Document:

Exhibit
10.12(e)

 

After
recording return to:

 

Jackson
Walker L.L.P.

 

Attn:
David S. Stolle

901 Main Street, Suite 6000

Dallas, Texas 75202

 

DEED
OF TRUST, SECURITY AGREEMENT,  

FIXTURE
FILING AND FINANCING STATEMENT

(Nebraska
Oil and Gas Properties)

 

FROM

LILIS
ENERGY, INC., Trustor

a Nevada corporation

 

to Robert G. Dailey, member of the
Nebraska Bar Association

Trustee,

 

for
the benefit of

 

HEARTLAND
BANK,

in
its capacity as Beneficiary, Beneficiary

 

Dated as of January 8, 2015

 

    	 

    	 

    

 

DEED
OF TRUST, SECURITY AGREEMENT,

FIXTURE
FILING AND FINANCING STATEMENT

 

THIS
DEED OF TRUST, SECURITY AGREEMENT, FIXTURE FILING AND FINANCING STATEMENT (this “Deed of Trust”) is from LILIS
ENERGY, INC., a Nevada corporation, as Trustor (the “Trustor”), to ROBERT G. DAILEY (the “Trustee”),
member of the Nebraska Bar Association, for the benefit of HEARTLAND BANK, an Arkansas state bank, as administrative agent
(“Beneficiary”). The addresses of the Trustor and the Beneficiary are set forth in Section 9.14
hereof.

 

ARTICLE
I

DEFINITIONS

 

1.1.For
all purposes of this Deed of Trust, unless the context otherwise requires:

 

“Accounts
and Contract Rights” means all accounts (including accounts in the form of joint interest billings), contract rights
and general intangibles of the Trustor now or hereafter existing, or hereafter acquired by, or on behalf of, the Trustor or the
Trustor’s successors in interest, relating to the sale, purchase, exchange, extraction, transportation or processing of
Hydrocarbons produced or to be produced from the Mortgaged Property, together with all accounts and proceeds accruing to the Trustor
attributable to the sale of Hydrocarbons produced from the Mortgaged Property.

 

“As-Extracted
Collateral” means Hydrocarbons which may be extracted from the Mortgaged Property, and the accounts relating thereto,
which will be financed at the wellheads of the wells located on the Mortgaged Property and accounts arising out of the sale thereof.

 

“Beneficiary”
means Heartland Bank, as contractual representative for itself and the other Credit Parties.

 

“Borrower”
means the Trustor.

 

“Business
Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in Dallas, Texas, are authorized
or required by Law to remain closed.

 

“Certificates
of Ownership Interests” means the Certificates of Ownership Interests, if any, delivered by the Trustor in connection
with the Credit Agreement.

 

“Code”
means the Uniform Commercial Code as in effect in Nebraska.

 

“Credit
Agreement” means the Credit Agreement between the Borrower and Benaficiary, for the benefit of the Lenders, pursuant
to which one or more of the Notes were issued, as the Credit Agreement may be amended from time to time.

 

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“Credit
Parties” means Beneficiary, any other Lender, and “Credit Party” means any of them.

 

“Effective
Date” means the date on which this Deed of Trust is executed.

 

“Event
of Default” has the meaning stated in Article VII of this Deed of Trust.

 

“Exhibit
A” means, unless specifically indicated otherwise, Exhibit A attached hereto.

 

“Hydrocarbon
Proceeds” has the meaning stated in Section 5.1 of this Deed of Trust.

 

“Hydrocarbons”
means oil, gas, casinghead gas, drip gasoline, natural gasoline and condensate and all other liquid or gaseous hydrocarbons.

 

“Indebtedness”
or “Secured Indebtedness” means all the indebtedness, obligations, and liabilities described or referred to
in Section 3.1 of this Deed of Trust.

 

“Lands”
means the lands described in Exhibit A and shall include any lands, the description of which is contained in Exhibit A
or incorporated in or referred to in Exhibit A by reference to another instrument or document, including, without
limitation, all lands described in the Oil and Gas Leases, and shall also include any lands now or hereafter unitized, pooled,
spaced, or otherwise combined, whether by statute, order, agreement, declaration or otherwise, with lands the description of which
is contained in Exhibit A or is incorporated in Exhibit A by reference.

 

“Law”
means at any time with respect to any Person or its Property, any statute, law, executive order, treaty, ordinance, order, writ,
injunction, judgment, ruling, decree, regulation, or determination of an arbitrator, court or other Governmental Authority, existing
at such time which are applicable to or binding upon such Person or any of its Property or to which such Person or any of its
Property is subject.

 

“Lender”
means Heartland Bank, in its capacity as a lender, and such other or additional lenders as may from time to time be parties to
the Credit Agreement, and each of their successors and assigns.

 

“Loan
Obligations” means the “Obligations,” as such term is defined in the Credit Agreement.

 

“Loan
Documents” means the Notes, this Deed of Trust, the Credit Agreement and all other documents, instruments and agreements
delivered to the Beneficiary at any time in connection with the Credit Agreement, as any of the foregoing are amended, extended,
renewed, restated or supplemented from time to time.

 

“Mortgaged
Property” has the meaning stated in Article II of this Deed of Trust.

 

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“Net
Revenue Interest” means Trustor’s share of the total production of oil, gas and other Hydrocarbons produced from
the Lands, after deducting Trustor’s share of all lessors’ royalties, overriding royalties, production payments and
other payments out of, or measured by, production.

 

“Notes”
means the promissory note or notes identified in Section 3.1.1 of this Deed of Trust, and all renewals, extensions,
replacements and modifications thereof or additional promissory notes issued under the Credit Agreement.

 

“Oil
and Gas Leases” means, collectively, oil, gas and mineral leases, oil and gas leases, oil leases, gas leases, other
mineral leases, subleases and assignments of operating rights pertaining to any of the foregoing, and all other interests pertaining
to any of the foregoing, including, without limitation, all royalty and overriding royalty interests, production payments and
net profit interests, mineral fee interests, and all contingent reversionary and carried interests relating to any of the foregoing
and all other rights therein, which are described and/or to which reference may be made on Exhibit A and/or in any
document or instrument referred to in Exhibit A and/or which cover or relate to any of the Lands.

 

“Operating
Equipment” means all personal property and fixtures pertaining, affixed or incidental to, situated upon or used or useful
in connection with all or any part of the Mortgaged Property, including, without limitation, all surface or subsurface machinery,
equipment, facilities, or other personal property of whatsoever kind or nature (excluding drilling rigs, trucks, automotive equipment
or other personal property taken to the premises to drill a well or for other similar temporary uses) now or hereafter located
on any of the Lands which are useful for the production, treatment, storage, transportation or sale of oil or gas, including,
but not by way of limitation, all oil wells, gas wells, water wells, injection wells, saltwater disposal wells, casing, tubing,
rods, pumping units and engines, Christmas trees, derricks, separators, gun barrels, flow lines, tanks, gas systems, (for gathering,
treating and compression), water systems (for treating, disposal and injection), power plants, poles, lines, transformers, starters
and controllers, machine shops, tools, storage yards and equipment stored therein, buildings and camps, telegraph, telephone and
other communication systems, roads, loading racks and shipping facilities.

 

“Person”
means a natural person, a corporation, a partnership, a limited partnership, a limited liability company, an association, a joint
venture, a trust or any other entity or organization, including a government or political subdivision thereof or any governmental
agency or instrumentality thereof.

 

“Property”
means any interest in any kind of property or asset, whether real, personal or mixed, tangible or intangible.

 

“Section”
and “Article” means and refer to a section or article of this Deed of Trust, unless specifically indicated
otherwise.

 

“Secured
Indebtedness” or “Indebtedness” means all the indebtedness, obligations, and liabilities described
or referred to in Section 3.1 of this Deed of Trust.

 

“Subject
Interests” has the meaning stated in Article II of this Deed of Trust.

 

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“Well
Data” means all logs, drilling reports, division orders, transfer orders, operating agreements, abstracts, title opinions,
files, records, memoranda and other written or electronic information in the possession or control of the Trustor relating to
any wells located on any of the Lands described in Exhibit A.

 

1.2.Other
Defined Terms. The capitalized terms used herein shall have the meanings assigned to them in the Credit Agreement, unless
they are otherwise defined herein or the context otherwise requires.

 

ARTICLE
II

GRANTING
CLAUSE - MORTGAGED PROPERTY

 

2.1.The
Trustor, for and in consideration of the premises and as security for the Secured Indebtedness hereinafter defined, has GRANTED,
BARGAINED, SOLD, WARRANTED, MORTGAGED, PLEDGED, ASSIGNED, TRANSFERRED and CONVEYED, and by these presents does GRANT, BARGAIN,
SELL, WARRANT, MORTGAGE, PLEDGE, ASSIGN, TRANSFER and CONVEY, to Trustee, in trust, for the benefit of the Beneficiary all the
Trustor’s right, title and interest, whether now owned or hereafter acquired, in all of the hereinafter described properties,
rights and interests; and, insofar as such properties, rights and interests consist of equipment, general intangibles, accounts,
contract rights, inventory, fixtures, proceeds and products of collateral or any other personal Property of a kind or character
defined in or subject to the applicable provisions of the Code, the Trustor hereby grants to the Beneficiary a security interest
in all of Trustor’s right, title and interest therein, whether now owned or hereafter acquired, namely:

 

2.1.1.All
of those certain Oil and Gas Leases, Lands, minerals, interests, and other properties (all such Oil and Gas Leases, Lands, interests
and other properties being herein called the “Subject Interests”, as hereinafter further defined) which are
described on Exhibit A and/or to which reference may be made on Exhibit A and/or which cover any of the Lands described
on Exhibit A and/or which are located in or under any of the Lands described on Exhibit A and/or which are
covered by any of the leases, assignments or documents described on or referred to in any document or instrument referred to in
Exhibit A, which Exhibit A is made a part of this Deed of Trust for all purposes, and is incorporated herein by
reference as fully as if copied at length in the body of this Deed of Trust at this point;

 

2.1.2.All
rights, titles, interests, and estates now owned or hereafter acquired by the Trustor in and to (i) any and all properties now
or hereafter pooled or unitized with any of the Subject Interests, and (ii) all presently existing or future unitization, communitization,
and pooling agreements and the units created thereby which include all or any part of the Subject Interests, including, without
limitation, all units formed under or pursuant to any Laws. The rights, titles, interests, and estates described in this Section 2.1.2 shall also be included within the term “Subject Interests” as used herein.

 

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2.1.3.All
presently existing and future agreements hereafter entered into between the Trustor and any third party that provide for acquisition
by the Trustor of any interest in any of the properties or interests specifically described in Exhibit A or which relate
to any of the properties and interests specifically described in Exhibit A;

 

2.1.4.The
Hydrocarbons (including inventory) which are in, under, upon, produced or to be produced from or attributable to the Lands and/or
the Subject Interests;

 

2.1.5.The
Accounts and Contract Rights;

 

2.1.6.The
Operating Equipment;

 

2.1.7.The
As-Extracted Collateral;

 

2.1.8.The
Well Data;

 

2.1.9.The
rights and security interests of the Trustor held by the Trustor to secure the obligation of the first purchaser to pay the purchase
price of the Hydrocarbons together with any and all accounts, proceeds, substitutions, replacements, corrections or amendments
to, or renewals, extensions or ratifications of, any of the foregoing, or of any instrument relating thereto;

 

2.1.10.All
surface leases, rights-of-way, franchises, easements, servitudes, licenses, privileges, tenements, hereditaments and appurtenances
now existing or in the future obtained in connection with any of the aforesaid, and all other things of value and incident thereto
which the Trustor may at any time have or be entitled to; and

 

2.1.11.All
and any different and additional rights of any nature, of value or convenience in the enjoyment, development, operation or production,
in any wise, of any Property or interest included in any of the foregoing clauses, and in all revenues, income, rents, issues,
profits and other benefits arising therefrom or from any contract now in existence or hereafter entered into pertaining thereto,
and in all rights and claims accrued or to accrue for the removal by anyone of oil and gas from, or other act causing damage to,
any of such properties or interests;

 

all
the aforesaid properties, rights and interests, together with any additions thereto which may be subjected to the lien of this
Deed of Trust by means of supplements hereto, being hereinafter called the “Mortgaged Property”;

 

subject,
however, to (i) the restrictions, exceptions, reservations, conditions, limitations, interests and other matters, if any, set
forth or referred to in the specific descriptions of such properties and interests in Exhibit A (including all presently
existing royalties, overriding royalties, payments out of production and other burdens which are referred to in Exhibit A
and which are taken into consideration in computing the decimal or fractional interest as set forth in the Certificates of Ownership
Interests); (ii) any operator’s lien arising by operation of applicable Law (or pursuant to the provisions of an operating
agreement designating a Person other than the Trustor as operator) which has been perfected under applicable Law prior to the
date of this Deed of Trust or of which the Beneficiary has constructive or actual notice as of the Effective Date; (iii) the assignment
of production contained in Article V hereof; (iv) liens, security interests, charges or encumbrances permitted by
Section 4.5.6 of this Deed of Trust and (v) the condition that the Beneficiary shall not be liable in any respect
for the performance of any covenant or obligation of the Trustor with respect to the Mortgaged Property;

 

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TO
HAVE AND TO HOLD the Mortgaged Property unto the Beneficiary, its successors and assigns, forever, to secure the payment of the
Secured Indebtedness and to secure the performance of the obligations of the Trustor contained herein.

 

ARTICLE
III

INDEBTEDNESS SECURED

 

3.1.Notes
and Secured Indebtedness. This Deed of Trust is given to secure the following indebtedness, obligations and liabilities:

 

3.1.1.The
Loan Obligations of the Trustor, as evidenced in part by those certain promissory notes (together with all renewals, extensions,
and modifications thereof) executed by the Trustor and payable to the order of the Lender in the aggregate original principal
amount of up to $25,000,000, which notes bear interest as provided therein and contain provisions for payment of attorneys’
fees as therein set forth, and including all obligations and indebtedness of the Trustor to the Lender in respect of Hedging Agreements
and all Hedging Transactions entered into thereunder, whether now existing or hereafter created;

 

3.1.2.Any
sums advanced as expenses or costs incurred by, or on behalf of, the Beneficiary (or any receiver appointed hereunder) which are
made or incurred pursuant to, or permitted by, the terms of this Deed of Trust or the other Loan Documents, plus interest thereon
at the rate herein specified or otherwise agreed upon, from the date of advance or expenditure until reimbursed; and

 

3.1.3.All
other and additional debts, obligations and liabilities of every kind and character of the Trustor now or hereafter owed to Beneficiary,
regardless of whether such debts, obligations and liabilities are specifically listed and described above or are direct or indirect,
primary or secondary, joint, several, or joint and several, fixed or contingent, and whether incurred by the Trustor as a maker,
endorser, guarantor, surety or otherwise, and regardless of whether such present or future debts, obligations and liabilities
may, prior to their acquisition by Beneficiary, be or have been payable to, or be or have been in favor of, some other Person
or have been acquired by Beneficiary in a transaction with one other than the Trustor, together with any and all renewals and
extensions of such debts, obligations and liabilities, or any part thereof (it being contemplated that Beneficiary may in the
future lend additional sums of money to the Trustor, from time to time, but shall not be obligated to do so, and that all such
additional sums and loans shall be part of the Secured Indebtedness).

 

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3.2.Final
Maturity. Unless earlier payment is required by the terms of the Notes or the Credit Agreement (including earlier payment
as a result of the acceleration of payment of the Notes or amounts owed pursuant to the Credit Agreement), the Notes and amounts
owed under the Credit Agreement shall mature ten years following the date of this Deed of Trust or, if such due date can be extended
under applicable Law without filing an amendment to this Deed of Trust, such later date as is specified (by amendment or otherwise)
in the Notes or Credit Agreement.

 

3.3.Future
Advances. The Trustor and the Beneficiary agree and acknowledge that any Lender may elect to make additional advances under
the terms of the Notes, the Credit Agreement or otherwise, and that any such future advances shall be subject to, and secured
by, this Deed of Trust. If the Secured Indebtedness decreases or increases pursuant to the terms of the Notes, the Credit Agreement,
or otherwise, at any time or from time to time, this Deed of Trust shall retain its priority position of record until (a) the
termination of the Credit Agreement, (b) the full, final and complete payment of all the Secured Indebtedness, and (c) the full
release and termination of the liens and security interests created by this Deed of Trust. The aggregate unpaid principal amount
of the Secured Indebtedness outstanding at any particular time which is secured by this Deed of Trust shall not aggregate in excess
of $50,000,000. Such amount does not in any way imply that any Credit Party is obligated to make any future advances to the Trustor
at any time unless specifically so provided in the Credit Agreement or any other Loan Document.

 

ARTICLE
IV

COVENANTS,
REPRESENTATIONS, WARRANTIES AND

AGREEMENTS
OF MORTGAGOR 

 

The
Trustor covenants, represents, warrants, and agrees that:

 

4.1.Payment
of Indebtedness. The Trustor will duly and punctually pay or cause to be paid all of the Indebtedness.

