing Contracts |
| Schedule 7.28 | Material Contracts |
| Schedule 9.02 | Existing Indebtedness |
| Schedule 9.03 | Existing Liens |
| Schedule 9.05(a) | Existing Investments |

---

v

------

**THIS AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT** (this "<u>Agreement</u>") dated as of August 12, 2024 is among PHOENIX ENERGY ONE, LLC, a Delaware limited liability company and formerly known as PHOENIX CAPITAL GROUP HOLDINGS, LLC (the "<u>Company</u>"), PHOENIX OPERATING LLC, a Delaware limited liability company (the "<u>Borrower</u>"), each of the Lenders from time to time party hereto and FORTRESS CREDIT CORP., as administrative agent for the Lenders (in such capacity, together with its successors in such capacity, the "<u>Administrative Agent</u>").

**W I T N E S S E T H:** 

WHEREAS, the Company, the Borrower, Amarillo National Bank, a national banking association, as lender (in such capacity, the "<u>Existing Lender</u>") and the other lenders from time to time party thereto, are parties to that certain Credit Commercial Agreement, dated as of July 24, 2023 (as amended, supplemented or otherwise modified from time to time prior to the date hereof, the "<u>Existing Credit Agreement</u>");

WHEREAS, effective immediately prior to giving effect to this Agreement and pursuant to that certain Assignment of Loans and Liens, dated as of the date hereof, among the Existing Lender, the Company, the Borrower, Fortress Credit Corp. and the Lenders (the "<u>Master Assignment Agreement</u>"), (a) the Existing Lender resigned in all of its representative capacities under the Existing Credit Agreement and any other documents referred to in the Existing Credit Agreement to which the Existing Lender is a party and assigned and conveyed the Assigned Security Interests (as defined in the Master Assignment Agreement) to the Administrative Agent and (b) the Lenders purchased and assumed from the Existing Lender, all of the outstanding extensions of credit made by the Existing Lender under the Existing Credit Agreement and other interests, in each case, as more particularly described in the Master Assignment Agreement;

WHEREAS, the Lenders have agreed to amend and restate the Existing Credit Agreement in its entirety in the form of this Agreement as set forth herein and the Lenders have agreed to make the Loans and the Commitment available to the Company and the Borrower pursuant to the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and of the loans, extensions of credit and commitments hereinafter referred to, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

**ARTICLE I** 

**DEFINITIONS AND ACCOUNTING MATTERS** 

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

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

------

"<u>ABR</u>" means, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 0.50%; <u>provided</u>, however that for any period ABR as so determined is less than the applicable Floor, the ABR shall be the applicable Floor. Any change in the ABR due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective from and including the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.

"<u>ABR Loan</u>" means a Loan that bears interest based on the ABR.

"<u>Accounting Change</u>" has the meaning assigned to such term in <u>Section 1.04</u>.

"<u>Acquisition Conditions</u>" means, with respect to any acquisition of assets (including assets constituting a business unit, line or business, division or discrete set of assets, but excluding Oil and Gas Properties (which, for the avoidance of doubt, are subject to the Asset Acquisition Conditions)) or Equity Interests, (a) if such acquisition involves the acquisition of Equity Interests of a Person, such acquisition shall result in the issuer of such Equity Interests becoming a Wholly-Owned Subsidiary and, to the extent required by <u>Section 8.14</u>, a Guarantor; (b) such acquisition shall result in the Collateral Agent, for the benefit of the Secured Parties, being granted a security interest in any assets or Equity Interests so acquired to the extent required by <u>Section 8.14</u>; (c) subject to <u>Section 1.06</u>, immediately after giving effect to such acquisition, no Default or Event of Default shall have occurred and be continuing; (d) (i) the Total Secured Leverage Ratio shall be less than 1.50 to 1.00, (ii) the Asset Coverage Ratio shall not be less than 2.00 to 1.00 and (iii) the Current Ratio shall be at least 0.90 to 1.00 (or, for the month ending April 30, 2026 and thereafter, 1.00 to 1.00), in each case calculated on a Pro Forma Basis giving effect to such acquisition; and (e) immediately after giving effect to such acquisition, the Company and its Subsidiaries shall be in compliance with <u>Section 9.06</u>.

"<u>Acquisition IRR</u>" means, with respect to any acquisition of Oil and Gas Properties by the Company or any of its Subsidiaries, the internal rate of return of such Oil and Gas Properties based on the following parameters: (a) the price forecast used to calculate the projected internal rate of return shall be, for crude oil or for natural gas, the then-current Five Year Strip Price applicable thereto, (b) the projected internal rate of return shall be measured from the date such Oil and Gas Properties are acquired and (c) the projected internal rate of return shall (i) reflect actual economic and production results of such Oil and Gas Properties and (ii) with respect to forecasted economic and production results, be based on the latest forecast provided by the Borrower in good faith and reasonably satisfactory to the Administrative Agent taking into consideration, in the case of this <u>clause (c)</u>, (A) any fees, costs and expenses related to spudding, (B) reversionary interests held by any counterparty to such Oil and Gas Properties, (C) severance and ad valorem taxes, and (D) lease operating expenses and midstream gathering, marketing, and transportation costs (including any appropriate fee escalations), based on historical expense data and contractual arrangements in respect thereof, in each case, reflecting the reasonably expected development timeline for such Oil and Gas Properties.

"<u>ACR Secured Indebtedness</u>" means as of any date of determination, an amount equal to (x) Consolidated Total Secured Indebtedness as of such date <u>minus</u> (y) Net Working Capital as of such date. For the avoidance of doubt, if Net Working Capital as of any date of determination is a negative number, such amount shall be added to Consolidated Total Secured Indebtedness as of such date for purposes of determining ACR Secured Indebtedness as of such date.

------

"<u>Adamantium</u>" means Adamantium Capital, LLC, a Delaware limited liability company.

"<u>Adjusted Term SOFR</u>" means, for purposes of any calculation, the rate *per annum* equal to (a) Term SOFR for such calculation plus (b) the Term SOFR Adjustment.

"<u>Administrative Agent</u>" has the meaning assigned to such term in the preamble hereto.

"<u>Administrative Questionnaire</u>" means an Administrative Questionnaire in a form supplied by the Administrative Agent.

"<u>Affected Financial Institution</u>" means (a) any EEA Financial Institution or (b) any UK Financial Institution.

"<u>Affiliate</u>" means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

"<u>Agents</u>" means, collectively, the Administrative Agent and the Technical Agent, and "<u>Agent</u>" means any of the foregoing.

"<u>Aggregate Weighted Average Life to Maturity</u>" means, when applied to any Indebtedness at any date, the number of years obtained by dividing:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the sum of the aggregate Duration Adjusted Principal of each outstanding issuance of Debt for Borrowed Money (excluding the Loans); by

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the then outstanding principal amount of all such Debt for Borrowed Money (excluding the Loans).

For purposes of this definition, "<u>Duration Adjusted Principal</u>" means, when applied to any Debt for Borrowed Money at any date, the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of such Debt for Borrowed Money, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment.

"<u>Agreement</u>" means this Amended and Restated Senior Secured Credit Agreement, including the Annexes, Schedules and Exhibits hereto, as the same may be amended, restated, amended and restated, supplemented or modified from time to time.

"<u>Amendment No. 3</u>" means that certain Amendment No. 3 to Amended and Restated Senior Secured Credit Agreement, dated as of December 18, 2024, among the Company, the Borrower, the Guarantors party thereto, the Specified Additional Guarantors party thereto, the Lenders party thereto and the Administrative Agent.

------

"<u>Amendment No. 3 Effective Date</u>" has the meaning assigned to such term in Amendment No. 3.

"<u>Amendment No. 3 Fee Letter</u>" means that certain Fee Letter, dated as of the Amendment No. 3 Effective Date, by and among the Company, the Borrower and Fortress.

"<u>Amendment No. 4</u>" means that certain Limited Waiver and Amendment No. 4 to Amended and Restated Senior Secured Credit Agreement, dated as of April 16, 2025, among the Company, the Borrower, the Guarantors party thereto, the Specified Additional Guarantors party thereto, the Lenders party thereto and the Administrative Agent.

"<u>Amendment No. 4 DDTL Commitment Expiration Date</u>" means the earliest to occur of (a) the date on which the Maximum Amendment No. 4 DDTL Amount has been fully drawn, (b) the date on which the Amendment No. 4 Delayed Draw Term Loan Commitments are terminated in accordance with <u>Section 2.05</u> and (c) the date that is twelve (12) months after the Amendment No. 4 Effective Date.

"<u>Amendment No. 4 Delayed Draw Term Lender</u>" means, as of any date of determination, each Lender having an Amendment No. 4 Delayed Draw Term Loan Commitment or that holds Amendment No. 4 Delayed Draw Term Loans.

"<u>Amendment No. 4 Delayed Draw Term Loan Availability Period</u>" means the period from and including the Amendment No. 4 Effective Date through and including the Amendment No. 4 DDTL Commitment Expiration Date.

"<u>Amendment No. 4 Delayed Draw Term Loan Commitment</u>" means, as to any Amendment No. 4 Delayed Draw Term Lender, the aggregate commitment of such Amendment No. 4 Delayed Draw Term Lender to make Amendment No. 4 Delayed Draw Term Loans as set forth on <u>Schedule 1.02(b)</u>, as such commitment (a) may be reduced or terminated from time to time pursuant to <u>Section 2.05(c)</u>, (b) may be reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to <u>Section 12.04</u> and (c) is reduced in an amount equal to any Amendment No. 4 Delayed Draw Term Loans drawn under <u>Section 2.01(f)</u>. The aggregate amount of the Amendment No. 4 Delayed Draw Term Loan Commitments of the Amendment No, 4 Delayed Draw Term Lenders as of the Amendment No. 4 Effective Date is $25,000,000.

"<u>Amendment No. 4 Delayed Draw Term Loans</u>" means the loans made by the Amendment No. 4 Delayed Draw Term Lenders to the Borrower pursuant to <u>Section 2.01(f)</u>.

"<u>Amendment No. 4 Lender</u>" means, as of any date of determination, each Tranche D Lender having an Amendment No. 4 Term Loan Commitment or that holds Amendment No. 4 Term Loans.

"<u>Amendment No. 4 Term Loan Commitment</u>" means, with respect to each Amendment No. 4 Lender, the commitment of such Amendment No. 4 Lender to make Amendment No. 4 Term Loans as set forth on <u>Schedule 1.02(b)</u>. The aggregate amount of the Amendment No. 4 Term Loan Commitments of the Amendment No. 4 Lenders as of the Amendment No. 4 Effective Date is $25,000,000.

------

"<u>Amendment No. 4 Term Loans</u>" means the loans made by the Amendment No. 4 Lenders to the Borrower pursuant to <u>Section 2.01(e)</u>.

"<u>Amendment No. 4 Effective Date</u>" has the meaning assigned to such term in Amendment No. 4.

"<u>Amendment No. 4 Fee Letter</u>" means that certain Fee Letter, dated as of the Amendment No. 4 Effective Date, by and among the Company, the Borrower and Fortress.

<u>"Amendment No. 5" means that certain Amendment No. 5 to Amended and Restated Senior Secured Credit Agreement, dated as of June 26, 2025, among the Company, the Borrower, the Guarantors party thereto, the Specified Additional Guarantors party thereto, the Lenders party thereto, the Collateral Agent and the Administrative Agent.</u>

<u>"Amendment No. 5 Effective Date" has the meaning assigned to such term in Amendment No. 5.</u>

"<u>Annual Budget</u>" has the meaning assigned to such term in <u>Section 8.01(d)(ii)</u>.

"<u>Anti-Corruption Laws</u>" means the United States Foreign Corrupt Practices Act of 1977 and all other laws, rules, and regulations of any jurisdiction applicable to the Company or any of its Subsidiaries from time to time concerning or relating to bribery or corruption.

"<u>APOD</u>" means the approved plan of development of the Company's and its Subsidiaries' Oil and Gas Properties and all related Hydrocarbon Interests attached as <u>Schedule 1.02(a)</u>.

"<u>APOD Approval Period</u>" has the meaning set forth in <u>Section 8.20(c)</u>.

"<u>APOD Completion Date</u>" means the first date on which (a) all APOD Wells have become Producing APOD Wells and (b) the Borrower has delivered to the Administrative Agent a certificate of a Responsible Officer certifying as to the foregoing (together with reasonably detailed supporting documentation).

"<u>APOD Criteria</u>" means, with respect to a Proposed APOD, the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the internal rate of return (calculated as of such date in accordance with the IRR Parameters) of all wells proposed to be drilled during the term of such Proposed APOD is equal to or greater than twenty-five percent (25%);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) as of the Business Day immediately prior to the date such Proposed APOD is received by the Administrative Agent, the Five-Year Strip Price for crude oil is no less than $60.00/bbl;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) such Proposed APOD shall cover (i) with respect to the Initial APOD, a period commencing on the Closing Date and ending on August 12, 2025 (or such later date as the Lenders may approve in their sole discretion) and (ii) with respect to any other APOD, a period that is no longer than six (6) months (or such later date as the Lenders may approve in their sole discretion); and

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the amount of Capital Expenditures proposed to be incurred pursuant to such Proposed APOD shall not exceed the amount of Capital Expenditures reasonably anticipated by the Borrower that will actually be incurred pursuant to the plan of development set forth in such Proposed APOD (it being agreed and understood that any estimated Capital Expenditures in the Proposed APOD, as applicable, shall not include any "cushion").

"<u>APOD Economic Test</u>" means, for any Producing APOD Tranche, as of any APOD Economic Test Date, the internal rate of return (calculated as of such date in accordance with the IRR Parameters) of all Producing APOD Wells in such Producing APOD Tranche as of such date. The Borrower shall be deemed to be in compliance with the APOD Economic Test as of any APOD Economic Test Date if the internal rate of return described in the preceding sentence is equal to or greater than twenty-five percent (25%).

"<u>APOD Economic Test Date</u>" means (a) the last day of the Fiscal Quarter in which the APOD Tranche consisting of each Initial APOD Group first becomes a Producing APOD Tranche and (b) the last day of each Fiscal Quarter thereafter.

"<u>APOD Expenditure Report</u>" means, for the applicable calendar month, a report, in form and substance reasonably satisfactory to the Administrative Agent, setting forth in reasonable detail all capital expenditures made in support of the APOD (broken out on an invoice-by-invoice basis) for such calendar month, and including evidence reasonably satisfactory to the Administrative Agent of the source of funds used for such capital expenditures.

"<u>APOD Quarterly Test Event</u>" means, as of any date of determination, that the Borrower is not in compliance with the APOD Economic Test as of such date, except as a result of a Force Majeure Event that directly, materially and adversely impacts the business operations of the Borrower for a period no longer than forty-five (45) days, as reasonably determined by the Majority Lenders in consultation with the Borrower.

"<u>APOD Revision Event</u>" means that any of the following has occurred:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) as of the last day of any Fiscal Quarter (commencing with the Fiscal Quarter ending September 30, 2024), an APOD Quarterly Test Event has occurred; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) at any time, the Five Year Strip Price for crude oil is less than $60.00/bbl (WTI) for five (5) consecutive Business Days.

"<u>APOD Tranche</u>" means (a) individually, each Initial APOD Group and (b) each other group of wells to be drilled on the same pad pursuant to any APODs approved after the Initial APOD.

"<u>APOD Wells</u>" means the wells contained in the APOD and described on <u>Schedule 1.02(a)</u>.

------

"<u>Applicable Borrowing Date</u>" means (a) for the Initial Term Loans and Tranche B Loans, the Closing Date, (b) for any Delayed Draw Term Loans, the date on which such Delayed Draw Term Loans are made to the Borrower, (c) for the Tranche C Loans, the Amendment No. 3 Effective Date, (d) for the Amendment No. 4 Term Loans, the Amendment No. 4 Effective Date and (e) for any Amendment No. 4 Delayed Draw Term Loans, the date on which such Amendment No. 4 Delayed Draw Term Loans are made to the Borrower.

"<u>Applicable Margin</u>" means a rate of interest *per annum* equal to (a) with respect to SOFR Loans (or Loans bearing interest at a rate determined by reference to any other Benchmark), 7.00% and (b) with respect to ABR Loans, 6.00%.

"<u>Applicable Parties</u>" has the meaning assigned to such term in <u>Section 11.14(c)</u>.

"<u>Applicable Percentage</u>" means, with respect to any Lender, a percentage equal to a fraction (a) the numerator of which is an amount equal to such Lender's Credit Exposure (b) the denominator of which is the sum of the Credit Exposure of all Lenders; <u>provided</u> that, in the case of <u>Section 4.04</u> when a Defaulting Lender shall exist, "Applicable Percentage" shall be adjusted to disregard any Defaulting Lender's Credit Exposure.

"<u>Approved Counterparty</u>" means (a) any Designated Non-Lender Swap Provider and (b) any Person that, at the time a Swap Agreement is entered into, (i) is a Lender or an Affiliate of a Lender and (ii) has (or whose parent company has), at the time the applicable Swap Agreement is entered into, a long term senior unsecured debt rating of A- or higher by S&P or A3 or higher by Moody's (or their equivalent). The term "parent company," as used in the preceding sentence with reference to any Lender or any of their respective Affiliates, shall include any Person that owns a majority of the outstanding Equity Interests having by the terms thereof ordinary voting power to elect a majority of the board of directors, manager or other governing body of such Lender or such Affiliate, as applicable.

"<u>Approved Electronic Platform</u>" has the meaning assigned such term in <u>Section 11.14(a)</u>.

"<u>Approved Fund</u>" means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and 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.

"<u>Approved Petroleum Engineer</u>" means any of (a) NSAI, (b) Cawley, Gillespie and Associates, Inc. and (c) Ryder Scott Company, LP.

"<u>Approved Swap Agreement</u>" means a Swap Agreement with any Approved Counterparty entered into in the ordinary course of business by any Credit Party for purposes of fixing prices and not for speculative purposes. For the avoidance of doubt, Approved Swap Agreements must be in the form of puts, floors, swap agreements and collars, but shall exclude put options, "put spreads", and "three way collars" (as such terms are commonly understood by swap dealers); <u>provided</u> that the price floor for any such put or collar shall be set at an amount no less than 15% below the Five Year Strip Price, determined as of the date of purchase of such put or collar.

------

"<u>Arranger</u>" means Fortress, in its capacity as sole lead arranger.

"<u>Asset Acquisition Conditions</u>" means, with respect to any acquisition (or series of related acquisitions) of Oil and Gas Properties, (a) such Oil and Gas Properties shall be located within the states of Colorado, Montana, North Dakota, Texas, Wyoming or Utah; (b) such Oil and Gas Properties consist solely of Proved Reserves; (c) such acquisition shall not be made with proceeds of any Loans, (d) immediately after giving effect to such acquisition, no Default or Event of Default shall have occurred and be continuing; (e) immediately after giving effect to such acquisition, the Minimum Liquidity Test is satisfied; (f) immediately after giving effect to such acquisition, the Company and its Subsidiaries shall be in compliance with <u>Section 9.06</u>; and (g) if the consideration for all such Oil and Gas Properties is equal to or greater than $500,000, the Acquisition IRR with respect to such Oil and Gas Properties is at least twenty percent (20%).

"<u>Asset Coverage Ratio</u>" means, as of any date, the ratio of (a) Total PDP PV-10 as of such date to (b) ACR Secured Indebtedness as of such date.

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

"<u>Available Amount</u>" means an amount equal to (x) $10,000,000 <u>minus</u> (y) the amount of Permitted Capital Expenditures made since the Closing Date.

"<u>Available Tenor</u>" means, as of any date of determination and with respect to the then-current Benchmark, as applicable, (a) if such Benchmark is a term rate, any tenor for such Benchmark (or component thereof) that is or may be used for determining the length of an Interest Period pursuant to this Agreement or (b) otherwise, any payment period for interest calculated with reference to such Benchmark (or component thereof) that is or may be used for determining any frequency of making payments of interest calculated with reference to such Benchmark pursuant to this Agreement, in each case, as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of "Interest Period" pursuant to <u>Section 3.03(d)</u>.

"<u>Bail-In Action</u>" means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.

"<u>Bail-In Legislation</u>" means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).

------

"<u>Bankruptcy Code</u>" means Title 11 of the United States Code entitled "Bankruptcy," as now and hereafter in effect, or any successor statute.

"<u>Bankruptcy Event</u>" means, with respect to any Person, such Person becomes the subject of a voluntary or involuntary bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment or has had any order for relief in such proceeding entered in respect thereof, <u>provided</u> that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by a Governmental Authority or instrumentality thereof, <u>provided</u>, <u>further</u>, that such ownership interest does not result in or provide such Person 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 Person (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.

"<u>Benchmark</u>" means, initially, the Term SOFR Reference Rate; <u>provided</u> that if a Benchmark Transition Event has occurred with respect to the Term SOFR Reference Rate or the then-current Benchmark, then "Benchmark" means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to <u>Section 3.03(a)</u>.

"<u>Benchmark Replacement</u>" means, with respect to any Benchmark Transition Event, the first alternative set forth in the order below that can be determined by the Administrative Agent for the applicable Benchmark Replacement Date:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the sum of (i) Daily Simple SOFR plus (ii) 0.10% (10 basis points); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the sum of: (i) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower giving due consideration to (A) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (B) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement to the then-current Benchmark for Dollar-denominated syndicated credit facilities and (ii) the related Benchmark Replacement Adjustment.

If the Benchmark Replacement as determined pursuant to <u>clause (a)</u> or <u>(b)</u> above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.

"<u>Benchmark Replacement Adjustment</u>" means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower giving due consideration to (a) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or

------

(b) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for Dollar-denominated syndicated credit facilities at such time.

"<u>Benchmark Replacement Date</u>" means the earliest to occur of the following events with respect to the then-current Benchmark:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) in the case of <u>clause (a)</u> or <u>(b)</u> of the definition of "Benchmark Transition Event," the later of (i) the date of the public statement or publication of information referenced therein and (ii) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) in the case of <u>clause (c)</u> of the definition of "Benchmark Transition Event," the first date on which all Available Tenors of such Benchmark (or the published component used in the calculation thereof) have been determined and announced by the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be non-representative; <u>provided</u> that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such <u>clause (c)</u> and even if any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date.

For the avoidance of doubt, the "Benchmark Replacement Date" will be deemed to have occurred in the case of <u>clause (a)</u> or <u>(b)</u> with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).

"<u>Benchmark Transition Event</u>" means the occurrence of one or more of the following events with respect to the then-current Benchmark:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, <u>provided</u> that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the Federal Reserve Board of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, <u>provided</u> that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer representative.

For the avoidance of doubt, a "Benchmark Transition Event" will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).

"<u>Benchmark Unavailability Period</u>" means the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to <u>clauses (a)</u> or <u>(b)</u> of that definition has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with <u>Section 3.03</u> and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with <u>Section 3.03</u>.

"<u>Beneficial Ownership Certification</u>" means a certification regarding beneficial ownership or control as required by the Beneficial Ownership Regulation.

"<u>Beneficial Ownership Regulation</u>" means 31 C.F.R. § 1010.230.

"<u>Benefit Plan</u>" means any of (a) an "employee benefit plan" (as defined in ERISA) that is subject to Title I of ERISA, (b) a "plan" as defined in and subject to Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such "employee benefit plan" or "plan."

"<u>BHC Act Affiliate</u>" of a party means an "affiliate" (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.

"<u>Board</u>" means the Board of Governors of the Federal Reserve System of the United States of America or any successor Governmental Authority.

"<u>Borrower</u>" has the meaning assigned to such term in the preamble hereto.

"<u>Borrowing</u>" means Loans made on the same date.

"<u>Borrowing Request</u>" means a request by the Borrower, substantially in the form of <u>Exhibit B</u> or any other form approved by the Administrative Agent, for a Borrowing in accordance with <u>Section 2.03</u>.

"<u>Business Day</u>" means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City or Irvine, California, are authorized or required by law to remain closed.

------

"<u>Business Loan Agreement</u>" means that certain Business Loan and Security Agreement Supplement, dated as of January 9, 2024, by and between the Company, as borrower, and WebBank, as lender, as in effect on October 25, 2024.

"<u>Capital Expenditures</u>" means, with respect to any Person (determined without duplication), all expenditures by such Person for the acquisition or leasing of fixed or capital assets or additions to equipment (including replacements, capitalized repairs and improvements and capitalized workover expenses) that are required to be capitalized under GAAP on a balance sheet of such Person. For purposes of this definition, the purchase price of equipment that is purchased simultaneously with the trade-in of existing equipment owned by such Person or with insurance proceeds shall be included in Capital Expenditures only to the extent of the gross amount of such purchase price <u>minus</u> the credit granted by the seller of such equipment for such equipment being traded in at such time, or the amount of such proceeds, as the case may be.

"<u>Cash Equivalents</u>" means the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) direct obligations of the United States or any agency thereof, or obligations guaranteed by the United States or any agency thereof, in each case maturing within one (1) year from the date of acquisition thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) commercial paper maturing within one (1) year from the date of acquisition thereof rated in one of the two highest grades by S&P or Moody's;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) deposits maturing within one (1) year from the date of acquisition thereof with, including certificates of deposit issued by, any Lender or any office located in the United States of any other bank or trust company which is organized under the laws of the United States or any state thereof, has capital, surplus and undivided profits aggregating at least $100,000,000 (as of the date of such bank or trust company's most recent financial reports) and has a short term deposit rating of no lower than A2 or P2, as such rating is set forth from time to time, by S&P or Moody's, respectively; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) deposits in money market funds investing primarily in Investments described in <u>clauses (a)</u>, <u>(b)</u> and <u>(c)</u> of this definition.

"<u>Casualty Event</u>" means any loss, casualty or other insured damage to, or any nationalization, taking under power of eminent domain or by condemnation or similar proceeding of, any Property of the Company or any of its Subsidiaries.

"<u>Change in Control</u>" means the occurrence of any of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the failure of the Permitted Holders to (i) own, directly or indirectly, at least 51% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the Company, (ii) own, directly or indirectly, at least 51% of the beneficial economic ownership of the Company or (iii) control the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the failure of Parent to own, directly, 100% of the Company's issued and outstanding Equity Interests <u>(other than the Specified Preferred Equity)</u> or the failure of Parent to Control the Company;

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) both of Adam Ferrari and Lindsey Wilson ceasing to be managers<u>a director, manager or other similar role within the governing body</u> of the Company, or any of Adam Ferrari or Curtis Allen ceasing to be an officer of the Company that is involved in the day to day management and operations of the Company, including in any case as a result of death, unless, within sixty (60) days of such event, the Company shall have retained a replacement manager or officer <u>reasonably satisfactory to the Administrative Agent</u> and shall have provided to the Administrative Agent a succession management plan detailing its continued plan of operation and management that is satisfactory to the Administrative Agent in the exercise of its reasonable discretion;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the failure of the Company to own, directly, 100% of the issued and outstanding membership interests of the Borrower;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) the Borrower or a Wholly-Owned Subsidiary of the Borrower shall cease to own, directly, 100% of the Equity Interests of each Subsidiary (except in connection with an asset sale of 100% of the Equity Interests of a Subsidiary permitted under this Agreement);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) if any Person or group (other than the Permitted Holders) has the ability to elect, or so elects, directly or indirectly, a majority of the members of the board of directors of the Company or the Borrower, including, without limitation, by the acquisition of revocable proxies for the election of directors; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) a "Change<u>change</u> in Control<u>control</u> " (or comparable term) occurs under <u>(i)</u> any Material Indebtedness (in the case of Material Indebtedness described in clause (a) of the definition thereof, to the extent the aggregate outstanding principal amount of such Material Indebtedness exceeds $5,000,000) <u>or (ii) the Specified Preferred Equity</u>.

For purposes of this definition, "control" of a Person (including, with its correlative meanings, "controlled by" and "under common control with") means the power, directly or indirectly, to direct or cause the direction of the general management and policies of such Person, whether by contract or otherwise.

"<u>Change in Law</u>" means the occurrence after the date of this Agreement of (a) the adoption of or taking effect of any law, rule or regulation or treaty, (b) any change in any law, rule or regulation or treaty or in the administration, in the interpretation, implementation or application thereof by any Governmental Authority or (c) compliance by any Lender (or, for purposes of <u>Section 5.01(b)</u>, by any lending office of such Lender or by such Lender's holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement; <u>provided</u> that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith or in the implementation thereof and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States of America or foreign regulatory authorities, in each case pursuant to Basel III (but not Basel II), shall in each case be deemed to be a "Change in Law", regardless of the date enacted, issued, adopted, promulgated or implemented.

------

"<u>Class</u>", when used in reference to any Loan, refers to whether such Loan is a Tranche A Loan, Tranche B Loan, Tranche C Loan or Tranche D Loan.

"<u>Close Affiliate</u>" means, with respect to a specified Person, another Person that (a) is a director or officer of the specified Person or (b) is the spouse, issue or parent of the specified Person or of an Affiliate of the specified Person.

"<u>Closing Date</u>" means the date on which the conditions specified in <u>Section 6.01</u> are satisfied (or waived in accordance with <u>Section 12.02</u>).

"<u>Code</u>" means the Internal Revenue Code of 1986, as amended from time to time, and any successor statute.

"<u>Collateral Agent</u>" has the meaning given to such term in the Intercreditor Agreement.

"<u>Collateral Coverage Minimum</u>" has the meaning assigned to such term in <u>Section 8.14(a)</u>.

"<u>Commitment</u>" means a Tranche A Commitment, a Tranche B Commitment, a Tranche C Commitment or a Tranche D Commitment.

"<u>Commodities Account</u>" has the meaning assigned to such term in the UCC.

"<u>Commodity Exchange Act</u>" means the Commodity Exchange Act (7 U.S.C. § 1 *et seq.*), as amended from time to time, and any successor statute, and any regulations promulgated thereunder.

"<u>Communications</u>" means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of the Borrower or any Guarantor or Specified Additional Guarantor pursuant to any Loan Document or the transactions contemplated therein which is distributed by the Administrative Agent, any Lender by means of electronic communications pursuant to this Agreement, including through an Approved Electronic Platform.

"<u>Company</u>" has the meaning assigned to such term in the Preamble.

"<u>Company Materials</u>" has the meaning assigned to such term in <u>Section 12.20</u>.

"<u>Compliance Certificate</u>" means a Compliance Certificate, signed by a Financial Officer, substantially in the form of <u>Exhibit C</u> or any other form approved by the Administrative Agent.

------

"<u>Conforming Changes</u>" means, with respect to either the use or administration of Adjusted Term SOFR or the use, administration, adoption or implementation of any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition "Business Day," the definition of "U.S. Government Securities Business Day," the definition of "Interest Period" or any similar or analogous definition (or the addition of a concept of "interest period"), timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of breakage provisions and other technical, administrative or operational matters) that the Administrative Agent decides may be appropriate to reflect the adoption and implementation of any such rate or to permit the use and administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of any such rate exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).

"<u>Consolidated Net Income</u>" means, with respect to the Company and its Consolidated Subsidiaries for any period, the aggregate of the net income (or loss) of the Company and its Consolidated Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; <u>provided</u> that there shall be excluded therefrom:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the net income (or loss) of any Person in which the Company or any Consolidated Subsidiary has an interest (which interest does not cause the net income of such other Person to be consolidated with the net income of the Company and the Consolidated Subsidiaries in accordance with GAAP), except to the extent of the amount of dividends or distributions actually paid in cash during such period by such other Person to the Company or to a Consolidated Subsidiary, as the case may be;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the net income of any Subsidiary to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that net income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or by operation of the terms of its charter or any agreement, instrument or Governmental Requirement in each case applicable to that Subsidiary or its stockholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) any gains or losses attributable to any write-ups or write-downs of assets, including ceiling test write-downs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) any gain (or loss), together with any related provision for Taxes on such gain (or loss), realized in connection with: (i) any Disposition which is not made in the ordinary course of business or (ii) the disposition of any securities by such Person or any of its Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Subsidiaries; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) any non-recurring non-cash gains or losses.

------

"<u>Consolidated Subsidiaries</u>" means, as to any Person, each Subsidiary of such Person (whether now existing or hereafter created or acquired) the financial statements of which shall be (or should have been) consolidated with the financial statements of such Person in accordance with GAAP.

"<u>Consolidated Total Indebtedness</u>" means as of any date of determination, the aggregate principal amount of all Indebtedness of the Company and its Consolidated Subsidiaries, without duplication, outstanding on such date, in an amount that would be reflected on a consolidated balance sheet (excluding the notes thereto) prepared as of such date on a consolidated basis in accordance with GAAP but only to the extent such Indebtedness comprises (a) Indebtedness for borrowed money, (b) obligations in respect of Finance Leases, (c) obligations evidenced by bonds, notes, debentures or similar instruments, (d) obligations in respect of unreimbursed drawn letters of credit, (e) Disqualified Capital Stock and (f) any Indebtedness to the extent included in the foregoing <u>clauses (a)</u> through <u>(e)</u> of others guaranteed by the Company or any of its Subsidiaries or in which the Company or such Subsidiary otherwise assures a creditor against loss of the Indebtedness (howsoever such assurance shall be made) to the extent of the lesser of the amount of such Indebtedness and the maximum stated amount of such guarantee or assurance against loss; <u>provided</u> that Consolidated Total Indebtedness shall not include obligations in respect of any Swap Agreement, other than to the extent such obligations are due and payable and not paid on such date. For the avoidance of doubt, Consolidated Total Indebtedness shall not include Indebtedness of the Company and its Consolidated Subsidiaries owed to the Company or a Consolidated Subsidiary.

"<u>Consolidated Total Secured Indebtedness</u>" means as of any date of determination, the aggregate amount of Consolidated Total Indebtedness that is then secured by Liens on property of the Company and its Subsidiaries. For the avoidance of doubt, Consolidated Total Secured Indebtedness shall not include Indebtedness of the Company and its Consolidated Subsidiaries owed to the Company or a Consolidated Subsidiary.

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

"<u>Control Agreement</u>" means a control agreement or similar agreement, as applicable, in form and substance reasonably satisfactory to the Administrative Agent, executed by the Borrower or a Guarantor, the Administrative Agent and the relevant financial institution party thereto, which (a) provides a first priority perfected Lien in favor of the Collateral Agent for the benefit of the Secured Parties (<u>provided</u> such Control Agreement may permit certain Excepted Liens according to its terms) and (b) establishes the Collateral Agent's control, in each case, with respect to any Deposit Account, Securities Account or Commodities Account of such Credit Party.

"<u>Controlled Account</u>" means a Deposit Account, Securities Account or Commodities Account that is subject to a Control Agreement.

------

"<u>Covered Entity</u>" means any of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) a "covered entity" as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) a "covered bank" as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) a "covered FSI" as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).

"<u>Covered Party</u>" has the meaning assigned to such term in <u>Section 12.23</u>.

"<u>Credit Exposure</u>" means, as to any Lender at any time, an amount equal to the sum of (a) the aggregate unused Commitments of such Lender at such time plus (b) the aggregate principal amount of its Loans outstanding at such time.

"<u>Credit Parties</u>" means, collectively, the Company, the Borrower, each Guarantor and Specified Additional Guarantor.

"<u>Current Assets</u>" means, as of any date of determination, without duplication, the sum of all amounts that would, in accordance with GAAP, be set forth opposite the caption "total current assets" (or any like caption) on a consolidated balance sheet of the Company and its Consolidated Subsidiaries at such date but excluding (i) all non-cash assets under FASB ASC Topic 815, (ii) the aggregate amount of any deposits (whether in cash or otherwise) posted by the Company or any of its Consolidated Subsidiaries to secure Swap Obligations owing by such Persons or to cover market exposures, (iii) any deferred tax assets and (iv) any cash or Cash Equivalents deemed to be "restricted" in accordance with GAAP (other than to the extent such cash or Cash Equivalents are deemed to be "restricted" solely as a result of being maintained in a Controlled Account).

"<u>Current Liabilities</u>" means, as of any date of determination, without duplication, the sum of all amounts that would, in accordance with GAAP, be set forth opposite the caption "total current liabilities" (or any like caption) on a consolidated balance sheet of the Company and its Consolidated Subsidiaries on such date, but excluding (a) all non-cash obligations under FASB ASC Topic 815, (b) the current portion of the then outstanding aggregate principal amount of the Loans under this Agreement, (c) any deferred tax liabilities and (d) the lesser of (i) any current maturities of long-term Indebtedness for borrowed money and (ii) the product of (A) the principal amount of the cash proceeds of Specified Additional Bond Indebtedness issued during the Fiscal Quarter most recently ended with respect to which financial statements have been delivered pursuant to <u>Section 8.01(a)</u> or <u>Section 8.01(b)</u> (or, solely for purposes of Section 6.01(w), the Fiscal Quarter ending June 30, 2024), *multiplied by* (B) four (4).

"<u>Current Ratio</u>" means, as of any date of determination, the ratio of (a) Current Assets as of such date to (b) Current Liabilities as of such date.

------

"<u>Daily Simple SOFR</u>" means, for any day (a "<u>SOFR Rate Day</u>"), a rate *per annum* equal to SOFR for the day (such day "<u>SOFR Determination Date</u>") five (5) U.S. Government Securities Business Days prior to (i) if such SOFR Rate Day is a U.S. Government Securities Business Day, such SOFR Rate Day or (ii) if such SOFR Rate Day is not a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such SOFR Rate Day, in each case, as such SOFR is published by the SOFR Administrator on the SOFR Administrator's Website; <u>provided</u> that if by 5:00 p.m. (New York City time) on the second (2nd) U.S. Government Securities Business Day immediately following any SOFR Determination Date, SOFR in respect of such SOFR Determination Date has not been published on the SOFR Administrator's Website and a Benchmark Replacement Date with respect to Daily Simple SOFR has not occurred, then SOFR for such SOFR Determination Date will be SOFR as published in respect of the first preceding U.S. Government Securities Business Day for which such SOFR was published on the SOFR Administrator's Website; <u>provided</u>, <u>further</u> that SOFR as determined pursuant to this proviso shall be utilized for purposes of calculation of Daily Simple SOFR for no more than three (3) consecutive SOFR Rate Days. Any change in Daily Simple SOFR due to a change in SOFR shall be effective from and including the effective date of such change in SOFR without notice to the Borrower.

"<u>DDTL Commitment Expiration Date</u>" means the earliest to occur of (a) the date on which the Maximum DDTL Amount has been fully drawn, (b) the date on which the Delayed Draw Term Loan Commitments are terminated in accordance with <u>Section 2.05</u> and (c) the date that is twelve (12) months after the Closing Date.

"<u>Debt for Borrowed Money</u>" means Indebtedness of the type described in <u>clause (a)</u> of the definition thereof (including, for the avoidance of doubt, any Specified Existing Indebtedness and Specified Additional Bond Indebtedness).

"<u>Declined Proceeds</u>" has the meaning assigned to such term in <u>Section 3.04(c)(iii)</u>.

"<u>Default</u>" means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

"<u>Defaulting Lender</u>" means any Lender that (a) has failed, within two (2) Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans or (ii) pay over to any Credit Party any other amount required to be paid by it hereunder, unless, in the case of <u>clause (i)</u> above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender's good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Borrower or any Credit Party in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender's good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within three (3) Business Days after request by a Credit Party, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations as of the date of certification) to fund prospective Delayed Draw Term Loans or Amendment No. 4 Delayed Draw Term Loans under this Agreement, <u>provided</u> that such Lender shall cease to be a Defaulting Lender pursuant to this <u>clause (c)</u> upon such Credit Party's receipt of such certification in form and substance satisfactory to it and the Administrative Agent, (d) has become the subject of (i) a Bankruptcy Event or (ii) a Bail-In Action or (e) is a Sanctioned Lender.

------

"<u>Delayed Draw Term Lender</u>" means, as of any date of determination, each Lender having a Delayed Draw Term Loan Commitment or that holds Delayed Draw Term Loans.

"<u>Delayed Draw Term Loan Availability Period</u>" means the period from and including the Closing Date through and including the DDTL Commitment Expiration Date.

"<u>Delayed Draw Term Loan Commitment</u>" means, as to any Delayed Draw Term Lender, the aggregate commitment of such Delayed Draw Term Lender to make Delayed Draw Term Loans as set forth on <u>Schedule 1.02(b)</u>, as such commitment (a) may be reduced or terminated from time to time pursuant to <u>Section 2.05(b)</u>, (b) may be reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to <u>Section 12.04</u> and (c) is reduced in an amount equal to any Delayed Draw Term Loans drawn under <u>Section 2.01(c)</u>. The aggregate amount of the Delayed Draw Term Loan Commitments of the Delayed Draw Term Lenders as of the Closing Date is $35,000,000.

"<u>Delayed Draw Term Loans</u>" means the loans made by the Delayed Draw Term Lenders to the Borrower pursuant to <u>Section 2.01(c)</u>.

"<u>Deposit Account</u>" has the meaning assigned to such term in the UCC.

"<u>Designated Non-Lender Swap Provider</u>" means (a) BP Energy Company, (b) Cargill, Incorporated, (c) Mercuria Energy America, LLC and (d) any other Person that, at the time a Swap Agreement is entered into, has (or whose parent company or credit support guarantor has) a long-term senior unsecured debt rating of A- or higher by S&P or A3 or higher by Moody's (or their equivalent). The term "parent company," as used in the preceding sentence with reference to any Person, shall include any other Person that owns a majority of the outstanding Equity Interests having by the terms thereof ordinary voting power to elect a majority of the board of directors, manager or other governing body of such first Person.

"<u>Disposition</u>" means, with respect to any property, any sale, lease, sale and leaseback, assignment, conveyance, transfer, condemnation or other disposition thereof (in one transaction or in a series of transactions and whether effected pursuant to a division or otherwise). The terms "<u>Dispose</u>" and "<u>Disposed of</u>" shall have correlative meanings.

"<u>Disposition Threshold</u>" means (i) $1,000,000, in connection with any individual Disposition, of series of related Dispositions and (ii) $5,000,000 in any fiscal year.

"<u>Disputed Reserve Report</u>" means any Reserve Report (including, without limitation, any Replacement Reserve Report) delivered pursuant to <u>Section 8.12</u> which the Administrative Agent has determined that the valuation of the Proved Reserves contained therein is not satisfactory to the Administrative Agent in its sole discretion and designated as a "Disputed Reserve Report" by delivery of a written notice of such designation to the Borrower, which designation may be made via email and shall be effective immediately upon the sending of such notice.

------

"<u>Disputed Reserve Report Period</u>" means each period beginning on the date on which the Administrative Agent notifies the Borrower in writing that a Reserve Report delivered pursuant to <u>Section 8.12</u> is a Disputed Reserve Report and ending immediately prior to the date on which a Replacement Reserve Report is delivered to the Administrative Agent pursuant to <u>Section 8.12(c)</u>; <u>provided</u> that if such Replacement Reserve Report is itself a Disputed Reserve Report, the Disputed Reserve Report Period shall extend until the delivery of an additional Replacement Reserve Report.

"<u>Disqualified Capital Stock</u>" 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, (a) matures (excluding any maturity as a result of the optional redemption by the issuer thereof) or is mandatorily redeemable, in whole or in part, for any consideration other than other Equity Interests (which would not constitute Disqualified Capital Stock), pursuant to a sinking fund obligation or otherwise, (b) is convertible or exchangeable (unless at the sole option of the issuer thereof), in whole or in part, for Indebtedness, (c) is redeemable, in whole or in part, for any consideration other than other Equity Interests (which would not constitute Disqualified Capital Stock) at the option of the holder thereof or (d) requires the payment in cash of regularly scheduled dividends or distributions, in each case, on or prior to the date that is one (1) year after the Maturity Date.

"<u>dollars</u>" or "<u>$</u>" refers to lawful money of the United States of America.

"<u>Domestic Subsidiary</u>" means any Subsidiary that is organized under the laws of the United States of America or any state thereof or the District of Columbia.

"<u>EBITDAX</u>" means, for any period, an amount determined for the Company and its Consolidated Subsidiaries equal to the sum of Consolidated Net Income for such period <u>plus</u> the following expenses or charges to the extent deducted from Consolidated Net Income in such period: (a) interest expense, (b) income taxes, (c) depreciation, (d) depletion, (e) amortization, (f) impairment and all other non-cash charges, (g) exploration expenses or costs (to the extent the Company adopts the successful efforts method of accounting), (h) any fees, expenses and other transaction costs which are incurred in connection with the Transactions, (i) the amount of any non-recurring cash expenses and charges, determined in accordance with GAAP, in an amount not to exceed $500,000 for such period (determined prior to giving effect to such addback), (j) non-cash losses (including non-cash losses resulting from the requirements of Accounting Standards Codifications 410 and 815) and (k) to the extent incurred in any of the four Fiscal Quarters immediately preceding the Closing Date, the amount of Specified Financing Costs paid in cash during such Reference Period in excess of $29,000,000; <u>provided</u> that such amounts added back pursuant to this <u>clause (k)</u> shall not exceed $10,000,000 during any Reference Period, <u>minus</u> the following items of income to the extent included in Consolidated Net Income in such period: (i) all non-cash gains and non-cash income (including cancellation of indebtedness income and non-cash income resulting from the requirements of Accounting Standards Codifications 410 and 815) and (ii) the amount of any non-recurring cash items of income, determined in accordance with GAAP; <u>provided</u> that for purposes of calculating EBITDAX for any period of four consecutive Fiscal Quarters (each, a "<u>Reference Period</u>"), if (x) during such Reference Period (or, in the case of pro forma calculations, during the period from the last day of such Reference Period to and including the date as of which such calculation is made) the Company or any Consolidated Subsidiary shall

------

have made an acquisition or Disposition, EBITDAX (including Consolidated Net Income) for such Reference Period shall be calculated after giving pro forma effect thereto as if such acquisition or Disposition by the Company or its Consolidated Subsidiaries occurred on the first day of such Reference Period and (y) if any calculation in the immediately foregoing <u>clause (i)</u> is made on a pro forma basis, such pro forma adjustments are factually supportable and are determined in good faith by a Responsible Officer and subject to supporting documentation reasonably acceptable to the Administrative Agent.

"<u>ECP</u>" means any Person who qualifies as an "eligible contract participant" under Section 2(e) of the Commodity Exchange Act.

"<u>EEA Financial Institution</u>" 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 <u>clause</u> (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in <u>clauses (a)</u> or <u>(b)</u> of this definition and is subject to consolidated supervision with its parent.

"<u>EEA Member Country</u>" means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

"<u>EEA Resolution Authority</u>" 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.

"<u>Electronic Signature</u>" means an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record.

"<u>Eligible Assignee</u>" means any Person, subject to such consents, if any, as may be required under <u>Section 12.04(b)(i)</u>, that meets the requirements to be an assignee under <u>Section 12.04(b)(i)</u>; <u>provided</u> that, in no event shall any of the following persons be an Eligible Assignee: (i) any natural person (or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural Person), (ii) any Defaulting Lender or (iii) the Borrower, any other Credit Party, any Specified Additional Guarantor or any Affiliate (or Close Affiliate) of the Borrower or any other Credit Party or Specified Additional Guarantor.

"<u>Emergency Capital Expenditures</u>" means any Capital Expenditures that are incurred in response to and to resolve or mitigate an emergency or threat to human health, safety or protection of the environment, as determined by the Borrower in good faith in consultation with the Administrative Agent, or to the extent required under any applicable law, rule or regulation of any Governmental Authority (including Environmental Laws).

"<u>Eminent Domain Proceeds</u>" means all amounts and proceeds which any Loan Party receives in respect of an Event of Eminent Domain.

------

"<u>Environmental Laws</u>" means any and all Governmental Requirements pertaining in any way to the environment, the preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Substance or human health and safety (to the extent relating to exposure to Hazardous Substances), in effect in any and all jurisdictions in which the Company or any Subsidiary is conducting or at any time has conducted business, or where any Property of the Company or any Subsidiary is located, including without limitation, the Oil Pollution Act of 1990 ("<u>OPA</u>"), as amended, the Clean Air Act, as amended, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("<u>CERCLA</u>"), as amended, the Federal Water Pollution Control Act, as amended, the Occupational Safety and Health Act of 1970, as amended, the Resource Conservation and Recovery Act of 1976 ("<u>RCRA</u>"), as amended, the Safe Drinking Water Act, as amended, the Toxic Substances Control Act, as amended, the Superfund Amendments and Reauthorization Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended, and other environmental conservation or protection Governmental Requirements.

"<u>Environmental Liability</u>" means any liability, contingent or otherwise (including any liability for damages, costs of medical monitoring, costs of environmental remediation or restoration, administrative oversight costs, attorneys' fees, consultants' fees, fines, penalties or indemnities) directly or indirectly resulting from or based upon (a) any violation of any Environmental Law or permit, license or approval issued thereunder, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Substances, (c) exposure to any Hazardous Substances, (d) the Release or threatened Release of any Hazardous Substances, or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

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

"<u>ERISA</u>" means the Employee Retirement Income Security Act of 1974, and the rules and regulations thereunder, each as amended or modified from time to time.

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

"<u>ERISA Event</u>" means (a) a "reportable event" described in section 4043 of ERISA with respect to a Plan or a controlled group member, as applicable, for which the reporting requirements have not been waived, (b) the withdrawal of the Company, a Subsidiary or any ERISA Affiliate from a Plan subject to section 4063 or 4064 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 that is treated as such a withdrawal as provided in section 4062(e) of ERISA, (c) the filing of a notice of intent to terminate a Plan or the treatment of a Plan amendment as a termination under section 4041 of ERISA, (d) the institution of proceedings to terminate a Plan by the PBGC, (e) receipt of a notice of withdrawal liability pursuant to section 4202 of ERISA, (f) the failure of Company, a Subsidiary or any ERISA Affiliate to meet the minimum funding standards under section 430 of the Code or section 303 of ERISA (determined without regard to any waiver of

------

funding provisions therein) with respect to a Plan, (g) the Company, a Subsidiary or any ERISA Affiliate incurs a withdrawal liability under Subtitle E of Title IV of ERISA with respect to a Multiemployer Plan or (h) any other event or condition which constitutes grounds under section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan.

"<u>Erroneous Payment</u>" has the meaning assigned to such term in <u>Section 11.16(a)</u>.

"<u>Erroneous Payment Deficiency Assignment</u>" has the meaning assigned to such term in <u>Section 11.16(d)</u>.

"<u>Erroneous Payment Impacted Class</u>" has the meaning assigned to such term in <u>Section 11.16(d)</u>.

"<u>Erroneous Payment Return Deficiency</u>" has the meaning assigned to such term in <u>Section 11.16(d)</u>.

"<u>Erroneous Payment Subrogation Rights</u>" has the meaning assigned to such term in <u>Section 11.16(e)</u>.

"<u>EU Bail-In Legislation Schedule</u>" means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.

"<u>Event of Default</u>" has the meaning assigned to such term in <u>Section 10.01</u>.

"<u>Excepted Liens</u>" means: (a) Liens for Taxes, assessments or other governmental charges or levies which are not delinquent or which are being contested in good faith by appropriate action and for which adequate reserves have been maintained to the extent required in accordance with GAAP; (b) Liens in connection with workers' compensation, unemployment insurance or other social security, old age pension or public liability obligations which are not delinquent or which are being contested in good faith by appropriate action and for which adequate reserves have been maintained in accordance with GAAP; (c) landlord's liens, operators', vendors', carriers', warehousemen's, repairmen's, mechanics', suppliers', workers', materialmen's, construction or other like Liens arising by operation of law in the ordinary course of business or incident to the exploration, development, operation and maintenance of Oil and Gas Properties each of which is in respect of obligations that are not more than sixty (60) days delinquent or which are being contested in good faith by appropriate action and for which adequate reserves have been maintained in accordance with GAAP; (d) contractual Liens which arise in the ordinary course of business under operating agreements, joint venture agreements, oil and gas partnership agreements, oil and gas leases, farm-out agreements, division orders, contracts for the sale, transportation or exchange of oil and natural gas, unitization and pooling declarations and agreements, area of mutual interest agreements, overriding royalty agreements, marketing agreements, processing agreements, net profits agreements, development agreements, gas balancing or deferred production agreements, injection, repressuring and recycling agreements, salt water or other disposal agreements, seismic or other geophysical permits or agreements, and other agreements which are usual and customary in the oil and gas business and are for claims which are not more than sixty (60) days delinquent or which are being contested in good faith by

------

appropriate action and for which adequate reserves have been maintained in accordance with GAAP, <u>provided</u> that any such Lien referred to in this clause does not materially impair the use of the Property covered by such Lien for the purposes for which such Property is held by the Company or any Subsidiary or materially impair the value of such Property subject thereto; (e) Liens arising solely by virtue of any statutory or common law provision relating to banker's liens, rights of set-off or similar rights and remedies and burdening only deposit accounts or other funds maintained with a creditor depository institution, <u>provided</u> that no such deposit account is a dedicated cash collateral account or is subject to restrictions against access by the depositor in excess of those set forth by regulations promulgated by the Board and no such deposit account is intended by Company or any of its Subsidiaries to provide collateral to the depository institution; (f) easements, restrictions, servitudes, permits, conditions, covenants, exceptions or reservations in any Property of the Company or any Subsidiary for the purpose of roads, pipelines, transmission lines, transportation lines, distribution lines for the removal of gas, oil, coal or other minerals or timber, and other like purposes, or for the joint or common use of real estate, rights of way, facilities and equipment, that do not secure any Indebtedness for borrowed money and which in the aggregate do not materially impair the use of such Property for the purposes of which such Property is held by the Company or any Subsidiary or materially impair the value of such Property subject thereto; (g) Liens on cash or securities pledged to secure performance of tenders, surety and appeal bonds, government contracts, performance and return of money bonds, bids, trade contracts, leases, statutory obligations, regulatory obligations and other obligations of a like nature incurred in the ordinary course of business and not in connection with the borrowing of money; (h) judgment and attachment Liens not giving rise to an Event of Default, <u>provided</u> that any appropriate legal proceedings which may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within which such proceeding may be initiated shall not have expired and no action to enforce such Lien has been commenced; (i) Liens arising from UCC financing statement filings regarding operating leases entered into in the ordinary course of business covering only the Property under any such operating lease; (j) Liens listed on the exhibits to the Security Instruments with respect to the Oil and Gas Properties of Company and each of its Subsidiaries, so long as such Liens (i) do not reduce the Net Revenues Interest (or "<u>NRI</u>" or terms of similar effect) attributable to any well, unit or lease included in the Oil and Gas Properties of Company and its Subsidiaries, materially below that shown on such exhibits to the Security Instruments or (ii) increase the Working Interest (or "<u>WI</u>" or terms of similar effect) attributable to any well, unit or lease included in the Oil and Gas Properties of Company and its Subsidiaries, materially above that shown on such exhibits to the Security Instruments; and (k) Liens pursuant to merger agreements, stock purchase agreements, asset sale agreements and similar agreements (i) limiting the transfer of properties and assets pending the consummation of the subject transaction, or (ii) in respect of earnest money deposits, good faith deposits, purchase price adjustment and indemnity escrows and similar deposit or escrow arrangements made or established thereunder; <u>provided</u>, <u>further</u> that Liens described in <u>clauses (a)</u> through <u>(e)</u> shall remain "Excepted Liens" only for so long as no action to enforce such Lien has been commenced and no intention to subordinate the first priority Lien granted in favor of the Collateral Agent and the Lenders is to be hereby implied or expressed by the permitted existence of such Excepted Liens.

