Document:

Exhibit

Exhibit 10.1

Northern Oil and Gas, Inc. 
$350,000,000 8.50% Senior Secured Second Lien Notes due 2023 
Purchase Agreement
September 21, 2018

RBC Capital Markets, LLC
As representative of the several Initial Purchasers listed in Schedule I hereto
c/o RBC Capital Markets, LLC
200 Vesey Street
New York, New York 10281-8098

Ladies and Gentlemen:

Northern Oil and Gas, Inc. a Delaware corporation (the “Company”), proposes to issue and sell to the several initial purchasers listed in Schedule I hereto (the “Initial Purchasers”), for whom you are acting as representative (the “Representative”) an aggregate of $350 million principal amount of its 8.50% Senior Secured Second Lien Notes due 2023 (the “Securities”).  The Securities will be issued pursuant to the second supplemental indenture (the “Second Supplemental Indenture”) to be dated the Closing Date (as defined below) among the Company and Wilmington Trust, National Association, as trustee (the “Trustee”) and as collateral agent (the “Collateral Agent”), to the Indenture dated as of May 15, 2018 (the “Base Indenture” and as amended and supplemented by the First Supplemental Indenture (as defined below) and the Second Supplemental Indenture, collectively the “Indenture”), among the Company, the Trustee and the Collateral Agent.
The Company has previously issued approximately $344 million in aggregate principal amount of its 8.50% Senior Secured Second Lien Notes due 2023 under the Indenture (the “Existing Notes”). The Securities, when issued, will constitute “Additional Notes” (as such term as defined in the Indenture). Except as otherwise described in the Time of Sale Information (as defined below) and in the Final Offering Memorandum (as defined below), the Securities will have substantially identical terms to the Existing Notes and will be treated together with the Existing Notes as a single series of debt securities for all purposes under the Indenture. 
The Securities will be sold to the Initial Purchasers without being registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon an exemption therefrom.  The Company has prepared a preliminary offering memorandum dated September 18, 2018 (the “Preliminary Offering Memorandum”) and will prepare an offering memorandum dated the date hereof (the “Final Offering Memorandum”) setting forth information concerning the Company and the Securities.  Copies of the Preliminary Offering Memorandum have been, and copies of the Final Offering Memorandum will be, delivered by the Company to the Initial Purchasers pursuant to the terms of this purchase agreement (the “Agreement”).  The Company hereby confirms that it has authorized the use of the Preliminary Offering Memorandum, the other Time of Sale Information (as defined below) and the Final Offering Memorandum in connection with the offering and resale of the Securities by the Initial Purchasers in the manner contemplated by this Agreement.  Capitalized terms used but not defined herein shall have the meanings given to such terms in the Preliminary Offering Memorandum. 
At or prior to the time when sales of Securities were first made (the “Time of Sale”), the Company had prepared the following information (collectively, the “Time of Sale Information”): the Preliminary Offering Memorandum, as supplemented and amended by the written communications listed on Annex A hereto.
The Company intends to use the proceeds of the offering of the Securities together with proceeds from the RBL Credit Facility (as defined below) to (i) repay all of the outstanding indebtedness of the Company under that term loan credit agreement (as amended, restated, amended and restated, supplemented and otherwise modified from time to time, the “Term Loan Agreement”) dated as of November 1, 2017, among the Company, as borrower, the several lenders from time to time party thereto and TPG Specialty Lending, Inc. as administrative agent and collateral agent (the “Agent”), (ii) redeem or repurchase all of the Company’s outstanding 8.000% Senior Notes due 2020 (the “Existing Senior Notes”) and pay accrued and unpaid interest thereon plus any related premiums, fees and costs and (iii) if any remainder, for general corporate purposes (collectively, the “Refinancing”).

On or prior to the Closing Date, the Issuer also intends to enter into the Amended and Restated Credit Agreement (the “RBL Agreement”) for a reserve-based credit facility (the “RBL Credit Facility”), by and among the Company, as borrower, Royal Bank of Canada, as administrative agent and the lenders party thereto to replace the Term Loan Agreement.
On September 11, 2018, the Company commenced a consent solicitation (the “Consent Solicitation”) in order to make certain amendments to the Base Indenture (the “Amendments”), including amending the covenants in the Base Indenture to permit the incurrence of the Securities. Upon receipt of consent from not less than a majority in aggregate principal amount of the outstanding Existing Notes, on September 18, 2018, the Company and the Trustee executed a First Supplemental Indenture to the Base Indenture (the “First Supplemental Indenture”) providing for the Amendments, which will become operative on the Closing Date upon payment of the consent fee in connection with the Amendments.
As used herein, the term “Transactions” means (i) the offer and sale of the Securities, (ii) the Refinancing, (iii) the Consent Solicitation and (iv) the payment of all fees and expenses payable by the Company related to the foregoing.
The Securities will be secured by a second-priority lien, subject to liens granted to secure the RBL Credit Facility and certain liens permitted to exist on the Collateral by the Indenture or the Intercreditor Agreement, on substantially all of the tangible and intangible personal property of the Company and the Company's and the Guarantors' oil and gas properties constituting proved developed producing reserves representing at least 95% of the total present value (using a 10% discount rate), now owned or hereafter acquired by the Company, that secure borrowings under the RBL Agreement on a first-priority basis and the Existing Notes on a second-priority basis, subject to certain exceptions described in the Indenture, the Intercreditor Agreement and the Collateral Documents (as defined below) (the “Collateral”), as described in the Preliminary Offering Memorandum. The term “Collateral Documents,” as used herein, shall mean that certain Second Lien Mortgage, Deed of Trust, Assignment of As-Extracted Collateral, Security Agreement, Fixture Filing and Financing Statement, dated as of May 15, 2018, by the Company in favor of the Collateral Agent delivered in connection with the Existing Notes (collectively, as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Existing Mortgages”), a mortgage amendment to the Existing Mortgages to be dated the Closing Date among the Company and the Collateral Agent to reflect the additional Securities (the “Mortgage Amendment”), and the Second Lien Guaranty and Collateral Agreement, dated as of May 15, 2018, among the Company and the Collateral Agent (the “Security Agreement”).  The rights of the holders of the Securities with respect to the Collateral shall be further governed by the Intercreditor Agreement (the “Base Intercreditor Agreement”), dated as of May 15, 2018, among the Company, TPG Specialty Lending, Inc., and Wilmington Trust, National Association, as second lien agent (“Second Lien Agent”), which will be amended to permit the issuance of the Securities, among other things, by the First Amendment and Reaffirmation of the Intercreditor Agreement, to be entered into on the Closing Date, among the Company, Royal Bank of Canada, as priority lien agent, and the Second Lien Agent (the “Intercreditor Amendment” and, together with the Base Intercreditor Agreement, the “Intercreditor Agreement”).
Holders of the Securities (including the Initial Purchasers and their direct and indirect transferees) will be entitled to the benefits of a Registration Rights Agreement (the “Registration Rights Agreement”), to be dated the Closing Date (as defined below), pursuant to which the Company may be required to file with the Securities and Exchange Commission (the “Commission”), under the circumstances set forth therein, (i) a registration statement under the Securities Act relating to another issuance of debt securities of the Company with terms substantially identical to the Securities and of the same series under the Indenture as the Securities (the “Exchange Securities”) to be offered in exchange for the Securities (the “Exchange Offer”) and (ii) to the extent required by the Registration Rights Agreement, a shelf registration statement pursuant to Rule 415 of the Securities Act relating to the resale by certain holders of the Securities, and in each case, to use its commercially reasonable efforts to cause such registration statements to be declared effective.
The Company hereby confirms its agreement with the several Initial Purchasers concerning the purchase and resale of the Securities, as follows:
1.    Purchase and Resale of the Securities.  
(a)    The Company agrees to issue and sell the Securities to the several Initial Purchasers as provided in this Agreement, and each Initial Purchaser, on the basis of the representations, warranties and agreements set forth herein and subject to the conditions set forth herein, agrees, severally and not jointly, to purchase from the Company 100.00% of the respective principal amount of Securities set forth opposite such Initial Purchaser’s name in Schedule 1 hereto at a price equal to 101.910200% of the principal amount thereof plus accrued interest, if any, from October 1, 2018 to the Closing Date.  The Company will not be obligated to deliver any of the Securities except upon payment for all the Securities to be purchased as provided herein.

(b)    The Company understands that the Initial Purchasers intend to offer the Securities for resale (“Exempt Resales”) on the terms set forth in the Time of Sale Information and Final Offering Memorandum.  Each Initial Purchaser, severally and not jointly, represents, warrants and agrees that:
(i)    it is a qualified institutional buyer within the meaning of Rule 144A under the Securities Act (a “QIB”) and an accredited investor within the meaning of Rule 501(a) of Regulation D under the Securities Act (“Regulation D”);
(ii)    it has not solicited offers for, or offered or sold, and will not solicit offers for, or offer or sell, the Securities by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) of Regulation D or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act; and
(iii)    it has not solicited offers for, or offered or sold, and will not solicit offers for, or offer or sell, the Securities as part of their initial offering except:
(A)    within the United States to persons whom it reasonably believes to be QIBs in transactions pursuant to Rule 144A under the Securities Act (“Rule 144A”) and in connection with each such sale, it has taken or will take reasonable steps to ensure that the purchaser of the Securities is aware that such sale is being made in reliance on Rule 144A; or
(B)    in accordance with the restrictions set forth in Annex C hereto.
(c)    Each Initial Purchaser acknowledges and agrees that the Company and, for purposes of the “no registration” opinions to be delivered to the Initial Purchasers pursuant to Sections 6(i) and 6(j), counsel for the Company and counsel for the Initial Purchasers, respectively, may rely upon the accuracy of the representations and warranties of the Initial Purchasers, and compliance by the Initial Purchasers with their agreements, contained in paragraph (b) above (including Annex C hereto), and each Initial Purchaser hereby consents to such reliance.
(d)    The Company acknowledges and agrees that the Initial Purchasers may offer and sell Securities to or through any affiliate of an Initial Purchaser and that any such affiliate may offer and sell Securities purchased by it to or through any Initial Purchaser.
(e)    The Company acknowledges and agrees that each Initial Purchaser is acting solely in the capacity of an arm’s-length contractual counterparty to the Company with respect to the offering of Securities contemplated hereby (including in connection with determining the terms of the offering) and not as a financial advisor or a fiduciary to, or an agent of, the Company or any other person.  Additionally, neither the Representative nor any other Initial Purchaser is advising the Company or any other person as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction.  The Company shall consult 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 neither the Representative nor any other Initial Purchaser shall have any responsibility or liability to the Company with respect thereto. Any review by the Representative or any of the Initial Purchasers of the Company and the transactions contemplated hereby or other matters relating to such transactions will be performed solely for the benefit of the Representative or such Initial Purchaser, as the case may be, and shall not be on behalf of the Company or any other person.
2.    Payment and Delivery.  
(a)    Payment for and delivery of the Securities will be made at the offices of Latham & Watkins LLP not later than 10:00 A.M., New York City time, on October 5, 2018, or at such other time or place on the same or such other date, not later than the fifth business day thereafter, as the Representative and the Company may agree upon in writing.  The time and date of such payment and delivery is referred to herein as the “Closing Date.”
(b)    Payment for the Securities shall be made by wire transfer in immediately available funds to the account(s) specified by the Company to the Representative against delivery to the nominee of The Depository Trust Company (“DTC”), for the account of the Initial Purchasers, of one or more global notes representing the Securities (collectively, the “Global Note”), with any transfer taxes payable in connection with the sale of the Securities duly paid by the Company.  The Global Note will be made available for inspection by the Representative not later than 1:00 P.M., New York City time, on the business day prior to the Closing Date.

3.    Representations and Warranties of the Company.  The Company represents and warrants to, and agrees with, the Initial Purchasers that, as of the date hereof and as of the Closing Date:
(a)Preliminary Offering Memorandum, Time of Sale Information and Final Offering Memorandum.  The Preliminary Offering Memorandum, as of its date, did not, the Time of Sale Information, at the Time of Sale, did not, and at the Closing Date, will not, and the Final Offering Memorandum, as of the date thereof and as of the Closing Date, will not, contain 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; provided that the Company makes no representation or warranty with respect to any statements or omissions made in reliance upon and in conformity with information relating to the Initial Purchasers furnished to the Company in writing by such Initial Purchaser through the Representative expressly for use in the Preliminary Offering Memorandum, the Time of Sale Information or the Final Offering Memorandum as set forth in Section 7(b). 

(b)Incorporated Documents.  The documents incorporated by reference in each of the Time of Sale Information and the Final Offering Memorandum, when filed with the Commission, comply or will comply, as the case may be, in all material respects to the requirements of the Exchange Act, and the rules and regulations of the Commission thereunder, and did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. There are no contracts or other documents required to be described in such incorporated documents or to be filed as exhibits to such incorporated documents that have not been described or filed as required. The Company is subject to, and is in full compliance in all material respects with, the reporting requirements of Section 13 and Section 15(d), as applicable, of the Exchange Act.

(c)Additional Written Communications.  The Company (including its agents and representatives, other than the Initial Purchasers in their capacity as such) has not prepared, made, used, authorized, approved or referred to and will not prepare, make, use, authorize, approve or refer to any written communication that constitutes an offer to sell or solicitation of an offer to buy the Securities (each such communication by the Company or its agents and representatives (other than a communication referred to in clauses (i) and (ii) below) an “Issuer Written Communication”) other than (i) the Preliminary Offering Memorandum, (ii) the Final Offering Memorandum, (iii) the documents listed on Annex A hereto, including a term sheet substantially in the form of Annex B hereto, which constitute part of the Time of Sale Information, and (iv) any electronic road show or other written communications, in each case used in accordance with Section 4(c).  Each such Issuer Written Communication, when taken together with the Time of Sale Information at the Time of Sale, did not, and at the Closing Date will not, contain 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; provided that the Company makes no representation or warranty with respect to any statements or omissions made in each such Issuer Written Communication in reliance upon and in conformity with information relating to any Initial Purchaser furnished to the Company in writing by such Initial Purchaser through the Representative expressly for use in any Issuer Written Communication.  

(d)Financial Statements.  The financial statements and the related notes and supporting schedules thereto included or incorporated by reference in each of the Time of Sale Information and the Final Offering Memorandum present fairly the financial position of the Company as of the dates indicated and the results of its operations and the changes in its cash flows for the periods specified; such financial statements have been prepared in conformity with generally accepted accounting principles applied on a consistent basis throughout the periods covered thereby and the requirements of Regulation S-X; the financial data set forth under the caption “Summary Historical and Pro Forma Financial Data” in the Time of Sale Information and the Final Offering Memorandum has been prepared on a basis consistent with that of the financial statements referred to above and present fairly the financial position of the Company as of the dates indicated and the results of operations and the changes in its cash flows for the periods specified; and the other financial information included or incorporated by reference in each of the Time of Sale Information and the Final Offering Memorandum has been derived from the accounting records of the Company and presents fairly the information shown thereby; and the pro forma financial information and the related notes thereto included or incorporated by reference in each of the Time of Sale Information and the Final Offering Memorandum has been prepared in accordance with Regulation S-X, and the assumptions underlying such pro forma financial information are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein, in each case as set forth in each of the Time of Sale Information and the Final Offering Memorandum. The interactive data in eXtensible Business Reporting Language included or incorporated by reference in each of the Preliminary Offering Memorandum, the Time of Sale Information and the Final Offering Memorandum fairly presents the information called for in all material respects and is prepared in accordance with the Commission's rules and guidelines applicable thereto.

(e)No Material Adverse Change.  Except as disclosed in the Time of Sale Information and the Final Offering Memorandum, since the date of the most recent financial statements of the Company included or incorporated by reference in each of the Time of Sale Information and the Final Offering Memorandum (i) there has not been any change in the capital stock, short-term debt or long-term debt of the Company, 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 any material adverse change, or any development involving a prospective material adverse change, in or affecting the business, properties, rights, assets, management, financial position, results of operations, liabilities, conditions or prospects of the Company; (ii) the Company has not entered into any transaction or agreement that is material to the Company and out of the ordinary course of business or incurred any liability or obligation, direct or contingent, that is material to the Company; and (iii) the Company has not sustained any material loss or interference with its business from fire, explosion, flood, earthquakes, accident 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, except in each case as otherwise disclosed in each of the Time of Sale Information and the Final Offering Memorandum.