 

4.2.Warranties.
(a) The Oil and Gas Leases are valid, subsisting leases, superior and paramount to all other oil and gas leases respecting the
properties to which they pertain; (b) the Trustor owns an interest in the oil and gas leases and properties described in Exhibit A hereto and, to the extent of the interest specified in the Certificates of Ownership Interests, has valid and defensible title
to each Property right or interest constituting the Mortgaged Property and has a good and legal right to make the grant and conveyance
made in this Deed of Trust, it being understood that the Trustor’s interest in each Oil and Gas Lease or Operating Equipment
shall exceed Trustor’s Net Revenue Interest in production from such Oil and Gas Lease to the extent of the Trustor’s
proportionate share of all royalties, overriding royalties, and other such payments out of production burdening the Trustor’s
interest in each such Oil and Gas Lease; (c) the Trustor’s present Net Revenue Interest in the Mortgaged Property is not
less than that specified in the Certificates of Ownership Interests; (d) the Mortgaged Property is free from all encumbrances
or liens whatsoever, except as may be specifically set forth in Exhibit A or as permitted by the provisions of Section 4.5.6;
and (e) the Trustor is not obligated, by virtue of any deficiency presently existing under any contract providing for the sale
by the Trustor of Hydrocarbons which contains a “take or pay” clause or under any similar arrangement, to deliver
Hydrocarbons at some future time without then or thereafter receiving full payment therefor. The Trustor will warrant and forever
defend the Mortgaged Property unto the Beneficiary against every Person whomsoever lawfully claiming the same or any part thereof
(except with respect to liens or other encumbrances permitted by Section 4.5.6), and the Trustor will maintain and preserve
the lien and security interest hereby created so long as any of the Secured Indebtedness remains unpaid.

 

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4.3.Further
Assurances. Promptly, but in any event within five (5) Business Days following a written request from the Beneficiary, the
Trustor will execute and deliver such other and further instruments and will do such other and further acts as in the reasonable
opinion of the Beneficiary may be necessary or desirable to carry out more effectively the purposes of this Deed of Trust, including,
without limiting the generality of the foregoing, (a) prompt correction of any defect which may hereafter be discovered in the
title to the Mortgaged Property or in the execution and acknowledgment of this Deed of Trust, any Notes, or any other document
used in connection herewith or at any time delivered to the Beneficiary in connection with any Secured Indebtedness, and (b) prompt
execution and delivery of all division or transfer orders that in the opinion of the Beneficiary are needed to transfer effectively
the assigned proceeds of production from the Mortgaged Property to the Beneficiary.

 

4.4.Taxes.
Subject to the Trustor’s right to contest the same in good faith and by appropriate proceedings, the Trustor will promptly
pay all taxes, assessments and governmental charges legally imposed upon this Deed of Trust or upon the Mortgaged Property or
upon the interest of the Beneficiary therein, or upon the income, profits, proceeds and other revenues thereof; provided
that, in the alternative, the Trustor must, if it is unlawful for the Trustor to pay such taxes or to reimburse Beneficiary for
such taxes, prepay that portion of the Secured Indebtedness which the Beneficiary in good faith determines is secured by Property
covered by such Law within sixty (60) days after demand therefor by the Beneficiary.

 

4.5.Operation
of the Mortgaged Property. So long as the Secured Indebtedness or any part thereof remains unpaid, and whether or not the
Trustor is the operator of the Mortgaged Property, the Trustor shall, at the Trustor’s own expense and subject to the terms
of the Loan Documents:

 

4.5.1.Maintain,
develop and operate the Subject Interests in a good and workmanlike manner and will observe and comply in all material respects
with all of the terms and provisions, express or implied, of the Oil and Gas Leases in order to keep the Oil and Gas Leases in
full force and effect so long as the Oil and Gas Leases are capable of producing Hydrocarbons in commercial quantities;

 

4.5.2.Comply
in all material respects with all contracts and agreements applicable to or relating to the Mortgaged Property or the production
and sale of Hydrocarbons therefrom and all applicable proration and conservation Laws of the jurisdictions in which the Mortgaged
Property is located, and all applicable Laws, rules and regulations of every agency and authority from time to time constituted
to regulate the development and operation of the Mortgaged Property and the production and sale of Hydrocarbons therefrom;

 

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4.5.3.Commence
such development as may be reasonably necessary to the prudent and economical operation of the Mortgaged Property, including such
work as may be appropriate to protect the Mortgaged Property from diminution in the production capacity thereof and against drainage
of Hydrocarbons thereunder by reason of production on other Property;

 

4.5.4.At
all times, maintain, preserve and keep all Operating Equipment in proper repair, working order and condition, and make all necessary
or appropriate repairs, renewals, replacements, additions and improvements thereto, so that the efficiency of such Operating Equipment
shall at all times be properly preserved and maintained, provided that no item of Operating Equipment need be so repaired,
renewed, replaced, added to or improved, if the Trustor shall in good faith determine that such action is not necessary or desirable
for the continued efficient and profitable operation of the business of the Trustor and the failure to take such action shall
not prejudice the interests of the Beneficiary;

 

4.5.5.Not
abandon or cease developing, maintaining, operating and producing Hydrocarbons from, or cause or permit its agent to abandon,
or cease developing, maintaining, operating, and producing Hydrocarbons from, any producing Mortgaged Property without first having
undertaken and completed all reasonably prudent measures under the circumstances to restore such producing Mortgaged Property
to economic production, and then only if the aggregate projected future ad valorem and severance taxes and operating expenses
with respect to said Mortgaged Property exceed the projected future gross revenues attributable thereto;

 

4.5.6.Cause
the Mortgaged Property to be kept free and clear of all liens, security interests, charges and encumbrances of every character,
other than (i) Permitted Liens, and (ii) those hereafter consented to in writing by the Beneficiary; provided that no intention
to subordinate the first priority liens, security interests, and encumbrances granted in favor of or for the benefit of the Beneficiary
is hereby implied or expressed or is to be inferred by the permitted existence of the liens, security interests and encumbrances
referred to in this Section 4.5.6 or elsewhere herein;

 

4.5.7.Maintain
or cause to be maintained insurance with such insurers, in such amounts and covering such risks as is required by the Credit Agreement;
and

 

4.5.8.Not
sell, convey, trade, exchange, pool or unitize any portion of the Mortgaged Property or any of Trustor’s rights, titles,
or interests therein or thereto, except as specifically provided otherwise herein or in the Credit Agreement;

 

provided
that with respect to Mortgaged Property which is operated by operators other than the Trustor or any Affiliate of the
Trustor, the Trustor shall not be obligated itself to perform any undertakings contemplated by the covenants and agreements contained
herein which are performable only by such operators and are beyond the control of the Trustor; and provided further, that
the Trustor agrees to promptly take all commercially reasonable actions available to the Trustor under any operating agreement
or otherwise to bring about the performance of any such undertaking required to be performed by such operators.

 

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4.6.Recording.
The Trustor will promptly and at the Trustor’s expense, record, register, deposit and file this Deed of Trust and every
other instrument in addition or supplemental hereto in such offices and places and at such times and as often as may be necessary
to preserve, protect and renew the lien and security interest hereof as a first lien and security interest on real or personal
Property, as the case may be, and the rights and remedies of the Beneficiary, and otherwise will do and perform all matters or
things necessary or expedient to be done or observed by reason of any Law or regulation of any state or of the United States or
of any other competent authority, for the purpose of effectively creating, maintaining and preserving the lien and security interest
hereof on the Mortgaged Property.

 

4.7.Records,
Statements and Reports. The Trustor will keep proper books of record and account in which complete correct entries will be
made of the Trustor’s transactions in accordance with sound accounting principles consistently applied and will furnish
or cause to be furnished to the Beneficiary (a) all reports required under the Loan Documents, and (b) such other information
concerning the business and affairs and financial condition of the Trustor as the Beneficiary may from time to time reasonably
request.

 

4.8.No
Governmental Approvals. The Trustor warrants that no approval or consent of any regulatory or administrative commission or
authority, or of any other governmental body, is necessary to authorize the execution and delivery of this instrument, or any
of the other Loan Documents or the Notes, or to authorize the observance or performance by the Trustor of the covenants herein
or therein contained.

 

4.9.Right
of Entry. Upon reasonable prior notice, the Trustor will permit the Beneficiary or its agents or designated representatives
to enter upon the Mortgaged Property, and all parts thereof, for the purpose of investigating and inspecting the condition and
operation thereof.

 

4.10.Flood
Insurance Regulation. Notwithstanding any provision in this Deed of Trust to the contrary, in no event is any Building (as
defined in the applicable Flood Insurance Regulation) or Manufactured (Mobile) Home (as defined in the applicable Flood Insurance
Regulation) located on the Mortgaged Property within an area having special flood hazards and in which flood insurance is available
under the National Flood Insurance Act of 1968 included in the definition of “Mortgaged Property” and no Building
or Manufactured (Mobile) Home is hereby encumbered by this Deed of Trust. As used herein, “Flood Insurance Regulations”
shall mean (i) the National Flood Insurance Act of 1968 as now or hereafter in effect or any successor statute thereto, (ii) the
Flood Disaster Protection Act of 1973 as now or hereafter in effect or any successor statue thereto, (iii) the National Flood
Insurance Reform Act of 1994 (amending 42 USC 4001, et seq.), as the same may be amended or recodified from time to time, and
(iv) the Flood Insurance Reform Act of 2004 and any regulations promulgated thereunder.

 

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ARTICLE
V

ASSIGNMENT
OF PRODUCTION

 

5.1.Assignment.
As further security for the payment of the Secured Indebtedness and performance of the obligations contained herein, the Trustor
hereby transfers, assigns, warrants and conveys to the Beneficiary all Hydrocarbons, and the proceeds and products obtained or
processed therefrom (such proceeds and products being in this Article V called “Hydrocarbon Proceeds”
or “Proceeds”), produced and to be produced from, or which accrue by pooling, unitization or otherwise, to
the Mortgaged Property, in order to provide a source of future payment of the Loan Obligations and the other Secured Indebtedness.
All parties producing, purchasing or receiving any such Hydrocarbons, or having such, or Hydrocarbon Proceeds therefrom, in their
possession for which they or others are accountable to the Beneficiary by virtue of the provisions of this Article V,
are authorized and directed to treat and regard the Beneficiary as the assignee and transferee of the Trustor and entitled in
the Trustor’s place and stead to receive such Hydrocarbons and all Hydrocarbon Proceeds therefrom; and such parties and
each of them shall be fully protected in so treating and regarding the Beneficiary, and shall be under no obligation to see to
the application by the Beneficiary of any such proceeds or payments received by the Beneficiary.

 

5.2.Payments.
This Article V constitutes a present assignment effective as of the Effective Date, but in the event that the Beneficiary
should elect not to exercise immediately its right to receive Hydrocarbons or Hydrocarbon Proceeds, then the purchasers or other
persons obligated to make such payment may continue to make payment to Trustor until such time as written demand has been made
upon them by the Beneficiary that payment be made directly to the Beneficiary. Such failure to notify shall not in any way waive
the right of the Beneficiary to receive any payments not theretofore paid out to the Trustor before the giving of written notice.
In the event payments are made directly to the Beneficiary, and then, at the request of the Beneficiary, payments are for a period
or periods of time paid to the Trustor, the Beneficiary shall nevertheless have the continuing right, effective upon written notice,
to require that future payments be again made to the Beneficiary. The Trustor and the Beneficiary agree, and it is the intention
of the Trustor and the Beneficiary, that in no event will any reduction in the Loan Obligations or the other Secured Indebtedness
be measured by the fair market value of the Hydrocarbons, other minerals, proceeds, or other rents, profits, or income assigned
to the Beneficiary under this Deed of Trust.

 

5.3.No
Restriction on the Rights. Nothing herein contained shall detract from or limit the absolute obligation of the Trustor to
make payment of the Secured Indebtedness regardless of whether the Hydrocarbons and Hydrocarbon Proceeds assigned by this Article V are sufficient to pay the same, and the rights under this Article V shall be in addition to all other security
now or hereafter existing to secure the payment of the Secured Indebtedness.

 

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5.4.Use
of Hydrocarbon Proceeds. The Beneficiary or any receiver appointed in judicial proceedings for the enforcement of this Deed
of Trust shall have the right to receive all of the Hydrocarbons herein assigned and the Hydrocarbon Proceeds therefrom and may,
in the sole discretion of the Beneficiary, apply all of such Hydrocarbon Proceeds as follows or in such other order of priority
as the Beneficiary may determine:

 

First:
To the payment and satisfaction of all costs and expenses incurred in connection with the collection of such Hydrocarbon Proceeds;

 

Second:
To the payment and satisfaction of the Loan Obligations; and

 

Third:
To the payment and satisfaction of any other or additional amounts owed to Beneficiary; and

 

Fourth:
Any surplus thereafter remaining shall be paid to the Trustor or the Trustor’s successors or assigns, as their interests
may appear of record or otherwise as required by Law.

 

Upon
any sale of the Mortgaged Property or any part thereof pursuant to Article VIII, the Hydrocarbons thereafter produced
from the Mortgaged Property so sold, and the Hydrocarbon Proceeds therefrom, shall be included in such sale and shall pass to
the purchaser free and clear of the assignment contained in this Article V.

 

5.5.Beneficiary
as Beneficiary and Attorney-in-Fact. The Trustor hereby irrevocably designates and appoints the Beneficiary as the Trustor’s
true and lawful agent and attorney-in-fact (with full power of substitution, either generally or for such limited periods or purposes
as the Beneficiary may from time to time prescribe), with full power and authority, for and on behalf and in the name of the Trustor,
to execute, acknowledge and deliver all such division orders, transfer orders, certificates and other documents of every nature,
with such covenants, warranties, indemnities and other provisions as may from time to time, in the opinion of the Beneficiary,
be necessary or proper to effectuate the intent and purpose of the assignment contained in Section 5.1 hereof. The
Trustor shall be bound thereby as fully and effectively as if the Trustor had personally executed, acknowledged and delivered
any such division order, transfer order, certificate and other documents. The powers and authorities herein conferred on the Beneficiary
may be exercised by the Beneficiary through any Person who, at the time of the execution of a particular instrument, is an officer
of the Beneficiary. The power of attorney conferred by this Section 5.5 is granted for a valuable consideration and
hence is coupled with an interest and is irrevocable so long as the Secured Indebtedness, or any part thereof, shall remain unpaid.
All Persons dealing with the Beneficiary, or any officer thereof above designated, or any substitute, shall be fully protected
in treating the powers and authorities conferred by this Section 5.5 as continuing in full force and effect until
advised in writing by the Beneficiary that all the Secured Indebtedness is fully and finally paid.

 

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5.6.Indemnity.
The Trustor agrees to indemnify the Beneficiary and each Credit Party on a current basis against all claims, actions, liabilities,
judgments, costs, reasonable attorneys’ fees or other charges of whatsoever kind or nature, INCLUDING, WITHOUT LIMITATION,
ANY OF THE FOREGOING IN THIS SECTION ARISING FROM THE SOLE, COMPARATIVE, CONCURRENT OR CONTRIBUTORY NEGLIGENCE, BUT EXCLUDING
GROSS NEGLIGENCE OR INTENTIONAL MISCONDUCT, OF THE MORTGAGEE OR ANY CREDIT PARTY (all hereinafter in this Section 5.6
called “claims”) made against or incurred by the Beneficiary or any Credit Party as a consequence of the
assertion, either before or after the payment in full of the Secured Indebtedness, that the Beneficiary or any Credit Party received
Hydrocarbons herein assigned or the proceeds thereof claimed by third persons, and the Beneficiary and the Credit Party shall
have the exclusive right to defend against any such claims, employing attorneys therefor, and unless furnished with reasonable
indemnity, the Beneficiary and the Credit Party shall have the right to pay or compromise and adjust all such claims. The Trustor
will indemnify and pay to the Beneficiary and the Credit Party any and all such amounts as may be paid in respect thereof or as
may be successfully adjudged against the Beneficiary or any Credit Party. The obligations of the Trustor as hereinabove set forth
in this Section 5.6 shall survive the release of this instrument.

 

ARTICLE
VI

ADDITIONS
TO MORTGAGED PROPERTY; SUBROGATION

 

6.1.Additions
to Mortgaged Property. It is understood and agreed that the Trustor may periodically subject additional properties to the
lien and security interest of this Deed of Trust. In the event that additional properties are to be subjected to the lien and
security interest hereof, the parties hereto agree to execute a supplemental mortgage or an amendment to this Deed of Trust, satisfactory
in form and substance to both Trustor and Beneficiary, together with any security agreement, financing statement or other security
instrument required by the Beneficiary, all in form and substance satisfactory to the Trustor and Beneficiary and in a sufficient
number of executed (and, where necessary or appropriate, acknowledged) counterparts for recording purposes. Upon execution of
such supplemental mortgage, all additional properties thereby subjected to the lien and security interest of this Deed of Trust
shall become part of the Mortgaged Property for all purposes.