------

"<u>Excluded Accounts</u>" means (a) Deposit Accounts the balance of which consists exclusively of (i) withheld income Taxes and federal, state or local employment Taxes required to be paid to the Internal Revenue Service or state or local Governmental Authorities with respect to employees of the Company or any Subsidiary, (ii) amounts set aside for payroll and the payment of accrued and customary employee benefits, medical, dental and employee benefits claims to employees of the Company or any Subsidiary, (iii) to the extent such transaction is permitted pursuant to this Agreement, amounts constituting purchase price deposits held in escrow pursuant to a purchase and sale agreement with a third party containing customary provisions regarding the payment and refunding of such deposits, (iv) amounts held in escrow or in trust pending litigation or other settlement claims, and (v) amounts held in trust or as fiduciaries for third parties held in segregated accounts in respect of such third party's ratable share of the revenues from Oil and Gas Properties operated by the Company or any Subsidiary and owed to such third party and/or amounts paid by such third party to the Company or any Subsidiary on account of expenses associated with Oil and Gas Properties operated by the Company or any Subsidiary and owed (or to be owed) to other third parties, (b) Deposit Accounts used exclusively as zero balance accounts (*i.e*., Deposit Accounts which are swept daily and do not carry an overnight balance) in the ordinary course of business and (c) other Deposit Accounts, Securities Accounts or Commodities Accounts so long as (i) the average daily maximum balance in each such account over a thirty (30) day period does not at any time exceed $100,000 and (ii) the aggregate balance for all such accounts excluded pursuant to this <u>clause (b)</u> on any day does not exceed $150,000 and (c) that certain Securities Account of the Company held with Interactive Brokers and identified on Schedule 7 to the Guarantee and Collateral Agreement; <u>provided</u> that such account shall immediately cease to constitute an "Excluded Account" if the average daily balance in such account during any period of ten (10) consecutive days exceeds $200,000.

"<u>Excluded Assets</u>" has the meaning assigned to such term in the Guarantee and Collateral Agreement.

"<u>Excluded Swap Obligation</u>" means (as such definition may be modified from time to time as agreed by the Borrower and the Administrative Agent), 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 security interest to secure, as applicable, such Swap Obligation (or any guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order thereunder (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 and the regulations thereunder, at the time the guarantee of (or grant of such security interest by, as applicable) such Guarantor becomes or would become effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one Swap Agreement, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to Swap Agreements for which such guarantee or security interest is or becomes illegal.

"<u>Excluded Taxes</u>" means, with respect to the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrower or any Guarantor hereunder or under any other Loan Document, (a) Taxes on income (however denominated), branch profits Taxes or franchise Taxes, in each case, (i) imposed by any jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located or (ii) that are Other Connection Taxes, (b) in the case of a Lender (other than an assignee pursuant to a request by the Borrower under <u>Section 5.04(b)</u>), any

------

withholding Tax that is imposed on amounts payable to such Lender at the time such Lender becomes a party to this Agreement (or designates a new lending office), except to the extent that such Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts with respect to such federal withholding Tax pursuant to <u>Section 5.03</u>, (c) Taxes attributable to such Lender's failure to comply with <u>Section 5.03(e)</u> and (d) any withholding Tax that is imposed under FATCA.

"<u>Existing Commitments</u>" means the "Commitments," as defined in the Existing Credit Agreement.

"<u>Existing Credit Agreement</u>" has the meaning assigned to such term in the recitals.

"<u>Existing Lender</u>" has the meaning assigned to such term in the recitals.

"<u>Existing Loans</u>" means the "Loans," as defined in the Existing Credit Agreement.

"<u>Existing Obligations</u>" means all "Obligations" as such term is defined in the Existing Credit Agreement.

"<u>Extraordinary Receipts</u>" means, amounts received by, incurred or paid to or for the account of the Company or any Subsidiary not in the ordinary course of business, consisting of (a) proceeds of judgments or settlements or other consideration of any kind received in connection with any cause of action or claim and (b) indemnity payments (other than to the extent such indemnity payments are immediately payable to a person that is not an Affiliate of any member of the Company), but excluding amounts received by, incurred or paid to or for the account of the Company or any Subsidiary not in the ordinary course of business which are equal to or less than $100,000 in the aggregate in any fiscal year.

"<u>FATCA</u>" 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, any agreements entered into pursuant to Section 1471(b)(1) of the Code, and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement between the United States and any other such jurisdiction that facilitates the implementation of the foregoing.

"<u>February 2025 Reserve Report</u>" means the report with respect to certain Oil and Gas Properties of the Company and the Subsidiaries prepared by NSAI with an "as of" date of February 28, 2025 in form and substance reasonably satisfactory to the Administrative Agent.

"<u>Federal Funds Effective Rate</u>" means, for any day, the greater of (a) the rate calculated by the Federal Reserve Bank of New York based on such day's Federal funds transactions by depositary institutions (as determined in such manner as the Federal Reserve Bank of New York shall set forth on its public website from time to time) and published on the next succeeding Business Day by the Federal Reserve Bank of New York as the Federal funds effective rate and (b) 0.00%.

------

"<u>Federal Reserve Board</u>" means the Board of Governors of the Federal Reserve System of the United States.

"<u>Fee Letter</u>" means that certain Fee Letter, dated as of the Closing Date, by and among the Company, the Borrower and Fortress.

"<u>Finance Leases</u>" means, in respect of any Person, all leases which shall have been, or should have been, in accordance with GAAP, recorded as finance leases on the balance sheet of the Person liable (whether contingent or otherwise) for the payment of rent thereunder; <u>provided</u> that any lease that would not have been recorded as a finance lease if it had been entered into prior to the adoption of ASU No. 2016-02 "Leases (Topic 842)" and ASU No. 2018-11 "Leases (Topic 842)" shall not be a Finance Lease whether or not so designated in accordance with GAAP as in effect at the time of the execution of such lease.

"<u>Financial Officer</u>" means, for any Person, the chief executive officer, the chief financial officer, principal accounting officer, treasurer or controller of such Person. Unless otherwise specified, all references herein to a Financial Officer means a Financial Officer of the Company.

"<u>Financial Statements</u>" means the financial statement or statements of the Company and its Consolidated Subsidiaries referred to in <u>Section 7.04(a)</u>.

"<u>Five-Year Strip Price</u>" means, as of any date of determination, (a) for the sixty (60) month period commencing with the month in which such date occurs, as quoted on the NYMEX and published in a nationally recognized publication for such pricing as selected by the Administrative Agent (as such prices may be corrected or revised from time to time by the NYMEX in accordance with its rules and regulations), the corresponding monthly quoted futures contract price for months 0–60 and (b) for periods after such sixty (60) month period, the average corresponding monthly quoted futures contract price for months 49–60; <u>provided</u>, <u>however</u>, that (i) in the event that the NYMEX no longer provides futures contract price quotes for sixty (60) month periods, the longest period of quotes of less than sixty (60) months shall be used and (ii) if the NYMEX no longer provides such futures contract quotes or has ceased to operate, the Majority Lenders shall, in consultation with the Borrower, designate another nationally recognized commodities exchange to replace the NYMEX for purposes of the references to the NYMEX in this definition.

"<u>Flood Insurance Regulations</u>" 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.*), (d) the Flood Insurance Reform Act of 2004 and (e) the Biggert-Waters Flood Insurance Reform Act of 2012, in each case as now or hereafter in effect or any successor statute thereto and including any regulations promulgated thereunder.

"<u>Floor</u>" means a rate of interest per annum equal to (a) 3.00%, with respect to Term SOFR and (b) 4.00%, with respect to ABR.

------

"<u>Force Majeure Event</u>" means any catastrophic accident, act of war or terrorism, civil or military disturbance, natural catastrophe or act of God, and significant interruptions, losses or malfunctions of utilities services (in each case, which are not caused by and are outside the control of the Borrower and its Subsidiaries and their respective officers, employees and agents).

"<u>Foreign Lender</u>" means any Lender that is not a U.S. Person.

"<u>Foreign Subsidiary</u>" means any Subsidiary that is not a Domestic Subsidiary.

"<u>Fortress</u>" means Fortress Credit Corp.

"<u>G&A Expenses</u>" means expenses and costs incurred by the Company and any Subsidiary, on behalf of itself or any other Person, that are classified as "general and administrative costs" in accordance with GAAP and, without duplication, including any Specified Financing Costs, any retention or bonus payments paid in cash and any expense and costs incurred by the Company in connection with advertising, payroll and/or other compensation to the holders of their Equity Interests or any Affiliates (including Close Affiliates); <u>provided</u> that G&A Expenses shall not include any expenses or costs incurred in connection with the Transactions.

"<u>GAAP</u>" means generally accepted accounting principles in the United States of America as in effect from time to time subject to the terms and conditions set forth in <u>Section 1.04</u>.

"<u>Gas Balancing Obligations</u>" means those obligations set forth on <u>Schedule 7.18</u> (as may be updated pursuant to the terms of <u>Section 7.18</u>).

"<u>Governmental Authority</u>" means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

"<u>Governmental Requirement</u>" means any law, statute, code, ordinance, determination, rule, regulation, rule of common law, or other directive or requirement, whether now or hereinafter in effect, of any Governmental Authority.

"<u>Group of Loans</u>" means each of the following: (a) the Initial Term Loans and the Tranche B Loans, (b) the Delayed Draw Term Loans, (c) the Tranche C Loans, (d) the Amendment No. 4 Term Loans and (e) the Amendment No. 4 Delayed Draw Term Loans.

"<u>Guarantee and Collateral Agreement</u>" means the Amended and Restated Guarantee and Collateral Agreement, dated as of the Closing Date, among the Borrower and the Guarantors and the Administrative Agent.

"<u>Guarantors</u>" means, collectively, (a) as of the Closing Date, the Company and each Subsidiary of the Company (which Subsidiaries are set forth on <u>Schedule 7.14</u> hereto) and (b) following the Closing Date, each Material Subsidiary that guarantees the Secured Obligations pursuant to <u>Section 8.14(b)</u> or any other Subsidiary of the Company that guarantees the Secured Obligations at the election of the Borrower.

------

"<u>Hazardous Substance</u>" means any material, substance, or waste that is listed, classified, defined or regulated as hazardous or toxic, or as a pollutant or contaminant, under any Environmental Law, or that is otherwise regulated by or for which liability or standards of care may be imposed pursuant to Environmental Laws due to its harmful or deleterious properties or characteristics, including petroleum, petroleum distillate or petroleum products, radioactive materials, explosives, asbestos or asbestos containing materials, polychlorinated biphenyls, radon, or per- and polyfluoroalkyl substances.

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

"<u>Holdings</u>" means Lion of Judah Capital, LLC, a Delaware limited liability company.

"<u>Holdings Pledge Agreement</u>" means the Pledge Agreement dated as of the Closing Date and executed by Holdings in favor of the Administrative Agent, for the benefit of the Secured Parties.

"<u>Hydrocarbon Interests</u>" means all rights, titles, interests and estates now or hereafter acquired in and to oil and gas leases, oil, gas and mineral leases, or other liquid or gaseous hydrocarbon leases, mineral fee interests, overriding royalty and royalty interests, net profit interests and production payment interests, including any reserved or residual interests of whatever nature.

"<u>Hydrocarbons</u>" means oil, gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all products refined or separated therefrom.

"<u>Immaterial Subsidiary</u>" means, at any date of determination, each Subsidiary of the Borrower, that has been designated as such by the Borrower in writing to the Administrative Agent, and, when taken together with its subsidiaries (direct or indirect), (a) does not own Property with a fair market value in excess of $100,000 and (b) does not generate revenues or EBITDA in excess of $100,000 in any twelve month period; *provided that* all such Subsidiaries designated as "Immaterial Subsidiaries" shall not own any Property or generate total revenues or EBITDA, respectively, in the aggregate in excess of $250,000 (the "<u>Immaterial Subsidiary Cap</u>").

"<u>Immaterial Subsidiary Cap</u>" has the meaning assigned to such term in the definition of "Immaterial Subsidiary".

"<u>Indebtedness</u>" means, for any Person, the sum of the following (without duplication): (a) all obligations of such Person for borrowed money or evidenced by bonds, bankers' acceptances, debentures, notes or other similar instruments; (b) all obligations of such Person (whether contingent or otherwise) in respect of letters of credit, surety or other bonds and similar instruments; (c) all obligations under Finance Leases; (d) all obligations under Synthetic

------

"<u>Indemnified Taxes</u>" means Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrower under any Loan Document.

"<u>Indemnitee</u>" has the meaning assigned to such term in <u>Section 12.03(b)</u>.

"<u>Information</u>" has the meaning assigned to such term in <u>Section 12.11</u>.

"<u>Initial APOD</u>" has the meaning assigned to such term in <u>Section 6.01(v)</u>.

"<u>Initial APOD Group</u>" means each group of wells located on the same pad and set forth under the heading "Pad" on <u>Schedule 1.02(a)</u>.

"<u>Initial Reserve Report</u>" means the report with respect to certain Oil and Gas Properties of the Company and the Subsidiaries prepared by NSAI with an "as of" date of March 31, 2023.

"<u>Initial Term Lender</u>" means, as of any date of determination, each Tranche A Lender having an Initial Term Loan Commitment or that holds Initial Term Loans.

------

"<u>Initial Term Loan Commitment</u>" means, with respect to each Initial Term Lender, the commitment of such Initial Term Lender to make Initial Term Loans as set forth on <u>Schedule 1.02(b)</u>. The aggregate amount of the Initial Term Loan Commitments of the Initial Term Lenders as of the Closing Date is $100,000,000.

"<u>Initial Term Loans</u>" means the loans made by the Initial Term Lenders to the Borrower pursuant to <u>Section 2.01(a)</u>.

"<u>Interest Payment Date</u>" means (a) in respect of the Tranche A Loans, Tranche C Loans and Tranche D Loans, (i) the last day of each fiscal quarter (commencing September 30, 2024 for the Tranche A Loans, December 31, 2024 for the Tranche C Loans and June 30, 2025 for the Tranche D Loans) and (ii) the Maturity Date and (b) in respect of the Tranche B Loans, the Maturity Date.

"<u>Interest Period</u>" means (a) initially, (i) with respect to Initial Term Loans and Tranche B Loans, the period commencing on the Closing Date and ending on September 30, 2024, (ii) with respect to any Delayed Draw Term Loans, the period commencing on the funding of such Delayed Draw Term Loans and ending on the next succeeding Interest Payment Date, (iii) with respect to Tranche C Loans, the period commencing on the Amendment No. 3 Effective Date and ending on December 31, 2024, (iv) with respect to Amendment No. 4 Term Loans, the period commencing on the Amendment No. 4 Effective Date and ending on June 30, 2025 and (v) with respect to any Amendment No. 4 Delayed Draw Term Loans, the period commencing on the funding of such Amendment No. 4 Delayed Draw Term Loans and ending on the next succeeding Interest Payment Date and (b) each subsequent period commencing on the first day of each fiscal quarter and ending on the last day of each fiscal quarter.

"<u>Intermediate Holdings</u>" means Phoenix Equity Holdings, LLC, a Delaware limited liability company.

"<u>Investment</u>" means, for any Person: (a) the acquisition (whether for cash, Property, services or securities or otherwise) of Equity Interests of any other Person (including any "short sale" or any sale of any securities at a time when such securities are not owned by the Person entering into such short sale); (b) the making of any deposit with, or advance, loan or capital contribution to, assumption of Indebtedness of, purchase or other acquisition of any other Indebtedness of, or equity participation or interest in, or other extension of credit to, any other Person (including the purchase of Property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such Property to such Person, but excluding any such advance, loan or extension of credit having a term not exceeding ninety (90) days representing the purchase price of inventory, goods, supplies or services sold by such Person in the ordinary course of business); or (c) the entering into of any guarantee of, or other contingent obligation (including the deposit of any Equity Interests to be sold) with respect to, Indebtedness or other liability of any other Person and (without duplication) any amount committed to be advanced, lent or extended to such Person.

------

"<u>IRR Parameters</u>" means, for purposes of the APOD Economic Test, (a) the price forecast used to calculate the projected internal rate of return shall be for crude oil and natural gas, the then-current Five Year Strip Price, as applicable, in each case adjusted by taking into account all then-existing Swap Agreements attributable to projected production from the Producing APOD Wells, (b) the projected internal rate of return for any Producing APOD Tranche shall be measured from the date when Capital Expenditures associated with such Producing APOD Tranche were initially made, (c) the cumulative projected internal rate of return shall (i) reflect actual economic and production results of existing Producing APOD Tranches (including, for the avoidance of doubt, pricing actually realized) and (ii) with respect to forecasted economic and production results, be based on the latest forecast provided by the Borrower in good faith and based on reasonable assumptions and approved by the Administrative Agent; <u>provided</u> that, if the Administrative Agent does not approve any such forecast, the Borrower shall provide an updated forecast from NSAI and (d) all costs and expenses associated with the drilling and completion of the wells included in each Producing APOD Tranche shall be included in the calculation of the projected internal rate of return, regardless of whether the Borrower shall have received invoices therefor at the time of measurement of the APOD Economic Test.

"<u>January 2025 Reserve Report</u>" means the report with respect to certain Oil and Gas Properties of the Company and the Subsidiaries prepared by the Company with an "as of" date of January 30, 2025 and shared with the Administrative Agent, titled as "Phoenix Energy ARIES Oneline + Monthly 24Q4 Roll Forward 25Q1 Strip Pricing NSAI & 550mbo TC 2025.01.30".

"<u>Lender Secured Swap Provider</u>" means any Person that (a) at the time it enters into a Swap Agreement with a Credit Party (including by novation), is a Lender or an Affiliate of a Lender, (b) at the time it (or its Affiliate) becomes a Lender (including on the Closing Date), is a party to a Swap Agreement with a Credit Party or (c) is a Lender or an Affiliate of a Lender at the time a Secured Swap Agreement is assigned or transferred to it (by novation or otherwise) by another Secured Swap Provider, in each case in its capacity as a party to such Swap Agreement; <u>provided</u> that any such Person that ceases to be a Lender or an Affiliate of a Lender shall not be a Lender Secured Swap Provider with respect to any Swap Agreement that it thereafter enters into (or that is assigned or transferred to it) while it is not a Lender or an Affiliate of a Lender.

"<u>Lenders</u>" means the Persons listed on <u>Schedule 1.02(b)</u> and <u>Schedule 1.02(d)</u> and any Person that shall have become a party hereto pursuant to an Assignment and Assumption other than, in each case, any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.

"<u>Lien</u>" means any interest in Property securing an obligation owed to, or a claim by, a Person other than the owner of the Property, whether such interest is based on the common law, statute or contract, and whether such obligation or claim is fixed or contingent, and including but not limited to (a) the lien or security interest arising from a deed of trust, mortgage, encumbrance, pledge, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes or (b) production payments and the like payable out of Oil and Gas Properties. The term "Lien" shall include easements, restrictions, servitudes, permits, conditions, covenants, exceptions or reservations. For the purposes of this Agreement, (i) the Company and its Subsidiaries shall be deemed to be the owner of any Property which it has acquired or holds subject to a conditional sale agreement, or leases under a financing lease or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person in a transaction intended to create a financing and (ii) in no event shall an operating lease be deemed to be a Lien.

------

"<u>Loan Documents</u>" means (a) this Agreement, (b) the Notes, if any, (c) the Fee Letter, (d) the Security Instruments, (e) the Swap Intercreditor Agreement, (f) the Specified Additional Guarantee Agreements, (g) the Amendment No. 3 Fee Letter, (h) the Amendment No. 4 Fee Letter and (i) any other agreements entered into in connection herewith by a Credit Party, Parent or any Specified Additional Guarantor with or in favor of the Administrative Agent, the Collateral Agent or the Lenders, which such agreements are expressly identified therein as a "Loan Document."

"<u>Loan Obligations</u>" has the meaning assigned to such term in the Intercreditor Agreement.

"<u>Loans</u>" means, collectively, Tranche A Loans, Tranche B Loans, Tranche C Loans and Tranche D Loans, and "<u>Loan</u>" means any of the foregoing.

"<u>Majority Lenders</u>" means, at any date Non-Defaulting Lenders having or holding more than fifty percent (50%) of the Total Outstandings (excluding the Tranche B Loans) in the aggregate at such date.

"<u>Make-Whole Amount</u>" has the meaning given to such term in <u>Section 3.04(d)</u>.

"<u>Master Assignment Agreement</u>" has the meaning assigned to such term in the recitals.

"<u>Material Adverse Effect</u>" means a material adverse effect on (a) the business, financial condition, operations, performance or properties of the Credit Parties and their respective Subsidiaries, taken as a whole, (b) the ability of the Credit Parties to perform their respective material obligations under the Loan Documents, or (c) the ability of the Administrative Agent and the Lenders to enforce the Loan Documents.

"<u>Material Contract</u>" means (a) each contract or agreement under which the projected aggregate revenue to be paid to the Company and its Subsidiaries, or payments to be made by the Company and its Subsidiaries, in each case during any fiscal year exceeds $2,500,000 and (b) each agreement, contract, joint venture agreement and other instrument to which the Company or any Subsidiary is a party, in each case the termination or breach of which could reasonably be expected to result in a Material Adverse Effect.

"<u>Material Indebtedness</u>" means (a) any Specified Additional Bond Indebtedness and any other notes or bonds issued by the Company or a Subsidiary to investors pursuant to the exemptions from registration permitted under Regulation A or Regulation D promulgated under the Securities Act of 1933, as amended, or in a public offering registered with the SEC and (b) any other Indebtedness (other than the Loans), or obligations in respect of one or more Swap Agreements, of the Company or any of its Subsidiaries in an aggregate outstanding principal amount exceeding $5,000,000. For purposes of determining Material Indebtedness, the "principal amount" of the obligations in respect of any Swap Agreement at any time shall be the Swap Termination Value.

"<u>Material Oil and Gas Properties</u>" means Oil and Gas Properties with a fair market value in excess of $500,000.

------

"<u>Material Non-Op AFE</u>" means a Non-Op AFE (or series of related Non-Op AFEs) which, if consented to by the Company or the applicable Subsidiary, would require the Company or any of its Subsidiaries to make Capital Expenditures or other expenditures in an aggregate amount in excess of $500,000.

"<u>Material Subsidiary</u>" means, as of any date, any Subsidiary of the Company that, (a) is not an Immaterial Subsidiary, (b) otherwise is or becomes a Guarantor pursuant to <u>Section 8.14</u>, (c) owns any Oil and Gas Properties or (d) is an obligor under any Indebtedness (including Specified Indebtedness).

"<u>Maturity Date</u>" means December 18, 2027.

"<u>Maximum Amendment No. 4 DDTL Amount</u>" means $25,000,000.

"<u>Maximum DDTL Amount</u>" means $35,000,000.

"<u>Minimum Liquidity Test</u>" means, on the relevant date of determination, the Company and its Consolidated Subsidiaries have Unrestricted Cash in an amount at least equal to the greater of (x) $15,000,000 and (y) Projected Expenses.

"<u>Minimum Volume Commitment</u>" means any "ship or pay" or other similar arrangement where a Person (a) commits to utilize a minimum capacity in a pipeline or otherwise guarantees a minimum thru-put volume in respect of a pipeline, processing or other midstream facility and (b) agrees to pay for such capacity or thru-put regardless of whether such capacity or thru-put is actually utilized.

"<u>MOIC</u>" means, as of any date of calculation, with respect to any Group of Loans, the ratio of (a) the sum of all upfront fees, interest, principal, original issue discount in respect of principal amounts repaid (net of any rebates thereof), premium (including the Make-Whole Amount) and other payments received in cash by the applicable Lenders in respect of such Group of Loans since the Applicable Borrowing Date for such Group of Loans (excluding, for the avoidance of doubt, any reimbursement of out of pocket costs or expenses, administrative agent fees and any indemnification payments made to the Lenders), as the numerator, and (b) the aggregate principal amount of all Loans in such Group of Loans funded to the Borrower under this Agreement, as the denominator.

"<u>MOIC Amount</u>" has the meaning assigned to such term in the definition of "Repayment Premium." For the avoidance of doubt, the MOIC Amount constitutes part of the Secured Obligations under this Agreement and until the MOIC Amount is paid in full, this Agreement shall remain in full force and effect.

"<u>MOIC Event</u>" means the occurrence of any of the following: (a) any payment resulting in the payment in full of the Loans, (b) any acceleration of the Loans or (c) the Maturity Date.

"<u>Money Laundering Laws</u>" has the meaning assigned to such term in <u>Section 7.23</u>.

------

"<u>Moody's</u>" means Moody's Investors Service, Inc. and any successor thereto that is a nationally recognized rating agency.

"<u>Mortgage</u>" means each of the mortgages or deeds of trust executed by any one or more Credit Parties for the benefit of the Secured Parties as security for the Secured Obligations, together with any supplements, modifications or amendments thereto and assumptions or assignments of the obligations thereunder by any Credit Party. "<u>Mortgages</u>" means all of such Mortgages collectively.

"<u>Mortgaged Property</u>" means any Property owned by any Credit Party which is subject to the Liens existing and to exist under the terms of the Security Instruments.

"<u>Most Recently Delivered Reserve Report</u>" means, as of any date, the Reserve Report most recently delivered to the Administrative Agent by the Borrower pursuant to <u>Section 8.12(a)</u> which is not a Disputed Reserve Report.

"<u>Most Recently Delivered Reserve Report, as Updated</u>" means, as of any date, the Most Recently Delivered Reserve Report updated to give effect to (a) any change in the category of any Oil and Gas Property to another category of Oil and Gas Property since the as-of date of the Most Recently Delivered Reserve Report (*e.g.*, any proved undeveloped reserves becoming Proved Developed Producing Reserves, including prior to the APOD Completion Date, any Non-Producing APOD Wells becoming Producing APOD Wells that constitute Proved Developed Producing Reserves) and (b) other information obtained by the Company or any of the Subsidiaries and delivered to the Administrative Agent subsequent to the publication of the Most Recently Delivered Reserve Report including adjusted internal forecasts of production decline rates for existing wells and additions to or deletions from anticipated future production from new wells and completed acquisitions coming on stream or failing to come on stream.

"<u>Multiemployer Plan</u>" means a multiemployer plan as defined in sections 3(37) or 4001 (a)(3) of ERISA, to which the Company, a Subsidiary or an ERISA Affiliate makes or is obligated to make contributions, or during the immediately preceding six (6) years, has made or been obligated to make contributions.

"<u>Net Cash Proceeds</u>" means:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) with respect to any issuance of Equity Interests, debt securities or instruments or the incurrence or issuance of Indebtedness, as applicable, any cash proceeds received by the Company or a Subsidiary in connection therewith, <u>minus</u> (i) attorneys' fees, investment banking fees, accountants' fees, underwriting discounts and commissions and other customary fees and expenses actually incurred in connection therewith and (ii) any Taxes paid or payable by the Company or relevant Subsidiary, as applicable, in connection therewith (after taking into account any available tax credit, deductions, or any tax sharing arrangements);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) with respect to any Casualty Event, an amount equal to: (i) any cash payments or cash proceeds received by the Company or a Subsidiary (A) under any casualty or "key man" insurance policies in respect of any covered loss thereunder, or (B) as a result of the taking of any assets of the Company or a Subsidiary by any Person pursuant to the power of eminent domain, condemnation or otherwise, or pursuant to a sale of any such assets to a purchaser

------

with such power under threat of such a taking, <u>minus</u> (ii)(A) any actual and reasonable costs incurred by the Company or a Subsidiary in connection with the adjustment or settlement of any claims of the Company or a Subsidiary in respect thereof, (B) any bona fide costs and expenses (including legal, accounting, investment banking and other professional and transactional fees, and sales commissions) solely to the extent incurred in connection with any sale of such assets as referred to in <u>subclause (i)</u> of this definition and (C) any Taxes paid or payable by the Company or relevant Subsidiary, as applicable, in connection therewith (after taking into account any available tax credit, deductions, or any tax sharing arrangements); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) with respect to any Disposition, an amount equal to: (i) the sum of cash payments and Cash Equivalents received by Company or a Subsidiary from such Disposition (including any cash or Cash Equivalents received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received), <u>minus</u> (ii) (A) any bona fide costs and reasonable and documented expenses (including legal, accounting and investment banking and other professional fees, and sales commissions) incurred in connection with such Disposition and (B) Taxes paid or payable by the Company or a Subsidiary as a result of such Disposition (after taking into account any available tax credit or any tax sharing arrangements) and (C) a reasonable reserve for any indemnification payments (fixed or contingent) attributable to seller's indemnities and representations and warranties to purchaser in respect of such Disposition; <u>provided</u> that upon release of any such reserve, the amount released shall be considered Net Cash Proceeds.

"<u>Net Working Capital</u>" means, as of any date of determination, (a) Current Assets as of such date less (b) Current Liabilities as of such date; <u>provided</u>, that, for purposes of determining Net Working Capital, proceeds from the borrowing of Loans hereunder shall not be included in such calculation.

"<u>Non-APOD Wells</u>" means wells other than wells contained in the APOD.

"<u>Non-Conforming Hedge Agreement</u>" means a Swap Agreement in the form of puts, floors, collars or any other form other than a swap.

"<u>Non-Defaulting Lender</u>" means, at any time, each Lender that is not a Defaulting Lender at such time.

"<u>Non-Lender Secured Swap Provider</u>" means any Designated Non-Lender Swap Provider so long as it is party to, and remains subject to, the Swap Intercreditor Agreement.

"<u>Non-Op AFE</u>" means a document or invoice delivered to non-operating parties and prepared by an operator (which is not an Affiliate of a Credit Party) of Oil and Gas Properties detailing the estimated costs and expenditures of a particular oil and gas operation.

"<u>Non-Op AFE Conditions</u>" means, with respect to any consent provided by the Company or any of its Subsidiaries in respect of any Non-Op AFE, (a) at the time of providing such consent, no Default or Event of Default shall have occurred and be continuing; (b) the Borrower reasonably expects that the Minimum Liquidity Test will be satisfied at the time the Company or any of its Subsidiaries is required to pay amounts pursuant to such Non-Op AFE (after giving pro forma effect to each such payment); and (c) if such Non-Op AFE would require the Company or any of its Subsidiaries to make Capital Expenditures or other expenditures in an aggregate amount in excess of $500,000, the Non-Op IRR with respect to such Non-Op AFE shall be at least twenty percent (20%).

------

"<u>Non-Op IRR</u>" means, with respect to any Non-Op AFE, the internal rate of return of the Oil and Gas Properties of the Company or any of its Subsidiaries to which the expenditures proposed pursuant to such Non-Op AFE relate, based on the following parameters: (a) the price forecast used to calculate the projected internal rate of return shall be, for crude oil or for natural gas, the then-current Five Year Strip Price applicable thereto, (b) the projected internal rate of return shall be measured from the date of the consent or participation election, as applicable, and (c) the projected internal rate of return shall (i) reflect actual economic and production results of such Oil and Gas Properties and (ii) with respect to forecasted economic and production results, be based on the latest forecast provided by the Borrower in good faith and reasonably satisfactory to the Administrative Agent taking into consideration, in the case of this <u>clause (c)</u>, (A) any fees, costs and expenses related to spudding, (B) reversionary interests held by any counterparty to such Oil and Gas Properties, (C) severance and ad valorem taxes, and (D) lease operating expenses and midstream gathering, marketing, and transportation costs (including any appropriate fee escalations), based on historical expense data and contractual arrangements in respect thereof, in each case, reflecting the reasonably expected development timeline for such Oil and Gas Properties.

<u>"Nonpayment Event" has the meaning given to such term in the Specified Preferred Equity Share Designation.</u>

"<u>Non-Producing APOD Wells</u>" means wells contained in the APOD that are spud but do not constitute Proved Developed Producing Reserves (based on the Borrower's reasonable estimates thereof).

"<u>Notes</u>" means the promissory notes of the Borrower as requested by a Lender and described in <u>Section 2.02(c)</u> and being substantially in the form of <u>Exhibit A-1, Exhibit A-2</u>, <u>Exhibit A-3</u>, <u>Exhibit A-4</u>, <u>Exhibit A-5</u> or <u>Exhibit A-6</u>, as applicable, together with all amendments, modifications, replacements, extensions and rearrangements thereof.

"<u>November 2024 Reserve Report</u>" means the report with respect to certain Oil and Gas Properties of the Company and the Subsidiaries prepared by NSAI with an "as of" date of November 30, 2024.

"<u>NSAI</u>" means Netherland, Sewell & Associates, Inc.

"<u>NYMEX</u>" means the New York Mercantile Exchange.

"<u>Oil and Gas Properties</u>" means (a) Hydrocarbon Interests; (b) the Properties now or hereafter pooled or unitized with Hydrocarbon Interests; (c) all presently existing or future unitization, pooling agreements and declarations of pooled units and the units created thereby (including without limitation all units created under orders, regulations and rules of any Governmental Authority) which may affect all or any portion of the Hydrocarbon Interests; (d) all operating agreements, contracts and other agreements, including production sharing contracts and agreements, which relate to any of the Hydrocarbon Interests or the production, sale, purchase,

------

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

"<u>Original Issue Discount</u>" has the meaning assigned to such term in <u>Section 3.05(b)</u>.

"<u>Other Connection Taxes</u>" 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 solely 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).

"<u>Other Lenders</u>" has the meaning assigned to such term in <u>Section 12.03(a)</u>.

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

"<u>Outbound Investment Rules</u>" means the regulations administered and enforced, together with any related public guidance issued, by the United States Treasury Department under U.S. Executive Order 14105 of August 9, 2023, or any similar law or regulation; as of the date of this Agreement, and as codified at 31 C.F.R. § 850.101 et seq.

"<u>Outstanding Amount</u>" means the aggregate outstanding principal amount of Loans after giving effect to any borrowings and prepayments or repayments of Loans occurring on such date.

"<u>Participant</u>" has the meaning assigned to such term in <u>Section 12.04(c)</u>.

"<u>Participant Register</u>" has the meaning assigned to such term in <u>Section 12.04(c)</u>.

------

"<u>Patriot Act</u>" has the meaning assigned to such term in <u>Section 7.23</u>.

"<u>Parent</u>" means Intermediate Holdings.

"<u>Payment in Full</u>" means (a) the Commitments have expired or been terminated, (b) the principal of and interest on each Loan and all fees payable hereunder and all other amounts payable under the Loan Documents shall have been indefeasibly paid in full in cash (other than contingent indemnification obligations) and (c) the expiration or termination of all Secured Swap Agreements with Lender Secured Swap Providers and all amounts owing by any Credit Party or Specified Additional Guarantor thereunder shall have been indefeasibly paid in full in cash (other than Secured Swap Agreements as to which arrangements satisfactory to the applicable Lender Secured Swap Provider have been made).

"<u>Payment Recipient</u>" has the meaning assigned to such term in <u>Section 11.16(a)</u>.

"<u>PCGHI</u>" means Phoenix Capital Group Holdings I, LLC, a Delaware limited liability company.

"<u>Perfection Certificate</u>" means that certain Perfection Certificate, dated as of the date hereof.

"<u>Periodic Term SOFR Determination Day</u>" has the meaning assigned to such term in the definition of "Term SOFR".

"<u>Permitted Acquisition</u>" means the acquisition, by merger or otherwise, by the Company or any of the Subsidiaries of any Equity Interests, so long as the Acquisition Conditions are satisfied.

"<u>Permitted Capital Expenditures</u>" means (a) Capital Expenditures made by the Company or any of its Subsidiaries in connection with the development of operated wells not contained in the APOD, so long as the Available Amount, after taking into account such Capital Expenditures, is equal to or greater than zero and (b) Capital Expenditures made pursuant to Non-Op AFEs, so long as the Non-Op AFE Conditions are satisfied with respect to each such Non-Op AFE.

"<u>Permitted Holders</u>" means (a) Charlene Ferrari, (b) Daniel Ferrari, (c) Adam Ferrari, and (d) any spouse, parent or lineal descendant (including by adoption) of any of the foregoing Persons set forth in <u>clauses (a)</u>, <u>(b)</u> and <u>(c)</u> who is a natural person and any trust for the benefit of such Persons.

"<u>Person</u>" means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

"<u>Petroleum Industry Standards</u>" means the Definitions for Oil and Gas Reserves promulgated by the Society of Petroleum Engineers (or any generally recognized successor) as in effect at the time in question.

------

"<u>Phoenix 9.0% Reg A Bonds</u>" means the Company's unsecured subordinated bonds, offered and sold to date pursuant to an offering exemption from registration permitted under Regulation A promulgated under the Securities Act of 1933, as amended, which commenced in December 2021, and are being on a continuous basis, with a term of three years and an interest rate of 9.0% *per annum*.

"<u>Plan</u>" means any employee pension benefit plan, as defined in section 3(2) of ERISA, that is subject to Title IV of ERISA, section 302 of ERISA or section 412 of the Code, other than a Multiemployer Plan, which (a) is currently or hereafter sponsored, maintained or contributed to by the Company, a Subsidiary or an ERISA Affiliate or (b) was at any time during the immediately preceding six years, sponsored, maintained or contributed to, or required to be contributed to, by the Company, a Subsidiary or an ERISA Affiliate.

"<u>Prime Rate</u>" means the rate of interest last quoted by The Wall Street Journal as the "Prime Rate" in the U.S. (or, if such rate ceases to be so published, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the "bank prime loan" rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by the Administrative Agent) or any similar release by the Federal Reserve Board (as determined by the Administrative Agent)).

"<u>Pro Forma Basis</u>" means, as of any date of determination, with respect to any transaction to occur on such date, (a) determined as of the last day of the most recently ended fiscal quarter for which financial statements have been delivered or are required to have been delivered pursuant to <u>Section 8.01(a)</u> or <u>Section 8.01(b)</u>, after giving effect to such transaction as if such transaction had occurred on the first day of such fiscal quarter, (b) calculated after giving effect to any Indebtedness incurred and/or repaid by the Company and its Subsidiaries since the last day of such fiscal quarter, and (c) with respect to the Asset Coverage Ratio, calculated in accordance with the definition of "Total PDP PV-10" using the Most Recently Delivered Reserve Report.

"<u>Producing APOD Tranche</u>" means an APOD Tranche for which all of the wells in such APOD Tranche are Producing APOD Wells; <u>provided</u>, that, if one or more wells in such APOD Tranche are not, or are not reasonably expected by the Borrowers to become, Producing APOD Well(s) for a period of at least sixty (60) days after the most recent date of any well in such APOD Tranche has become a Producing APOD Well, then such APOD Tranche shall be deemed a Producing APOD Tranche for all purposes hereunder.

"<u>Producing APOD Wells</u>" means wells contained in the APOD that were previously Non-Producing APOD Wells but have been producing at least sixty (60) days prior to the date of determination.

"<u>Projected Expenses</u>" means, as of the relevant date of determination, an amount equal to (a) scheduled principal and interest payments in respect of any Indebtedness and (b) G&A Expenses, in each case, due within the next thirty (30) day period.

"<u>Property</u>" means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, including, without limitation, cash, securities, accounts and contract rights.

------

"<u>Proposed APOD</u>" has the meaning set forth in <u>Section 8.20(c)</u>.

"<u>Proved Developed Producing Reserves</u>" or "<u>PDP Reserves</u>" means oil and gas reserves that, in accordance with the Petroleum Industry Standards, are classified as both "Proved Reserves" and "Developed Producing Reserves."

"<u>Proved Reserves</u>" means oil and gas reserves that, in accordance with Petroleum Industry Standards, are classified as both "Proved Reserves" and one of the following: (a) "Developed Producing Reserves," (b) "Developed Non-Producing Reserves" or (c) "Undeveloped Reserves."

"<u>PTE</u>" means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.

"<u>Public Lender</u>" has the meaning assigned to such term in <u>Section 12.20</u>.

"<u>PV-10</u>" means, on any date of determination, with respect to any Proved Reserves expected to be produced from any Oil and Gas Properties to which Proved Reserves are attributed, the net present value, discounted at 10% per annum, of the future net revenues expected to accrue to the Company's and the other Subsidiaries' collective interests in such Proved Reserves during the remaining expected economic lives of such reserves, calculated in accordance with the Five-Year Strip Price.

"<u>QFC Credit Support</u>" has the meaning assigned to such term in <u>Section 12.23</u>.

"<u>Qualified ECP Guarantor</u>" means, in respect of any Swap Obligation, each of the Company, any Subsidiary and any Guarantor that has total assets exceeding $10,000,000 at the time such Swap Obligation is incurred or such other person as constitutes an ECP under the Commodity Exchange Act or any regulations promulgated thereunder.

"<u>Recipient</u>" means (a) any Agent and (b) any Lender, as applicable.

"<u>Redemption</u>" means <u>(a)</u> with respect to any Indebtedness, the repurchase, redemption, prepayment, repayment, defeasance, purchase or any other acquisition or retirement for value (or the segregation of funds with respect to any of the foregoing) of such Indebtedness, other than at the maturity date of such Indebtedness <u>or (b) with respect to the Specified Preferred Equity, the redemption or purchase of such Specified Preferred Equity</u>, as applicable. "R<u>edeem</u>" has the correlative meaning thereto <u>with respect to any Indebtedness or the Specified Preferred Equity, as applicable</u>.

"<u>Reference Period</u>" has the meaning assigned to such term in the definition of "EBITDAX".

"<u>Register</u>" has the meaning assigned to such term in <u>Section 12.04(b)(iv)</u>.

"<u>Regulation D</u>" means Regulation D of the Board, as the same may be amended, supplemented or replaced from time to time.

------

"<u>Related Parties</u>" means, with respect to any specified Person, such Person's Affiliates and the respective directors, officers, employees, agents, partners, representatives and advisors (including attorneys, accountants and experts) of such Person and such Person's Affiliates.

"<u>Release</u>" means any actual or threatened release, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, abandonment, disposing or allowing to escape or migrate into or through the indoor or outdoor environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata or within any building, structure, facility or fixture).

"<u>Relevant Governmental Body</u>" means the Board or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board or the Federal Reserve Bank of New York, or any successor thereto.

"<u>Remaining Scheduled Principal Payments</u>" means, with respect to each Loan on any date, (a) first, the remaining principal payments of such Loan required to be made pursuant to <u>Section 3.01(a)</u> and (b) after those payments have been made, the principal payment in respect of such Loan required to be made pursuant to <u>Section 3.01(b)</u>.

"<u>Remedial Work</u>" has the meaning assigned to such term in <u>Section 8.10(a)</u>.

"<u>Repayment Premium</u>" means, with respect to any MOIC Event, regardless of whether such event occurs as a result of an acceleration pursuant to <u>Section 10.02</u> following an Event of Default, at the Borrower's option or otherwise in accordance with this Agreement, an amount (such amount, the "<u>MOIC Amoun</u>t"), sufficient to achieve a MOIC, calculated separately with respect to each Group of Loans, of 1.18.

"<u>Replacement Reserve Report</u>" has the meaning assigned to such term in <u>Section 8.12(c)</u>.

"<u>Required Closing Date Swap Agreements</u>" means the Swap Agreements described in <u>Section 8.19(a)</u>.

"<u>Reserve Report</u>" means the Initial Reserve Report, the November 2024 Reserve Report, the January 2025 Reserve Report, the February 2025 Reserve Report and any other subsequent report, in form and substance reasonably satisfactory to the Administrative Agent, setting forth, as of each March 31, June 30, September 30 or December 31, the oil and gas reserves attributable to the Oil and Gas Properties of the Company and the Subsidiaries, together with a projection of the rate of production and future net cash flows, taxes, operating expenses and capital expenditures with respect thereto as of such date, based upon the Five-Year Strip Price as of the date that is five (5) Business Days prior to delivery of such Reserve Report pursuant to <u>Section 8.12</u>. The term "Reserve Report" includes each Updated Reserve Report and each Replacement Reserve Report.

"<u>Reserve Report Certificate</u>" has the meaning assigned to such term in <u>Section 8.12(d)</u>.

------

"<u>Resolution Authority</u>" means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.

"<u>Responsible Officer</u>" means, as to any Person, the chief executive officer, the president, the chief operating officer, any Financial Officer, the chief legal officer or any executive vice president of such Person. Unless otherwise specified, all references to a Responsible Officer herein means a Responsible Officer of the Company.

"<u>Restricted Payment</u>" means (a) any dividend or other distribution (whether in cash, securities or other Property) with respect to any Equity Interests in any Person, or any payment (whether in cash, securities or other Property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of (i) any such Equity Interests or (ii) any option, warrant or other right to acquire any such Equity Interests and (b) any payment of management fees, advisory fees or similar fees by the Company or any Subsidiary to any holders of their Equity Interests or any Affiliates (including Close Affiliates) thereof; <u>provided</u> that salaries and other compensation to the holders of the Equity Interests or any Affiliates (including Close Affiliates) shall not constitute Restricted Payments, but shall be subject to the restrictions in Section <u>9.18</u> as G&A Expenses.

"<u>S&P</u>" means Standard & Poor's Rating Services, a Standard & Poor's Financial Services LLC business and any successor thereto that is a nationally recognized rating agency.

"<u>Sanctioned Country</u>" means, at any time, a country, region or territory which is itself the subject or target of any comprehensive Sanctions (as of the Closing Date, the so-called Donetsk People's Republic, the so-called Luhansk People's Republic, the Crimea, Zaporizhzhia and Kherson Regions of Ukraine, Cuba, Iran, North Korea and Syria).

"<u>Sanctioned Lender</u>" means, at any time, a Lender that is either (a) a Sanctioned Person or (b) subject to Sanctions that would materially restrict its interests, rights or obligations under (or materially restrict or impair any Person in dealing with such Lender in relation to) the Loan Documents.

"<u>Sanctioned Person</u>" 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, the U.S. Department of State, or by the United Nations Security Council, the European Union or any European Union member state, or HM Treasury of the United Kingdom, (b) any Person operating, organized or resident in a Sanctioned Country, (c) any government, including any agency or instrumentality thereof, of a Sanctioned Country or Venezuela, or (d) any Person owned or controlled by any such Person or Persons described in the foregoing <u>clauses (a)</u>, <u>(b)</u> or <u>(c)</u>.

"<u>Sanctions</u>" means all economic or financial sanctions or trade embargoes, or other requirements imposed under similar laws or regulations, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of Commerce or the U.S. Department of State, or (b) the United Nations Security Council, the European Union, any European Union member state or HM Treasury of the United Kingdom.

------

"<u>Scheduled Reserve Report</u>" means any Reserve Report delivered pursuant to <u>Section 8.12(a)</u> or <u>8.12(b)</u>. The term "Scheduled Reserve Report" shall not include any Replacement Reserve Report.

"<u>SEC</u>" means the Securities and Exchange Commission or any successor Governmental Authority.

"<u>Secured Obligations</u>" means any and all amounts, liabilities and obligations of every nature owing or to be owing by the Borrower, any Credit Party, or any Specified Additional Guarantor to (a) each Agent or any Lender under any Loan Document, (b) any Secured Swap Provider with respect to any Secured Swap Agreement and (c) all renewals, extensions and/or rearrangements of any of the foregoing, in each case, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising whether for principal, interest (including interest and fees accruing after the maturity of the Loans or the termination of the Secured Swap Agreements and interest accruing after the filing of any petition for bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Company or any of its Subsidiaries, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), fees expenses, reimbursements, indemnification, penalties, premium (including, without limitation, the Repayment Premium and, if applicable, the Make-Whole Amount); <u>provided</u> that solely with respect to any Credit Party that is not an "eligible contract participant" under the Commodity Exchange Act, Excluded Swap Obligations of such Credit Party shall in any event be excluded from "Secured Obligations" owing by such Credit Party.

"<u>Secured Parties</u>" means, collectively, each Agent, the Lenders, each Secured Swap Provider and any other Person owed Secured Obligations. "<u>Secured Party</u>" means any of the foregoing individually.

"<u>Secured Swap Agreement</u>" means each Approved Swap Agreement between any Credit Party and a Secured Swap Provider.

"<u>Secured Swap Provider</u>" means, collectively, each Lender Secured Swap Provider and each Non-Lender Secured Swap Provider.

"<u>Securities Account</u>" has the meaning assigned to such term in the UCC.

"<u>Security Instruments</u>" means (a) the Guarantee and Collateral Agreement, (b) the Mortgages, (c) any Perfection Certificate, (d) any Control Agreement, (e) the Holdings Pledge Agreement, (f) the other agreements, instruments or certificates described or referred to in <u>Exhibit D</u> and (g) any and all other agreements, instruments or certificates now or hereafter executed and delivered by the Borrower or any other Person (other than Swap Agreements with the Lenders or any Affiliate of a Lender or participation or similar agreements between any Lender and any other lender or creditor with respect to any Secured Obligations pursuant to this Agreement), in each case in connection with, or as security for the payment or performance of the Secured Obligations, the Loans, the Notes, if any, this Agreement, as such agreements may be amended, modified, supplemented or restated from time to time.

------

"<u>SOFR</u>" means a rate equal to the secured overnight financing rate as administered by the SOFR Administrator.

"<u>SOFR Administrator</u>" means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).

"<u>SOFR Determination Date</u>" has the meaning assigned to such term in the definition of "Daily Simple SOFR".

"<u>SOFR Loan</u>" means a Loan that bears interest at a rate based on Adjusted Term SOFR.

"<u>SOFR Rate Day</u>" has the meaning assigned to such term in the definition of "Daily Simple SOFR".

"<u>Solvency Certificate</u>" means a solvency certificate signed by a Financial Officer in substantially the form of <u>Exhibit G</u> hereto.

"<u>Special Compensation</u>" means any Specified Financing Costs which are paid to, or on behalf of (including through one or more intermediaries), a natural person that is a member, manager or owner, directly or indirectly, of Parent, the Company or any of its Subsidiaries.

"<u>Specified Additional Bond Indebtedness</u>" means any unsecured notes or bonds issued by the Company or a Subsidiary after the Closing Date to investors pursuant to exemptions from registration under the Securities Act of 1933, as amended, including those provided by Regulation A, including Phoenix 9.0% Reg A Bonds, or Regulation D promulgated thereunder, or in a public offering registered with the SEC:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) that do not restrict, by their terms, the terms of or the prepayment or repayment of the Secured Obligations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) that do not have covenants, events of default or guarantees which (other than "market" interest rate, fees, funding discounts and redemption or prepayment premiums as determined at the time of issuance thereof) are more restrictive on the Company and each of its Subsidiaries than the terms of this Agreement (as in effect at the time of such issuance);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) that either (i) do not permit Redemption by the holders thereof or (ii) limit Redemptions by the holders thereof to (A) Redemptions upon the occurrence of a "change of control", (B) Redemptions upon the death, disability or bankruptcy of the holder thereof or (C) an amount during any calendar year that does not exceed 10% of the outstanding principal balance of such notes or bonds outstanding on (i) January 1st of such year, or (ii) if such notes or bonds are issued during such year, on the most recent April 1st, July 1st or October 1st of such year following the issuance thereof; provided that Redemptions under clause (B) hereof will count towards limitation in this clause (C), but will not be limited by it; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) that do not, at the time of issuance thereof, provide for the payment of cash interest in excess of the Specified Interest Cap.

------

"<u>Specified Additional Factoring Indebtedness</u>" means any accounts receivable factoring arrangements:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) that do not restrict, by its terms, the terms of or the prepayment or repayment of the Secured Obligations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) that do not have covenants, events of default or guarantees which (other than "market" interest rate, fees, funding discounts and redemption or prepayment premiums as determined at the time of issuance or incurrence thereof) are more restrictive on the Company and each of its Subsidiaries than the terms of this Agreement (as in effect at the time of such issuance or incurrence); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) are secured solely by the accounts receivable purchased under such arrangement and the proceeds thereof.

"<u>Specified Additional Guarantee Agreements</u>" means (a) the Guarantee, dated as of the Closing Date, made by Adam Ferrari in favor of Fortress, (b) the Guarantee, dated as of the Closing Date, made by Brynn Ferrari in favor of Fortress, (c) the Guarantee, dated as of the Closing Date, made by Curtis Allen in favor of Fortress and (d) the Guarantee, dated as of the Closing Date, made by Lindsey Wilson in favor of Fortress.

"<u>Specified Additional Guarantors</u>" means, collectively, Adam Ferrari, Brynn Ferrari, Curtis Allen and Lindsey Wilson.

"<u>Specified Additional Indebtedness</u>" means, collectively, Specified Additional Bond Indebtedness and Specified Additional Factoring Indebtedness.

"<u>Specified Existing Indebtedness</u>" means Indebtedness of the Company and its Subsidiaries in the aggregate amount existing on the date hereof and that is set forth on <u>Schedule 9.02</u>.

"<u>Specified Financing Costs</u>" means fees, costs, expenses or charges incurred in connection with the marketing, issuance, incurrence, redemption, exchange, repayment or refinancing of any Specified Additional Bond Indebtedness or any other Indebtedness, including any costs and expenses relating to any registration statement, or registered exchange offer, in respect of any Indebtedness permitted hereunder, in each case, whether or not such transaction is successful.

"<u>Specified G&A Expenses</u>" means (a) all G&A Expenses, but excluding any (i) G&A Expenses constituting Specified Financing Costs and (ii) Specified Non-Recurring G&A, and (b) all Special Compensation.

"<u>Specified Indebtedness</u>" means, collectively, Specified Existing Indebtedness and Specified Additional Indebtedness.

"<u>Specified Interest Cap</u>" means a rate of interest per annum equal to 16.0%.

------

<u>"Specified Preferred Equity" means the Series A Cumulative Redeemable Preferred Shares of the Company designated pursuant to the Specified Preferred Equity Share Designation.</u>

<u>"Specified Preferred Equity Share Designation" means the Share Designation with respect to the Series A Cumulative Redeemable Preferred Shares, in the form attached as Exhibit I hereto, with administrative changes thereto not adverse in any respect to the Administrative Agent or the Lenders, as amended or otherwise modified in accordance with Section 9.04(c).</u>

"<u>Specified Non-Recurring G&A</u>" means extraordinary and non-recurring G&A Expenses (other than, for the avoidance of doubt, salaries and compensation of employees) in an amount not to exceed $10,000,000 in the aggregate since January 1, 2025.

"<u>Subsidiary</u>" means (a) any Person of which at least a majority of the outstanding Equity Interests having by the terms thereof ordinary voting power to elect a majority of the board of directors, manager or other governing body of such Person (irrespective of whether or not at the time Equity Interests of any other class or classes of such Person shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by the Company and/or one or more of its Subsidiaries and (b) any partnership of which the Company or any of its Subsidiaries is a general partner.

"<u>Supermajority Lenders</u>" means, at any date, Non-Defaulting Lenders having or holding at least sixty-six and two thirds percent (66 2/3%) of the Total Outstandings at such date.

"<u>Supported QFC</u>" has the meaning assigned to such term in <u>Section 12.23</u>.

"<u>Swap Agreement</u>" means any agreement with respect to any swap, forward, future or derivative transaction, collar or option or similar agreement, whether exchange traded, "over-the-counter" or otherwise, involving, or settled by reference to, one or more interest 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; <u>provided</u> that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Company or the Subsidiaries shall be a Swap Agreement.