(f)Organization and Good Standing.  The Company has been duly incorporated and is validly existing as a corporation and in good standing under the laws of its jurisdiction of incorporation, is duly qualified to do business and is in good standing in each jurisdiction in which its ownership or lease of property or the conduct of its business requires such qualification, and has corporate power and authority necessary to own or hold its properties and to conduct the business in which it is engaged, except where the failure to be so qualified, in good standing or have such power or authority would not, individually or in the aggregate, have a material adverse effect on (i) the business, properties, rights, assets, management, financial position, results of operations, liabilities, conditions (financial or otherwise) or prospects of the Company, (ii) the performance by the Company of its obligations under this Agreement, the Securities and the Collateral Documents or (iii) the validity or enforceability of this Agreement, the Indenture, the Collateral Documents, the Registration Rights Agreement and the Notes or (iv) the consummation of any of the Transactions (a “Material Adverse Effect”). 

(g)Subsidiaries. The Company does not have any subsidiaries and does not own any beneficial interest, directly or indirectly, in any corporation, partnership, joint venture or other business entity.

(h)Capitalization.  The Company has the capitalization as set forth in each of the Time of Sale Information and the Final Offering Memorandum under the heading “Capitalization”. Except as disclosed in the Time of Sale Information and the Final Offering Memorandum, there are no outstanding (i) options, warrants, preemptive rights, rights of first refusal or other rights to purchase from the Company, (ii) agreements, contracts, arrangements or other obligations of the Company to issue or (iii) other rights to convert any obligation into or exchange any securities for, in the case of each of clauses (i) through (iii), shares of capital stock of or other ownership or equity interests in the Company.

(i)Due Authorization.  The Company has full right, power and authority to execute and deliver this Agreement, the Securities, the Indenture, the Exchange Securities, the Intercreditor Amendment, the Registration Rights Agreement, each of the Collateral Documents and the RBL Agreement (collectively, the “Transaction Documents”), including to perform its obligations hereunder and thereunder; and all action required to be taken for the due and proper authorization, execution and delivery of each of the Transaction Documents and the consummation of the transactions contemplated thereby has been duly and validly taken.  

(j)The Base Indenture.  The Base Indenture has been duly authorized, executed and delivered by the Company and constitutes a valid and legally binding agreement of the Company enforceable against the Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability (collectively, the “Enforceability Exceptions”); the Indenture conforms in all material respects to the requirements of the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”), and the rules and regulations of the Commission applicable to an indenture that is qualified thereunder.

(k)The First Supplemental Indenture.  The First Supplemental Indenture has been duly authorized, duly executed and delivered by the Company and on the Closing Date, when the First Supplemental Indenture becomes operative in accordance with its terms, the Indenture (as supplemented by the First Supplemental Indenture) constitutes a valid and legally binding agreement of the Company enforceable against the Company in accordance with its terms, subject to the Enforceability Exceptions.

(l)The Second Supplemental Indenture. The Second Supplemental Indenture has been duly authorized by the Company and on the Closing Date will be duly executed and delivered by the Company and, when duly executed and delivered in accordance with its terms by each of the parties thereto, the Indenture (as supplemented by the Second Supplemental 

Indenture) will constitute a valid and legally binding agreement of the Company enforceable against the Company in accordance with its terms, subject to the Enforceability Exceptions.

(m)The Securities.  The Securities have been duly authorized by the Company and, when duly executed, authenticated, issued and delivered as provided in the Indenture and paid for as provided herein, will be duly and validly issued and outstanding and will constitute valid and legally binding obligations of the Company enforceable against the Company in accordance with their terms, subject to the Enforceability Exceptions, and will be entitled to the benefits of the Indenture.

(n)The Exchange Securities.  The Exchange Securities have been duly authorized for issuance by the Company and, when issued and authenticated in accordance with the terms of the Indenture and the Registration Rights Agreement, will be duly and validly issued and outstanding and will constitute valid and legally binding obligations of the Company enforceable against the Company in accordance with its terms, subject to the Enforceability Exceptions, and will be entitled to the benefits of the Indenture.

(o)This Agreement and the Registration Rights Agreement.  This Agreement has been duly authorized, executed and delivered by the Company; and the Registration Rights Agreement has been duly authorized by the Company and on the Closing Date will be duly executed and delivered by the Company and, when duly executed and delivered in accordance with its terms by each of the parties thereto, will constitute a valid and legally binding agreement of the Company enforceable against the Company in accordance with its terms, subject to the Enforceability Exceptions, and except that rights to indemnity and contribution thereunder may be limited by applicable law and public policy.

(p)Collateral Documents.  Each of the Collateral Documents has been (or with respect to the Mortgage Amendment, will be) duly authorized, executed and delivered by the Company and constitutes (or with respect to the Mortgage Amendment, will constitute) a valid and legally binding agreement of the Company enforceable against the Company in accordance with its terms, subject to the Enforceability Exceptions. 

(q)The Base Intercreditor Agreement.  The Base Intercreditor Agreement has been duly authorized, executed and delivered by the Company and constitutes a valid and legally binding agreement of the Company enforceable against the Company in accordance with its terms, subject to the Enforceability Exceptions.

(r)Intercreditor Amendment.  The Intercreditor Amendment has been duly authorized by the Company and on the Closing Date will be duly executed and delivered by the Company and, when duly executed and delivered in accordance with its terms by each of the parties thereto, the Intercreditor Agreement (as amended by the Intercreditor Amendment) will constitute a valid and legally binding agreement of the Company enforceable against the Company in accordance with its terms, subject to the Enforceability Exceptions. 

(s)The RBL Agreement.  The RBL Agreement has been duly authorized by the Company and on the Closing Date will be duly executed and delivered by the Company and, when duly executed and delivered in accordance with its terms by each of the parties thereto, will constitute a valid and legally binding agreement of the Company enforceable against the Company in accordance with its terms, subject to the Enforceability Exceptions.

(t)Descriptions of the Transaction Documents; Collateral.  Each Transaction Document conforms in all material respects to the description thereof contained in each of the Time of Sale Information and the Final Offering Memorandum.  The Collateral conforms in all material respects to the description thereof contained in each of the Time of Sale Information and the Final Offering Memorandum.

(u)Collateral Documents and Collateral.  Upon the filing with the appropriate governmental authorities of the financing statements in appropriate form describing the Collateral Documents with respect to which a security interest may be perfected by filing or recordation, the lien and security interest created by the Collateral Documents will be fully perfected with all right, title and interest of the Company in the Collateral to the extent such interests can be perfected by such filing with the priority required by the Collateral Documents.

(v)No Violation or Default.  The Company is not (i) in violation of its charter or by-laws (“Charter Documents”); (ii) in default, and no event has occurred that, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which the Company is a party or by which the Company is bound or to which any property, right or asset of the Company is subject; or (iii) in violation of any law, ordinance, decree, injunction or statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority 

(“Law”), except, in the case of clauses (ii) and (iii) above, for any such default or violation that has been waived or would not, individually or in the aggregate, have a Material Adverse Effect.

(w)No Conflicts.  The execution, delivery and performance by the Company of each of the Transaction Documents to which it is a party, the issuance and sale of the Securities, the issuance of the Exchange Notes, and the consummation of the transactions contemplated by the Transaction Documents, including the Refinancing, will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, result in the termination, modification or acceleration of, or result in the creation or imposition of any lien, charge or encumbrance upon any property, right or asset of the Company pursuant to, any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which the Company is a party or by which the Company is bound or to which any property, right or asset of the Company is subject (other than any lien or encumbrance created or imposed pursuant to the Collateral Documents or the collateral documents relating to the RBL Agreement, in each case, permitted under the Intercreditor Agreement); (ii) result in any violation of the provisions of the charter or by-laws of the Company; or (iii) result in the violation of any law or statute or any judgment, order, rule, decree or regulation of any court or arbitrator or governmental or regulatory authority, except, in the case of clauses (i) and (iii) above, for any such conflict, breach, violation, default, lien, charge or encumbrance that would not, individually or in the aggregate, have a Material Adverse Effect.

(x)No Consents Required.  No consent, approval, authorization, order, registration or qualification of or with any court, arbitrator, governmental or regulatory authority or other third-party is required for the execution, delivery and performance by the Company of each of the Transaction Documents to which each is a party, the issuance and sale of the Securities, the issuance of the Exchange Notes and the consummation of the transactions contemplated by the Transaction Documents, except for such consents, approvals, authorizations, orders and registrations or qualifications as may be required (i) under applicable state securities laws in connection with the purchase and resale of the Securities by the Initial Purchasers and (ii) with respect to the Exchange Securities under the Securities Act, the Trust Indenture Act and applicable state securities laws as contemplated by the Registration Rights Agreement.

(y)Legal Proceedings.  Except as described in each of the Time of Sale Information and the Final Offering Memorandum, there are no legal, governmental or regulatory investigations, actions, demands, claims, suits, arbitrations, inquiries or proceedings (“Actions”) pending to which the Company is or may be a party or to which any property, right or asset of the Company is or may be the subject that, individually or in the aggregate, if determined adversely to the Company, could have a Material Adverse Effect or interfere with the consummation of the offering of the Securities or any of the Transactions; and no such Actions are, to the knowledge of the Company, threatened or contemplated by any governmental or regulatory authority or by others.

(z)Independent Accountants for the Company.  Each of Grant Thornton LLP and Deloitte LLP, who have certified certain financial statements of the Company, is an (i) independent public accountant with respect to the Company within the applicable rules and regulations adopted by the Commission and the Public Company Accounting Oversight Board (United States) and as required by the Securities Act, (ii) in compliance with the applicable requirements relating to the qualification of accountants Regulation S-X and (iii) a registered public accounting firm as defined by the Public Company Accounting Oversight Board (United States) whose registration has not been suspended or revoked and who has not requested such registration to be withdrawn.

(aa)Independent Accountants for Pivotal Williston Basin, LP and Pivotal Williston Basin II, LP (collectively, “Pivotal”).  Weaver and Tidwell, LLP, who have certified certain financial statements of Pivotal, is an (i) independent public accountant with respect to the Company within the applicable rules and regulations adopted by the Commission and the Public Company Accounting Oversight Board (United States) and as required by the Securities Act, (ii) in compliance with the applicable requirements relating to the qualification of accountants Regulation S-X and (iii) a registered public accounting firm as defined by the Public Company Accounting Oversight Board (United States) whose registration has not been suspended or revoked and who has not requested such registration to be withdrawn.

(bb)    Independent Accountants for WR Operating LLC (“W Energy”).  Whitley Penn LLP, who have certified certain financial statements of W Energy, is an (i) independent public accountant with respect to W Energy within the applicable rules and regulations adopted by the Commission and the Public Company Accounting Oversight Board (United States) and as required by the Securities Act, (ii) in compliance with the applicable requirements relating to the qualification of accountants Regulation S-X and (iii) a registered public accounting firm as defined by the Public Company Accounting Oversight Board (United States) whose registration has not been suspended or revoked and who has not requested such registration to be withdrawn.

(cc)    Real and Personal Property.  The Company has good, valid and marketable title in fee simple to, or has valid rights to lease or otherwise use, all items of real and personal property that are described in or referred to in the Mortgages and all other real and personal property that are material to the business of the Company, in each case free and clear of all liens, encumbrances, claims and defects and imperfections of title except for Permitted Exceptions, in the case of Mortgaged Properties, and, in the case of all other real and personal property, those that (i) do not materially interfere with the use made and proposed to be made of such property by the Company, or (ii) could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.
  
(dd)    Intellectual Property.  (i) The Company owns or possesses the right to use all patents, patent applications, trademarks, service marks, trade names, trademark registrations, service mark registrations, domain names and other source indicators, copyrights and copyrightable works, know-how, trade secrets, systems, procedures, proprietary or confidential information and all other worldwide intellectual property, industrial property and proprietary rights (collectively, “Intellectual Property”) used in the conduct of its business; (ii) the Company’s conduct of its business does not infringe, misappropriate or otherwise violate any Intellectual Property of any person; (iii) the Company has not received any written notice of any claim relating to Intellectual Property; and (iv) to the knowledge of the Company, the Intellectual Property of the Company is not being infringed, misappropriated or otherwise violated by any person. The Company is not a party to, or bound by, any options, licenses or agreements with respect to the intellectual property rights of any other person or entity that are necessary to be described in the Time of Sale Information or the Final Offering Memorandum to avoid a material misstatement or omission and are not described therein. None of the Intellectual Property used by the Company has been obtained or is hereby used by the Company in violation of any contractual obligation binding on the Company or, to the Company’s knowledge, its officers, directors or employees or otherwise in violation of the rights of any person. 
 
(ee)    Related Party Transactions.  No relationship, direct or indirect, exists between or among the Company, on the one hand, and the directors, officers, stockholders or other affiliates of the Company, on the other, that would be required by the Securities Act to be described in a registration statement on Form S-1 to be filed with the Commission and that is not so described in each of the Time of Sale Information and the Final Offering Memorandum. Except as otherwise disclosed in the Time of Sale Information and the Final Offering Memorandum, there are no outstanding loans, advances (except advances for business expenses in the ordinary course of business) or guarantees of indebtedness by the Company or any affiliate of the Company to or for the benefit of any of the officers or directors of the Company or any affiliate of the Company or any of their respective family members. 
 
(ff)    Investment Company Act. The Company is not, and after giving effect to the offering and sale of the Securities and the application of the proceeds thereof as described in each of the Time of Sale Information and the Final Offering Memorandum, will not be, an “investment company” or an entity “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission thereunder (collectively, the “Investment Company Act”).

(gg)    Taxes.  The Company has paid all federal, state, local and foreign taxes and filed all tax returns required to be paid or filed through the date hereof and all such returns are true, complete and correct in all material respects; and except as otherwise disclosed in each of the Time of Sale Information and the Final Offering Memorandum, there is no tax deficiency that has been, or could reasonably be expected to be, asserted against the Company or any of its properties or assets. To the knowledge of the Company there are no actual or proposed tax assessments against the Company that would, individually or in the aggregate, have a Material Adverse Effect. The accruals on the books and records of the Company in respect of any material tax liability for any period not finally determined are adequate to meet any assessments of tax for any such period.

(hh)    Licenses and Permits.  The Company possesses all licenses, sub-licenses, certificates, consents, permits and other authorizations issued by, and has made all declarations and filings with, the appropriate federal, state, local or foreign governmental or regulatory authorities that are necessary for the ownership or lease of its properties or the conduct of its business as described in each of the Time of Sale Information and the Final Offering Memorandum, except where the failure to possess or make the same would not, individually or in the aggregate, have a Material Adverse Effect; and except as described in each of the Time of Sale Information and the Final Offering Memorandum, the Company has not received notice of any revocation or modification of any such license, sub-license, certificate, consent permit or authorization or does not have any reason to believe that any such license, certificate, permit or authorization will not be renewed in the ordinary course, except which would not, individually or in the aggregate, have a Material Adverse Effect.

(ii)    No Labor Disputes.  No labor disturbance by or dispute with employees of the Company exists or, to the knowledge of the Company, is contemplated or threatened and the Company is not aware of any existing or imminent labor disturbance by, or dispute with, the employees of any of the Company’s principal suppliers, contractors or customers, except as 

would not have a Material Adverse Effect.  The Company has not received any notice of cancellation or termination with respect to any collective bargaining agreement to which it is a party.

(jj)    Compliance with Environmental Laws.  Except as would not, individually or in the aggregate, have a Material Adverse Effect, (i) the Company (x) is in compliance with any and all applicable federal, state, local and foreign laws, rules, regulations, requirements, decisions and orders relating to the protection of human health or safety (to the extent related to exposure to hazardous or toxic substances or wastes, pollutants or contaminants), pollution or protection of the environment or natural resources, or otherwise relating to the use, treatment, storage, disposal, or release of or exposure to hazardous or toxic substances or wastes, pollutants or contaminants (collectively, “Environmental Laws”), (y) has received and is in compliance with all permits, licenses, certificates or other authorizations or approvals required of it under applicable Environmental Laws to conduct its business, and (z) has not received notice of any actual or potential liability under or relating to any Environmental Laws, including for the investigation or remediation of any disposal or release of hazardous or toxic substances or wastes, pollutants or contaminants; and (ii) there are no costs or liabilities associated with a violation of or liability under Environmental Laws of or relating to the Company.  Except as described in each of the Time of Sale Information and the Final Offering Memorandum, there are no proceedings that are pending, or, to the knowledge of the Company, threatened, against the Company under any Environmental Laws in which a governmental entity is also a party, other than such proceedings regarding which it is reasonably believed no monetary sanctions of $100,000 or more will be imposed. The Company has not been named as a “potentially responsible party” under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, or any similar U.S. or non-U.S. state or local Environmental Laws requiring the Company to investigate or remediate any pollutants or contaminants, except where such requirements would not, individually or in the aggregate, have a Material Adverse Effect, whether or not arising from transactions in the ordinary course of business. 
 