 

6.2.Subrogation.
To the extent that the proceeds of any Secured Indebtedness was or is used to pay any indebtedness or obligations secured by any
lien, security interest, charge or prior encumbrance against the Mortgaged Properties or such proceeds have been or will be advanced
by the Beneficiary or the Credit Parties to the Trustor or to any other Person, then the Beneficiary shall, for the benefit of
the Credit Parties, be subrogated to any and all of such liens, security interests, charges or prior encumbrances, irrespective
of whether such liens, security interests, charges or prior encumbrances are released (unless such release is executed by the
Beneficiary).

 

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ARTICLE
VII

EVENTS
OF DEFAULT

 

7.1.Events
of Default. In the event any one or more of the following “Events of Default” has occurred and has not been waived:

 

7.1.1.Any
event of default or default specified in the Loan Documents shall have occurred and the cure period, if any, with respect thereto
shall have elapsed; or

 

7.1.2.The
failure of any principal or interest on the Notes to be paid when due or to be paid at the maturity thereof, whether stated or
by acceleration;

 

then
and in any such event the Beneficiary, at its sole option and discretion, may declare all or any portion of the unpaid principal
of and the interest accrued on the Notes and all other Secured Indebtedness secured hereby to be immediately due and payable,
without any notice or demand of any kind, all of which are hereby expressly waived.

 

ARTICLE
VIII

ENFORCEMENT
OF THE SECURITY

 

8.1.General
Remedies. Upon the occurrence and during the continuance of an Event of Default, the Beneficiary may, at its sole option and
discretion, subject to any mandatory requirements or limitations of Law then in force and applicable thereto:

 

8.1.1.Exercise
all of the rights, remedies, powers and privileges of the Trustor with respect to the Mortgaged Property or any part thereof,
give or withhold all consents required therein which the Trustor would otherwise be entitled to give or withhold, and perform
or attempt to perform any covenants in this Deed of Trust which the Trustor is obligated to perform; provided that no payment
or performance by the Beneficiary shall constitute a waiver of any Event of Default, and the Beneficiary shall be subrogated to
all rights and liens securing the payment of any debt, claim, tax, or assessment for the payment of which the Beneficiary may
make an advance or pay;

 

8.1.2.Appoint
as a matter of right, or seek the appointment of, a receiver or receivers to serve without bond for all or any part of the Mortgaged
Property, whether such receivership be incident to a proposed sale thereof or otherwise, and the Trustor does hereby consent to
the appointment of such receiver or receivers to serve without bond, and does hereby agree not to oppose any application therefor
by the Beneficiary, and does hereby agree that there shall be no necessity of showing fraud, insolvency or mismanagement by the
Trustor for the appointment of a receiver or receivers of the Mortgaged Properties, and such receiver may be appointed by any
court of competent jurisdiction upon ex parte application, and without notice, notice being expressly waived, and
any such receiver shall have all powers conferred by the court appointing such receiver, which powers shall, to the extent not
prohibited by applicable Law, include, without limitation, the right to enter upon and take immediate possession of the Mortgaged
Property or any part thereof, to exclude the Trustor therefrom, to hold, use, operate, manage and control such Mortgaged Property,
to make all such repairs, replacements, alterations, additions and improvements to the same as such receiver or the Beneficiary
may deem proper or expedient, to lease, sell or otherwise transfer the Mortgaged Property or any portion thereof as such receiver
or the Beneficiary may deem proper or expedient, to sell all of the severed and extracted Hydrocarbons included in the same subject
to the provisions of Article V hereof, and to demand and collect all of the other earnings, rents, issues, profits,
proceeds and other sums due or to become due with respect to such Mortgaged Property;

 

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8.1.3.At
the option of the Beneficiary, this Deed of Trust may be foreclosed in the manner provided by law for the judicial foreclosure
of mortgages on real property or may be sold in the manner provided in the Nebraska Trust Deeds Act under the power of sale conferred
upon the Trustee hereunder.

 

In
the event that the Property is sold pursuant to the power of sale conferred upon Trustee hereunder, Trustee shall cause to be
filed of record a written notice of default and election to sell such property. After the lapse of such time as then may be required
by law following recordation of such notice of default, and notice of sale having been given as then required by law, Trustee,
without demand on Trustor, shall sell the Property, either as a whole or in separate parcels, and in such order as it or the Beneficiary
may determine at public auction to the highest bidder. Trustee may postpone the sale of all or any portion of the Property by
public announcement at the time and place of sale, and from time to time thereafter may postpone the sale by public announcement
at the time and place fixed by the preceding postponement. Trustee shall deliver to the purchaser at such sale its deed conveying
the property so sold, but without any covenant or warranty, express or implied. The recital in such deed of any matters of fact
or otherwise shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee or the Beneficiary,
may purchase at such sale. The Trustee shall apply the proceeds of the Trustee’s sale, first, to the costs and expenses
of exercising the power of sale and of the sale, including the payment of Trustee’s fees actually incurred, second, to the
payment of the Secured Indebtedness, third, to the payment of junior deeds of trust, mortgages or other liens, and the balance,
if any, to the person or persons legally entitled thereto..

 

8.1.4.The
Beneficiary may, to the fullest extent permitted by applicable law, proceed by a suit or suits in equity or at law, whether for
collection of the Secured Indebtedness, the specific performance of any covenant or agreement herein contained or in aid of the
execution of any power herein granted, or for any foreclosure hereunder or for the sale of the Property under the judgment or
decree of any court or courts of competent jurisdiction.

 

8.1.5.The
Beneficiary is authorized, prior or subsequent to the institution of any foreclosure proceedings, to the fullest extent permitted
by applicable law, to enter upon the Property, or any part thereof, and to take possession of the Property and all books and records,
and all recorded data of any kind or nature, regardless of the medium of recording including, without limitation, all software,
writings, plans, specifications and schematics relating thereto, and to exercise without interference from Trustor any and all
rights which Trustor has with respect to the management, possession, operation, protection or preservation of the Property. The
Beneficiary shall not be deemed to have taken possession of the Property or any part thereof except upon the exercise of its right
to do so, and then only to the extent evidenced by its demand and overt act specifically for such purpose. All costs, expenses
and liabilities of every character incurred by the Beneficiary in managing, operating, maintaining, protecting or preserving the
Property shall constitute a demand obligation of Trustor (which obligation Trustor hereby promises to pay) to the Beneficiary
pursuant to this Deed of Trust. If necessary to obtain the possession provided for above, the Beneficiary may invoke any and all
legal remedies to dispossess Trustor. In connection with any action taken by the Beneficiary pursuant to this Section, the Beneficiary
shall not be liable for any loss sustained by Trustor resulting from any failure to let the Property or any part thereof, or from
any act or omission of the Beneficiary in managing the Property, nor shall the Beneficiary be obligated to perform or discharge
any obligation, duty or liability of Trustor arising under any lease or other agreement relating to the Property.

 

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8.1.6.Execute
and deliver to such person or persons as may be designated by the Beneficiary appropriate powers of attorney to act for and on
behalf of the Trustor in all transactions with any federal, state or local agency relating to any of the Mortgaged Property; and

 

8.1.7.Exercise
any and all other rights or remedies granted to the Beneficiary pursuant to the provisions of any of the Loan Documents or by
Law;

 

provided
that the Beneficiary shall have no obligation to do or refrain from doing any of the acts, or to make or refrain from making
any payment, referred to in this Section 8.1. Any receiver or receivers of the Mortgaged Property, or any portion
thereof, shall serve without bond.

 

8.2.Trustor’s
Waiver of Appraisement, Marshaling, etc. Rights. The Trustor agrees, to the full extent that the Trustor may lawfully so agree,
that the Trustor will not at any time insist upon or plead or in any manner whatever claim the benefit of any appraisement, valuation,
stay, extension or redemption Law now or hereafter in force, in order to prevent or hinder the enforcement or foreclosure of this
Deed of Trust or the absolute sale of the Mortgaged Property or the possession thereof by any purchaser at any sale made pursuant
to any provision hereof, or pursuant to the decree of any court of competent jurisdiction; but the Trustor, for the Trustor and
all who may claim through or under the Trustor, so far as the Trustor or those claiming through or under the Trustor now or hereafter
lawfully may, hereby waives the benefit of all such Laws.  The Trustor, for the Trustor and all who may claim through or
under the Trustor, waives, to the extent that the Trustor may lawfully do so, any and all right to have the Mortgaged Property
marshaled upon any foreclosure of the lien hereof, or sold in inverse order of alienation, and agrees that the Beneficiary or
any court having jurisdiction to foreclose such lien may sell the Mortgaged Property as an entirety. If any Law in this Section 8.2 referred to and now in force, of which the Trustor or the Trustor’s successor or successors might take advantage despite
the provisions hereof, shall hereafter be repealed or cease to be in force, such Law shall not thereafter be deemed to constitute
any part of the contract herein contained or to preclude the operation or application of the provisions of this Section 8.2.

 

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8.3.Power
of Attorney to Beneficiary. Upon the occurrence of an Event of Default, Trustor does hereby designate Beneficiary as the agent
of Trustor to act in the name, place, and stead of Trustor in the exercise of each and every remedy set forth herein and in conducting
any and all operations and taking any and all action reasonably necessary to do so, recognizing such agency in favor of Beneficiary
to be coupled with the interests of Beneficiary under this Deed of Trust and, thus, irrevocable so long as this Deed of Trust
is in force and effect.

 

8.4.Costs
and Expenses. All costs, expenses (including attorneys’ fees), and payments incurred or made by the Beneficiary in protecting
and enforcing its rights hereunder, upon providing prior notice to Trustor shall constitute a demand obligation owing by the Trustor
to the party incurring such or making costs, expenses, or payments and shall bear interest at a rate per annum equal to the maximum
rate of interest permitted by applicable Law, all of which shall constitute a portion of the Secured Indebtedness.

 

8.5.Operation
of the Mortgaged Property by the Beneficiary. Upon the occurrence of an Event of Default which has not been waived by the
Beneficiary, and in addition to all other rights herein conferred on the Beneficiary, the Beneficiary (or any Person designated
by the Beneficiary) shall have the right and power, but shall not be obligated, to enter upon and take possession of any of the
Mortgaged Property without the necessity of posting bond, and to exclude the Trustor, and the Trustor’s agents or servants,
wholly therefrom, and to hold, use, administer, manage and operate the same to the extent that the Trustor shall be at the time
entitled to do any of such things and in the Trustor’s place and stead. The Beneficiary (or any Person designated by the
Beneficiary) may operate the same without any liability or duty to the Trustor in connection with such operations, except to use
ordinary care in the operation of such Mortgaged Property, and the Beneficiary or any Person designated by the Beneficiary, shall
have the right to collect and receive all Hydrocarbons produced and sold from the Mortgaged Property, to make repairs, purchase
machinery and equipment, conduct work-over operations, drill additional wells and to exercise every power, right and privilege
of the Trustor with respect to the Mortgaged Property. When and if the expenses of such operation and development (including costs
of unsuccessful work-over operations or additional wells) have been paid and the Secured Indebtedness paid, such Mortgaged Property
shall, if there has been no sale or foreclosure thereof, be returned to the Trustor.

 

8.6.No
Additional Duties Created. Notwithstanding any provision of this Article VIII or any other provision of this Deed
of Trust, with respect to that portion of the Mortgaged Property located in any jurisdiction, the Beneficiary shall be entitled
to enforce the rights and remedies described herein with respect to such portion of the Mortgaged Property in such jurisdiction
in accordance with the Laws in effect in such jurisdiction at the time such enforcement action is taken, and the Trustor hereby
waives its right to require the Beneficiary to comply with any contrary terms and provisions of this Deed of Trust in such circumstance,
it being the intention of the Trustor and Beneficiary that the waivers of Trustor herein and the powers granted to the Beneficiary
herein are for the sole benefit of the Beneficiary and are neither intended to limit the rights and powers of the Beneficiary,
nor intended to establish a standard or duty of performance by the Beneficiary in excess of or in addition to that required by
the Laws of such jurisdiction as in effect at the time the particular right or remedy is sought to be enforced.

 

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8.7.Federal
Transfers. Upon a sale conducted pursuant to this Article VIII of all or any portion of the Mortgaged Property
consisting of interests (the “Federal Interests”) in leases, easements, rights-of-way, agreements or other
documents and instruments covering, affecting or otherwise relating to federal lands (including leases, easements and rights-of-way
issued by the Bureau of Land Management); the Trustor agrees to take all action and execute all instruments necessary or advisable
to transfer the Federal Interests to the purchaser at such sale, including, without limitation, to execute, acknowledge and deliver
assignments of the Federal Interests on officially approved forms in sufficient counterparts to satisfy applicable statutory and
regulatory requirements, to seek and request approval thereof and to take all other action necessary or advisable in connection
therewith. The Trustor hereby irrevocably appoints the Beneficiary as the Trustor’s attorney-in-fact and proxy, with full
power and authority in the place and steed of the Trustor, in the name of the Trustor or otherwise, to take any such action and
to execute any such instruments on behalf of the Trustor that the Beneficiary may deem necessary or advisable to so transfer the
Federal Interests, including, without limitation, the power and authority to execute, acknowledge and deliver such assignments,
to seek and request approval thereof and to take all other action deemed necessary or advisable by the Beneficiary in connection
therewith; and the Trustor hereby adopts, ratifies and confirms all such actions and instruments. Such power of attorney and proxy
are coupled with an interest, shall survive the dissolution, termination, reorganization or other incapacity of the Trustor and
shall be irrevocable. No action taken by the Beneficiary shall constitute acknowledgment of, or assumption of liabilities relating
to, the Federal Interests, and neither the Trustor nor any other party may claim that Beneficiary is bound, directly or indirectly,
by any such action.

 

8.8.Limitation
on Rights and Waivers. All rights, powers and remedies herein conferred shall be exercisable by the Beneficiary only to the
extent not prohibited by applicable Law; and all waivers and relinquishments of rights and similar matters shall only be effective
to the extent such waivers or relinquishments are not prohibited by applicable Law.

 

ARTICLE
IX

MISCELLANEOUS

 

9.1.Advances
by the Beneficiary. Each and every covenant herein contained shall be performed and kept by the Trustor solely at the Trustor’s
expense. If the Trustor shall fail to perform or keep any of the covenants of whatsoever kind or nature contained in this Deed
of Trust, the Beneficiary or any receiver appointed hereunder, may, but shall not be obligated to, make advances to perform the
same in the Trustor’s behalf, and the Trustor hereby agrees to repay such sums upon demand plus interest at a rate per annum
equal to the maximum rate of interest permitted by applicable Law. No such advance shall be deemed to relieve the Trustor from
any Event of Default hereunder.

 

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9.2.Defense
of Claims. The Trustor will notify the Beneficiary, in writing, promptly of the commencement of any legal proceedings affecting
or which could adversely affect the lien and security interest hereof or the status of or title to the Mortgaged Property, or
any part thereof, and will take such action, employing attorneys agreeable to the Beneficiary, as may be necessary to preserve
the Trustor’s and the Beneficiary’s rights affected thereby; and should the Trustor fail or refuse to take any such
action, the Beneficiary may take such action on behalf and in the name of the Trustor and at the Trustor’s expense. Moreover,
the Beneficiary may take such independent action in connection therewith as it may in its discretion deem proper without any liability
or duty to the Trustor except to use ordinary care, the Trustor hereby agreeing that all sums advanced or all expenses incurred
in such actions plus interest at the maximum rate of interest permitted by applicable Law, will, on demand, be reimbursed to the
Beneficiary or any receiver appointed hereunder.

 

9.3.Defeasance.
If the Secured Indebtedness shall be paid and discharged in full, no Credit Party has any further obligation to advance amounts
to or for the benefit of the Trustor, and all related transactions and confirmations thereunder have expired or been terminated,
as applicable, and the Beneficiary has no commitment to permit or intention to allow the creation of additional Secured Indebtedness,
then the Beneficiary will, upon request of the Trustor and at the Trustor’s expense, execute and deliver to the Trustor
all releases and other instruments reasonably requested by the Trustor for the purpose of releasing and discharging of record
the lien and security interest created hereunder. Otherwise this Deed of Trust shall remain and continue in full force and effect.
The Trustor shall pay all legal fees and other fees, costs and expenses incurred by the Beneficiary for preparing and reviewing
instruments of termination and release and the execution and delivery thereof and the Beneficiary may require payment of the same
prior to delivery of such instruments. The release of this Deed of Trust and the termination of the liens and security interests
created by this Deed of Trust shall not terminate or otherwise affect the Beneficiary’s right or ability to exercise any
right, power or remedy relating to any claim for breach of warranty or representation, for failure to perform any covenant or
other agreement, under any indemnity or for fraud, deceit or other misrepresentation or omission.

 

9.4.Other
Security. The Beneficiary may receive or may hold security from Persons other than the Trustor for the Secured Indebtedness
and may release or modify the same without notice to or consent of the Trustor. The Beneficiary may resort first to such other
security or any part thereof or first to the security herein given or any part thereof, or from time to time to either or both,
even to the partial or complete abandonment of either security, and such action shall not be a waiver of any rights conferred
by this Deed of Trust, which shall continue as a first lien and security interest upon the Mortgaged Property not expressly released
until all Secured Indebtedness secured hereby is fully paid and no Credit Party shall have any commitment to advance amounts or
extend credit to or for the benefit of the Trustor or any other payor of Indebtedness.