"<u>Swap Intercreditor Agreement</u>" means the Swap Intercreditor Agreement dated as of the Closing Date among the Administrative Agent, the Company, the Borrower, the Guarantors and the Non-Lender Secured Swap Providers from time to time party thereto.

"<u>Swap Obligation</u>" 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.

------

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

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

"<u>Taxes</u>" means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority.

"<u>Technical Agent</u>" means Fortress, in its capacity as technical agent hereunder, and includes its successors and permitted assigns in such capacity.

"<u>Term SOFR"</u> means the Term SOFR Reference Rate on the day (such day, the "<u>Periodic Term SOFR Determination Day</u>") that is two (2) U.S. Government Securities Business Days prior to the first day of the relevant Interest Period, as such rate is published by the Term SOFR Administrator; <u>provided</u>, <u>however</u>, that if as of 5:00 p.m. (New York City time) on any Periodic Term SOFR Determination Day the Term SOFR Reference Rate for a tenor of three (3) months has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such Periodic Term SOFR Determination Day; <u>provided further</u> that, if for any period Term SOFR as so determined is less than the applicable Floor, Term SOFR shall be the applicable Floor.

"<u>Term SOFR Adjustment</u>" means a percentage equal to 0.10% *per annum*.

"<u>Term SOFR Administrator</u>" means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Administrative Agent in its reasonable discretion).

"<u>Term SOFR Reference Rate</u>" means the forward-looking term rate based on SOFR for a tenor of three (3) months.

"<u>Third A&R LLC Agreement</u>" means the Third Amended and Restated Limited Liability Company Agreement of Phoenix Energy One, LLC, in the form attached as Exhibit J hereto, as amended or otherwise modified in accordance with Section 9.07.

"<u>Third-Party Reserve Report</u>" has the meaning assigned to such term in <u>Section 8.12(a)</u>.

"<u>Title Coverage Minimum</u>" has the meaning assigned to such term in <u>Section 8.13(a)</u>.

------

"<u>Total Outstandings</u>" means the aggregate Outstanding Amount of all Loans.

"<u>Total PDP PV-10</u>" means, as of any date of determination, the sum of (a) the estimated market value (whether positive of negative) of the Borrower's and the Guarantor's hedge position as of the date that is five (5) Business Days prior to delivery of the applicable Reserve Report, discounted using an annual discount rate of 10%, <u>plus</u> (b) the present value of estimated future net cash flow to be realized from the production of Hydrocarbons from the Oil and Gas Properties of the Borrower and the Guarantors to which Proved Developed Producing Reserves are attributed as set forth in the applicable Reserve Report and calculated in accordance with Society of Petroleum Engineers guidelines for reporting proved oil and gas reserves, with appropriate deductions for take or pay and other prepayments, severance and ad valorem taxes, operating, gathering, transportation and marketing expenses, capital expenditures (including capitalized workover expenses) and plugging and abandonment costs. Each calculation of such estimated future net cash flow shall be made (i) using the Five-Year Strip Price as of the date that is five (5) Business Days prior to delivery of the applicable Reserve Report, adjusted to reflect (A) any basis differential between the actual delivery location and the reference price delivery location and price differential between the actual product delivered and the reference product, in each case, in each case using methodology consistent with past practices and in good faith based on observable differentials (which utilized differentials shall be, volume weighted on the basis of current and expected future arrangements for the sale of production, the lesser of (I) the average actual differentials for the last twelve (12) months and (II) those future differentials which may be hedged by contract); and (B) quality and gravity, (ii) using costs as of the date of estimation without future escalation and without giving effect to non-property related expenses such as general and administrative expenses, debt service, future income tax expense and depreciation, depletion and amortization, (iii) discounted using an annual discount rate of 10%, and (iv) to the extent not otherwise specified in the preceding clauses of this sentence, using reasonable economic assumptions consistent with such clauses. Total PDP PV-10 shall be calculated on a pro forma basis, giving effect to (1) acquisitions of Oil and Gas Properties consummated by the Borrower and the Guarantors (<u>provided</u> that the Administrative Agent shall have received an updated reserve report prepared by or under the supervision of the chief engineer of the Borrower consistent with the most recently delivered Updated Reserve Report delivered under <u>Section 8.12(b)</u>), (2) Dispositions of Oil and Gas Properties consummated by the Borrower and the Guarantors since the date of the Most Recently Delivered Reserve Report, (3) any change in the category of any Oil and Gas Property to a better category of Oil and Gas Property (*e.g.*, any "proved undeveloped reserves" becoming "proved developed reserves"), (4) any change in the category of any Oil and Gas Property to a lesser category of Oil and Gas Property (*e.g*., any "proved developed producing reserves" becoming "proved developed non-producing reserves") and (5) the unwind, monetization or termination of any Swap Agreement to which the Borrower and the Guarantors are a party, in each case occurring since the date of the applicable Reserve Report.

"<u>Total Secured Leverage Ratio</u>" means, as of any date of determination, the ratio of (a) Consolidated Total Secured Indebtedness as of such date to (b) EBITDAX for the period of four consecutive fiscal quarters ending on such date (or, if such date is not the last day of a fiscal quarter, the last day of the most recently ended fiscal quarter).

"<u>Tranche A Commitment</u>" means an Initial Term Loan Commitment or a Delayed Draw Term Loan Commitment.

------

"<u>Tranche A Lender</u>" means, as of any date of determination, each Lender that has a Tranche A Commitment or that holds Tranche A Loans. As of the Closing Date, the Tranche A Lenders are listed on <u>Schedule 1.02(b)</u> under the headings "Initial Term Loan Lenders" and "Delayed Draw Term Loan Lenders".

"<u>Tranche A Loans</u>" means, collectively, Initial Term Loans and Delayed Draw Term Loans and "<u>Tranche A Loan</u>" means any of the foregoing.

"<u>Tranche B Commitment</u>" means, with respect to each Lender, the commitment of such Lender to make Tranche B Loans as set forth on <u>Schedule 1.02(b)</u>. The aggregate amount of the Tranche B Commitments of the Lenders as of the Closing Date is $8,500,000.

"<u>Tranche B Lender</u>" means, as of any date of determination, each Lender that has a Tranche B Commitment or that holds Tranche B Loans. As of the Closing Date, the Tranche B Lenders are listed on <u>Schedule 1.02(b)</u> under the heading "Tranche B Lenders".

"<u>Tranche B Loans</u>" means the loans made by the Lenders to the Borrower pursuant to <u>Section 2.01(b)</u>.

"<u>Tranche C Commitment</u>" means, with respect to each Lender, the commitment of such Lender to make Tranche C Loans as set forth on <u>Schedule 1.02(d)</u>. The aggregate amount of the Tranche C Commitments of the Lenders as of the Amendment No. 3 Effective Date is $115,000,000.

"<u>Tranche C Lender</u>" means, as of any date of determination, each Lender that has a Tranche C Commitment or that holds Tranche C Loans. As of the Amendment No. 3 Effective Date, the Tranche C Lenders are listed on <u>Schedule 1.02(d)</u> under the heading "Tranche C Lenders".

"<u>Tranche C Loans</u>" means the loans made by the Lenders to the Borrower pursuant to <u>Section 2.01(d)</u>.

"<u>Tranche D Commitment</u>" means an Amendment No. 4 Term Loan Commitment or an Amendment No. 4 Delayed Draw Term Loan Commitment.

"<u>Tranche D Lender</u>" means, as of any date of determination, each Lender that has a Tranche D Commitment or that holds Tranche D Loans. As of the Amendment No. 4 Effective Date, the Tranche D Lenders are listed on <u>Schedule 1.02(b)</u> under the headings "Amendment No. 4 Lenders" and "Amendment No. 4 Delayed Draw Term Lenders".

"<u>Tranche D Loans</u>" means, collectively, Amendment No. 4 Term Loans and Amendment No. 4 Delayed Draw Term Loans and "<u>Tranche D Loan</u>" means any of the foregoing.

"<u>Transactions</u>" means, with respect to (a) the Borrower, the execution, delivery and performance by the Borrower of its obligations under this Agreement, each other Loan Document to which it is a party, the borrowing of Loans, the use of the proceeds thereof, and the grant of Liens by the Borrower on Mortgaged Properties and other Properties pursuant to the Security Instruments, (b) each Guarantor, the execution, delivery and performance by such Guarantor of

------

each Loan Document to which it is a party, the guaranteeing of the Secured Obligations and the other obligations under the Guarantee and Collateral Agreement by such Guarantor and such Guarantor's grant of the security interests and provision of collateral thereunder, and the grant of Liens by such Guarantor on Mortgaged Properties and other Properties pursuant to the Security Instruments, (c) each Specified Additional Guarantor, the execution, delivery and performance by such Person of his or her obligations under the applicable Specified Additional Guarantee Agreement and each other Credit Party to which it is a party and (d) the payment in full of all Indebtedness (including the Existing Obligations) outstanding under, the termination of all commitments under, and the termination or release of all Liens and guarantees under, the Existing Credit Agreement.

"<u>UCC</u>" means the Uniform Commercial Code of the State of New York or of any other state the laws of which are required to be applied in connection with the perfection of security interests in any collateral.

"<u>UK Financial Institutions</u>" means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.

"<u>UK Resolution Authority</u>" means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.

"<u>Unadjusted Benchmark Replacement</u>" means the Benchmark Replacement excluding the Benchmark Replacement Adjustment.

"<u>Unwind</u>" means, with respect to any transaction under a Swap Agreement, the early termination, unwind, or cancelation of any transaction under such Swap Agreement. "<u>Unwound</u>" shall have a meaning correlative to the foregoing.

"<u>Updated Reserve Report</u>" has the meaning assigned to such term in <u>Section 8.12(b)</u>.

"<u>U.S. Government Securities Business Day</u>" means any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.

"<u>U.S. Person</u>" has the meaning assigned to such term in Section 7701(a)(30) of the Code.

"<u>U.S. Special Resolution Regimes</u>" has the meaning assigned to such term in <u>Section 12.23</u>.

"<u>U.S. Tax Compliance Certificate</u>" has the meaning assigned to such term in <u>Section 5.03(e)(ii)(B)(3)</u>.

------

"<u>Weighted Average Life to Maturity</u>" means, when applied to any Indebtedness at any date, the number of years obtained by dividing:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the then outstanding principal amount of such Indebtedness.

"<u>Wholly-Owned Subsidiary</u>" means any Subsidiary of which all of the outstanding Equity Interests (other than any directors' qualifying shares mandated by applicable law), on a fully-diluted basis, are owned by the Company or one or more of the Wholly-Owned Subsidiaries or by the Company and one or more of the Wholly-Owned Subsidiaries.

"<u>Write-Down and Conversion Powers</u>" means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.

Section 1.03 <u>Terms Generally; Rules of Construction</u>. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented, restated, amended and restated or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth in the Loan Documents), (b) any reference herein to any law shall be construed as referring to such law as amended, modified, codified or reenacted, in whole or in part, and in effect from time to time, (c) any reference herein to any Person shall be construed to include such Person's successors and assigns (subject to the restrictions contained in the Loan Documents), (d) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (e) with respect to the determination of any time period, the word "from" means "from and including", and the word "to" means "to but excluding" and the word "through" means "through and including," (f) any reference herein to Articles, Sections, Annexes, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Annexes, Exhibits and Schedules to, this Agreement,

------

(g) the use herein of the word "include" or "including," when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not no limiting language (such as "without limitation" or "but not limited to" or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter and (h) the use herein of the phrase "to the knowledge of" with respect to a Credit Party that is not an individual shall be a reference to the knowledge of the Responsible Officers of the applicable Credit Party. The use of the phrase "subject to" as used in connection with Excepted Liens or otherwise and the permitted existence of any Excepted Liens or any other Liens shall not be interpreted to expressly or impliedly subordinate any Liens granted in favor of the Collateral Agent and the other Secured Parties as there is no intention to subordinate the Liens granted in favor of the Collateral Agent and the other Secured Parties. No provision of this Agreement or any other Loan Document shall be interpreted or construed against any Person solely because such Person or its legal representative drafted such provision.

Section 1.04 <u>Accounting Terms and Determinations; GAAP</u>. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all determinations with respect to accounting matters hereunder shall be made, and all financial statements and certificates and reports as to financial matters required to be furnished to the Administrative Agent or the Lenders hereunder shall be prepared, in accordance with GAAP (including the impact of "fresh start" accounting under Accounting Standards Codification 852, which for the avoidance of doubt shall be applicable only on a post-emergence basis), applied on a basis consistent with the Financial Statements, except for Accounting Changes (as defined below) with which the Company's independent certified public accountants concur and which are disclosed to the Administrative Agent on the next date on which financial statements are required to be delivered to the Lenders pursuant to <u>Section 8.01(a)</u>. Notwithstanding anything to the contrary contained in the preceding sentence or in the definitions of "Finance Leases," in the event of an accounting change requiring all leases to be capitalized, only those leases (assuming for purposes hereof that such leases were in existence on the date hereof) that would constitute Finance Leases in conformity with GAAP as in effect prior to giving effect to the adoption of ASU No. 2016-02 "Leases (Topic 842)" and ASU No. 2018-11 "Leases (Topic 842)" shall be considered Finance Leases, and all calculations and deliverables under this Agreement or any other Loan Document shall be made or delivered, as applicable, in accordance therewith. In the event that any "Accounting Change" shall occur and such change results in a change in the method of calculation of financial covenants, standards or terms in this Agreement, then the Borrower and the Administrative Agent agree to enter into negotiations in good faith in order to amend such provisions of this Agreement so as to reflect equitably such Accounting Changes with the desired result that the criteria for evaluating the Company's financial condition shall be the same after such Accounting Changes as if such Accounting Changes had not been made. Until such time as such an amendment shall have been executed and delivered by the Borrower, the Administrative Agent and the Majority Lenders, all financial covenants, standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Changes had not occurred. "Accounting Changes" refers to changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board or, if applicable, the SEC.

------

Section 1.05 <u>Interest Rates</u>. The Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, (a) the continuation of, administration of, submission of, calculation of or any other matter related to ABR, the Term SOFR Reference Rate, Adjusted Term SOFR or Term SOFR, or any component definition thereof or rates referred to in the definition thereof, or any alternative, successor or replacement rate thereto (including any Benchmark Replacement), including whether the composition or characteristics of any such alternative, successor or replacement rate (including any Benchmark Replacement) will be similar to, or produce the same value or economic equivalence of, or have the same volume or liquidity as, ABR, the Term SOFR Reference Rate, Adjusted Term SOFR, Term SOFR or any other Benchmark prior to its discontinuance or unavailability, or (b) the effect, implementation or composition of any Conforming Changes. The Administrative Agent and its affiliates or other related entities may engage in transactions that affect the calculation of ABR, the Term SOFR Reference Rate, Term SOFR, Adjusted Term SOFR, any alternative, successor or replacement rate (including any Benchmark Replacement) or any relevant adjustments thereto, in each case, in a manner adverse to the Borrower. The Administrative Agent may select information sources or services in its reasonable discretion to ascertain ABR, the Term SOFR Reference Rate, Term SOFR, Adjusted Term SOFR or any other Benchmark, or any component definition thereof or rates referred to in the definition thereof, in each case pursuant to the terms of this Agreement, and shall have no liability to the Borrower, any Lender or any other person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service.

Section 1.06 <u>Divisions</u>. For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction's laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized and acquired on the first date of its existence by the holders of its Equity Interests at such time.

**ARTICLE II** 

**THE CREDITS** 

Section 2.01 <u>Commitments</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Subject to the terms and conditions set forth herein, each Initial Term Lender (severally and not jointly) agrees to make an Initial Term Loan to the Borrower on the Closing Date in an amount equal to such Initial Term Lender's Initial Term Loan Commitment by making immediately available funds available to the Administrative Agent's designated account, not later than the time specified by the Administrative Agent on the Closing Date. Amounts repaid or prepaid in respect of the Initial Term Loans may not be reborrowed. Each Initial Term Lender's Initial Term Loan Commitment shall automatically and without notice be reduced to zero immediately after the funding of the Initial Term Loans on the Closing Date.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Subject to the terms and conditions set forth herein, each Tranche B Lender (severally and not jointly) agrees to make a Tranche B Loan to the Borrower on the Closing Date in an amount equal to such Tranche B Lender's Tranche B Commitment by making immediately available funds available to the Administrative Agent's designated account, not later than the time specified by the Administrative Agent on the Closing Date. Amounts repaid or prepaid in respect of the Tranche B Loans may not be reborrowed. Each Tranche B Lender's Tranche B Commitment shall automatically and without notice be reduced to zero immediately after the funding of the Tranche B Loans on the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Subject to the terms and conditions set forth herein (including <u>Section 6.02</u>), each Delayed Draw Term Lender (severally and not jointly), upon its approval (in its sole discretion), agrees to make Delayed Draw Term Loans to the Borrower from time to time on any Business Day during the Delayed Draw Term Loan Availability Period; <u>provided</u> that (i) the aggregate principal amount of any Delayed Draw Term Loan made by any Delayed Draw Term Lender on the occasion of any Borrowing of Delayed Draw Term Loans shall not exceed the then available Delayed Draw Term Loan Commitment of such Lender (immediately prior to giving effect to the making of such Delayed Draw Term Loans) and (ii) the aggregate principal amount of all Delayed Draw Term Loans made by the Delayed Draw Term Lenders during the Delayed Draw Term Loan Availability Period shall not exceed the Maximum DDTL Amount. Delayed Draw Term Loan Commitment Amounts repaid or prepaid in respect of the Delayed Draw Term Loans may not be reborrowed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Subject to the terms and conditions set forth herein, each Tranche C Lender (severally and not jointly) agrees to make a Tranche C Loan to the Borrower on the Amendment No. 3 Effective Date in an amount equal to such Tranche C Lender's Tranche C Commitment by making immediately available funds available to the Administrative Agent's designated account, not later than the time specified by the Administrative Agent on the Amendment No. 3 Effective Date. Amounts repaid or prepaid in respect of the Tranche C Loans may not be reborrowed. Each Tranche C Lender's Tranche C Commitment shall automatically and without notice be reduced to zero immediately after the funding of the Tranche C Loans on the Amendment No. 3 Effective Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Subject to the terms and conditions set forth herein, each Amendment No. 4 Lender (severally and not jointly) agrees to make an Amendment No. 4 Term Loan to the Borrower on the Amendment No. 4 Effective Date in an amount equal to such Amendment No. 4 Lender's Amendment No. 4 Term Loan Commitment by making immediately available funds available to the Administrative Agent's designated account, not later than the time specified by the Administrative Agent on the Amendment No. 4 Effective Date. Amounts repaid or prepaid in respect of the Amendment No. 4 Term Loans may not be reborrowed. Each Amendment No. 4 Lender's Amendment No. 4 Term Loan Commitment shall automatically and without notice be reduced to zero immediately after the funding of the Amendment No. 4 Term Loans on the Amendment No. 4 Effective Date.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Subject to the terms and conditions set forth herein (including <u>Section 6.03</u>), each Amendment No. 4 Delayed Draw Term Lender (severally and not jointly), upon its approval (in its sole discretion), agrees to make Amendment No. 4 Delayed Draw Term Loans to the Borrower from time to time on any Business Day during the Amendment No. 4 Delayed Draw Term Loan Availability Period; <u>provided</u> that (i) the aggregate principal amount of any Amendment No. 4 Delayed Draw Term Loan made by any Amendment No. 4 Delayed Draw Term Lender on the occasion of any Borrowing of Amendment No. 4 Delayed Draw Term Loans shall not exceed the then available Amendment No. 4 Delayed Draw Term Loan Commitment of such Lender (immediately prior to giving effect to the making of such Amendment No. 4 Delayed Draw Term Loans) and (ii) the aggregate principal amount of all Amendment No. 4 Delayed Draw Term Loans made by the Amendment No. 4 Delayed Draw Term Lenders during the Amendment No. 4 Delayed Draw Term Loan Availability Period shall not exceed the Maximum Amendment No. 4 DDTL Amount. Amendment No. 4 Delayed Draw Term Loan Commitment Amounts repaid or prepaid in respect of the Amendment No. 4 Delayed Draw Term Loans may not be reborrowed.

Section 2.02 <u>Loans and Borrowings</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Borrowings; Several Obligations</u>. Each Loan shall be made by the applicable Lenders ratably in accordance with their respective applicable Commitments. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; <u>provided</u> that the Commitments are several and no Lender shall be responsible for any other Lender's failure to make Loans as required.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Amount</u>. The Borrowing of the Initial Term Loans on the Closing Date shall be in an aggregate amount equal to the aggregate Initial Term Loan Commitments. The Borrowing of the Tranche B Loans on the Closing Date shall be in an aggregate amount equal to the aggregate Tranche B Commitments. The Borrowing of the Tranche C Loans on the Amendment No. 3 Effective Date shall be in an aggregate amount equal to the aggregate Tranche C Commitments. The Borrowing of the Amendment No. 4 Term Loans on the Amendment No. 4 Effective Date shall be in an aggregate amount equal to the aggregate Amendment No. 4 Term Loan Commitments. Each Borrowing of Delayed Draw Term Loans shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $5,000,000. Each Borrowing of Amendment No. 4 Delayed Draw Term Loans shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $5,000,000.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Notes</u>. Any Lender may request that Loans made by it be evidenced by a Note. In such event, the Borrower shall prepare, execute and deliver to such Lender a Note payable to such Lender and substantially in the form of <u>Exhibit A-1</u>, <u>Exhibit A-2</u> or <u>Exhibit A-3</u>, as applicable, dated, in the case of (i) any Lender party hereto as of the date of this Agreement, as of the date of this Agreement, or (ii) any Lender that becomes a party hereto pursuant to an Assignment and Assumption, as of the effective date of the Assignment and Assumption. The date, amount and interest rate of each Loan made by each Lender, and all payments made on account of the principal thereof, shall be recorded by such Lender on its books for its Note, and, prior to any transfer, may be endorsed by such Lender on a schedule attached to such Note or any continuation thereof or on any separate record maintained by such Lender. Failure to make any such notation or to attach a schedule shall not affect any Lender's or the Borrower's rights or obligations in respect of such Loans or affect the validity of such transfer by any Lender of its Note.

------

Section 2.03 <u>Requests for Borrowings</u>. To request a Borrowing, the Borrower shall notify the Administrative Agent of such request by submitting a Borrowing Request not later than 12:00 p.m., New York City time, (a) in the case of the Borrowing of Initial Term Loans and Tranche B Loans, three (3) Business Days before the Closing Date, (b) in the case of the Borrowing of Delayed Draw Term Loans, seven (7) Business Days the date of the proposed Borrowing, (c) in the case of the Borrowing of Tranche C Loans, three (3) Business Days before the Amendment No. 3 Effective Date, (d) in the case of the Borrowing of Amendment No. 4 Term Loans, three (3) Business Days before the Amendment No. 4 Effective Date and (e) in the case of the Borrowing of Amendment No. 4 Delayed Draw Term Loans, seven (7) Business Days the date of the proposed Borrowing. Such Borrowing Request shall be irrevocable and shall be signed by a Responsible Officer of the Borrower. Such Borrowing Request shall specify the following information in compliance with <u>Section 2.02</u>:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the aggregate amount of the requested Borrowing (including whether such Loans are Initial Term Loans, Tranche B Loans, Delayed Draw Term Loans, Tranche C Loans, Amendment No. 4 Term Loans or Amendment No. 4 Delayed Draw Term Loans), which shall comply with the requirements of <u>Section 2.02(b)</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the date of such Borrowing, which shall be a Business Day; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) the location and number of the Borrower's account to which the proceeds of such Borrowing are to be disbursed.

Promptly following receipt of such Borrowing Request in accordance with this <u>Section 2.03</u>, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender's Loan to be made as part of the requested Borrowing. Not later than 1:00 p.m., New York City time, on the date of the proposed Borrowing, each Lender shall make available to the Administrative Agent an amount in Dollars and in immediately available funds equal to the Loan to be made by such Lender on the date of the proposed Borrowing. The Administrative Agent shall then make available to Borrower the aggregate of the amounts made available to the Administrative Agent by the Lenders, in like funds as received by the Administrative Agent. For the avoidance of doubt, the Administrative Agent shall not be required to make the amount of any Loans available to the Borrower on the occasion of any Borrowing unless and until the Administrative Agent has received from the applicable Lenders, in its designated account, an aggregate amount of immediately available funds equal to the Loans requested by the Borrower to be funded hereunder pursuant to such Borrowing.

Section 2.04 <u>Evidence of Debt</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender's share thereof.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Register and the corresponding entries made in the accounts maintained pursuant to <u>paragraph (a)</u> or <u>(b)</u> of this Section shall be <u>prima facie</u> evidence of the existence and amounts of the obligations recorded therein; <u>provided</u> that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement. If any conflict exists between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.

Section 2.05 <u>Scheduled Termination of Commitments; Optional Termination, Reduction of Delayed Draw Term Loan Commitments and Reduction of Amendment No. 4 Delayed Draw Term Loan Commitments</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Initial Term Loan Commitments and Tranche B Loan Commitments shall terminate on the Closing Date immediately after the funding of the Initial Term Loans or Tranche B Loans, as applicable, on the Closing Date. Unless previously terminated, the Delayed Draw Term Loan Commitments shall terminate on the DDTL Commitment Expiration Date; <u>provided</u> that, on the date of each Borrowing of Delayed Draw Term Loans, the portion of the Delayed Draw Term Loan Commitments being funded pursuant to such Borrowing shall terminate immediately after the funding of such Delayed Draw Term Loans (and it is acknowledged that the Delayed Draw Term Loan Commitments terminated on October 11, 2024 immediately after the funding of Delayed Draw Term Loans on such date). The Tranche C Commitments shall terminate on the Amendment No. 3 Effective Date immediately after the funding of the Tranche C Loans on the Amendment No. 3 Effective Date. The Amendment No. 4 Term Loan Commitments shall terminate on the Amendment No. 4 Effective Date immediately after the funding of the Amendment No. 4 Term Loans on the Amendment No. 4 Effective Date. Unless previously terminated, the Amendment No. 4 Delayed Draw Term Loan Commitments shall terminate on the Amendment No. 4 DDTL Commitment Expiration Date; <u>provided</u> that, on the date of each Borrowing of Amendment No. 4 Delayed Draw Term Loans, the portion of the Amendment No. 4 Delayed Draw Term Loan Commitments being funded pursuant to such Borrowing shall terminate immediately after the funding of such Amendment No. 4 Delayed Draw Term Loans

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Borrower may at any time terminate, or from time to time reduce, the Delayed Draw Term Loan Commitments; <u>provided</u> that each partial reduction of the Delayed Draw Term Loan Commitments shall be in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Borrower may at any time terminate, or from time to time reduce, the Amendment No. 4 Delayed Draw Term Loan Commitments; <u>provided</u> that each partial reduction of the Amendment No. 4 Delayed Draw Term Loan Commitments shall be in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Borrower shall notify the Administrative Agent in writing of any election to terminate or reduce the Delayed Draw Term Loan Commitments under <u>paragraph (b)</u> of this Section by 12:00 noon, New York City time, as least three (3) Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any such notice, the Administrative Agent shall advise the Delayed Draw Term Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section shall be irrevocable. Each reduction of the Delayed Draw Term Loan Commitments shall be made ratably among the Delayed Draw Term Lenders in accordance with their respective Delayed Draw Term Loan Commitments.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The Borrower shall notify the Administrative Agent in writing of any election to terminate or reduce the Amendment No. 4 Delayed Draw Term Loan Commitments under <u>paragraph (c)</u> of this Section by 12:00 noon, New York City time, as least three (3) Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any such notice, the Administrative Agent shall advise the Amendment No. 4 Delayed Draw Term Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section shall be irrevocable. Each reduction of the Amendment No. 4 Delayed Draw Term Loan Commitments shall be made ratably among the Amendment No. 4 Delayed Draw Term Lenders in accordance with their respective Amendment No. 4 Delayed Draw Term Loan Commitments.

**ARTICLE III** 

**PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES** 

Section 3.01 <u>Repayment of Loans; Repayment Premium</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) On December 31, 2026, the Borrower hereby unconditionally promises to repay the Loans (excluding Tranche B Loans) in an aggregate principal amount equal to the greater of (i) $0 and (ii) an amount equal to the sum of (A) $150,000,000 less (B) the aggregate amount of all voluntary prepayments made pursuant to <u>Section 3.04(a)</u> and all mandatory prepayments made pursuant to <u>Section 3.04(c)</u> during the period commencing on the Closing Date and ending on December 31, 2026. The repayment of the Loans made pursuant to this <u>Section 3.01(a)</u> shall be applied as between Classes of outstanding Loans (excluding Tranche B Loans) on a pro rata basis.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) To the extent not previously repaid, the Borrower unconditionally promises to pay to the Administrative Agent, for the account of each Lender, the outstanding principal amount of the Loans on the Maturity Date (including, without limitation, any applicable Repayment Premium).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In connection with any MOIC Event, the Borrower shall pay to Administrative Agent (for the benefit of the Lenders) as liquidated damages and compensation for the costs of being prepared to make funds available hereunder with respect to the Loans a Repayment Premium, which Repayment Premium shall be fully earned, and due and payable, on the date of such payment, prepayment or repayment, or on the date such payment, prepayment or repayment is required to be made, as applicable, and nonrefundable when made. The parties hereto further acknowledge and agree that the Repayment Premium is not intended to act as a penalty or to punish the Borrower for any such payment, repayment or prepayment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Without limiting the generality of the foregoing, and notwithstanding anything to the contrary in this Agreement or any other Loan Document, the Credit Parties and each Specified Additional Guarantor hereby acknowledge and agree that if the Secured Obligations are (i) accelerated for any reason, including because of an Event of Default (including

------

by operation of law or otherwise), the commencement of any insolvency proceeding or other proceeding pursuant to any applicable debtor relief laws, sale, disposition or encumbrance (including that by operation of law or otherwise) or a satisfaction or release by foreclosure (whether by power of judicial proceeding), deed in lieu of foreclosure or by any other means or (ii) the board of directors (or similar governing body) of any Credit Party (or any committee thereof) adopts or causes the adoption or occurrence of any resolution, written consent or otherwise authorizing any action to approve any bankruptcy or insolvency related event, the Repayment Premium, determined as of the date of such triggering event will also be due and payable as though said Secured Obligations were voluntarily prepaid or repaid as of such date and shall constitute part of the Secured Obligations, in view of the impracticability and extreme difficulty of ascertaining actual damages and by mutual agreement of the parties as to a reasonable calculation of each Lender's lost profits or damages as a result thereof. The Repayment Premium payable in accordance with the immediately preceding sentence shall be presumed to be the liquidated damages sustained by the Lenders as the result of the applicable triggering event and each Credit Party and each Specified Additional Guarantor agrees that it is reasonable under the circumstances. In the event the Secured Obligations are reinstated in connection with or following any applicable triggering event, it is understood and agreed that the Secured Obligations shall include any Repayment Premium payable in accordance with the Loan Documents. The Repayment Premium shall be immediately due and payable whether or not such triggering event has commenced and without regard to whether such triggering event is voluntary or involuntary, or whether payment occurs pursuant to a motion, plan of reorganization, or otherwise, and without regard to whether the Loans and other Secured Obligations are satisfied or released by foreclosure (whether by power of judicial proceeding), deed in lieu of foreclosure or by any other similar means. EACH OF BORROWER AND EACH CREDIT PARTY AND EACH SPECIFIED ADDITIONAL GUARANTOR HEREBY WAIVES THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE OR LAW THAT PROHIBITS OR MAY PROHIBIT THE COLLECTION OF THE REPAYMENT PREMIUM AND ANY DEFENSE TO PAYMENT, WHETHER SUCH DEFENSE MAY BE BASED IN PUBLIC POLICY, AMBIGUITY, OR OTHERWISE, INCLUDING WITHOUT LIMITATION IN CONNECTION WITH ANY VOLUNTARY OR INVOLUNTARY ACCELERATION OF THE OBLIGATIONS PURSUANT TO ANY INSOLVENCY PROCEEDING OR OTHER PROCEEDING PURSUANT TO ANY DEBTOR RELIEF LAWS OR PURSUANT TO A PLAN OF REORGANIZATION. The Borrower, each other Credit Party, each Specified Additional Guarantor and each Secured Party acknowledges and agrees that any Repayment Premium due and payable in accordance with the Loan Documents does not and shall not be deemed to constitute unmatured interest, whether under section 502(b)(2) of the Bankruptcy Code or otherwise. Each Credit Party and each Specified Additional Guarantor further acknowledges and agrees, and waives any argument to the contrary, that payment of such amount does not constitute a penalty or an otherwise unenforceable or invalid obligation. The parties have agreed on the Repayment Premium because it captures the attractiveness of the investment and the opportunity cost to each Lender for its capital investment because each Lender is an investment fund with limited ability to recycle capital and the Repayment Premium reflects the parties' view on risk return. All parties to this Agreement agree (and each person that accepts an interest in the Secured Obligations from time to time by their acceptance of such interest agrees) that the Repayment Premium is not to be construed as part of a headline interest rate, but instead as compensation specifically reflecting the Lenders' agreement to forego receiving additional compensation, fees and pricing on the Closing Date, the Amendment No. 3 Effective Date and the

------

Amendment No. 4 Effective Date in return for the Credit Parties and each Specified Guarantor agreeing to pay the Repayment Premium and that the payment of such amount reflects each Lender's capital anticipated to be returned for the specific investment of the Lender's capital after taking into account all of the circumstances, including the costs of funds, the opportunity cost of capital, the relative risk of the investment, and the operational benefits for the Credit Parties and each Specified Guarantor from continued use of funds as a result of the Lenders' agreement to receive cash payment of that portion of their compensation at a date later than the Closing Date, the Amendment No. 3 Effective Date and the Amendment No. 4 Effective Date in lieu of additional up-front fees. Each Credit Party and each Specified Additional Guarantor expressly agrees that, prior to executing this Agreement, it has had the opportunity to review, evaluate and negotiate the Repayment Premium and the calculations thereof with its advisors and that: (A) the Repayment Premium is reasonable and is the product of an arm's length transaction between sophisticated business people, ably represented by counsel, (B) the Repayment Premium shall be payable notwithstanding the then prevailing market rates at the time payment is made, (C) there has been a course of conduct between Lenders and the each Credit Party and each Specified Additional Guarantor giving specific consideration in this transaction for such agreement to pay the Repayment Premium, and (D) the Repayment Premium represents a good faith, reasonable estimate and calculation of the lost profits or damages of the Lenders and that it would be impractical and extremely difficult to ascertain the actual amount of damages to the Lenders or profits lost by the Lenders as a result of such MOIC Event. Each Credit Party and each Specified Additional Guarantor expressly acknowledges that its respective agreement to pay the Repayment Premium as herein described is a material inducement to the Lenders to provide the Commitments hereunder and to make the Loans. Furthermore, each Credit Party and each Specified Additional Guarantor acknowledges and agrees that it shall be estopped hereafter from claiming differently than as agreed to with respect to the Repayment Premium and each Credit Party and each Specified Additional Guarantor acknowledges and agrees that the Repayment Premium is not intended to act as a penalty or to punish any Credit Party or any Specified Additional Guarantor for any action.

Section 3.02 <u>Interest</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Interest</u>. The Loans shall bear interest during each Interest Period at the Adjusted Term SOFR plus the Applicable Margin; <u>provided</u> that ABR Loans shall bear interest at the ABR plus the Applicable Margin; <u>provided further</u> that the rate of interest on the Loans shall in no event exceed the Highest Lawful Rate. Borrowings of ABR Loans shall be permitted only as expressly set forth in <u>Section 3.03</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Post-Default Rate</u>. If an Event of Default has occurred and is continuing, then (i) all outstanding principal amounts shall bear interest, after as well as before judgment, at a rate *per annum* equal to four percent (4%) plus the otherwise applicable interest rate (or, in the event there is no applicable rate, four percent (4%) plus the rate otherwise applicable to Loans as provided in <u>Section 3.02(a)</u>) and (ii) any amounts other than principal that is not paid when due shall bear interest, after as well as before judgment, at a rate *per annum* equal to the ABR plus the Applicable Margin, but, in each case, in no event to exceed the Highest Lawful Rate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Interest Payment Dates</u>. Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and on the Maturity Date; <u>provided</u> that (i) interest accrued pursuant to <u>Section 3.02(b)</u> shall be payable on demand, and (ii) in the event of any repayment or prepayment of any Loan (including by acceleration or otherwise), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Interest Rate Computations</u>. All interest hereunder shall be computed on the basis of a year of 360 days, except (i) interest computed by reference to the ABR at times when the ABR is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year) and (ii) if the computation of interest on the basis of a year of 360 days would exceed the Highest Lawful Rate, interest shall instead be computed on the basis of a year of 365 days (or 366 days in a leap year). In each case interest shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Adjusted Term SOFR, Term SOFR or ABR shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Term SOFR Conforming Changes</u>. In connection with the use or administration of Term SOFR, the Administrative Agent will have the right to make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document. The Administrative Agent will promptly notify the Borrower and the Lenders of the effectiveness of any Conforming Changes in connection with the use or administration of Term SOFR.

Section 3.03 <u>Alternate Rate of Interest</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Benchmark Replacement</u>. Notwithstanding anything to the contrary herein or in any other Loan Document, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to any setting of the then-current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with <u>clause (a)</u> of the definition of "Benchmark Replacement" for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document and (y) if a Benchmark Replacement is determined in accordance with <u>clause (b)</u> of the definition of "Benchmark Replacement" for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Majority Lenders. If the Benchmark Replacement is Daily Simple SOFR, all interest payments will be payable on a quarterly basis.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Benchmark Replacement Conforming Changes</u>. In connection with the use, administration, adoption or implementation of a Benchmark Replacement, the Administrative Agent will have the right to make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Notices; Standards for Decisions and Determinations</u>. The Administrative Agent will promptly notify the Borrower and the Lenders of (i) the implementation of any Benchmark Replacement and (ii) the effectiveness of any Conforming Changes in connection with the use, administration, adoption or implementation of a Benchmark Replacement. The Administrative Agent will notify the Borrower of (x) the removal or reinstatement of any tenor of a Benchmark pursuant to <u>Section 3.03(d)</u> and (y) the commencement of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this <u>Section 3.03</u>, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this <u>Section 3.03</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Unavailability of Tenor of Benchmark</u>. Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including Term SOFR Reference Rate) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is not or will not be representative, then the Administrative Agent may modify the definition of "Interest Period" (or any similar or analogous definition) for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (ii) if a tenor that was removed pursuant to <u>clause (i)</u> above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is not or will not be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent may modify the definition of "Interest Period" (or any similar or analogous definition) for all Benchmark settings at or after such time to reinstate such previously removed tenor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Benchmark Unavailability Period</u>. Upon the Borrower's receipt of notice of the commencement of a Benchmark Unavailability Period, (i) the Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of SOFR Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any such request into a request for a Borrowing of or conversion to ABR Loans and (ii) any outstanding affected SOFR Loans will be deemed to have been converted to ABR Loans at the end of the applicable Interest Period.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Inability to Determine Rates</u>. Subject to <u>clauses (a)</u>, <u>(b)</u>, <u>(c)</u>, <u>(d)</u> and <u>(e)</u> of this <u>Section 3.03</u>, if, on or prior to the first day of any Interest Period for any SOFR Loan:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the Administrative Agent determines (which determination shall be conclusive and binding absent manifest error) prior to the commencement of any Interest Period for a Borrowing of SOFR Loans that adequate and reasonable means do not exist for ascertaining the Adjusted Term SOFR or Term SOFR (including, without limitation, because the Term SOFR Reference Rate is not available or published on a current basis), for such Interest Period, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the Majority Lenders determine that for any reason in connection with any request for a SOFR Loan or a conversion thereto or a continuation thereof that Adjusted Term SOFR for any requested Interest Period with respect to a proposed SOFR Loan does not adequately and fairly reflect the cost to such Lenders of making and maintaining such Loan, and the Majority Lenders have provided notice of such determination to the Administrative Agent,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) then, in each case, the Administrative Agent will promptly so notify the Borrower and each Lender.

Upon notice thereof by the Administrative Agent to the Borrower, any obligation of the Lenders to make SOFR Loans, and any right of the Borrower to continue SOFR Loans, shall be suspended (to the extent of the affected SOFR Loans or affected Interest Periods) until the Administrative Agent (with respect to <u>clause (ii)</u>, at the instruction of the Majority Lenders) revokes such notice. Upon receipt of such notice, (x) the Borrower may revoke any pending request for a borrowing of, conversion to or continuation of SOFR Loans (to the extent of the affected SOFR Loans or affected Interest Periods) or, failing that, the Borrower will be deemed to have converted any such request into a request for a Borrowing of or conversion to ABR Loans in the amount specified therein and (y) any outstanding affected SOFR Loans will be deemed to have been converted into ABR Loans at the end of the applicable Interest Period. Upon any such conversion, the Borrower shall also pay accrued interest on the amount so converted, together with any additional amounts required pursuant to <u>Section 5.02</u>.

Section 3.04 <u>Prepayments</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Optional Prepayments</u>. The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to prior notice in accordance with <u>Section 3.04(b)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Notice and Terms of Optional Prepayment</u>. The Borrower shall notify the Administrative Agent in writing (which may be by electronic mail) of any prepayment hereunder not later than 2:00 p.m., New York City time, three (3) Business Days before the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date, the principal amount of each Borrowing or portion thereof to be prepaid; <u>provided</u> that a notice of prepayment delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit or debt facilities or any other transaction, in which case, such notice may be revoked by the Borrower (by written notice to the Administrative Agent on or prior to the

------

specified effective date) if such condition is not satisfied. Promptly following receipt of any such notice of prepayment, the Administrative Agent shall advise the Lenders of the contents thereof. Prepayments shall be accompanied by (i) accrued interest to the extent required by <u>Section 3.03</u>, (ii) with respect to any prepayment which results in the payment in full of the Loans, the Repayment Premium, (iii) the Make-Whole Amount, if applicable, and (iv) any amounts due under <u>Section 5.02</u>. Each partial prepayment shall be in an aggregate amount not less than $1,000,000 or integral multiples of $1,000,000 in excess thereof. Each prepayment of Loans made pursuant to <u>Section 3.04(a)</u> shall be applied against the Remaining Scheduled Principal Payments of each Class of Loans (other than Tranche B Loans) in the direct order of maturity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Mandatory Prepayments</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Indebtedness Incurrence</u>. Upon the incurrence or issuance of any Indebtedness of the Company or its Subsidiaries not expressly permitted by <u>Section 9.02</u>, the Borrower shall, on the next Business Day, prepay the Loans and Incremental Prepayment Amounts in an aggregate amount equal one hundred percent (100%) of the Net Cash Proceeds received in respect of such Indebtedness.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Causality Events, Dispositions and Unwinds</u>. Within five (5) Business Days following the receipt by the Company or any of its Subsidiaries of any Net Cash Proceeds from any Casualty Event, Disposition or series of related Dispositions, (other than Dispositions made pursuant to <u>Section 9.12(a)</u>, <u>Section 9.12(b)</u>, <u>Section 9.12(c)</u>, <u>Section 9.12(e)</u>, <u>Section 9.12(f)</u>, <u>Section 9.12(g)</u>, <u>Section 9.12(j)</u> and <u>Section 9.12(k)</u>) or any Unwind of a Swap Agreement, to the extent that the aggregate amount of all such Net Cash Proceeds received since the Closing Date exceeds the Disposition Threshold, the Borrower shall prepay the Loans and Incremental Prepayment Amounts in an aggregate amount equal to one hundred percent (100%) of the Net Cash Proceeds from such Casualty Event, Disposition or Unwind (or, if less, such excess above the Disposition Threshold).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <u>Extraordinary Receipts</u>. Within five (5) Business Days following the receipt by the Company or any of its Subsidiaries of any Extraordinary Receipts, to the extent that the aggregate amount of such Extraordinary Receipts received since the Closing Date exceeds the Disposition Threshold, the Borrower shall prepay the Loans and Incremental Prepayment Amounts in an aggregate amount equal to one hundred percent (100%) of such Extraordinary Receipts in excess of the Disposition Threshold.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) <u>Opt-Out of Prepayment</u>. With respect to each prepayment of Loans required pursuant to <u>Section 3.04(c)(ii)</u> as a result of any Unwind of one or more Swap Agreements pursuant to <u>Section 9.12(h)</u>, (A) the Administrative Agent shall provide notice of such prepayment to each Lender of Loans and (B) each Lender of Loans shall have the right to refuse such prepayment by giving written notice of such refusal to the Administrative Agent no later than one (1) Business Day prior to such prepayment (such refused amounts, the "<u>Declined Proceeds</u>"); <u>provided</u> that if a Lender fails to timely deliver such refusal notice, such Lender shall be deemed to have accepted such prepayment. The Administrative Agent shall return any Declined Proceeds to the Borrower, and the Borrower may use such Declined Proceeds for any purpose not prohibited by this Agreement.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) <u>Application of Prepayments</u>. Each prepayment of the Loans made pursuant to this <u>Section 3.04(c)</u> shall be (A) applied as between Classes of outstanding Loans (other than Tranche B Loans) on a pro rata basis and (B) applied against the Remaining Scheduled Principal Payments of each Class of Loans (other than Tranche B Loans) in the indirect order of maturity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) <u>Interest to be Paid with Prepayments; Repayment Premium</u>. Prepayments pursuant to this <u>Section 3.04(c)</u> shall be accompanied by (A) accrued interest to the extent required by <u>Section 3.02</u>, (B) with respect to any prepayment which results in the payment in full of the Loans, the Repayment Premium, (C) the Make-Whole Amount, if applicable, and (D) any break funding payments required by <u>Section 5.02</u> (the sum of clauses (A) through (D), the "<u>Incremental Prepayment Amount</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Make-Whole Amount</u>. With respect to any Loans that are, or are required to be, prepaid or repaid during the period from and including the Applicable Borrowing Date for such Loans to and including the one-year anniversary of such Applicable Borrowing Date, to the extent such prepayment or repayment is made, or is required to be made, (i) following any acceleration of the Loans pursuant to <u>Section 10.01</u> (including following an Event of Default pursuant to <u>Section 10.01(h)</u>, <u>(i)</u> or (j)) and <u>Section 10.02</u>, (ii) at the Borrower's option pursuant to <u>Section 3.04(a)</u>, or (iii) as a result of a mandatory prepayment required by (A) <u>Section 3.04(c)(i)</u> or (B) <u>Section 3.04(c)(ii)</u>, the Borrower shall pay, concurrently with such prepayment or repayment, an amount (the "<u>Make-Whole Amount</u>") equal to the sum of the aggregate undiscounted interest payments (calculated using a *per annum* rate of interest equal to the interest rate at the date of prepayment, repayment or acceleration prior to giving effect to any increase in interest rate pursuant to <u>Section 3.02(b)</u>) that would have been paid on the full principal amount of the Loans so prepaid, repaid or accelerated if such principal amount had been outstanding from the date of prepayment, repayment or acceleration through the one-year anniversary of the Applicable Borrowing Date for such Loans.

Section 3.05 <u>Fees</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Administrative Agent Fees</u>. The Borrower agrees to pay to Fortress, in its capacity as Administrative Agent and Collateral Agent, the fees payable in the amounts and at the times set forth in the Fee Letter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>OID</u>. The Tranche A Loans and Tranche B Loans shall be funded net of original issue discount in the amount set forth in the Fee Letter, the Tranche C Loans shall be funded net of original issue discount in the amount set forth in the Amendment No. 3 Fee Letter and the Tranche D Loans shall be funded net of original issue discount in the amount set forth in the Amendment No. 4 Fee Letter. In each case, such discount will be treated as original issue discount on the Loans for U.S. federal income tax purposes and will reduce the net issue price of the Tranche A Loans, Tranche B Loans, Tranche C Loans or Tranche D Loans, as applicable. Notwithstanding anything herein to the contrary, all calculations of interest and fees in respect of the Loans will be calculated on the basis of their full stated principal amount.

------

**ARTICLE IV** 

**PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS** 

Section 4.01 <u>Payments Generally; Pro Rata Treatment; Sharing of Set-offs</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Payments by the Borrower</u>. The Borrower shall make each payment or prepayment required to be made by it hereunder (whether of principal, interest, fees or of amounts payable under <u>Section 5.01</u>, <u>Section 5.02</u>, <u>Section 5.03</u> or otherwise) prior to 2:00 p.m., New York City time, on the date when due or the date fixed for any prepayment hereunder, in immediately available funds, without defense, deduction, recoupment, set-off or counterclaim. Fees, once paid, shall be fully earned and shall not be refundable under any circumstances. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon, but shall be considered received on the date paid for purposes of <u>Section 10.01</u>. All such payments shall be made to the Administrative Agent at its offices specified in <u>Section 12.01</u> and except that payments pursuant to <u>Section 5.01</u>, <u>Section 5.02</u>, <u>Section 5.03</u> and <u>Section 12.03</u> shall be made directly to the Persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder shall be made in dollars.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Application of Insufficient Payments</u>. If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, interest and fees then due hereunder, such funds shall be applied (i) <u>first</u>, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) <u>second</u>, towards payment of principal then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal then due to such parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Sharing of Payments by Lenders</u>. If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans; <u>provided</u> 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 <u>Section 4.01(c)</u> shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or Participant, other than to the Company or any Subsidiary or Affiliate thereof (as to which the provisions of this <u>Section 4.01(c)</u> shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

------

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

Section 4.03 <u>Disposition of Proceeds</u>. The Security Instruments contain an assignment by the Borrower and the Guarantors to and in favor of the Administrative Agent for the benefit of the Secured Parties of all of the Borrower's and each Guarantor's interest in and to production and all proceeds attributable thereto which may be produced from or allocated to the Mortgaged Property. The Security Instruments further provide in general for the application of such proceeds to the satisfaction of the Secured Obligations and other obligations described therein and secured thereby. Notwithstanding the assignment contained in such Security Instruments, unless and until an Event of Default has occurred and is continuing, (a) the Administrative Agent and the Lenders agree that they will neither notify the purchaser or purchasers of such production nor take any other action to cause such proceeds to be remitted to the Administrative Agent or the Lenders, but the Lenders will instead permit such proceeds to be paid to the Borrower and the Guarantors and (b) the Lenders hereby authorize the Administrative Agent to take such actions as may be necessary or advisable to cause such proceeds to be paid to the Borrower and the Guarantors.

Section 4.04 <u>Payments and Deductions to a Defaulting Lender</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) If any Lender shall fail to make any payment required to be made by it pursuant to <u>Section 2.02(a), Section 2.04(a)</u>, or <u>Section 4.02</u>, then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender's obligations under such Sections until all such unsatisfied obligations are fully paid in cash.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If a Defaulting Lender as a result of the exercise of a set-off shall have received a payment in respect of its Credit Exposure which results in its Credit Exposure being less than its Applicable Percentage of the aggregate Credit Exposures, then no payments will be made to such Defaulting Lender until such time as all amounts due and owing to the Lenders have been equalized in accordance with each Lender's respective pro rata share of the aggregate Credit Exposures. Further, if at any time prior to the acceleration or maturity of the Loans, the Administrative Agent shall receive any payment in respect of principal of a Loan while one or

------

more Defaulting Lenders shall be party to this Agreement, the Administrative Agent shall apply such payment first to the Borrowing(s) for which such Defaulting Lender(s) shall have failed to fund its *pro rata* share until such time as such Borrowing(s) are paid in full or each Lender (including each Defaulting Lender) is owed its Applicable Percentage of all Loans then outstanding. After acceleration or maturity of the Loans, subject to the first sentence of this <u>Section 4.04(b)</u>, all principal will be paid ratably as provided in <u>Section 10.02(c)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Fees shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Lender pursuant to <u>Section 3.05</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The Commitment and the outstanding principal balance of the Loans of such Defaulting Lender shall not be included in determining whether all Lenders, the Majority Lenders or the Supermajority Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to <u>Section 12.02</u>), <u>provided</u> that (except as expressly set forth in <u>Section 12.02</u> and in the next proviso) any waiver, amendment or modification requiring the consent of each affected Lender and which affects such Defaulting Lender, shall require the consent of such Defaulting Lender.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to <u>Section 10.02(c)</u> or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to <u>Section 12.08</u> shall be applied at such time or times as may be determined by the Administrative Agent as follows: *first*, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; *second*, as the Borrower may request, 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; *third* if so determined by the Administrative Agent and the Borrower, to be held in a deposit account and released *pro rata* in order to satisfy such Defaulting Lender's potential future funding obligations with respect to Loans under this Agreement; *fourth*, to the payment of any amounts owing to the Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lender against such Defaulting Lender as a result of such Defaulting Lender's breach of its obligations under this Agreement or under any other Loan Document; *fifth*, so long as no Event of Default is continuing, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender's breach of its obligations under this Agreement or under any other Loan Document; and *sixth*, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; <u>provided</u> that if such payment is a payment of the principal amount of any Loans in respect of which such Defaulting Lender has not fully funded its appropriate share, such payment shall be applied solely to pay the Loans of all non-Defaulting Lenders on a *pro rata* basis prior to being applied to the payment of any Loans of such Defaulting Lender until such time as all Loans and funded are held by the Lenders *pro rata* in accordance with the Commitments. 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 <u>Section 4.04</u> shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) In the event that the Administrative Agent and the Borrower each agrees that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein, the Lender will, to the extent applicable, purchase at par such of the Loans of the other Lenders as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Applicable Percentage. 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.

**ARTICLE V** 

**INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES** 

Section 5.01 <u>Increased Costs</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Changes in Law</u>. If any Change in Law shall:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) impose, modify or deem applicable any reserve (including pursuant to regulations issued from time to time by the Federal Reserve Board for determining the maximum reserve requirement (including any emergency, special, supplemental or other marginal reserve requirement) with respect to eurocurrency funding (currently referred to as "Eurocurrency liabilities" in Regulation D)), 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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) shall subject any Lender to any Taxes (other than (A) Indemnified Taxes or Other Taxes indemnified under <u>Section 5.03</u> and (B) Excluded Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) impose on any Lender or the London interbank market any other condition (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 of making, converting into, 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 Credit Party to reduce the amount of any sum received or receivable by such Lender (whether of principal, interest or otherwise), then the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Capital and Liquidity Requirements</u>. If any Lender determines that any Change in Law regarding capital requirements or liquidity requirements has or would have the effect of reducing the rate of return on such Lender's capital or liquidity on the capital or liquidity of such Lender's holding company, if any, as a consequence of this Agreement or the Loans made by such Lender, to a level below that which such Lender or such Lender's holding company could have achieved but for such Change in Law (taking into consideration such Lender's policies and the policies of such Lender's holding company with respect to capital adequacy and liquidity), then from time to time the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender's holding company for any such reduction suffered.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Certificates</u>. 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 <u>Section 5.01(a)</u> or <u>Section 5.01(b)</u> shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within thirty (30) days after receipt thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Effect of Failure or Delay in Requesting Compensation</u>. Failure or delay on the part of any Lender to demand compensation pursuant to this <u>Section 5.01</u> shall not constitute a waiver of such Lender's right to demand such compensation; <u>provided</u> that the Borrower shall not be required to compensate a Lender pursuant to this <u>Section 5.01</u> for any increased costs or reductions incurred more than 180 days prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender's intention to claim compensation therefor; <u>provided further</u> that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 1-day period referred to above shall be extended to include the period of retroactive effect thereof.