(kk)    Compliance with ERISA.  (i) Each employee benefit plan, within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), for which the Company or any member of its “Controlled Group” (defined as any organization which is a member of a controlled group of corporations within the meaning of Section 414 of the Internal Revenue Code of 1986, as amended (the “Code”)) would have any liability (each, a “Plan”) is in compliance with its terms and the requirements of any applicable statutes, orders, rules and regulations, including but not limited to ERISA and 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 Plan excluding transactions effected pursuant to a statutory or administrative exemption; (iii) for each Plan that is subject to the funding rules of Section 412 of the Code or Section 302 of ERISA, no failure to satisfy the “minimum funding standard” or “minimum funding contribution” (as such terms are defined in Section 412 or 430 of the Code or Section 302 of ERISA), whether or not waived, has occurred or is reasonably expected to occur; (iv) no “reportable event” (within the meaning of Section 4043(c) of ERISA) has occurred or is reasonably expected to occur; and (v) neither the Company nor any member of the Controlled Group has incurred, nor reasonably expects to incur, any liability under Title IV of ERISA (other than employer contributions and premiums to the Pension Benefit Guarantee Corporation, in the ordinary course and without default) in respect of a Plan or in respect of any “multiemployer plan,” within the meaning of Section 4001(a)(3) of ERISA, except in each case with respect to the events or conditions set forth in (i) through (v) hereof, as would not, individually or in the aggregate, have a Material Adverse Effect.

(ll)    Disclosure Controls.  The Company maintains an effective system of “disclosure controls and procedures” (as defined in Rule 13a-15(e) of the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, including controls and procedures designed to ensure that such information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure. Since the date of the most recent evaluation of such disclosure controls and procedures, there have been no significant changes in internal controls or in other factors that could significantly affect internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses. The Company has carried out evaluations of the effectiveness of its disclosure controls and procedures as required by Rule 13a-15 of the Exchange Act. The statements relating to disclosure controls and procedures made by the principal executive officers and principal financial officers of the Company in the certifications required by the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith are complete and correct. 

(mm)    Accounting Controls.  The Company maintain systems of “internal control over financial reporting” (as defined in Rule 13a-15(f) of the Exchange Act) that comply with the requirements of the Exchange Act. The Company maintains a system of accounting controls that is in compliance with the Sarbanes-Oxley Act and is sufficient to provide reasonable assurances that: (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles as applied in the United States and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is 

compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. There are no significant deficiencies or material weaknesses in the design or operation of internal controls which could adversely affect the Company’s ability to record, process, summarize, or report financial data to management and the Board of Directors of the Company. The Company is not aware of any fraud, whether or not material, that involves management or other employees who have a role in the Company’s internal controls. Except as set forth in the Time of Sale Information and the Final Offering Memorandum, the Audit Committee of the Board of Directors of the Company (the “Audit Committee”) is not reviewing or investigating, and neither the Company’s independent auditors nor its internal auditors have recommended that the Audit Committee review or investigate, (i) adding to, deleting, changing the application of or changing the Company’s disclosure with respect to, any of the Company’s material accounting policies, (ii) any matter which could result in a restatement of the Company’s financial statements for any annual or interim period during the current or prior three fiscal years, or (iii) a significant deficiency, material weakness, change in internal control over financial reporting or fraud involving management or other employees who have a significant role in the internal control over financial reporting.

(nn)    Insurance.  The Company maintains or is covered by insurance provided by insurers of recognized financial responsibility covering its properties, operations, personnel and business, including business interruption insurance, which insurance is in amounts and insures against such losses and risks as are adequate to protect the Company and its business; and the Company has not (i) received 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 or (ii) 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. The Company is in compliance with the terms of such policies and instruments in all material respects, and there are no claims by the Company under any such policy or instrument as to which any insurance company is denying liability or defending under a reservation of rights clause.
  
(oo)    No Unlawful Payments.  None of the Company, nor any director, officer or employee of the Company nor, to the knowledge of the Company, any agent, affiliate or other person associated with or acting on behalf of the Company has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made or taken an act in furtherance of an offer, promise or authorization of any direct or indirect unlawful payment or benefit to any foreign or domestic government official or employee, including of any government-owned or controlled entity or of a public international organization, or any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political office; (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended, or any applicable law or regulation implementing the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, or committed an offence under the Bribery Act 2010 of the United Kingdom, or any other applicable anti-bribery or anti-corruption law; or (iv) made, offered, agreed, requested or taken an act in furtherance of any unlawful bribe or other unlawful benefit, including, without limitation, any rebate, payoff, influence payment, kickback or other unlawful or improper payment or benefit.  The Company has instituted, maintained and enforce, and will continue to maintain and enforce, policies and procedures designed to promote and ensure compliance with all applicable anti-bribery and anti-corruption laws.

(pp)    Compliance with Money Laundering Laws.  The operations of the Company are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements, including those of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the applicable money laundering statutes of all jurisdictions where the Company conducts 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 “Anti-Money Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company with respect to the Anti-Money Laundering Laws is pending or, to the knowledge of the Company, threatened.

(qq)    No Conflicts with Sanctions Laws.  Neither the Company nor any of its, directors, officers or employees, nor, to the knowledge of the Company, any agent, affiliate or other person associated with or acting on behalf of the Company is currently the subject or the target of any sanctions administered or enforced by the U.S. government (including, without limitation, the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”) or the U.S. Department of State and including, without limitation, the designation as a “specially designated national” or “blocked person”), the United Nations Security Council (“UNSC”), the European Union, Her Majesty’s Treasury (“HMT”), or other relevant sanctions authority (collectively, “Sanctions”), nor is the Company located, organized or resident in a country or territory that is the subject or target of Sanctions, including, without limitation, Cuba, Burma (Myanmar), Iran, North Korea, Sudan, Syria and Crimea (each, a “Sanctioned Country”); and the Company will not directly or indirectly use the proceeds of the offering of the Securities hereunder, or lend, contribute or otherwise make available such proceeds to any joint venture partner or other person or entity (i) to fund or facilitate any activities of or business with any person that, at the time of such funding or facilitation, is the subject or target of Sanctions, (ii) to fund or facilitate any activities of or business in any Sanctioned Country or (iii) in any other manner that will result in a violation by any person (including any person participating in the transaction, whether as 

underwriter, initial purchaser, advisor, investor or otherwise) of Sanctions.  For the past five years, the Company has not knowingly engaged in, is not now knowingly engaged in and will not engage in, any dealings or transactions with any person that at the time of the dealing or transaction is or was the subject or the target of Sanctions or with any Sanctioned Country.

(rr)    Solvency.  On and immediately after the Closing Date, the Company (after giving effect to the issuance and sale of the Securities and the other transactions related thereto as described in each of the Time of Sale Information and the Final Offering Memorandum) will be Solvent.  As used in this paragraph, the term “Solvent” means, with respect to a particular date and entity, that on such date (i) the fair value (and present fair saleable value) of the assets of such entity is not less than the total amount required to pay the probable liability of such entity on its total existing debts and liabilities (including contingent liabilities) as they become absolute and matured; (ii) such entity is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and commitments as they mature and become due in the normal course of business; (iii) assuming consummation of the issuance and sale of the Securities as contemplated by this Agreement, the Time of Sale Information and the Final Offering Memorandum, such entity does not have, intend to incur or believe that it will incur debts or liabilities beyond its ability to pay as such debts and liabilities mature; (iv) such entity is not engaged in any business or transaction, and does not propose to engage in any business or transaction, for which its property would constitute unreasonably small capital; and (v) such entity is not a defendant in any civil action that would result in a judgment that such entity is or would become unable to satisfy.

(ss)    No Broker’s Fees.  The Company is not a party to any contract, agreement or understanding with any person (other than this Agreement) that would give rise to a valid claim against it or any Initial Purchaser for a brokerage commission, finder’s fee or like payment in connection with the offering and sale of the Securities.

(tt)    Rule 144A Eligibility.  On the Closing Date, the Securities will not be of the same class as securities listed on a national securities exchange registered under Section 6 of the Exchange Act or quoted in an automated inter-dealer quotation system.

(uu)    No Integration.  Neither the Company nor any of its affiliates (as defined in Rule 501(b) of Regulation D) has, directly or through any agent, sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any security (as defined in the Securities Act), that is or will be integrated with the sale of the Securities in a manner that would require registration of the Securities under the Securities Act.

(vv)    No General Solicitation or Directed Selling Efforts.  None of the Company or any of its affiliates or any other person acting on its or their behalf (other than the Initial Purchasers, as to which no representation is made) has (i) solicited offers for, or offered or sold, the Securities by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) of Regulation D other than in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act or (ii) engaged in any directed selling efforts within the meaning of Regulation S under the Securities Act (“Regulation S”), and all such persons have complied with the offering restrictions requirement of Regulation S.

(ww)    Securities Law Exemptions.  Assuming the accuracy of the representations and warranties of the Initial Purchasers contained in Section 1(b) (including Annex C hereto) and their compliance with their agreements set forth therein, it is not necessary, in connection with the issuance and sale of the Securities to the Initial Purchasers and the offer, resale and delivery of the Securities by the Initial Purchasers in the manner contemplated by this Agreement, the Time of Sale Information and the Final Offering Memorandum, to register the Securities under the Securities Act or to qualify the Indenture under the Trust Indenture Act.

(xx)    No Stabilization or Manipulation.  Neither the Company nor any of its affiliates has taken, directly or indirectly, any action designed to or that could reasonably be expected to cause or result in any stabilization or manipulation of the price of the Securities.

(yy)    No Applicable Registration or Other Similar Rights.  Except as disclosed in the Time of Sale Information and the Final Offering Memorandum, there are no persons with registration or other similar rights to have any equity or debt securities of the Company or any “affiliate” registered for sale under a registration statement, except for rights (i) contained in the Registration Rights Agreement or (ii) as have been waived in writing in connection with the transactions contemplated by this Agreement or otherwise satisfied.  

(zz)    Margin Rules.  Neither the issuance, sale and delivery of the Securities nor the application of the proceeds thereof by the Company as described in each of the Time of Sale Information and the Final Offering Memorandum will violate Regulation T, U or X of the Board of Governors of the Federal Reserve System or any other regulation of such Board of Governors.

(aaa)    Forward-Looking Statements.  No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act) included or incorporated by reference in any of the Time of Sale Information or the Final Offering Memorandum has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.

(bbb)    Industry Statistical and Market Data.  Nothing has come to the attention of the Company that has caused the Company to believe that the industry statistical and market-related data included or incorporated by reference in each of the Time of Sale Information and the Final Offering Memorandum is not based on or derived from sources that are reliable and accurate in all material respects.

(ccc)    Sarbanes-Oxley Act.  There is and has been no failure on the part of the Company or, to the knowledge of the Company, any of the Company’s directors or officers, in their capacities as such, to comply with any provision of the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated in connection therewith (the “Sarbanes-Oxley Act”), including Section 402 related to loans and Sections 302 and 906 related to certifications.

(ddd)    Rating Agencies.  No “nationally recognized statistical rating organization” (as that term is used in Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act) (i) has imposed (or has informed the Company that it is considering imposing) any condition (financial or otherwise) to retain any rating assigned to the Company or to any securities of the Company or (ii) has indicated to the Company that it is considering (A) the downgrading, suspension, or withdrawal of, or any review (or of any potential or intended review) for a possible change in, any rating so assigned (including, without limitation, the placing of any of the foregoing ratings on credit watch with negative or developing implications or under review with an uncertain direction) or (B) any change in the outlook for any rating of the Company or any securities of the Company.

(eee)    Reserve Reports (Company).  The information underlying the estimates of the reserves of the Company included in the Time of Sale Information and the Final Offering Memorandum, and which was supplied by the Company to Ryder Scott Company, LP (“Ryder Scott”) and Cawley, Gillespie & Associates, Inc. (“Cawley”), independent petroleum engineers, for purposes of preparing the Company’s reserve reports (the “Company Reserve Reports”), including, without limitation, production, volumes, sales prices for production, contractual pricing provisions under oil or gas sales or marketing contracts under hedging arrangements, costs of operations and development, and working interest and net revenue interest information relating to the Company’s ownership interests in properties, was true and correct in all material respects on the dates of such Company Reserve Reports; the estimates of future capital expenditures and other future exploration and development costs supplied to Ryder Scott and Cawley were prepared in good faith and with a reasonable basis; the information provided to Ryder Scott and Cawley by the Company for purposes of preparing the Company Reserve Reports was prepared in accordance with customary industry practices; each of Ryder Scott and Cawley was, as of the dates of their respective Reserve Reports, and, as of the date hereof, an independent petroleum engineer with respect to the Company; other than any decrease in reserves resulting from normal production of the reserves and intervening spot market product price fluctuations disclosed in the Time of Sale Information and the Final Offering Memorandum, to the knowledge of the Company, there are not any facts or circumstances that would adversely affect the reserves in the aggregate, or the aggregate present value of future net cash flows therefrom, as disclosed in the Time of Sale Information and the Final Offering Memorandum and reflected in the Company Reserve Reports such as to cause a material adverse change; estimates of such reserves and the present value of the future net cash flows therefrom as disclosed in the Time of Sale Information and the Final Offering Memorandum and reflected in the Company Reserve Reports comply in all material respects with the applicable requirements of Regulation S-X and Subpart 1200 of Regulation S-K under the Securities Act.

(fff)    Reserve Reports (Pivotal).  To the knowledge of the Company, the information underlying the estimates of the reserves of Pivotal included in the Time of Sale Information and the Final Offering Memorandum, and which was supplied by Pivotal to Cawley, independent petroleum engineer, for purposes of preparing Pivotal’s reserve report (the “Pivotal Reserve Report”), including, without limitation, production, volumes, sales prices for production, contractual pricing provisions under oil or gas sales or marketing contracts under hedging arrangements, costs of operations and development, and working interest and net revenue interest information relating to Pivotal’s ownership interests in properties, was true and correct in all material respects on the date of such Pivotal Reserve Report; to the knowledge of the Company, the estimates of future capital expenditures and other future exploration and development costs supplied to Cawley by Pivotal were prepared in good faith and with a reasonable basis; to the knowledge of the Company, the information provided to Cawley by Pivotal for purposes of preparing the Pivotal Reserve Report was prepared in accordance with customary industry practices; to the knowledge of the Company, Cawley was, as of the date of the Pivotal Reserve Report, and is, as of the date hereof, an independent petroleum engineer with respect to Pivotal; other than any decrease in reserves resulting from normal production of the reserves and intervening spot market product price fluctuations disclosed in the Time of Sale Information and the Final Offering Memorandum, to the knowledge of the Company, there are not any facts or circumstances that would adversely affect the reserves in the aggregate, or the aggregate present value of future net cash flows therefrom, as disclosed in the Time of Sale 

Information and the Final Offering Memorandum and reflected in the Pivotal Reserve Report such as to cause a material adverse change; to the knowledge of the Company, estimates of such reserves and the present value of the future net cash flows therefrom as disclosed in the Time of Sale Information and the Final Offering Memorandum and reflected in the Pivotal Reserve Report comply in all material respects with the applicable requirements of the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum Engineers.