 

9.5.Instrument
an Assignment, Etc. This Deed of Trust shall be deemed to be and may be enforced from time to time as an assignment, chattel
mortgage, contract, financing statement, real estate mortgage, pledge, or security agreement, and from time to time as any one
or more thereof.

 

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9.6.Limitation
on Interest. No provision of this Deed of Trust or of the other Loan Documents shall require the payment or permit the collection
of interest, or be construed to create a contract regarding the same, in excess of the maximum rate permitted by Law or which
is otherwise contrary to Law. If any excess of interest in such respect is herein or in the other Loan Documents provided for,
or shall be adjudicated to be so provided for herein or in the other Loan Documents, such amount which would be deemed excessive
interest shall be deemed a partial prepayment of the principal of the Secured Indebtedness and treated hereunder as such; and,
if the entire principal amount of the Secured Indebtedness owed is paid in full, any remaining excess shall be repaid to the payors
on the applicable Indebtedness. In determining whether the interest paid or payable, under any specific contingency, exceeds the
Highest Lawful Rate in effect from day to day, the Trustor and the holders of the Indebtedness shall, to the maximum extent permitted
under applicable Law, (i) characterize any nonprincipal payment as an expense, fee, or premium rather than as interest, (ii) exclude
voluntary prepayments and the effects thereof, and (iii) amortize, prorate, allocate, and spread the total amount of interest
throughout the entire contemplated term of the Indebtedness so that the interest rate is uniform throughout the entire term of
the Indebtedness; provided that if the interest received by the holders of the Indebtedness for the actual period of existence
thereof exceeds the Highest Lawful Rate in effect from day to day, the holders of the Indebtedness shall apply or refund to the
payors on the applicable Indebtedness the amount of such excess as provided in this Section, and, in such event, the holders of
the Indebtedness shall not be subject to any penalties provided by any Laws for contracting for, charging, taking, reserving,
or receiving interest in excess of the Highest Lawful Rate in effect from day to day.

 

9.7.Severability.
If any provision of this Deed of Trust or in any of the other Loan Documents is invalid or unenforceable in any jurisdiction,
the other provisions hereof or of any of the other Loan Documents shall remain in full force and effect in such jurisdiction,
and such other provisions shall be liberally construed in favor of the Beneficiary in order to effectuate the provisions hereof,
and the invalidity of any provision hereof in any jurisdiction shall not affect the validity or enforceability of any such provision
in any other jurisdiction. The parties hereby agree that to the extent any provision hereof is invalid or unenforceable in any
jurisdiction, that this document will be deemed to contain a substitute provision, as similar as possible in intent and application
to the invalid or unenforceable provision that meets any statutory or other legal requirements in such jurisdiction required for
the provision to be given effect. Any reference herein contained to statute or Law of a state in which no part of the Mortgaged
Property is situated shall be deemed inapplicable to, and not used in, the interpretation hereof.

 

9.8.Rights
Cumulative. Each and every right, power and remedy herein given to the Beneficiary shall be cumulative and not exclusive;
and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time
to time and so often and in such order as may be deemed expedient by the Beneficiary, and the exercise, or the beginning of the
exercise, of any such right, power or remedy shall not be deemed a waiver of the right to exercise, at the same time or thereafter,
any other right, power or remedy. No delay or omission by the Beneficiary in the exercise of any right, power or remedy shall
impair any such right, power or remedy or operate as a waiver thereof or of any other right, power or remedy then or thereafter
existing.

 

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9.9.Waiver
of Covenants by Beneficiary. Any and all covenants in this Deed of Trust may from time to time by instrument in writing signed
by the Beneficiary be waived to such extent and in such manner as the Beneficiary may desire, but no such waiver shall ever affect
or impair the Beneficiary’s rights and remedies or liens and security interests hereunder, except to the extent specifically
stated in such written instrument.

 

9.10.Successors
and Assigns.

 

9.10.1.This
instrument is binding upon the Trustor, and the Trustor’s heirs, successors and assigns, and shall inure to the benefit
of the Beneficiary, and their respective successors and assigns, and the provisions hereof shall likewise be covenants running
with the Lands.

 

9.10.2.The
parties hereto agree that the Notes may be transferred without the necessity for a notarial act of transfer thereof, and that
any such transfer shall carry with it into the hands of any future holder or holders of the Notes full and entire subrogation
of title in and to the Notes and to any and all rights and privileges under this instrument herein granted to the Beneficiary,
as holder of the Notes. This Deed of Trust is for the benefit of the Beneficiary and for such other Person or Persons as may from
time to time become or be the holders of any of the Secured Indebtedness, and this Deed of Trust shall be transferable and negotiable,
with the same force and effect and to the same extent as the Secured Indebtedness may be transferable.

 

9.11.Article
and Section Headings. The article and section headings in this instrument are inserted for convenience and shall not be considered
a part of this Deed of Trust or used in its interpretation.

 

9.12.Counterpart.
This Deed of Trust may be executed in any number of counterparts, each of which shall for all purposes be deemed to be an original,
and all of which are identical except that, to facilitate recordation in any particular county or parish, counterpart portions
of Exhibit A which describe properties situated in parishes or counties other than the county or parish in which such counterpart
is to be recorded may be omitted. Exhibit A might not be paginated and any pagination might not be consecutive. Exhibit A may also contain language indicating that it is attached to a document other than this Deed of Trust or that a particular
page is the end of Exhibit A, when neither is applicable. Such language shall be ignored for the purposes of interpreting
this Deed of Trust.

 

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9.13.Special
Filing as Financing Statement.

 

9.13.1.
This Deed of Trust shall likewise be a Security Agreement and a Financing Statement and Trustor, as debtor (the “Debtor”),
hereby grants to the Beneficiary, its successors and assigns, as secured party (hereinafter, the “Secured Party”),
a security interest in all personal Property, fixtures, as-extracted collateral, accounts, equipment, inventory, contract rights
and general intangibles described or referred to in granting Sections 2.1.1 through 2.1.11 of Article II
hereof and all proceeds and products from the sale, lease or other disposition of the Mortgaged Property or any part thereof.
The addresses shown in Section 9.14 hereof are the addresses of the Debtor and Secured Party and information concerning
the security interest may be obtained from the Secured Party at its address. Without in any manner limiting the generality of
any of the foregoing provisions hereof: (a) some portion of the goods described or to which reference is made herein are or are
to become fixtures on the Lands described or to which reference is made herein; (b) the minerals and the like (including oil and
gas) included in the Mortgaged Property and the accounts resulting from the sale thereof will be financed at the wellhead(s) or
minehead(s) of the well(s) or mine(s) located on the Lands described or to which reference is made herein; and (c) this Deed of
Trust is to be filed of record, among other places, in the real estate records of each county in which the Lands, or any part
thereof, are situated, as a financing statement, but the failure to do so will not otherwise affect the validity or enforceability
of this instrument.

 

9.13.2.
The Beneficiary is authorized to complete and file financing statements naming the Trustor as debtor.

 

9.13.3.
Following the occurrence of any Event of Default specified in Section 7.1, or at any time thereafter, in addition
to all other rights, powers and remedies herein conferred or conferred by operation of Law, the Beneficiary shall have all of
the rights and remedies of an assignee and secured party granted by applicable Law, including but not limited to, the Code as
then in effect.

 

9.14.Notices.
Whenever this Deed of Trust requires or permits any consent, approval, notice, request, or demand from one party to another, the
consent, approval, notice, or demand must be in writing to be effective and shall be personally delivered or sent to the party
to be notified at the address or facsimile number stated below (or such other address as may have been designated by written notice
by the party pursuant to this Section 9.14):

 

	MORTGAGOR-DEBTOR	 	BENFICIARY-SECURED
    PARTY
	 	 	 
	LILIS
    ENERGY, INC.	 	HEARTLAND
    BANK
	1900
    Grant Street, #920	 	One
    Information Way, Suite 300
	Denver,
    Colorado 80203	 	Little
    Rock, Arkansas 72202
	Attention:
    Chief Financial Officer	 	Attention:
    Greg White
	Telephone:
    303-951-7920	 	Telephone:
    501-734-0125

 

Each
such notice, request or other communication shall be effective (i) if given by facsimile transmission, when transmitted to the
facsimile number specified in this Section and confirmation of receipt is received (the receipt thereof shall be deemed to
have been acknowledged upon the sending Person’s receipt of its facsimile machine’s confirmation of successful transmission;
provided that if the day on which such facsimile is received is not a Business Day or is after 4:00 p.m. on a Business Day, then
the receipt of such facsimile shall be deemed to have been acknowledged on the next following Business Day), (ii) if given by
mail, three (3) Business Days after such communication is deposited in the mail with first class postage prepaid, addressed as
aforesaid, or (iii) if given by any other means, when delivered at the address specified in this Section.

 

    	22

    	 

    

 

9.15.No
Waiver by Beneficiary. No course of dealing on the part of Beneficiary, its officers or employees, nor any failure or delay
by Beneficiary with respect to exercising any of its rights or remedies hereunder shall operate as a waiver thereof nor shall
the exercise or partial exercise of any such right or remedy preclude the subsequent exercise thereof or the exercise of any other
right or remedy.

 

9.16.Governing
Agreement. This Deed of Trust is made pursuant and subject to the terms and provisions of the Credit Agreement. In the event
of a direct conflict between the terms and provisions of this Deed of Trust and those of the Credit Agreement, the terms and provisions
of the Credit Agreement shall govern and control, except that if the two documents contain different formal definitions for the
same term or terms, the formal definition of such term or terms herein shall be applicable in construing this Deed of Trust. The
inclusion in this Deed of Trust of provisions not addressed in the Credit Agreement shall not be deemed a conflict, and all such
additional provisions contained herein shall be given full force and effect. The indemnification and releases contained herein
are in addition to any indemnification or releases contained in the Credit Agreement.

 

9.17.Drafting
of Deed of Trust. Trustor declares that it has contributed to the drafting of this Deed of Trust or has had the opportunity
to have it reviewed by its counsel before signing it and agrees that it has been purposefully drawn and correctly reflects its
understanding of the transaction that it contemplates.

 

9.18.Execution
by Beneficiary; Corrections. The Beneficiary may at any time file this Deed of Trust of record. Additionally, in the event
it is determined that Exhibit A contains any errors or inaccurate or incomplete descriptions of the Oil and Gas Leases
and Lands intended to be covered hereby or referred to in any Certificates of Ownership Interests, the Beneficiary may, without
obtaining the consent of the Trustor, attempt to correct any such errors or omissions and make accurate and complete any such
inaccuracies, omissions or misdescriptions and, if deemed appropriate, subsequently file or re-file this Deed of Trust of record.

 

9.19.Governing
Law. This Deed of Trust is intended to be performed in the State of Nebraska and the substantive Laws of such State and or
the United States of America shall govern the validity, construction, enforcement and interpretation of this Deed of Trust, except
that to the extent that the Law of a State in which a portion of Mortgaged Property is located (or which is otherwise applicable
to a portion of the Mortgaged Property) necessarily governs with respect to procedural and substantive matters relating to the
creation, perfection, priority and enforcement of the liens, security interests and other rights and remedies of the Beneficiary
granted herein, the Law of such State shall apply as to that portion of the Mortgaged Property located in (or which is otherwise
subject to the Laws of) such State.

 

    	23

    	 

    

 

9.20.Credit
Agreement. This Deed of Trust shall be deemed to be encompassed by the definition of “Security Documents” as such
term is defined and used in any Credit Agreement that may be in effect from time to time.

 

9.21.Request
for Notice. Trustor hereby requests a copy of any notice of default or notice of sale hereunder be mailed to it at the address
for Trustor set forth herein.

 

9.22.NOTICE:
THIS DOCUMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

 

ARTICLE
X

CONCERNING
TRUSTEE

 

10.1.No
Required Action. Trustee shall not be required to take any action toward the execution and enforcement of the trust created
in this Deed of Trust or to institute, appear in, or defend any action, suit, or other proceeding in connection therewith where,
in Trustee’s opinion, such action would be likely to involve Trustee in expense or liability, unless requested to do so
by a written instrument signed by Beneficiary unless Trustee is tendered security and indemnity satisfactory to Trustee against
all cost, expense, and liability arising therefrom. Trustee is not responsible for the execution, acknowledgment, or validity
of the Loan Documents, for the proper authorization thereof, or for the sufficiency of the lien and security interest purported
to be created hereby, and Trustee makes no representation regarding such matters or regarding the rights, remedies, and recourses
of Beneficiary.

 

10.2.Certain
Rights. With the approval of Beneficiary, Trustee may take any or all of the following actions: (a) select, employ, and
advise with counsel (who may be, but need not be, counsel for Beneficiary) upon any matters arising hereunder, including the preparation,
execution, and interpretation of the Loan Documents, and Trustee shall be fully protected in relying on the advice of counsel
regarding such legal matters; (b) execute any of the trusts and powers hereof and perform any duty hereunder either directly
or through its agents or attorneys; (c) select and employ, regarding the execution of its duties hereunder, suitable accountants,
engineers and other experts, agents and attorneys-in-fact, either corporate or individual, not regularly in the employ of Trustee,
and Trustee shall not be answerable for any act, default, negligence, or misconduct of any such accountant, engineer or other
expert, agent or attorney-in-fact, if selected with reasonable care, or for any error of judgment or act done by Trustee in good
faith, or be otherwise responsible or accountable under any circumstances, except for Trustee’s gross negligence or bad
faith; and (d) all other lawful action that Beneficiary may instruct Trustee to take to protect or enforce Beneficiary’s
rights hereunder. If Trustee, or anyone under Trustee’s powers, enters upon the Mortgaged Property, then Trustee shall not
be personally liable for debts contracted for or liability or damages incurred in the management or operation of the Mortgaged
Property. Trustee may rely on any instrument, document, or signature authorizing or supporting any action taken or proposed to
be taken by Trustee hereunder, believed by Trustee in good faith to be genuine. Trustee shall be entitled to reimbursement for
expenses incurred by Trustee in the performance of Trustee’s duties hereunder and to reasonable compensation for services
rendered by Trustee.

 

    	24

    	 

    

 

10.3.Retention
of Money. Until used or applied as herein provided, all moneys received by Trustee shall be held in trust for the purposes
for which they were received, but need not be segregated in any manner from any other moneys (except as required by applicable
law) and Trustee has no liability for interest on any moneys received by Trustee hereunder.

 

10.4.Successor
Trustees. Trustee may resign by giving written or verbal notice of resignation to Beneficiary. If Trustee shall die, resign,
or become disqualified from acting in the execution of this trust, or if, for any reason, Beneficiary shall prefer to appoint
a substitute trustee or multiple substitute trustees, or successive substitute trustees or successive multiple substitute trustees,
to act instead of Trustee, then Beneficiary has the full power to appoint any such substitute trustees that shall succeed to all
the estates, rights, powers, and duties of Trustee. Such appointment may be executed by any authorized agent of Beneficiary, and
if such Beneficiary be a corporation and such appointment be executed in its behalf by any officer of such corporation, such appointment
shall be conclusively presumed to be executed with authority and shall be valid and sufficient without proof of any action by
the board of directors or any superior officer of the corporation. Grantor hereby ratifies and confirms all acts that Trustee,
or Trustee’s successor or successors in this trust, shall do lawfully by virtue hereof.

 

10.5.Perfection
of Appointment. Should any deed, conveyance, or instrument of any nature be required from Grantor by Trustee or substitute
trustee to more fully and certainly vest in and confirm to Trustee or substitute trustee such estates, rights, powers, and duties
of Trustee, then, upon request by Trustee or substitute trustee, Grantor shall make, execute, acknowledge, deliver, and cause
to be recorded and/or filed all such deeds, conveyances, and instruments.

 

10.6.Succession
Instruments. Any substitute trustee appointed as Trustee pursuant to any of the provisions hereof shall, without any further
act, deed, or conveyance, become vested with all the estates, properties, rights, powers, and trusts of its predecessor in the
rights hereunder with like effect as if originally named as Trustee herein.

 

10.7.No
Representation by Trustee or Beneficiary10.8.. By accepting or approving anything required to be observed, performed,
or fulfilled or to be given to Trustee or Beneficiary pursuant to the Loan Documents, including without limitation any officer’s
certificate, balance sheet, statement of profit and loss or other financial statement, survey, appraisal, or insurance policy,
neither Trustee nor Beneficiary shall be deemed to have warranted, consented to, or affirmed the sufficiency, legality, effectiveness,
or legal effect of the same, or of any term, provision, or condition thereof, and such acceptance or approval thereof shall not
be or constitute any warranty or affirmation with respect thereto by Trustee or Beneficiary.

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

 

    	25

    	 

    

 

IN
WITNESS WHEREOF, the Trustor has executed or caused to be executed this Deed of Trust as of the date first set forth above.

 

		MORTGAGOR:
	 	 	 
	 	LILIS ENERGY, INC.,
	 	a Nevada corporation
	 	 	 
	 	By:	
	 	Name:	
	 	Title:	

 

ACKNOWLEDGEMENT

 

	STATE OF	 	§
	 	 	§
	COUNTY OF	 	§

 

The foregoing instrument
was acknowledged before me this ____ day of January, 2015, by _________________, _________________ of Lilis Energy, Inc.,
a Nevada corporation, on behalf of said corporation.