Section 5.02 <u>Break Funding Payments</u>. In the event of (a) the payment of any principal of any Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Loan other than on the last day of the Interest Period applicable thereto, or (c) the failure to borrow, convert, continue or prepay any Loan on the date specified in any notice delivered pursuant hereto or (d) the assignment of any Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to <u>Section 5.04(b)</u>, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event, including any loss, cost or expense arising from the liquidation or redeployment of funds or from any fees payable including any loss, cost or expense arising from the liquidation or redeployment of funds or from any fees payable. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this <u>Section 5.02</u> shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within ten (10) days after receipt thereof.

Section 5.03 <u>Taxes</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Payments Free of Taxes</u>. Any and all payments by or on account of any obligation of the Borrower or any Guarantor under any Loan Document shall be made free and clear of and without deduction for any Taxes, except as required by applicable law. If a withholding agent shall be required under applicable law (as determined in the good faith discretion by the applicable withholding agent) to deduct any Taxes from such payments, then (i) the applicable

------

withholding agent shall make such deductions, (ii) the applicable withholding agent shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law and (iii) if such Tax is an Indemnified Tax or Other Tax, the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this <u>Section 5.03</u>), the Administrative Agent or Lender (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Payment of Other Taxes by the Borrower</u>. The Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law, or at the option of the Administrative Agent timely reimburse it for such Other Taxes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Indemnification by the Borrower</u>. The Borrower and Guarantors shall jointly and severally indemnify the Administrative Agent and each Lender, within twenty (20) days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent and such Lender, on or with respect to any payment by or on account of any obligation of the Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this <u>Section 5.03</u>) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate of the Administrative Agent or a Lender as to the amount of such payment or liability under this <u>Section 5.03</u> shall be delivered to the Borrower and shall be conclusive absent manifest error. Failure or delay on the part of any Lender or the Administrative Agent to demand compensation pursuant to this <u>Section 5.03</u> shall not constitute a waiver of such Lender's or the Administrative Agent's right to demand such compensation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Evidence of Payments</u>. As soon as reasonably practicable after any payment of Taxes by the Borrower or a Guarantor to a Governmental Authority pursuant to this <u>Section 5.03</u>, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Status of Lenders</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Any Lender that is entitled to an exemption from or reduction of withholding tax with respect to payments under this Agreement or any other Loan Document shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times reasonably requested by the Borrower, such properly completed and executed documentation reasonably requested by the Borrower 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 a Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by such Borrower or the Administrative Agent as will enable such Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in <u>Section 5.03(e)(ii)(A)</u>, <u>Section 5.03(e)(ii)(B)</u> and <u>Section 5.03(e)(ii)(D)</u> below) shall not be required if in the Lender's 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.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Without limiting the generality of the foregoing:

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

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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 or W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the "interest" article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or W-8BEN-E 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;

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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 <u>Exhibit F-1</u> to the effect that such Foreign Lender is not a "bank" within the meaning of Section 881(c)(3)(A) of the Code, a "10 percent shareholder" of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, or a "controlled foreign corporation" described in Section 881(c)(3)(C) of the Code (a "<u>U.S. Tax Compliance Certificate</u>") and (y) executed copies of IRS Form W-8BEN or W-8BEN-E; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) to the extent a Foreign Lender is not the beneficial owner (for example, where the Foreign Lender is a partnership), executed copies of IRS Form W-8IMY, accompanied by a Form W-8ECI, W-8BEN, W-8BEN-E, U.S. Tax Compliance Certificate substantially in the form of <u>Exhibit F-2</u> or <u>Exhibit F-3</u>, Form W-9, and/or other certification documents from each beneficial owner, as applicable; <u>provided</u> that if the Foreign Lender is a partnership (and not a participating Lender) and one or more beneficial owners 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 <u>Exhibit F-4</u> on behalf of each such beneficial owner;

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), 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 the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and

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

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Each Lender shall severally indemnify the Administrative Agent, within ten (10) days after demand therefor, for (i) any Taxes attributable to such Lender (but only to the extent that the Borrower or Guarantors have not already indemnified the Administrative Agent for such Taxes and without limiting the obligation of the Borrower and Guarantors to do so) and (ii) any Taxes attributable to such Lender's failure to comply with the provisions of <u>Section 12.04(c)</u> relating to the maintenance of a Participant Register, in either case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this <u>Section 5.03(f)</u>.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Tax Refunds</u>. If the Administrative Agent or a Lender determines, in its sole discretion (exercised in good faith), that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this <u>Section 5.03</u>, it shall pay over such refund to the Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this <u>Section 5.03</u> with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); <u>provided</u>, that the Borrower, upon the request of the Administrative Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority. This <u>Section 5.03</u> shall not be construed to require the Administrative Agent or any Lender to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Borrower or any other Person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) For purposes of this <u>Section 5.03</u>, the term Lender shall include the Administrative Agent.

Section 5.04 <u>Mitigation Obligations; Replacement of Lenders</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Designation of Different Lending Office</u>. If any Lender requests compensation under <u>Section 5.01</u>, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to <u>Section 5.03</u>, then such Lender shall (at the request of the Borrower) use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to <u>Section 5.01</u> or <u>Section 5.03</u>, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Replacement of Lenders</u>. If (i) any Lender requests compensation under <u>Section 5.01</u>, (ii) the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to <u>Section 5.03</u>, (iii) any Lender becomes a Defaulting Lender or (iv) any Lender has failed to consent to a proposed amendment, waiver, modification, consent, discharge or termination that requires the consent of all the Lenders (or the affected Lenders and such Lender is an affected Lender) pursuant to <u>Section 12.02</u> and with respect to which the Majority Lenders have consented, then the Borrower may, at its sole expense, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in <u>Section 12.04(b)</u>), all its interests, rights (other than its existing rights to payments pursuant to <u>Section 5.01</u> or <u>Section 5.03</u>) and obligations under this Agreement and the other Loan Documents to an

------

assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); <u>provided</u> that (A) the Borrower shall have received the prior written consent of the Administrative Agent, which consent shall not unreasonably be withheld, (B) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (C) in the case of any such assignment resulting from a claim for compensation under <u>Section 5.01</u> or payments required to be made pursuant to <u>Section 5.03</u>, such assignment will result in a reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply. Each party hereto agrees that (1) an assignment required pursuant to this <u>paragraph (b)</u> may be effected pursuant to an Assignment and Assumption executed by the Borrower, the Administrative Agent and the assignee (or, to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to an Approved Electronic Platform as to which the Administrative Agent and such parties are participants), and (2) the Lender required to make such assignment need not be a party thereto in order for such assignment to be effective and shall be deemed to have consented to and be bound by the terms thereof; <u>provided</u> that, following the effectiveness of any such assignment, the other parties to such assignment agree to execute and deliver such documents necessary to evidence such assignment as reasonably requested by the applicable Lender; <u>provided</u> that any such documents shall be without recourse to or warranty by the parties thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Sanctioned Lenders</u>. If any Lender becomes a Sanctioned Lender, (i) to the extent an Eligible Assignee is willing and able to accept such assignment, the Administrative Agent may require the Sanctioned Lender to assign all its interests, rights and obligations under this Agreement and the other Loan Documents to the Eligible Assignee that shall assume such obligations in accordance with <u>Section 5.04(b)</u>, (ii) if the Administrative Agent determines it advisable to comply with applicable law, the Administrative Agent may open a segregated deposit account for the benefit of such Sanctioned Lender and deposit any payments owed to such Sanctioned Lender pursuant to the terms of the Loan Documents, including amounts owed in connection with an assignment pursuant to <u>clause (i)</u> of this paragraph, into such segregated deposit account, the proceeds of which shall be released by the Administrative Agent to the Sanctioned Lender when the Administrative Agent is permitted to do so by applicable law or otherwise applied in accordance with applicable law, and (iii) the Administrative Agent may take any other actions it reasonably determines are advisable to comply with the applicable Sanctions or applicable law, without liability to the Sanctioned Lender, any other Lender or the Borrower, including specifying an effective date for its resignation under <u>Section 11.06(b)</u> that is less than thirty (30) days (but not less than the shorter of (x) fifteen (15) days and (y) the maximum amount of days, as determined by the Administrative Agent, permitted by applicable law) following the date of the Administrative Agent's notice thereunder. Notwithstanding the foregoing, the Administrative Agent shall not be required to take any action, or refrain for taking any action, under this Agreement or any of the Loan Documents which would result in a violation of applicable Sanctions or applicable law.

------

**ARTICLE VI** 

**CONDITIONS PRECEDENT** 

Section 6.01 <u>Closing Date</u>. The effectiveness of this Agreement is subject to satisfaction or waiver in accordance with <u>Section 12.02</u> of each of the following conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Credit Agreement</u>. The Administrative Agent shall have received from each party hereto counterparts (in such number as may be requested by the Administrative Agent) of this Agreement signed on behalf of such party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Loan Documents</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Execution of Security Instruments</u>. The Administrative Agent shall have received from each party thereto counterparts (in such number as may be requested by the Administrative Agent) of the Security Instruments described on <u>Exhibit D</u>, including the Swap Intercreditor Agreement, the Guarantee and Collateral Agreement, the Mortgages listed thereon and the Perfection Certificate, in each case executed and delivered by each party thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Execution of Specified Additional Guarantee Agreements</u>. The Administrative Agent shall have received from each party thereto counterparts (in such number as may be requested by the Administrative Agent) of the Specified Additional Guarantee Agreements, in each case, executed and delivered by each party thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <u>Amendments to Existing Mortgages; Mortgage Recording</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) The Administrative Agent shall have received from each party thereto counterparts (in such number as may be requested by the Administrative Agent) of the Mortgages in form and substance reasonably acceptable to the Administrative Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) The Administrative Agent shall be reasonably satisfied that, upon recording the Mortgages in the appropriate filing offices, it shall have a first priority Lien on at least the Collateral Coverage Minimum.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) <u>Filings, Registrations and Recordings</u>. Each Security Instrument and any other document (including any UCC financing statement) required by any Security Instrument or under law or reasonably requested by the Administrative Agent to be filed, registered or recorded in order to create in favor of the Collateral Agent, for the benefit of the Secured Parties, a perfected Lien on the Collateral, prior and superior in right to any other Person (other than Liens permitted by <u>Section 9.03</u>) shall be in proper form for filing, registration or recordation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) <u>Pledged Stock; Stock Powers; Pledged Notes</u>. The Collateral Agent shall have received (A) the certificates (if any) representing the Equity Interests required to be pledged pursuant to the Guarantee and Collateral Agreement, together with an undated stock power for each such certificate executed in blank by a duly authorized officer of the pledgor thereof and (B) each promissory note (if any) required to be pledged to the Collateral Agent pursuant to the Guarantee and Collateral Agreement endorsed (without recourse) in blank (or accompanied by an executed transfer form in blank) by the pledgor thereof.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Fees and Expenses</u>. All fees required to be paid to the Administrative Agent, the Arranger and the Lenders on or before the Closing Date shall have been paid. To the extent invoiced at least one (1) Business Day prior to the Closing Date, all out-of-pocket expenses required to be reimbursed or paid by the Borrower hereunder or under any other Loan Document (including the reasonable and documented fees, disbursements and other charges of Sidley Austin LLP, counsel to the Administrative Agent) shall have been paid.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Solvency Certificate</u>. The Administrative Agent shall have received a Solvency Certificate duly executed by a Financial Officer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Secretary's Certificates</u>. The Administrative Agent shall have received a certificate of a Responsible Officer of each Credit Party setting forth (i) resolutions of its board of directors or other appropriate governing body with respect to the authorization of such Credit Party, as applicable, to execute and deliver the Loan Documents to which it is a party and to enter into the transactions contemplated in those documents, (ii) the officers of such Credit Party, as applicable, (A) who are authorized to sign the Loan Documents to which such Credit Party is a party and (B) who will, until replaced by another officer or officers duly authorized for that purpose, act as its representative for the purposes of signing documents and giving notices and other communications in connection with this Agreement and the transactions contemplated hereby, (iii) specimen signatures of such authorized officers and (iv) the articles or certificate of incorporation and by-laws or other applicable organizational documents of such Credit Party, as applicable, certified by such Responsible Officer as being true and complete. The Administrative Agent and the Lenders may conclusively rely on such certificate until the Administrative Agent receives notice in writing such Credit Party, as applicable, to the contrary. For the purposes of this Section 6.01(e), "Credit Party" shall include Parent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Legal Opinions</u>. The Administrative Agent shall have received an opinion of (i) Latham & Watkins LLP, special counsel for the Credit Parties, and (ii) local counsel in North Dakota, Texas, Colorado and Wyoming where Security Instruments will be recorded to perfect first priority Liens on any Oil and Gas Properties, in each case in form and of substance reasonably acceptable to the Administrative Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Financial Statements; No Other Debt</u>. The Administrative Agent shall have received (i) a certificate of a Financial Officer in form and substance reasonably satisfactory to the Administrative Agent certifying that attached to such certificate is a *pro forma* unaudited consolidated balance sheet of the Company and its Consolidated Subsidiaries as of the most recently ended fiscal quarter ending at least sixty (60) days prior to the Closing Date giving effect to the Transactions and the other transactions contemplated to occur on the Closing Date, which will reflect that the Borrower and the other Credit Parties have no Indebtedness on the Closing Date other than the Secured Obligations or other Indebtedness permitted by <u>Section 9.02</u> and (ii) the Financial Statements.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>Approvals and Consents; No Material Adverse Effect; Officer's Certificate</u>. The Administrative Agent shall have received a certificate of a Responsible Officer in form and substance reasonably satisfactory to the Administrative Agent certifying that (i) all governmental and third party consents and approvals necessary in connection with the Transactions and the other transactions contemplated hereby shall have been obtained; (ii) since December 31, 2023, there has been no event, occurrence, development or change that has had or could reasonably be expected to have a Material Adverse Effect; and (iii) the conditions set forth in <u>clauses (q)</u> and <u>(r)</u> of this <u>Section 6.01</u> have been satisfied.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Reserved.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) <u>Good Standing Certificates</u>. The Administrative Agent shall have received certificates of the appropriate State agencies with respect to the existence or good standing, as applicable, of the Borrower and each Guarantor, in each case, in their respective jurisdiction of organization and foreign qualification in any other jurisdiction in which such Person owns Oil and Gas Properties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) <u>Patriot Act; Beneficial Ownership Regulation</u>. Each Lender that has requested in writing the same at least ten (10) Business Days prior to the Closing Date shall have received, at least three (3) Business Days prior to the Closing Date, (i) all documentation and other information in connection with applicable "know your customer" and anti-money laundering rules and regulations, including the Patriot Act, and (ii) to the extent applicable, in connection with the Beneficial Ownership Regulation, a Beneficial Ownership Certification in a form reasonably satisfactory to the Administrative Agent and each requesting Lender.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) <u>Title Information</u>. The Administrative Agent shall have received title information as the Administrative Agent may reasonably require, reasonably satisfactory to the Administrative Agent, setting forth the status of title to (i) at least eighty percent (80%) of the PV-10 of the PDP Reserves of the Borrower and the Guarantors evaluated in the Initial Reserve Report, (ii) at least eighty percent (80%) of the PV-10 of the Proved Reserves of the Borrower and the Guarantors evaluated in the Initial Reserve Report, (iii) a selected sampling of the PV-10 of the Proved Reserves of the Borrower and the Guarantors evaluated in the Initial Reserve Report in the Administrative Agent's sole discretion and (iv) all of the PV-10 of the Proved Reserves of the Oil and Gas Properties described in the APOD.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) <u>Initial Reserve Report</u>. The Administrative Agent shall have received (i) the Initial Reserve Report and (ii) a Reserve Report Certificate with respect to the Oil and Gas Properties covered by the Initial Reserve Report and covering only the matters described in <u>Section 8.12(d)(A)</u>, <u>Section 8.12(d)(B)</u>, <u>Section 8.12(d)(C)</u> and <u>Section 8.12(d)(E)</u> with respect thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) <u>Production Reports and Lease Operating Statements</u>. The Administrative Agent shall have received production reports and accounting lease operating statements in form and substance reasonably acceptable to the Administrative Agent, setting forth, for the fiscal year ended December 31, 2023 and for each calendar month ended thereafter up to and including the month ended April 30, 2024, on an accounting date basis, the volume of production and sales attributable to production for which cash activity has been recorded (and the prices at which such sales or transactions were made and the revenues derived from such sales or transactions) for each such period from the Oil and Gas Properties evaluated in the Initial Reserve Report, in each case setting forth the related ad valorem, severance and production taxes and lease operating expenses attributable thereto and incurred for each such period.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) <u>Assignment of Existing Credit Agreement; No Other Liens</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) On the Closing Date, or substantially contemporaneously with the Loans advanced hereunder on the Closing Date, the Administrative Agent shall have received evidence satisfactory to it that (A) all Liens under the Existing Credit Agreement have been assigned by the Existing Lender to the Administrative Agent pursuant to the Master Assignment Agreement and (B) all Indebtedness under the Existing Credit Agreement has been assigned by the Existing Lender to the Lenders pursuant to the Master Assignment Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The Administrative Agent shall have received evidence satisfactory to it that all Liens on the assets of the Company and its Subsidiaries (other than Liens under the Existing Credit Agreement and Liens permitted by <u>Section 9.03</u>) shall have been (or will be or substantially contemporaneously with the Loans advanced hereunder on the Closing Date) released or terminated and that duly executed recordable releases or terminations in forms reasonably acceptable to the Administrative Agent with respect thereto have been obtained by the Company or its Subsidiaries.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) <u>Borrowing Request</u>. The Administrative Agent shall have received a Borrowing Request for the Initial Term Loans and Tranche B Loans in accordance with <u>Section 2.03</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) <u>No Default</u>. As of the Closing Date, immediately after giving effect to the Borrowing of Loans funded on the Closing Date, no Default or Event of Default shall have occurred and be continuing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) <u>Representations and Warranties</u>. The representations and warranties of the Credit Parties and the Specified Additional Guarantors set forth in this Agreement and the other Loan Documents shall be true and correct in all material respects (or, with respect to any representation and warranty qualified by materiality or a material adverse change or material adverse effect standard, in all respects) on and as of the Closing Date (although any representations and warranties which expressly relate to an earlier date shall be required only to be true and correct in all material respects (or, with respect to any representation and warranty qualified by materiality or a material adverse change or material adverse effect standard, in all respects) as of the specified earlier date).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) <u>Ratio Compliance</u>. The Administrative Agent shall have received evidence satisfactory to it that as of June 30, 2024, on a pro forma basis giving effect to the Transactions to occur on the Closing Date and otherwise calculated on a pro forma basis mutually agreed by the Borrower, the Administrative Agent and the Lenders, the Asset Coverage Ratio was greater than or equal to 2.00 to 1.00.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) <u>Annual Budget</u>. The Administrative Agent shall have received reasonably detailed forecasts prepared by management of the Company (including projected consolidated balance sheets, income statements, EBITDAX, cash flow statements, the projected production of Hydrocarbons by the Company and its Subsidiaries and the assumptions used in calculating such projections, the Company's annual operating and capital expenditure budgets and financial forecasts, including cash flow projections covering proposed fundings, repayments, additional advances, investments and other cash receipts and disbursements of the Company and its Subsidiaries) on a quarterly basis for the 2024 fiscal year, prepared in good faith on the basis of assumptions believed to be reasonable at the time of preparation thereof and in form and substance reasonably acceptable to the Administrative Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) <u>Material Contracts</u>. The Administrative Agent shall have received copies of all gas gathering and transportation agreements and Material Contracts to which the Borrower or any other Credit Party is party as of the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) <u>Initial APOD</u>. The Administrative Agent shall have received the initial APOD (the "<u>Initial APOD</u>"), and the Lenders shall have approved such Initial APOD.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w) <u>Current Ratio</u>. The Administrative Agent shall have received evidence satisfactory to it that, as of July 31, 2024, the Current Ratio was greater than or equal to 0.9 to 1.00.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) <u>Due Diligence</u>. The Administrative Agent and the Lenders shall have completed such business, accounting, environmental, legal and other due diligence with respect to the business, assets, liabilities, operations and condition (financial or otherwise) of the Credit Parties as the Administrative Agent and the Lenders deems appropriate and shall be satisfied with the results thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y) <u>Environmental Conditions</u>. The Administrative Agent and the Lenders shall be satisfied with the environmental conditions of the Oil and Gas Properties of the Borrower and the Guarantors and shall have received copies of all existing environmental assessments and other environmental reports related thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z) <u>No Material Adverse Effect</u>. No Material Adverse Effect has occurred since December 31, 2023.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aa) <u>Closing Certificate</u>. A certificate from a Responsible Officer of the Company certifying as to the matters set forth in <u>Section 6.01(q)</u>, <u>(r)</u>, <u>(s)</u>, <u>(w)</u> and (z).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bb) <u>Other Documents</u>. The Administrative Agent and the Lenders shall have received copies of all other documents, certificates and instruments reasonably requested thereby with respect to the transactions contemplated by this Agreement.

The Administrative Agent shall notify the Borrower and the Lenders of the Closing Date, and such notice shall be conclusive and binding. For purposes of determining compliance with the conditions specified in this <u>Section 6.01</u>, 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 under this <u>Section 6.01</u> to be consented to or approved by a Lender unless the Administrative Agent shall have received notice from such Lender prior to the Closing Date specifying its objection thereto.

------

Section 6.02 <u>Each Delayed Draw Term Loan Borrowing</u>. Each Delayed Draw Term Lender in its sole and absolute discretion may make a Delayed Draw Term Loan on the occasion of any Borrowing of Delayed Draw Term Loans subject to the satisfaction (or waiver by each Delayed Draw Term Lender) of the following conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Borrowing Request</u>. The Administrative Agent shall have received a Borrowing Request in accordance with <u>Section 2.03</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Representations and Warranties</u>. The representations and warranties of the Credit Parties and the Specified Additional Guarantors set forth in this Agreement and the other Loan Documents shall be true and correct in all material respects (or, with respect to any representation and warranty qualified by materiality or a material adverse change or material adverse effect standard, in all respects) on and as of the occasion of the Borrowing of Delayed Draw Term Loans (although any representations and warranties which expressly relate to an earlier date shall be required only to be true and correct in all material respects (or, with respect to any representation and warranty qualified by materiality or a material adverse change or material adverse effect standard, in all respects) as of the specified earlier date).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>No Default</u>. At the time of and immediately after giving effect to such Borrowing, no Default or Event of Default shall have occurred and be continuing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Financial Covenants</u>. Immediately after giving effect to such Borrowing and the application of proceeds therefrom, the Borrower and its Subsidiaries shall be in compliance with the financial ratios set forth in <u>Section 9.01(a)</u>, <u>Section 9.01(b)</u> and <u>Section 9.01(c)</u> on a Pro Forma Basis.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Solvency Certificate</u>. The Administrative Agent shall have received a Solvency Certificate duly executed by a Financial Officer.

Each Borrowing of Delayed Draw Term Loans shall be accompanied by a certificate of Responsible Officer certifying as to the matters described in the foregoing <u>clauses (b)</u> through <u>(d)</u>.

Section 6.03 <u>Each Amendment No. 4 Delayed Draw Term Loan Borrowing</u>. Each Amendment No. 4 Delayed Draw Term Lender in its sole and absolute discretion may make an Amendment No. 4 Delayed Draw Term Loan on the occasion of any Borrowing of Amendment No. 4 Delayed Draw Term Loans subject to the satisfaction (or waiver by each Amendment No. 4 Delayed Draw Term Lender) of the following conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Borrowing Request</u>. The Administrative Agent shall have received a Borrowing Request in accordance with <u>Section 2.03</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Representations and Warranties</u>. The representations and warranties of the Credit Parties and the Specified Additional Guarantors set forth in this Agreement and the other Loan Documents shall be true and correct in all material respects (or, with respect to any representation and warranty qualified by materiality or a material adverse change or material adverse effect standard, in all respects) on and as of the occasion of the Borrowing of Amendment No. 4 Delayed Draw Term Loans (although any representations and warranties which expressly relate to an earlier date shall be required only to be true and correct in all material respects (or, with respect to any representation and warranty qualified by materiality or a material adverse change or material adverse effect standard, in all respects) as of the specified earlier date).

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>No Default</u>. At the time of and immediately after giving effect to such Borrowing, no Default or Event of Default shall have occurred and be continuing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Financial Covenants</u>. Immediately after giving effect to such Borrowing and the application of proceeds therefrom, the Borrower and its Subsidiaries shall be in compliance with the financial ratios set forth in <u>Section 9.01(a)</u>, <u>Section 9.01(b)</u> and <u>Section 9.01(c)</u> on a Pro Forma Basis.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Solvency Certificate</u>. The Administrative Agent shall have received a Solvency Certificate duly executed by a Financial Officer.

Each Borrowing of Amendment No. 4 Delayed Draw Term Loans shall be accompanied by a certificate of Responsible Officer certifying as to the matters described in the foregoing <u>clauses (b)</u> through <u>(d)</u>.

**ARTICLE VII** 

**REPRESENTATIONS AND WARRANTIES** 

The Company, and the Borrower each represents and warrants to the Lenders that:

Section 7.01 <u>Organization; Powers</u>. Each of Parent, the Company, the Borrower and their respective Subsidiaries (a) is duly organized or formed, validly existing and in good standing under the laws of the jurisdiction of its organization and (b) has all requisite power and authority, and all governmental licenses, authorizations, consents and approvals necessary, to own its assets and to carry on its business as now conducted, and is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required, except, in the case of this <u>clause (b)</u>, where the failure to have such power, authority, licenses, authorizations, consents, approvals and qualifications could not reasonably be expected to have a Material Adverse Effect.

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

------

Section 7.04 <u>Financial Condition; No Material Adverse Effect</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Borrower has heretofore furnished to the Lenders (i) the consolidated financial statements of the Company and its Consolidated Subsidiaries as of and for the fiscal year ended December 31, 2023, reported on by Ramirez Jimenez International CPAs and (ii) the unaudited consolidated balance sheet and statements of income, members' equity and cash flows of the Company and its Consolidated Subsidiaries as of and for each fiscal quarter ended March 31, 2024. Such financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of the Company and its Consolidated Subsidiaries as of such dates and for such periods in accordance with GAAP, subject to year-end audit adjustments and the absence of footnotes in the case of the unaudited quarterly financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Since December 31, 2023, there has been no event, development or circumstance that has had or could reasonably be expected to have a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Neither the Company nor any Subsidiary has on the Amendment No. 4 Effective Date any material Indebtedness (including Disqualified Capital Stock) or any contingent liabilities, off-balance sheet liabilities or partnerships, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable commitments (other than the Gas Balancing Obligations and the Swap Agreements listed on <u>Schedule 1.02(c)</u>) which are not referred to or reflected or provided for in the Financial Statements or the financial statements most recently delivered pursuant to <u>Section 8.01(b)</u>.

Section 7.05 <u>Litigation</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Except as set forth on <u>Schedule 7.05</u>, there are no actions, suits, investigations or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Company, threatened against or affecting Parent, the Company or any Subsidiary (i) not fully covered by insurance (except for normal deductibles) as to which there is a reasonable possibility of an adverse determination that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect or (ii) that involve any Loan Document or the Transactions.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Since the date of this Agreement, there has been no change in the status of the matters disclosed in <u>Schedule 7.05</u> that, individually or in the aggregate, has resulted in a Material Adverse Effect.

Section 7.06 <u>Environmental Matters</u>. Except as could not be reasonably expected to have a Material Adverse Effect (or with respect to clauses (b), (c), (d) and (e) below, where the failure to take such actions could not be reasonably expected to have a Material Adverse Effect):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) no Property of the Company or any Subsidiary nor the operations conducted thereon violate any order or requirement of any court or Governmental Authority arising under Environmental Law, or any Environmental Laws.

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) all notices, permits, licenses, exemptions, approvals or similar authorizations, if any, required to be obtained or filed in connection with the operation or use of any Property of the Company and each Subsidiary, including, without limitation, past or present treatment, storage, disposal or Release of a Hazardous Substance into the environment, have been duly obtained or filed, and the Company and each Subsidiary are in compliance with the terms and conditions of all such notices, permits, licenses and similar authorizations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) the Company and its Subsidiaries have taken all steps reasonably necessary to determine and has determined that no Hazardous Substances have been disposed of or otherwise Released and there has been no threatened Release of any Hazardous Substances on or to any Property of the Company or any Subsidiary except in compliance with Environmental Laws and so as not to pose an imminent and substantial endangerment to public health or welfare or the environment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) to the extent applicable, all Property of the Company and each Subsidiary currently satisfies all design, operation, and equipment requirements imposed by the OPA, and neither the Company nor the Borrower have any reason to believe that such Property, to the extent subject to the OPA, will not be able to maintain compliance with the OPA requirements during the term of this Agreement.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) neither the Company nor any of its Subsidiaries has any known contingent liability or Remedial Work in connection with any Release or threatened Release of any Hazardous Substance into the environment.

Section 7.07 <u>Compliance with Laws and Agreements; No Defaults</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Each of Parent, the Company and each Subsidiary is in compliance with all Governmental Requirements applicable to it or its Property and all agreements and other instruments binding upon it or its Property, and possesses all licenses, permits, franchises, exemptions, approvals and other governmental authorizations necessary for the ownership of its Property and the conduct of its business, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) No Default has occurred and is continuing.

Section 7.08 <u>Investment Company Act</u>. Neither the Company nor any Subsidiary is an "investment company" or a company "controlled" by an "investment company," within the meaning of, or subject to regulation under, the Investment Company Act of 1940, as amended.

Section 7.09 <u>Taxes</u>. Each of the Company and the Subsidiaries has timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which the Company or such Subsidiary, as applicable, has set aside on its books adequate reserves to the extent required in accordance with GAAP or (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect.

Section 7.10 <u>ERISA</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Except as could not reasonably be expected to result in a Material Adverse Effect, the Company, the Subsidiaries and each ERISA Affiliate have complied in all respects with the applicable provisions of ERISA, the Code and other applicable federal and state laws with respect to each Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Except as could not reasonably be expected to result in a Material Adverse Effect, each Plan is, and has been, established and maintained in substantial compliance with its terms and applicable provisions of ERISA, the Code and other applicable federal and state laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Except as could not reasonably be expected to result in a Material Adverse Effect, no act, omission or transaction has occurred which would result in imposition on the Company, any Subsidiary or any ERISA Affiliate (whether directly or indirectly) of (i) either a civil penalty assessed pursuant to subsections (c), (i), (l) or (m) of section 502 of ERISA or a tax imposed pursuant to Chapter 43 of Subtitle D of the Code or (ii) breach of fiduciary duty liability damages under section 409 of ERISA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Except as could not reasonably be expected to result in a Material Adverse Effect, full payment when due has been made of all amounts which the Company, the Subsidiaries or any ERISA Affiliate is required under applicable law or the terms of each Plan or Multiemployer Plan to have paid as contributions to such Plan or Multiemployer Plan as of the date hereof.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Neither the Company or any of the Subsidiaries sponsors, maintains, or contributes to, or has any liability with respect to, an employee welfare benefit plan, as defined in section 3(1) of ERISA, including, without limitation, any such plan maintained to provide benefits to former employees of such entities (except for continuation coverage required to be provided by the Consolidated Omnibus Budget Reconciliation Act of 1985 or similar state law), that may not be terminated by the Company or a Subsidiary in its sole discretion at any time without any material liability other than the payment of accrued benefits or claims incurred prior to the effective date of such termination under such plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Neither the Borrower, the Subsidiaries nor any ERISA Affiliate sponsors, maintains or contributes to, or has at any time in the six (6)-year period preceding the date hereof sponsored, maintained or contributed to, any employee pension benefit plan, as defined in section 3(2) of ERISA, that is subject to Title IV of ERISA, section 302 of ERISA or section 412 of the Code.

Section 7.11 <u>Disclosure; No Material Misstatements</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) None of the reports, financial statements, certificates or other information (other than projections and other forward-looking information and information of a general economic or industry specific nature) furnished by or on behalf of the Company or any Subsidiary to the Administrative Agent or any Lender or any of their Affiliates in connection with the negotiation of this Agreement or any other Loan Document or delivered hereunder or under any other Loan Document (as modified or supplemented by other information so furnished) when furnished contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not materially misleading; <u>provided</u> that, with respect to any projected financial information, the Company represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time (it being understood that actual results may vary from the projected financial information). There is no fact peculiar to the Company or any Subsidiary which could reasonably be expected to have a Material Adverse Effect or in the future is reasonably likely to have a Material Adverse Effect and which has not been set forth in this Agreement or the Loan Documents or the other documents, certificates and statements furnished to the Administrative Agent or the Lenders by or on behalf of the Company or any Subsidiary on the date hereof in connection with the transactions contemplated hereby. No statements or conclusions exist in any Reserve Report which are based upon or include misleading information or which fail to take into account material information regarding the matters reported therein to the extent such misstatement, misleading information or failure could reasonably be expected to have a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) As of the Closing Date, to the knowledge of the Company, the information included in the Beneficial Ownership Certification provided on or prior to the Closing Date to any Lender in connection with this Agreement is true and correct in all respects.

------

Section 7.12 <u>Insurance</u>. The Company has, and has caused all its Subsidiaries to have, (a) all insurance policies sufficient for the compliance by each of them with all material Governmental Requirements and all material agreements and (b) insurance coverage in at least amounts and against such risk (including, without limitation, public liability) that are usually insured against by companies similarly situated and engaged in the same or a similar business for the assets and operations of the Company and its Subsidiaries. Subject to <u>Section 8.21</u>, the Administrative Agent is named as an additional insured in respect of such liability insurance policies and as lender loss payee and mortgagee with respect to Property loss insurance. Subject to <u>Section 8.21</u>, each liability insurance shall name the Administrative Agent as "additional insured" and, to the extent consistent with such insurer's ordinary business practices, will provide that the insurer will endeavor to give no less than thirty (30) days prior written notice of any cancellation to Administrative Agent (or not less than ten (10) days prior written notice for non-payment).

Section 7.13 <u>Restriction on Liens</u>. Except as otherwise permitted by <u>Section 9.15</u>, none of the Company, nor any of the Subsidiaries is a party to any material agreement or arrangement or subject to any order, judgment, writ or decree, which either restricts or purports to restrict its ability to grant Liens to the Administrative Agent and the Lenders on or in respect of their Properties to secure the Secured Obligations and the Loan Documents.

Section 7.14 <u>Subsidiaries</u>. <u>Schedule 7.14</u> sets forth a true and completed list of all Subsidiaries as of the Amendment No. 4 Effective Date (as updated from time to time pursuant to <u>Section 8.01(d)</u>) and includes a designation as to whether such Subsidiary is a Guarantor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Except as could not reasonably be expected to have a Material Adverse Effect, (i) all leases and agreements necessary for the conduct of the business of the Company and the Subsidiaries are valid and subsisting, in full force and effect, and (ii) there exists no default or event or circumstance which with the giving of notice or the passage of time or both would give rise to a default under any such leases or agreements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The rights and Properties presently owned, leased or licensed by the Company and the Subsidiaries including, without limitation, all easements and rights of way, include all rights and Properties necessary to permit the Company and the Subsidiaries to conduct their business in all material respects in the same manner as its business has been conducted prior to the date hereof, except to the extent that the failure to include any such rights could not reasonably be expected to result in a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) All of the Properties of the Company and the Subsidiaries which are reasonably necessary for the operation of their businesses are in good working condition and are maintained in accordance with prudent business standards, except for any such failure to maintain such Properties, individually or in the aggregate, that could not reasonably be expected to result in a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Company and each Subsidiary owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual Property material to its business, and the use thereof by the Company and such Subsidiary does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not

------

reasonably be expected to result in a Material Adverse Effect. The Company and its Subsidiaries either own or have valid licenses or other rights to use all databases, geological data, geophysical data, engineering data, seismic data, maps, interpretations and other technical information used in their businesses as presently conducted, subject to the limitations contained in the agreements governing the use of the same, which limitations are customary for companies engaged in the business of the exploration and production of Hydrocarbons, with such exceptions as could not reasonably be expected to have a Material Adverse Effect.

Section 7.15 <u>Location of Business and Offices</u>. The name as listed in the public records of its jurisdiction of organization, jurisdiction of organization, organizational identification number, principal place of business and chief executive offices, and notice address for the Borrower, and each Guarantor is accurately set forth on <u>Schedule 7.14</u> (or as set forth in a notice delivered pursuant to <u>Section 8.01(m)</u>).

Section 7.16 <u>Properties; Titles, Etc</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Each of the Company and the Subsidiaries has good and defensible title to their respective Oil and Gas Properties evaluated in the most recently delivered Reserve Report and good title to all its other personal Properties, in each case, free and clear of all Liens except Liens permitted by <u>Section 9.03</u>. After giving full effect to the Excepted Liens, the Company or the Subsidiary specified as the owner owns the net interests in production attributable to the Hydrocarbon Interests as reflected in the most recently delivered Reserve Report, and the ownership of such Properties shall not in any material respect obligate the Company or such Subsidiary to bear the costs and expenses relating to the maintenance, development and operations of each such Property in an amount in excess of the working interest of each Property set forth in the most recently delivered Reserve Report that is not offset by a corresponding proportionate increase in the Company's or such Subsidiary's net revenue interest in such Property.

Section 7.17 <u>Maintenance of Properties</u>. Except for such acts or failures to act as could not be reasonably expected to have a Material Adverse Effect, the Oil and Gas Properties (and Properties unitized therewith) of the Company and its Subsidiaries have been maintained, operated and developed in a good and workmanlike manner and in conformity with all Governmental Requirements and in conformity with the provisions of all leases, subleases or other contracts comprising a part of the Hydrocarbon Interests and other contracts and agreements forming a part of the Oil and Gas Properties of the Company and its Subsidiaries. Specifically in connection with the foregoing, except for those as could not be reasonably expected to have a Material Adverse Effect, (a) no Oil and Gas Property of the Company or any Subsidiary is subject to having allowable production reduced below the full and regular allowable (including the maximum permissible tolerance) because of any overproduction (whether or not the same was permissible at the time) and (b) none of the wells comprising a part of the Oil and Gas Properties (or Properties unitized therewith) of the Company or any Subsidiary is deviated from the vertical more than the maximum permitted by Governmental Requirements, and such wells are, in fact, bottomed under and are producing from, and the well bores are wholly within, the Oil and Gas Properties (or in the case of wells located on Properties unitized therewith, such unitized Properties) of the Company or such Subsidiary.

------

Section 7.18 <u>Gas Imbalances, Prepayments</u>. On a net basis there are no gas imbalances, take or pay or other prepayments which would require the Company or any of its Subsidiaries to deliver Hydrocarbons produced from the Oil and Gas Properties at some future time without then or thereafter receiving full payment therefor in an aggregate amount exceeding $500,000.

Section 7.19 <u>Marketing of Production</u>. Except for contracts listed on <u>Schedule 7.19</u> and in effect on the date hereof, and thereafter either disclosed in writing to the Administrative Agent or included in the most recently delivered Reserve Report (with respect to all of which contracts the Company represents that it or its Subsidiaries are receiving a price for all production sold thereunder which is computed substantially in accordance with the terms of the relevant contract and are not having deliveries curtailed substantially below the subject Property's delivery capacity), no material agreements exist (other than Swap Agreements permitted under this Agreement) which are not cancelable on sixty (60) days' notice or less without penalty or detriment for the sale of production from the Company's or its Subsidiaries' Hydrocarbons (including, without limitation, calls on or other rights to purchase production, whether or not the same are currently being exercised) that (a) (i) pertain to the sale of production at a fixed price for a period that is one (1) month or less and (ii) have a maturity or expiry date of longer than six (6) months from the date hereof or (b) pertain to the sale of production at a fixed price for a period longer than one (1) month.

Section 7.20 <u>Swap Agreements</u>. <u>Schedule 1.02(c)</u> sets forth, as of the date hereof, and after the date hereof, each report required to be delivered by the Company pursuant to <u>Section 8.01(f)</u> or as may otherwise be disclosed in writing to the Administrative Agent, sets forth, a true and complete list of all Swap Agreements of the Company and each Subsidiary, the material terms thereof (including the type, term, effective date, termination date and notional amounts or volumes), the net mark to market value thereof, all credit support agreements relating thereto (including any margin required or supplied) and the counterparty to each such agreement.

Section 7.21 <u>Use of Loans</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The proceeds of the Loans shall be used solely (i) to pay all amounts owing under the Existing Credit Agreement, (ii) to pay fees and expenses related to the Transactions, this Agreement and the other Loan Documents, (iii) to develop the Oil and Gas Properties of the Company and its Subsidiaries in accordance with the APOD.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Neither the Company nor any Subsidiary is engaged principally, or as one of its important activities, in the business of extending credit for the purpose, whether immediate, incidental or ultimate, of buying or carrying margin stock (within the meaning of Regulation T, U or X of the Board). No part of the proceeds of any Loan will be used for any purpose which violates the provisions of Regulations T, U or X of the Board.

Section 7.22 <u>Solvency</u>. Immediately after giving effect the Transactions and the other transactions contemplated hereby and thereby, (a) the aggregate assets (after giving effect to amounts that could reasonably be received by reason of indemnity, offset, insurance or any similar arrangement), at a fair valuation, of the Company and its Subsidiaries, taken as a whole, will exceed the aggregate debt and liabilities (including subordinated liabilities) of the Company and its Subsidiaries on a consolidated basis, as such debt and liabilities (including subordinated

------

liabilities) become absolute and mature, (b) the Company and its Subsidiaries, taken as a whole, will not have incurred or intended to incur, and will not believe that they will incur, debt or liabilities (including subordinated liabilities) beyond their ability to pay such debt and liabilities (including subordinated liabilities) (after taking into account the timing and amounts of cash to be received by the Company and its Subsidiaries and the amounts to be payable on or in respect of their debt and liabilities, and giving effect to amounts that could reasonably be received by reason of indemnity, offset, insurance or any similar arrangement) as such debt and liabilities (including subordinated liabilities) become absolute and mature and (c) the Company and its Subsidiaries, taken as a whole, will not have (and will have no reason to believe that they will have thereafter) unreasonably small capital for the conduct of their business.

Section 7.23 <u>Anti-Money Laundering</u>. The operations of Parent, the Company and the Subsidiaries are and have been conducted at all times in material compliance with applicable financial recordkeeping and reporting requirements including those of the Bank Secrecy Act, as amended by the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the "<u>Patriot Act</u>"), and the applicable anti-money laundering statutes of jurisdictions where Parent, the Company and its Subsidiaries conduct business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the "<u>Money Laundering Laws</u>"), and no material action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving Parent, the Company or any of the Subsidiaries with respect to the Money Laundering Laws is pending or, to the best knowledge of the Company and the Borrower, threatened.

Section 7.24 <u>Anti-Corruption Laws</u>. None of Parent, the Company or any of the Subsidiaries, nor any officer, or to the knowledge of Parent, the Company and the Borrower, any Affiliate, director, agent or employee of Parent, the Company or any of the Subsidiaries is aware of or has taken any action, directly or indirectly, that would result in a material violation by such Persons of any Anti-Corruption Laws, including without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any "foreign official" (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of any Anti-Corruption Laws; and Parent, the Company and the Subsidiaries have conducted their business in material compliance with the Anti-Corruption Laws and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.

Section 7.25 <u>Anti-Corruption Laws; Sanctions; OFAC</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Parent, the Company and the Borrower have implemented and maintain in effect policies and procedures designed to promote compliance by Parent, the Company, and the Subsidiaries and their respective Affiliates, directors, officers, employees and agents with applicable Anti-Corruption Laws and applicable Sanctions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Parent, the Company and the Subsidiaries and their respective Affiliates, officers, employees, directors and agents are in compliance with Anti-Corruption Laws and applicable Sanctions in all respects and are not engaged in any activity that would reasonably be expected to result in any of Holdings, Parent or Credit Party being designated as a Sanctioned Person.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) None of Parent, the Company, any Subsidiary or any of their respective Affiliates, directors, officers or employees, or any agent of the Company or any Subsidiary that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person. The Company and the Borrower will not directly or, to its knowledge, indirectly use the proceeds from the Loans or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other Person, for the purpose of financing or facilitating the activities or business of, with or for the benefit of, any Sanctioned Person or in a Sanctioned Country, or in any manner that will result in the violation of any applicable Sanctions.

Section 7.26 <u>EEA Financial Institutions</u>. Neither the Company nor any of its Subsidiaries is an EEA Financial Institution.

Section 7.27 <u>Senior Debt Status</u>. Except with respect to the Phoenix 9.0% Reg A Bonds, (a) the Secured Obligations constitute "Senior Indebtedness," "Designated Senior Indebtedness" or any similar designation under and as defined in any agreement governing any unsecured, senior subordinated or subordinated Indebtedness, and the subordination provisions set forth in each such agreement, if any, are legally valid and enforceable against the parties thereto in favor of the Administrative Agent, the Lenders and any other Secured Parties and (b) the Secured Obligations are expressly superior in rank to any Specified Indebtedness.

Section 7.28 <u>Material Contracts</u>. <u>Schedule 7.28</u> sets forth, as of the Amendment No. 4 Effective Date, a true and complete list of all Material Contracts (in each case, including a reasonably detailed description as to the revenues and nature thereof) of the Company and each Subsidiary. Other than as set forth in <u>Schedule 7.28</u>, as of the Amendment No. 4 Effective Date, each such Material Contract is, and after giving effect to the consummation of the transactions contemplated by the Loan Documents will be, in full force and effect in accordance with the terms thereof. Neither the Company nor any of its Subsidiaries (nor, to its knowledge, any other party thereto) is in breach of or in default under any Material Contract in any material respect. As of the Closing Date, the Company has delivered to the Administrative Agent copies of all Material Contracts listed on <u>Schedule 7.28</u>.

Section 7.29 <u>Outbound Investment Rules</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) None of Parent, the Company, any Subsidiary or any of their respective Affiliates, directors, officers or employees, or any agent of the Company or any Subsidiary that will act in any capacity in connection with or benefit from the credit facility established hereby, is a "covered foreign person," as that term is defined in the Outbound Investment Rules. The Company and the Borrower will not directly or, to its knowledge, indirectly use the proceeds from the Loans or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other Person, for the purpose of financing or facilitating any transaction in violation of the Outbound Investment Rules.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company and the Borrower will not directly or, to its knowledge, indirectly, engage in any transaction that will in violation of the Outbound Investment Rules.

------

**ARTICLE VIII** 

**AFFIRMATIVE COVENANTS** 

Until Payment in Full, each of the Company, and the Borrower covenants and agrees on behalf of itself and the Subsidiaries that:

Section 8.01 <u>Financial Statements; Other Information</u>. The Company will furnish to the Administrative Agent and each Lender:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Annual Financial Statements</u>. As soon as available, but in any event in accordance with then applicable law and not later than one hundred and twenty (120) days after the end of each fiscal year of the Company, commencing with the fiscal year ending December 31, 2024, its audited consolidated balance sheet and related statements of operations, members' equity and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by Ramirez Jimenez International CPAs or other independent public accountants of recognized national standing (without a "going concern" or like qualification or exception and without any qualification or exception as to the scope of such audit, except for any such qualification or exception resulting solely from the impending maturity date of the Loans or any anticipated breach of a financial covenant herein, including pursuant to <u>Section 9.01(a)</u>, <u>Section 9.01(b)</u> or <u>Section 9.01(c)</u>) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Company and its Consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Quarterly Financial Statements</u>. As soon as available, but in any event in accordance with then applicable law and not later than sixty (60) days after the end of each fiscal quarter of each fiscal year of the Company, its consolidated balance sheet and related statements of operations, members' equity and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by one of its Financial Officers as presenting fairly in all material respects the financial condition and results of operations of the Company and its Consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Monthly Debt and Acquisition and Non-Op AFE Schedules and Current Ratio Compliance</u>. Not later than ten (10) days after the end of each calendar month, a certificate signed by a Responsible Officer attaching a schedule setting forth:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) all Debt for Borrowed Money (other than the Loans hereunder) outstanding as of the last day of such month, including (A) the outstanding principal amount under each relevant loan agreement, note, indenture or similar agreement or instrument evidencing such Debt for Borrowed Money, (B) the interest rate applicable to such Debt for Borrowed Money, (C) the amortization schedule applicable to such Debt for Borrowed Money and (D) the maturity date applicable to such Debt for Borrowed Money;

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the following information with respect to each acquisition of Material Oil and Gas Properties by the Company and its Subsidiaries during such month: (A) the purchase price of such Oil and Gas Properties, (B) the PV-10 of such Oil and Gas Properties, (C) the Acquisition IRR of each such acquisition of Material Oil and Gas Properties, together with reasonably detailed evidence and calculations supporting such Acquisition IRR (which shall be reasonably acceptable to the Administrative Agent), and (D) a certification that each such acquisition complied with the Asset Acquisition Conditions at the time made (with supporting detail if requested by the Administrative Agent);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) the following information related to each Material Non-Op AFE consented to by the Company or any of its Subsidiaries during such month: (A) a description of such Non-Op AFEs, together with a reasonable description as to the Oil and Gas Properties to which each such Non-Op AFE relates, (B) the Non-Op IRR of each such Material Non-Op AFE, together with reasonably detailed evidence and calculations supporting such Non-Op IRR (which shall be reasonably acceptable to the Administrative Agent), and (C) a certification that each such Non-Op AFE complied with the Non-Op AFE Conditions at the time consented to by the Company or the applicable Subsidiary (with supporting detail if requested by the Administrative Agent); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) detailed calculations showing compliance with <u>Section 9.01(b)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Certificate of Financial Officer – Compliance</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Concurrently with any delivery of financial statements under <u>Section 8.01(a)</u> or <u>Section 8.01(b)</u>, a Compliance Certificate (i) certifying as to whether a Default exists and, if a Default so exists, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) certifying that the Company has provided true and accurate calculation of the APOD Economic Test and is in compliance with the financial covenants contained in <u>Section 9.01(a)</u>, <u>Section 9.01(b)</u> and <u>Section 9.01(c)</u> as of the last day of the fiscal period covered by such financial statements and, in connection therewith, setting forth reasonably detailed calculations of the APOD Economic Test and demonstrating compliance with the financial covenants, (iii) stating whether any change in GAAP or in the application thereof has occurred since the date of the audited financial statements referred to in <u>Section 7.04</u> and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate, and (iv) certifying as to whether the Company is in compliance with the covenants contained in <u>Section 9.18</u> for the most recently ended fiscal quarter, with reasonably detailed supporting information, and (v) either (A) attaching an updated <u>Schedule 7.14</u> listing all of Company's Subsidiaries or (B) certifying there have been no changes to <u>Schedule 7.14</u> since the later of (1) the Amendment No. 4 Effective Date and (2) the last date on which a Compliance Certificate was delivered pursuant to this <u>Section 8.01(c)</u>. In the event a Compliance Certificate is required to be delivered during a Disputed Reserve Report Period, such Compliance Certificate shall not be required to include the calculation of the Company's compliance with the financial covenant contained in <u>Section 9.01(c)</u>; <u>provided</u> that the Company shall be required to deliver a new Compliance Certificate with respect to the Company's compliance with the financial covenant contained in <u>Section 9.01(c)</u> within five (5) Business Days after the final date of the applicable Disputed Reserve Report Period certifying the calculation of the financial covenant contained in <u>Section 9.01(c)</u> based on the Most Recently Delivered Reserve Report.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Within ten (10) days after the end of each calendar month, a certificate, in form and substance reasonably satisfactory to the Administrative Agent, (x) attaching the APOD Expenditure Report and (y) certifying that the Company is in compliance with (A) <u>Section 9.08</u> and (B) the financial covenant contained in <u>Section 9.01(b)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Annual Budget</u>. As soon as reasonably practicable, but no later than December 15 of each year (commencing with the fiscal year ending December 31, 2024), reasonably detailed forecasts prepared by management of the Company (the "<u>Annual Budget</u>") (including projected combined balance sheets, income statements, EBITDAX, cash flow statements, the projected production of Hydrocarbons by the Company and its Subsidiaries and the assumptions used in calculating such projections, the Company's annual operating and capital expenditure budgets and financial forecasts, including cash flow projections covering proposed fundings, repayments, additional advances, investments and other cash receipts and disbursements of the Company and its Subsidiaries) on a quarterly basis for the immediately succeeding fiscal year, which forecasts shall be prepared in good faith on the basis of assumptions believed to be reasonable at the time of preparation thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Certificate of Financial Officer – Swap Agreements</u>. Concurrently with the delivery of each Scheduled Reserve Report under <u>Section 8.12(a)</u> and <u>Section 8.12(b)</u>, a certificate of a Financial Officer, in form and substance satisfactory to the Administrative Agent, setting forth as of the date used to calculate the Five-Year Strip Price for purposes of such Scheduled Reserve Report, a true and complete list of all Swap Agreements of the Company and each Subsidiary, the material terms thereof (including the type, term, effective date, termination date and notional amounts or volumes), the net mark to market value therefor, any new credit support agreements relating thereto not listed on <u>Schedule 1.02(c)</u>, any margin required or supplied under any credit support document, and the counterparty to each such agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Certificate of Insurer – Insurance Coverage</u>. Concurrently with any delivery of financial statements under <u>Section 8.01(a)</u>, a certificate of insurance coverage from each insurer with respect to the insurance required by <u>Section 8.07</u>, in form and substance reasonably satisfactory to the Administrative Agent, or, if no material change to such insurance coverage has occurred since the date of the most recently delivered financial statements under <u>Section 8.01(a)</u>, a statement from a Financial Officer to such effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>Other Accounting Reports</u>. Promptly following receipt thereof, a copy of each other material report or opinion submitted to the Company or any of its Subsidiaries by independent accountants in connection with any annual, interim or special audit made by them of the books of the Company or any such Subsidiary, and a copy of any response by the Company or any such Subsidiary, or the Board of Directors or other governing body of the Company or any such Subsidiary, to such material report or opinion.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Notices Under Material Instruments</u>. Promptly <u>(but in any event with five (5) Business Days)</u> after the furnishing thereof, copies of any <u>(a)</u> financial statement, report or notice furnished to or by any Person pursuant to the terms of any preferred stock designation <u>(including the Specified Preferred Equity)</u>, indenture, loan or credit or other similar agreement <u>and (b) without duplication of clause (a), periodic and other reports, proxy statements and other materials filed by any Loan Party (or filed on behalf of any Loan Party) with the SEC, or any Governmental Authority succeeding to any or all of the functions of the SEC, or with any national securities exchange, in each case</u>, other than this Agreement and not otherwise required to be furnished to the Lenders pursuant to any other provision of this <u>Section 8.01</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) <u>Lists of Purchasers</u>. Concurrently with the delivery of the annual financial statements in accordance with <u>Section 8.01(a)</u>, a list of all Persons who collectively purchased at least 80% of the aggregate operated production of Hydrocarbons from the Company and its Subsidiaries during the year presented in such annual financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) <u>Notice of Sales of Oil and Gas Properties and Unwinds of Swap Agreements</u>. In the event that the Company or any Subsidiary intends to sell, transfer, assign, Unwind or otherwise Dispose of any Oil and Gas Properties, Swap Agreements or any Equity Interests in any Subsidiary in accordance with <u>Section 9.12(d)</u>, prior written notice (of at least five (5) Business Days or such shorter time as the Administrative Agent may agree in its sole discretion) of such Disposition or Unwind, the price thereof, in the case of Oil and Gas Properties (or any Equity Interests of any Subsidiary), and the anticipated decline in the mark-to-market value thereof or net cash proceeds therefrom, in the case of Swap Agreements, and, in each case, the anticipated date of closing and any other details thereof reasonably requested by the Administrative Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) <u>Notice of Casualty Events</u>. Prompt written notice, and in any event within three (3) Business Days, after the Company obtains knowledge of the occurrence of any Casualty Event or the commencement of any action or proceeding that could reasonably be expected to result in a Casualty Event having a fair market value in excess of $1,000,000.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) <u>Information Regarding Credit Parties</u>. At least five (5) Business Days prior to the occurrence thereof (or such later time as the Administrative Agent may agree in its sole discretion), written notice of any change, with respect Parent, the Company and its Subsidiaries, (i) in such Person's name or in any trade name used to identify such Person in the conduct of its business or in the ownership of its Properties, (ii) in the location of such Person's chief executive office or principal place of business, (iii) in such Person's identity or corporate structure or in the jurisdiction in which such Person is incorporated or formed, (iv) in such Person's jurisdiction of organization, and (v) in such Person's federal taxpayer identification number.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) <u>Production Report and Lease Operating Statements</u>. Concurrently with any delivery of a Scheduled Reserve Report under <u>Section 8.12(a)</u> and <u>Section 8.12(b)</u>, a report setting forth, for each calendar month during the then current fiscal year to the end of such calendar month on a production date basis, the volume of production and sales attributable to production for which cash activity has been recorded (and the prices at which such sales were made and the revenues derived from such sales) for each such calendar month from the Oil and Gas Properties, and setting forth the related ad valorem, severance and production taxes and lease operating expenses attributable thereto and incurred for each such calendar month, and in form and substance reasonably acceptable to the Administrative Agent.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) <u>Amendments to Organizational Documents</u>. Promptly, but in any event, at least five (5) Business Days prior to the effective thereof (or such later time as the Administrative Agent may agree in is sole discretion), copies of any material amendment, modification or supplement to the certificate or articles of incorporation, by-laws, any preferred stock designation or, any other organic document of the Company, or any Subsidiary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) <u>Issuance and Incurrences of Indebtedness</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) At least five (5) Business Days' prior written notice of the incurrence, in one transaction or a series of related transactions, by the Company or any Subsidiary of any Material Indebtedness or any other Indebtedness in excess of $2,500,000 (other than Specified Additional Bond Indebtedness), which such notice shall include the principal amount thereof, the anticipated closing thereof and drafts of the definitive documentation therefor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) At least three (3) Business Day's prior written notice of any prospectus, private placement memorandum or marketing materials being provided or made available to investors or prospective investors in connection with any Indebtedness (other than Specified Additional Bond Indebtedness).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Within ten (10) days after the end of each calendar month, notice of the incurrence, in one transaction or a series of related transactions, by the Company or any Subsidiary of any Specified Additional Bond Indebtedness, which such notice shall include the principal amount thereof and the definitive documentation therefor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) <u>Budget</u>. As soon as available, but in any event not later than sixty (60) days after the end of each fiscal quarter (other than any fiscal quarter ending on December 31 of any year), a certificate of a Financial Officer, in form and substance reasonably satisfactory to the Administrative Agent, setting forth updates to the Annual Budget for each fiscal quarter covered by the Annual Budget, including updates to the projected production of Hydrocarbons by the Company and its Subsidiaries and the assumptions used in calculating such projections, the Company's operating and capital expenditure budgets and financial forecasts, including cash flow projections covering proposed fundings, repayments, additional advances, investments and other cash receipts and disbursements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) <u>Securities Commission and Other Filings; Reports to Equityholders</u>. Promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by the Company or any Subsidiary with any securities commission having jurisdiction over the Company or any Subsidiary, or with any other national securities exchange and distributed by the Company or any Subsidiary to its equityholders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) <u>Material Contracts</u>. Concurrently with any delivery of financial statements under <u>Section 8.01(a)</u> or <u>Section 8.01(b)</u>, a certificate of a Financial Officer, in form and substance satisfactory to the Administrative Agent, setting forth a true and complete list of all Material Contracts, include descriptions thereof consistent with the descriptions of Material Contracts

------

included on <u>Schedule 7.28</u>. Upon request of the Administrative Agent, the Company shall deliver to the Administrative Agent copies of any such Material Contracts not previously delivered to the Administrative Agent, including any material amendments, modifications, waivers or other material supplements related thereto not previously delivered to the Administrative Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) <u>Other Requested Information</u>. Promptly following any request therefor, (i) such other information regarding the properties, operations, business affairs and financial condition of the Company or any Subsidiary (including, without limitation, any joint venture agreements and any Plan and any reports (and subject to <u>Section 8.15</u>) or other information required to be filed by the Company or any of the Subsidiaries under ERISA in respect of any Plan), or any Reserve Report delivered hereunder, or compliance with the terms of this Agreement or any other Loan Document, or such other information of data with respect to any Specified Additional Guarantor, Parent, or Credit Party as the Administrative Agent or any Lender may reasonably request and (ii) information and documentation reasonably requested by the Administrative Agent or any Lender for purposes of compliance with applicable "know your customer" and anti-money laundering rules and regulations, including the Patriot Act and the Beneficial Ownership Regulation (including compliance by any prospective assignee with applicable "know your customer" and anti-money laundering rules and regulations).