(ggg)    Reserve Reports (W Energy).  To the knowledge of the Company, the information underlying the estimates of the reserves of W Energy included in the Time of Sale Information and the Final Offering Memorandum, and which was supplied by W Energy to Cawley, independent petroleum engineer, for purposes of preparing W Energy’s reserve report (the “W Energy Reserve Report”), including, without limitation, production, volumes, sales prices for production, contractual pricing provisions under oil or gas sales or marketing contracts under hedging arrangements, costs of operations and development, and working interest and net revenue interest information relating to W Energy’s ownership interests in properties, was true and correct in all material respects on the date of such W Energy Reserve Report; to the knowledge of the Company, the estimates of future capital expenditures and other future exploration and development costs supplied to Cawley by W Energy were prepared in good faith and with a reasonable basis; to the knowledge of the Company, the information provided to Cawley by W Energy for purposes of preparing the W Energy Reserve Report was prepared in accordance with customary industry practices; to the knowledge of the Company, Cawley was, as of the date of the W Energy Reserve Report, and is, as of the date hereof, an independent petroleum engineer with respect to W Energy; other than any decrease in reserves resulting from normal production of the reserves and intervening spot market product price fluctuations disclosed in the Time of Sale Information and the Final Offering Memorandum, to the knowledge of the Company, there are not any facts or circumstances that would adversely affect the reserves in the aggregate, or the aggregate present value of future net cash flows therefrom, as disclosed in the Time of Sale Information and the Final Offering Memorandum and reflected in the W Energy Reserve Report such as to cause a material adverse change; to the knowledge of the Company, estimates of such reserves and the present value of the future net cash flows therefrom as disclosed in the Time of Sale Information and the Final Offering Memorandum and reflected in the W Energy Reserve Report comply in all material respects with the applicable requirements of the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum Engineers.

4.    Further Agreements of the Company.  The Company covenants and agrees with each Initial Purchaser that:

(a)Delivery of Copies.  The Company will deliver, without charge, to the Initial Purchasers as many copies of the Preliminary Offering Memorandum, any other Time of Sale Information, any Issuer Written Communication and the Final Offering Memorandum (including all amendments and supplements thereto) as the Representative may reasonably request.  

(b)Final Offering Memorandum, Amendments or Supplements.  Before finalizing the Final Offering Memorandum or making or distributing any amendment or supplement to any of the Time of Sale Information or the Final Offering Memorandum, the Company will furnish to the Representative and counsel for the Initial Purchasers a copy of the proposed Final Offering Memorandum or such amendment or supplement (or document to be incorporated by reference therein) for review, and will not distribute any such proposed Final Offering Memorandum, amendment or supplement or file any such document with the Commission to which the Representative reasonably objects; provided that, if in the opinion of outside counsel of the Company such proposed amendment or supplement is required by law, the Company can make such amendment or supplement, notwithstanding any such reasonable objection. 

(c)Additional Written Communications.  Before using, authorizing, approving, distributing or referring to any Issuer Written Communication, the Company will furnish to the Representative and counsel for the Initial Purchasers a copy of such written communication for review and will not use, authorize, approve, distribute or refer to any such written communication to which the Representative reasonably objects.

(d)Compliance with Securities Laws.  The Company will advise the Representative promptly, and confirm such advice in writing, (i) of the issuance by any governmental or regulatory authority of any order preventing or suspending the use of any of the Time of Sale Information, any Issuer Written Communication or the Final Offering Memorandum or the initiation or threatening of any proceeding for that purpose; (ii) of the occurrence of any event at any time prior to the completion of the initial offering of the Securities as a result of which any of the Time of Sale Information, any Issuer Written Communication or the Final Offering Memorandum as then amended or supplemented would 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 existing when such Time of Sale Information, such Issuer Written Communication or the Final Offering Memorandum is delivered to a purchaser, not misleading; and (iii) of the receipt by the Company of any notice with respect to any suspension of the qualification of the Securities for offer and sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and the Company will use its reasonable best efforts to prevent the issuance of any such order preventing or 

suspending the use of any of the Time of Sale Information, any Issuer Written Communication or the Final Offering Memorandum or suspending any such qualification of the Securities and, if any such order is issued, will obtain as soon as possible the withdrawal thereof.

(e)Time of Sale Information.  If at any time prior to the Closing Date (i) any event shall occur or condition shall exist as a result of which any of the Time of Sale Information as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading or (ii) it is necessary to amend or supplement the Time of Sale Information to comply with law, the Company will promptly notify the Initial Purchasers thereof and forthwith prepare and, subject to paragraph (b) above, furnish to the Initial Purchasers such amendments or supplements to the Time of Sale Information (or any document to be filed with the Commission and incorporated by reference therein) as may be necessary so that the statements in any of the Time of Sale Information as so amended or supplemented (including such documents to be incorporated by reference therein) will not, in the light of the circumstances under which they were made, be misleading or so that any of the Time of Sale Information will comply with Law. 

(f)Ongoing Compliance of the Final Offering Memorandum.  If at any time prior to the completion of the initial offering of the Securities (i) any event shall occur or condition shall exist as a result of which the Final Offering Memorandum as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances existing when the Final Offering Memorandum is delivered to a purchaser, not misleading or (ii) it is necessary to amend or supplement the Final Offering Memorandum to comply with Law, the Company will promptly notify the Initial Purchasers thereof and forthwith prepare and, subject to paragraph (b) above, furnish to the Initial Purchasers such amendments or supplements (or any document to be filed with the Commission and incorporated by reference therein) to the Final Offering Memorandum as may be necessary so that the statements in the Final Offering Memorandum as so amended or supplemented (including such document to be incorporated by reference therein) will not, in the light of the circumstances existing when the Final Offering Memorandum is delivered to a purchaser, be misleading or so that the Final Offering Memorandum will comply with Law. 

(g)Blue Sky Compliance.  The Company will qualify the Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions as the Representative shall reasonably request and will continue such qualifications in effect so long as required for the offering and resale of the Securities; provided that the Company shall not be required to (i) qualify as a foreign corporation or other entity or as a dealer in securities in any such jurisdiction where it would not otherwise be required to so qualify, (ii) file any general consent to service of process in any such jurisdiction or (iii) subject itself to taxation in any such jurisdiction if it is not otherwise so subject. 

(h)Clear Market.  During the period from the date hereof through and including the date that is 90 days after the date hereof, the Company will not, without the prior written consent of the Representative, offer, sell, contract to sell or otherwise dispose of, except as provided hereunder, any debt securities issued or guaranteed by the Company similar to the Securities (other than the Exchange Securities).

(i)Use of Proceeds.  The Company will apply the net proceeds from the sale of the Securities as described in each of the Time of Sale Information and the Final Offering Memorandum under the heading “Use of Proceeds.”

(j)Supplying Information to Holders of Securities.  While the Securities remain outstanding and are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, the Company will, during any period in which the Company is not subject to and in compliance with Section 13 or 15(d) of the Exchange Act, furnish to holders of the Securities and prospective purchasers of the Securities designated by such holders, upon the request of such holders or such prospective purchasers, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

(k)DTC.  The Company will assist the Initial Purchasers in arranging for the Securities to be eligible for clearance and settlement through DTC.

(l)No Resales by the Company.  The Company will not, and will not permit any of its affiliates (as defined in Rule 144 under the Securities Act) to, resell any of the Securities that have been acquired by any of them, except for Securities purchased by the Company or any of its affiliates and resold in a transaction registered under the Securities Act.

(m)No Integration.  Neither the Company nor any of its affiliates (as defined in Rule 501(b) of Regulation D) will, directly or through any agent, sell, offer for sale, solicit offers to buy or otherwise negotiate in respect of, any “security” (as defined in the Securities Act), that is or will be integrated with the sale of the Securities in a manner that would require registration of the Securities under the Securities Act.

(n)No General Solicitation or Directed Selling Efforts.  None of the Company or any of its affiliates or any other person acting on its or their behalf (other than the Initial Purchasers, as to which no covenant is given) will (i) solicit offers for, or offer or sell, the Securities by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) of Regulation D or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act or (ii) with respect to those Securities offered or sold in reliance upon Regulation S, engage in any directed selling efforts within the meaning of Regulation S, and all such persons will comply with the offering restrictions requirement of Regulation S.

(o)No Stabilization.  The Company will not take, and will ensure that no affiliate of the Company will take, directly or indirectly, any action designed to or that could reasonably be expected to cause or result in any stabilization or manipulation of the price of the Securities or any other reference security, whether to facilitate the sale or resale of the Securities or otherwise.

(p)Repayment of Existing Senior Notes.  The Company shall provide evidence reasonably satisfactory to the Representative that it has redeemed or repurchased all of the Existing Senior Notes and paid all accrued and unpaid interest thereon plus any related premiums, fees and costs in the manner and on the timing contemplated in the Time of Sale Information and the Final Offering Memorandum.

5.    Certain Agreements of the Initial Purchasers. The Initial Purchasers hereby represents and agrees that it has not and will not use, authorize use of, refer to, or participate in the planning for use of, any written communication that constitutes an offer to sell or the solicitation of an offer to buy the Securities other than (i) the Preliminary Offering Memorandum and the Final Offering Memorandum, (ii) any written communication that contains either (a) no “issuer information” (as defined in Rule 433(h)(2) under the Securities Act) or (b) “issuer information” that was not included (including through incorporation by reference) in the Time of Sale Information or the Final Offering Memorandum (including through incorporation by reference), (iii) any written communication listed on Annex A or prepared pursuant to Section 4(c) (including any electronic road show) above, (iv) any written communication prepared by such Initial Purchaser and approved by the Company and the Representative in advance in writing or (v) any written communication relating to or that contains the terms of the Securities and/or other information that was included (including through incorporation by reference) in the Time of Sale Information or the Final Offering Memorandum.
6.    Conditions of Initial Purchasers’ Obligations.  The obligation of the Initial Purchasers to purchase Securities on the Closing Date as provided herein is subject to the performance by the Company of its covenants and other obligations hereunder and to the following additional conditions:
(a)Representations and Warranties.  The representations and warranties of the Company contained herein shall be true and correct on the date hereof and on and as of the Closing Date; and the statements of the Company and its officers made in any certificates delivered pursuant to this Agreement shall be true and correct on and as of the Closing Date.

(b)No Downgrade.  Subsequent to the earlier of (A) the Time of Sale and (B) the execution and delivery of this Agreement, (i) no downgrading shall have occurred in the rating accorded the Securities or any other debt securities or preferred stock issued or guaranteed by the Company by any “nationally recognized statistical rating organization,” as such term is defined under Section 3(a)(62) under the Exchange Act and (ii) no such organization shall have publicly announced that it has under surveillance or review, or has changed its outlook with respect to, its rating of the Securities or of any other debt securities or preferred stock issued or guaranteed by the Company (other than an announcement with positive implications of a possible upgrading).

(c)No Material Adverse Change.  No event or condition of a type described in Section 3(d) hereof shall have occurred or shall exist, which event or condition is not described in each of the Time of Sale Information (excluding any amendment or supplement thereto) and the Final Offering Memorandum (excluding any amendment or supplement thereto) the effect of which in the sole judgment of the Representative makes it impracticable or inadvisable to proceed with the offering, sale or delivery of the Securities on the terms and in the manner contemplated by this Agreement, the Time of Sale Information and the Final Offering Memorandum.

(d)Officer’s Certificate.  The Representative shall have received on and as of the Closing Date a certificate signed by an executive officer of the Company who has specific knowledge of the Company’s financial matters and is satisfactory to the Representative (i) confirming that such officer has carefully reviewed the Time of Sale Information and the Final Offering Memorandum and, to the best knowledge of such officer, the representations set forth in Sections 3(a) and 3(b) hereof are true and correct, (ii) confirming that the other representations and warranties of the Company in this Agreement are 

true and correct and that the Company has complied with all agreements and satisfied all conditions on their part to be performed or satisfied hereunder at or prior to the Closing Date and (iii) to the effect set forth in paragraphs (b) and (c) above.

(e)Comfort Letters.  On the date of this Agreement and on the Closing Date, each of Grant Thornton LLP, Deloitte LLP, Weaver and Tidwell, LLP and Whitley Penn LLP shall have furnished to the Representative, at the request of the Company, letters, dated the respective dates of delivery thereof and addressed to the Initial Purchasers, in form and substance reasonably satisfactory to the Representative, containing statements and information of the type customarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial information contained (or incorporated by reference) in each of the Time of Sale Information and the Final Offering Memorandum; provided that the letter delivered on the Closing Date shall use a “cut-off” date no more than three business days prior to the Closing Date.

(f)CFO Certificate.  The Company shall have furnished to the Representative a certificate, dated the Closing Date and addressed to the Initial Purchasers, of its chief financial officer with respect to certain financial data contained in the Time of Sale Information and the Final Offering Memorandum, providing “management comfort” with respect to such information, in form and substance reasonably satisfactory to the Representative.

(g)Litigation Matters Certificate. On the date of this Agreement and on the Closing Date, the Company shall have furnished to the Initial Purchasers, certificates, dated the respective dates of delivery thereof and addressed to the Initial Purchasers, from each of its chief financial officer and of its president, in form and substance satisfactory to the Initial Purchasers, to the effect set forth in Annex E-1 and Annex E-2 hereto.

(h)Reserve Engineer Letters. On the date of this Agreement and on the Closing Date, Ryder Scott and Cawley shall have furnished to the Representative, at the request of the Company, letters, dated the respective dates of delivery thereof and addressed to the Initial Purchasers, stating the conclusions and findings of such firm with respect to the oil and natural gas reserves of the Company, Pivotal and W Energy, as applicable, in form and substance reasonably satisfactory to the Representative.

(i)Opinion and 10b-5 Statement of Counsel for the Company.  Kirkland & Ellis LLP, counsel for the Company, shall have furnished to the Initial Purchasers, at the request of the Company, their written opinion and 10b-5 statement, dated the Closing Date and addressed to the Initial Purchasers, in form and substance reasonably satisfactory to the Initial Purchasers.

(j)Opinion and 10b-5 Statement of Counsel for the Initial Purchasers.  The Initial Purchasers shall have received on and as of the Closing Date an opinion and 10b-5 statement, addressed to the Initial Purchasers, of Latham & Watkins LLP, counsel for the Initial Purchasers, with respect to such matters as the Representative may reasonably request, and such counsel shall have received such documents and information as they may reasonably request to enable them to pass upon such matters.

(k)Good Standing.  The Representative shall have received on and as of the Closing Date satisfactory evidence of the good standing of the Company in Delaware and its good standing in such other jurisdictions as the Representative may reasonably request, in each case in writing or any standard form of telecommunication from the appropriate governmental authorities of such jurisdictions.

(l)Registration Rights Agreement.  The Initial Purchasers shall have received a counterpart of the Registration Rights Agreement that shall have been executed and delivered by a duly authorized officer of the Company.

(m)DTC.  The Securities shall be eligible for clearance and settlement through DTC.

(n)Securities.  The Securities shall have been duly executed and delivered by a duly authorized officer of the Company and duly authenticated by the Trustee.

(o)The First Supplemental Indenture.  The First Supplemental Indenture shall have become operative in accordance with its terms.

(p)The Second Supplemental Indenture.  The Second Supplemental Indenture shall have been duly executed and delivered by a duly authorized officer of the Company, the Trustee and the Collateral Agent.

(q)Intercreditor Amendment. The Initial Purchasers shall have received conformed counterparts of the Intercreditor Amendment that shall have been executed and delivered by duly authorized officers of each party thereto, in form and substance reasonably satisfactory to the Representative. 

(r)Repayment of Term Loan.  The Initial Purchaser shall have received evidence reasonably satisfactory to it that, substantially simultaneously with the purchase of the Securities by the Initial Purchaser, all of the outstanding indebtedness under the term loan facility of the Term Loan Agreement, and all accrued and unpaid interest, fees and other amounts owing thereunder, shall have been paid in full, all commitments to extend credit under the Term Loan Agreement shall have terminated, and all liens securing obligations thereunder shall have been released.

(s)RBL Agreement.  Concurrently with or prior to the Closing Date, the Company shall have entered into the RBL Agreement consistent in all material respects with the terms described in the Time of Sale Information and the Final Offering Memorandum and the Initial Purchasers shall have received conformed counterparts thereof.

(t)Transactions.  Concurrently with or prior to the Closing Date (unless otherwise provided in the Time of Sale Information and the Final Offering Memorandum), each of the Transactions shall have been consummated in a manner consistent in all material respects with the descriptions thereof in the Time of Sale Information and the Final Offering Memorandum.

(u)Additional Documents.  On or prior to the Closing Date, the Company shall have furnished to the Initial Purchasers such further certificates and documents as the Initial Purchasers may reasonably request, including a secretary’s certificate dated the Closing Date executed by the secretary of the Company certifying such matters as the Initial Purchasers may reasonably request.