 

	Witness my hand and seal.	 	 
	 	 	 
	 	 	Notary Public in and for the State of _____
	[NOTARIAL SEAL]	 	My Commission Expires:  _____________

 

    	 

    	 

    

 

EXHIBIT
A

TO MORTGAGE, SECURITY AGREEMENT,

FIXTURE
FILING AND FINANCING STATEMENT

 

This
Exhibit A sets forth the description of certain Property interests covered by the Deed of Trust in Banner County, Nebraska. All
of the terms defined in the Deed of Trust are used in this Exhibit A with the same meanings given therein.

 

This
Exhibit A and the Deed of Trust cover and include the following:

 

(a)All
right, title and interest, whether now owned and existing or hereafter acquired or arising, of Trustor in and to the oil, gas
and mineral leases described herein and/or lands described in and subject to such oil, gas and mineral leases (regardless, as
to such leases and/or lands, of any surface acreage and/or depth limitations set forth in any description of any of such oil,
gas and mineral leases), and all right, title and interest, whether now owned and existing or hereafter acquired or arising, of
Trustor in and to any of the oil, gas and minerals in, on or under the lands, if any, described on this Exhibit, including, without
limitation, all contractual rights, fee interests, leasehold interests, overriding royalty interests, non-participating royalty
interests, mineral interests, production payments, net profits interests or any other interest measured by or payable out of production
of oil, gas or other minerals from the oil, gas and mineral leases and/or lands described herein; and

 

(b)All
of the foregoing interests of Trustor as such interests may be enlarged by the discharge of any payments out of production or
by the removal of any charges or encumbrances, together with all interests, whether now owned and existing or hereafter acquired
or arising, of Trustor in, to and under or derived from all renewals and extensions of any oil, gas and mineral leases described
herein, it being specifically intended hereby that any new oil and gas lease (i) in which an interest is acquired by Trustor after
the termination or expiration of any oil and gas lease, the interests of Trustor in, to and under or derived from which are subject
to the lien and security interest hereof, and (ii) that covers all or any part of the Property described in and covered by such
terminated or expired leases, shall, to the extent, and only to the extent such new oil and gas lease may cover such Property,
be considered a renewal or extension of such terminated or expired lease; and

 

(c)All
right, title and interest, whether now owned and existing or hereafter acquired or arising, of Trustor in, to and under or derived
from any operating, farmout and bidding agreements, assignments and subleases, whether or not described in this Exhibit, to the
extent, and only to the extent, that such agreements, assignments and subleases (i) cover or include any present right, title
and interest of Trustor in and to the leases and/or lands described in this Exhibit, or (ii) cover or include any other undivided
interests now or hereafter held by Trustor in, to and under the described leases and/or lands, including, without limitation,
any future operating, farmout and bidding agreements, assignments, subleases and pooling, unitization and communitization agreements
and the units created thereby (including, without limitation, all units formed under orders, regulations, rules or other official
acts of any governmental body or agency having jurisdiction) to the extent and only to the extent that such agreements, assignments,
subleases, or units cover or include the described leases and/or lands; and

 

    	 

    	 

    

 

(d)All
right, title and interest, whether now owned and existing or hereafter acquired or arising, of Trustor in, to and under or derived
from all presently existing and future advance payment agreements, oil, casinghead gas and gas sales, exchange and processing
contracts and agreements, including, without limitation, those contracts and agreements that are described on this Exhibit, to
the extent, and only to the extent, those contracts and agreements cover or include the described leases and/or lands; and

 

(e)All
right, title and interest, whether now owned and existing or hereafter acquired or arising, of Trustor in, to and under or derived
from all existing and future permits, licenses, easements and similar rights and privileges that relate to or are appurtenant
to any of the described leases and/or lands.

 

Notwithstanding
the intention of the Deed of Trust to cover all of the right, title and interest of Trustor in and to the described leases and/or
lands, whether now owned and existing or hereafter acquired or arising, Trustor hereby specifically warrants and represents that
the interests covered by this Exhibit are not greater than the working interest nor less than the net revenue interest, overriding
royalty interest, net profit interest, production payment interest, royalty interest or other interest payable out of or measured
by production set forth in connection with each oil and gas well described in this Exhibit. In the event Trustor owns any other
or greater interest, such additional interest shall also be covered by and included in the Deed of Trust.

 

Any
reference herein to Wells or Units is for warranty of interest, administrative convenience and identification and is not intended
to limit or restrict the right, title, interest of properties covered by the Deed of Trust and all of Trustor’s right, title
and interest in the Lands, Subject Interests and Mortgaged Property described herein are and shall be subject to the Deed of Trust,
regardless of the presence of any Units or Wells not herein referenced.

 

The
Leases covered by the Deed of Trust shall include all leases and force pooled interests now or thereafter owned by Trustor included
within the geographic areas set forth in this Exhibit whether or not the schedules of leases included in this Exhibit list all
such leases.

 

No
depth limitation exception contained in any description of leases and other real Property interests set forth in this Exhibit
shall exclude from the grants of the Mortgaged Property and collateral contained in the Deed of Trust any depth owned by Trustor
within the geographic area described in this Exhibit for such leases and other real Property interests.

 

The
designation “Working Interest” or “W.I.” when used in this Exhibit means an interest owned
in an oil, gas, and mineral lease that determines the cost-bearing percentage of the owner of such interest. The designation “Net
Revenue Interest” or “N.R.I.” means that portion of the production attributable to the owner of a
working interest after deduction for all royalty burdens, overriding royalty burdens or other burdens on production, except severance,
production, and other similar taxes. The designation “Overriding Royalty Interest” or “ORRI”
means an interest in production which is free of any obligation for the expense of exploration, development, and production, bearing
only its pro rata share of severance, production, and other similar taxes and, in instances where the document creating the overriding
royalty interest so provides, costs associated with compression, dehydration, other treating or processing, or transportation
of production of oil, gas, or other minerals relating to the marketing of such production. The designation “Royalty Interest”
or “RI” means an interest in production which results from an ownership in the mineral fee estate or royalty
estate in the relevant land and which is free of any obligation for the expense of exploration, development, and production, bearing
only its pro rata share of severance, production, and other similar taxes and, in instances where the document creating the royalty
interest so provides, costs associated with compression, dehydration, other treating or processing or transportation of production
of oil, gas, or other minerals relating to the marketing of such production.

 

    	 

    	 

    

 

The
references to book or volume and page herein refer to the recording location of each respective Mortgaged Property described herein
in the county/parish where the land covered by the Mortgaged Property is located.

 

This
Deed of Trust covers all lands, leases and properties of the Trustor, whether now owned or hereafter acquired, located in any
county/parish identified elsewhere in this Exhibit or located in any county/parish wherein this Deed of Trust has been recorded.

 

(Exhibit
A continues on next page)Exhibit 10.12(f)

 

MORTGAGE, SECURITY AGREEMENT, 

FIXTURE FILING AND FINANCING STATEMENT

(Wyoming Oil and Gas Properties)

FROM

LILIS ENERGY, INC., Mortgagor

a Nevada corporation

(Charter/File/Organizational I.D. No. E0615822007-2)

 

TO

HEARTLAND BANK,

in its capacity as Agent, Mortgagee

Dated as of January 8, 2015

 

A POWER OF SALE HAS BEEN GRANTED
IN THIS MORTGAGE. A POWER OF SALE MAY ALLOW THE MORTGAGEE TO TAKE THE MORTGAGED PROPERTY AND SELL IT WITHOUT GOING TO COURT IN
A FORECLOSURE ACTION UPON DEFAULT BY THE MORTGAGOR UNDER THIS MORTGAGE.

 

THIS INSTRUMENT IS A MORTGAGE OF BOTH REAL
AND PERSONAL PROPERTY AND IS, AMONG OTHER THINGS, A MORTGAGE OF CHATTELS, A SECURITY AGREEMENT, A FIXTURE FILING AND A FINANCING
STATEMENT.

 

“THIS INSTRUMENT CONTAINS AFTER ACQUIRED
PROPERTY PROVISIONS.”

 

“THIS INSTRUMENT SECURES PAYMENT OF FUTURE
ADVANCES.”

 

THIS INSTRUMENT WAS PREPARED BY, AND RECORDED
COUNTERPARTS SHOULD BE RETURNED TO:

 

JACKSON WALKER L.L.P.

901 Main Street, Suite 6000

Dallas, Texas 75202-3797

Attention: David S. Stolle

 

    	 

    	 

    

 

MORTGAGE, SECURITY
AGREEMENT,

FIXTURE FILING
AND FINANCING STATEMENT

 

THIS MORTGAGE, SECURITY
AGREEMENT, FIXTURE FILING AND FINANCING STATEMENT (this “Mortgage”) is from LILIS ENERGY, INC., a Nevada
corporation, as Mortgagor (the “Mortgagor”), to HEARTLAND BANK, an Arkansas state bank, as administrative
agent (“Agent”). The addresses of the Mortgagor and the Mortgagee are set forth in Section 9.14
hereof.

 

ARTICLE
I

DEFINITIONS

 

1.1.For all purposes
of this Mortgage, unless the context otherwise requires:

 

“Accounts and
Contract Rights” means all accounts (including accounts in the form of joint interest billings), contract rights and
general intangibles of the Mortgagor now or hereafter existing, or hereafter acquired by, or on behalf of, the Mortgagor or the
Mortgagor’s successors in interest, relating to the sale, purchase, exchange, extraction, transportation or processing of
Hydrocarbons produced or to be produced from the Mortgaged Property, together with all accounts and proceeds accruing to the Mortgagor
attributable to the sale of Hydrocarbons produced from the Mortgaged Property.

 

“As-Extracted
Collateral” means Hydrocarbons which may be extracted from the Mortgaged Property, and the accounts relating thereto,
which will be financed at the wellheads of the wells located on the Mortgaged Property and accounts arising out of the sale thereof.

 

“Borrower”
means the Mortgagor.

 

“Business Day”
means any day that is not a Saturday, Sunday or other day on which commercial banks in Dallas, Texas, are authorized or required
by Law to remain closed.

 

“Certificates
of Ownership Interests” means the Certificates of Ownership Interests, if any, delivered by the Mortgagor in connection
with the Credit Agreement.

 

“Code”
means the Uniform Commercial Code as in effect in Colorado.

 

“Credit Agreement”
means the Credit Agreement between the Borrower and Agent, for the benefit of the Lenders, pursuant to which one or more of the
Notes were issued, as the Credit Agreement may be amended from time to time.

 

“Credit Parties”
means Agent, any other Lender, and “Credit Party” means any of them.

 

“Effective Date”
means the date on which this Mortgage is executed.

 

    	1

    	 

    

 

“Event of Default”
has the meaning stated in Article VII of this Mortgage.

 

“Exhibit A”
means, unless specifically indicated otherwise, Exhibit A attached hereto.

 

“Hydrocarbon Proceeds”
has the meaning stated in Section 5.1 of this Mortgage.

 

“Hydrocarbons”
means oil, gas, casinghead gas, drip gasoline, natural gasoline and condensate and all other liquid or gaseous hydrocarbons.

 

“Indebtedness”
or “Secured Indebtedness” means all the indebtedness, obligations, and liabilities described or referred to
in Section 3.1 of this Mortgage.

 

“Lands”
means the lands described in Exhibit A and shall include any lands, the description of which is contained in Exhibit A
or incorporated in or referred to in Exhibit A by reference to another instrument or document, including, without limitation,
all lands described in the Oil and Gas Leases, and shall also include any lands now or hereafter unitized, pooled, spaced, or otherwise
combined, whether by statute, order, agreement, declaration or otherwise, with lands the description of which is contained in Exhibit A
or is incorporated in Exhibit A by reference.

 

“Law”
means at any time with respect to any Person or its Property, any statute, law, executive order, treaty, ordinance, order, writ,
injunction, judgment, ruling, decree, regulation, or determination of an arbitrator, court or other Governmental Authority, existing
at such time which are applicable to or binding upon such Person or any of its Property or to which such Person or any of its Property
is subject.

 

“Lender”
means Heartland Bank, in its capacity as a lender, and such other or additional lenders as may from time to time be parties to
the Credit Agreement, and each of their successors and assigns.

 

“Loan Obligations”
means the “Obligations,” as such term is defined in the Credit Agreement.

 

“Loan Documents”
means the Notes, this Mortgage, the Credit Agreement and all other documents, instruments and agreements delivered to the Mortgagee
at any time in connection with the Credit Agreement, as any of the foregoing are amended, extended, renewed, restated or supplemented
from time to time.

 

“Mortgaged Property”
has the meaning stated in Article II of this Mortgage.

 

“Mortgagee”
means Agent, as contractual representative for itself and the other Credit Parties.

 

“Net Revenue Interest”
means Mortgagor’s share of the total production of oil, gas and other Hydrocarbons produced from the Lands, after deducting
Mortgagor’s share of all lessors’ royalties, overriding royalties, production payments and other payments out of, or
measured by, production.

 

    	2

    	 

    

 

“Notes”
means the promissory note or notes identified in Section 3.1.1 of this Mortgage, and all renewals, extensions, replacements
and modifications thereof or additional promissory notes issued under the Credit Agreement.

 

“Oil and Gas Leases”
means, collectively, oil, gas and mineral leases, oil and gas leases, oil leases, gas leases, other mineral leases, subleases and
assignments of operating rights pertaining to any of the foregoing, and all other interests pertaining to any of the foregoing,
including, without limitation, all royalty and overriding royalty interests, production payments and net profit interests, mineral
fee interests, and all contingent reversionary and carried interests relating to any of the foregoing and all other rights therein,
which are described and/or to which reference may be made on Exhibit A and/or in any document or instrument referred
to in Exhibit A and/or which cover or relate to any of the Lands.

 

“Operating Equipment”
means all personal property and fixtures pertaining, affixed or incidental to, situated upon or used or useful in connection with
all or any part of the Mortgaged Property, including, without limitation, all surface or subsurface machinery, equipment, facilities,
or other personal property of whatsoever kind or nature (excluding drilling rigs, trucks, automotive equipment or other personal
property taken to the premises to drill a well or for other similar temporary uses) now or hereafter located on any of the Lands
which are useful for the production, treatment, storage, transportation or sale of oil or gas, including, but not by way of limitation,
all oil wells, gas wells, water wells, injection wells, saltwater disposal wells, casing, tubing, rods, pumping units and engines,
Christmas trees, derricks, separators, gun barrels, flow lines, tanks, gas systems, (for gathering, treating and compression),
water systems (for treating, disposal and injection), power plants, poles, lines, transformers, starters and controllers, machine
shops, tools, storage yards and equipment stored therein, buildings and camps, telegraph, telephone and other communication systems,
roads, loading racks and shipping facilities.

 

“Person”
means a natural person, a corporation, a partnership, a limited partnership, a limited liability company, an association, a joint
venture, a trust or any other entity or organization, including a government or political subdivision thereof or any governmental
agency or instrumentality thereof.

 

“Property”
means any interest in any kind of property or asset, whether real, personal or mixed, tangible or intangible.

 

“Section”
and “Article” means and refer to a section or article of this Mortgage, unless specifically indicated otherwise.

 

“Secured Indebtedness”
or “Indebtedness” means all the indebtedness, obligations, and liabilities described or referred to in Section 3.1
of this Mortgage.

 

“Subject Interests”
has the meaning stated in Article II of this Mortgage.

 

    	3

    	 

    

 

“Well Data”
means all logs, drilling reports, division orders, transfer orders, operating agreements, abstracts, title opinions, files, records,
memoranda and other written or electronic information in the possession or control of the Mortgagor relating to any wells located
on any of the Lands described in Exhibit A.

 

1.2.Other Defined
Terms. The capitalized terms used herein shall have the meanings assigned to them in the Credit Agreement, unless they are
otherwise defined herein or the context otherwise requires.

 

ARTICLE
II

GRANTING CLAUSE - MORTGAGED PROPERTY

 

2.1.The Mortgagor,
for and in consideration of the premises and as security for the Secured Indebtedness hereinafter defined, has GRANTED, BARGAINED,
SOLD, WARRANTED, MORTGAGED, PLEDGED, ASSIGNED, TRANSFERRED and CONVEYED, and by these presents does GRANT, BARGAIN, SELL, WARRANT,
MORTGAGE, PLEDGE, ASSIGN, TRANSFER and CONVEY, unto the Mortgagee WITH POWER OF SALE all the Mortgagor’s right, title and
interest, whether now owned or hereafter acquired, in all of the hereinafter described properties, rights and interests; and,
insofar as such properties, rights and interests consist of equipment, general intangibles, accounts, contract rights, inventory,
fixtures, proceeds and products of collateral or any other personal Property of a kind or character defined in or subject to the
applicable provisions of the Code, the Mortgagor hereby grants to the Mortgagee a security interest in all of Mortgagor’s
right, title and interest therein, whether now owned or hereafter acquired, namely:

 

2.1.1.All of those
certain Oil and Gas Leases, Lands, minerals, interests, and other properties (all such Oil and Gas Leases, Lands, interests and
other properties being herein called the “Subject Interests”, as hereinafter further defined) which are described
on Exhibit A and/or to which reference may be made on Exhibit A and/or which cover any of the Lands described on
Exhibit A and/or which are located in or under any of the Lands described on Exhibit A and/or which are covered
by any of the leases, assignments or documents described on or referred to in any document or instrument referred to in Exhibit
A, which Exhibit A is made a part of this Mortgage for all purposes, and is incorporated herein by reference as fully
as if copied at length in the body of this Mortgage at this point;

 

2.1.2.All rights, titles,
interests, and estates now owned or hereafter acquired by the Mortgagor in and to (i) any and all properties now or hereafter pooled
or unitized with any of the Subject Interests, and (ii) all presently existing or future unitization, communitization, and pooling
agreements and the units created thereby which include all or any part of the Subject Interests, including, without limitation,
all units formed under or pursuant to any Laws. The rights, titles, interests, and estates described in this Section 2.1.2
shall also be included within the term “Subject Interests” as used herein.