Section 8.02 <u>Notices of Material Events</u>. The Company will furnish to the Administrative Agent and each Lender prompt written notice (but, in any event, within five (5) Business Days) of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Defaults</u>. The occurrence of any Default or Event of Default;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Governmental Matters</u>. The filing or commencement of, or the threat in writing of, any action, suit, proceeding, investigation or arbitration by or before any arbitrator or Governmental Authority against or affecting the Company or any of the Subsidiaries not previously disclosed in writing to the Lenders or any material adverse development in any action, suit, proceeding, investigation or arbitration previously disclosed to the Lenders that could reasonably be expected to be adversely determined and result in liability in excess of $1,000,000 not fully covered by insurance, subject to normal deductibles; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Material Adverse Effect</u>. Any other development that results in, or could reasonably be expected to result in a Material Adverse Effect.

Each notice delivered under this <u>Section 8.02</u> shall be accompanied by a statement of a Responsible Officer setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

Section 8.03 <u>Existence; Conduct of Business</u>. The Company will, and will cause each Subsidiary to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material to the conduct of its business and maintain, if necessary, its qualification to do business in each other jurisdiction in which its Oil and Gas Properties is located or the ownership of its Properties requires such qualification, except where the failure to so qualify could not reasonably be expected to have a Material Adverse Effect; <u>provided</u> that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under <u>Section 9.11</u>. The Company shall at all times remain organized under the laws of the United States of America, any State thereof or the District of Columbia.

------

Section 8.04 <u>Payment of Obligations</u>. The Company will, and will cause each Subsidiary to, pay its obligations, including Tax liabilities of the Company and all of its Subsidiaries before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the Company, or such Subsidiary has set aside on its books adequate reserves with respect thereto to the extent required in accordance with GAAP and (c) the failure to make payment pending such contest could not reasonably be expected to result in (i) a Material Adverse Effect or (ii) the seizure or levy of any material Property or material Collateral of the Company or any Subsidiary thereof.

Section 8.05 <u>Performance of Obligations under Loan Documents</u>. The Borrower will pay the Loans according to the terms hereof, and the Company will, and will cause each Subsidiary to, do and perform every act and discharge all of the obligations to be performed and discharged by them under the Loan Documents, including, without limitation, this Agreement, at the time or times and in the manner specified.

Section 8.06 <u>Operation and Maintenance of Properties</u>. Except for matters that could not reasonably be expected to result in a Material Adverse Effect, the Company, at its own expense, will, and will cause each Subsidiary to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) operate its Oil and Gas Properties and other material Properties or cause such Oil and Gas Properties and other material Properties to be operated in a careful and efficient manner in accordance with the practices of the industry and in compliance with all applicable contracts and agreements and in compliance with all Governmental Requirements, including, without limitation, applicable pro ration requirements and Environmental Laws, and all applicable laws, rules and regulations of every other Governmental Authority from time to time constituted to regulate the development and operation of its Oil and Gas Properties and the production and sale of Hydrocarbons and other minerals therefrom;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) keep and maintain all Property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, and preserve, maintain and keep in good repair, working order and efficiency (ordinary wear and tear excepted) all of its Oil and Gas Properties and other Properties, including, without limitation, all equipment, machinery and facilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) promptly pay and discharge, or make reasonable and customary efforts to cause to be paid and discharged, all delay rentals, royalties, expenses and indebtedness accruing under the leases or other agreements affecting or pertaining to its Oil and Gas Properties and will do all other things necessary to keep unimpaired their rights with respect thereto and prevent any forfeiture thereof or default thereunder, except for leases or other agreements which are no longer used or useful in its business as determined in good faith by the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) promptly perform or make reasonable and customary efforts to cause to be performed, in accordance with industry standards, the obligations required by each and all of the assignments, deeds, leases, sub-leases, contracts and agreements affecting its interests in its Oil and Gas Properties and other material Properties;

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) to the extent the Company or such Subsidiary is not the operator of any Property, use reasonable efforts to cause the operator to comply with this <u>Section 8.06</u>; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) cause each non-Loan Party Affiliate (including Close Affiliates) of the Borrower which operates any of the Credit Parties' Oil and Gas Properties to subordinate, pursuant to agreements in form and substance satisfactory to the Administrative Agent, any operators' Liens or other Liens in favor of such non-Loan Party Affiliate (or Close Affiliates) in respect of such Oil and Gas Properties to the Liens in favor of the Administrative Agent for the benefit of the Secured Parties.

Section 8.07 <u>Insurance</u>. The Company will, and will cause each Subsidiary to, maintain, with financially sound and reputable insurance companies, insurance in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating in the same or similar locations. Subject to <u>Section 8.21</u>, the loss payable clauses or provisions in said insurance policy or policies insuring any of the collateral for the Loans shall be endorsed in favor of and made payable to the Administrative Agent as its interests may appear and such policies shall (a) name the Administrative Agent as an "additional insured" in respect of liability insurance, (b) name the Administrative Agent as lender loss payee and mortgagee with respect to Property insurance and (c) provide that the insurer will use commercially reasonable efforts to give at least thirty (30) days prior notice of any cancellation to the Administrative Agent, but in any event not less than ten (10) days prior notice of such cancellation.

Section 8.08 <u>Books and Records; Inspection Rights</u>. The Company will, and will cause each Subsidiary to, keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities. The Company will, and will cause each Subsidiary to, permit any representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice, to visit and inspect its Properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times during normal business hours and as often as reasonably requested; <u>provided</u>, that, so long as no Event of Default shall have occurred and be continuing, (a) the Administrative Agent and the Lenders shall not exercise their rights under this <u>Section 8.08</u> more than twice, taken together, in any fiscal year and (b) the Company and its Subsidiaries shall not be required to reimburse the Administrative Agent and the Lenders for more than one inspection during any fiscal year.

Section 8.09 <u>Compliance with Laws and Material Contractual Obligations</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Each of the Company and the Borrower will, and will cause each Subsidiary to, comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its Property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Each of the Company and the Borrower will maintain in effect and enforce policies and procedures regarding compliance by the Company, the Borrower, the Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Company will, and will cause each Subsidiary to, perform its obligations under all Material Contracts.

Section 8.10 <u>Environmental Matters</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company shall at its sole expense: (i) comply, and shall cause its Properties and operations and Properties of each Subsidiary to comply, with all applicable Environmental Laws, the breach of which could be reasonably expected to have a Material Adverse Effect; (ii) not dispose of or otherwise Release, and shall cause each Subsidiary not to dispose of or otherwise Release, any Hazardous Substance on, under, about or from any of the Properties of the Company or any Subsidiary or any other Property to the extent caused by the operations of the Company or any Subsidiary except in compliance with applicable Environmental Laws, the disposal or Release of which could reasonably be expected to have a Material Adverse Effect; (iii) timely obtain or file, and shall cause each Subsidiary to timely obtain or file, all notices, permits, licenses, exemptions, approvals, registrations or other authorizations, if any, required under applicable Environmental Laws to be obtained or filed in connection with the operation or use of the Properties of the Company or any Subsidiary, which failure to obtain or file could reasonably be expected to have a Material Adverse Effect; (iv) promptly commence and diligently prosecute to completion, and shall cause each Subsidiary to promptly commence and diligently prosecute to completion, any assessment, evaluation, investigation, monitoring, containment, cleanup, removal, repair, restoration, remediation or other remedial obligations (collectively, the "<u>Remedial Work</u>") in the event any Remedial Work is required or reasonably necessary under applicable Environmental Laws because of or in connection with the actual or suspected past, present or future disposal or other Release of any Hazardous Substance on, under, about or from any of the Properties of the Company or any Subsidiary, which failure to commence and diligently prosecute to completion could reasonably be expected to have a Material Adverse Effect; and (v) establish and implement, and shall cause each Subsidiary to establish and implement, such procedures as may be necessary to continuously determine and assure that the obligations of the Company and each Subsidiary under this <u>Section 8.10(a)</u> are timely and fully satisfied, which failure to establish and implement could reasonably be expected to have a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company will promptly, but in no event later than five (5) days after the occurrence of a triggering event, notify the Administrative Agent and the Lenders in writing of any threatened action, investigation or inquiry by any Governmental Authority or any threatened demand or lawsuit by any landowner or other third party against the Company or any of the Subsidiaries, or their respective Properties, of which the Company has knowledge in connection with any Environmental Laws (excluding routine testing and corrective action) if the Company reasonably anticipates that such action will result in liability (whether individually or in the aggregate) in excess of $5,000,000, not fully covered by insurance, subject to normal deductibles.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Company will, and will cause each Subsidiary to, provide environmental audits and tests in accordance with ASTM International standards upon request by the Administrative Agent and the Lenders and no more than once per year in the absence of any Event of Default (or as otherwise required to be obtained by the Administrative Agent or the Lenders by any Governmental Authority), in connection with any future acquisitions of Oil and Gas Properties or other Properties.

------

Section 8.11 <u>Further Assurances</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Each of the Company and the Borrower at its expense will, and will cause each Subsidiary to, promptly execute and deliver to the Administrative Agent and Collateral Agent all such other documents, agreements and instruments reasonably requested by the Administrative Agent to comply with, cure any defects or accomplish the conditions precedent, covenants and agreements of the Company or any Subsidiary, as the case may be, in the Loan Documents, including the Notes, if requested, or to further evidence and more fully describe the Collateral intended as security for the Secured Obligations, or to correct any omissions in this Agreement or the Security Instruments, or to state more fully the obligations secured therein, or to perfect, protect or preserve any Liens created pursuant to this Agreement or any of the Security Instruments or the priority thereof, or to make any recordings, file any notices or obtain any consents, all as may be reasonably necessary or appropriate, in the reasonable discretion of the Administrative Agent, to reasonably ensure that the Collateral Agent, on behalf of the Secured Parties, has a perfected security interest in the Collateral. In addition, at the Administrative Agent's reasonable written request, the Company shall, and shall cause any and the Specified Additional Guarantors Credit Party to, at its sole expense, enter into any Security Instruments to evidence the Liens on the Collateral and provide any information requested to identify any Collateral, including an updated Perfection Certificate, exhibits to Mortgages in form and substance reasonably satisfactory to the Administrative Agent (which such exhibits shall be in recordable form for the applicable jurisdiction) or any other information reasonably requested in connection with the identification of any Collateral.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Each of the Company and the Borrower hereby authorizes the Administrative Agent, Collateral Agent or any of their designees to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral (including the Mortgaged Property) without the signature of any Credit Party and the Specified Additional Guarantors where permitted by law. A carbon, photographic or other reproduction of the Security Instruments or any financing statement covering the Collateral (including the Mortgaged Property) or any part thereof shall be sufficient as a financing statement where permitted by law. Each of the Company and the Borrower acknowledges and agrees that any such financing statement may describe the collateral as "all assets" or "all assets and all personal property of debtor, whether now owned or existing or hereafter acquired or arising, wherever located, together with all proceeds thereof, substitutions and replacements therefor, and additions and accessions thereto" of the applicable Credit Party or Specified Additional Guarantor or words of similar effect as may be required by the Administrative Agent or Collateral Agent.

Section 8.12 <u>Reserve Reports</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) On or before March 1 of each year (beginning March 1, 2025), the Company shall furnish to the Administrative Agent, the Technical Agent and the Lenders a Reserve Report prepared by one or more Approved Petroleum Engineers evaluating the Oil and Gas Properties of the Company and its Subsidiaries as of the immediately preceding January 1 and July 1, respectively (each, a "<u>Third-Party Reserve Report</u>"). Additionally, the Technical Agent may request a Third Party Reserve Report with respect to the APOD Wells once per fiscal year.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) On or before June 1, September 1 and December 1 of each year (beginning December 1, 2024), the Company shall deliver an update to the most recently delivered Third-Party Reserve Report evaluating the Oil and Gas Properties of the Company and its Subsidiaries as of the immediately preceding April 1, July 1 and October 1, respectively (each, an "<u>Updated Reserve Report</u>"). Each Updated Reserve Report (i) shall be prepared by or under the supervision of the chief engineer of the Company who shall certify such Reserve Report update to be true and accurate in all material respects and to have been prepared in accordance with the procedures used in the immediately preceding Third-Party Reserve Report and shall be adjusted to reflect the production levels since the delivery of the most recent Reserve Report (including the removal of any cash flows attributable to the production during the time period prior to the delivery of such Updated Reserve Report), and (ii) shall be based on an updated Five-Year Strip Price as of the date that is five (5) Business Days prior to delivery of such Updated Reserve Report and shall otherwise be "rolled forward" in a manner satisfactory to the Technical Agent and the Supermajority Lenders. Notwithstanding the foregoing, the Company shall not be required to deliver any Updated Reserve Report during any Disputed Reserve Report Period; <u>provided</u> that if the Company did not deliver an Updated Reserve Report as would have otherwise been required pursuant to this <u>Section 8.12(b)</u> on June 1 or December 1, as applicable, due to the existence of a Disputed Reserve Report Period, then the Company shall be required to deliver an Updated Reserve Report as of April 1 or October 1, respectively, within thirty-five (35) days after the delivery of such Replacement Reserve Report.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In that event that the Administrative Agent notifies the Company in writing that any Reserve Report constitutes a Disputed Reserve Report (including an Updated Reserve Report), then such Disputed Reserve Report shall not constitute the Most Recently Delivered Reserve Report for any purpose under this Agreement, and the Administrative Agent may request, and the Company shall engage an Approved Petroleum Engineer that has not delivered a Disputed Reserve Report within ten (10) days of such request, and deliver within thirty (30) days after such engagement of an Approved Petroleum Engineer, a Reserve Report evaluating the Oil and Gas Properties of the Company and its Subsidiaries as of the immediately preceding January 1 or July 1, as applicable (a "<u>Replacement Reserve Report</u>"), prepared by one or more Approved Petroleum Engineers acceptable to the Administrative Agent, so long as such Approved Petroleum Engineer(s) did not deliver such Disputed Reserve Report. From and after the delivery of any Replacement Reserve Report, such Replacement Reserve Report shall constitute the Most Recently Delivered Reserve Report until the next subsequent delivery of a Reserve Report in accordance with the terms hereof. To the extent a Replacement Reserve Report is delivered either (i) after a Compliance Certificate is delivered during a Disputed Reserve Report Period or (ii) after a Compliance Certificate is delivered which includes calculations derived, in any part, from the values included in the Disputed Reserve Report in respect of such Replacement Reserve Report, then in either case, the Company shall deliver, promptly following (and in any event within two (2) Business Days of) the delivery of such Replacement Reserve Report, a Compliance Certificate including calculations based upon the values included in such Replacement Reserve Report.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) With the delivery of each Reserve Report, the Company shall provide to the Administrative Agent, the Technical Agent and the Lenders (i) a database of the Oil and Gas Properties evaluated in such Reserve Report and (ii) a certificate substantially in the form of <u>Exhibit H</u> (a "<u>Reserve Report Certificate</u>") from a Responsible Officer certifying that: (A) the factual information upon which such Reserve Report is based and any factual information included in such Reserve Report prepared by the Company is true and correct in all material respects, (B) the Company or its Subsidiaries owns good and defensible title to the Oil and Gas Properties evaluated in such Reserve Report and such Properties are free of all Liens except for Liens permitted by <u>Section 9.03</u>, (C) on a net basis there are no gas imbalances, take or pay or other prepayments in excess of the volume specified in <u>Section 7.18</u> with respect to its Oil and Gas Properties evaluated in such Reserve Report which would require the Company or any Subsidiary to deliver Hydrocarbons either generally or produced from such Oil and Gas Properties at some future time without then or thereafter receiving full payment therefor, (D) none of their Oil and Gas Properties evaluated in the previous reserve report have been sold since the date of the last Reserve Report except as set forth on an exhibit to the certificate, which exhibit shall list all of its Oil and Gas Properties sold other than Hydrocarbons sold in the ordinary course of business and in such detail as reasonably required by the Administrative Agent and the Technical Agent (in consultation with the Supermajority Lenders) and (E) attached thereto is a list of all marketing agreements entered into subsequent to the later of the date hereof or the Most Recently Delivered Reserve Report which the Company could reasonably be expected to have been obligated to list on <u>Schedule 7.19</u> had such agreement been in effect on the date hereof.

Section 8.13 <u>Title Information</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) On or before the delivery to the Administrative Agent and the Lenders of each Reserve Report required by <u>Section 8.12(a)</u>, the Company shall deliver title information in form and substance acceptable to the Administrative Agent covering enough of the Oil and Gas Properties evaluated by such Reserve Report that were not included in the immediately preceding Reserve Report, so that the Administrative Agent shall have received, together with title information previously delivered to the Administrative Agent, reasonably satisfactory title information on at least (w) eighty percent (80%) of the PV-10 of the Proved Developed Producing Reserves of the Company and its Subsidiaries evaluated in such Reserve Report, (x) eighty percent (80%) of the PV-10 of the Proved Reserves of the Company and its Subsidiaries evaluated in such Reserve Report and (y) prior to the APOD Completion Date, all of the PV-10 of the Proved Reserves of the of the Oil and Gas Properties in the APOD, (collectively, the "<u>Title Coverage Minimum</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If the Company has provided title information for additional Properties under <u>Section 8.13(a),</u> the Company shall, within sixty (60) days (or such longer period of time as may be agreed to by the Administrative Agent in its sole discretion) of written notice from the Administrative Agent that title defects or exceptions exist with respect to such additional Properties, either (i) cure any such title defects or exceptions (including defects or exceptions as to priority) which are not permitted by <u>Section 9.03</u> raised by such information, (ii) substitute acceptable Mortgaged Properties with no title defects or exceptions except for Excepted Liens (other than Excepted Liens described in <u>clauses (e)</u>, <u>(g)</u> and <u>(h)</u> of such definition) having an equivalent value or (iii) deliver title information in form and substance acceptable to the Administrative Agent so that the Administrative Agent shall have received, together with title information previously delivered to the Administrative Agent, reasonably satisfactory title information on at least the Title Coverage Minimum.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If the Company is unable to cure any title defect requested by the Administrative Agent or the Lenders to be cured within the period of time required by <u>clause (b)</u> above or the Company does not comply with the requirements to provide acceptable title information covering at least the Title Coverage Minimum, such default shall not be a Default, but instead the Administrative Agent and/or the Majority Lenders shall have the right to exercise the following remedy in their sole discretion from time to time, and any failure to so exercise this remedy at any time shall not be a waiver as to future exercise of the remedy by the Administrative Agent or the Majority Lenders. To the extent that the Administrative Agent or the Majority Lenders are not satisfied with title to any Mortgaged Property after such period of time has elapsed, such unacceptable Mortgaged Property shall not count towards the Title Coverage Minimum requirement, and the Administrative Agent may send a written notice to the Company and the Lenders that the PV-10 and Total PDP PV-10 for purposes of calculating the Asset Coverage Ratio for all purposes hereunder, shall be recalculated as determined by the Administrative Agent to exclude the property subject to a title defect that the Company is unable (or has elected not to) cure. Furthermore, any properties described in such notice shall be excluded from the determination of PV-10 and Total PDP PV-10 for any other purpose of calculation under the Loan Documents unless the applicable title defect is cured to the reasonable satisfaction of the Administrative Agent.

Section 8.14 <u>Additional Collateral; Additional Guarantors</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) In connection with each delivery of a Reserve Report, the Company shall review the Reserve Report and the list of current Mortgaged Properties (as described in <u>Section 8.12(b)</u>) to ascertain whether the Mortgaged Properties represent at least (w) ninety percent (90%) of the PV-10 of the Proved Developed Producing Reserves of the Company and it Subsidiaries evaluated in such Reserve Report, (x) ninety percent (90%) of the PV-10 of the Proved Reserves of the Company and its Subsidiaries evaluated in such Reserve Report (after giving effect to exploration and production activities, acquisitions, dispositions and production) and (y) prior to the APOD Completion Date, all of the Oil and Gas Properties of the Company and its Subsidiaries included in the APOD (collectively, the "<u>Collateral Coverage Minimum</u>"). In the event that the Mortgaged Properties do not represent at least the Collateral Coverage Minimum, then the Company shall, and shall cause its Subsidiaries to, grant, within thirty (30) days (or such longer period of time agreed to by the Administrative Agent in its sole discretion) of delivery of the Reserve Report Certificate required under <u>Section 8.12(c)</u>, to the Administrative Agent as security for the Secured Obligations a first-priority Lien interest (<u>provided</u> that Excepted Liens of the type described in <u>clauses (a)</u> to <u>(d)</u> and <u>(f)</u> of the definition thereof shall be permitted to exist thereupon, but subject to the provisos at the end of such definition) on additional Oil and Gas Properties not already subject to a Lien of the Security Instruments such that after giving effect thereto, the Mortgaged Properties will represent at least the Collateral Coverage Minimum. All such Liens will be created and perfected by and in accordance with the provisions of deeds of trust, mortgages, security agreements and financing statements or other Security Instruments, all in form and substance reasonably satisfactory to the Administrative Agent and Collateral Agent and in sufficient executed (and acknowledged where necessary or appropriate) counterparts for recording purposes. In order to comply with the foregoing, if any Subsidiary places a Lien on its Oil and Gas Properties and such Subsidiary is not a Guarantor, then it shall become a Guarantor and comply with <u>Section 8.14(b)</u>.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) From and after the Closing Date, in the event that any Material Subsidiary is formed or acquired by the Company or any of its Subsidiaries (or the Company determines that any existing Subsidiary is a Material Subsidiary (including as a result of the Immaterial Subsidiary Cap being exceeded)), the Company shall promptly, but in no event later than fifteen (15) Business Days after the date on which such Subsidiary was formed or acquired (or, if applicable, determined to be a Material Subsidiary) (or such longer period as may be agreed by the Administrative Agent in its reasonable discretion) cause such newly formed or acquired Subsidiary (or such existing Subsidiary, if applicable) to guarantee and secure the Secured Obligations pursuant to the Guarantee and Collateral Agreement. In connection with any such guaranty and security interest grant, the Company shall, or shall cause (i) such Material Subsidiary to, execute and deliver a supplement to the Guarantee and Collateral Agreement executed by such Material Subsidiary, (ii) in the case of any newly formed or acquired Material Subsidiary, the owners of the Equity Interests of such Material Subsidiary who are Credit Parties to pledge all of the Equity Interests of such new Material Subsidiary (including, without limitation, delivery of original stock certificates evidencing the Equity Interests of such Material Subsidiary, together with an appropriate undated stock powers for each certificate duly executed in blank by the registered owner thereof) and (iii) execute and deliver such other additional closing documents, certificates and legal opinions as shall reasonably be requested by the Administrative Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Company will at all times cause the other material tangible and intangible assets of the Borrower and each Guarantor to be subject to a Lien pursuant to and as required by the Security Instruments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Within thirty (30) days (or such longer period of time agreed to by the Administrative Agent in its sole discretion) after any written request of the Administrative Agent, the Company shall execute, or shall cause to be executed, Mortgages or supplements to Mortgages with respect to any Oil and Gas Properties acquired since the Most Recently Delivered Reserve report to the extent not already subject to a Lien of the Security Instruments or otherwise desirable to evidence the Liens in favor of the Collateral Agent, for the benefit of the Secured Parties.

Section 8.15 <u>ERISA Compliance</u>. The Company will promptly furnish and will cause the Subsidiaries to promptly furnish to the Administrative Agent (a) promptly after the filing thereof with the United States Secretary of Labor or the Internal Revenue Service, copies of each annual and other report with respect to each Plan or any trust created thereunder, and (b) promptly upon becoming aware of the occurrence of any "prohibited transaction," as described in section 406 of ERISA or in section 4975 of the Code, in connection with any Plan or any trust created thereunder, a written notice signed by the President or the principal Financial Officer of the Company or the Subsidiary, as the case may be, specifying the nature thereof, what action the Company or the Subsidiary is taking or proposes to take with respect thereto, and, when known, any action taken or proposed by the Internal Revenue Service or the Department of Labor with respect thereto if such prohibited transaction could reasonably be expected to result in liability to the Company, the Guarantors or their respective Subsidiaries (whether individually of in the aggregate) in excess of $1,000,000.

------

Section 8.16 <u>Account Control Agreements; Location of Proceeds of Loans</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company will, and will cause each of such Credit Parties to, cause each of its Deposit Accounts, Securities Accounts and Commodities Accounts (other than any such account that constitutes an Excluded Account for so long as it is an Excluded Account) to be a Controlled Account subject to a Control Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company will, and will cause each Credit Party to, until the proceeds of any Loans are transferred to a third party in accordance with the Loan Documents, hold the proceeds of any Loans made under this Agreement in a Controlled Account.

Section 8.17 <u>Marketing Activities</u>. The Company will not, and will not permit any of its Subsidiaries to, engage in marketing activities for any Hydrocarbons or enter into any contracts related thereto other than (a) contracts for the sale of Hydrocarbons scheduled or reasonably estimated to be produced from their Proved Reserves during the period of such contract, (b) contracts for the sale of Hydrocarbons scheduled or reasonably estimated to be produced from Proved Reserves of third parties during the period of such contract associated with the of the Company and its Subsidiaries Oil and Gas Properties that the Company or one of its Subsidiaries has the right to market pursuant to joint operating agreements, unitization agreements or other similar contracts that are usual and customary in the oil and gas business and (c) other contracts for the purchase and/or sale of Hydrocarbons of third parties (i) which have generally offsetting provisions (*i.e.*, corresponding pricing mechanics, delivery dates and points and volumes) such that no "position" is taken and (ii) for which appropriate credit support has been taken to alleviate the material credit risks of the counterparty thereto.

Section 8.18 <u>Keepwell</u>. The Company will, and will cause each Guarantor to, provide such funds or other support as may be needed from time to time by the Company or any Guarantor, as applicable, to honor all of its obligations under this Agreement and any other Loan Document in respect of Swap Obligations (<u>provided</u>, <u>however</u>, that each Qualified ECP Guarantor shall only be liable under this <u>Section 8.18</u> for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this <u>Section 8.18</u>, or otherwise under this Agreement or any other Loan Document, as it relates to the Company, any Subsidiary or any Guarantor, as applicable, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations of each Credit Party and each Specified Additional Guarantor under this <u>Section 8.18</u> shall remain in full force and effect until Payment in Full. The Company intends that this <u>Section 8.18</u> constitute, and this <u>Section 8.18</u> shall be deemed to constitute, a "keepwell, support, or other agreement" for the benefit the Company and any Guarantor, as applicable, for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

Section 8.19 <u>Required Swap Agreements</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) On the Closing Date (or such later date as may be agreed to by the Administrative Agent in its sole discretion), the Company shall enter into and maintain through September 30, 2025, Swap Agreements in form and substance reasonably

------

satisfactory to the Majority Lenders with one or more Approved Counterparties pursuant to which the Company shall hedge notional volumes of not less than 18.75 percent (18.75%) of the reasonably anticipated projected production of crude oil for each month during the twelve (12) month period from the Company's and its Subsidiaries' Proved Developed Producing Reserves from Non-APOD Wells based on the Initial Reserve Report, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Within ten (10) days after the Closing Date (or such later date as may be agreed to by the Administrative Agent in its sole discretion), the Company shall enter into and maintain through September 30, 2025, Swap Agreements in form and substance reasonably satisfactory to the Majority Lenders with one or more Approved Counterparties pursuant to which the Company shall hedge notional volumes of not less than (when aggregated with other such Swap Agreements then in effect) seventy five percent (75%) of the reasonably anticipated projected production of crude oil for each month during the twelve (12) month period from the Company's and its Subsidiaries' Proved Developed Producing Reserves from Non-APOD Wells based on the Initial Reserve Report.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Within thirty (30) days after the Closing Date (or such later date as may be agreed to by the Administrative Agent in its sole discretion), the Company shall enter into and maintain through September 30, 2025, Swap Agreements in form and substance reasonably satisfactory to the Majority Lenders with one or more Approved Counterparties pursuant to which the Company shall hedge notional volumes of not less than seventy five percent (75%) of the reasonably anticipated projected production of crude oil for each month during the thirteen (13) month through the (36) month period from the Company's and its Subsidiaries' Proved Developed Producing Reserves from Non-APOD Wells based on the Initial Reserve Report.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) No later than the last day of each fiscal quarter (commencing with the fiscal quarter ending September 30, 2024), the Company shall enter into, and maintain on a rolling basis, Swap Agreements in form and substance reasonably satisfactory to the Majority Lenders (i) with one or more Approved Counterparties, (ii) that mitigate commodity index price risk and (iii) the notional volumes for which, when aggregated with all other Swap Agreements then in effect, are no less than fifty percent (50%) of the reasonably anticipated projected production of crude oil for each month during the thirty six (36) month period following the end of such fiscal quarter from the Company's and its Subsidiaries' Proved Developed Producing Reserves based on the Most Recently Delivered Reserve Report, as updated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Before or substantially concurrently with the commencement of any completion activities of the wells in any APOD Tranche, the Company shall enter into, and, commencing with the fiscal quarter ending September 30, 2025, maintain on a rolling basis, Swap Agreements in form and substance reasonably satisfactory to the Majority Lenders with one or more Approved Counterparties the notional volumes for which, when aggregated with all other Swap Agreements then in effect, are no less than fifty percent (50%) of the reasonably anticipated projected production of crude oil for each month during the twenty four (24) month period from such Producing APOD Wells which constitute Proved Developed Producing Reserves based on the Most recently delivered Reserve Report, as updated.

------

Section 8.20 <u>APOD</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Subject to <u>Section 8.20(b)</u>, the Company shall, and shall cause its Subsidiaries to, (x) complete development of their respective Oil and Gas Properties that are subject to the APOD substantially as contemplated by the APOD and (y) in all material respects in accordance with the schedule set forth in the APOD; <u>provided</u> that any changes in timing as to when the APOD Wells are developed and any changes to the order in which such wells are developed, to the extent made in the Company's reasonable discretion, shall not result in a violation of this <u>Section 8.20(a)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If an APOD Revision Event has occurred, the Company shall, and shall cause its Subsidiaries to, immediately cease making any expenditures in respect of the then-current APOD (other than Emergency Capital Expenditures) for the period starting on the date that such APOD Revision Event has occurred and ending on the date when a Proposed APOD is approved after such APOD Revision Event.

Notwithstanding anything to the contrary contained in this paragraph (b), in the event that an APOD Quarterly Test Event has occurred, the Company may provide reasonably detailed written materials to the Administrative Agent and the Lenders regarding the reason for such APOD Quarterly Test Event and request that the Lenders waive such APOD Revision Event resulting from an APOD Quarterly Test Event. An APOD Revision Event may be waived with the consent of all Lenders, in their respective sole discretion, by providing written notice of such waiver to the Company; provided, that if no APOD Revision Event exists at the end of the next succeeding Fiscal Quarter (without an adjustment to the forecasted production of any wells) and the Company is in compliance with the APOD Economic Test, then the Company may resume completion and drilling activities and continue to make expenditures in respect of the APOD without the further consent of any Lender. For the avoidance of doubt, the occurrence of a APOD Revision Event shall not itself constitute a Default or Event of Default under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Company shall submit a revised APOD or a new APOD, in each case, meeting the APOD Criteria (a "<u>Proposed APOD</u>") on or prior to the date that is thirty (30) days before the last day of the period covered by the then-current APOD, including a written narrative (i) describing the changes being proposed in such Proposed APOD for review with the Lenders and the Administrative Agent, (ii) describing in reasonable detail compliance with the APOD Criteria by such Proposed APOD and (iii) to the extent the most recently delivered Annual Budget (or Annual Budget update delivered pursuant to <u>Section 8.01(d)(ii)</u>) covers the period covered by such Proposed APOD, describing in reasonable detail any differences in such Proposed APOD from (x) the plan of development and/or (y) the operating and capital expenditure budget, in each case, as set forth in such Annual Budget (or such Annual Budget update). Upon the delivery of a Proposed APOD, the Lenders shall have fifteen (15) calendar days to consent to or reject such Proposed APOD, in either case in writing and in their respective sole discretion (the "<u>APOD Approval Period</u>"). If, upon the expiration of the then-current APOD no Proposed APOD has been approved by the Lenders, then the Company shall, and shall cause its Subsidiaries to, as promptly as possible after such expiration stop all completion and drilling activities and cease making any Capital Expenditures; <u>provided</u> that the Company and its Subsidiaries may continue to make (A) Emergency Capital Expenditures and (B) with respect to any well for which material completion or drilling activities have been performed prior to such expiration, such completion or drilling expenditures that are, as reasonably determined by the Company in good faith, necessary to prevent material harm to such well.

------

Section 8.21 <u>Post-Closing Covenants</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) [Reserved].

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Not later than thirty (30) days after the Closing Date (or such later date as may be agreed to by the Administrative Agent in its sole discretion), the Company and the Borrower shall file, or cause to be filed, UCC-3 termination or amendment statements reasonably requested by the Administrative Agent or Collateral Agent to the extent necessary to ensure that the only Liens on Collateral are Liens permitted under <u>Section 9.03</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Within the time periods set forth on <u>Schedule 8.21</u>, Holdings and the applicable Credit Parties shall, or shall cause the applicable Person to, to take the actions described on <u>Schedule 8.21</u>.

Section 8.22 <u>Senior Debt Status</u>.

The Company shall ensure, and shall cause each Subsidiary to ensure, that except with respect to the Phoenix 9.0% Reg A Bonds, (a) the Secured Obligations constitute "Senior Indebtedness," "Designated Senior Indebtedness" or any similar designation under and as defined in any agreement governing any unsecured, senior subordinated or subordinated Indebtedness, and the subordination provisions set forth in each such agreement, if any, are legally valid and enforceable against the parties thereto in favor of the Administrative Agent, the Lenders and any other Secured Parties and (b) the Secured Obligations are expressly superior in rank to any Specified Indebtedness.

**ARTICLE IX** 

**NEGATIVE COVENANTS** 

Until Payment in Full, the Company and the Borrower covenant and agree with the Lenders that:

Section 9.01 <u>Financial Covenants</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Total Secured Leverage Ratio</u>. The Company will not permit the Total Secured Leverage Ratio, as of the last day of each fiscal quarter (i) ending during the period from December 31, 2024 through December 31, 2025, to be greater than 2.00 to 1.00 and (ii) ending March 31, 2026 and thereafter, to be greater than 1.50 to 1.00.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Current Ratio</u>. The Company will not permit the Current Ratio, as of the last day of each calendar month (i) from September 30, 2024 through October 31, 2024, to be less than 0.90 to 1:00, (ii) from November 30, 2024 through November 30, 2025, to be less than 0.80 to 1.00, (iii) from December 31, 2025 through December 31, 2026, to be less than 0.90 to 1:00 and (iv) for each calendar month ending January 31, 2027 and thereafter, to be less than 1.00 to 1.00.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Asset Coverage Ratio</u>. The Company shall not permit the Asset Coverage Ratio, as of the last day of any fiscal quarter (i) ending during the period from June 30, 2024 through December 31, 2024, to be less than 2.00 to 1.00, (ii) ending during the period from March 31, 2025 through September 30, 2025, to be less than 1.70 to 1.00 and (iii) ending during the period from December 31, 2025 and thereafter, to be less than 2.00 to 1.00.

------

Section 9.02 <u>Indebtedness</u>. The Company shall not, nor shall it permit any Subsidiary to, incur, create, assume or suffer to exist any Indebtedness, except:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the Loans, any Notes or other Secured Obligations arising under the Loan Documents or any Secured Swap Agreement or any guaranty of or suretyship arrangement for the Loans, any Notes or other Secured Obligations arising under the Loan Documents or any Secured Swap Agreement, including any deferred put premiums associated with Swap Agreements entered into with an Approved Counterparty;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Specified Existing Indebtedness in the aggregate outstanding amounts set forth on <u>Schedule 9.02</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Specified Additional Bond Indebtedness, so long as, after giving pro forma effect to the incurrence of such Specified Additional Bond Indebtedness, the Aggregate Weighted Average Life to Maturity of all outstanding Debt for Borrowed Money is greater than the Weighted Average Life to Maturity of the Loans by at least ninety one (91) days;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Specified Additional Factoring Indebtedness in an aggregate outstanding amount not to exceed $10,000,000; <u>provided</u>, that any such Specified Additional Factoring Indebtedness shall be subordinated to the Secured Obligations on terms satisfactory to the Administrative Agent in its sole discretion;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Indebtedness associated with worker's compensation claims, performance, bid, surety or similar bonds or surety obligations required by Governmental Requirements or third parties in connection with the operation of the Oil and Gas Properties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Indebtedness between or among the Company and any Subsidiaries to the extent permitted by <u>Section 9.05(e)</u>; <u>provided</u> that such Indebtedness is not held, assigned, transferred, negotiated or pledged to any Person other than the Borrower or a Guarantor and, <u>provided further</u>, that any such Indebtedness owed by the Borrower or a Guarantor shall be subordinated to the Secured Obligations on terms set forth in the Guarantee and Collateral Agreement; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Indebtedness with respect to any obligations of the Company or any of its Subsidiaries owed to any Lender or Affiliate of any Lender in respect of treasury management arrangements, depositary or other cash management services, including any treasury management line of credit.

Section 9.03 <u>Liens</u>. The Company shall not, nor shall it permit any Subsidiary to, create, incur, assume or permit to exist any Lien on any of its Properties (now owned or hereafter acquired), except:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Liens securing the payment of any Secured Obligations;

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Liens existing on the Closing Date and set forth on <u>Schedule 9.03</u> securing solely the Specified Existing Indebtedness specified to be secured by such Liens on such Schedule;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Liens on accounts receivable that have been purchased by funding of Specified Additional Factoring Indebtedness and the proceeds thereof securing the payment of such Specified Additional Factoring Indebtedness;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Liens on Collateral securing Indebtedness permitted by <u>Section 9.02(f)</u>; <u>provided</u> that any such Liens are subordinated to the Liens securing the Secured Obligations in a manner satisfactory to the Administrative Agent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) [reserved];

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Liens on Cash Equivalents securing Indebtedness permitted by <u>Section 9.02(g)</u>; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Liens that constitute Excepted Liens.

No intention to subordinate the first priority Lien granted in favor of the Collateral Agent, for the benefit of the Secured Parties is to be hereby implied or expressed by the permitted existence of Liens permitted under this <u>Section 9.03</u> or the use of the phrase "subject to" when used in connection with Liens permitted by this <u>Section 9.03</u> or otherwise.

Section 9.04 <u>Restricted Payments; Repayment of Specified Indebtedness; Restrictions on Amendments of Specified Indebtedness</u> <u>and Specified Preferred Equity</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Restricted Payments</u>. The Company shall not, nor shall it permit any Subsidiary to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, return any capital to its stockholders or make any distribution of its Property to its Equity Interest holders, except that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the Company may declare and pay dividends with respect to its Equity Interests payable solely in additional shares of its Equity Interests (other than Disqualified Capital Stock); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(ii) so long as there is (x) no Default or Event of Default that has occurred and is continuing or would occur as a result of such payment and (y) immediately after giving effect to such payment, the Borrower and its Subsidiaries shall be in compliance with the financial ratios set forth in Section 9.01(a), Section 9.01(b) and Section 9.01(c) on a Pro Forma Basis, the Company may pay cash dividends with respect to the Specified Preferred Equity pursuant to the Specified Preferred Equity Share Designation; and</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(iii)</u> (ii) the Company's Subsidiaries may declare and pay dividends or any other distributions ratably with respect to their Equity Interests;

------

provided that salaries and other compensation to the holders of their Equity Interests or any Affiliates (including Close Affiliates) shall not constitute Restricted Payments, but shall be subject to the restrictions in <u>Section 9.18</u> as G&A Expenses.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Redemptions</u>. The Company shall not, nor shall it permit any Subsidiary to call, make or offer to make any optional or voluntary<u>(i)</u> Redemption of or otherwise optionally or voluntarily Redeem (whether in whole or in part), any Specified Existing Indebtedness or any Specified Additional Bond Indebtedness; <u>provided</u> that the <u>or (ii) Redemption of or otherwise Redeem any Specified Preferred Equity, as applicable, except as specified below in this paragraph (b). The</u> Company may Redeem such Specified Existing Indebtedness or Specified Additional Bond Indebtedness so long as (i) no Default or Event of Default has occurred and is continuing or would occur as a result of such Redemption, (ii) the relevant holder of such Indebtedness has requested or caused (in each case, without solicitation by the Company or any of its Subsidiaries), such Redemption to be required in accordance with the terms of the applicable Specified Existing Indebtedness or Specified Additional Bond Indebtedness, (iii) no Disputed Reserve Report Period is continuing and (iv) immediately after giving effect to such Redemption, the Borrower and its Subsidiaries shall be in compliance with the financial ratios set forth in <u>Section 9.01(a)</u> to the extent following the date when the financial statements required to be delivered pursuant to Section 8.01(a) for the fiscal year ended December 31, 2024 are required to be delivered,<u>Section 9.01(a,)</u> <u>Section 9.01(b)</u> to the extent following the date when the financial statements required to be delivered pursuant to Section 8.01(a) for the fiscal year ended December 31, 2024 are required to be delivered, and <u>Section 9.01(c)</u> on a Pro Forma Basis. <u>The Company may Redeem Specified Preferred Equity (whether in whole or in part) so long as (i) no Default or Event of Default has occurred and is continuing or would occur as a result of such Redemption, (ii) no Disputed Reserve Report Period is continuing and (iii) immediately after giving effect to such Redemption, the Borrower and its Subsidiaries shall be in compliance with the financial ratios set forth in Section 9.01(a,) Section 9.01(b) and Section 9.01(c) on a Pro Forma Basis.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c) Restrictions on Specified Indebtedness and Specified Preferred Equity.</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(i)</u> <u>(c) Amendments.</u> The Company will not, and will not permit any of its Subsidiaries to amend, modify, waive or otherwise change, consent or agree to any amendment, modification, waiver or other change <u>(including via a side letter)</u> to any Specified Indebtedness if doing so would (i<u>A</u>) cause such Specified Indebtedness to not meet the requirements of Specified Indebtedness (tested as if such Specified Indebtedness were being issued or incurred at such time) or (ii<u>B</u>) such amendment, modification, waiver or other change would be adverse in any respect to the interests of the Administrative Agent or the Lenders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(ii) The Company will not and will not permit any of its Subsidiaries to amend, modify, waive or otherwise change, consent or agree to any amendment, modification, waiver or other change (including via a side letter) to the Specified Preferred Equity Share Designation in a manner that is adverse in any respect to the interests of the Lenders (including, without limitation, by (A) issuing any other series of Equity Interests thereunder, (B) giving the holders of such Specified Preferred Equity the right to elect any directors to the board of the Company; ***provided that*** the</u> <u>Company shall be permitted to give such holders the right to elect no more than two (2) directors in the event of a Nonpayment Event or (C) imposing any restriction on transfer or sale of any common or voting Equity Interests), in each case without the prior written consent of the Administrative Agent and the Majority Lenders.</u>

------

Section 9.05 <u>Investments, Loans and Advances</u>. The Company shall not, nor shall it permit any Subsidiary to, make or permit to remain outstanding any Investments in or to any Person, except that the foregoing restriction shall not apply to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Investments made on or prior to the Closing Date in the entities described in <u>Schedule 7.14</u> or as set forth on <u>Schedule 9.05(a)</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Investments constituting Permitted Acquisitions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) accounts receivable arising in the ordinary course of business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Cash Equivalents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Investments (i) made by the Company in or to the Borrower or the other Guarantors or (ii) made by any Subsidiary in or to the Company, the Borrower or any Guarantor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Investments expressly contemplated by the APOD;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Investments in stock, obligations or securities received in settlement of debts arising from Investments permitted under this <u>Section 9.05</u> owing to the Company or any Subsidiary as a result of a bankruptcy or other insolvency proceeding of the obligor in respect of such debts or upon the enforcement of any Lien in favor of the Company or any of its Subsidiaries; <u>provided</u> that the Company shall give the Administrative Agent prompt written notice in the event that the aggregate amount of all Investments held at any one time under this <u>Section 9.05(g)</u> exceeds $2,500,000; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) Investments in Swap Agreements permitted by <u>Section 9.17</u>.

Section 9.06 <u>Nature of Business</u>. Neither the Company nor any Subsidiary will allow any material change to be made in the character of its business as an independent oil and gas minerals, exploration, development and production company and activities incidental to the foregoing. From and after the date hereof, the Company shall not, and shall not permit any Subsidiary to, own or operate Oil and Gas Properties other than as otherwise permitted in the APOD.

Section 9.07 <u>Amendments to Material Documents; Fiscal Year End</u>. **The<u>Without limiting Section 9.04, the</u>** Company shall not, nor shall it permit any Subsidiary to, (a) amend, supplement or otherwise modify (or permit to be amended, supplemented or modified<u>**; it being understood that any amendment to such organizational documents of the Company with or without its consent shall be subject to the restrictions in this Section 9.07**</u>) its certificate or articles of incorporation, by-laws, any preferred stock designation <u>**(other than the Specified Preferred Equity Share Designation, which shall be governed solely by Section 9.04)**</u> or any other organic document without the consent of the Majority Lenders and the Administrative Agent (other than immaterial amendments, supplements or other modifications not adverse <u>**in any**</u>

------

<u>**respect**</u> to the Administrative Agent or the Lenders<u>**; *provided* that, notwithstanding anything herein to the contrary, any amendment, supplement or other modification to any provision governing, or the creation of any new provision relating to, the transfer, restriction on transfer or required sale of any common or voting Equity Interests of the Company (other than with respect to the Specified Preferred Equity) shall require the consent of the Majority Lenders and the Administrative Agent**</u>), (b) modify or otherwise change any of the terms of the Specified Existing Debt, or Specified Additional Indebtedness other than any such amendment, modification, waiver or other change which is not adverse in any respect to any right, privilege or interest of the Administrative Agent, Collateral Agent or any of the Lenders under the Loan Documents or in the Collateral (it being agreed and understood that (i) the terms of the Specified Additional Bond Indebtedness must continue to satisfy the definition of a Specified Additional Bond Indebtedness, (ii) any Specified Additional Factoring Indebtedness must continue to satisfy the definition of Specified Additional Factoring Indebtedness and (iii) any amendments, supplements or modifications made to any Specified Existing Indebtedness that would not satisfy the definition of "Specified Additional Bond Indebtedness" shall be deemed adverse to the rights, privileges and interests of the Administrative Agent, Collateral Agent and the Lenders), or (c) have its fiscal year end on a date other than December 31 or change the its method of determining fiscal quarters. Notwithstanding anything to the contrary in this Section 9.07, on or before the effective date of the Third A&R LLC Agreement, the Administrative Agent and the Majority Lenders shall have an approval right to any changes to the form of the Third A&R LLC Agreement other than administrative changes not adverse in any respect to the Administrative Agent or the Lenders.

Section 9.08 <u>Proceeds of Loans</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Neither the Company nor the Borrower shall permit the proceeds of the Loans to be used for any purpose other than those permitted by <u>Section 7.21</u>. None of the Company or the Borrower or any Person acting on behalf of the Company or the Borrower has taken or will take any action which might cause any of the Loan Documents to violate Regulations T, U or X or any other regulation of the Board or to violate Section 7 of the Securities Exchange Act of 1934 or any rule or regulation thereunder, in each case as now in effect or as the same may hereinafter be in effect. If requested by the Administrative Agent, the Borrower will furnish to the Administrative Agent and each Lender a statement to the foregoing effect in conformity with the requirements of FR Form U-1 or such other form referred to in Regulation U, Regulation T or Regulation X of the Board, as the case may be.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Borrower will not request any Borrowing, and the Company shall not use, and shall procure that the Subsidiaries and its or their respective directors, officers, employees and agents shall not use, the proceeds of any Borrowing (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, directly or indirectly, to any Person in violation of any Anti-Corruption Laws, (ii) for the purpose of funding, financing or facilitating any activities, business or transaction of, with, or for the benefit of, directly or indirectly, any Sanctioned Person, or involving, directly or indirectly, any Sanctioned Country to the extent such activities, businesses or transaction would be prohibited by Sanctions if conducted by a corporation incorporated in the United States of America, or (iii) in any manner that would result in the violation of any Sanctions applicable to any party hereto. No Credit Party or Specified Additional Guarantor is engaged in any activity that would reasonably be expected to result in any Credit Party or Specified Additional Guarantor being designated as a Sanctioned Person.

------

Section 9.09 <u>ERISA Compliance</u>. The Company shall not, nor shall it permit any Subsidiary to, at any time:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) engage, or permit any ERISA Affiliate to engage, in any transaction in connection with which the Company, any Subsidiary or any ERISA Affiliate could be subjected to either a civil penalty assessed pursuant to subsections (c), (i), (l) or (m) of section 502 of ERISA or a tax imposed by Chapter 43 of Subtitle D of the Code, either of which would have a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) fail to make, or permit any ERISA Affiliate to fail to make, full payment when due of all amounts which, under the provisions of any such Plan, agreement relating thereto or applicable law, the Company, any Subsidiary or any ERISA Affiliate is required to pay as contributions thereto, if such failure could reasonably be expected to have a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) contribute to or assume an obligation to contribute to, or permit any ERISA Affiliate to contribute to or assume an obligation to contribute to (i) any employee welfare benefit plan, as defined in section 3(1) of ERISA, including, without limitation, any such plan maintained to provide benefits to former employees of such entities (except for continuation coverage required to be provided by the Consolidated Omnibus Budget Reconciliation Act of 1985 or similar state law), that may not be terminated by such entities in their sole discretion at any time without any material liability other than the payment of accrued benefits under such plan, or (ii) any employee pension benefit plan, as defined in section 3(2) of ERISA, that is subject to Title IV of ERISA, section 302 of ERISA or section 412 of the Code, in either case of <u>clause (i)</u> or <u>clause (ii)</u> if such obligation to contribute would reasonably be expected to have a Material Adverse Effect.