All opinions, letters, certificates and evidence mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form and substance reasonably satisfactory to counsel for the Initial Purchasers.
7.    Indemnification and Contribution.  
(a)Indemnification of the Initial Purchasers.  The Company agrees to indemnify and hold harmless each Initial Purchaser, its affiliates, directors, employees, agents and officers and each person, if any, who controls such Initial Purchaser within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages and liabilities (including, without limitation, legal fees and other expenses reasonably incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are incurred), joint or several, that arise out of, or are based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Offering Memorandum, any of the other Time of Sale Information, any Issuer Written Communication or the Final Offering Memorandum (or any amendment or supplement thereto) or (ii) any omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case except insofar as such losses, claims, damages or liabilities arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to any Initial Purchaser furnished to the Company in writing by such Initial Purchaser through the Representative expressly for use therein. 

(b)Indemnification of the Company.  Each Initial Purchaser, severally and not jointly, agrees to indemnify 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 to the same extent as the indemnity set forth in paragraph (a) above, but only with respect to any losses, claims, damages or liabilities that arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to such Initial Purchaser furnished to the Company in writing by such Initial Purchaser through the Representative expressly for use in the Preliminary Offering Memorandum, any of the other Time of Sale Information, any Issuer Written Communication or the Final Offering Memorandum (or any amendment or supplement thereto), it being understood and agreed that the only such information consists of the following paragraphs in the Preliminary Offering Memorandum and the Final Offering Memorandum: the statements set forth in the seventh paragraph (except for the last two sentences) under the caption “Plan of Distribution” in the Time of Sale Information and the Final Offering Memorandum.

(c)Notice and Procedures.  If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any person in respect of which indemnification may be sought pursuant to either paragraph (a) or (b) above, such person (the “Indemnified Person”) shall promptly notify the person 

against whom such indemnification may be sought (the “Indemnifying Person”) in writing; provided that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have under paragraph (a) or (b) above except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided, further, that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have to an Indemnified Person otherwise than under paragraph (a) or (b) above.  If any such proceeding shall be brought or asserted against an Indemnified Person and it shall have notified the Indemnifying Person thereof, the Indemnifying Person shall retain counsel reasonably satisfactory to the Indemnified Person (who shall not, without the consent of the Indemnified Person, be counsel to the Indemnifying Person) to represent the Indemnified Person and any others entitled to indemnification pursuant to this Section 7 that the Indemnifying Person may designate in such proceeding and shall pay the reasonable fees and expenses of such proceeding and shall pay the fees and expenses of such counsel related to such proceeding, as incurred.  In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to the contrary; (ii) the Indemnifying Person has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified Person; (iii) the Indemnified Person shall have reasonably concluded that there may be legal defenses available to it that are different from or in addition to those available to the Indemnifying Person; or (iv) the named parties in any such proceeding (including any impleaded parties) include both the Indemnifying Person and the Indemnified Person and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them.  It is understood and agreed that the Indemnifying Person shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Persons, and that all such reasonable fees and expenses shall be reimbursed as they are incurred.  Any such separate firm for any Initial Purchaser, its affiliates, directors and officers and any control persons of such Initial Purchaser shall be designated in writing by RBC Capital Markets, LLC and any such separate firm for the Company, its directors and officers and any control persons of the Company shall be designated in writing by the Company.  The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its written consent (which consent shall not be unreasonably withheld or delayed), but if settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying Person agrees to indemnify each Indemnified Person from and against any loss or liability by reason of such settlement or judgment.  Notwithstanding the foregoing sentence, if at any time an Indemnified Person shall have requested that an Indemnifying Person reimburse the Indemnified Person for fees and expenses of counsel as contemplated by this paragraph, the Indemnifying Person shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by the Indemnifying Person of such request and (ii) the Indemnifying Person shall not have reimbursed the Indemnified Person in accordance with such request prior to the date of such settlement.  No Indemnifying Person shall, without the written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnification could have been sought hereunder by such Indemnified Person, unless such settlement (x) includes an unconditional release of such Indemnified Person, in form and substance reasonably satisfactory to such Indemnified Person, from all liability on claims that are the subject matter of such proceeding and (y) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person.

(d)Contribution.  If the indemnification provided for in paragraph (a) or (b) above is unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages, expenses or liabilities (or actions in respect thereof) referred to therein, then each Indemnifying Person under such paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages, expenses or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Initial Purchasers on the other from the offering of the Securities pursuant to this Agreement or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) but also the relative fault of the Company on the one hand and the Initial Purchasers on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations.  The relative benefits received by the Company on the one hand and the Initial Purchasers on the other shall be deemed to be in the same respective proportions as the net proceeds (before deducting expenses) received by the Company from the sale of the Securities pursuant to this Agreement and the total discounts and commissions received by the Initial Purchasers in connection therewith, as provided in this Agreement, bear to the aggregate offering price of the Securities.  The relative fault of the Company on the one hand and the Initial Purchasers on the other shall be determined 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 or by the Initial Purchasers and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

(e)Limitation on Liability.  The Company and the Initial Purchasers agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation (even if the Initial Purchaser was treated was 

one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in paragraph (d) above.  The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages and liabilities referred to in paragraph (d) above shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Person in connection with investigating, defending or preparing to defend any such action or claim.  Notwithstanding the provisions of this Section 7, in no event shall an Initial Purchaser be required to contribute any amount in excess of the amount by which the total discounts and commissions received by such Initial Purchaser with respect to the offering of the Securities exceeds the amount of any damages that such Initial Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.  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.  The Initial Purchaser’s obligation to contribute pursuant to this Section 7 are several in proportion to their respective purchase obligations hereunder and not joint. 

(f)Non-Exclusive Remedies.  The remedies provided for in this Section 7 are not exclusive and shall not limit any rights or remedies that may otherwise be available to any Indemnified Person at law or in equity.

8.    Termination.  This Agreement may be terminated in the absolute discretion of the Representative, by notice to the Company, if after the execution and delivery of this Agreement and on or prior to the Closing Date (i) trading generally shall have been suspended or materially limited on the New York Stock Exchange, NASDAQ Global Market or the over-the-counter market; (ii) trading of any securities issued or guaranteed by the Company shall have been suspended on any exchange or in any over-the-counter market; (iii) a general moratorium on commercial banking activities shall have been declared by federal or New York State authorities; or (iv) there shall have occurred a material disruption in settlement or clearing services; or (v) there shall have occurred any outbreak or escalation of hostilities or any change in financial markets or any calamity or crisis, either within or outside the United States, that, in the judgment of the Representative, is material and adverse and makes it impracticable or inadvisable to proceed with the offering, sale or delivery of the Securities on the terms and in the manner contemplated by this Agreement, the Time of Sale Information and the Final Offering Memorandum. The Initial Purchasers may also terminate this Agreement on the Closing Date if any condition described in Section 6 is not fulfilled or waived in writing by the Initial Purchaser on or prior to the Closing Date.

9.    Defaulting Initial Purchaser.  
(a)If, on the Closing Date, any Initial Purchaser defaults on its obligation to purchase the Securities that it has agreed to purchase hereunder, the non-defaulting Initial Purchasers may in their discretion arrange for the purchase of such Securities by other persons satisfactory to the Company on the terms contained in this Agreement.  If, within 36 hours after any such default by any Initial Purchaser, the non-defaulting Initial Purchasers do not arrange for the purchase of such Securities, then the Company shall be entitled to a further period of 36 hours within which to procure other persons satisfactory to the non-defaulting Initial Purchasers to purchase such Securities on such terms.  If other persons become obligated or agree to purchase the Securities of a defaulting Initial Purchaser, either the non‐defaulting Initial Purchasers or the Company may postpone the Closing Date for up to five full business days in order to effect any changes that in the opinion of counsel for the Company or counsel for the Initial Purchasers may be necessary in the Time of Sale Information, the Final Offering Memorandum or in any other document or arrangement, and the Company agrees to promptly prepare any amendment or supplement to the Time of Sale Information or the Final Offering Memorandum that effects any such changes.  As used in this Agreement, the term “Initial Purchaser” includes, for all purposes of this Agreement unless the context otherwise requires, any person not listed in Schedule 1 hereto that, pursuant to this Section 9, purchases Securities that a defaulting Initial Purchaser agreed but failed to purchase.

(b)If, after giving effect to any arrangements for the purchase of the Securities of a defaulting Initial Purchaser or Initial Purchasers by the non-defaulting Initial Purchasers and the Company as provided in paragraph (a) above, the aggregate principal amount of such Securities that remains unpurchased does not exceed one-eleventh of the aggregate principal amount of all the Securities, then the Company shall have the right to require each non-defaulting Initial Purchaser to purchase the principal amount of Securities that such Initial Purchaser agreed to purchase hereunder plus such Initial Purchaser’s pro rata share (based on the principal amount of Securities that such Initial Purchaser agreed to purchase hereunder) of the Securities of such defaulting Initial Purchaser or Initial Purchasers for which such arrangements have not been made.

(c)If, after giving effect to any arrangements for the purchase of the Securities of a defaulting Initial Purchaser or Initial Purchasers by the non-defaulting Initial Purchasers and the Company as provided in paragraph (a) above, the aggregate principal amount of such Securities that remains unpurchased exceeds one-eleventh of the aggregate principal amount of all the Securities, or if the Company shall not exercise the right described in paragraph (b) above, then this 

Agreement shall terminate without liability on the part of the non-defaulting Initial Purchasers.  Any termination of this Agreement pursuant to this Section 9 shall be without liability on the part of the Company or the Guarantors, except that the Company and each of the Guarantors will continue to be liable for the payment of expenses as set forth in Section 10 hereof and except that the provisions of Section 7 hereof shall not terminate and shall remain in effect.

(d)Nothing contained herein shall relieve a defaulting Initial Purchaser of any liability it may have to the Company, the Guarantors or any non-defaulting Initial Purchaser for damages caused by its default.

10.    Payment of Expenses.  
(a)Whether or not the transactions contemplated by this Agreement are consummated or this Agreement is terminated, the Company agrees to pay or cause to be paid all costs and expenses incident to the performance of their respective obligations hereunder, including without limitation, (i) the costs incident to the authorization, issuance, sale, preparation and delivery of the Securities and any taxes payable in that connection; (ii) the costs incident to the preparation and printing of the Preliminary Offering Memorandum, any other Time of Sale Information, any Issuer Written Communication and the Final Offering Memorandum (including any amendment or supplement thereto) and the distribution thereof; (iii) the costs of reproducing and distributing each of the Transaction Documents and all other agreements, memoranda, correspondence and other documents prepared and delivered in connection herewith; (iv) the fees and expenses of the Company’s counsel and independent accountants; (v) the fees and expenses incurred in connection with the registration or qualification and determination of eligibility for investment of the Securities under the laws of such jurisdictions as the Representative may designate and the preparation, printing and distribution of a Blue Sky Memorandum (including the related fees and expenses of counsel for the Initial Purchasers); (vi) any fees charged by rating agencies for rating the Securities; (vii) the fees and expenses of the Trustee, the Collateral Agent and any paying agent (including related fees and expenses of any counsel to such parties); (viii) all expenses (including the expenses of Company’s counsel) and application fees incurred in connection with the approval of the Securities for book-entry transfer by DTC; and (ix) the fees and expenses (including without limitation, filing and recording fees, search fees, taxes and costs of title policies (if any)) incurred with respect to creating, documenting and perfecting the security interests in the Collateral as contemplated by the Collateral Documents (including the related fees and expenses of counsel to the Initial Purchasers for all periods prior to and after the Closing Date); (x) all expenses in connection with any “road show” or “investor” presentation to potential investors, including travel and lodging expenses, the cost of chartering airplanes, word processing charges, the costs of printing or producing any investor presentation materials, messenger and duplicating service expenses, facsimile expenses and other customary expenditures.

(b)If (i) this Agreement is terminated pursuant to Section 8, (ii) the Company for any reason fails to tender the Securities for delivery to the Initial Purchasers or (iii) the Initial Purchasers declines to purchase the Securities for any reason permitted under this Agreement, the Company agrees to reimburse the Initial Purchasers for all out-of-pocket costs and expenses (including the fees and expenses of their counsel) reasonably incurred by the Initial Purchasers in connection with this Agreement and the offering contemplated hereby.

11.    Persons Entitled to Benefit of Agreement.  This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and the officers and directors and any controlling persons referred to herein, and the affiliates of the Initial Purchasers referred to in Section 7 hereof.  Nothing in this Agreement is intended or shall be construed to give any other person any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein.  No purchaser of Securities from the Initial Purchasers shall be deemed to be a successor merely by reason of such purchase.
12.    Survival.  The respective indemnities, rights of contribution, representations, warranties and agreements of the Company and the Initial Purchasers contained in this Agreement or made by or on behalf of the Company or the Initial Purchasers pursuant to this Agreement or any certificate delivered pursuant hereto shall survive the delivery of and payment for the Securities and shall remain in full force and effect, regardless of any termination of this Agreement or any investigation made by or on behalf of the Company or the Initial Purchasers.
13.    Certain Defined Terms.  For purposes of this Agreement, (a) except where otherwise expressly provided, the term “affiliate” has the meaning set forth in Rule 405 under the Securities Act; (b) the term “business day” means any day other than a day on which banks are permitted or required to be closed in New York City; (c) the term “subsidiary” has the meaning set forth in Rule 405 under the Securities Act; (d) the term “Exchange Act” means the Securities Exchange Act of 1934, as amended; and (e) the term “written communication” has the meaning set forth in Rule 405 under the Securities Act. 
14.    Compliance with USA Patriot Act.  In accordance with the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), the Initial Purchasers are required to obtain, verify and record information 

that identifies their respective clients, including the Company, which information may include the name and address of their respective clients, as well as other information that will allow the Initial Purchasers to properly identify their respective clients.
15.    Miscellaneous.  
(a)Authority of the Representative.  Any action by the Initial Purchasers hereunder may be taken by RBC Capital Markets, LLC on behalf of the Initial Purchasers, and any such action taken by RBC Capital Markets, LLC shall be binding upon the Initial Purchasers.  

(b)Notices.  All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted and confirmed by any standard form of telecommunication.  Notices to the Initial Purchasers shall be given to the Representative c/o RBC Capital Markets, LLC, Three World Financial Center, 200 Vesey Street, New York, New York 10281; Attention: High Yield Capital Markets, with a copy to Latham & Watkins LLP, 885 Third Avenue, New York, New York 10022; Attention: Michael Chambers.  Notices to the Company shall be given to them at 601 Carlson Pkwy, Suite 990, Minnetonka, Minnesota 55305, (fax: 952-476-9801); Attention: Erik Romslo with a copy to Kirkland & Ellis LLP, 609 Main Street, Houston, Texas 77002; Attention: Matthew Pacey.

(c)Governing Law.  This Agreement and any claim, controversy or dispute arising under or related to this Agreement shall be governed by and construed in accordance with the laws of the State of New York.

(d)Submission to Jurisdiction.  The Company hereby submits to the exclusive jurisdiction of the U.S. federal and New York state courts in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.  The Company waives any objection which it may now or hereafter have to the laying of venue of any such suit or proceeding in such courts.  The Company agrees that final judgment in any such suit, action or proceeding brought in such court shall be conclusive and binding upon the Company and may be enforced in any court to the jurisdiction of which Company is subject by a suit upon such judgment.  

(e)Waiver of Jury Trial.  Each of the parties hereto hereby waives any right to trial by jury in any suit or proceeding arising out of or relating to this Agreement.

(f)Entire Agreement; Counterparts.  This Agreement constitutes the entire agreement of the parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof.  This Agreement may be signed in counterparts (which may include counterparts delivered by any standard form of telecommunication), each of which shall be an original and all of which together shall constitute one and the same instrument.

(g)Amendments or Waivers.  No amendment or waiver of any provision of this Agreement, nor any consent or approval to any departure therefrom, shall in any event be effective unless the same shall be in writing and signed by the parties hereto.

(h)Headings.  The headings herein are included for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement.

    

    

If the foregoing is in accordance with your understanding, please indicate your acceptance of this Agreement by signing in the space provided below.

	
		
	Very truly yours,
Northern Oil and Gas, Inc.