 

    	4

    	 

    

 

2.1.3.All presently existing
and future agreements hereafter entered into between the Mortgagor and any third party that provide for acquisition by the Mortgagor
of any interest in any of the properties or interests specifically described in Exhibit A or which relate to any of the
properties and interests specifically described in Exhibit A;

 

2.1.4.The Hydrocarbons
(including inventory) which are in, under, upon, produced or to be produced from or attributable to the Lands and/or the Subject
Interests;

 

2.1.5.The Accounts and
Contract Rights;

 

2.1.6.The Operating Equipment;

 

2.1.7.The As-Extracted
Collateral;

 

2.1.8.The Well Data;

 

2.1.9.The rights and
security interests of the Mortgagor held by the Mortgagor to secure the obligation of the first purchaser to pay the purchase price
of the Hydrocarbons together with any and all accounts, proceeds, substitutions, replacements, corrections or amendments to, or
renewals, extensions or ratifications of, any of the foregoing, or of any instrument relating thereto;

 

2.1.10.All surface leases,
rights-of-way, franchises, easements, servitudes, licenses, privileges, tenements, hereditaments and appurtenances now existing
or in the future obtained in connection with any of the aforesaid, and all other things of value and incident thereto which the
Mortgagor may at any time have or be entitled to; and

 

2.1.11.All and any
different and additional rights of any nature, of value or convenience in the enjoyment, development, operation or production,
in any wise, of any Property or interest included in any of the foregoing clauses, and in all revenues, income, rents, issues,
profits and other benefits arising therefrom or from any contract now in existence or hereafter entered into pertaining thereto,
and in all rights and claims accrued or to accrue for the removal by anyone of oil and gas from, or other act causing damage to,
any of such properties or interests;

 

all the aforesaid properties,
rights and interests, together with any additions thereto which may be subjected to the lien of this Mortgage by means of supplements
hereto, being hereinafter called the “Mortgaged Property”;

 

subject, however, to (i)
the restrictions, exceptions, reservations, conditions, limitations, interests and other matters, if any, set forth or referred
to in the specific descriptions of such properties and interests in Exhibit A (including all presently existing royalties,
overriding royalties, payments out of production and other burdens which are referred to in Exhibit A and which are taken
into consideration in computing the decimal or fractional interest as set forth in the Certificates of Ownership Interests); (ii)
any operator’s lien arising by operation of applicable Law (or pursuant to the provisions of an operating agreement designating
a Person other than the Mortgagor as operator) which has been perfected under applicable Law prior to the date of this Mortgage
or of which the Mortgagee has constructive or actual notice as of the Effective Date; (iii) the assignment of production contained
in Article V hereof; (iv) liens, security interests, charges or encumbrances permitted by Section 4.5.6
of this Mortgage and (v) the condition that the Mortgagee shall not be liable in any respect for the performance of any covenant
or obligation of the Mortgagor with respect to the Mortgaged Property;

 

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TO HAVE AND TO HOLD
the Mortgaged Property unto the Mortgagee, its successors and assigns, forever,  WITH POWER OF SALE, to secure the payment of
the Secured Indebtedness and to secure the performance of the obligations of the Mortgagor contained herein.

 

ARTICLE
III

INDEBTEDNESS SECURED

 

3.1.Notes and Secured
Indebtedness. This Mortgage is given to secure the following indebtedness, obligations and liabilities:

 

3.1.1.The Loan Obligations
of the Mortgagor, as evidenced in part by those certain promissory notes (together with all renewals, extensions, and modifications
thereof) executed by the Mortgagor and payable to the order of the Lender in the aggregate original principal amount of up to $25,000,000,
which notes bear interest as provided therein and contain provisions for payment of attorneys’ fees as therein set forth,
and including all obligations and indebtedness of the Mortgagor to the Lender in respect of Hedging Agreements and all Hedging
Transactions entered into thereunder, whether now existing or hereafter created;

 

3.1.2.Any sums advanced
as expenses or costs incurred by, or on behalf of, the Mortgagee (or any receiver appointed hereunder) which are made or incurred
pursuant to, or permitted by, the terms of this Mortgage or the other Loan Documents, plus interest thereon at the rate herein
specified or otherwise agreed upon, from the date of advance or expenditure until reimbursed; and

 

3.1.3.All other and
additional debts, obligations and liabilities of every kind and character of the Mortgagor now or hereafter owed to Agent, regardless
of whether such debts, obligations and liabilities are specifically listed and described above or are direct or indirect, primary
or secondary, joint, several, or joint and several, fixed or contingent, and whether incurred by the Mortgagor as a maker, endorser,
guarantor, surety or otherwise, and regardless of whether such present or future debts, obligations and liabilities may, prior
to their acquisition by Agent, be or have been payable to, or be or have been in favor of, some other Person or have been acquired
by Agent in a transaction with one other than the Mortgagor, together with any and all renewals and extensions of such debts,
obligations and liabilities, or any part thereof (it being contemplated that Agent may in the future lend additional sums of money
to the Mortgagor, from time to time, but shall not be obligated to do so, and that all such additional sums and loans shall be
part of the Secured Indebtedness).

 

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3.2.Final Maturity.
Unless earlier payment is required by the terms of the Notes or the Credit Agreement (including earlier payment as a result of
the acceleration of payment of the Notes or amounts owed pursuant to the Credit Agreement), the Notes and amounts owed under the
Credit Agreement shall mature ten years following the date of this Mortgage or, if such due date can be extended under applicable
Law without filing an amendment to this Mortgage, such later date as is specified (by amendment or otherwise) in the Notes or Credit
Agreement.

 

3.3.Future Advances.
The Mortgagor and the Mortgagee agree and acknowledge that any Lender may elect to make additional advances under the terms of
the Notes, the Credit Agreement or otherwise, and that any such future advances shall be subject to, and secured by, this Mortgage.
If the Secured Indebtedness decreases or increases pursuant to the terms of the Notes, the Credit Agreement, or otherwise, at any
time or from time to time, this Mortgage shall retain its priority position of record until (a) the termination of the Credit Agreement,
(b) the full, final and complete payment of all the Secured Indebtedness, and (c) the full release and termination of the liens
and security interests created by this Mortgage. The aggregate unpaid principal amount of the Secured Indebtedness outstanding
at any particular time which is secured by this Mortgage shall not aggregate in excess of $50,000,000. Such amount does not in
any way imply that any Credit Party is obligated to make any future advances to the Mortgagor at any time unless specifically so
provided in the Credit Agreement or any other Loan Document.

 

ARTICLE
IV

COVENANTS, REPRESENTATIONS, WARRANTIES AND

AGREEMENTS OF MORTGAGOR

 

The Mortgagor covenants,
represents, warrants, and agrees that:

 

4.1.Payment of Indebtedness.
The Mortgagor will duly and punctually pay or cause to be paid all of the Indebtedness.

 

4.2.Warranties.
(a) The Oil and Gas Leases are valid, subsisting leases, superior and paramount to all other oil and gas leases respecting the
properties to which they pertain; (b) the Mortgagor owns an interest in the oil and gas leases and properties described in Exhibit A
hereto and, to the extent of the interest specified in the Certificates of Ownership Interests, has valid and defensible title
to each Property right or interest constituting the Mortgaged Property and has a good and legal right to make the grant and conveyance
made in this Mortgage, it being understood that the Mortgagor’s interest in each Oil and Gas Lease or Operating Equipment
shall exceed Mortgagor’s Net Revenue Interest in production from such Oil and Gas Lease to the extent of the Mortgagor’s
proportionate share of all royalties, overriding royalties, and other such payments out of production burdening the Mortgagor’s
interest in each such Oil and Gas Lease; (c) the Mortgagor’s present Net Revenue Interest in the Mortgaged Property is not
less than that specified in the Certificates of Ownership Interests; (d) the Mortgaged Property is free from all encumbrances or
liens whatsoever, except as may be specifically set forth in Exhibit A or as permitted by the provisions of Section 4.5.6;
and (e) the Mortgagor is not obligated, by virtue of any deficiency presently existing under any contract providing for the sale
by the Mortgagor of Hydrocarbons which contains a “take or pay” clause or under any similar arrangement, to deliver
Hydrocarbons at some future time without then or thereafter receiving full payment therefor. The Mortgagor will warrant and forever
defend the Mortgaged Property unto the Mortgagee against every Person whomsoever lawfully claiming the same or any part thereof
(except with respect to liens or other encumbrances permitted by Section 4.5.6), and the Mortgagor will maintain and preserve
the lien and security interest hereby created so long as any of the Secured Indebtedness remains unpaid.

 

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4.3.Further Assurances.
Promptly, but in any event within five (5) Business Days following a written request from the Mortgagee, the Mortgagor will execute
and deliver such other and further instruments and will do such other and further acts as in the reasonable opinion of the Mortgagee
may be necessary or desirable to carry out more effectively the purposes of this Mortgage, including, without limiting the generality
of the foregoing, (a) prompt correction of any defect which may hereafter be discovered in the title to the Mortgaged Property
or in the execution and acknowledgment of this Mortgage, any Notes, or any other document used in connection herewith or at any
time delivered to the Mortgagee in connection with any Secured Indebtedness, and (b) prompt execution and delivery of all division
or transfer orders that in the opinion of the Mortgagee are needed to transfer effectively the assigned proceeds of production
from the Mortgaged Property to the Mortgagee.

 

4.4.Taxes. Subject
to the Mortgagor’s right to contest the same in good faith and by appropriate proceedings, the Mortgagor will promptly pay
all taxes, assessments and governmental charges legally imposed upon this Mortgage or upon the Mortgaged Property or upon the interest
of the Mortgagee therein, or upon the income, profits, proceeds and other revenues thereof; provided that, in the alternative,
the Mortgagor must, if it is unlawful for the Mortgagor to pay such taxes or to reimburse Mortgagee for such taxes, prepay that
portion of the Secured Indebtedness which the Mortgagee in good faith determines is secured by Property covered by such Law within
sixty (60) days after demand therefor by the Mortgagee.

 

4.5.Operation of
the Mortgaged Property. So long as the Secured Indebtedness or any part thereof remains unpaid, and whether or not the Mortgagor
is the operator of the Mortgaged Property, the Mortgagor shall, at the Mortgagor’s own expense and subject to the terms of
the Loan Documents:

 

4.5.1.Maintain, develop
and operate the Subject Interests in a good and workmanlike manner and will observe and comply in all material respects with all
of the terms and provisions, express or implied, of the Oil and Gas Leases in order to keep the Oil and Gas Leases in full force
and effect so long as the Oil and Gas Leases are capable of producing Hydrocarbons in commercial quantities;

 

4.5.2.Comply in all material
respects with all contracts and agreements applicable to or relating to the Mortgaged Property or the production and sale of Hydrocarbons
therefrom and all applicable proration and conservation Laws of the jurisdictions in which the Mortgaged Property is located, and
all applicable Laws, rules and regulations of every agency and authority from time to time constituted to regulate the development
and operation of the Mortgaged Property and the production and sale of Hydrocarbons therefrom;

 

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4.5.3.Commence such development
as may be reasonably necessary to the prudent and economical operation of the Mortgaged Property, including such work as may be
appropriate to protect the Mortgaged Property from diminution in the production capacity thereof and against drainage of Hydrocarbons
thereunder by reason of production on other Property;

 

4.5.4.At all times, maintain,
preserve and keep all Operating Equipment in proper repair, working order and condition, and make all necessary or appropriate
repairs, renewals, replacements, additions and improvements thereto, so that the efficiency of such Operating Equipment shall at
all times be properly preserved and maintained, provided that no item of Operating Equipment need be so repaired, renewed,
replaced, added to or improved, if the Mortgagor shall in good faith determine that such action is not necessary or desirable for
the continued efficient and profitable operation of the business of the Mortgagor and the failure to take such action shall not
prejudice the interests of the Mortgagee;

 

4.5.5.Not abandon or
cease developing, maintaining, operating and producing Hydrocarbons from, or cause or permit its agent to abandon, or cease developing,
maintaining, operating, and producing Hydrocarbons from, any producing Mortgaged Property without first having undertaken and completed
all reasonably prudent measures under the circumstances to restore such producing Mortgaged Property to economic production, and
then only if the aggregate projected future ad valorem and severance taxes and operating expenses with respect to said Mortgaged
Property exceed the projected future gross revenues attributable thereto;

 

4.5.6.Cause the Mortgaged
Property to be kept free and clear of all liens, security interests, charges and encumbrances of every character, other than (i)
Permitted Liens, and (ii) those hereafter consented to in writing by the Mortgagee; provided that no intention to subordinate
the first priority liens, security interests, and encumbrances granted in favor of or for the benefit of the Mortgagee is hereby
implied or expressed or is to be inferred by the permitted existence of the liens, security interests and encumbrances referred
to in this Section 4.5.6 or elsewhere herein;

 

4.5.7.Maintain or cause
to be maintained insurance with such insurers, in such amounts and covering such risks as is required by the Credit Agreement;
and

 

4.5.8.Not sell, convey,
trade, exchange, pool or unitize any portion of the Mortgaged Property or any of Mortgagor’s rights, titles, or interests
therein or thereto, except as specifically provided otherwise herein or in the Credit Agreement;

 

provided that with respect to Mortgaged
Property which is operated by operators other than the Mortgagor or any Affiliate of the Mortgagor, the Mortgagor shall
not be obligated itself to perform any undertakings contemplated by the covenants and agreements contained herein which are performable
only by such operators and are beyond the control of the Mortgagor; and provided further, that the Mortgagor agrees to promptly
take all commercially reasonable actions available to the Mortgagor under any operating agreement or otherwise to bring about the
performance of any such undertaking required to be performed by such operators.

 

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4.6.Recording.
The Mortgagor will promptly and at the Mortgagor’s expense, record, register, deposit and file this Mortgage and every other
instrument in addition or supplemental hereto in such offices and places and at such times and as often as may be necessary to
preserve, protect and renew the lien and security interest hereof as a first lien and security interest on real or personal Property,
as the case may be, and the rights and remedies of the Mortgagee, and otherwise will do and perform all matters or things necessary
or expedient to be done or observed by reason of any Law or regulation of any state or of the United States or of any other competent
authority, for the purpose of effectively creating, maintaining and preserving the lien and security interest hereof on the Mortgaged
Property.

 

4.7.Records, Statements
and Reports. The Mortgagor will keep proper books of record and account in which complete correct entries will be made of the
Mortgagor’s transactions in accordance with sound accounting principles consistently applied and will furnish or cause to
be furnished to the Mortgagee (a) all reports required under the Loan Documents, and (b) such other information concerning the
business and affairs and financial condition of the Mortgagor as the Mortgagee may from time to time reasonably request.

 

4.8.No Governmental
Approvals. The Mortgagor warrants that no approval or consent of any regulatory or administrative commission or authority,
or of any other governmental body, is necessary to authorize the execution and delivery of this instrument, or any of the other
Loan Documents or the Notes, or to authorize the observance or performance by the Mortgagor of the covenants herein or therein
contained.

 

4.9.Right of Entry.
Upon reasonable prior notice, the Mortgagor will permit the Mortgagee or its agents or designated representatives to enter upon
the Mortgaged Property, and all parts thereof, for the purpose of investigating and inspecting the condition and operation thereof.

 

4.10.Flood Insurance
Regulation. Notwithstanding any provision in this Mortgage to the contrary, in no event is any Building (as defined in the
applicable Flood Insurance Regulation) or Manufactured (Mobile) Home (as defined in the applicable Flood Insurance Regulation)
located on the Mortgaged Property within an area having special flood hazards and in which flood insurance is available under the
National Flood Insurance Act of 1968 included in the definition of “Mortgaged Property” and no Building or Manufactured
(Mobile) Home is hereby encumbered by this Mortgage. As used herein, “Flood Insurance Regulations” shall mean (i) the
National Flood Insurance Act of 1968 as now or hereafter in effect or any successor statute thereto, (ii) the Flood Disaster Protection
Act of 1973 as now or hereafter in effect or any successor statue thereto, (iii) the National Flood Insurance Reform Act of 1994
(amending 42 USC 4001, et seq.), as the same may be amended or recodified from time to time, and (iv) the Flood Insurance Reform
Act of 2004 and any regulations promulgated thereunder.