Section 9.10 <u>Sale or Discount of Receivables</u>. Except for (a) accounts receivable sold for payment that constitutes Specified Additional Factoring Indebtedness, (b) accounts receivable obtained by the Company or any Subsidiary out of the ordinary course of business or (c) the settlement of joint interest billing accounts in the ordinary course of business or discounts granted to settle collection of accounts receivable or the sale of defaulted accounts arising in the ordinary course of business in connection with the compromise or collection thereof and not in connection with any financing transaction, neither the Company nor any Subsidiary will discount or sell (with or without recourse) any of its notes receivable or accounts receivable.

Section 9.11 <u>Merger, Etc</u>. The Company shall not, nor shall the Company permit any Subsidiary to, merge into or with or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its Property to any other Person (whether now owned or hereafter acquired) (any such transaction, a "consolidation"), or liquidate or dissolve; <u>provided</u> that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) any Subsidiary may participate in a consolidation with the Company, the Borrower or any Guarantor (<u>provided</u> that the Company or the Borrower, as applicable, shall be the continuing or surviving entity in any such transaction involving the Company or the Borrower, and a Guarantor shall be the continuing or surviving entity of any such transaction not involving the Company or the Borrower);

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) any Guarantor may participate in a consolidation with another Guarantor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) any Subsidiary other than the Borrower may liquidate or dissolve so long as its assets (if any) are distributed to the Borrower or a Guarantor prior to such liquidation or dissolution; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) any Subsidiary other than the Borrower may merge, amalgamate or consolidated with a Person that, prior to the consummation of such merger, amalgamation or consolidated, is not a Subsidiary of the Borrower if (i) the Borrower delivers to the Administrative Agent a certificate of a Responsible Officer stating that such merger, amalgamation or consolidation and such supplements to any Loan Documents preserve the enforceability of the guaranty and the perfection and priority of Liens under the Security Instruments and (ii) such merger, amalgamation or consolidation complies with all the conditions set forth in the definition of the term "Permitted Acquisition".

Section 9.12 <u>Sale of Properties; Unwinds of Swap Agreements</u>. The Company shall not, and shall not permit any Subsidiary to, sell, assign, farm-out, convey or otherwise transfer any Property or to Unwind any Swap Agreement in respect commodities, except for:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the sale of Hydrocarbons and geological and seismic data in the ordinary course of business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the abandonment, farm-out, lease or sublease of undeveloped or underdeveloped acreage (but excluding any acreage in the APOD) which are usual and customary in the oil and gas business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the sale or transfer of equipment that is worn-out, obsolete or no longer necessary for the business of the Company or such Subsidiary or is damaged as a result of any Casualty Event and is replaced by equipment of at least comparable value and use;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) any Disposition of Property, or any series of Dispositions of Properties (excluding, prior to the APOD Completion Date, any Oil and Gas Properties included in the APOD) or any interest therein, or any Unwind of any Swap Agreement (excluding any Required Closing Date Swap Agreement and subject to the requirements of <u>Section 8.19</u>); <u>provided</u> that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) in the case of any Disposition of Property, 100% of the consideration shall be cash and/or Cash Equivalents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) in the case of any Unwind of a Swap Agreement, 100% of the consideration received in respect of such Unwind shall be cash;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) the consideration received in respect of any such sale or other Disposition or Unwind shall be equal to or greater than the fair market value of the asset subject of such sale or other Disposition or Unwind;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) no Default or Event of Default exists or would result from such Disposition or Unwind;

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) to the extent required by <u>Section 3.04(c)</u>, the Net Cash Proceeds from such Disposition or Unwind shall be applied as a prepayment of Loans;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) if the fair market value of the Property subject to such Disposition (or if the Swap Termination Value of the Swap Agreements being Unwound) is equal to or greater than $2,500,000, the Company shall be in compliance with each of the financial ratios set forth in <u>Section 9.01</u>, calculated on a Pro Forma Basis giving effect to such Disposition or Unwind;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) if any such Disposition is of a Subsidiary owning Oil and Gas Properties, such Disposition shall include all the Equity Interests of such Subsidiary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) any such Disposition shall not include operated working interests; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) the aggregate consideration received in respect sales, Dispositions and Unwinds made since the Closing Date pursuant to this <u>Section 9.12(d)</u> shall not exceed $50,000,000.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) sales and other Dispositions of Properties among the Borrower and the Guarantors, including Dispositions to another Person created as a result of a division so long as such other Person created as a result of a division becomes a Guarantor hereunder concurrently with such Disposition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) any surrender, expiration or waiver of contract rights or oil and gas leases or the settlement, release, recovery on or surrender of contract, tort or other claims of any kind in the ordinary course of business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) the lapse or abandonment of intellectual property in the ordinary course of business, which in the reasonable good faith determination of the Company is not material to the conduct of the business of Credit Parties and their Subsidiaries, taken as a whole;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) the Unwinding or termination of (i) any commodity Swap Agreement to the extent necessary to comply with the requirements set forth in <u>Section 9.17(d)</u>, but only to the extent that, as a result thereof, future hedging volumes in respect of the Company's and its Subsidiaries' Proved Developed Producing Reserves satisfy the requirements of <u>Section 8.19</u> on a pro forma basis and are equal to or less than 90% of reasonably anticipated projected production from the Company's and its Subsidiaries' Proved Developed Producing Reserves for each of crude oil and natural gas for the then-current and any succeeding fiscal quarter based on the Most Recently Delivered Reserve Report, as Updated, or (ii) any interest rate Swap Agreement; <u>provided</u> that any Net Cash Proceeds received from any such Unwind or termination pursuant to this <u>Section 9.12(h)</u> are applied as a prepayment of Loans to the extent required by <u>Section 3.04(c)</u>; <u>provided further</u> that reasonably anticipated projected production from the Company's and its Subsidiaries' Proved Developed Producing Reserves shall be calculated under this <u>Section 9.12(h)</u> in a manner consistent with <u>Section 9.17(d)</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) any sale or discount of receivables permitted pursuant to <u>Section 9.10</u>;

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) to the extent constituting a Disposition, Investments permitted pursuant to <u>Section 9.05(e)</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) if no Default or Event of Default then exists, sales and other dispositions of Properties not otherwise permitted above having a fair market value not to exceed $1,000,000 in the aggregate since the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) any exchanges of Oil and Gas Properties with a third party, or any series of exchanges of Oil and Gas Properties with third parties (excluding, prior to the APOD Completion Date, any Oil and Gas Properties included in the APOD) or any interest therein; <u>provided</u> that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) no more than 20% of the consideration received in respect of any such exchange shall be cash and/or Cash Equivalents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the consideration received in respect of any such exchange shall be equal to or greater than the fair market value of the Oil and Gas Properties subject of such exchange;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) the Oil and Gas Properties received in respect of any such exchange shall be for "like" category or better than the Oil and Gas Properties subject of such exchange (for example, for the avoidance of doubt, any Oil and Gas Properties constituting PDP Reserves shall only be exchanged for Oil and Gas Properties constituting PDP Reserves); provided that PDP Reserves may be exchanged for non-PDP Reserves in an amount not to exceed $10,000,000 in the aggregate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) if the Oil and Gas Properties subject of such exchange is Mortgaged Property, within ten (10) days (or such longer period of time agreed to by the Administrative Agent in its sole discretion) after the consummation of such exchange, the Company shall execute, or shall cause to be executed, Mortgages or supplements to Mortgages with respect the Oil and Gas Properties received in respect of such exchange to evidence the Liens in favor of the Collateral Agent, for the benefit of the Secured Parties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) no Default or Event of Default exists or would result from such exchange;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) to the extent required by <u>Section 3.04(c)</u>, the Net Cash Proceeds from such exchange shall be applied as a prepayment of Loans;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) if the fair market value of the Oil and Gas Properties subject to such exchange is equal to or greater than $2,500,000, the Company shall be in compliance with each of the financial ratios set forth in <u>Section 9.01</u>, calculated on a Pro Forma Basis giving effect to such exchange;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) the aggregate fair market value of the Oil and Gas Properties exchanged pursuant to this <u>Section 9.12(l)</u> shall not exceed $50,000,000.

------

Section 9.13 <u>Environmental Matters</u>. The Company shall not, nor shall it permit any Subsidiary to, cause or permit any of its Property to be in violation of, or do anything or permit anything to be done which will subject any such Property to any Remedial Work under any Environmental Laws, assuming disclosure to the applicable Governmental Authority of all relevant facts, conditions and circumstances, if any, pertaining to such Property where such violations or Remedial Work could reasonably be expected to have a Material Adverse Effect.

Section 9.14 <u>Transactions with Affiliates</u>. The Company shall not, nor shall it permit any Subsidiary to, enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of Property or the rendering of any service or the making of any payment, with any Affiliate (other than the Guarantors) or Close Affiliate except for (a) transactions otherwise permitted under this Agreement and are upon fair and reasonable terms no less favorable to it than it would obtain in a comparable arm's length transaction with a Person not an Affiliate or Close Affiliate, as applicable, (b) any Restricted Payment permitted by <u>Section 9.04(a)</u>, and (c) any Investment permitted by <u>Section 9.05(e)</u>, and (d) any G&A Expenses, so long as such G&A Expenses are otherwise permitted to be incurred by <u>Section 9.18</u>.

Section 9.15 <u>Negative Pledge Agreements; Dividend Restrictions</u>. The Company shall not, nor shall it permit any Subsidiary to, create, incur, assume or suffer to exist any contract, agreement or understanding which in any way prohibits or restricts the granting, conveying, creation or imposition of any Lien on any of its Property in favor of the Collateral Agent and the Secured Parties or restricts any Subsidiary from paying dividends or making distributions to the Company, the Borrower or any Guarantor or prohibits Parent, or any direct or indirect parent company thereof, from making capital contributions to the Company or the Company from making capital contributions to the Borrower, or which requires the consent of or notice to other Persons in connection therewith; <u>provided</u>, <u>however</u>, the preceding restrictions will not apply to encumbrances or restrictions arising under or by reason of (a) this Agreement or the Security Instruments, (b) any leases, licenses or similar contracts as they affect any Property or Lien subject to a lease or license, (c) restriction with respect to a Subsidiary imposed pursuant to an agreement entered into for the direct or indirect sale or Disposition of all or substantially all of the Equity Interests or Property of such Subsidiary (or the Property that is subject to such restriction) pending the closing of such sale or Disposition to the extent such sale is permitted under this Agreement, (d) customary provisions with respect to the distribution of Property of a joint venture contained in joint venture agreements entered into in the ordinary course of business with respect to such joint venture, (e) conditions, prohibitions, encumbrances or other restrictions imposed by Governmental Requirements, (f) restrictions on cash and other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business**,** and (g) conditions, prohibitions, encumbrances or other restrictions imposed by any agreement relating to secured Indebtedness permitted by <u>Section 9.02</u> or Indebtedness (including guarantees) under Finance Leases permitted by <u>Section 9.02</u>; <u>provided</u> that such prohibitions, encumbrances or other restrictions apply only to the assets securing such Indebtedness, do not apply to the Collateral and do not otherwise adversely affect the interest of the Secured Parties.

Section 9.16 <u>Gas Imbalances, Take-or-Pay or Other Prepayments</u>. The Company shall not, nor shall it permit any Subsidiary to, allow the aggregate amount of gas imbalances, take-or-pay or other prepayments with respect to the Oil and Gas Properties of the Company or any Subsidiary that would require the Company or such Subsidiary to deliver Hydrocarbons at some future time without then or thereafter receiving full payment therefor to exceed $500,000 at any time.

------

Section 9.17 <u>Swap Agreements</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company shall not, nor shall it permit any Subsidiary to, enter into any Swap Agreements with any Person other than:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) (A) Swap Agreements in respect of commodities entered into by the Company or its Subsidiaries with one or more Approved Counterparties for the purpose of hedging reasonably anticipated projected production from the Company's and its Subsidiaries' Proved Developed Producing Reserves, the notional volumes for which, when aggregated with all other commodity Swap Agreements of the Company and its Subsidiaries then in effect in respect of the Company's and its Subsidiaries' Proved Developed Producing Reserves, do not exceed, as of the date such Swap Agreement is executed, 95% of the reasonably anticipated projected production of crude oil and natural gas (calculated separately) from the Company's and its Subsidiaries' Proved Developed Producing Reserves for each month during the succeeding twelve (12) month period based on the Most Recently Delivered Reserve Report, as Updated, and (B) in consultation with and with the written consent of the Administrative Agent, other Swap Agreements in respect of commodities entered into by the Company or its Subsidiaries with one or more Approved Counterparties for the purpose of hedging reasonably anticipated projected production from the Company's and its Subsidiaries' Proved Developed Producing Reserves.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Swap Agreements in respect of interest rates with an Approved Counterparty, as follows: (A) Swap Agreements effectively converting interest rates from fixed to floating, the notional amounts of which (when aggregated and netted with all other Swap Agreements of the Company and its Subsidiaries then in effect effectively converting interest rates from fixed to floating) do not exceed 50% of the then outstanding principal amount of the Company's Indebtedness for borrowed money which bears interest at a fixed rate and (B) Swap Agreements effectively converting interest rates from floating to fixed, the notional amounts of which (when aggregated and netted with all other Swap Agreements of the Company and its Subsidiaries then in effect effectively converting interest rates from floating to fixed) do not exceed 50% of the then outstanding principal amount of the Company's Indebtedness for borrowed money which bears interest at a floating rate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In no event shall any Swap Agreement entered into by the Company or any Subsidiary (i) contain any requirement, agreement or covenant for the Company or any Subsidiary to post collateral or margin to secure their obligations under such Swap Agreement or to cover market exposures other than pursuant to the Security Instruments or (ii) have a tenor longer than sixty (60) months.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In no event shall the Company or any Subsidiary enter into any Swap Agreement in respect of physical commodities constituting a forward sale of commodities at a fixed price for which the delivery date is later than one (1) month after the date such Swap Agreement is executed.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) If the aggregate volume of all Swap Agreements in respect of commodities for which settlement payments were calculated during any fiscal quarter (commencing with the fiscal quarter ending September 30, 2024) exceeds 95% of actual production of crude oil and natural gas (calculated separately) in such fiscal quarter, then the Company shall as soon as possible (but in any event within ten (10) Business Days) following the last day of such fiscal quarter (or such later time to which the Administrative Agent may agree in its sole discretion) terminate, create off-setting positions, allocate volumes to other production the Company or any Subsidiary is marketing, or otherwise Unwind existing Swap Agreements such that, at such time, future hedging volumes in respect of the Company's and its Subsidiaries' Proved Reserves will not exceed 90% of reasonably anticipated projected production from the Company's and its Subsidiaries' Proved Developed Producing Reserves for each of crude oil and natural gas (calculated separately) for the then-current and any succeeding fiscal quarter; <u>provided</u> that for purposes of calculating reasonably anticipated projected production from the Company's and its Subsidiaries' Proved Developed Producing Reserves under this <u>Section 9.17(d)</u>, the Company shall, but may only, include the reasonably anticipated projected production of crude oil and natural gas from each non-producing well that the Company in good faith estimates will become a producing well within three (3) months after the applicable date of determination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) If the aggregate notional amount of all Swap Agreements pursuant to <u>Section 9.17(a)(ii)</u> exceeds 50% of the then outstanding principal amount of the Company's Indebtedness of borrowed money as of the end of any fiscal quarter, then the Company shall as soon as possible (but in any event within ten (10) Business Days) after the end of such fiscal quarter terminate, create off-setting positions or otherwise Unwind existing Swap Agreements such that, at such time, the aggregate notional amount of such Swap Agreements does not exceed 50% of the then outstanding principal amount of the Company's Indebtedness of borrowed money for the then-current and any future fiscal quarter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The Company shall not, and shall not permit any Subsidiary to, Unwind any Required Closing Date Swap Agreement except to comply with the requirements contained in <u>Section 9.17(d)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) For calculating the limits in <u>Section 9.17(a)</u> and <u>Section 9.17(d)</u>, such limits are calculated without giving effect to basis differential swaps on volumes hedged pursuant to other commodity Swap Agreements and Swap Agreements providing for floors. For purposes of entering into or maintaining Swap Agreement trades or transactions under <u>Section 9.17(a)</u>, forecasts of reasonably anticipated production from the Borrower's and the Subsidiaries' Oil and Gas Properties constituting Proved Developed Producing Reserves as set forth on the Most Recently Delivered Reserve Report delivered pursuant to the terms of this Agreement shall be revised to account for any increase or decrease therein anticipated because of information obtained by the Borrower or any of the Subsidiaries and delivered to the Administrative Agent subsequent to the publication of such Reserve Report including the Borrower's or any of the Subsidiaries' internal forecasts of production decline rates for existing wells and additions to or deletions from anticipated future production from new wells and completed acquisitions coming on stream or failing to come on stream.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) The Company shall not, and shall not permit any Subsidiary to, enter into any Swap Agreement (i) with any Person other than a Secured Swap Provider, (ii) that does not constitute an Approved Swap Agreement or (iii) that is a Non-Conforming Hedge Agreement which, when aggregated with all other Non-Conforming Hedge Agreements then in effect, hedges more than twenty two and one half percent (22.50%) of the reasonably anticipated projected production of crude oil and natural gas (calculated separately) from the Company's and its Subsidiaries' Proved Developed Producing Reserves, Proved Developed Non-Producing Reserves, Proved Undeveloped Reserves and natural gas, each calculated separately, for each month during the succeeding thirty-six (36) month period based on the Most Recently Delivered Reserve Report, as Updated; <u>provided</u>, that, if the aggregate volume of all Non-Conforming Hedge Agreements then in effect, hedges more than twenty two and one half percent (22.50%) of the actual production of crude oil and natural gas (calculated separately) in such month, then the Company shall as soon as possible (but in any event within ten (10) Business Days) following the last day of such month (or such later time to which the Administrative Agent may agree in its sole discretion) terminate, create off-setting positions, allocate volumes to other production the Company or any Subsidiary is marketing, or otherwise Unwind existing Non-Conforming Hedge Agreements such that, at such time, future hedging volumes in respect of the Company's and its Subsidiaries' Proved Reserves will not exceed twenty two and one half percent (22.50%) of the reasonably anticipated projected production of crude oil and natural gas (calculated separately) from the Company's and its Subsidiaries' Proved Developed Producing Reserves, Proved Developed Non-Producing Reserves, Proved Undeveloped Reserves and natural gas (calculated separately) for the then-current month and any succeeding month.

Section 9.18 <u>G&A Expenses; Specified Financing Costs</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company and its Subsidiaries shall not incur any Specified G&A Expenses to the extent the incurrence would cause the aggregate amount of Specified G&A Expenses to exceed (i) from the fiscal quarter ending September 30, 2024 through the fiscal quarter ending December 31, 2024, to exceed $7,500,000 and (ii) for the fiscal quarter ending March 31, 2025 and thereafter, to exceed the lesser of (x) $15,000,000 and (y) ten percent (10%) of the aggregate revenue paid to the Company and its Subsidiaries during any fiscal quarter; <u>provided</u> that upon the occurrence of any Event of Default, such amount shall be reduced to $4,000,000 per fiscal quarter on a go-forward basis from the date of the occurrence of such Event of Default (and shall be calculated on a proportional basis for the remaining portion of the fiscal quarter in which such Event of Default has occurred).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company and its Subsidiaries shall not incur any Specified Financing Costs to the extent the incurrence would cause the aggregate amount of Specified Financing Costs to exceed, for each annual period commencing on August 1 of each year and ending on July 31 of the following year (commencing with the annual period beginning on August 1, 2024), the lesser of (i) fifteen percent (15%) of the net proceeds of all Specified Additional Bond Indebtedness incurred by the Company and its Subsidiaries during such period and (ii) $70,000,000.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Notwithstanding <u>Section 9.18(b)</u>, upon the occurrence of any Event of Default, the Company shall, and shall cause its Subsidiaries to, stop incurring Specified Financing Costs that have not been consented to in writing after such Event of Default by the Administrative Agent in its sole discretion.

------

Section 9.19 <u>Capital Expenditures and other Asset Acquisitions</u>. The Company shall not, nor shall it permit any Subsidiary to, make any Capital Expenditures or acquire any Oil and Gas Properties other than (a) Capital Expenditures in support of the APOD, (b) Permitted Capital Expenditures, (c) Emergency Capital Expenditures, (d) acquisitions of Oil and Gas Properties so long as at the time of and immediately after giving effect to such acquisition, the Asset Acquisition Conditions are satisfied, (e) Capital Expenditures approved by the Administrative Agent in its sole discretion; and (f) other Capital Expenditures in an aggregate amount not to exceed $500,000 per fiscal year.

Section 9.20 <u>Minimum Volume Commitments; Well Service Contracts</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company shall not, nor shall it permit any Subsidiary to, enter into or permit to exist any Minimum Volume Commitments (except for any Minimum Volume Commitments existing prior to the Closing Date that have been disclosed in writing to the Lenders and the Administrative Agent).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company shall not, nor shall it permit any Subsidiary to, enter into any agreement to provide services relating to the drilling or completion of any oil and gas well that (i) has a tenor of greater than six (6) months with any Person or (ii) contemplates the provision of any such services after the APOD Completion Date.

Section 9.21 <u>Subsidiaries</u>. The Company shall not, and shall not permit any Subsidiaries to, have any Subsidiaries which are not Wholly-Owned Subsidiaries. The Company will not, and will not permit any Person other than the Borrower or another Guarantor, to own any Equity Interests in any Guarantor. The Company shall not, and shall not permit any other Subsidiary to, have any Foreign Subsidiaries.

Section 9.22 <u>Drilling and Completion Activities</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company shall not, nor shall it permit any Subsidiary to, conduct in its role as operator, any drilling or completion activities not otherwise contemplated under the APOD; <u>provided</u>, that, during the continuance of an Event of Default, the Company shall, and shall cause its Subsidiaries to cease all completion and drilling activities and cease making any Capital Expenditures.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Notwithstanding <u>Section 9.22(a)</u>, the Company and its Subsidiaries may continue to make expenditures in connection with (i) Emergency Capital Expenditures and (ii) the maintenance of Oil and Gas Properties in a manner consistent with customary and prudent industry practices.

------

**ARTICLE X** 

**EVENTS OF DEFAULT; REMEDIES** 

Section 10.01 <u>Events of Default</u>. One or more of the following events shall constitute an "<u>Event of Default</u>":

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Borrower shall fail to pay any principal of any Loan when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof, by acceleration or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Borrower shall fail to pay any interest on any Loan or any Credit Party or Specified Additional Guarantor shall fail to pay any fee or any other amount (other than an amount referred to in <u>Section 10.01(a)</u>) payable under any Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of three (3) Business Days.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Any representation or warranty made or deemed made by or on behalf of any Credit Party or Specified Additional Guarantor in or in connection with any Loan Document or any amendment or modification of any Loan Document or waiver under such Loan Document, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with any Loan Document or any amendment or modification thereof or waiver thereunder, that (i) was subject to a materiality qualifier (by reference to Material Adverse Effect or otherwise) shall prove to have been incorrect when made or deemed made or (ii) was not subject to a materiality qualifier shall prove to have been incorrect in any material respect when made or deemed made.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Any Credit Party or Specified Additional Guarantor and, in the case of <u>Section 8.21,</u> Intermediate Holdings, shall fail to observe or perform any covenant, condition or agreement contained in <u>Section 8.02(a)</u>, <u>Section 8.03</u> (with respect to the Credit Party's existence only), <u>Section 8.14</u>, <u>Section 8.16</u>, <u>Section 8.19(a)</u>, <u>Section 8.21</u> or in <u>ARTICLE IX</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Any Credit Party or Specified Additional Guarantor shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those specified in <u>Section 10.01(a)</u>, <u>Section 10.01(b)</u>, or <u>Section 10.01(d)</u>) or any other Loan Document, and such failure shall continue unremedied for a period of thirty (30) days after the earlier to occur of (i) notice thereof from the Administrative Agent to the Borrower (which notice will be given at the request of the Majority Lenders) or (ii) a Responsible Officer of any Credit Party (or such Specified Additional Guarantor) otherwise becoming aware of such default.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Any Credit Party shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness (to the extent the aggregate outstanding principal amount of all Material Indebtedness for which any payment default described in this clause (f) exists exceeds $5,000,000) prior to the longer of (i) three (3) Business Days after the same shall become due and payable or (ii) the expiration of any applicable grace or notice period, if any, specified in the relevant document for such Material Indebtedness.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Any other event or condition occurs that results in any Material Indebtedness (to the extent the aggregate outstanding principal amount of all Material Indebtedness for which any event or condition described in this clause (g) has occurred exceeds $5,000,000) becoming due prior to its scheduled maturity or that enables or permits (after giving effect to any applicable notice periods, if any, and any applicable grace periods) the holder or holders of any such Material Indebtedness or any trustee or agent on its or their behalf to cause any such Material Indebtedness to become due, or to require the Redemption thereof or any offer to Redeem to be made in respect thereof, prior to its scheduled maturity or require any Credit Party to make an offer in respect thereof (other than in connection with Redemptions described in clause (c)(ii)(B) of the definition of Specified Additional Bond Indebtedness (other than as a result of, or during, a default or event of default under such Specified Additional Bond Indebtedness) and clause (C) of the definition of Specified Additional Bond Indebtedness).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) An involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect any Credit Party or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Credit Party for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Any Credit Party shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in <u>Section 10.01(h)</u>, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Credit Party or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors, (vi) take any action for the purpose of effecting any of the foregoing or (vii) any owner of the Equity Interests of the Company or the Borrower shall make any request or take any action for the purpose of calling a meeting of such owners to consider a resolution to dissolve and wind-up the Company's or the Borrower's affairs, or an order or a resolution is passed effecting any of the foregoing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) Any Credit Party shall become unable, admit in writing its inability or fail generally to pay its debts as they become due.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) One or more judgments for the payment of money in an aggregate amount in excess of $5,000,000 (to the extent not covered by independent third party insurance provided by reputable insurers as to which the insurer does not dispute coverage and is not subject to an insolvency proceeding) shall be rendered against any Credit Party or any combination thereof and the same shall remain undischarged for a period of thirty (30) consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of any Credit Party to enforce any such judgment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) The Loan Documents after delivery thereof shall for any reason, except to the extent permitted by the terms thereof, cease to be in full force and effect and valid, binding and enforceable in accordance with their terms against any Credit Party or Specified Additional Guarantor that is party thereto or shall be repudiated by any of them, or cease to create a valid and perfected Lien of the priority required thereby on any of the collateral purported to be covered thereby, except to the extent permitted by the terms of this Agreement, or any Credit Party shall so state in writing.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) a Change in Control shall occur.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) an ERISA Event shall have occurred that when taken together with all other ERISA Events that have occurred, could reasonably be expected to result in a Material Adverse Effect.

Section 10.02 <u>Remedies</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) In the case of an Event of Default other than one described in <u>Section 10.01(h)</u> or <u>Section 10.01(i)</u>, at any time thereafter during the continuance of such Event of Default, the Administrative Agent may, and at the request of the Majority Lenders, shall, by notice to the Borrower, take any or all of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, (ii) declare the Loans, and Notes, if any, then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Credit Parties and the Specified Additional Guarantors accrued hereunder and under the Loans, the Repayment Premium, Make-Whole Amount, if any, the Notes, if any, and the other Loan Documents, shall become due and payable immediately, without presentment, demand, protest, notice of intent to accelerate, notice of acceleration or other notice of any kind, all of which are hereby waived by each Credit Party and Specified Additional Guarantor and (iii) exercise on behalf of itself and the Lenders all rights and remedies available to it, the Lenders under the Loan Documents and applicable law; and in the case of an Event of Default described in <u>Section 10.01(h)</u> or <u>Section 10.01(i)</u>, the Commitments shall automatically terminate and the Loans, and Notes, if any, and the principal of the Loans then outstanding, together with accrued interest thereon, the Repayment Premium or, if applicable, the Make-Whole Amount with respect thereto and all fees and the other obligations of the Credit Parties and the Specified Additional Guarantors accrued hereunder and under the Loans, the Notes, if any, and the other Loan Documents, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Credit Party and Specified Additional Guarantor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In the case of the occurrence and continuation of an Event of Default, the Administrative Agent and the Lenders will have all other rights and remedies available at law and equity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Subject to the Swap Intercreditor Agreement, all proceeds realized from the liquidation or other Disposition of collateral or otherwise received after maturity of the Loans, whether from the Borrower, another Credit Party, by acceleration or otherwise, shall be applied by the Administrative Agent as follows:

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>first</u>, to payment or reimbursement of that portion of the Secured Obligations constituting fees, expenses and indemnities payable to the Administrative Agent in its capacity as such;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>second</u>, pro rata to payment or reimbursement of that portion of the Secured Obligations constituting fees, expenses and indemnities payable to the Lenders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <u>third</u>, pro rata to payment of (A) charges and accrued interest on the Loans and (B) accrued fees, premiums and scheduled periodic payments owing to any Secured Swap Providers under any Secured Swap Agreements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) <u>fourth</u>, *pro rata* to principal outstanding on the Loans and Secured Obligations referred to in <u>clause (b)</u> of the definition of "Secured Obligations";

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) <u>fifth</u>, to any other Secured Obligations; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) <u>sixth</u>, any excess shall be paid to the Company or as otherwise required by any Governmental Requirement.

Notwithstanding the foregoing, amounts received from the Borrower or any Guarantor that is not an "eligible contract participant" under the Commodity Exchange Act shall not be applied to any Excluded Swap Obligations (it being understood, that in the event that any amount is applied to Secured Obligations other than Excluded Swap Obligations as a result of this clause, the Administrative Agent shall make such adjustments as it determines are appropriate to distributions pursuant to <u>clause fourth</u> above from amounts received from "eligible contract participants" under the Commodity Exchange Act to ensure, as nearly as possible, that the proportional aggregate recoveries with respect to Secured Obligations described in <u>clause fourth</u> above by the holders of any Excluded Swap Obligations are the same as the proportional aggregate recoveries with respect to other Secured Obligations pursuant to <u>clause fourth</u> above).

**ARTICLE XI** 

**THE AGENTS** 

Section 11.01 <u>Appointment; Powers</u>. Each of the Lenders hereby irrevocably appoints each of the Administrative Agent and the Technical Agent, acting in such capacity, as its agent and authorizes each Agent to take such actions on its behalf and to exercise such powers as are delegated to such Agent by the terms hereof and the other Loan Documents, together with such actions and powers as are reasonably incidental thereto. Each Lender (and each Person that becomes a Lender hereunder pursuant to <u>Section 12.04</u>) hereby authorizes and directs the Administrative Agent to enter into the Loan Documents, including without limitation, the Security Instruments, on behalf of such Lender, in each case, as needed to effectuate the transactions permitted by this Agreement and agrees that the Administrative Agent may take such actions on its behalf as is contemplated by the terms of such applicable Security Instrument. Without limiting the provisions of <u>Section 11.02</u> and <u>Section 12.03</u>, each Lender hereby consents to each Agent and any successor serving in such capacity and agrees not to assert any claim (including as a result of any conflict of interest) against such Agent, or any such successor, arising from the role of the such Agent or such successor under the Loan Documents so long as it is either acting in accordance with the terms of such documents and otherwise has not engaged in gross negligence or willful misconduct.

------

Section 11.02 <u>Duties and Obligations of the Agents</u>. The Agents shall not have any duties or obligations except those expressly set forth in the Loan Documents as are specifically delegated or granted to such Agent. In performing its functions and duties hereunder and under the other Loan Documents, each Agent is acting solely on behalf of the Lenders (except in limited circumstances expressly provided for herein), and its duties are entirely mechanical and administrative in nature. Without limiting the generality of the foregoing, (a) no Agent shall be subject to any fiduciary or other implied duties, regardless of whether a Default or Event of Default has occurred and is continuing (the use of the term "agent" herein and in the other Loan Documents with reference to the such Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law; rather, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties), (b) no Agent shall have any duty to take any discretionary action or exercise any discretionary powers, except as provided in <u>Section 11.03</u>, and (c) except as expressly set forth herein, no Agent shall have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Company or any of its Subsidiaries that is communicated to or obtained by bank serving as an Agent or any of its Affiliates in any capacity. Additionally, each Lender agrees that it will not assert any claim against any Agent based on an alleged breach of fiduciary duty by such Agent in connection with this Agreement and/or the transactions contemplated hereby. Nothing in this Agreement or any Loan Document shall require the any Agent to account to any Lender for any sum or the profit element of any sum received by the any Agent for its own account. Each Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof (stating that it is a "notice of default") is given to the applicable Agent by the Borrower or a Lender, and shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or under any other Loan Document or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or in any other Loan Document or the occurrence of any Default, (iv) the sufficiency, validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, (v) the satisfaction of any condition set forth in <u>ARTICLE VI</u> or elsewhere in any Loan Document, other than to confirm receipt of items (which on their face purport to be items) expressly required to be delivered to the applicable Agent or as to those conditions precedent expressly required to be to the applicable Agent's satisfaction, (vi) the existence, value, perfection or priority of any collateral security or the financial or other condition of the Company and its Subsidiaries or any other obligor or guarantor, or (vii) any failure by any Credit Party or Specified Additional Guarantor or any other Person (other than itself) to perform any of its obligations hereunder or under any other Loan Document or the performance or observance of any covenants, agreements or other terms or conditions set forth herein or therein. For purposes of determining compliance with the conditions specified in <u>ARTICLE VI</u>, each Lender shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received written notice from such Lender prior to the proposed Closing Date specifying its objection thereto.

------

Section 11.03 <u>Action by Agents</u>. Neither Administrative Agent shall have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby that the such Agent is required to exercise in writing as directed by the Majority Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in <u>Section 5.04(b)</u>, <u>Section 8.13(c)</u> or <u>Section 12.02</u>) and in all cases each Agent shall be fully justified in failing or refusing to act hereunder or under any other Loan Documents unless it shall (a) receive written instructions from the Majority Lenders or the Lenders, as applicable, (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in <u>Section 5.04(b)</u>, <u>Section 8.13(c)</u> or <u>Section 12.02</u>) specifying the action to be taken and (b) be indemnified to its satisfaction by the Lenders against any and all liability and expenses which may be incurred by it by reason of taking or continuing to take any such action. The instructions as aforesaid and any action taken or failure to act pursuant thereto by such Agent shall be binding on all of the Lenders. If a Default or Event of Default has occurred and is continuing, then the Administrative Agent shall take such action with respect to such Default or Event of Default as shall be directed by the requisite Lenders in the written instructions (with indemnities) described in this <u>Section 11.03</u>, <u>provided</u> that, unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders. In no event, however, shall any Agent be required to take any action which exposes such Agent to personal liability or which is contrary to this Agreement, the Loan Documents or applicable law. No Agent shall (i) be liable for any action taken or not taken by it with the consent or at the request of the Majority Lenders, the Supermajority Lenders or the Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith to be necessary, under the circumstances as provided in <u>Section 5.04(b)</u>, <u>Section 8.13(c)</u> or <u>Section 12.02</u>), and otherwise no Agent shall be liable for any action taken or not taken by it hereunder or under any other Loan Document or under any other document or instrument referred to or provided for herein or therein or in connection herewith or therewith INCLUDING ITS OWN ORDINARY NEGLIGENCE, except for its own gross negligence or willful misconduct (the absence of which is to be presumed unless otherwise determined by a court of competent jurisdiction by a final and non-appealable judgment) or (ii) be responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by any Specified Additional Guarantor, Credit Party or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of any Credit Party or Specified Additional Guarantor to perform its obligations hereunder or thereunder.

Section 11.04 <u>Reliance by Agents</u>. Each 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 (which writing may be a fax, electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed or sent by the proper Person. Each Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon and each Credit Party or Specified Additional Guarantor and the Lenders hereby waives the right to dispute such Agent's record of such statement, except in the case of gross

------

negligence or willful misconduct by such Agent. Each Agent may consult with legal counsel (who may be counsel for the Company), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. The Administrative Agent may deem and treat the payee of the Notes, if any, as the holder thereof for all purposes hereof unless and until a written notice of the assignment or transfer thereof permitted hereunder shall have been filed with the Administrative Agent. The Administrative Agent may rely on the Register to the extent set forth in <u>Section 12.04(b)</u>. No Agent makes any warranty or representation to any Lender and no Agent shall be responsible to any Lender for any statements, warranties or representations made by or on behalf of the Company or any Subsidiary in connection with this Agreement or any other Loan Document.

Section 11.05 <u>Subagents</u>. Each Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by such Agent. Each Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties. The exculpatory provisions of this <u>ARTICLE XI</u> shall apply to any such sub-agent and to the Related Parties of such Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as the applicable Agent. No Agent shall not be responsible for the negligence or misconduct of any sub-agent except to the extent that a court of competent jurisdiction determines in a final and nonappealable judgment that such Agent acted with gross negligence or willful misconduct in the selection of such sub-agent.

Section 11.06 <u>Resignation of an Agent</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Subject to the appointment and acceptance of a successor Agent as provided in this <u>Section 11.06</u>, any Agent may resign at any time by notifying the other Agent, the Lenders and the Borrower; <u>provided</u> that, Fortress shall resign as Technical Agent if it (i) is no longer a Lender and (ii) no longer holds any Secured Obligations. Upon any such resignation, the Majority Lenders shall have the right, with the consent of the Borrower, which consent shall not be unreasonably withheld or delayed (<u>provided</u> that no such consent of the Borrower in respect of such resignation shall be required upon the occurrence and during the continuation of an Event of Default under <u>Section 10.01(a)</u>, <u>Section 10.01(b)</u>, <u>Section 10.01(h)</u> or <u>Section 10.01(i)</u>), to appoint a successor from among the Lenders. If no successor shall have been so appointed and shall have accepted such appointment within thirty (30) days after the retiring Agent gives notice of its resignation, then the retiring Agent may, on behalf of the other Agent and the Lenders, appoint a successor Administrative Agent from among the Lenders, or an Affiliate of any such bank. Upon acceptance of its appointment as an Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. The fees payable by the Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After an Agent's resignation hereunder, the provisions of this <u>ARTICLE XI</u> and <u>Section 12.03</u>, as well as any exculpatory, reimbursement and indemnification provisions set forth in any other Loan Document, shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Agent.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Notwithstanding <u>Section 11.06(a)</u>, in the event no successor Agent shall have been so appointed and shall have accepted such appointment within thirty (30) days (or such lesser number of days as the Administrative Agent may specify pursuant to <u>Section 5.04(c))</u> after the retiring Agent gives notice of its intent to resign, the retiring Agent may give notice of the effectiveness of its resignation to the other Agent, the Lenders and the Borrower, whereupon, on the date of effectiveness of such resignation stated in such notice, (i) the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents and (ii) the Majority Lenders shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent; <u>provided</u> that (A) all payments required to be made hereunder or under any other Loan Document to the Agent for the account of any Person other than the Agent shall be made directly to such Person and (B) all notices and other communications required or contemplated to be given or made to the Agent shall directly be given or made to each Lender.

Section 11.07 <u>Agent as a Lender</u>. Each Agent shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent or Technical Agent, as applicable, and such bank 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 banking, trust or other business with the Company or any Subsidiary or other Affiliate thereof as if it were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders. The terms "Lenders", "Majority Lenders", "Supermajority Lenders" and any similar terms shall, unless the context clearly otherwise indicates, include the Administrative Agent and the Technical Agent, as applicable, in its individual capacity as a Lender or as one of the Majority Lenders or Supermajority Lenders, as applicable.

Section 11.08 <u>No Reliance</u>. Each Lender acknowledges that it has, independently and without reliance upon any Agent, any Arranger or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and each other Loan Document to which it is a party. Each Lender also acknowledges that it will, independently and without reliance upon any Agent, any Arranger or any other Lender, or any Related Parties of any of the foregoing and based on such documents and information (which may contain material non-public information within the meaning of the United States securities laws concerning the Company and its Affiliates) as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document, any related agreement or any document furnished hereunder or thereunder. The Administrative Agent shall not be required to keep itself informed as to the performance or observance by the Company or any of its Subsidiaries of this Agreement, the Loan Documents or any other document referred to or provided for herein or to inspect the Properties or books of the Company or its Subsidiaries. Except for notices, reports and other documents and information expressly required to be furnished to the Lenders by the Administrative Agent hereunder, none of the Administrative Agent, the Technical Agent or the Arranger shall have any duty or responsibility to provide any Lender with any credit or other information concerning the affairs, financial condition or business of the Company (or any of its Affiliates) which may come into the possession of the Administrative Agent or any of its Affiliates. In this regard, each Lender acknowledges that Sidley Austin LLP is acting in this transaction as special counsel to the Administrative Agent only, except to the extent otherwise expressly stated in any

------

legal opinion or any Loan Document. Each other party hereto will consult with its own legal counsel to the extent that it deems necessary in connection with the Loan Documents and the matters contemplated therein. Each Lender, by delivering its signature page to this Agreement on the Closing Date, or delivering its signature page to an Assignment and Assumption or any other Loan Document pursuant to which it shall become a Lender hereunder, shall be deemed to have acknowledged receipt of, and consented to and approved, each Loan Document and each other document that is explicitly required to be delivered to, or be approved by or satisfactory to, the Administrative Agent or the Lenders on the Closing Date under this Agreement or any other Loan Document.

Section 11.09 <u>Administrative Agent May File Proofs of Claim</u>. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any of its Subsidiaries, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Secured Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under <u>Section 12.03</u>) allowed in such judicial proceeding; and

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

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under <u>Section 12.03</u>.

Except as specifically contemplated herein, nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or other Secured Party any plan of reorganization, arrangement, adjustment or composition affecting the Secured Obligations or the rights of any Lender or other Secured Party or to authorize the Administrative Agent to vote in respect of the claim of any Lender or other Secured Party in any such proceeding.

------

Section 11.10 <u>Authority of Administrative Agent to Release Collateral and Liens</u>. Each Lender and each other Secured Party hereby authorizes the Administrative Agent to release or subordinate or direct the release or subordination of any collateral held directly by the Administrative Agent or indirectly through the Collateral Agent that is permitted to be sold or released or subordinated pursuant to the terms of the Loan Documents, including irrevocably authorizing the Administrative Agent to comply with the provisions of <u>Section 12.19</u>, in each case without requirement of notice to or consent of any Person except as expressly required by <u>Section 12.02(b)</u>. Each Lender hereby authorizes the Administrative Agent to execute and deliver to the Company, at the Borrower's sole cost and expense, any and all release or subordination directions to the Collateral Agent, releases of the Administrative Agent from the Security Instruments or other documents reasonably requested by the Company in connection therewith. Upon request by the Administrative Agent at any time, the Majority Lenders will confirm in writing the Administrative Agent's authority to release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations under the Guarantee and Collateral Agreement pursuant to this <u>Section 11.10</u> or <u>Section 12.19</u>.

Section 11.11 <u>Certain ERISA Matters</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Credit Party, that at least one of the following is and will be true:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) such Lender is not using "plan assets" (within the meaning of Section 3(42) of ERISA or otherwise) of one or more Benefit Plans with respect to such Lender's entrance into, participation in, administration of and performance of the Loans, the Commitments, or this Agreement,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender's entrance into, participation in, administration of and performance of the Loans, Commitments and this Agreement,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) (A) such Lender is an investment fund managed by a "Qualified Professional Asset Manager" (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender's entrance into, participation in, administration of and performance of the Loans, the Commitments and this Agreement, or

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In addition, unless <u>sub-clause (i)</u> in the immediately preceding <u>clause (a)</u> is true with respect to a Lender or such Lender has provided another representation, warranty and covenant in accordance with <u>sub-clause (iv)</u> in the immediately preceding <u>clause (a)</u>, such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of the Administrative Agent, and not, for the avoidance of doubt, to or for the benefit of any Credit Party or any Specified Additional Guarantor, that the Administrative Agent is not a fiduciary with respect to the assets of such Lender involved in such Lender's entrance into, participation in, administration of and performance of the Loans, Commitments and this Agreement (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related hereto or thereto).

Section 11.12 <u>The Arranger</u>. The Arranger shall have no duties, responsibilities or liabilities under this Agreement and the other Loan Documents other than its duties, responsibilities and liabilities in its capacity as a Lender hereunder (if it is a Lender).

Section 11.13 <u>Credit Bidding</u>. The Secured Parties hereby irrevocably authorize the Administrative Agent, at the direction of the Majority Lenders, to credit bid all or any portion of the Secured Obligations (including by accepting some or all of the Collateral in satisfaction of some or all of the Secured Obligations pursuant to a deed in lieu of foreclosure or otherwise) and in such manner purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral (a) at any sale thereof conducted under the provisions of the Bankruptcy Code, including under Sections 363, 1123 or 1129 of the Bankruptcy Code, or any similar laws in any other jurisdictions to which a Secured Party is subject, or (b) at any other sale, foreclosure or acceptance of collateral in lieu of debt conducted by (or with the consent or at the direction of) the Administrative Agent (whether by judicial action or otherwise) in accordance with any applicable law. In connection with any such credit bid and purchase, the Secured Obligations owed to the Secured Parties shall be entitled to be credit bid by the Administrative Agent at the direction of the Majority Lenders on a ratable basis (with Secured Obligations with respect to contingent or unliquidated claims receiving contingent interests in the acquired assets on a ratable basis that shall vest upon the liquidation of such claims in an amount proportional to the liquidated portion of the contingent claim amount used in allocating the contingent interests) for the asset or assets so purchased (or for the equity interests or debt instruments of the acquisition vehicle or vehicles that are issued in connection with such purchase). In connection with any such bid (i) the Administrative Agent shall be authorized to form one or more acquisition vehicles and to assign any successful credit bid to such acquisition vehicle or vehicles, (ii) each of the Secured Parties' ratable interests in the Secured Obligations which were credit bid shall be deemed without any further action under this Agreement to be assigned to such vehicle or vehicles for the purpose of closing such sale, (iii) the Administrative Agent shall be authorized to adopt documents providing for the governance of the acquisition vehicle or vehicles (<u>provided</u> that any actions by the Administrative Agent with respect to such acquisition vehicle or vehicles, including any Disposition of the assets or equity interests thereof, shall be governed, directly or indirectly, by, and the governing documents shall provide for, control by the vote of the Majority Lenders or their

------

permitted assignees under the terms of this Agreement or the governing documents of the applicable acquisition vehicle or vehicles, as the case may be, irrespective of the termination of this Agreement and without giving effect to the limitations on actions by the Majority Lenders contained in <u>Section 12.02</u> of this Agreement), (iv) the Administrative Agent on behalf of such acquisition vehicle or vehicles shall be authorized to issue to each of the Secured Parties, ratably on account of the relevant Secured Obligations which were credit bid, interests, whether as equity, partnership, limited partnership interests or membership interests, in any such acquisition vehicle and/or debt instruments issued by such acquisition vehicle, all without the need for any Secured Party or acquisition vehicle to take any further action, and (v) to the extent that Secured Obligations that are assigned to an acquisition vehicle are not used to acquire Collateral for any reason (as a result of another bid being higher or better, because the amount of Secured Obligations assigned to the acquisition vehicle exceeds the amount of Secured Obligations credit bid by the acquisition vehicle or otherwise), such Secured Obligations shall automatically be reassigned to the Secured Parties *pro rata* and the equity interests and/or debt instruments issued by any acquisition vehicle on account of such Secured Obligations shall automatically be cancelled, without the need for any Secured Party or any acquisition vehicle to take any further action. Notwithstanding that the ratable portion of the Secured Obligations of each Secured Party are deemed assigned to the acquisition vehicle or vehicles as set forth in <u>clause (ii)</u> above, each Secured Party shall execute such documents and provide such information regarding the Secured Party (and/or any designee of the Secured Party which will receive interests in or debt instruments issued by such acquisition vehicle) as the Administrative Agent may reasonably request in connection with the formation of any acquisition vehicle, the formulation or submission of any credit bid or the consummation of the transactions contemplated by such credit bid. For the avoidance of doubt, Secured Obligations under a Secured Swap Agreement shall not be subject to a credit bid without the prior written consent of the relevant Secured Swap Provider.

Section 11.14 <u>Posting of Communications</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Each of the Company and the Borrower agree that the Administrative Agent may, but shall not be obligated to, make any Communications available to the Lenders by posting the Communications on IntraLinks™, DebtDomain, SyndTrak, ClearPar or any other electronic platform chosen by the Administrative Agent to be its electronic transmission system (the "<u>Approved Electronic Platform</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Although the Approved Electronic Platform and its primary web portal are secured with generally-applicable security procedures and policies implemented or modified by the Administrative Agent from time to time (including, as of the Closing Date, a user ID/password authorization system) and the Approved Electronic Platform is secured through a per-deal authorization method whereby each user may access the Approved Electronic Platform only on a deal-by-deal basis, each of the Lenders, the Company and the Borrower each acknowledge and agree that the distribution of material through an electronic medium is not necessarily secure, that the Administrative Agent is not responsible for approving or vetting the representatives or contacts of any Lender that are added to the Approved Electronic Platform, and that there may be confidentiality and other risks associated with such distribution. Each of the Lenders, the Company and the Borrower hereby approves distribution of the Communications through the Approved Electronic Platform and understands and assumes the risks of such distribution.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) THE APPROVED ELECTRONIC PLATFORM AND THE COMMUNICATIONS ARE PROVIDED "AS IS" AND "AS AVAILABLE". THE APPLICABLE PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS, OR THE ADEQUACY OF THE APPROVED ELECTRONIC PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE APPROVED ELECTRONIC PLATFORM AND THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE APPLICABLE PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE APPROVED ELECTRONIC PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE AGENT, ANY ARRANGER, ANY AGENT OR ANY OF THEIR RESPECTIVE RELATED PARTIES (COLLECTIVELY, "<u>APPLICABLE PARTIES</u>") HAVE ANY LIABILITY TO ANY CREDIT PARTY OR SPECIFIED ADDITIONAL GUARANTOR, ANY LENDER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF ANY CREDIT PARTY'S OR SPECIFIED ADDITIONAL GUARANTOR'S OR THE ADMINISTRATIVE AGENT'S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET OR THE APPROVED ELECTRONIC PLATFORM EXCEPT TO THE EXTENT THE LIABILITY OF ANY SUCH PERSON IS FOUND BY A FINAL AND NON-APPEALABLE JUDGMENT OF A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM SUCH PERSON'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Each Lender agrees that notice to it (as provided in the next sentence) specifying that Communications have been posted to the Approved Electronic Platform shall constitute effective delivery of the Communications to such Lender for purposes of the Loan Documents. Each Lender agrees (i) to notify the Administrative Agent in writing (which could be in the form of electronic communication) from time to time of such Lender's email address to which the foregoing notice may be sent by electronic transmission and (ii) that the foregoing notice may be sent to such email address.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Each of the Lenders, the Company and the Borrower agrees that the Administrative Agent may, but (except as may be required by applicable law) shall not be obligated to, store the Communications on the Approved Electronic Platform in accordance with the Administrative Agent's generally applicable document retention procedures and policies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Nothing herein shall prejudice the right of the Administrative Agent or any Lender to give any notice or other communication pursuant to any Loan Document in any other manner specified in such Loan Document.

Section 11.15 <u>No Third Party Beneficiaries</u>. The provisions of this <u>ARTICLE XI</u> are solely for the benefit of the Administrative Agent and the Lenders, and, except solely to the extent of the Borrower's rights to consent and the release of collateral, in each case, pursuant to and subject to the conditions set forth in this Article, none of the Company or any Subsidiary, or any of their respective Affiliates (or Close Affiliates), shall have any rights as a third party beneficiary under any such provisions.

------

Section 11.16 <u>Erroneous Payments</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) If the Administrative Agent (x) notifies a Lender or Secured Party, or any Person who has received funds on behalf of a Lender or Secured Party (any such Lender, Secured Party or Person (and each of their respective successors and assigns), a "<u>Payment Recipient</u>") that the Administrative Agent has determined in its sole discretion (whether or not after receipt of any notice under immediately succeeding <u>clause (b)</u>) that any funds (as set forth in such notice from the Administrative Agent) received by such Payment Recipient from the Administrative Agent or any of its Affiliates were erroneously or mistakenly transmitted to, or otherwise erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Secured Party or other Payment Recipient on its behalf) (any such funds, whether transmitted or received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and collectively, an "<u>Erroneous Payment</u>") and (y) demands in writing the return of such Erroneous Payment (or a portion thereof), such Erroneous Payment shall at all times remain the property of the Administrative Agent pending its return or repayment as contemplated below in this <u>Section 11.16</u> and held in trust for the benefit of the Administrative Agent, and such Lender or Secured Party shall (or, with respect to any Payment Recipient who received such funds on its behalf, shall cause such Payment Recipient to) promptly, but in no event later than two (2) Business Days thereafter (or such later date as the Administrative Agent may, in its sole discretion, specify in writing), return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon (except to the extent waived in writing by the Administrative Agent) in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Payment Recipient to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect. A notice of the Administrative Agent to any Payment Recipient under this <u>clause (a)</u> shall be conclusive, absent manifest error.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Without limiting immediately preceding <u>clause (a)</u>, each Lender, Secured Party or any Person who has received funds on behalf of a Lender or Secured Party (and each of their respective successors and assigns), agrees that if it receives a payment, prepayment or repayment (whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise) from the Administrative Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in this Agreement or in a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment, (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates), or (z) that such Lender or Secured Party, or other such Person, otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part), then in each such case:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) it acknowledges and agrees that (A) in the case of immediately preceding <u>clauses (x)</u> or <u>(y)</u>, an error and mistake shall be presumed to have been made (absent written confirmation from the Administrative Agent to the contrary) or (B) an error and mistake has been made (in the case of immediately preceding <u>clause (z)</u>), in each case, with respect to such payment, prepayment or repayment; and

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) such Lender or Secured Party shall (and cause any other recipient that receives funds on its respective behalf to) promptly (and, in all events, within one (1) Business Day of its knowledge of the occurrence of any of the circumstances described in immediately preceding <u>clauses (x)</u>, <u>(y)</u> and <u>(z)</u>) notify the Administrative Agent of its receipt of such payment, prepayment or repayment, the details thereof (in reasonable detail) and that it is so notifying the Administrative Agent pursuant to this <u>Section 11.16(b)</u>.