	By:
	/s/ Nicholas O’Grady

	 
	Name:Nicholas O’Grady

	 
	Title:Chief Financial Officer

Accepted: 

RBC CAPITAL MARKETS, LLC

For itself and on behalf of 
the several Initial Purchasers 
listed in Schedule 1 hereto.

	
		
	By:  RBC CAPITAL MARKETS, LLC

	By:
	/s/ James S. Wolfe

	 
	Name:James S. Wolfe

	 
	Title:Managing Director
Head of Global Leveraged FinanceExhibit 10.12

 

 

 

 

 

 

 

 

China
Merchants Bank Co., Ltd.

 

Shanghai
Branch

 

 

 

 

 

 

Credit
Granting Agreement

 

 

 

 

     

     

    

 

Credit Granting Agreement

 

Credit grantor: China Merchants Bank Co.,
Ltd., Shanghai Century Avenue Branch (hereinafter referred to as “Party A”)

 

Person-in-charge: Chen Siqing

 

Credit applicant: CLPS
Incorporation (hereinafter referred to as “Party B”)

 

Legal representative/person-in-charge:
Yang Xiaofeng

 

Upon application by Party B, Party A agrees
to provide a line of credit (LOC) to Party B. Upon fully consultation, Party A and Party B have reached a consensus in respect
of the following terms and conditions in accordance with the relevant laws and regulations, and hereby enter into this agreement.

 

1.
Line of Credit

 

1.1 Party A shall
grant Party B a LOC of RMB Ten Million yuan (or equivalent amount of other currencies, which shall be translated with the
exchange rate published by Party A on the date when the specific business occurs, the same below), including revolving LOC
and/or one-time LOC.

 

The varieties of credit
granting under the LOC includes but is not limited to credit for loan/order-related loan, trade financing, bill discounting, commercial
bill acceptance, guaranteed discount for commercial acceptance bills, international/domestic letter of guarantee, customs duties
and dues payment guarantee, corporate account overdraft, derivative transaction and gold leasing or the combination thereof.

 

The revolving LOC refers
to the maximum amount of total principal balance of the credit for one or more business varieties mentioned in the preceding paragraph
granted by Party A to Party B occurred during the credit period, which can be repeatedly used in a revolving manner.

 

The one-time LOC means
that the cumulative amount of credit for the business varieties mentioned in the preceding paragraph granted by Party A to Party
B occurred during the credit period shall not exceed the one-time LOC approved by Party A. Party B shall not use the one-time LOC
in a revolving manner, and the amount of each credit granting applied by Party B under the LOC shall offset the amount of one-time
LOC until the amount of LOC is fully offset by the accumulated amount of all the credit granting.

 

“Trade financing”
includes but is not limited to international/domestic letters of credit, import bill advance, delivery against bank guarantee,
import bill advance under collection, packaged loans, export bill advance, export negotiation, export bill advance under collection,
remittance financing for import/export, and credit insurance financing, factoring, bill avalization and other business varieties.

 

1.2 If Party A
conducts import factoring or domestic buyer factoring with Party B as the debtor, the account receivable owed by Party B
transferred to Party A in such business shall offset the above-mentioned LOC; if Party B applies for domestic seller
factoring or export factoring to Party A, the basic acquisition price (basic acquisition funds) provided by Party A to Party
B using its own funds or other legal funds shall offset the above-mentioned LOC.

 

     

     

    

 

1.3 Where Party A, according
to the needs of its internal processes, entrusts other branches of China Merchants Bank to issue a subsidiary letter of credit
to the beneficiary after issuing the master letter of credit, the bill advance and delivery against bank guarantee that occurs
under such letter of credit shall offset the above-mentioned LOC;

 

When the import letter
of credit is used, if the import bill advance is actually incurred later under the same letter of credit, the import letter of
credit and import bill advance shall offset the same amount at different stages. That is, when the import bill advance occurs,
the amount recovered after the letter of credit is paid, if re-used for import bill advance, shall be deemed to offset the same
amount under the original import license.

 

1.4 The LOC
exclude the amount of credit corresponding to the security deposit or pledge of deposit provided by Party B or a third party
for a single specific transaction under this Agreement, the same below.

 

1.5 The unsettled
balance for business conducted under the (insert the name and No. of agreement) previously entered by Party A (or Party
A’s subsidiary) and Party B are automatically incorporated in this Agreement and shall offset the LOC under this
Agreement.

 

2. Credit Period 

 

The credit period shall
be 12 months, from July 11, 2018 to July 10, 2019.Party B shall submit application for using the credit line to Party A during
the credit period, and Party A does not accept the application for using the credit line submitted by Party B after the expiration
of the credit period, except as otherwise provided in this Agreement.

 

3. Types and Scope of Credit Line

 

The types of LOC under
this Agreement (revolving LOC or one-time LOC), the applicable types of credit granting, the amount of LOC under each type of credit
granting, the transferability of different types of credit granting, and the specific conditions for use, etc. are subject to the
approval of Party A. If Party A makes adjustments to its original approval opinions according to the application of Party B during
the credit period, the subsequent approval opinions issued by Party A constitute supplements and changes to the original approval
opinions, and so on.

 

4. Use of LOC

 

4.1 The specific business
agreement (whether a single agreement/application or a framework agreement) signed by Party A and Party B for each specific business
under the LOC constitutes an integral part of the Credit Granting Agreement and they jointly specify the rights and obligations,
etc. related to the specific business.

 

Party B must apply for
using the LOC on a case-by-case basis and submit the materials requested by Party A. Party A shall examine and approve the application
one by one. Party A has the right to comprehensively consider whether to approve based on its internal management requirements
and Party B’s operation, and has the right to refuse Party B’s application unilaterally, without bearing any form of legal responsibility
for Party B. In the event of any inconsistency between this paragraph and other terms, the agreement in this paragraph shall prevail.

 

    	 	2	 

     

    

 

The business elements
such as the specific amount, interest rate, term, purpose, and expenses of each loan or other credit granting shall be determined
by the specific business agreement, the business certificate confirmed by Party A, and the business record of Party A’s system.

 

4.2 The using
period of each loan or other credit granting under the LOC shall be determined according to Party B’s business needs and
Party A’s business management rules. The expiration date of specific business may be later than the expiration date of credit
period (unless otherwise requested by Party A).

 

4.3
During the credit period, Party A shall have the right to assess Party B’s operation and financial status on a regular basis
every year, and adjust the LOC available for Party B to use based on the assessment (if this provision is applicable, please
place a √ in the ☐).

 

5. Guarantee Provisions

 

5.1 All the debts owed
by Party B to Party A under this Agreement shall be jointly and severally guaranteed by Lin Minghui, Deng Zhaohui, Yang Xiaofeng
and Pan Yan, and they shall issue a separate letter of guarantee to Party A.

 

At
the same time, the working capital loan limit of RMB Three Million yuan under this Agreement is jointly and severally guaranteed
by the Shanghai Small and Medium-sized Enterprises Policy Financing Guarantee Fund Management Center. The guarantee amount is not
less than 70% of the principal amount of the single loan to Party B, with the specific proportion being subject to the Guarantee
Contract signed by Party A and the Shanghai Small and Medium-sized Enterprises Policy Financing Guarantee Fund Management Center
when Party B use the working capital loan limit.

 

5.2 All debts owed by
Party B to Party A under this Agreement shall be pledged by the property it owns or has the right to dispose of according to law,
and the two parties shall sign a guarantee contract separately.

 

If the guarantor fails
to sign the guarantee contract and complete the guarantee procedures in accordance with the provisions of this clause (including
the debtor of account receivable raises a defense before the receivable is pledged), Party A has the right to refuse to provide
credit to Party B.

 

5.3 Under the circumstances
that the guarantor provides the guarantee for any debt owed by Party B to Party A under this Agreement using real estate, Party
B shall immediately notify Party A if it knows that the collateral has been or may be included in the government demolition and
land expropriation plan, and press the guarantor to continue to provide guarantees for Party B’s debts in accordance with the guarantee
contract using the compensation provided by the expropriator and complete the corresponding guarantee procedures in a timely manner,
or provide other guarantee measures required and approved by Party A.

 

Under the circumstances
stated in the preceding paragraph, if the guarantee needs to be reset or other guarantee measures are taken, the relevant expenses
incurred shall be borne by the guarantor, with Party B being jointly and severally liable for the expenses. Party A has the right
to deduct these fees directly from Party B’s account.

 

    	 	3	 

     

    

 

6. Rights and Obligations of Party B

 

6.1 Party B shall have
right to:

 

6.1.1 Request Party
A to provide loans or other credits within the LOC in accordance with the conditions specified in this Agreement;

 

6.1.2 Use the LOC as
stipulated in this Agreement;

 

6.1.3 Request Party
A to keep confidential the production, operation, property, account and other information provided by Party B, unless otherwise
required by laws and regulations or otherwise required by the regulatory authority; and

 

6.1.4 Transfer the debt
to a third party after obtaining the consent of Party A.

 

6.2 Party B shall bear
the following obligations:

 

6.2.1 It shall truthfully
provide documents and information required by Party A (including but not limited to providing its true financial books/statements
and annual financial reports in the period required by Party A, major decisions and changes in production, operation and management,
withdrawal/use of funds, information related to guarantee, etc.), and all the bank accounts, account numbers and balance of deposits
and loans, as well as cooperate with Party A’s investigation, review and inspection.

 

6.2.2 It shall accept
the supervision of Party A on its use of credit funds and related production operations and financial activities.

 

6.2.3 It shall use loans
and/or other credits in accordance with the provision of this Agreement and the specific contract and/or promised purposes.

 

6.2.4 It shall repay
the principal, interest and expenses of loans, advances and other debt under credit granting in full and on time in accordance
with the provisions of this Agreement and each specific contract.

 

6.2.5 It shall obtain
Party A’s written consent if transferring all or part of the debts under this Agreement to a third party.

 

6.2.6 Under the following
circumstances, it shall immediately notify Party A and actively cooperate with Party A to implement the guarantee measures for
the safe repayment of principal, interest and expenses of loans, advances and other debt under credit granting:

 

6.2.6.1 Occurrence of
major financial losses, asset losses or other financial crisis;

 

6.2.6.2 Providing a
loan or guarantee for a third party, or providing a collateral (pledge) guarantee with its own property (right);

 

6.2.6.3 Suspension of
business, revocation or cancellation of business license, filing or being filed for bankruptcy, dissolution, etc;

 

    	 	4	 

     

    

 

6.2.6.4 The controlling
shareholder and other related companies fall into a major operational or financial crisis, which affects their normal operation;

 

6.2.6.5 The amount of
the related transaction with the controlling shareholder and other related companies exceeds 10% of the net assets of Party B;

 

6.2.6.6 Occurrence of
any litigation, arbitration or criminal or administrative penalty that has a material adverse effect on its business or property
status; and

 

6.2.6.7 Occurrence of
other significant events that may affect its ability to pay its debts.

 

6.2.7 It shall not neglect
to manage and exercise their mature creditor’s right, or dispose of existing primary property improperly or without consideration.

 

6.2.8 It shall obtain
the written consent of Party A before carrying out major events such as merger (M&A), division, restructuring, joint
venture (cooperation), transfer of property (share) rights, joint-stock reform, foreign investment, and increase of debt financing.

 

6.2.9
In accordance with Party A’s request, it shall: (place a “√” in ☐)

 

●     Effect
insurance for its core assets and designate Party A as the first-order beneficiary;

 

●     Not
sell or use as collateral the /       assets designated by Party A before the settlement of the
debt under the credit granting;

 

●     Impose
the following restrictions on the dividends paid to its shareholders as required by Party A before the settlement of the debt
under the credit granting: /      ;

 

●     Others:
/      .

 

6.2.10
In the event of dynamic pledge of accounts receivable, it shall guarantee that the LOC balance at any point during the credit
period is lower than /       % of the balance of pledged accounts receivable, otherwise must provide
new accounts receivable recognized by Party A for pledge or pay a security deposit until the balance of the accounts receivable
pledged ×/     % + valid security
deposit > LOC balance.

 

6.2.11 In the event
that Party B provides a security deposit for pledge, it shall be obliged to add the corresponding amount of security deposit or
provide other guarantee in accordance with Party A’s request if the balance of the security deposit falls short of _/_%
of the specific business amount due to exchange rate fluctuations.

 

6.2.12 It shall ensure
that the payment for goods under the import transaction are collected through the account designated by Party A; in the event of
export negotiation, transfer the notes and/or documents under the letter of credit to Party A.

 

7. Rights and Obligations of Party A

 

7.1 Party A shall have:

 

7.1.1 Right to request
Party B to repay the principal, interest and expenses of the loan, advance and other debt under the credit granting under this
Agreement and the specific contract in full and on time;

 

    	 	5	 

     

    

 

7.1.2 Right to request
Party B to provide information related to the use of the LOC;

 

7.1.3 Right to know
the production and operation and financial activities of Party B;

 

7.1.4 Right to supervise
Party B’s use of loans and/or other credits for the purposes specified in this Agreement and each specific contract; directly suspend
or limit the corporate online banking function of Party B’s account when the business needs it (including but not limited to closing
the online banking, presetting the list of payment targets/single payment limit/phased payment limit, etc.), restrict the sale
of settlement documents, or restrict telephone banking, mobile banking and other non-counter payment and universal cash withdrawing
functions of Party B’s account;

 

7.1.5 Right to entrust
other agencies of China Merchants Bank located at the place where the beneficiary is located to issue subsidiary letter of credit
to the beneficiary, according to the needs of its internal processes, after accepting Party B’s application for the opening of
letter of credit;

 

7.1.6 Right to deduct
directly from the account opened by Party B at any branch of China Merchants Bank to repay the debts owed by Party B under this
Agreement and each specific contract (when the debt under the credit granting is not in RMB, it has the right to deduct directly
from the RMB account of Party B and purchase foreign exchange at the exchange rate published by Party A to repay the principal,
interest and expenses under the credit granting);

 

7.1.7 Right to transfer
its creditor’s rights owed by Party B and notify Party B of the transfer and collect the debt in such manner as it deems appropriate,
including but not limited to by fax, posts, personal delivery, and announcement in public media;

 

7.1.8 Right to supervise
the account of Party B and entrust other agencies of China Merchants Bank other than Party A to supervise Party B’s account, and
control the payment of loan funds according to the loan purpose and payment scope agreed by both parties; and

 

7.1.9 Other rights set
out in this Agreement.

 

7.2 Party A shall bear
the following obligations:

 

7.2.1 It shall grant
loans or other credits to Party B within the LOC in accordance with the conditions stipulated in this Agreement and each specific
contract; and

 

7.2.2 It shall keep
confidential the information of assets, finance, production and operation of Party B, except as otherwise provided by laws and
regulations or otherwise required by the regulatory authority.

 

8. Party B specifically undertakes:

 

8.1 That it is a legal
person duly incorporated and validly existing under the laws of PRC and have full civil capacity to sign and perform this Agreement,
and its registration and annual report publicity procedures are true, legal and valid;

 

    	 	6	 

     

    

 

8.2 That it has been
fully authorized by the Board of Directors or any other authorized body to sign and fulfill this Agreement;

 

8.3 That the documents,
information, and vouchers provided by it regarding Party B, the guarantor, the mortgagor (pledgor), and the collateral (pledged
property) are true, accurate, complete, and valid, without any significant errors that are inconsistent with the facts or omissions
of any significant facts;

 

8.4 To strictly abide
by covenants set out in the specific business agreements and various letters and related documents issued to Party A;

 

8.5 That at the time
of signing this Agreement, there was no litigation, arbitration or criminal or administrative punishment that may have significant
adverse consequences for Party B or Party B’s major property, and such litigation, arbitration or criminal or administrative penalties
will not occur during the execution of this Agreement; in the event of occurrence, Party B shall immediately notify Party A;

 

8.6 To strictly abide
by the national laws and regulations in business activities, carry out various business in strict accordance with the business
scope stipulated by the business license of Party B or approved according to law, and go through the formalities for registration,
annual inspection, and the extension of term of business operation, etc. on time;

 

8.7 To maintain or enhance
the management level, ensure the value preservation and appreciation of existing assets, and not to waive any mature claims or
dispose of existing major assets improperly or without consideration;

 

8.8
That without the permission of Party A, it shall not pay off other long-term debts in advance,               ,
and               ;

 

8.9 That at the signing
and during the performance of this Agreement, no other significant events occur to Party B that affect the performance of its
obligations under this Agreement;

 

8.10 That, during the
validity period of this Agreement, if Party B’s annual main business revenue falls short of RMB 300 million yuan, the funds withdrawn
under this Agreement shall not exceed RMB 8 million yuan;

 

8.11 That, during the
validity period of this Agreement, it shall notify Party A in writing in advance of the profit distribution, and its undistributed
profit shall not be less than 2 times of the balance of LOC under this Agreement (excluding the conversion of profit into registered
capital).