 

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ARTICLE
V

ASSIGNMENT OF PRODUCTION

 

5.1.Assignment.
As further security for the payment of the Secured Indebtedness and performance of the obligations contained herein, the Mortgagor
hereby transfers, assigns, warrants and conveys to the Mortgagee all Hydrocarbons, and the proceeds and products obtained or processed
therefrom (such proceeds and products being in this Article V called “Hydrocarbon Proceeds” or “Proceeds”),
produced and to be produced from, or which accrue by pooling, unitization or otherwise, to the Mortgaged Property, in order to
provide a source of future payment of the Loan Obligations and the other Secured Indebtedness. All parties producing, purchasing
or receiving any such Hydrocarbons, or having such, or Hydrocarbon Proceeds therefrom, in their possession for which they or others
are accountable to the Mortgagee by virtue of the provisions of this Article V, are authorized and directed to treat
and regard the Mortgagee as the assignee and transferee of the Mortgagor and entitled in the Mortgagor’s place and stead
to receive such Hydrocarbons and all Hydrocarbon Proceeds therefrom; and such parties and each of them shall be fully protected
in so treating and regarding the Mortgagee, and shall be under no obligation to see to the application by the Mortgagee of any
such proceeds or payments received by the Mortgagee.

 

5.2.Payments.
This Article V constitutes a present assignment effective as of the Effective Date, but in the event that the Mortgagee
should elect not to exercise immediately its right to receive Hydrocarbons or Hydrocarbon Proceeds, then the purchasers or other
persons obligated to make such payment may continue to make payment to Mortgagor until such time as written demand has been made
upon them by the Mortgagee that payment be made directly to the Mortgagee. Such failure to notify shall not in any way waive the
right of the Mortgagee to receive any payments not theretofore paid out to the Mortgagor before the giving of written notice. In
the event payments are made directly to the Mortgagee, and then, at the request of the Mortgagee, payments are for a period or
periods of time paid to the Mortgagor, the Mortgagee shall nevertheless have the continuing right, effective upon written notice,
to require that future payments be again made to the Mortgagee. The Mortgagor and the Mortgagee agree, and it is the intention
of the Mortgagor and the Mortgagee, that in no event will any reduction in the Loan Obligations or the other Secured Indebtedness
be measured by the fair market value of the Hydrocarbons, other minerals, proceeds, or other rents, profits, or income assigned
to the Mortgagee under this Mortgage.

 

5.3.No Restriction
on the Rights. Nothing herein contained shall detract from or limit the absolute obligation of the Mortgagor to make payment
of the Secured Indebtedness regardless of whether the Hydrocarbons and Hydrocarbon Proceeds assigned by this Article V
are sufficient to pay the same, and the rights under this Article V shall be in addition to all other security now
or hereafter existing to secure the payment of the Secured Indebtedness.

 

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5.4.Use of Hydrocarbon
Proceeds. The Mortgagee or any receiver appointed in judicial proceedings for the enforcement of this Mortgage shall have the
right to receive all of the Hydrocarbons herein assigned and the Hydrocarbon Proceeds therefrom and may, in the sole discretion
of the Mortgagee, apply all of such Hydrocarbon Proceeds as follows or in such other order of priority as the Mortgagee may determine:

 

First:
To the payment and satisfaction of all costs and expenses incurred in connection with the collection of such Hydrocarbon Proceeds;

 

Second:
To the payment and satisfaction of the Loan Obligations; and

 

Third:
To the payment and satisfaction of any other or additional amounts owed to Agent; and

 

Fourth:
Any surplus thereafter remaining shall be paid to the Mortgagor or the Mortgagor’s successors or assigns, as their interests
may appear of record or otherwise as required by Law.

 

Upon any sale of the Mortgaged Property or
any part thereof pursuant to Article VIII, the Hydrocarbons thereafter produced from the Mortgaged Property so sold,
and the Hydrocarbon Proceeds therefrom, shall be included in such sale and shall pass to the purchaser free and clear of the assignment
contained in this Article V.

 

5.5.Mortgagee as
Agent and Attorney-in-Fact. The Mortgagor hereby irrevocably designates and appoints the Mortgagee as the Mortgagor’s
true and lawful agent and attorney-in-fact (with full power of substitution, either generally or for such limited periods or purposes
as the Mortgagee may from time to time prescribe), with full power and authority, for and on behalf and in the name of the Mortgagor,
to execute, acknowledge and deliver all such division orders, transfer orders, certificates and other documents of every nature,
with such covenants, warranties, indemnities and other provisions as may from time to time, in the opinion of the Mortgagee, be
necessary or proper to effectuate the intent and purpose of the assignment contained in Section 5.1 hereof. The Mortgagor
shall be bound thereby as fully and effectively as if the Mortgagor had personally executed, acknowledged and delivered any such
division order, transfer order, certificate and other documents. The powers and authorities herein conferred on the Mortgagee may
be exercised by the Mortgagee through any Person who, at the time of the execution of a particular instrument, is an officer of
the Mortgagee. The power of attorney conferred by this Section 5.5 is granted for a valuable consideration and hence
is coupled with an interest and is irrevocable so long as the Secured Indebtedness, or any part thereof, shall remain unpaid. All
Persons dealing with the Mortgagee, or any officer thereof above designated, or any substitute, shall be fully protected in treating
the powers and authorities conferred by this Section 5.5 as continuing in full force and effect until advised in writing
by the Mortgagee that all the Secured Indebtedness is fully and finally paid.

 

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5.6.Indemnity.
The Mortgagor agrees to indemnify the Mortgagee and each Credit Party on a current basis against all claims, actions, liabilities,
judgments, costs, reasonable attorneys’ fees or other charges of whatsoever kind or nature, INCLUDING, WITHOUT LIMITATION,
ANY OF THE FOREGOING IN THIS SECTION ARISING FROM THE SOLE, COMPARATIVE, CONCURRENT OR CONTRIBUTORY NEGLIGENCE, BUT EXCLUDING GROSS
NEGLIGENCE OR INTENTIONAL MISCONDUCT, OF THE MORTGAGEE OR ANY CREDIT PARTY (all hereinafter in this Section 5.6
called “claims”) made against or incurred by the Mortgagee or any Credit Party as a consequence of the assertion,
either before or after the payment in full of the Secured Indebtedness, that the Mortgagee or any Credit Party received Hydrocarbons
herein assigned or the proceeds thereof claimed by third persons, and the Mortgagee and the Credit Party shall have the exclusive
right to defend against any such claims, employing attorneys therefor, and unless furnished with reasonable indemnity, the Mortgagee
and the Credit Party shall have the right to pay or compromise and adjust all such claims. The Mortgagor will indemnify and pay
to the Mortgagee and the Credit Party any and all such amounts as may be paid in respect thereof or as may be successfully adjudged
against the Mortgagee or any Credit Party. The obligations of the Mortgagor as hereinabove set forth in this Section 5.6
shall survive the release of this instrument.

 

ARTICLE
VI

ADDITIONS TO MORTGAGED PROPERTY; SUBROGATION

 

6.1.Additions to
Mortgaged Property. It is understood and agreed that the Mortgagor may periodically subject additional properties to the lien
and security interest of this Mortgage. In the event that additional properties are to be subjected to the lien and security interest
hereof, the parties hereto agree to execute a supplemental mortgage, satisfactory in form and substance to both Mortgagor and Mortgagee,
together with any security agreement, financing statement or other security instrument required by the Mortgagee, all in form and
substance satisfactory to the Mortgagor and Mortgagee and in a sufficient number of executed (and, where necessary or appropriate,
acknowledged) counterparts for recording purposes. Upon execution of such supplemental mortgage, all additional properties thereby
subjected to the lien and security interest of this Mortgage shall become part of the Mortgaged Property for all purposes.

 

6.2.Subrogation.
To the extent that the proceeds of any Secured Indebtedness was or is used to pay any indebtedness or obligations secured by any
lien, security interest, charge or prior encumbrance against the Mortgaged Properties or such proceeds have been or will be advanced
by the Mortgagee or the Credit Parties to the Mortgagor or to any other Person, then the Mortgagee shall, for the benefit of the
Credit Parties, be subrogated to any and all of such liens, security interests, charges or prior encumbrances, irrespective of
whether such liens, security interests, charges or prior encumbrances are released (unless such release is executed by the Mortgagee).

 

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ARTICLE
VII

EVENTS OF DEFAULT

 

7.1.Events of Default.
In the event anyone or more of the following “Events of Default” has occurred and has not been waived:

 

7.1.1.Any event of
default or default specified in the Loan Documents shall have occurred and the cure period, if any, with respect thereto shall
have elapsed; or

 

7.1.2.The failure of
any principal or interest on the Notes to be paid when due or to be paid at the maturity thereof, whether stated or by acceleration;

 

then and in any such event
the Mortgagee, at its sole option and discretion, may declare all or any portion of the unpaid principal of and the interest accrued
on the Notes and all other Secured Indebtedness secured hereby to be immediately due and payable, without any notice or demand
of any kind, all of which are hereby expressly waived.

 

ARTICLE
VIII

ENFORCEMENT OF THE SECURITY

 

8.1.General Remedies.
Upon the occurrence and during the continuance of an Event of Default, the Mortgagee may, at its sole option and discretion, subject
to any mandatory requirements or limitations of Law then in force and applicable thereto:

 

8.1.1.Exercise all of
the rights, remedies, powers and privileges of the Mortgagor with respect to the Mortgaged Property or any part thereof, give or
withhold all consents required therein which the Mortgagor would otherwise be entitled to give or withhold, and perform or attempt
to perform any covenants in this Mortgage which the Mortgagor is obligated to perform; provided that no payment or performance
by the Mortgagee shall constitute a waiver of any Event of Default, and the Mortgagee shall be subrogated to all rights and liens
securing the payment of any debt, claim, tax, or assessment for the payment of which the Mortgagee may make an advance or pay;

 

8.1.2.Appoint as a matter
of right, or seek the appointment of, a receiver or receivers to serve without bond for all or any part of the Mortgaged Property,
whether such receivership be incident to a proposed sale thereof or otherwise, and the Mortgagor does hereby consent to the appointment
of such receiver or receivers to serve without bond, and does hereby agree not to oppose any application therefor by the Mortgagee,
and does hereby agree that there shall be no necessity of showing fraud, insolvency or mismanagement by the Mortgagor for the appointment
of a receiver or receivers of the Mortgaged Properties, and such receiver may be appointed by any court of competent jurisdiction
upon ex parte application, and without notice, notice being expressly waived, and any such receiver shall have all
powers conferred by the court appointing such receiver, which powers shall, to the extent not prohibited by applicable Law, include,
without limitation, the right to enter upon and take immediate possession of the Mortgaged Property or any part thereof, to exclude
the Mortgagor therefrom, to hold, use, operate, manage and control such Mortgaged Property, to make all such repairs, replacements,
alterations, additions and improvements to the same as such receiver or the Mortgagee may deem proper or expedient, to lease, sell
or otherwise transfer the Mortgaged Property or any portion thereof as such receiver or the Mortgagee may deem proper or expedient,
to sell all of the severed and extracted Hydrocarbons included in the same subject to the provisions of Article V hereof,
and to demand and collect all of the other earnings, rents, issues, profits, proceeds and other sums due or to become due with
respect to such Mortgaged Property. 

 

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8.1.3.Execute and deliver
to such person or persons as may be designated by the Mortgagee appropriate powers of attorney to act for and on behalf of the
Mortgagor in all transactions with any federal, state or local agency relating to any of the Mortgaged Property; and

 

8.1.4.Exercise any and
all other rights or remedies granted to the Mortgagee pursuant to the provisions of any of the Loan Documents or by Law;

 

provided that the Mortgagee shall have
no obligation to do or refrain from doing any of the acts, or to make or refrain from making any payment, referred to in this Section 8.1.
Any receiver or receivers of the Mortgaged Property, or any portion thereof, shall serve without bond.

 

8.2.Power
of Sale; Abandonment of Sale. Upon the occurrence and during the continuance of an Event of Default, the Mortgagee may proceed
with foreclosure, and in such event the Mortgagee is hereby authorized to sell the Mortgaged Property, or any part thereof, under
the power of sale granted herein.

 

A POWER OF SALE
HAS BEEN GRANTED IN THIS MORTGAGE. A POWER OF SALE MAY ALLOW THE MORTGAGEE TO TAKE THE MORTGAGED PROPERTIES AND SELL THEM WITHOUT
GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY THE MORTGAGOR UNDER THIS MORTGAGE.

 

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Any sale of the Mortgaged
Property under this Article VIII shall take place at such place or places and otherwise in such manner and upon such
notice as may be required by Law; or, in the absence of any such requirement, as Mortgagee may deem appropriate. If the Lands are
situated in more than one county (or judicial district thereof), and if permitted by applicable Law, such sale of the Mortgaged
Property, or part thereof, may be made in any county in the State wherein any part of the Lands then subject to the lien and security
interest hereof are situated. After such sale, the Mortgagee shall make to the purchaser or purchasers thereunder good and sufficient
deeds and assignments, in the name of the Mortgagor, conveying the Mortgaged Property, or any part thereof, so sold to the purchaser
or purchasers with appropriate warranties of title on behalf of the Mortgagor. Sale of a part of the Mortgaged Property shall not
exhaust the power of sale, and sales may be made from time to time until the Secured Indebtedness is paid and performed in full.
It shall not be necessary to have present or to exhibit at any such sale any of the personal property. In addition to the rights
and powers of sale granted under the preceding provisions of this Section, if default is made in the payment of any installment
of, or performance of, the Secured Indebtedness, the Mortgagee, at its option, at once, or at any time thereafter while any matured
installment remains unpaid, without declaring the entire Secured Indebtedness to be due and payable, may sell the Mortgaged Property
subject to such unmatured Secured Indebtedness and the liens and security interests securing its payment, in the same manner, on
the same terms, at the same place and time, and after having given notice in the same manner, all as provided in the preceding
provisions of this Section. Sales made without maturing the Secured Indebtedness may be made hereunder whenever there is a default
in the payment of any installment of the Secured Indebtedness without exhausting the power of sale granted hereby, and without
affecting in any way the power of sale granted under this Section or the unmatured balance of the Secured Indebtedness (except
as to any proceeds of any sale which the Mortgagee may apply as a prepayment on the Secured Indebtedness) or the liens and security
interests securing payment of the Secured Indebtedness. It is intended by each of the foregoing provisions of this Section that
the Mortgagee may, where permitted by Law, sell not only the Subject Interests but also all items constituting a part of the Mortgaged
Property, or any part thereof, together with the Lands, or any part thereof, all as a unit and as a part of the single sale, or
may sell any part of the Mortgaged Property separately from the remainder of the Mortgaged Property. It is agreed that in any deed
or deeds given by the Mortgagee any and all statements of fact or other recitals therein made as to the identity of the Mortgagee,
or as to the occurrence or existence of any Event of Default, or as to the acceleration of the maturity of the Secured Indebtedness,
or as to the request to sell, notice of sale, time, place, terms, and manner of sale and receipt, distribution, and application
of the money realized therefrom, and, without being limited by the foregoing, as to any other act or thing having been duly done
by the Mortgagee, shall be taken by all courts of Law and equity as prima facie evidence that such statements or recitals are for
all purposes correct statements of the facts and are without further question to be so accepted, and the Mortgagor does hereby
ratify and confirm any and all acts that the Mortgagee may lawfully perform by virtue hereof. In the event a foreclosure under
the power of sale hereunder should be commenced by the Mortgagee in accordance with this Section, Mortgagee may at any time before
the sale abandon the sale, and may then institute suit for the collection of the Secured Indebtedness, and/or for the foreclosure
of the liens hereof by judicial proceeding.

 

8.3.Judicial
Proceedings; Receiver. This Mortgage shall be effective as a mortgage and may be foreclosed as to any of the Property covered
hereby in any manner permitted by the Laws of any state in which any part of the Mortgaged Property is situated, and any foreclosure
suit may be brought, to the extent permitted by Law, by the Mortgagee. The Mortgagee may proceed, where permitted by Law, by a
suit or suits in equity or at law, whether for a foreclosure hereunder, or for the sale of the Mortgaged Property, or for the
specific performance of any covenant or agreement herein contained or in aid of the execution of any power herein granted, or
without any showing of fraud, insolvency or mismanagement by the Mortgagor, for the appointment of a receiver or receivers of
the Mortgaged Property and of the income, rents issues, products, profits and proceeds thereof (any such receiver or receivers
to serve without bond) pending any foreclosure hereunder or the sale of the Mortgaged Property, or for the enforcement of any
other appropriate legal or equitable remedy. The appointment of a receiver shall in no manner affect the rights of the Mortgagee
under Article V hereof. If Mortgagee should institute a suit for the collection of the Secured Indebtedness and/or
for a foreclosure of the liens hereof by judicial proceeding, it may at any time before the entry of a final judgment in said
suit dismiss the same, and, where permitted by Law, sell the Mortgaged Property under the power of sale granted hereunder in accordance
with the terms of this Mortgage and applicable Law.