For the avoidance of doubt, the failure to deliver a notice to the Administrative Agent pursuant to this <u>Section 11.16(b)</u> shall not have any effect on a Payment Recipient's obligations pursuant to <u>Section 11.16(a)</u> or on whether or not an Erroneous Payment has been made.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Each Lender or Secured Party hereby authorizes the Administrative Agent to set off, net and apply any and all amounts at any time owing to such Lender or Secured Party under any Loan Document, or otherwise payable or distributable by the Administrative Agent to such Lender or Secured Party under any Loan Document with respect to any payment of principal, interest, fees or other amounts, against any amount that the Administrative Agent has demanded to be returned under immediately preceding <u>clause (a)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) In the event that an Erroneous Payment (or portion thereof) is not recovered by the Administrative Agent for any reason, after demand therefor in accordance with immediately preceding <u>clause (a)</u>, from any Lender that has received such Erroneous Payment (or portion thereof) (and/or from any Payment Recipient who received such Erroneous Payment (or portion thereof) on its respective behalf) (such unrecovered amount, an "<u>Erroneous Payment Return Deficiency</u>"), upon the Administrative Agent's notice to such Lender at any time, then effective immediately (with the consideration therefor being acknowledged by the parties hereto), (A) such Lender shall be deemed to have assigned its Loans (but not its Commitments) with respect to which such Erroneous Payment was made (the "<u>Erroneous Payment Impacted Class</u>") in an amount equal to the Erroneous Payment Return Deficiency (or such lesser amount as the Administrative Agent may specify) (such assignment of the Loans (but not Commitments) of the Erroneous Payment Impacted Class, the "<u>Erroneous Payment Deficiency Assignment</u>") (on a cashless basis and such amount calculated at par plus any accrued and unpaid interest (with the assignment fee to be waived by the Administrative Agent in such instance)), and is hereby (together with the Borrower) deemed to execute and deliver an Assignment and Assumption (or, to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to an Approved Electronic Platform as to which the Administrative Agent and such parties are participants) with respect to such Erroneous Payment Deficiency Assignment, and such Lender shall deliver any Notes evidencing such Loans to the Borrower or the Administrative Agent (but the failure of such Person to deliver any such Notes shall not affect the effectiveness of the foregoing assignment), (B) the Administrative Agent as the assignee Lender shall be deemed to have acquired the Erroneous Payment Deficiency Assignment, (C) upon such deemed acquisition, the Administrative Agent as the assignee Lender shall become a Lender, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment and the assigning Lender shall cease to be a Lender, as applicable, hereunder with respect to such Erroneous Payment Deficiency

------

Assignment, excluding, for the avoidance of doubt, its obligations under the indemnification provisions of this Agreement and its applicable Commitments which shall survive as to such assigning Lender, (D) the Administrative Agent and the Borrower shall each be deemed to have waived any consents required under this Agreement to any such Erroneous Payment Deficiency Assignment, and (E) the Administrative Agent will reflect in the Register its ownership interest in the Loans subject to the Erroneous Payment Deficiency Assignment. for the avoidance of doubt, no Erroneous Payment Deficiency Assignment will reduce the Commitments of any Lender and such Commitments shall remain available in accordance with the terms of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Subject to <u>Section 12.04</u> (but excluding, in all events, any assignment consent or approval requirements (whether from the Borrower or otherwise)), the Administrative Agent may, in its discretion, sell any Loans acquired pursuant to an Erroneous Payment Deficiency Assignment and upon receipt of the proceeds of such sale, the Erroneous Payment Return Deficiency owing by the applicable Lender shall be reduced by the net proceeds of the sale of such Loan (or portion thereof), and the Administrative Agent shall retain all other rights, remedies and claims against such Lender (and/or against any recipient that receives funds on its respective behalf). In addition, an Erroneous Payment Return Deficiency owing by the applicable Lender (x) shall be reduced by the proceeds of prepayments or repayments of principal and interest, or other distribution in respect of principal and interest, received by the Administrative Agent on or with respect to any such Loans acquired from such Lender pursuant to an Erroneous Payment Deficiency Assignment (to the extent that any such Loans are then owned by the Administrative Agent) and (y) may, in the sole discretion of the Administrative Agent, be reduced by any amount specified by the Administrative Agent in writing to the applicable Lender from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The parties hereto agree that (x) irrespective of whether the Administrative Agent may be equitably subrogated, in the event that an Erroneous Payment (or portion thereof) is not recovered from any Payment Recipient that has received such Erroneous Payment (or portion thereof) for any reason, the Administrative Agent shall be subrogated to all the rights and interests of such Payment Recipient (and, in the case of any Payment Recipient who has received funds on behalf of a Lender or Secured Party, to the rights and interests of such Lender or Secured Party, as the case may be) under the Loan Documents with respect to such amount (the "<u>Erroneous Payment Subrogation Rights</u>") (<u>provided</u> that the Credit Parties' Secured Obligations under the Loan Documents in respect of the Erroneous Payment Subrogation Rights shall not be duplicative of such Secured Obligations in respect of Loans that have been assigned to the Administrative Agent under an Erroneous Payment Deficiency Assignment) and (y) an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Secured Obligations owed by the Borrower or any other Credit Party or Specified Additional Guarantor; <u>provided</u> that this <u>Section 11.16</u> shall not be interpreted to increase (or accelerate the due date for), or have the effect of increasing (or accelerating the due date for), the Secured Obligations of the Borrower relative to the amount (and/or timing for payment) of the Secured Obligations that would have been payable had such Erroneous Payment not been made by the Administrative Agent; <u>provided</u>, <u>further</u>, that for the avoidance of doubt, this <u>clause (e)</u> shall not apply to the extent any such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by the Administrative Agent from the Borrower for the purpose of making a payment on the Secured Obligations.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) To the extent permitted by applicable law, no Payment Recipient shall assert any right or claim to an Erroneous Payment, and hereby waives, and is deemed to waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payment received, including, without limitation, any defense based on "discharge for value" or any similar doctrine.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Each party's obligations, agreements and waivers under this <u>Section 11.16</u> shall survive the resignation or replacement of the Administrative Agent, any transfer of rights or obligations by, or the replacement of, a Lender, the termination of the Commitments and/or the repayment, satisfaction or discharge of all Secured Obligations (or any portion thereof) under any Loan Document.

**ARTICLE XII** 

**MISCELLANEOUS** 

Section 12.01 <u>Notices</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Except in the case of notices and other communications expressly permitted to be given by telephone (and subject to <u>Section 12.01(b)</u>), all notices and other communications provided for herein shall be in writing (i) delivered by hand or overnight courier service, mailed by certified or registered mail, (ii) sent by telecopy or (iii) sent by email, as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) if to a Credit Party, to it at 18575 Jamboree Road, Suite 830, Irvine, CA 92612, Attention: Curtis Allen, email address: CA@phxcapitalgroup.com;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) if to a Specified Additional Guarantor, to it at its address, email or phone number set forth in the applicable Specified Additional Guarantee Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) if to the Administrative Agent, to it at 1345 Avenue of the Americas, 46th Floor, New York, New York 10105, email address: CreditOperations@fortress.com and gc.credit@fortress.com Attention: Credit Operations and General Counsel; and a copy to email address:dshea@fortress.com Attention: Daniel Shea;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D) if to any other Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire.

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 Approved Electronic Platforms, to the extent provided in <u>paragraph (b)</u> below, shall be effective as provided in said <u>paragraph (b)</u>.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Notices and other communications to the Lenders hereunder may be delivered or furnished by Approved Electronics Platforms pursuant to procedures approved by the Administrative Agent; <u>provided</u> that the foregoing shall not apply to notices pursuant to <u>ARTICLE II</u>, <u>ARTICLE III</u>, <u>ARTICLE IV</u> and <u>ARTICLE V</u> unless otherwise agreed by the Administrative Agent and the applicable Lender. The Administrative Agent or any Credit Party or Specified Additional Guarantor may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; <u>provided</u> that approval of such procedures may be limited to particular notices or communications.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.

Section 12.02 <u>Waivers; Amendments</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) No failure on the part of the Administrative Agent or any Lender to exercise and no delay in exercising, and no course of dealing with respect to, any right, power or privilege, or any abandonment or discontinuance of steps to enforce such right, power or privilege, or any abandonment or discontinuance of steps to enforce such right, power or privilege, or any abandonment or discontinuance of steps to enforce such right, power or privilege, under any of the Loan Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under any of the Loan Documents preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies of the Administrative Agent and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or any other Loan Document or consent to any departure by a Credit Party or Specified Additional Guarantor therefrom shall in any event be effective unless the same shall be permitted by <u>Section 12.02(b)</u>, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, any Lender may have had notice or knowledge of such Default at the time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Subject to <u>Section 3.03</u>, <u>Section 4.04</u> and <u>Section 12.02(c)</u>, neither this Agreement nor any provision hereof nor any Loan Document nor any provision thereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the applicable Credit Parties or Specified Additional Guarantors party thereto and the Majority Lenders or by the applicable Credit Parties or Specified Additional Guarantors party thereto and the Administrative Agent with the consent of the Majority Lenders; <u>provided</u> that no such agreement shall:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) increase the Commitment of any Lender without the written consent of such Lender affected thereby,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) reduce the principal amount of any Loan or reduce the rate of interest thereon, or reduce any fees payable hereunder, or reduce any other Secured Obligations hereunder or under any other Loan Document, without the written consent of each Lender directly and adversely affected thereby (except in connection with any amendment or waiver of the applicability of any post-default increase in interest rates, which shall be effective with the written consent of the Supermajority Lenders),

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) postpone the scheduled date of payment or prepayment of the principal amount of any Loan, or any interest thereon, or any fees payable hereunder, or any other Secured Obligations hereunder or under any other Loan Document, reduce the amount of, waive or excuse any such payment, or postpone or extend the scheduled date of expiration of the Commitment, or postpone or extend the Maturity Date without the written consent of each Lender (other than any Defaulting Lender) directly and adversely affected thereby,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) change <u>Section 4.01(b)</u> or <u>Section 4.01(c)</u> or any other provisions in the Loan Documents in a manner that would alter the *pro rata* sharing of payments required thereby, without the written consent of each Lender directly and adversely affected thereby,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) waive or amend <u>Section 6.01</u> or change the definition of "Applicable Percentage", without the written consent of each Lender directly and adversely affected thereby,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) release any Credit Party (except as set forth in the Guarantee and Collateral Agreement or as otherwise permitted hereby) or Specified Additional Guarantor or release all or substantially all of the Collateral, in each case, without the written consent of each Lender directly and adversely affected thereby,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) modify the terms of <u>Section 12.24(b)</u> without the written consent of Fortress,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) modify the terms of <u>Section 10.02(c)</u>, <u>Section 12.14</u> or <u>Section 12.19</u> without the written consent of the Supermajority Lenders,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) change (A) any of <u>Section 12.02(b)(i)</u>, <u>Section 12.02(b)(iii)</u>, <u>Section 12.02(b)(iv)</u>, <u>Section 12.02(b)(v)</u>, <u>Section 12.02(b)(vi),</u> this <u>Section 12.02(b)(ix)</u>, <u>Section 12.02(b)(xi), Section 12.02(b)(xii)</u> without the written consent of each Lender, (B) <u>Section 12.02(b)(vii)</u>, or <u>Section 12.02(b)(xi)</u> without the written consent of the Supermajority Lenders, (C) the definitions of "Majority Lenders" or "Supermajority Lenders", without the written consent of each directly and adversely affected Lender (other than any Defaulting Lender) or (D) any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or under any other Loan Documents or make any determination or grant any consent hereunder or any other Loan Documents, without the written consent of each Lender directly and adversely affected thereby; <u>provided</u> that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent or the Technical Agent hereunder or under any other Loan Document without the prior written consent of the Administrative Agent or the Technical Agent, as the case may be,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) (A) amend the definitions of "Five-Year Strip Price" or "Reserve Report" or (B) amend, modify, terminate or waive any provision of <u>Section 8.19</u>, Section 9.01 or Section 9.18, in each case, without the written consent of the Supermajority Lenders and the Technical Agent,

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) (A) amend the definitions of "Approved Petroleum Engineer", "Disputed Reserve Report", "Material Subsidiary", "Immaterial Subsidiary", "Replacement Reserve Report", or "Technical Agent" or (B) amend, modify, terminate or waive any provision of <u>Section 8.12</u>, without the consent of the Supermajority Lenders and the Technical Agent,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii) subordinate the Liens securing any of the Secured Obligations on all or substantially all of the Collateral to the Liens securing any other Indebtedness or other obligations or subordinate the Secured Obligations in contractual right of payment to any other Indebtedness or other obligations, in each case, other than in connection with a debtor-in-possession financing, without the written consent of each Lender (other than any Defaulting Lender).

Notwithstanding the foregoing, any supplement to <u>Schedule 7.05</u> (Litigation) <u>Schedule 7.14</u> (Subsidiaries), <u>Schedule 7.18</u> (Gas Imbalances), <u>Schedule 7.19</u> (Marketing Contracts), or <u>Schedule 1.02(c)</u> (Existing Swap Agreements) shall be effective simply by delivering to the Administrative Agent a supplemental schedule clearly marked as such and, upon receipt, the Administrative Agent will promptly deliver a copy thereof to the Lenders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Notwithstanding anything to the contrary contained in the Loan Documents, (A) in the case of <u>clauses (i)</u> through <u>(iv)</u> below, the Administrative Agent and the applicable Credit Parties or, in the cash of the Specified Additional Guarantee Agreement the Specified Additional Guarantors, thereto, or (B) in the case of <u>clause (v)</u> below, the Administrative Agent, in each case may amend, modify or supplement any Loan Document without the consent of any Lender in order to (i) correct, amend, cure or resolve any jointly identified ambiguity, omission, defect, typographical error, inconsistency or other manifest error therein, (ii) add a guarantor or collateral or otherwise enhance the rights and benefits of the Lenders, (iii) make minor administrative or operational changes not adverse to any Lender, (iv) adhere to any local Governmental Requirement on advice of local counsel or (v) implement any Benchmark Replacement or any Benchmark Replacement Conforming Changes or otherwise effectuate the terms of <u>Section 3.03(b)</u> in accordance with the terms of <u>Section 3.03(b)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Notwithstanding anything to the contrary contained in any Loan Documents, the Commitment of any Defaulting Lender may not be increased without its consent.

Section 12.03 <u>Expenses, Indemnity; Damage Waiver</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Borrower shall pay (i) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent, Collateral Agent, the Arranger, the Technical Agent, Fortress, in its capacity as a Lender, and their respective Affiliates, including the reasonable fees, charges and disbursements of counsel and other outside consultants for the Administrative Agent and Collateral Agent (<u>provided</u> that counsel shall be limited to (x) one (1) counsel to such Persons, taken as a whole, one (1) local counsel in each relevant jurisdiction and one (1) regulatory counsel to all such Persons with respect to a relevant regulatory matter, taken as a whole and

------

(y), solely in the event of a conflict of interest, one (1) additional counsel (and, if necessary, one (1) regulatory counsel and one (1) local counsel in each relevant jurisdiction or for each matter) to each group of similarly situated affected indemnified persons), the reasonable travel, photocopy, mailing, courier, telephone and other similar expenses, including all expenses associated with any Approved Electronic Platform, and the cost of environmental assessments and audits and surveys and appraisals, in connection with the syndication of this Agreement, preparation, negotiation, execution, delivery and administration (both before and after the execution hereof and including advice of counsel to the Administrative Agent or Collateral Agent as to the rights and duties of the Administrative Agent, the Collateral Agent and the Lenders with respect thereto) of this Agreement and the other Loan Documents and any amendments, modifications or waivers of or consents related to the provisions hereof or thereof (whether or not the Transactions or the transactions contemplated hereby or thereby shall be consummated) and including, without limitation, all costs and expenses of holding, preparing for sale and selling, collecting or otherwise realizing upon the Collateral and all attorneys' fees, legal expenses and court costs in connection therewith, (ii) all reasonable and documented out-of-pocket expenses incurred by the Lenders, other than Fortress (the "<u>Other Lenders</u>"), and their respective Affiliates, including the reasonable fees, charges and disbursements of counsel and other outside consultants for the Other Lenders, the reasonable travel, photocopy, mailing, courier, telephone and other similar expenses, including all expenses associated with any Approved Electronic Platform, and the cost of environmental assessments and audits and surveys and appraisals, in connection with the syndication of this Agreement, preparation, negotiation, execution, delivery and administration (both before and after the execution hereof and including advice of counsel to the Other Lenders as to the rights and duties of the Lenders) of this Agreement and the other Loan Documents and any amendments, modifications or waivers of or consents related to the provisions hereof or thereof (whether or not the Transactions or the transactions contemplated hereby or thereby shall be consummated), (iii) all costs, expenses, taxes, assessments and other charges incurred by the Administrative Agent, the Collateral Agent or any Lender in connection with any filing, registration, recording or perfection of any security interest contemplated by this Agreement or any Security Instrument or any other document referred to therein or conducting of title reviews, mortgage matches and collateral review and (iv) all reasonable out-of-pocket expenses incurred by the Administrative Agent, the Collateral Agent, the Technical Agent or any Lender, including the fees, charges and disbursements of any counsel for the Administrative Agent, the Collateral Agent, the Technical Agent or any Lender, in connection with the enforcement or protection of its rights in connection with this Agreement, any other Loan Document or any Collateral, including its rights under this <u>Section 12.03</u> and in connection with the preservation of the Lien of, or the rights of the Collateral Agent or any other Secured Party under the Security Instruments, any actual or attempted sale, lease, disposition, exchange, collection, compromise, settlement or other realization in respect of, or care of, the Collateral, including all such costs and expenses incurred in any bankruptcy, reorganization, workout or other similar proceeding and/or in connection with the Loans made, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans; <u>provided</u>, this <u>Section 12.03(a)</u> shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) THE BORROWER SHALL INDEMNIFY THE ADMINISTRATIVE AGENT, THE COLLATERAL AGENT, THE TECHNICAL AGENT, THE ARRANGER AND EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH PERSON BEING CALLED AN "<u>INDEMNITEE</u>") AGAINST, AND HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES, LITIGATIONS, INVESTIGATIONS, PROCEEDINGS AND RELATED EXPENSES, INCLUDING THE REASONABLE FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE (<u>PROVIDED</u> THAT COUNSEL SHALL BE LIMITED TO (X) ONE (1) COUNSEL TO SUCH INDEMNITEES, TAKEN AS A WHOLE, ONE (1) LOCAL COUNSEL IN EACH RELEVANT JURISDICTION AND ONE (1) REGULATORY COUNSEL TO ALL SUCH INDEMNITEES WITH RESPECT TO A RELEVANT REGULATORY MATTER, TAKEN AS A WHOLE AND (Y), SOLELY IN THE EVENT OF A CONFLICT OF INTEREST, ONE (1) ADDITIONAL COUNSEL (AND, IF NECESSARY, ONE (1) REGULATORY COUNSEL AND ONE (1) LOCAL COUNSEL IN EACH RELEVANT JURISDICTION OR FOR EACH MATTER) TO EACH GROUP OF SIMILARLY SITUATED AFFECTED INDEMNITEES), INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF (i) THE EXECUTION OR DELIVERY OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OR THE PARTIES TO ANY OTHER LOAN DOCUMENT OF THEIR RESPECTIVE OBLIGATIONS, RIGHTS OR REMEDIES HEREUNDER OR THEREUNDER OR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR BY ANY OTHER LOAN DOCUMENT (INCLUDING THE ARRANGEMENT AND SYNDICATION OF THE COMMITMENTS OR THE EXERCISE OF ANY RIGHT OR REMEDY WITH RESPECT TO COLLATERAL), (ii) THE FAILURE OF ANY CREDIT PARTY OR SPECIFIED ADDITIONAL GUARANTOR TO COMPLY WITH THE TERMS OF ANY LOAN DOCUMENT, INCLUDING THIS AGREEMENT, OR WITH ANY GOVERNMENTAL REQUIREMENT, (iii) ANY INACCURACY OF ANY REPRESENTATION OR ANY BREACH OF ANY WARRANTY OR COVENANT ANY CREDIT PARTY OR SPECIFIED ADDITIONAL GUARANTOR SET FORTH IN ANY OF THE LOAN DOCUMENTS OR ANY INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS DELIVERED IN CONNECTION THEREWITH, (iv) ANY LOAN OR THE USE OF THE PROCEEDS THEREFROM, (v) ANY OTHER ASPECT OF THE LOAN DOCUMENTS, (vi) THE OPERATIONS OF THE BUSINESS OF THE COMPANY AND ITS SUBSIDIARIES BY THE COMPANY AND ITS SUBSIDIARIES, (vii) ANY ASSERTION THAT THE LENDERS WERE NOT ENTITLED TO RECEIVE THE PROCEEDS RECEIVED PURSUANT TO THE SECURITY INSTRUMENTS, (viii) ANY ENVIRONMENTAL LAW APPLICABLE TO THE COMPANY OR ANY SUBSIDIARY OR ANY OF THEIR PROPERTIES, INCLUDING WITHOUT LIMITATION, THE PRESENCE, GENERATION, STORAGE, RELEASE, THREATENED RELEASE, USE, TRANSPORT, DISPOSAL, ARRANGEMENT OF DISPOSAL OR TREATMENT OF OIL, OIL AND GAS WASTES, SOLID WASTES OR HAZARDOUS SUBSTANCES ON ANY OF THEIR PROPERTIES, (ix) THE BREACH OR NON-COMPLIANCE BY THE COMPANY OR ANY SUBSIDIARY WITH ANY ENVIRONMENTAL LAW APPLICABLE TO THE COMPANY OR ANY SUBSIDIARY, (x) THE PAST OWNERSHIP BY THE COMPANY OR ANY SUBSIDIARY OF ANY OF THEIR PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR PROPERTIES WHICH, THOUGH LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD RESULT IN PRESENT LIABILITY, (xi) THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT, DISPOSAL, GENERATION, THREATENED RELEASE,

------

TRANSPORT, ARRANGEMENT FOR TRANSPORT OR ARRANGEMENT FOR DISPOSAL OF OIL, OIL AND GAS WASTES, SOLID WASTES OR HAZARDOUS SUBSTANCES ON OR AT ANY OF THE PROPERTIES OWNED OR OPERATED BY THE COMPANY OR ANY SUBSIDIARY OR ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS SUBSTANCES ON OR FROM ANY PROPERTY OWNED OR OPERATED BY THE COMPANY OR ANY OF ITS SUBSIDIARIES, (xii) ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, OR (xiii) ANY OTHER ENVIRONMENTAL, HEALTH OR SAFETY CONDITION IN CONNECTION WITH THE LOAN DOCUMENTS, OR (xiv) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING THAT MAY BE BROUGHT BY ANY CREDIT PARTY OR SPECIFIED ADDITIONAL GUARANTOR, ANY OF THEIR RESPECTIVE AFFILIATES OR ANY OTHER PERSON OR ENTITY, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO, AND SUCH INDEMNITY SHALL EXTEND TO EACH INDEMNITEE NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND OR CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT OR AN OMISSION, INCLUDING WITHOUT LIMITATION, ALL TYPES OF NEGLIGENT CONDUCT IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF ONE OR MORE OF THE INDEMNITEES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON ANY ONE OR MORE OF THE INDEMNITEES; <u>PROVIDED</u> THAT SUCH INDEMNITY SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS NEGLIGENCE, BAD FAITH OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) To the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent, Collateral Agent or the Technical Agent under <u>Section 12.03(a)</u> or <u>Section 12.03(b)</u>, each Lender severally agrees to pay to the Administrative Agent, the Collateral Agent or the Technical Agent, as the case may be, such Lender's Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; <u>provided</u> that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent, Collateral Agent or the Technical Agent in its capacity as such.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) All amounts due under this <u>Section 12.03</u> shall be payable not later than five (5) days after written demand therefor.

Section 12.04 <u>Successors and Assigns</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that (i) the Company and the Borrower may not assign or otherwise transfer any of their rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no

------

Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this <u>Section 12.04</u> (and any attempted assignment or transfer not complying with the terms of this <u>Section 12.04</u>, including an assignment to a Person that is not an Eligible Assignee, 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 <u>Section 12.04(c)</u>) and, to the extent expressly contemplated hereby, the Related Parties of each Agent and each of the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Subject to the conditions set forth in <u>Section 12.04(b)(ii)</u>, any Lender may assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld, conditioned or delayed) of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) the Borrower, <u>provided</u> that no consent of the Borrower shall be required for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if an Event of Default has occurred and is continuing, any other assignee, and <u>provided</u> that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within ten (10) days after having received notice thereof and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) the Administrative Agent; <u>provided</u>, that no consent of the Administrative Agent shall be required for an assignment to an assignee that is a Lender or an Affiliate of a Lender immediately prior to giving effect to such assignment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Assignments shall be subject to the following additional conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) except in the case of an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or an assignment of the entire remaining amount of the assigning Lender's Commitment or Loans, the amount of the Commitments or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 unless each of the Borrower and the Administrative Agent otherwise consent; <u>provided</u> that no such consent of the Borrower shall be required if an Event of Default of the type described in <u>Section 10.01(a)</u>, <u>Section 10.01(b)</u>, <u>Section 10.01(h)</u> or <u>Section 10.01(i)</u> has occurred and is continuing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Agreement; <u>provided</u> that this clause (B) shall not prohibit any Lender from assigning all or a proportionate part of its rights and obligations in respect of any Class of Loans;

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) the parties to each assignment shall execute and deliver to the Administrative Agent (1) an Assignment and Assumption or (2) to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to an Approved Electronic Platform as to which the Administrative Agent and the parties to the Assignment and Assumption are participants, together with a processing and recordation fee of $3,500;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire in which the assignee designates one or more contacts to whom all syndicate-level information (which may contain material non-public information about the Borrower, the Subsidiaries and their Related Parties or their respective securities) will be made available and who may receive such information in accordance with the assignee's compliance procedures and applicable laws, including Federal and state securities laws;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(E) the assignee must not be (x) a natural Person (or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural Person), (y) a Defaulting Lender or (z) the Borrower, any other Credit Party, or any Affiliate (or Close Affiliate) (including a Specified Additional Guarantor) of the Borrower or any other Credit Party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Subject to <u>Section 12.04(b)(iv)</u>, and the acceptance and recording thereof, from and after the effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of <u>Section 5.01</u>, <u>Section 5.02</u>, <u>Section 5.03</u> and <u>Section 12.03</u>). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this <u>Section 12.04</u> 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 <u>Section 12.04(c)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders of, and principal amount of (and stated interest on) the Loans owing to, each Lender pursuant to the terms hereof from time to time (the "<u>Register</u>"). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the 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, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice. In connection with any changes to the Register, if necessary, the Administrative Agent will reflect the revisions on <u>Annex I</u> and, at its election, forward a copy of such revised <u>Annex I</u> to the Borrower and each Lender.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Upon its receipt of (A) a duly completed Assignment and Assumption executed by an assigning Lender and an assignee or (B) to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to an Approved Electronic Platform as to which the Administrative Agent and the parties to the Assignment and Assumption are participants, the assignee's completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in <u>Section 12.04(b)</u> and any written consent to such assignment required by <u>Section 12.04(b)</u>, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register; <u>provided</u> that if either the assigning Lender or the assignee shall have failed to make any payment required to be made by it pursuant to <u>Section 2.04(a)</u>, <u>Section 4.02</u> or <u>Section 12.03(a)</u>, the Administrative Agent shall have no obligation to accept such Assignment and Assumption and record the information therein in the Register unless and until such payment shall have been made in full, together with all accrued interest thereon. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this <u>Section 12.04(b)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) (i) Any Lender may, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to one or more banks or other Persons (other than any 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 an Affiliate or a Subsidiary of the Borrower or any other Credit Party) (a "<u>Participant</u>") in all or a portion of such Lender's rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans owing to it); <u>provided</u> that (A) such Lender's obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. 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; <u>provided</u> 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 <u>clauses (i)</u>, <u>(iii)</u>, <u>(iv)</u>, and <u>(vi)</u> of the proviso to <u>Section 12.02(b)</u> that affects such Participant and for which such Lender would have consent rights. In addition, such agreement must provide that the Participant be bound by the provisions of <u>Section 12.03</u>. Subject to clause (i) of this <u>Section 12.04(c)</u>, the Borrower agrees that each Participant shall be entitled to the benefits of <u>Section 5.01</u>, <u>Section 5.02</u> and <u>Section 5.03</u> (subject to the requirements and limitations therein, including the requirements under <u>Section 5.03(e)</u> (it being understood that the documentation required under <u>Section 5.03(e)</u> 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 <u>Section 12.04(b)</u>; <u>provided</u> that such Participant agrees to be subject to the provisions of <u>Section 5.04</u> as if it were an assignee under <u>paragraph (b)</u> of this Section. Each Lender that sells a participation to a Participant agrees, at the Borrower's request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of <u>Section 5.04</u> with respect to

------

such Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of <u>Section 12.08</u> as though it were a Lender, <u>provided</u> such Participant agrees to be subject to <u>Section 4.01(c)</u> as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant's interest in the Loans or other obligations under the Loan Documents (the "<u>Participant Register</u>"); <u>provided</u> 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 or its other obligations under any Loan Document) except to the extent that such disclosure is necessary to establish that such Commitment, Loan or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) A Participant shall not be entitled to receive any greater payment under <u>Section 5.01</u> or <u>Section 5.03</u> than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) A Participant must not be 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 an Affiliate or a Subsidiary of the Borrower or any other Credit Party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including, without limitation, any pledge or assignment to secure obligations to a Federal Reserve Bank or any other central bank having jurisdiction over such Lender, and this <u>Section 12.04</u> shall not apply to any such pledge or assignment of a security interest; <u>provided</u> that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Notwithstanding any other provisions of this <u>Section 12.04</u>, no transfer or assignment of the interests or obligations of any Lender or any grant of participations therein shall be permitted if such transfer, assignment or grant would require the Borrower and the Guarantors to file a registration statement with the SEC or to qualify the Loans under the "Blue Sky" laws of any state.

------

Section 12.05 <u>Survival; Revival; Reinstatement</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All covenants, agreements, representations and warranties made by or on behalf of the Company or any Subsidiary herein, in the other Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Loans, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the any Agent or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect until Payment in Full. The provisions of <u>Section 5.01</u>, <u>Section 5.02, Section 5.03</u> and <u>Section 12.03</u> and <u>ARTICLE XI</u> shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Commitments or the termination of this Agreement, any other Loan Document or any provision hereof or thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) To the extent that any payments on the Secured Obligations or proceeds of any collateral are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, debtor in possession, receiver or other Person under any bankruptcy law, common law or equitable cause, then to such extent, the Secured Obligations so satisfied shall be revived and continue as if such payment or proceeds had not been received and the Administrative Agent's and the Secured Parties' Liens, security interests, rights, powers and remedies under this Agreement and each Loan Document shall continue in full force and effect. In such event, each Loan Document shall be automatically reinstated and the Borrower shall take such action as may be reasonably requested by the Administrative Agent and the Lenders and other Secured Parties to effect such reinstatement.

Section 12.06 <u>Counterparts; Integration; Effectiveness</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) This Agreement and the other Loan Documents represent the final agreement among the parties hereto and thereto and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties. There are no unwritten oral agreements between the parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Except as provided in <u>Section 6.01</u>, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Delivery of an executed counterpart of a signature page of this Agreement by telecopy, emailed pdf. or any other electronic means that reproduces an image of the actual executed signature page shall be effective as delivery of a manually executed counterpart of this

------

Agreement. The words "execution," "signed," "signature," "delivery," and words of like import in or relating to any document to be signed in connection with this Agreement and the transactions contemplated hereby shall be deemed to include Electronic Signatures, deliveries 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, physical delivery thereof 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; <u>provided</u> that nothing herein shall require the Administrative Agent to accept electronic signatures in any form or format without its prior written consent.

Section 12.07 <u>Severability</u>. Any provision of this Agreement or any other Loan Document held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof or thereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

Section 12.08 <u>Right of Setoff</u>. If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations (of whatsoever kind, including, without limitations obligations under Swap Agreements) at any time owing by such Lender or any such Affiliate to or for the credit or the account of the Borrower or any Guarantor against any of and all the obligations of the Borrower or any Guarantor owed to such Lender or its Affiliates now or hereafter existing under this Agreement or any other Loan Document, irrespective of whether or not such Lender or such Affiliate shall have made any demand under this Agreement or any other Loan Document and although such obligations may be contingent or unmatured or are owed to a branch office or Affiliate holding such deposit or obligated on such indebtedness; <u>provided</u> that to the extent prohibited by applicable law as described in the definition of "Excluded Swap Obligation," no amounts received from, or set off with respect to, any Guarantor shall be applied to any Excluded Swap Obligations of such Guarantor. The rights of each Lender under this <u>Section 12.08</u> are in addition to other rights and remedies (including other rights of setoff) which such Lender or its Affiliates may have; <u>provided</u> that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of <u>Section 10.02(c)</u> and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of each Agent and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Secured Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender and its Affiliates under this <u>Section 12.08</u> are in addition to other rights and remedies (including other rights of setoff) that such Lender or its Affiliates may have. Each Lender agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application; <u>provided</u> that the failure to give such notice shall not affect the validity of such setoff and application.

------

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) THIS AGREEMENT, THE NOTES (IF ANY) AND ANY LOAN DOCUMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN DOCUMENTS SHALL BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY, AND CITY OF NEW YORK, BOROUGH OF MANHATTAN, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS; <u>PROVIDED</u>, THAT NOTHING CONTAINED HEREIN OR IN ANY OTHER LOAN DOCUMENT WILL PREVENT ANY PARTY FROM BRINGING ANY ACTION TO ENFORCE ANY AWARD OR JUDGMENT OR EXERCISE ANY RIGHT UNDER THE LOAN DOCUMENTS IN ANY OTHER FORUM IN WHICH JURISDICTION CAN BE ESTABLISHED. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION 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. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) EACH PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT THE ADDRESS SPECIFIED IN <u>SECTION 12.01</u> OR SUCH OTHER ADDRESS AS IS SPECIFIED PURSUANT TO <u>SECTION 12.01</u> (OR ITS ASSIGNMENT AND ASSUMPTION), SUCH SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF A PARTY OR ANY HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR ANY OF THE AGENTS, ANY LENDER OR THE HOLDER OF ANY NOTE TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANOTHER PARTY IN ANY OTHER JURISDICTION.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) EACH PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN; (ii) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL

------

DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES (<u>PROVIDED</u>, THAT THIS WAIVER SHALL NOT LIMIT RECOVERY BY AN INDEMNITEE PURSUANT TO <u>SECTION 12.03</u> FOR INDEMNIFICATION OF EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES PAID TO, OR ASSERTED BY, A THIRD PARTY); (iii) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OF COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (iv) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS <u>SECTION 12.09</u>.

Section 12.10 <u>Headings</u>. Article and Section headings and the **Table of Contents** used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

Section 12.11 <u>Confidentiality</u> **<u>and Publicity</u><u>.</u>**

**. <u>(a)</u>** Each of the Administrative Agent, the Technical Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (**a<u>i</u>**) to its and its Affiliates' directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (**b<u>ii</u>**) to the extent requested by any regulatory authority, (**c<u>iii</u>**) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (**d<u>iv</u>**) to any other party to this Agreement or any other Loan Document, (**e<u>v</u>**) in connection with the exercise of any remedies hereunder or under any other Loan Document or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (**f<u>vi</u>**) subject to an agreement containing provisions substantially the same as those of this <u>Section 12.11</u>, to (**i<u>1</u>**) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or any pledge or assignment permitted under <u>Section 12.04(d)</u> or (**ii<u>2</u>**) any actual or prospective counterparty (or its advisors) to any Swap Agreement or any credit insurance provider, in each case relating to any Credit Party and its obligations, (**g<u>vii</u>**) with the consent of any Credit Party, (**h<u>viii</u>**) to the National Association of Insurance Commissioners or any similar organization or any nationally recognized rating agency that requires access to information about a Lender's investment portfolio in connection with ratings issued with respect to such Lender or (**i<u>ix</u>**) to the extent such Information (**i<u>1</u>**) becomes publicly available other than as a result of a breach of this <u>Section 12.11</u> or (**ii<u>2</u>**) becomes available to the Administrative Agent or any Lender on a nonconfidential basis from a source other than the Borrower or (**j<u>x</u>**) on a confidential basis to a rating agency in connection with rating any Credit Party or the credit facilities provided for herein. For the purposes of this <u>Section 12.11</u>, "<u>Information</u>" means all information received from the Company or any Subsidiary relating to the Company or any Subsidiary and their businesses, other than any such information that is available to the Administrative Agent or any Lender on a non-confidential basis prior to disclosure by the Company or any Subsidiary and other than information pertaining to this Agreement routinely provided by the Arranger to data service providers, including league table providers, that serve the lending industry. Any Person required to maintain the confidentiality of Information as provided in this <u>Section 12.11</u> 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.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>(b) Without the express written consent of Fortress, each Loan Party shall not, and shall ensure its Affiliates and employees shall not (including through any investor marketing materials, on any websites or other media outlets (including, without limitation, newspapers, periodicals and other publicly disseminated marketing materials), (i) publicize any relationship with, or endorsement by, Fortress or its Affiliates, other than, when discussing the debt of the Loan Parties, a factual reference to Fortress and its Affiliates as secured lenders, without further commentary, or (ii) use in any publicity Fortress' or its Affiliates' logo. For the avoidance of doubt, the forgoing shall not prohibit a Loan Party from disclosing Fortress' or its Affiliates' role in connection with the transactions to the extent required by law or requested by any regulatory authority, including by any subpoena or similar legal process.</u>** 

Section 12.12 <u>Interest Rate Limitation</u>. It is the intention of the parties hereto that each Lender shall conform strictly to usury laws applicable to it. Accordingly, if the transactions contemplated hereby would be usurious as to any Lender under laws applicable to it (including the laws of the United States of America, the State of New York and the State of Texas or any other jurisdiction whose laws may be mandatorily applicable to such Lender notwithstanding the other provisions of this Agreement), then, in that event, notwithstanding anything to the contrary in any of the Loan Documents or any agreement entered into in connection with or as security for the Loans, it is agreed as follows: (a) the aggregate of all consideration which constitutes interest under law applicable to any Lender that is contracted for, taken, reserved, charged or received by such Lender under any of the Loan Documents or agreements or otherwise in connection with the Loans shall under no circumstances exceed the maximum amount allowed by such applicable law, and any excess shall be canceled automatically and if theretofore paid shall be credited by such Lender on the principal amount of the Secured Obligations (or, to the extent that the principal amount of the Secured Obligations shall have been or would thereby be paid in full, refunded by such Lender to the Borrower); and (b) in the event that the maturity of the Loans is accelerated by reason of an election of the holder thereof resulting from any Event of Default under this Agreement or otherwise, or in the event of any required or permitted prepayment, then such consideration that constitutes interest under law applicable to any Lender may never include more than the maximum amount allowed by such applicable law, and excess interest, if any, <u>provided</u> for in this Agreement or otherwise shall be canceled automatically by such Lender as of the date of such acceleration or prepayment and, if theretofore paid, shall be credited by such Lender on the principal amount of the Secured Obligations (or, to the extent that the principal amount of the Secured Obligations shall have been or would thereby be paid in full, refunded by such Lender to the Borrower). All sums paid or agreed to be paid to any Lender for the use, forbearance or detention of sums due hereunder shall, to the extent permitted by law applicable to such Lender, be amortized, prorated, allocated and spread throughout the stated term of the Loans, until payment in full so that the rate or amount of interest on account of any Loans hereunder does not exceed the maximum amount allowed by such applicable law. If at any time and from time to time (i) the amount of interest payable to any Lender on any date shall be computed at the Highest Lawful Rate applicable to

------

such Lender pursuant to this <u>Section 12.11</u> and (ii) in respect of any subsequent interest computation period the amount of interest otherwise payable to such Lender would be less than the amount of interest payable to such Lender computed at the Highest Lawful Rate applicable to such Lender, then the amount of interest payable to such Lender in respect of such subsequent interest computation period shall continue to be computed at the Highest Lawful Rate applicable to such Lender until the total amount of interest payable to such Lender shall equal the total amount of interest which would have been payable to such Lender if the total amount of interest had been computed without giving effect to this <u>Section 12.11</u>.

Section 12.13 <u>EXCULPATION PROVISIONS</u>. EACH OF THE PARTIES HERETO SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT "CONSPICUOUS."

Section 12.14 <u>Collateral Matters; Swap Agreements; Swap Intercreditor Agreement</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Subject to the Swap Intercreditor Agreement, the benefit of the Security Instruments and of the provisions of this Agreement relating to any collateral securing the Secured Obligations shall also extend to and be available on a pro rata basis to any Secured Swap Provider, in each case, after giving effect to all netting arrangements relating to any Secured Swap Agreements between the Borrower or any other Credit Party and such Secured Swap Provider. Except as expressly set forth in this Agreement, no Person shall have any voting rights under any Loan Document as a result of the existence of obligations owed to it under any Secured Swap Agreements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) EACH LENDER HEREBY (i) INSTRUCTS AND AUTHORIZES THE ADMINISTRATIVE AGENT TO EXECUTE AND DELIVER THE SWAP INTERCREDITOR AGREEMENT ON ITS BEHALF, (ii) AUTHORIZES AND DIRECTS THE ADMINISTRATIVE AGENT TO EXERCISE ALL OF THE ADMINISTRATIVE AGENT'S RIGHTS AND TO COMPLY WITH ALL OF ITS OBLIGATIONS UNDER THE SWAP INTERCREDITOR AGREEMENT, (iii) AGREES THAT THE ADMINISTRATIVE AGENT

------

MAY TAKE ACTIONS ON ITS BEHALF AS IS CONTEMPLATED BY THE TERMS OF THE SWAP INTERCREDITOR AGREEMENT, AND (iv) UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT AT ALL TIMES FOLLOWING THE EXECUTION AND DELIVERY OF THE SWAP INTERCREDITOR AGREEMENT SUCH LENDER (AND EACH OF ITS SUCCESSORS AND ASSIGNS) SHALL BE BOUND BY THE TERMS THEREOF. EACH LENDER ACKNOWLEDGES THAT IT HAS REVIEWED AND IS SATISFIED WITH THE TERMS AND PROVISIONS OF THE SWAP INTERCREDITOR AGREEMENT AND ACKNOWLEDGES AND AGREES THAT SUCH LENDER IS RESPONSIBLE FOR MAKING ITS OWN ANALYSIS AND REVIEW OF THE SWAP INTERCREDITOR AGREEMENT AND THE TERMS AND PROVISIONS THEREOF, AND NEITHER THE ADMINISTRATIVE AGENT NOR ANY OF ITS AFFILIATES MAKES ANY REPRESENTATION TO ANY LENDER AS TO THE SUFFICIENCY OR ADVISABILITY OF THE PROVISIONS CONTAINED IN THE SWAP INTERCREDITOR AGREEMENT.

Section 12.15 <u>No Third Party Beneficiaries</u>. This Agreement, the other Loan Documents, and the agreement of the Lenders to make Loans are solely for the benefit of the Borrower, and no other Person (including, without limitation, any Subsidiary of the Company, any obligor, contractor, subcontractor, supplier or materialsman) shall have any rights, claims, remedies or privileges hereunder or under any other Loan Document against any Agent or any Lender for any reason whatsoever. Other than the Indemnitees, there are no third party beneficiaries.

Section 12.16 <u>USA Patriot Act Notice</u>. Each Lender hereby notifies the Borrower that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies the Credit Parties and the Specified Additional Guarantors, which information includes the name and address of the Credit Parties and the Specified Additional Guarantors and other information that will allow such Lender to identify the Credit Parties and the Specified Additional Guarantors in accordance with the Patriot Act.

Section 12.17 <u>Flood Insurance Provisions</u>. Notwithstanding any provision in any of the Loan Documents to the contrary, in no event is any Building (as defined in the applicable Flood Insurance Regulations) or Manufactured (Mobile) Home (as defined in the applicable Flood Insurance Regulations) owned by any Credit Party included in the Mortgaged Property and no Building or Manufactured (Mobile) Home shall be encumbered by any Security Instrument; <u>provided</u>, that (a) the applicable Credit Party's interests in all lands and Hydrocarbons situated under any such Building or Manufactured (Mobile) Home shall be included in the Mortgaged Property and shall be encumbered by the Security Instruments and (b) the Company shall not, and shall not permit any of its Subsidiaries to, permit to exist any Lien on any Building or Manufactured (Mobile) Home except Liens permitted by <u>Section 9.03</u>.

Section 12.18 <u>No Fiduciary Duty</u>. Each Lender and their Affiliates (collectively, solely for purposes of this <u>Section 12.18</u>, the "<u>Lenders</u>"), may have economic interests that conflict with those of the Company and its Subsidiaries and their stockholders and/or their Affiliates. The Company, for itself and on behalf of its Subsidiaries, agrees that nothing in this Agreement or the Loan Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between any Lender, on the one hand, and the Company or its Subsidiaries, their stockholders or their Affiliates, on the other. The Company, for itself and on behalf of its Subsidiaries, acknowledges and agrees that (a) the transactions

------

contemplated by the Loan Documents (including the exercise of rights and remedies hereunder and thereunder) are arm's-length commercial transactions between the Lenders, on the one hand, and the Company and its Subsidiaries, on the other, and (b) in connection therewith and with the process leading thereto, (x) no Lender has assumed an advisory or fiduciary responsibility in favor of the Company, the Company or its Subsidiaries, their stockholders or their Affiliates with respect to the transactions contemplated hereby (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any Lender has advised, is currently advising or will advise the Company or its Subsidiaries, their stockholders or their Affiliates on other matters) or any other obligation to the Company or any of its Subsidiaries except the obligations expressly set forth in the Loan Documents and (y) each Lender is acting solely as principal and not as the agent or fiduciary of the Company or any of its Subsidiaries, their management, stockholders, creditors or any other Person. The Company, for itself and its Subsidiaries, acknowledges and agrees that it has consulted its own legal and financial advisors to the extent it deemed appropriate and that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto. The Company, for itself and its Subsidiaries, agrees that it will not claim that any Lender has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Company or such Subsidiary, in connection with such transaction or the process leading thereto.

Section 12.19 <u>Releases</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Release Upon Payment in Ful</u>l. Upon Payment in Full, at the written request and expense of the Borrower, the Administrative Agent will (i) provide notice of Payment in Full to the Collateral Agent and take such other actions as may be reasonably requested by the Borrower to effect the release of the Liens under the Security Instruments insofar as they secure the Administrative Agent and (ii) release any guaranties and Collateral held directly by the Administrative Agent (or deliver such Collateral to the Collateral Agent to the extent contemplated by the Intercreditor Agreement). Nothing in this paragraph (a) shall require the Administrative Agent to release the Liens held by the Collateral Agent securing Non-Sender Secured Swap Providers under the Intercreditor Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Release Upon Disposition</u>. If any Collateral shall be sold, transferred or otherwise Disposed of by the Company or any Subsidiary in a transaction permitted by (or if not addressed, not prohibited by) the Loan Documents, or the release or subordination of any Liens on any Collateral is otherwise expressly contemplated and permitted by the Loan Documents, at the request and sole expense of the Company and the applicable Subsidiary, and to the extent permitted by the Intercreditor Agreement, the Administrative Agent shall (i) direct the Collateral Agent to release or subordinate the Liens of the Collateral Agent in the applicable Collateral or (ii) to the extent the Collateral is held by the Administrative Agent release or subordinate the Liens on the Collateral held directly by the Administrative Agent. If all the capital stock or other Equity Interests of any Guarantor (other than the Company or the Borrower, which shall not be released as Guarantors) shall be sold, transferred or otherwise Disposed of in a transaction permitted by the Loan Documents, at the request and sole expense of the Company and the applicable Guarantor, and to the extent permitted by the Intercreditor Agreement, the Administrative Agent shall direct the Collateral Agent to release the applicable Guarantor from its obligations under the Security Instruments. For the avoidance of doubt, no Guarantor shall be released from its guarantee obligations under the Loan Documents if less than all of its capital stock and Equity Interests are

------

sold or otherwise Disposed of. It shall be a condition precedent to the Administrative Agent taking any actions under this paragraph (b) that the Company shall have delivered to Administrative Agent, at least five (5) Business Days prior to the date of the proposed release or subordination, a written request for release or subordination identifying the relevant Collateral and the terms of such transaction in reasonable detail, together with a certification by Company stating that such transaction is in compliance with this Agreement and the other Loan Documents and that the proceeds of the transaction, if any, will be applied in accordance with this Agreement and the other Loan Documents.

Section 12.20 <u>Material Non-Public Information</u>.

Each of the Company and the Borrower hereby acknowledges that certain of the Lenders (each, a "<u>Public Lender</u>") may have personnel who do not wish to receive material non-public information with respect to the Company, the Borrower or its or their Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons' securities. Each of the Company and the Borrower hereby agrees that it will use commercially reasonable efforts to identify that portion of the materials and information provided by or on behalf of the Company or the Borrower hereunder and under the other Loan Documents (collectively, "<u>Company Materials</u>") that may be distributed to the Public Lenders and that (a) all such Company Materials shall be clearly and conspicuously marked "PUBLIC," which, at a minimum, shall mean that the word "PUBLIC" shall appear prominently on the first page thereof; (b) by marking Company Materials "PUBLIC," the Company and the Borrower shall be deemed to have authorized the Administrative Agent and the Lenders to treat such Company Materials as not containing any material non-public information with respect to the Company, the Borrower or its or their Affiliates or its or their securities for purposes of U.S. federal and state securities Laws (<u>provided</u>, <u>however</u>, that to the extent that such Company Materials constitute Information, they shall be subject to <u>Section 12.11</u>); (c) all Company Materials marked "PUBLIC" are permitted to be made available through a portion of the Approved Electronic Platform designated "Public Side Information;" and (d) the Administrative Agent and the Arranger shall be entitled to treat any Company Materials that are not marked "PUBLIC" as being suitable only for posting on a portion of the Approved Electronic Platform not designated "Public Side Information". Each Public Lender will designate one or more representatives that shall be permitted to receive information that is not designated as being available for Public Lenders.

Section 12.21 <u>Independence of Covenants</u>. 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 would otherwise be within the limitations of, another covenant shall not avoid the occurrence of a Default or an Event of Default if such action is taken or condition exists.

Section 12.22 <u>Acknowledgement and Consent to Bail-In of Affected Financial Institutions</u>. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Loan Document may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

------

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

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

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent entity, 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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority.

Section 12.23 <u>Acknowledgement Regarding Any Supported QFCs</u>. To the extent that the Loan Documents provide support, through a guarantee or otherwise, for hedging agreements or any other agreement or instrument that is a QFC (such support "<u>QFC Credit Support</u>" and each such QFC a "<u>Supported QFC</u>"), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the "<u>U.S. Special Resolution Regimes</u>") in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):

In the event a Covered Entity that is party to a Supported QFC (each, a "<u>Covered Party</u>") becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, default rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such default rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.

------

Section 12.24 <u>Intercreditor Agreement and Specified Additional Guarantee Agreements</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) In the event of any conflict between the terms of the Intercreditor Agreement and the terms of this Agreement, the terms of the Intercreditor Agreement shall govern.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Notwithstanding anything to the contrary contained in this Agreement or any other Loan Document, the obligation of the Specified Additional Guarantors under the Specified Additional Guarantee Agreements to guarantee the Loan Obligations are solely for the benefit of Fortress and it is expressly understood that no other Secured Party is intended to be a third-party beneficiary of the provisions of the Specified Additional Guarantee Agreements.

Section 12.25 <u>Existing Credit Agreement</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) On the Closing Date, the Existing Credit Agreement shall be amended and restated in its entirety by this Agreement, and the Existing Credit Agreement shall thereafter be of no further force and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) On and after the Closing Date, (i) all references to the Existing Credit Agreement (or to any amendment or any amendment and restatement thereof) in the Loan Documents (other than this Agreement) shall be deemed to refer to the Existing Credit Agreement as amended and restated hereby (as it may be further amended, modified or restated), (ii) all references to any section (or subsection) of the Existing Credit Agreement or in any Loan Document (but not herein) shall be amended to become, mutatis mutandis, references to the corresponding provisions of this Agreement and (iii) except as the context otherwise provides, on or after the Closing Date, all references to this Agreement herein (including for purposes of indemnification and reimbursement of fees) shall be deemed to be references to the Existing Credit Agreement, as amended and restated hereby (as it may be further amended, modified or restated).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Existing Lender is deemed to reallocate its Existing Loans and its Existing Commitments to the Lenders as contemplated by this Agreement. On the Closing Date and after giving effect to such reallocation and adjustment of such Existing Commitments, the Commitments of each Lender shall be as set forth on <u>Schedule 1.02(b)</u> or <u>Schedule 1.02(d)</u>, as applicable, hereto. The reallocation and adjustment to the Existing Loans and such Commitments of each Lender as contemplated by this <u>Section 12.25(c)</u> shall be deemed to have been consummated pursuant to the terms of the Assignment and Assumption attached as Exhibit E hereto as if each of the Lenders had executed an Assignment and Assumption with respect to such reallocation and adjustment. The Credit Parties, and the Specified Additional Guarantors and the Administrative Agent hereby consent to such reallocation and adjustment of the Existing Loans and such Commitments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) This amendment and restatement is limited as written and is not a consent to any other amendment, restatement or waiver, whether or not similar and, except as expressly provided herein or in any other Loan Document, all terms and conditions of the Loan Documents remain in full force and effect unless specifically amended hereby or by any other Loan Document.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) From and after the Closing Date, (i) the Existing Lender shall not be a party to this Agreement, (ii) the Existing Lender shall not have any obligations or liabilities under this Agreement with respect to the period from and after the Closing Date and, without limiting the foregoing, the Existing Lender shall not have any Commitment under this Agreement and (iii) the Existing Lender shall not have any rights under the Existing Credit Agreement, this Agreement or any other Loan Document (other than rights under the Existing Credit Agreement expressly stated to survive the termination of the Existing Credit Agreement and the repayment of amounts outstanding thereunder).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Each of the Credit Parties hereby (a) ratifies, confirms and reaffirms any and all Liens that it previously granted to the Existing Lender pursuant to the "Loan Documents" or "Loan Papers" (each as defined in the Existing Credit Agreement) which it has assigned to the Administrative Agent hereunder and acknowledges and agrees that none of such Liens has expired or has been terminated or released, except if and to the extent, if any, expressly provided in such "Loan Documents" or "Loan Papers" or as may have been previously and expressly terminated or released by the Existing Lender, and (b) acknowledges and agrees that each of such Liens is valid and enforceable in accordance with its terms and continues in full force and effect to secure the payment and performance of the entirety of the Secured Obligations.

[SIGNATURES BEGIN NEXT PAGE]

## Ex1A-8

**Exhibit 8.1** 

**ESCROW AGREEMENT** 

This **ESCROW AGREEMENT** (this "**Agreement**") dated as of this 8th day of June 2025 by and among **Phoenix Energy One, LLC**, a Delaware corporation (the "**Company**"), having an address at 18575 Jamboree Road, Suite 830 Irvine, CA 92612, **DIGITAL OFFERING, LLC**, a Delaware limited liability company, having an address at 1461 Glenneyre Street, Suite D, Laguna Beach, CA 92651 ("**Selling Agent**"), and **WILMINGTON TRUST, NATIONAL ASSOCIATION** (the "**Escrow Agent**"). The Company and the Selling Agent are collectively referred to as "Parties" and, individually, as a "Party."