 

8.12
/                       .

 

9. Other expenses

 

In the event that this
agreement needs to be notarized (excluding mandatory notarization) or other services provided by a third party, the relevant expenses
shall be borne by the party as the client in the commission. If the two parties jointly act as the client, they shall each bear
50%.

 

    	 	7	 

     

    

 

In the event that Party
B cannot repay the debts owed to Party A under this Agreement, Party B shall bear attorney fees, legal fees, travel expenses, announcement
fees, delivery fees and all other expenses incurred by Party A to realize the creditor’s rights. Party B authorizes Party A to
directly deduct such expenses from Party B’s bank account in Party A. If there are any shortfalls, Party B undertakes to repay
the amount after receiving the notice from Party A, and Party A does not need to provide any proof.

 

10. Event of Default and the Settlement

 

10.1 It shall be deemed
an event of default if:

 

10.1.1 Party B fails
to perform or breaches the obligations set out in this Agreement;

 

10.1.2 The information
in the representations or undertakings made by Party B under this Agreement is untrue or incomplete, or Party B breaches the requirement
and does not make correction as required by Party A;

 

10.1.3 Party B commits
a significant breach of a legally valid contract signed with other creditors and fails to satisfactorily resolve it within three
months from the date of breach;

 

The aforesaid significant
breach of contract means that due to Party B’s breach, its
creditors have the right to claim compensation of more than RMB/              from Party B;

 

10.1.4 Party B encounters
significant obstacles in listing its shares on the New Third Board or suspends its listing application; Party B is subject to warning
letter, ordered corrections, restrictions on securities account trading and other self-regulatory measures for more than three
times or subject to disciplinary punishment, termination of listing, etc; or

 

10.1.5 Other events
occurs that, in the opinion of Party A, damage its legitimate rights and interests.

 

10.2 If one of the following
circumstances occurs to the guarantor, Party A believes that it may affect the guarantor’s guarantee capacity, and requires the
guarantor to eliminate the adverse effects caused by it, or requires Party B to increase or replace the guarantee, but the guarantor
and Party B fail to cooperate, it shall be deemed an event of default:

 

10.2.1 A circumstance
similar to those described in Clause 6.2.6 of this Agreement occurs, or the consent of Party A is not obtained when the circumstances
described in Clause 6.2.8 occur;

 

10.2.2 When the irrevocable
letter of guarantee is issued, the actual guarantee capacity is concealed, or the authorization of relevant authority is not obtained;

 

10.2.3 Failure to go
through formalities for the annual inspection registration and the extension of term of business operation; or

 

10.2.4 Neglect to manage
and exercise their mature creditor’s right, or disposal of existing primary property improperly or without consideration.

 

    	 	8	 

     

    

 

10.3 If one of the following
circumstances occurs to the mortgagor (or pledgor), Party A believes that it may result in the invalidity of the mortgage (or pledge)
or the shortfall in the value of collateral (pledged property), and requires the mortgagor (or pledgor) to eliminate the adverse
effects caused by it, or requires Party B to increase or replace the mortgage (or pledge), but the mortgagor (or pledgor) and Party
B fail to cooperate, it shall be deemed an event of default:

 

10.3.1 The mortgagor
(or pledgor) does not own or has no right to dispose of the collateral (or pledged property), or there is dispute over the ownership;

 

10.3.2 The collateral
(or pledged property) has been rented, seized, detained, supervised, or is subject to legal right of priority (including but not
limited to priority of construction project), and / or such circumstances are concealed;

 

10.3.3 The mortgagor
transfers, leases, re-collateralizes the collateral or dispose of it in any other improper manner without the written consent of
Party A, or although the disposal of the collateral is consented to by Party A, the proceeds from the disposal are not used to
repay the debt owed by Party B to Party A as required by Party A;

 

10.3.4 The mortgagor
does not properly keep, maintain and repair the collateral, and thus the value of the collateral is obviously impaired; or the
mortgagor’s acts directly jeopardize the collateral, resulting
in a decrease in the value of the collateral; or the mortgagor does not effect insurance for the collateral during the mortgage
period according to Party A’s requirements;

 

10.3.5 The collateral
has been or may be included in the scope of government demolition and expropriation, and the mortgagor fails to immediately inform
Party A and fulfill the relevant obligations as stipulated in the mortgage contract; or

 

10.3.6 Where the mortgagor
uses its real estate mortgaged to China Merchants Bank to provide the residual value mortgage for the business under this Agreement,
the mortgagor settles the personal mortgage loan in advance without the consent of Party A before Party B pays off the debt under
this Agreement.

 

10.4 When the guarantee
under this Agreement includes the pledge of accounts receivable, if the debtor of the accounts receivable obviously deteriorates
in operation, transfers property/withdraws funds to avoid debts, colludes with the pledgor to change path for the payment of receivables,
causing that the collected funds are not transferred to the account designated for receivable collection, loses business reputation,
loses or may lose the ability to perform contract, or other significant events affecting the debtor’s solvency occurs, Party A
has the right to request Party B to provide corresponding guarantee or provide new valid receivables for pledge; if Party B fails
to provide, it shall be deemed an event of default.

 

10.5 In the event of
any of the above default, Party A shall have the right to adopt the following measures, separately or simultaneously:

 

10.5.1 Reducing the
LOC under this agreement, or stop the use of remaining LOC balance;

 

    	 	9	 

     

    

 

10.5.2 Recovering in
advance the principal, interest and related expenses of loans issued within the LOC;

 

10.5.3 For bills that
have been accepted by Party A during the credit period, or letter of credit (including subsidiary letter of credit issued by branches
entrusted by Party A), letter of guarantee, and letter of delivery against bank guarantee, etc. that have been issued by Party
A , Party A may request Party B to increase the amount of the security deposit (regardless of whether Party A has made advance
payment), or transfer the funds in other accounts opened by Party B at Party A into its security deposit account as a security
deposit for the settlement of Party A’s advances under this Agreement, or hand over the corresponding funds to a third party as
a security deposit for Party A’s advance payment for Party B;

 

10.5.4 For the unpaid
accounts receivable transferred from Party B to Party A under factoring, Party A has the right to request Party B to immediately
fulfill repurchase obligations and take other recovery measures in accordance with the specific business agreements; for the accounts
receivable transferred from Party B to Party A under factoring, Party A has the right to seek recourse from Party B.

 

10.5.5 Party A may directly
request Party B to provide other property accepted by Party A as a new guarantee, and if Party B fails to provide new guarantee
as required, a penalty shall be levied against it at a rate of /            % of the LOC amount under this Agreement.

 

10.5.6 Directly freezing/deducting
deposits from any settlement account and/or other accounts opened by Party B at China Merchants Bank; and

 

10.5.7 Seeking recourse
in accordance with this Agreement.

 

10.6 For the funds obtained
by Party A through seeking recourse, the repayment sequence shall be from the earliest to latest according to the actual maturity
date of each credit. For each credit, the repayment sequence shall be from expenses, penalty, compounded interest, penalty interest,
interest, to the principal of credit, until all the principal, interests and related expenses are paid off.

 

Party A has the right
to unilaterally adjust the above repayment sequence, unless otherwise required by laws and regulations.

 

11. Change and Rescission of Contract

 

This Agreement may be
changed and rescinded upon negotiation and conclusion of a written agreement by the Parties hereto. This Agreement shall still
be valid before the conclusion of the written agreement. Any Party shall not change, amend or rescind this Agreement unilaterally.

 

12. Miscellaneous 

 

12.1 During
the term of this Agreement, any tolerance, grace period granted by Party A for Party B’s breach of contract or delay
of performance, or any delay of Party A in performing any rights or interests under this Contract shall not damage, affect,
or limit any rights and interests of Party A as a creditor vested by relevant laws and this Agreement, and shall neither
be deemed as Party A’s consent or approval to
any breach of this Agreement by Party B, nor be deemed as Party A’s
waiver of right to take action against any existing or future default.

 

    	 	10	 

     

    

 

12.2 In the event
that this Agreement or any part thereof becomes null and void for any reason, Party B shall still be liable for repaying all
the debt owed to Party A under this Agreement. Under the above-mentioned circumstances, Party A shall have the right to
terminate this Agreement and promptly claim for the repayment of all the debt owed by Party B under this Agreement. In the
event that any change in the applicable laws and policy requirements causes the increase of costs for Party A to perform the
obligations under the Agreement, Party B shall compensate Party A for the new costs as required by Party A.

 

12.3
Notices, requests or other documents related to this Agreement between Party A and Party B shall be sent in writing (including
but not limited to by letters, faxes, e-mails, Party A’s online banking, SMS or WeChat).

 

12.3.1 For the delivery
by hand (including but not limited to delivery by lawyer/notary, express, etc.), the instrument shall be deemed to have been served
when the addressee signs the receipt (in the event of rejection by the addressee, it shall be deemed to have been served on the
date of rejection/return or the 7th day after mailing ( whichever is earlier)); for the delivery by mail, the instrument shall
be deemed to have been served at the 7th day after mailing; for the delivery by fax, email, Party A’s online banking notice, SMS,
WeChat or other electronic means, the instrument shall be deemed to have been served at the date when the sender’s corresponding
system displays that the transmission is successful.

 

For the notice to Party B regarding the transfer of the creditor’s
right or dunning published by Party A on mass media, it shall be deemed to have been served on the date of publishing.

 

Any Party that changes
the contact address, email address, fax number, mobile number or WeChat account number shall notify the other party of the change
within five working days from the date of the change, otherwise the other party shall have the right to deliver the instrument
according to the original contact address or information If the instrument is not successfully delivered due to the change of contact
address, the date of return or the 7th day after delivery (whichever is earlier) shall be deemed to be the date of service. The
party making the change is responsible for the losses that may arise therefrom, and the legal effect of delivery shall not be affected.

 

12.3.2 The above-mentioned
contact address, email address, fax number, mobile number, and WeChat account number are also used as their respective address
for service of notary instruments and judicial instruments (including but not limited to bill of complaint/arbitration applications,
evidence, subpoenas, notice of responding to action, notice to produce evidence, notice of court session, notice of hearing, judgment/arbitration
award, verdict, conciliation statement, notice for performance within a time limit and other instruments in the hearing and execution
stages). The instruments shall be deemed to be served effectively if the court or notary office accepting the case delivers them
in writing to such address in accordance with this Agreement (the specific criteria for service shall be implemented by reference
to the provisions of paragraphs 12.3.1).

 

    	 	11	 

     

    

 

12.4 The parties hereto
agree that for each business application under the trade financing, Party B shall affix the seal according to the Letter of Authorization
for Reserved Specimen Seal provided by Party B to Party A, and both parties shall recognize the validity of such seal.

 

12.5 When Party B submits
various applications under the credit granting through Party A’s online banking system, Party B’s digital signature generated in
the form of digital certificate is a valid signature for the application. Party A has the right to fill out relevant business documents
according to the application information sent online, and the authenticity, accuracy and legitimacy of the information shall be
confirmed by Party B.

 

12.6 The supplementary
written agreements entered into, upon negotiation, by the parties hereto for the matters that are not covered in this Agreement
or are subject to change, and the specific contracts under this Agreement shall be regarded as annexes to this Agreement and constitute
an integral part thereof.

 

12.7 In order to facilitate
business processing, the letters or documents related to Party A’s operations involving transactions under this Agreement
(including but not limited to acceptance of applications, data review, lending, transaction confirmation, withholding of funds,
inquiry, receipt printing, dunning, payment deduction, etc. and various notifications) may be generated or issued at any business
outlet of Party A. The operations of and letters or documents issued by Party A’s business outlets shall be deemed to be
the acts of Party A and binding upon Party B.

 

12.8 The annexes to
this Agreement shall constitute an integral part of this Agreement and are automatically applicable to the specific business that
actually occurs between the parties hereto.

 

12.9
/             .

 

13. Governing Laws and Settlement of
Dispute

 

13.1 The
conclusion, interpretation, and dispute settlement of this Agreement shall all be governed by the laws of the PRC (excluding
Hong Kong, Macao and Taiwan laws), which protect the rights of both parties.

 

13.2 Any dispute
arising from the performance of this Agreement shall be settled through friendly negotiation by the parties hereto. If the
negotiation fails, any party may (please place a √
in ☐ for selection

 

●    13.2.1
file a suit at the people’s court in the place where this Agreement is signed

 

●    13.2.2 file
a suit at the people’s court in the place where Party A is located

 

●    13.2.3
refer the dispute to /        (insert the name of specific arbitrator) for arbitration,
with the arbitration venue being at/            .

 

13.3 If the
parties hereto have this Agreement and related contracts notarized for legal enforcement, then Party A may directly apply to
the people’s court with jurisdiction for enforcement to collect the debt that Party B owes under this Agreement and related
contracts.

 

14. Effectiveness of Agreement

 

This Agreement shall
become effective after being signed (or sealed) by the legal representatives/person in charge or the authorized signatories of
both parties and being affixed with the company seal/special seal for contract of both parties, and shall automatically terminate
upon expiration of the credit period or full repayment of the debt and other related fees under this Agreement owed by Party B
to Party A (whichever comes later). 

 

15. Supplementary Provisions

 

This Agreement shall
be made in          copies, with Party A, Party B, and          each holding one copy, which have the same legal effect.

 

    	 	12	 

     

    

 

Annex I Special Provisions regarding Online
Customs Clearance (Customs Duties and Dues Payment Guarantee)

 

Annex II: Special Provisions regarding
Buyer / Import Factoring

 

Annex III: Special Provisions regarding
Order-related Loan

 

Annex IV: Special Provisions regarding
Guaranteed Discount for Commercial Acceptance Bills

 

Annex V: Special Provisions regarding Derivative
Transactions

 

Annex VI: Special Provisions regarding
Gold Leasing

 

Annex VII: Special Provisions regarding
Cross-border linkage Trade financing

 

    	 	13	 

     

    

 

Annex I Special Provisions regarding
Online Customs Clearance (Customs Duties and Dues Payment Guarantee)

 

		1.	If Party B applies to Party A for customs duties and dues
payment guarantee within the LOC, Party B shall login to electronic port system / www.easipay.net to send Party A the online payment
bank guarantee order; Party A provides guarantee to Party B, within the LOC, for its payment of tax payable to the customs in
the form of electronic payment guarantee letter through electronic port system / www.easipay.net (guaranteeing that the tax payable
by Party B will be paid to the state treasury when the tax payable is due, and the guarantee will be reflected in the system by
the information of “Payment is Successful”
sent by Party A to electronic port system / www.easipay.net), realizing that the formalities for goods customs clearance
are gone through at first, and the relevant import and export duties and dues are paid later within the time limit stipulated
by the customs.

 

		 	Party A’s advance payment (regardless of whether made during
the credit period) under the payment guarantee and related interest and expenses shall directly constitute debts owed by Party
B to Party A and be included in the scope of the LOC.

 

		2.	Party B shall deposit a certain amount of funds in Party
A as the security deposit according to the requirements of Party A (the account number shall be subject to the account automatically
generated or entered when the funds are deposited), and provide counter-guarantee for Party A’s tax payment guarantee.

 

		3.	Party A issues an electronic payment guarantee instrument
to the customs in its capacity as the guarantor; Party B is aware and confirms that the electronic payment guarantee has the nature
of independent guarantee, and the guarantee liability assumed by A to the customs is an independent demand guarantee.

 

		4.	Party B shall send a withholding order to Party A through
electronic port system / www.easipay.net, and Party A shall issue a payment guarantee to the customs according to the withholding
order sent by Party B; Party B shall grant Party A the right to deduct the principal and interest of the guarantee amount from
its security deposit accounts concerned and the right to fill out relevant business documents according to the withholding order
issued online.

 

The specific time, amount,
etc. of each payment guarantee provided by Party A within the LOC shall be subject to Party B’s online payment bank guarantee order
(payment guarantee withholding order) received by Party A and stored in the online system. Party B must send the payment guarantee
withholding order to Party A within the credit period, and Party A will not accept such order sent beyond the credit period.