**<u>W I T N E S S E T H:</u>**

**WHEREAS,** the Company proposes to sell (the "**Financing Transaction**") 4,166,666 shares of its Preferred Stock, par value $0.001 per share, for a maximum offering amount of $75,000,000, in a public offering (the "**Offering**") to investors (each, an "**Investor**"); and

**WHEREAS,** subject to all conditions to closing being satisfied or waived, it is intended that there be multiple closings in the Offering, which will terminate upon the earliest of (a) the date at which the maximum offering amount for the Offering has been sold, (b) the date which is one year after the Offering has been qualified by the U.S. Securities and Exchange Commission, and (c) the date on which the Offering is earlier terminated by the Company in its sole discretion (the earliest of (a), (b) or (c), the "**Final Termination Date**"); and

**WHEREAS,** there is no minimum offering amount and all funds shall only be returned to the potential Investors in the event the Offering is not consummated or if the Company, in its sole discretion, rejects all or a part of a particular potential Investor's subscription; and

**WHEREAS,** in connection with the Financing Transaction, the Company entered into a Selling Agency Agreement between the Company and the Selling Agent and any other agreements, documents, instruments and certificates necessary to carry out the purposes thereof; and

**WHEREAS,** the Company and the Selling Agent desire to establish an escrow account with the Escrow Agent into which the Company and Selling Agent shall instruct the Investors to deposit checks, make a credit card payment or make a wire transfer for the payment of money made payable to the order of "WILMINGTON TRUST, N.A. as Escrow Agent for Phoenix Energy One, LLC," and the Escrow Agent is willing to accept said checks and other instruments for the payment of money in accordance with the terms hereinafter set forth; and

**WHEREAS,** the Company and Selling Agent represent and warrant to the Escrow Agent that they have not stated to any individual or entity that the Escrow Agent's duties will include anything other than those duties stated in this Agreement; and

**WHEREAS,** the Selling Agent will assist the Company in opening a Stripe Connect account (the "**Connect Account**") on the platform account of EquiDeFi and/or AOS Inc. dba My IPO ("**My IPO**") for the purpose of processing potential investor payments by credit card that will be forwarded promptly, subject to any payment processing fees and/or holdbacks determined by the Selling Agent, to the Escrow Account upon receipt after My IPO has reviewed the investor's name, address, total investment amount and other necessary items;

------

**WHEREAS, THE ISSUER AND THE SELLING AGENT UNDERSTAND THAT THE ESCROW AGENT, BY ACCEPTING THE APPOINMTMENT AND DESIGNATION AS ESCROW AGENT HEREUNDER, IN NO WAY ENDORSES THE MERITS OF THE OFFERING OF THE SECURITIES. THE ISSUER AND THE SELLING AGENT AGREE TO NOTIFY ANY PERSON ACTING ON ITS BEHALF THAT THE ESCROW AGENT'S POSITION AS ESCROW AGENT DOES NOT CONSTITUTE SUCH AN ENDORSEMENT, AND TO PROHIBIT SAID PERSONS FROM THE USE OF THE ESCROW AGENT'S NAME AS AN ENDORSER OF SUCH OFFERING.** The Issuer and the Selling Agent further agree to include with any sales literature, in which the Escrow Agent's name appears and which is used in connection with such offering, a statement to the effect that the Escrow Agent in no way endorses the merits of the offering; and

WHEREAS, the Company and the Selling Agent represent and warrant to the Escrow Agent that a copy of each document that has been delivered to the Investors and third parties that includes Escrow Agent's name and duties has been attached hereto as <u>Schedule I.</u>

**NOW, THEREFORE, IT IS AGREED** as follows:

ARTICLE 1

ESCROW DEPOSIT

**Section 1.1 <u>Delivery of Escrow Funds.</u>** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Selling Agent and the Company shall instruct the Investors to deliver to Escrow Agent checks made payable to the order of "WILMINGTON TRUST, N.A. as Escrow Agent for Phoenix Energy One Escrow", by credit card payment via EquiDeFi or My IPO platform to Escrow Agent or wire transfer to:

Wilmington Trust, N.A.

ABA #: [Redacted]

A/C #: [Redacted]

A/C Name: Phoenix Energy One Escrow

Attn: Lance Schonert

**International Wires:** 

M&T

Buffalo, New York

ABA: [Redacted]

SWIFT: [Redacted]

Beneficiary Bank: Wilmington Trust

Beneficiary ABA: [Redacted]

A/C #: [Redacted]

A/C Name: Phoenix Energy One Escrow

------

All such checks, credit card payments and wire transfers remitted to the Escrow Agent shall be accompanied by information identifying each Investor, subscription, the Investor's social security or taxpayer identification number and address. In the event the Investor's address and/or social security number or taxpayer identification number are not provided to Escrow Agent by the Investor, then Selling Agent and/or the Company agree to promptly upon request provide Escrow Agent with such information in writing. The checks, credit card payments or wire transfers shall be deposited into a non interest-bearing account in the name of the Company at WILMINGTON TRUST, NATIONAL ASSOCIATION entitled "WILMINGTON TRUST, N.A. as Escrow Agent for Phoenix Energy One" (the **"Escrow Account"**).

Checks should be mailed to the following address:

Phoenix Energy One Escrow

c/o Wilmington Trust

1100 North Market Street

Wilmington, DE 19890

Attn: Workflow Management

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The collected funds deposited into the Escrow Account are referred to as the **"Escrow Funds",** which, for the avoidance of doubt, shall include any funds received by the Escrow Agent from any other escrow agent receiving deposits of funds from Investors in connection with the Offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Escrow Agent shall have no duty or responsibility to enforce the collection or demand payment of any funds deposited into the Escrow Account. If, for any reason, any check deposited into the Escrow Account shall be returned unpaid to the Escrow Agent, the sole duty of the Escrow Agent shall be to return the check to the Investor and advise the Company and Selling Agent promptly thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) All funds received by the Escrow Agent shall be held only in non interest-bearing bank accounts at WILMINGTON TRUST, NATIONAL ASSOCIATION.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) In the event that market conditions are such that negative interest applies to amounts deposited with the Escrow Agent, the Company and Selling Agent jointly and severally shall be responsible for the payment of such interest and the Escrow Agent shall be entitled to deduct from amounts on deposit with it an amount necessary to pay such negative interest. For the avoidance of doubt, the indemnification protections afforded to the Escrow Agent under Section 2.2 of this Agreement shall cover any interest-related expenses (including, but not limited to, negative interest) incurred by the Escrow Agent in the performance of its duties hereunder.

**Section 1.2 <u>Release of Escrow Funds.</u>** The Escrow Funds shall be paid by the Escrow Agent in accordance with the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) In the event that the Company advises the Escrow Agent in writing that the Offering has been terminated (the **"Termination Notice"**), the Escrow Agent shall promptly return the funds paid by each Investor to such Investor without interest or offset.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) At the closing of the Offering, the Company and the Selling Agent shall provide the Escrow Agent with written instructions regarding the disbursement of the Escrow Funds in accordance with **<u>Exhibit A</u>** attached hereto and made a part hereof and signed by the Company and the Selling Agent (the **"Written Direction"**).

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If an Investor is entitled to terminate its subscription, or the Company rejects or cancels such subscription in whole or in part, for which the Escrow Agent has received Escrow Funds, the Escrow Agent shall, upon receipt of a Written Direction from the Company and Selling Agent, promptly return directly to such Investor that portion of the Escrow Funds deposited by such Investor and specified in such Written Direction. If the Escrow Agent has not yet collected funds but has submitted the Investor's check for collection, the Escrow Agent shall promptly return the funds in the amount of the Investor's check to such Investor after such funds have been collected. If the Escrow Agent has not yet submitted such Investor's check for collection, the Escrow Agent shall promptly remit the Investor's check directly to the Investor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) If by 5:00 P.M. Eastern time on the Final Termination Date, the Escrow Agent has not received Written Direction from the Company and Selling Agent regarding the disbursement of the Escrow Funds in the Escrow Account, if any, then the Escrow Agent shall promptly return such Escrow Funds, if any, to the Investors without interest or offset. The Escrow Funds returned to the Investors shall be free and clear of any and all claims of the Escrow Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The Escrow Agent shall not be required to pay any uncollected funds or any funds that are not available for withdrawal.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The Selling Agent or the Company will provide the Escrow Agent with the payment instructions for each Investor, to whom the funds should be returned in accordance with this section.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) In the event that Escrow Agent makes any payment to any other party pursuant to this Escrow Agreement and for any reason such payment (or any portion thereof) is required to be returned to the Escrow Account or another party or is subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a receiver, trustee or other party under any bankruptcy or insolvency law, other federal or state law, common law or equitable doctrine, then the recipient party shall repay to the Escrow Agent upon written request the amount so paid to it.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) The Escrow Agent shall, in its sole discretion, comply with judgments or orders issued or process entered by any court with respect to the Escrow Funds, including without limitation any attachment, levy or garnishment, without any obligation to determine such court's jurisdiction in the matter and in accordance with its normal business practices. If the Escrow Agent complies with any such judgment, order or process, then it shall not be liable to any of the Parties or any other person by reason of such compliance, regardless of the final disposition of any such judgment, order or process.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Each Party understands and agrees that Escrow Agent shall have no obligation or duty to act upon a written direction delivered to Escrow Agent for the disbursement of all or part of the Escrow Funds under this Agreement (a **"Written Direction"**) if such Written Direction is not:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) in writing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) signed by, in the case of Company, any individual designated by Company on **<u>Exhibit B</u>** hereto or, in the case of Selling Agent, any individual designated by Selling Agent on **<u>Exhibit C</u>** hereto (in each case, each such individual an **"Authorized Representative"** of such Party); and

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) delivered to, and able to be authenticated by, Escrow Agent in accordance with Section 1.4 below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) Upon request by any Party, the Escrow Agent shall set up each Party with on-line access to the account(s) established pursuant to this Agreement, which each Party can use to view and verify the balance of, and transactions on, such account(s).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) A Party may specify in a Written Direction whether the Escrow Funds shall be disbursed by way of wire transfer, ACH to Connect Account or check. If the written notice for the disbursement of funds does not so specify the disbursement means, Escrow Agent may disburse the Escrow Funds by wire transfer.

**Section 1.3 <u>Written Direction and Other Instruction.</u>** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) With respect to any Written Direction or any other notice, direction or other instruction required to be delivered by a Party to Escrow Agent under this Agreement, Escrow Agent is authorized to follow and rely upon any and all such instructions given to it from time to time if the Escrow Agent believes, in good faith, that such instruction is genuine and to have been signed by an Authorized Representative of such Party. Escrow Agent shall have no duty or obligation to verify that the person who sent such instruction is, in fact, a person duly authorized to give instructions on behalf of a Party, other than to verify that the signature of the Authorized Representative on any such instruction appears to be the signature of such person. Each Party acknowledges and agrees that it is fully informed of the protections and risks associated with the various methods of transmitting instructions to Escrow Agent, and that there may be more secure methods of transmitting instructions other than the method selected by such Party. Escrow Agent shall have no responsibility or liability for any loss which may result from (i) any action taken or not taken by Escrow Agent in good faith reliance on any such signatures or instructions, including any signatures or instructions of any officer or Authorized Representative of a Party named in an incumbency certificate, **<u>Exhibit B</u> or <u>Exhibit C</u>** delivered hereunder prior to actual receipt by the Escrow Agent of a more current incumbency certificate or an updated **<u>Exhibit B</u> or <u>Exhibit C</u>** and a reasonable time for the Escrow Agent to act upon such updated or more current certificate or Exhibit, or (ii) a Party's reliance upon or use of any particular method of delivering instructions to Escrow Agent, including the risk of interception of such instruction and misuse by third parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company may, at any time, update **<u>Exhibit B</u>** and Selling Agent may, at any time, update **<u>Exhibit C</u>** by signing and submitting to the Escrow Agent an updated Exhibit. Any updated Exhibit shall not be effective unless the Escrow Agent countersigns a copy thereof (which Escrow Agent shall do promptly after its receipt thereof). The Escrow Agent shall be entitled to a reasonable time to act to implement any changes on an updated Exhibit.

**Section 1.4 <u>Delivery and Authentication of Written Direction.</u>** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) A Written Direction must be delivered to Escrow Agent by one of the delivery methods set forth in Section 3.3.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Each Party and Escrow Agent hereby agree that the following security procedures will be used to verify the authenticity of a Written Direction delivered by any Party to Escrow Agent under this Agreement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The Written Direction must include the name and signature of the person delivering the disbursement request to
Escrow Agent. Escrow Agent will check that the name and signature of the person identified on the Written Direction appears to be the same as the name and signature of an Authorized Representative of such Party;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Escrow Agent will make a telephone call to an Authorized Representative of the Party purporting to deliver the
Written Direction (which Authorized Representative may be the same as the Authorized Representative who delivered the Written Direction) at any telephone number for such Authorized Representative as set forth on  **<u>Exhibit B</u> or <u>Exhibit C</u>** to obtain oral confirmation of delivery of the Written Direction. If the Written Direction is a joint written notice of the Parties, the Escrow Agent shall call back an Authorized Representative of both of those Parties; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. If the Written Direction is sent by email to Escrow Agent, Escrow Agent also shall review such email address to
verify that it appears to have been sent from an email address for an Authorized Representative of one of the Parties as set forth on  **<u>Exhibit B</u>** and  **<u>Exhibit C</u>,** as applicable, or from an email address for a person
authorized under  **<u>Exhibit B</u> or <u>Exhibit C</u>,** as applicable, to email a Written Direction to Escrow Agent on behalf of the Authorized Representative).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Each Party acknowledges and agrees that, given its particular circumstances, including the nature of its business, the size, type and frequency of its instructions, transactions and files, internal procedures and systems, the alternative security procedures offered by Escrow Agent and the security procedures in general use by other customers and banks similarly situated, the security procedures set forth in this Section 1.4 are a commercially reasonable method of verifying the authenticity of a payment order in a Written Direction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Escrow Agent is authorized to execute, and each Party expressly agrees to be bound by, any payment order in a Written Direction issued in its name (and associated funds transfer) (i) that is accepted by Escrow Agent in accordance with the security procedures set forth in this Section 1.4, whether or not authorized by such Party, and/or (ii) without limiting Escrow Agent's obligation hereunder to follow the security procedures set forth in this Section 1.4, that is authorized by or on behalf of such Party or for which such Party is otherwise bound under the law of agency, whether or not the security procedures set forth in this Section 1.4 were followed, and Escrow Agent is authorized to debit the Escrow Account for the amount of such payment order. Notwithstanding anything else, Escrow Agent shall be deemed to have acted in good faith and without negligence, gross negligence or misconduct if Escrow Agent is authorized to execute the payment order under this Section 1.4. Any action taken by Escrow Agent pursuant to this paragraph prior to Escrow Agent's actual receipt and acknowledgement of a notice of revocation, cancellation or amendment of a Written Direction shall not be affected by such notice.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The security procedures set forth in this Section 1.4 are intended to verify the authenticity of payment orders provided to Escrow Agent and are not designed to, and do not, detect errors in the transmission or content of any payment order. Escrow Agent is not responsible for detecting an error in the payment order, regardless of whether any of the Parties believes the error was apparent, and Escrow Agent is not liable for any damages arising from any failure to detect an error.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) When instructed to credit or pay a party by both name and a unique numeric or alpha-numeric identifier (e.g. ABA number or account number), Escrow Agent, and any other banks participating in the funds transfer, may rely solely on the unique identifier, even if it identifies a party different than the party named. Each Party agrees to be bound by the rules of any funds transfer network used in connection with any payment order accepted by Escrow Agent hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Escrow Agent shall not be obliged to make any payment requested under this Escrow Agreement if it is unable to validate the authenticity of the request by the security procedures set forth in this Section 1.4. Escrow Agent's inability to confirm a payment order may result in a delay or failure to act on that payment order. Notwithstanding anything else in this Agreement, Escrow Agent shall not be required to treat a payment order as having been received until Escrow Agent has authenticated it pursuant to the security procedures in this Section 1.4 and shall not be liable or responsible for any losses arising in relation to such delay or failure to act.

ARTICLE 2

PROVISIONS CONCERNING THE ESCROW AGENT

**Section 2.1 <u>Acceptance by Escrow Agent.</u>** The Escrow Agent hereby accepts and agrees to perform its obligations hereunder, provided that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Escrow Agent shall be entitled to rely upon any order, judgment, opinion, or other writing delivered to it in compliance with the provisions of this Agreement without being required to determine the authenticity or the correctness of any fact stated therein or the propriety or validity of service thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Escrow Agent shall be entitled to rely on and shall not be liable for any action taken or omitted to be taken by the Escrow Agent in accordance with the advice of counsel or other professionals retained or consulted by the Escrow Agent as required for the Escrow Agent to perform its duties hereunder. The Escrow Agent shall be reimbursed as set forth in Section 2.2 for any and all compensation (fees, expenses and other costs) paid and/or reimbursed to such counsel and/or professionals. The Escrow Agent may perform any and all of its duties through its agents, representatives, attorneys, custodians, and/or nominees and shall not be responsible for the acts or omissions of such agents, representatives, attorneys, custodians or nominees appointed with due care.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In the event that the Escrow Agent shall be uncertain as to its duties or rights hereunder, the Escrow Agent shall be entitled to (i) refrain from taking any action other than to keep safely the Escrow Funds until it shall be directed otherwise by a court of competent jurisdiction, or (ii) deliver the Escrow Funds to a court of competent jurisdiction.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Escrow Agent shall have no duty, responsibility or obligation to interpret or enforce the terms of any agreement other than Escrow Agent's obligations hereunder, and the Escrow Agent shall not be required to make a request that any monies be delivered to the Escrow Account. The Escrow Agent makes no representation as to the validity, value, genuineness or collectability of any security or other document or instrument held by or delivered to it.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The Escrow Agent shall be obligated to perform only such duties as are expressly set forth in this Agreement. No implied covenants or obligations shall be inferred from this Agreement against the Escrow Agent, nor shall the Escrow Agent be bound by the provisions of any agreement by the Company beyond the specific terms hereof. Without limiting the foregoing, the Escrow Agent shall dispose of the Escrow Funds in accordance with the express provisions of this Agreement, and Escrow Agent has not reviewed and shall not make, be required to make or be liable in any manner for its failure to make, any determination under any other document, or any other agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) No term or provision of this Agreement is intended to create, nor shall any such term or provision be deemed to have created, any trust, joint venture or partnership, between or among the Escrow Agent and any of the Parties.

**Section 2.2. <u>Indemnification.</u>** Selling Agent and the Company agree, jointly and severally, to indemnify and hold the Escrow Agent and its employees, officers, directors and agents (the "Indemnified Parties") harmless from and against any and all liabilities, losses, actions, suits or proceedings at law or in equity, and any other expenses, fees or charges of any character or nature, (including, without limitation, negative interest, attorney's fees and expenses and the costs of enforcement of this Escrow Agreement or any provision thereof), which an Indemnified Party may incur or with which it may be threatened by reason of acting as or on behalf of the Escrow Agent under this Escrow Agreement or arising out of the existence of the Escrow Account, except to the extent the same shall have been finally adjudicated to have been directly caused by the gross negligence or willful misconduct of an Indemnified Party. Selling Agent and the Company agree, jointly and severally, to pay or reimburse the Escrow Agent upon request for any transfer taxes or other taxes relating to the Escrow Funds incurred in connection herewith and shall indemnify and hold harmless the Escrow Agent with respect to any amounts that it is obligated to pay in the way of such taxes. The terms of this paragraph shall survive termination of this Agreement.

**Section 2.3. <u>Limitation of Liability.</u>** THE ESCROW AGENT SHALL NOT BE LIABLE, DIRECTLY OR INDIRECTLY, FOR ANY (I) DAMAGES, LOSSES OR EXPENSES ARISING OUT OF THE SERVICES PROVIDED HEREUNDER, OTHER THAN DAMAGES, LOSSES OR EXPENSES WHICH HAVE BEEN FINALLY ADJUDICATED TO HAVE DIRECTLY RESULTED FROM THE ESCROW AGENT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, OR (II) SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES OR LOSSES OF ANY KIND WHATSOEVER (INCLUDING WITHOUT LIMITATION LOST PROFITS), EVEN IF THE ESCROW AGENT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSSES OR DAMAGES AND REGARDLESS OF THE FORM OF ACTION, OR (Ill) AMOUNT IN EXCESS OF THE ESCROW FUNDS.

------

**Section 2.4. <u>Resignation and Termination of the Escrow Agent.</u>** The Escrow Agent may resign at any time by giving 30 days' prior written notice of such resignation to Selling Agent and the Company. Upon providing such notice, the Escrow Agent shall have no further obligation hereunder except to hold as depositary the Escrow Funds that it receives until the end of such 30-day period. In such event, the Escrow Agent shall not take any action, other than receiving and depositing the Investor's checks, credit card payments and wire transfers in accordance with this Agreement, until the Company has designated a banking corporation, trust company, attorney or other person as successor. Upon receipt of such written designation signed by Selling Agent and the Company, the Escrow Agent shall promptly deliver the Escrow Funds to such successor and shall thereafter have no further obligations hereunder. If the Company and Selling Agent have failed to appoint a successor escrow agent prior to the expiration of thirty (30) days following the delivery of such notice of resignation, the Escrow Agent shall be entitled, at its sole discretion and at the expense of the Company and/or Selling Agent, to (a) return the Escrow Funds to the Company, or (b) petition any court of competent jurisdiction for the appointment of a successor escrow agent or for other appropriate relief, and any such resulting appointment shall be binding upon the parties. In either case provided for in this paragraph, the Escrow Agent shall be relieved of all further obligations and released from all liability thereafter arising with respect to the Escrow Funds.

**Section 2.5 <u>Termination.</u>** The Company and Selling Agent may terminate the appointment of the Escrow Agent hereunder upon written notice specifying the date upon which such termination shall take effect, which date shall be at least 30 days from the date of such notice. In the event of such termination, the Company and Selling Agent shall, within 30 days of such notice, appoint a successor escrow agent and the Escrow Agent shall, upon receipt of written instructions signed by the Company and Selling Agent, turn over to such successor escrow agent all of the Escrow Funds. Upon receipt of the Escrow Funds, the successor escrow agent shall become the escrow agent hereunder and shall be bound by all of the provisions hereof and the Escrow Agent shall be relieved of all further obligations and released from all liability thereafter arising with respect to the Escrow Funds and under this Agreement. If the Company has failed to appoint a successor escrow agent prior to the expiration of thirty (30) days following the delivery of the notice of termination, the Escrow Agent shall be entitled, at its sole discretion and at the expense of the Company, to (a) return the Escrow Funds to the Company, or (b) petition any court of competent jurisdiction for the appointment of a successor escrow agent or for other appropriate relief, and any such resulting appointment shall be binding upon the parties.

**Section 2.6 <u>Compensation.</u>** Escrow Agent shall be entitled, for the duties to be performed by it hereunder, to compensation as stated in the schedule attached hereto as <u>Schedule II</u>, which fee shall be paid by the Company upon the signing of this Agreement. In addition, the Company shall be obligated to reimburse Escrow Agent for all fees, costs and expenses incurred or that become due in connection with this Agreement or the Escrow Account, including attorney's fees. Neither the modification, cancellation, termination, resignation or rescission of this Agreement nor the resignation or termination of the Escrow Agent shall affect the right of Escrow Agent to retain the amount of any fee which has been paid, or to be reimbursed or paid any amount which has been incurred or becomes due, prior to the effective date of any such modification, cancellation, termination, resignation or rescission. To the extent the Escrow Agent has incurred any such expenses, or any such fee becomes due, prior to any closing, the Escrow Agent shall advise the Company and the Company shall direct all such amounts to be paid directly at any such closing. As security for the due and punctual performance of any and all of the Company's obligations to the Escrow Agent hereunder, now or hereafter arising, the Company hereby pledges, assigns and grants to the Escrow Agent a continuing security interest in, and a lien on and a right of setoff

------

against, the Escrow Funds and all distributions thereon, investments thereof or additions thereto. If any fees, expenses or costs incurred by, or any obligations owed to, the Escrow Agent hereunder are not promptly paid when due, the Escrow Agent may reimburse itself therefor from the Escrow Funds, and may sell, convey or otherwise dispose of any Escrow Funds for such purpose. The security interest and setoff rights of the Escrow Agent shall at all times be valid, perfected and enforceable by the Escrow Agent against the Parties and all third parties in accordance with the terms of this Escrow Agreement. The terms of this paragraph shall survive termination of this Agreement.

**Section 2.7. <u>Merger or Consolidation</u>.** Any corporation or association into which the Escrow Agent may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer all or substantially all of its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which the Escrow Agent is a party, shall be and become the successor escrow agent under this Agreement and shall have and succeed to the rights, powers, duties, immunities and privileges as its predecessor, without the execution or filing of any instrument or paper or the performance of any further act.

**Section 2.8. <u>Attachment of Escrow Funds; Compliance with Legal Orders</u>.** In the event that any portion of the Escrow Funds shall be attached, garnished or levied upon by any court order, or the delivery thereof shall be stayed or enjoined by an order of a court, or any order, judgment or decree shall be made or entered by any court order affecting the Escrow Funds , the Escrow Agent is hereby expressly authorized, in its sole discretion, to respond as it deems appropriate or to comply with all writs, orders or decrees so entered or issued, or which it is advised by legal counsel of its own choosing is binding upon it, whether with or without jurisdiction. In the event that the Escrow Agent obeys or complies with any such writ, order or decree, it shall not be liable to any Party or to any other person, firm or corporation, should, by reason of such compliance notwithstanding, such writ, order or decree be subsequently reversed, modified, annulled, set aside or vacated.

**Section 2.9 <u>Force Maieure</u>.** The Escrow Agent shall not be responsible or liable for any failure or delay in the performance of its obligation under this Escrow Agreement arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including, without limitation, acts of God; earthquakes; fire; flood; wars; acts of terrorism; civil or military disturbances; sabotage; epidemic; pandemics; riots; interruptions; loss or malfunctions of utilities including, but not limited to, computer (hardware or software), payment systems, or communications services; accidents; labor disputes; acts of civil or military authority or governmental action; hacking, cyber-attacks or other unauthorized infiltration of Escrow Agent's information technology infrastructure; it being understood that the Escrow Agent shall use commercially reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as reasonably practicable under the circumstances.

**Section 2.10 <u>No Financial Obligation</u>.** Escrow Agent shall not be required to use its own funds in the performance of any of its obligations or duties or the exercise of any of its rights or powers, and shall not be required to take any action which, in Escrow Agent's sole and absolute judgment, could involve it in expense or liability unless furnished with security and indemnity which it deems, in its sole and absolute discretion, to be satisfactory.

------

ARTICLE 3

MISCELLANEOUS

**Section 3.1. <u>Successors and Assigns</u>.** This Agreement shall be binding on and inure to the benefit of each Party and the Escrow Agent and their respective successors and permitted assigns. No other persons shall have any rights under this Agreement. Except with respect to the Escrow Agent as contemplated by Section 2. 7, no assignment of the interest of any of the Parties or the Escrow Agent shall be binding unless and until written notice of such assignment shall be delivered to the other Party and the Escrow Agent and such assignment shall require the prior written consent of the other Party and Escrow Agent (such consent not to be unreasonably withheld), and any attempted assignment without such consent shall be deemed null and void *ab initio;* <u>provided</u>, that the Company may assign this Agreement to any of its affiliates without the consent of Selling Agent or the Escrow Agent.

**Section 3.2. <u>Escheat</u>.** Each Party is aware that under applicable state law, property which is presumed abandoned may under certain circumstances escheat to the applicable state. The Escrow Agent shall have no liability to any of the Parties, their respective heirs, legal representatives, successors and assigns, or any other party, should any or all of the Escrow Funds escheat by operation of law.

**Section 3.3. Notices.** All notices, requests, demands, and other communications required under this Escrow Agreement shall be in writing, in English, and shall be deemed to have been duly given if delivered (i) personally, (ii) by facsimile transmission with written confirmation of receipt, (iii) by overnight delivery with a reputable national overnight delivery service, (iv) by mail or by certified mail, return receipt requested, and postage prepaid, or (v) by electronic transmission; including by way of e-mail (as long as such email is accompanied by a PDF or similar version of the relevant document bearing the signature of an Authorized Representative for the Party sending the notice) with email confirmation of receipt. If any notice is mailed, it shall be deemed given five business days after the date such notice is deposited in the United States mail. If notice is given to a party, it shall be given at the address for such party set forth below. It shall be the responsibility of a Party to notify the Escrow Agent in writing of any name or address changes. In the case of communications delivered to the Escrow Agent, such communications shall be deemed to have been given on the date received by the Escrow Agent.

If to Selling Agent:

Digital Offering, LLC

Gordon McBean, CEO

1461 Glenneyre St., Suite D

Laguna Beach, CA 92651

Email:[•]

------

If to the Company:

Phoenix Energy One, LLC

18575 Jamboree Road, Suite 830

Irvine, CA 92612

Attention: Adam Ferrari, CEO

Email: af@phoenixenergy.com

If to Escrow Agent:

Wilmington Trust, National Association

50 South Sixth Street, Suite 1290

Minneapolis, MN 55402

Attn: Lance Schonert

Telephone: 612-217-5681

Email Address: lschonert@wilmingtontrust.com

**Section 3.4. <u>Governing Law and Jurisdiction</u>.** This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. Each Party and Escrow Agent hereby consents to the exclusive personal jurisdiction of the courts located in the State of Delaware in the event of a dispute arising out of or under this Agreement. Each Party and Escrow Agent hereby irrevocably waives any objection to the laying of the venue of any suit, action or proceeding and irrevocably submits to the exclusive jurisdiction of such court in such suit, action or proceeding.

**Section 3.5. <u>Entire Agreement</u>.** This Agreement and the Exhibits attached hereto (as updated from time to time in accordance herewith) set forth the entire agreement and understanding of the parties related to the subject matter of this Agreement. If a court of competent jurisdiction declares a provision invalid, it will be ineffective only to the extent of the invalidity, so that the remainder of the provision and Escrow Agreement will continue in full force and effect.

**Section 3.6. <u>Amendment</u>.** This Agreement may be amended, modified or superseded only by a written instrument executed by each of the Parties and the Escrow Agent.

**Section 3.7. <u>Waivers</u>.** The failure of any party to this Agreement at any time or times to require performance of any provision under this Agreement shall in no manner affect the right at a later time to enforce the same performance. A waiver by any party to this Agreement of any such condition or breach of any term, covenant, representation, or warranty contained in this Agreement, in any one or more instances, shall neither be construed as a further or continuing waiver of any such condition or breach nor a waiver of any other condition or breach of any other term, covenant, representation, or warranty contained in this Agreement.

**Section 3.8. <u>Headings</u>.** Section headings of this Agreement have been inserted for convenience of reference only and shall in no way restrict or otherwise modify any of the terms or provisions of this Escrow Agreement.

------

**Section 3.9. <u>Electronic Signatures; Facsimile Signatures; Counterparts</u>.** This Escrow Agreement may be executed in one or more counterparts. Such execution of counterparts may occur by manual signature, electronic signature, facsimile signature, manual signature transmitted by means of facsimile transmission or manual signature contained in an imaged document attached to an email transmission, and any such execution that is not by manual signature shall have the same legal effect, validity and enforceability as a manual signature. Each such counterpart executed in accordance with the foregoing shall be deemed an original, with all such counterparts together constituting one and the same instrument. The exchange of executed copies of this Escrow Agreement or of executed signature pages to this Escrow Agreement by electronic transmission, facsimile transmission or as an imaged document attached to an email transmission shall constitute effective execution and delivery hereof. Any copy of this Escrow Agreement which is fully executed and transmitted in accordance with the terms hereof may be used for all purposes in lieu of a manually executed copy of this Escrow Agreement and shall have the same legal effect, validity and enforceability as if executed by manual signature.

**Section 3.10. <u>Waiver of Jury Trial</u>. EACH OF THE PARTIES HERETO AND THE ESCROW AGENT EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN RESOLVING ANY CLAIM OR COUNTERCLAIM RELATING TO OR ARISING OUT OF THIS AGREEMENT.** 

**Section 3.11 <u>Termination</u>.** This Agreement will automatically terminate upon the date that all funds in the Escrow Account are disbursed pursuant to this Agreement and all reporting obligations specified herein have been satisfied. The Company may earlier terminate this Agreement upon written notice to the other parties specifying the date upon which such termination shall take effect.

**Section 3.12 <u>Anti-Terrorism/Anti-Money Laundering Laws</u>.** 

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT—To help the United States government fight the funding of terrorism or money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens a new account. What this means for the parties to this Agreement: the Escrow Agent will ask for your name, address, date of birth, and other information that will allow the Escrow Agent to identify you (e.g., your social security number or tax identification number.) The Escrow Agent may also ask to see your driver's license or other identifying documents *(e.g.,* passport, evidence of formation of corporation, limited liability company, limited partnership, etc., and certificate of good standing.)

**[The balance of this page intentionally left blank-signature page follows]** 

------

**IN WITNESS WHEREOF,** the parties have duly executed this Agreement as of the date first set forth above.

---

| | | | |
|:---|:---|:---|:---|
| Phoenix Energy One, LLC, | Phoenix Energy One, LLC, | DIGITAL OFFERING, LLC, | DIGITAL OFFERING, LLC, |
| The Company | The Company | The Selling Agent | The Selling Agent |
| By: | /s/ Adam Ferrari | By: | /s/ Gordon McBean |
| Name: | Adam Ferrari | Name: | Gordon McBean |
| Title: | CEO | Title: | CEO |
| WILMINGTON TRUST, NATIONAL ASSOCIATION | WILMINGTON TRUST, NATIONAL ASSOCIATION | WILMINGTON TRUST, NATIONAL ASSOCIATION |  |
| as Escrow Agent | as Escrow Agent |  |  |
| By: | /s/ Lance Schonert |  |  |
| Name: | Lance Schonert |  |  |
| Title: | Assistant Vice President |  |  |

---

------

![LOGO](g72530dsp18.jpg)

**Exhibit A** 

**<u>Form of Written Direction</u>**

Date: [•]

Wilmington Trust, National Association

Corporate Client Services

50 South Sixth Street, Suite 1290

Minneapolis, MN 55402

Attention: Lance Schonert

Ladies and Gentlemen:

In accordance with the terms of Section 1.2[•] of the Escrow Agreement dated as of [•] 2025 (the "Escrow Agreement"), by and among Phoenix Energy One, LLC (the "Company"), Digital Offering, LLC ("Selling Agent") and WILMINGTON TRUST, NATIONAL ASSOCIATION (the "Escrow Agent"), the Company and Selling Agent hereby direct the Escrow Agent to release funds in the Escrow Account, account number [•], in the amounts, and to the account(s), as follows:

Amount:

Beneficiary Bank Name:

Beneficiary Bank Address

Line 1:

Beneficiary Bank Address

Line 2:

Beneficiary Bank Address

Line 3:

ABA#:

SWIFT#:

Beneficiary Account Title:

Beneficiary Account No./IBAN:

Beneficiary Address

Line 1:

Beneficiary Address

Line 2:

Beneficiary Address

Line 3: Additional Information:

------

---

| |
|:---|
| Very truly yours, |
| *Company* |
| By: |
| Name: |
| Title: |
| *Selling Agent* |
| By: |
| Name: |
| Title: |

---

------

**<u>EXHIBIT B</u>**

**CERTIFICATE AS TO AUTHORIZED SIGNATURES OF COMPANY** 

Phoenix Energy One, LLC, hereby designates each of the following persons as its Authorized Representative for purposes of this Agreement and confirms that the title, contact information and specimen signature of each such person as set forth below is true and correct. Each such Authorized Representative is authorized to initiate and approve transactions of all types for the Escrow Account established under the Agreement to which this **<u>Exhibit B</u>** is attached on behalf of Company.

---

| | |
|:---|:---|
| **Name** (print): | Adam Ferrari |
| **Specimen Signature:** | /s/ Adam Ferrari |
| **Title:** | CEO |
| **Telephone Number** (required): <br> *If more than one, list all applicable telephone numbers.* | Office<br> Cell: 720 737 9818 |
| **E-mail** (required): <br> *If more than one. list all applicable email add<sup>r</sup>esses.* | Email 1: af@phoenixenergy.com<br> Email 2: |

---

---

| | |
|:---|:---|
| **Name** (print): | Curtis Allen |
| **Specimen Signature:** | /s/ Curtis Allen |
| **Title:** | CFO |
| **Telephone Number** (required): <br> *If more than one, list all applicable telephone numbers.* | Office: Cell: 585-748-7317 |
| **E-mail** (required): <br> *If more than one, list all applicable email addresses.* | Email 1: ca@phoenixenergy.com<br> Email 2: |
| **Name** (<u>print</u>): |  |
| **Specimen Signature:** |  |

---

[*Signature Page to Escrow Agreement*] 

------

---

| | |
|:---|:---|
| **Title:** |  |
| **Telephone Number** (required): <br> *If more than one, list all applicable telephone numbers.* | Office:<br> Cell: |
| **E-mail** (required): <br> *If more than one, list all applicable email addresses.* | Email 1:<br> Email 2: |

---

<u>Additional Email Addresses:</u>

The following additional email addresses also may be used by Escrow Agent to verify the email address used to send any Payment Notice to Escrow Agent:

Email 1:<u> </u>

Email 2:<u> </u>

Email 3:<u> </u>

**COMPLETE BELOW TO UPDATE EXHIBIT B** 

If Company wishes to update this **<u>Exhibit B</u>**, Company must complete, sign and send to Escrow Agent an updated copy of this **<u>Exhibit B</u>** with such changes. Any updated **<u>Exhibit B</u>** shall be effective once signed by Company and Escrow Agent and shall entirely supersede and replace any prior **<u>Exhibit B</u>** to this Agreement.

---

| |
|:---|
| Company |
| By: |
| Name: |
| Title: |
| Date: |
| WILMINGTON TRUST, NATIONAL ASSOCIATION (as Escrow Agent) |
| By: |
| Name: |
| Title: |
| Date: |

---

------

**<u>EXHIBIT C</u>**

**CERTIFICATE AS TO AUTHORIZED SIGNATURES OF SELLING AGENT** 

Digital Offering, LLC hereby designates each of the following persons as its Authorized Representative for purposes of this Agreement, and confirms that the title, contact information and specimen signature of each such person as set forth below is true and correct. Each such Authorized Representative is authorized to initiate and approve transactions of all types for the Escrow Account established under the Agreement to which this **<u>Exhibit C</u>** is attached, on behalf of Selling Agent.

---

| | |
|:---|:---|
| **Name** (print): | Gordon McBean |
| **Specimen Signature:** | /s/ Gordon McBean |
| **Title:** | CEO |
| **Telephone Number** (required):<br> *If more than one, list all applicable telephone numbers.* | Office<br> Cell: 949 300 2240 |
| **E-mail** (required): <br> *If more than one. list all applicable email add<sup>r</sup>esses.* | Email 1: gmcbean@digitaloffering.com<br> Email 2: |

---

---

| | |
|:---|:---|
| **Name** (print): |  |
| **Specimen Signature:** |  |
| **Title:** |  |
| **Telephone Number** (required): <br> *If more than one, list all applicable telephone numbers.* | Office:<br> Cell: |
| **E-mail** (required): <br> *If more than one, list all applicable email addresses.* | Email 1:<br> Email 2: |
| **Name** (<u>print</u>): |  |
| **Specimen Signature:** |  |

---

[*Signature Page to Escrow Agreement*] 

------

---

| | |
|:---|:---|
| **Title:** |  |
| **Telephone Number** (required): <br> *If more than one, list all applicable telephone numbers.* | Office:<br> Cell: |
| **E-mail** (required): <br> *If more than one, list all applicable email addresses.* | Email 1:<br> Email 2: |

---

<u>Additional Email Addresses:</u>

The following additional email addresses also may be used by Escrow Agent to verify the email address used to send any Payment Notice to Escrow Agent:

Email 1:<u> </u>

Email 2:<u> </u>

Email 3:<u> </u>

**COMPLETE BELOW TO UPDATE EXHIBIT C** 

If SELLING AGENT wishes to update this **<u>Exhibit C</u>**, SELLING AGENT must complete, sign and send to Escrow Agent an updated copy of this **<u>Exhibit C</u>** with such changes. Any updated **<u>Exhibit C</u>** shall be effective once signed by SELLING AGENT and Escrow Agent and shall entirely supersede and replace any prior **<u>Exhibit C</u>** to this Agreement.

---

| |
|:---|
| SELLING AGENT |
| By: |
| Name: |
| Title: |
| Date: |
| WILMINGTON TRUST, NATIONAL ASSOCIATION (as Escrow Agent) |
| By: |
| Name: |
| Title: |
| Date: |

---

------

![LOGO](g72530dsp24.jpg)

**<u>Schedule I</u>**

**Applicable Escrow-Related Documents** 

------

![LOGO](g72530dsp24.jpg)

**<u>Schedule II</u><sup>1</sup>** 

**Fees of Escrow Agent** 

---

| | |
|:---|:---|
| **<u>Acceptance Fee:</u>** |  |
|  | **Waived** |

---

Initial Fees as they relate to Wilmington Trust acting in the capacity of Escrow Agent-includes review of the Escrow Agreement; acceptance of the Escrow appointment; setting up of Escrow Account(s) and accounting records; and coordination of receipt of Escrow Information for deposit to the Escrow Account(s). Acceptance Fee payable at time of Escrow Agreement execution.

---

| | |
|:---|:---|
|  **<u>Escrow Agent Administration Fee:</u>** | $**4500** |

---

For ordinary administrative services by Escrow Agent—includes daily routine account management; monitoring claim notices pursuant to the agreement; and disbursement of Escrow Information in accordance with the agreement. This fee is due and payable 90 days after closing.

***Wilmington Trust's bid is based on the following assumptions:***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Number of Escrow Accounts to be established: 1

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Est. Term: Under 12 months

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Escrow funds remain un-invested

---

| | |
|:---|:---|
| **<u>Out-of-Pocket Expenses</u>:** | **Billed At Cost** |

---

## Ex1A-11

**Exhibit 11.1** 

---

| | |
|:---|:---|
| ![LOGO](g72530g0626040320438.jpg) | 18012 Sky Park Circle, Suite 200<br> Irvine, California 92614<br> tel 949-852-1600<br> fax 949-852-1606<br> www.rjicpas.com |

---

**<u>Consent of Independent Registered Public Accounting Firm</u>**

We consent to the inclusion of our report dated March 26, 2025, except for Note 17, as to which the date is April 23, 2025 in Form 1-A of Phoenix Energy One, LLC and Subsidiaries (the "Company"), relating to the consolidated financial statements of the Company and Subsidiaries as of December 31, 2024, 2023 and 2022, and for the years then ended and to the reference to our firm as Experts.

/s/ Ramirez Jimenez International CPAs

Irvine, California

June 26, 2025

## Ex1A-12

**Exhibit 12.1** 

---

| | | |
|:---|:---|:---|
|  | 555 Eleventh Street, N.W., Suite 1000 | 555 Eleventh Street, N.W., Suite 1000 |
|  | Washington, D.C. 20004-1304 | Washington, D.C. 20004-1304 |
|  | Tel: +1.202.637.2200 Fax: +1.202.637.2201 | Tel: +1.202.637.2200 Fax: +1.202.637.2201 |
|  | www.lw.com<br>|  |
| ![LOGO](g72530g01k52.jpg) | FIRM / AFFILIATE OFFICES | FIRM / AFFILIATE OFFICES |
| ![LOGO](g72530g01k52.jpg) | Austin | Milan |
|  | Beijing | Munich |
|  | Boston | New York |
|  | Brussels | Orange County |
|  | Century City | Paris |
| June 26, 2025 | Chicago | Riyadh |
| June 26, 2025 | Dubai | San Diego |
|  | Düsseldorf | San Francisco |
|  | Frankfurt | Seoul |
| Phoenix Energy One, LLC<br> 18575 Jamboree Road, Suite 830<br> Irvine, California 92612 | Hamburg | Silicon Valley |
| Phoenix Energy One, LLC<br> 18575 Jamboree Road, Suite 830<br> Irvine, California 92612 | Hong Kong | Singapore |
| Phoenix Energy One, LLC<br> 18575 Jamboree Road, Suite 830<br> Irvine, California 92612 | Houston | Tel Aviv |
| Phoenix Energy One, LLC<br> 18575 Jamboree Road, Suite 830<br> Irvine, California 92612 | London | Tokyo |
|  | Los Angeles | Washington, D.C. |
|  | Madrid |  |

---

Re: <u>Phoenix Energy One, LLC – Offering Statement on Form 1-A</u>

To the addressee set forth above:

We have acted as special counsel to Phoenix Energy One, LLC, a Delaware limited liability company (the "***Company***"), in connection with the proposed issuance of up to 3,750,000 Series A Cumulative Redeemable Preferred Shares, representing limited liability company interests without par value (the "***Shares***"). The Shares are included in an offering statement on Form 1-A under the Securities Act of 1933, as amended (the "***Act***"), filed with the Securities and Exchange Commission (the "***Commission***") on June 26, 2025 (as amended, the "***Offering Statement***"). This opinion is being furnished in connection with the requirements of Item 17.12 of Form 1-A under the Act, and no opinion is expressed herein as to any matter pertaining to the contents of the Offering Statement or related offering circular (the "***Offering Circular***"), other than as expressly stated herein with respect to the issue of the Shares.

As such counsel, we have examined such matters of fact and questions of law as we have considered appropriate for purposes of this letter. With your consent, we have relied upon certificates and other assurances of officers of the Company and others as to factual matters without having independently verified such factual matters. We are opining herein only as to the Delaware Limited Liability Company Act (the "***DLLCA***"), and we express no opinion with respect to any other laws.

Subject to the foregoing and the other matters set forth herein, it is our opinion that, as of the date hereof, when the Third Amended and Restated Limited Liability Company Agreement of the Company in the form most recently filed as an exhibit to the Offering Statement, including the Share Designation with respect to the Shares included therein (collectively, the "***LLC Agreement***"), has been duly executed and delivered and is effective and when the Shares shall have been issued by the Company against payment therefor in the circumstances contemplated by the form of selling agency agreement and forms of subscription agreement, each as most recently filed as an exhibit to the Offering Statement, the Shares will have been duly authorized by all necessary limited liability company action of the Company, and the Shares will be validly issued in accordance with the LLC Agreement, fully paid (to the extent required in the LLC Agreement) and non-assessable (except as such non-assessability may be affected by Sections 18-607 or 18-804 of the DLLCA).

------

**June 26, 2025** 

 **Page 2**![LOGO](g72530g93o16.jpg)

This opinion is for your benefit in connection with the Offering Statement and may be relied upon by you and by persons entitled to rely upon it pursuant to the applicable provisions of the Act. We consent to your filing this opinion as an exhibit to the Offering Statement and to the reference to our firm in the Offering Circular under the heading "Legal Matters." In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under the rules and regulations of the Commission thereunder.

---

| |
|:---|
| Sincerely, |
| /s/ Latham & Watkins LLP |

---

## Add

**Exhibit 99.1** 

<u>Consent to be Named as a Director Nominee</u> 

In connection with the filing by Phoenix Energy One, LLC. (the "Company") of the offering statement on Form 1-A (the "Offering Statement") with the U.S. Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Securities Act"), I hereby consent, pursuant to Rule 438 of the Securities Act, to being named in the Offering Statement and any and all amendments and supplements thereto, as a nominee to become a member of the board of directors of the Company, in connection with the completion of the offering contemplated thereto. I also consent to the filing of this consent as an exhibit to such Offering Statement and any amendments thereto.

---

| | | |
|:---|:---|:---|
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; /s/ Daniel Ferrari | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; /s/ Daniel Ferrari |
| Dated: June 26, 2025 | Name: | Daniel Ferrari |

---

## Add

**Exhibit 99.2** 

<u>Consent to be Named as a Director Nominee</u> 

In connection with the filing by Phoenix Energy One, LLC. (the "Company") of the offering statement on Form 1-A (the "Offering Statement") with the U.S. Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Securities Act"), I hereby consent, pursuant to Rule 438 of the Securities Act, to being named in the Offering Statement and any and all amendments and supplements thereto, as a nominee to become a member of the board of directors of the Company, in connection with the completion of the offering contemplated thereto. I also consent to the filing of this consent as an exhibit to such Offering Statement and any amendments thereto.

---

| | | |
|:---|:---|:---|
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; /s/ Jason Allan Pangracs | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; /s/ Jason Allan Pangracs |
| Dated: June 26, 2025 | Name: | Jason Allan Pangracs |

---

## Add

**Exhibit 99.3** 

<u>Consent to be Named as a Director Nominee</u> 

In connection with the filing by Phoenix Energy One, LLC. (the "Company") of the offering statement on Form 1-A (the "Offering Statement") with the U.S. Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Securities Act"), I hereby consent, pursuant to Rule 438 of the Securities Act, to being named in the Offering Statement and any and all amendments and supplements thereto, as a nominee to become a member of the board of directors of the Company, in connection with the completion of the offering contemplated thereto. I also consent to the filing of this consent as an exhibit to such Offering Statement and any amendments thereto.

---

| | | |
|:---|:---|:---|
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; /s/ Jason Montgomery Wagner | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; /s/ Jason Montgomery Wagner |
| Dated: June 26, 2025 | Name: | Jason Montgomery Wagner |

---

## Add

**Exhibit 99.4** 

<u>Consent to be Named as a Director Nominee</u> 

In connection with the filing by Phoenix Energy One, LLC. (the "Company") of the offering statement on Form 1-A (the "Offering Statement") with the U.S. Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Securities Act"), I hereby consent, pursuant to Rule 438 of the Securities Act, to being named in the Offering Statement and any and all amendments and supplements thereto, as a nominee to become a member of the board of directors of the Company, in connection with the completion of the offering contemplated thereto. I also consent to the filing of this consent as an exhibit to such Offering Statement and any amendments thereto.

---

| | | |
|:---|:---|:---|
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; /s/ Adam Ferrari | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; /s/ Adam Ferrari |
| Dated: June 26, 2025 | Name: | Adam Ferrari |

---

## Add

**Exhibit 99.5** 

<u>Consent to be Named as a Director Nominee</u> 

In connection with the filing by Phoenix Energy One, LLC. (the "Company") of the offering statement on Form 1-A (the "Offering Statement") with the U.S. Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Securities Act"), I hereby consent, pursuant to Rule 438 of the Securities Act, to being named in the Offering Statement and any and all amendments and supplements thereto, as a nominee to become a member of the board of directors of the Company, in connection with the completion of the offering contemplated thereto. I also consent to the filing of this consent as an exhibit to such Offering Statement and any amendments thereto.

---

| | | |
|:---|:---|:---|
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; /s/ Curtis Allen | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; /s/ Curtis Allen |
| Dated: June 26, 2025 | Name: | Curtis Allen |

---

### UNITED STATES SECURITIES AND EXCHANGE COMMISSION
**Washington, D.C. 20549**

## FORM 1-A

### REGULATION A OFFERING STATEMENT
### UNDER THE SECURITIES ACT OF 1933

### Item 1. Issuer Information

**Exact name of issuer:** Phoenix Energy One, LLC

**Jurisdiction of Incorporation/Organization:** DE

**Year of Incorporation:** 2019

**CIK:** 0001818643

**I.R.S. Employer Identification Number:** 83-4526672

**Primary Standard Industrial Classification Code:** 1311

**Total number of full-time employees:** 154

**Total number of part-time employees:** 0

**Address of Principal Executive Offices:** 18575 Jamboree Road, Suite 830, Irvine, CA 92612

**Company Phone:** 949-416-5037

**Person to contact:** Ross McAloon

### Financial Statements

**Balance Sheet Information**

| Metric                                   | Amount         |
|:---|:---|
| Cash and Cash Equivalents                | $35366000.00   |
| Investment Securities                    | $0.00          |
| Accounts and Notes Receivable            | $44718000.00   |
| Property, Plant and Equipment (PP&E)     | $1032383000.00 |
| Total Assets                             | $1134672000.00 |
| Accounts Payable and Accrued Liabilities | $111036000.00  |
| Long-Term Debt                           | $986371000.00  |
| Total Liabilities                        | $1163131000.00 |
| Total Stockholders' Equity               | $28459000.00   |
| Total Liabilities and Equity             | $1134672000.00 |

**Statement of Comprehensive Income Information**

| Metric                                    | Amount       |
|:---|:---|
| Total Revenues                            | $29886000.00 |
| Costs and Expenses Applicable to Revenues | $27083000.00 |
| Depreciation and Amortization             | $31225000.00 |
| Net Income                                | $5599000.00  |
| Earnings Per Share - Basic                | 0.00         |
| Earnings Per Share - Diluted              | 0.00         |

**Auditor Information**

| Metric          | Amount                             |
|:---|:---|
| Name of Auditor | Ramirez Jimenez International CPAs |

### Outstanding Securities

| Class                         |   Outstanding |     CUSIP | Publicly Traded   |
|:---|---:|---:|:---|
| N/A                           |             0 | 000000000 | N/A               |
| N/A                           |             0 | 000000000 | N/A               |
| 9-12 percent Registered Notes |        300000 | 000000000 | N/A               |

### Item 2. Issuer Eligibility
- [x] The issuer certifies that all of the statements in this part are true.

### Item 3. Application of Rule 262
- [x] The issuer certifies that it is not disqualified and has not been involved in any disqualifying event.

### Item 4. Summary Information Regarding the Offering

**Tier:** Tier2

**Financial Statement Status:** Audited

**Type of Securities Offered:** Equity (common or preferred stock)

**Is this a delayed or continuous offering?** Yes

**Was or is the offering to take place within one year after qualification?** No

**Was or is the offering to commence within two days after qualification?** No

**Is this a best efforts offering?** Yes

**Was there any solicitation of interest?** No

**Are there any resale securities by affiliates of the issuer?** No

**Offering Amounts**

| Description                                                     | Amount       |
|:---|:---|
| Number of securities offered                                    | 3750000      |
| Number of securities outstanding                                | 0            |
| Price per security                                              | $20.00       |
| Issuer's aggregate offering price                               | $75000000.00 |
| Aggregate offering price of securities held by security holders | $0.00        |
| Aggregate price of securities offered concurrently              | $0.00        |
| Total aggregate offering price                                  | $75000000.00 |

**Anticipated Fees**

| Service Provider   | Name   | Fees   |
|:---|:---|:---|
| Auditor            | N/A    | $0.00  |
| Legal              | N/A    | $0.00  |
| Promoters          | N/A    | $0.00  |

**Estimated Net Proceeds to the Issuer:** $69187500.00

### Item 5. Jurisdictions in Which Securities are to be Offered

AL, AK, AZ, AR, CA, CO, CT, DE, DC, FL, GA, HI, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MS, MO, MT, NE, NV, NH, NJ, NM, NY, NC, ND, OH, OK, OR, PA, PR, RI, SC, SD, TN, TX, UT, VT, VA, WA, WV, WI, WY

### Item 6. Unregistered Securities Issued or Sold Within One Year

**Name of Such Issuer:** Phoenix Energy One, LLC

**Title of Securities Issued:** 506(c) - August 2023 9-14 percent Reg D Bonds

**Total Amount of Securities Issued:** 450013

**Amount of such securities sold by principal security holders:** 0

**Aggregate consideration:** 450013000

**Basis for aggregate consideration:** —

**Securities Act Exemption:** Reg A 9% Bonds pursuant to Reg A; sold solely to qualified purchasers. 506(c) offerings pursuant to 506(c), sold solely to accredited investors.  Exchange Bonds pursuant to Section 3(a)(9), exchange with existing holders of Reg A 9% Bonds