 

Party A shall determine the
expiration date of the single payment guarantee according to the “time
limit for payment” (i.e. “date
when tax payable is due”) specified by the actual deduction
order sent to Party A by electronic port system / www.easipay.net.

 

    	 	14	 

     

    

 

		5.	If Party B does not
                                         use the LOC for the customs duties and dues payment guarantee for         consecutive
                                         months, Party A has the right to refuse to conduct such business for Party B.

 

		6.	Party B authorizes Party A to directly deduct funds from
Party B’s account (including security deposit account) to pay tax to customs when the tax payable by Party B is due, without notifying
Party B or obtaining Party B’s consent If the account amount is insufficient to pay, Party B guarantees that all the shortfall
amount will be transferred into the account designated for tax payment within 3 days before the date when the tax payable is due,
making preparation for the payment due. If Party B fails to make up the shortfall in time, Party A shall have the right to seek
recourse from Party B after making advance payment to state treasury due to the obligation under the payment guarantee, and shall
have the right to levy a penalty against Party B at an annual rate of % of the advance amount according to the actual days counted
from the date when the advance payment is made.

 

		7.	Party A shall charge a guarantee fee quarterly at an annual
rate of % of the actual transaction amount under the online payment bank guarantee.

 

		8.	If Party B fails to fulfill its obligations under the Credit
Granting Agreement or this Annex, or if any statement, undertakings or guarantee made by it is untrue, Party A shall have the
right to take any remedy measures set out in the Credit Granting Agreement, and to require a security deposit from Party B equal
to 100% of the total amount of the payment guarantee provided by Party A under which no claim has occurred.

 

    	 	15	 

     

    

 

Annex II: Special Provisions regarding
Buyer / Import Factoring

 

		1.	Definition

 

		1.1	The buyer/import factoring means that Party A, as the buyer/import
factor, provides approved payment, accounts receivable dunning and management and other comprehensive factoring services for seller/export
factor after the seller/export factor transfers to it the accounts receivable (under a business contract) of which Party B is
the debtor.

 

Under the buyer/import factoring,
if the buyer’s credit risk occurs, Party A shall be liable to seller/export factor for approved payment; if a dispute arises during
the performance of the business contract, Party A shall have the right to re-transfer to the seller/export factor the accounts
receivable transferred to it.

 

		1.2	The seller/export factor is the party that signs a factoring
agreement with the supplier/service provider (creditor of an account receivable) under the business contract and to which the
account receivable held by the creditor thereof is transferred. Party A may act both as a buyer/import factor and as a seller/export
factor.

 

		1.3	The dispute refers to the defense, counter claim, offset
or other similar acts filed by Party B in respect of the accounts receivable transferred to Party A due to any dispute related
to the goods, services, invoices or any other commercial contracts related matters between the creditor of the accounts receivable
and Party B, and the acts of a third-party to make a claim on or apply for the freezing of the accounts receivable under this
Agreement. If the accounts receivable transferred to Party A cannot be recovered in full or in part due to non-buyer’s credit
risk, it shall be deemed to be a dispute.

 

		1.4	Business contract: refers to the transaction contract signed
between Party B and the creditors of the accounts receivable for the purpose of commodity trading and/or service trading, with
sale on credit as the settlement method.

 

		1.5	Approved payment / guaranteed payment means that after
the occurrence of buyer’s credit risk, Party A shall pay the corresponding amount of the account receivable to the seller/export
factor within a certain period after the account receivable is mature.

 

		2.	Upon application by Party B, Party A agrees to conduct
buyer/import factoring for it within the LOC. the funds and related expenses paid by Party A as the buyer/import factor for performing
the obligations of the approved payment shall be deemed as the credit granted by Party A to Party B under the Credit Granting
Agreement.

 

As long as an account receivable
is transferred to Party A during the credit period, Party A shall have the right to seek recourse from Party B in accordance with
the provisions of the Credit Granting Agreement and the business contracts, even if it performs the obligations of the approved
payment beyond the credit period.

 

		3.	Commission fees of buyer/import factoring

 

Commission fees of factoring:
mean the business management fee that should be charged by Party A for the buyer/import factoring services, which shall be charged
by Party A from Party B according to a certain percentage of the amount of accounts receivable at the time of transfer, with the
specific rate being reasonably determined by Party A in accordance with its business rules.

 

		4.	Party B shall waive the right to raise an objection based
on disputes arising during the performance of the business contract. In view of this, regardless of whether there are other agreements,
if Party B fails to make payment in accordance with the provision of the business contract, it shall be deemed as the occurrence
of the buyer’s credit risk; Party A will make the approved payment, and Party B will raise no objection.

 

    	 	16	 

     

    

 

Annex III: Special Provisions regarding
Order-related Loan

 

		1.	The order-related loan means the loan lent by Party A to
Party B based on the business contract (or engineering contract) signed between Party B and its downstream customers, used for
the performance of the business contract (or the engineering contract) for the business unit, with the proceeds from the business
contract (or engineering contract) being the first source for the repayment of the loan.

 

		2.	Party B shall open a special account at Party A for the
collection of proceeds under the business contract (or engineering contract). All sales under the business contract (or engineering
contract) based on which the order-related loan is applied must be directly paid to the special account; without the approval
of Party A, the funds may not be used and the special account may not be changed. Party B shall notify the payer that the account
is the only account for the payment of sales proceeds. Party A has the right to deduct the funds from the special account for
the repayment of the principal and interest, penalty interest and other related expenses of the order-related loan.

 

		3.	Under any of the following circumstances, Party A may immediately
stop the use of remaining LOC balance under the Credit Granting Agreement, and take remedy measures in accordance with the Credit
Granting Agreement:

 

		3.1	The downstream customers of Party B have delayed in payment
for three consecutive periods, and Party A has reasonably judged that their financial status has deteriorated, which is not conducive
to protecting Party A’s creditor’s
rights; and

 

		3.2	Party B’s supplier qualification is canceled by its downstream
customers, Party B’s supply to the downstream customers is not timely, the product quality is unstable, Party B fails to make
progress in construction as scheduled in the engineering contract, which is not recognized by the downstream customers, the industry
practice qualification of Party B has been lowered, which results in its failure to meet the requirements of downstream customers,
Party A has reasonably judged that Party B is difficult to operate and its financial status deteriorates, the funds collected
from downstream customers is less than the monthly total repayment amount of financing contracts under the credit granting for
three consecutive months, or the downstream customers fail to pay the installments as agreed in the engineering contract for two
consecutive period.

 

    	 	17	 

     

    

 

Annex IV: Special Provisions regarding
Guaranteed Discount for Commercial Acceptance Bills

 

		1.	The guaranteed discount for commercial acceptance bills is a service that Party A undertakes to
discount the commercial acceptance bills accepted by Party B or allows the bill holder to apply for discount to any branch of China
Merchants Bank (hereinafter referred to as “other discount
acceptance banks”). The holder (hereinafter referred to as
the “discount applicant”)
may apply to Party A or other discount acceptance banks for discounting such commercial acceptance bills. Such discount services
shall offset the LOC under this Agreement.

 

In view that the guaranteed
discount for commercial acceptance bills provided by Party A for Party B is the prerequisite for other discount acceptance banks
to accept the bill holder’s application for discounting, other discount acceptance banks have the right to transfer the discounted
bills to Party A after the discounting, and Party A is obliged to accept the transfer. For the commercial acceptance bills transferred
from other discount acceptance banks to Party A, Party B undertakes to pay the bills unconditionally on the maturity date, and
the parties hereto have no objection.

 

		2.	The commercial acceptance bills mentioned in this clause include both paper commercial acceptance
bills and electronic commercial acceptance bills (hereinafter referred to as “electronic
bills”); both commercial acceptance bills with discount interest
being paid by discount applicant and commercial acceptance bills with discount interest being paid by buyer.

 

The discount of commercial
acceptance bills with discount interest being paid by buyer means bill discount that the discount interest is paid by Party B when
the commercial acceptance bills issued and accepted by it are discounted.

 

		3.	During the credit period, Party B shall open a commercial acceptance bill security deposit account
in Party A (the account number shall be subject to the account automatically generated or entered when the security deposit are
deposited), and deposit a certain amount of funds in the security deposit account according to the requirements of Party A before
the discount guarantee is issued for each commercial bill, which shall be used as the security deposit for the payment of commercial
acceptance bill accepted by Party B that Party A undertakes to discount.

 

Party B shall deposit the full
amount of the bill payable in the security deposit account opened at Party A before the maturity of each commercial acceptance
bill, making preparation for the payment of bills due.

 

		4.	During the credit period,
the discount applicant may apply directly to Party A for discounting the commercial acceptance bill accepted by Party B, or apply
to other discount acceptance banks for discounting. Party A or other discount acceptance banks have the right to examine the qualification
of discount applicants, and have the right to request Party B to confirm upon review, and determine on its own whether to conduct
the discount.

 

After conducting discount,
the other discount acceptance banks shall have the right to transfer the discounted commercial acceptance bills to Party A in accordance
with the relevant rules of China Merchants Bank. When Party A require Party B to pay a commercial acceptance bill after discounting
the commercial acceptance bill or receiving the commercial acceptance bill discounted by other discount acceptance banks, Party
B shall unconditionally, fully and timely pay Party A the amount of bill payable.

 

		5.	The issuing and discounting of each electronic bill shall
be subject to the business information stored in the PBOC electronic bill system, or the business records such as customer statements
filled or printed according to it. The business records of Party A shall constitute an integral part of this Agreement and have
the same legal effect as this Agreement: Party B acknowledges the accuracy, authenticity and legality of such records.

 

		6.	If any dispute arises from the underlying contract of the
commercial acceptance bill that Party A undertakes to discount within the LOC, Party B shall settle the dispute with the relevant
parties themselves; before the maturity of each bill, Party B shall still be obliged to fully and timely deposit the security
deposit and the bill amount according to the foregoing agreement.

 

		7.	Where Party A has discounted the commercial acceptance bill accepted by Party B or has
                                                                             received the commercial acceptance bill accepted by Party B from other discount acceptance banks, Party A shall have the
                                                                             right to deduct funds from any account opened by Party B at Party A for the payment of bill amount if Party B fails to
                                                                             provide full amount of the bill payable before the maturity date of the commercial acceptance bill. For the advance payment
                                                                             made by Party A due to the insufficiency of amount provided by Party B and the insufficient balance of its account, Party A
                                                                             shall have the right to levy a penalty against Party B at a rate of
                                                                             ‱ of the amount of advance payment in accordance with the relevant provisions of the Measures for Payment and
                                                                             Settlement.

 

    	 	18	 

     

    

 

Annex V: Special Provisions regarding
Derivative Transactions

 

		1.	A derivative transaction for which Party A accepts the
application of Party B may offset the LOC according to a certain percentage of the nominal principal/transaction amount of the
transaction, or when floating loss occurs to the derivative transaction, Party A may offset additional amount of LOC granted to
Party B according to the specific agreement between the parties (the additional amount being offset shall be determined by Party
A according to the type, duration and risk of the derivative, as well as the risk coefficient of the business corresponding to
the offset LOC at the occurrence of each specific trading). The amount of LOC being actually offset shall be subject to the notice
of amount of LOC being offset issued by Party A and/or trading confirmation letter/certificate and other trading documents.

 

		2.	Where there is a derivative
transaction with a balance or loss during the credit period, it shall offset the LOC in accordance with the provisions of the
preceding clauses, regardless of whether the transaction occurs within the credit period.

 

    	 	19	 

     

    

 

Annex VI: Special Provisions regarding
Gold Leasing

 

		1.	The gold leasing service means that Party A leases the
physical gold to Party B, and Party B will return the same amount of gold with the same quality after the expiration of the lease,
and pay a lease fee to Party A by installment.

 

		2.	Party A may provide gold leasing service during the credit
period and within the LOC according to the application of Party B. The physical gold leased out by Party A shall offset the LOC
according to the value agreed in the gold lease agreement signed by both parties, and constitute debts owed by Party B to Party
A.

 

    	 	20	 

     

    

 

Annex VII: Special Provisions regarding
Cross-border linkage Trade financing

 

		1.	Cross-border linkage trade financing service refers to
the cross-border trade financing service jointly provided by Party B and the foreign branches of China Merchants Bank (hereinafter
referred to as “linkage platform”)
upon application of Party B based on the real cross-border trading between Party B and foreign companies.

 

		2.	The specific varieties of cross-border linkage trade financing
include, but are not limited to, back-to-back letter of credit, issuance of letter of credit by mandate, offshore financing by
mandate, bill avalization, overseas credit granting by letter of guarantee and cross-border trade financing through train. The
specific meanings and business rules, etc. of various services are set out by specific business agreements.

 

		3.	Under the back-to-back letter of credit, the master letter
of credit of which Party B applies to Party A for the issuance shall directly offset the LOC under this Agreement, and the bill
advance or advance payment made by Party A for fulfilling the obligations of issuing bank under the master letter of credit (regardless
of whether made within the credit period) and related interest and expenses shall constitute the financing debts owed by Party
B to Party A and be included in the scope of LOC.

 

Under the issuance of letter
of credit by mandate/offshore financing by mandate, the letter of credit issued by and trade financing provided by the linkage
platform to an overseas company (upon accepting the application by the overseas company) according to entrust by Party A based
on the application of Party B shall offset LOC under this Agreement. If Party A grants the funds of import bill advance under collection
or advance payment to Party B for overseas payment under the import collection, the funds of bill advance or advance payment (regardless
of whether occurs within the credit period) and related interest and expenses shall directly constitute the financing debts owed
by Party B to Party A and be included in the scope of LOC.

 

Under the bill avalization,
the bill accepted by Party B avalized by Party A according to Party B’s application shall directly offset the LOC under this Agreement.
If Party B fails to pay the full amount of the bill on time, Party A has the right to make advances directly for the avalized bill.
Such advances (regardless of whether occur during the credit period) and related interest and expenses are included in the scope
of LOC.

 

Under the overseas credit granting
by letter of guarantee, the letter of guarantee/standby letter of credit issued by Party A according to the application of Party
B shall directly offset the LOC under this Agreement. After the overseas company transfers the collection right (non-claim right)
under the letter of guarantee to the linkage platform, if the linkage platform claims to Party A according to the letter of guarantee/standby
letter of credit, the advances made by Party A (regardless of whether made during the credit period), and related interest and
expenses shall directly constitute the financing debts owed by Party B to Party A and be included in the scope of LOC.

 

Under the cross-border trade
financing through train, after Party A approves Party B’s trade financing according to its application, the trade financing provided
directly by linkage platform to Party B shall offset the LOC under this Agreement. If Party B fails to timely repay the amount
of trade financing to the linkage platform in full, Party A has the right to repay it by way of bill advance or advance payment.
The bill advance or advance payment (regardless of whether made during the credit period) and related interest and expenses shall
directly constitute the financing debts owed by Party B to Party A and be included in the scope of LOC.

 

    	 	21	 

     

    

 

Special Notes:

 

All terms & conditions
of this Agreement (including annexes) are fully negotiated by the parties hereto. The Bank has brought to the attention of other
parties hereto the terms of exemption or restriction of bank liability, unilateral possession of certain rights by bank, addition
of liability of other parties hereto or restriction on the rights of other parties hereto, as well as having a comprehensive and
accurate understanding of them. The Bank has provided corresponding explanation on the above terms & conditions at the request
of other parties hereto. The parties hereto have a unanimous understanding of the terms & conditions of this Agreement.

 

(The content hereinafter contains no main
text)

 

     

     

    

  

	(This page is the signature page for the (Credit Granting Agreement) numbered (5202180601))	 	 
	 	 
	Party A: 	(seal)
	 	 
	Person in charge or authorized signatory:	 
	 	 
	(signature/seal): 	 
	 	 
	(China Merchants Bank Co., Ltd., Shanghai Century Avenue Branch)	 
	 	 	 
	 	 	 
	 	 	 
	Party B: 	(seal)	 
	 	 
	Legal representative/person in charge or the authorized signatory	 
	 	 
	(signature/seal): 	 
	 	 
	CLPS Incorporation	 

 

Signed on: June 22, 2018

 

Signed in: Pudong New Area, Shanghai

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