 

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8.4.Certain Aspects
of a Sale. The Mortgagee shall have the right to become the purchaser at any such sale of the Mortgaged Property held by any
court, receiver or public officer, and the Mortgagee shall have the right to credit upon the amount of the bid made therefor, the
amount payable out of the net proceeds of such sale to it. Recitals contained in any conveyance made to any purchaser at any sale
made hereunder shall conclusively establish the truth and accuracy of the matters therein stated, including, without limiting the
generality of the foregoing, nonpayment of the unpaid principal sum of, interest accrued on, and fees payable in respect of, the
Secured Indebtedness after the same have become due and payable, and advertisement and conduct of such sale in the manner provided
herein.

 

8.5.Receipt to Purchaser.
Upon any sale, the receipt of the Mortgagee, sheriff or other official making such sale under judicial proceedings shall be sufficient
discharge to the purchaser or purchasers at any sale for his or their purchase money, and such purchaser or purchasers, or his
or their assigns or personal representatives, shall not, after paying such purchase money and receiving such receipt of the Mortgagee,
sheriff or other official therefor, be obligated to see to the application of such purchase money, or be in anywise answerable
for any loss, misapplication or nonapplication thereof.

 

8.6.Effect of
Sale. Any sale or sales of the Mortgaged Property shall operate to divest all right, title, interest, claim and demand
whatsoever either at law or in equity, of the Mortgagor of, in, and to the premises and the Property sold, and shall be a
perpetual bar, both at law and in equity, against the Mortgagor, and the Mortgagor’s successors or assigns, and against
any and all Persons claiming or who shall thereafter claim all or any of the Property sold from, through, or under the
Mortgagor, or the Mortgagor’s successors or assigns. Nevertheless, the Mortgagor, if requested by the Mortgagee to do
so, shall join in the execution and delivery of all proper conveyances, assignments and transfers of the Properties so
sold.

 

8.7.Application
of Proceeds. The proceeds of any such sale of the Mortgaged Property, or any part thereof, shall be applied as follows (as
appropriately modified to comply with any mandatory provisions of Law):

 

First:
To the payment of all expenses incurred by the Mortgagee in the performance of its duties including, without limiting the generality
of the foregoing, all expenses of any entry, or taking of possession, of any sale, of advertisement thereof, and of conveyances,
and, as well, court costs, compensation of agents and employees and legal fees;

 

Second:
To the payment and satisfaction of the Loan Obligations (as defined herein);

 

Third:
To the payment of any other amounts owed to Agent; and

 

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Fourth:
Any surplus thereafter remaining shall be paid to the Mortgagor or the Mortgagor’s successors or assigns, as their interests
shall appear of record.

 

8.8.Mortgagor’s
Waiver of Appraisement, Marshaling, etc. Rights. The Mortgagor agrees, to the full extent that the Mortgagor may lawfully so
agree, that the Mortgagor will not at any time insist upon or plead or in any manner whatever claim the benefit of any appraisement,
valuation, stay, extension or redemption Law now or hereafter in force, in order to prevent or hinder the enforcement or foreclosure
of this Mortgage or the absolute sale of the Mortgaged Property or the possession thereof by any purchaser at any sale made pursuant
to any provision hereof, or pursuant to the decree of any court of competent jurisdiction; but the Mortgagor, for the Mortgagor
and all who may claim through or under the Mortgagor, so far as the Mortgagor or those claiming through or under the Mortgagor
now or hereafter lawfully may, hereby waives the benefit of all such Laws.  The Mortgagor, for the Mortgagor and all who
may claim through or under the Mortgagor, waives, to the extent that the Mortgagor may lawfully do so, any and all right to have
the Mortgaged Property marshaled upon any foreclosure of the lien hereof, or sold in inverse order of alienation, and agrees that
the Mortgagee or any court having jurisdiction to foreclose such lien may sell the Mortgaged Property as an entirety. If any Law
in this Section 8.7 referred to and now in force, of which the Mortgagor or the Mortgagor’s successor or successors
might take advantage despite the provisions hereof, shall hereafter be repealed or cease to be in force, such Law shall not thereafter
be deemed to constitute any part of the contract herein contained or to preclude the operation or application of the provisions
of this Section 8.7.

 

8.9.Power of Attorney
to Mortgagee. Upon the occurrence of an Event of Default, Mortgagor does hereby designate Mortgagee as the agent of Mortgagor
to act in the name, place, and stead of Mortgagor in the exercise of each and every remedy set forth herein and in conducting any
and all operations and taking any and all action reasonably necessary to do so, recognizing such agency in favor of Mortgagee to
be coupled with the interests of Mortgagee under this Mortgage and, thus, irrevocable so long as this Mortgage is in force and
effect.

 

8.10.Costs and Expenses.
All costs, expenses (including attorneys’ fees), and payments incurred or made by the Mortgagee in protecting and enforcing
its rights hereunder, upon providing prior notice to Mortgagor shall constitute a demand obligation owing by the Mortgagor to the
party incurring such or making costs, expenses, or payments and shall bear interest at a rate per annum equal to the maximum rate
of interest permitted by applicable Law, all of which shall constitute a portion of the Secured Indebtedness.

 

8.11.Operation of
the Mortgaged Property by the Mortgagee. Upon the occurrence of an Event of Default which has not been waived by the Mortgagee,
and in addition to all other rights herein conferred on the Mortgagee, the Mortgagee (or any Person designated by the Mortgagee)
shall have the right and power, but shall not be obligated, to enter upon and take possession of any of the Mortgaged Property
without the necessity of posting bond, and to exclude the Mortgagor, and the Mortgagor’s agents or servants, wholly therefrom,
and to hold, use, administer, manage and operate the same to the extent that the Mortgagor shall be at the time entitled to do
any of such things and in the Mortgagor’s place and stead. The Mortgagee (or any Person designated by the Mortgagee) may
operate the same without any liability or duty to the Mortgagor in connection with such operations, except to use ordinary care
in the operation of such Mortgaged Property, and the Mortgagee or any Person designated by the Mortgagee, shall have the right
to collect and receive all Hydrocarbons produced and sold from the Mortgaged Property, to make repairs, purchase machinery and
equipment, conduct work-over operations, drill additional wells and to exercise every power, right and privilege of the Mortgagor
with respect to the Mortgaged Property. When and if the expenses of such operation and development (including costs of unsuccessful
work-over operations or additional wells) have been paid and the Secured Indebtedness paid, such Mortgaged Property shall, if there
has been no sale or foreclosure thereof, be returned to the Mortgagor.

 

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8.12.No Additional
Duties Created. Notwithstanding any provision of this Article VIII or any other provision of this Mortgage, with
respect to that portion of the Mortgaged Property located in any jurisdiction, the Mortgagee shall be entitled to enforce the rights
and remedies described herein with respect to such portion of the Mortgaged Property in such jurisdiction in accordance with the
Laws in effect in such jurisdiction at the time such enforcement action is taken, and the Mortgagor hereby waives its right to
require the Mortgagee to comply with any contrary terms and provisions of this Mortgage in such circumstance, it being the intention
of the Mortgagor and Mortgagee that the waivers of Mortgagor herein and the powers granted to the Mortgagee herein are for the
sole benefit of the Mortgagee and are neither intended to limit the rights and powers of the Mortgagee, nor intended to establish
a standard or duty of performance by the Mortgagee in excess of or in addition to that required by the Laws of such jurisdiction
as in effect at the time the particular right or remedy is sought to be enforced.

 

8.13.Federal Transfers.
Upon a sale conducted pursuant to this Article VIII of all or any portion of the Mortgaged Property consisting of interests
(the “Federal Interests”) in leases, easements, rights-of-way, agreements or other documents and instruments
covering, affecting or otherwise relating to federal lands (including leases, easements and rights-of-way issued by the Bureau
of Land Management); the Mortgagor agrees to take all action and execute all instruments necessary or advisable to transfer the
Federal Interests to the purchaser at such sale, including, without limitation, to execute, acknowledge and deliver assignments
of the Federal Interests on officially approved forms in sufficient counterparts to satisfy applicable statutory and regulatory
requirements, to seek and request approval thereof and to take all other action necessary or advisable in connection therewith.
The Mortgagor hereby irrevocably appoints the Mortgagee as the Mortgagor’s attorney-in-fact and proxy, with full power and
authority in the place and steed of the Mortgagor, in the name of the Mortgagor or otherwise, to take any such action and to execute
any such instruments on behalf of the Mortgagor that the Mortgagee may deem necessary or advisable to so transfer the Federal Interests,
including, without limitation, the power and authority to execute, acknowledge and deliver such assignments, to seek and request
approval thereof and to take all other action deemed necessary or advisable by the Mortgagee in connection therewith; and the Mortgagor
hereby adopts, ratifies and confirms all such actions and instruments. Such power of attorney and proxy are coupled with an interest,
shall survive the dissolution, termination, reorganization or other incapacity of the Mortgagor and shall be irrevocable. No action
taken by the Mortgagee shall constitute acknowledgment of, or assumption of liabilities relating to, the Federal Interests, and
neither the Mortgagor nor any other party may claim that Mortgagee is bound, directly or indirectly, by any such action.

 

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8.14.Limitation
on Rights and Waivers. All rights, powers and remedies herein conferred shall be exercisable by the Mortgagee only to the extent
not prohibited by applicable Law; and all waivers and relinquishments of rights and similar matters shall only be effective to
the extent such waivers or relinquishments are not prohibited by applicable Law.

 

ARTICLE
IX

MISCELLANEOUS

 

9.1.Advances by
the Mortgagee. Each and every covenant herein contained shall be performed and kept by the Mortgagor solely at the Mortgagor’s
expense. If the Mortgagor shall fail to perform or keep any of the covenants of whatsoever kind or nature contained in this Mortgage,
the Mortgagee or any receiver appointed hereunder, may, but shall not be obligated to, make advances to perform the same in the
Mortgagor’s behalf, and the Mortgagor hereby agrees to repay such sums upon demand plus interest at a rate per annum equal
to the maximum rate of interest permitted by applicable Law. No such advance shall be deemed to relieve the Mortgagor from any
Event of Default hereunder.

 

9.2.Defense of Claims.
The Mortgagor will notify the Mortgagee, in writing, promptly of the commencement of any legal proceedings affecting or which could
adversely affect the lien and security interest hereof or the status of or title to the Mortgaged Property, or any part thereof,
and will take such action, employing attorneys agreeable to the Mortgagee, as may be necessary to preserve the Mortgagor’s
and the Mortgagee’s rights affected thereby; and should the Mortgagor fail or refuse to take any such action, the Mortgagee
may take such action on behalf and in the name of the Mortgagor and at the Mortgagor’s expense. Moreover, the Mortgagee may
take such independent action in connection therewith as it may in its discretion deem proper without any liability or duty to the
Mortgagor except to use ordinary care, the Mortgagor hereby agreeing that all sums advanced or all expenses incurred in such actions
plus interest at the maximum rate of interest permitted by applicable Law, will, on demand, be reimbursed to the Mortgagee or any
receiver appointed hereunder.

 

9.3.Defeasance.
If the Secured Indebtedness shall be paid and discharged in full, no Credit Party has any further obligation to advance amounts
to or for the benefit of the Mortgagor, and all related transactions and confirmations thereunder have expired or been terminated,
as applicable, and the Mortgagee has no commitment to permit or intention to allow the creation of additional Secured Indebtedness,
then the Mortgagee will, upon request of the Mortgagor and at the Mortgagor’s expense, execute and deliver to the Mortgagor
all releases and other instruments reasonably requested by the Mortgagor for the purpose of releasing and discharging of record
the lien and security interest created hereunder. Otherwise this Mortgage shall remain and continue in full force and effect. The
Mortgagor shall pay all legal fees and other fees, costs and expenses incurred by the Mortgagee for preparing and reviewing instruments
of termination and release and the execution and delivery thereof and the Mortgagee may require payment of the same prior to delivery
of such instruments. The release of this Mortgage and the termination of the liens and security interests created by this Mortgage
shall not terminate or otherwise affect the Mortgagee’s right or ability to exercise any right, power or remedy relating
to any claim for breach of warranty or representation, for failure to perform any covenant or other agreement, under any indemnity
or for fraud, deceit or other misrepresentation or omission.

 

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9.4.Other Security.
The Mortgagee may receive or may hold security from Persons other than the Mortgagor for the Secured Indebtedness and may release
or modify the same without notice to or consent of the Mortgagor. The Mortgagee may resort first to such other security or any
part thereof or first to the security herein given or any part thereof, or from time to time to either or both, even to the partial
or complete abandonment of either security, and such action shall not be a waiver of any rights conferred by this Mortgage, which
shall continue as a first lien and security interest upon the Mortgaged Property not expressly released until all Secured Indebtedness
secured hereby is fully paid and no Credit Party shall have any commitment to advance amounts or extend credit to or for the benefit
of the Mortgagor or any other payor of Indebtedness.

 

9.5.Instrument an
Assignment, Etc. This Mortgage shall be deemed to be and may be enforced from time to time as an assignment, chattel mortgage,
contract, financing statement, real estate mortgage, pledge, or security agreement, and from time to time as any one or more thereof.

 

9.6.Limitation on
Interest. No provision of this Mortgage or of the other Loan Documents shall require the payment or permit the collection of
interest, or be construed to create a contract regarding the same, in excess of the maximum rate permitted by Law or which is otherwise
contrary to Law. If any excess of interest in such respect is herein or in the other Loan Documents provided for, or shall be adjudicated
to be so provided for herein or in the other Loan Documents, such amount which would be deemed excessive interest shall be deemed
a partial prepayment of the principal of the Secured Indebtedness and treated hereunder as such; and, if the entire principal amount
of the Secured Indebtedness owed is paid in full, any remaining excess shall be repaid to the payors on the applicable Indebtedness.
In determining whether the interest paid or payable, under any specific contingency, exceeds the Highest Lawful Rate in effect
from day to day, the Mortgagor and the holders of the Indebtedness shall, to the maximum extent permitted under applicable Law,
(i) characterize any nonprincipal payment as an expense, fee, or premium rather than as interest, (ii) exclude voluntary prepayments
and the effects thereof, and (iii) amortize, prorate, allocate, and spread the total amount of interest throughout the entire
contemplated term of the Indebtedness so that the interest rate is uniform throughout the entire term of the Indebtedness; provided
that if the interest received by the holders of the Indebtedness for the actual period of existence thereof exceeds the Highest
Lawful Rate in effect from day to day, the holders of the Indebtedness shall apply or refund to the payors on the applicable Indebtedness
the amount of such excess as provided in this Section, and, in such event, the holders of the Indebtedness shall not be subject
to any penalties provided by any Laws for contracting for, charging, taking, reserving, or receiving interest in excess of the
Highest Lawful Rate in effect from day to day.

 

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9.7.Severability.
If any provision of this Mortgage or in any of the other Loan Documents is invalid or unenforceable in any jurisdiction, the other
provisions hereof or of any of the other Loan Documents shall remain in full force and effect in such jurisdiction, and such other
provisions shall be liberally construed in favor of the Mortgagee in order to effectuate the provisions hereof, and the invalidity
of any provision hereof in any jurisdiction shall not affect the validity or enforceability of any such provision in any other
jurisdiction. The parties hereby agree that to the extent any provision hereof is invalid or unenforceable in any jurisdiction,
that this document will be deemed to contain a substitute provision, as similar as possible in intent and application to the invalid
or unenforceable provision that meets any statutory or other legal requirements in such jurisdiction required for the provision
to be given effect. Any reference herein contained to statute or Law of a state in which no part of the Mortgaged Property is situated
shall be deemed inapplicable to, and not used in, the interpretation hereof.

 

9.8.Rights Cumulative.
Each and every right, power and remedy herein given to the Mortgagee shall be cumulative and not exclusive; and each and every
right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time and so often
and in such order as may be deemed expedient by the Mortgagee, and the exercise, or the beginning of the exercise, of any such
right, power or remedy shall not be deemed a waiver of the right to exercise, at the same time or thereafter, any other right,
power or remedy. No delay or omission by the Mortgagee in the exercise of any right, power or remedy shall impair any such right,
power or remedy or operate as a waiver thereof or of any other right, power or remedy then or thereafter existing.

 

9.9.Waiver of
Covenants by Mortgagee. Any and all covenants in this Mortgage may from time to time by instrument in writing signed by
the Mortgagee be waived to such extent and in such manner as the Mortgagee may desire, but no such waiver shall ever affect
or impair the Mortgagee’s rights and remedies or liens and security interests hereunder, except to the extent
specifically stated in such written instrument.

 

9.10.Successors
and Assigns.

 

9.10.1.This instrument
is binding upon the Mortgagor, and the Mortgagor’s heirs, successors and assigns, and shall inure to the benefit of the Mortgagee,
and their respective successors and assigns, and the provisions hereof shall likewise be covenants running with the Lands.

 

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9.10.2.The parties hereto
agree that the Notes may be transferred without the necessity for a notarial act of transfer thereof, and that any such transfer
shall carry with it into the hands of any future holder or holders of the Notes full and entire subrogation of title in and to
the Notes and to any and all rights and privileges under this instrument herein granted to the Mortgagee, as holder of the Notes.
This Mortgage is for the benefit of the Mortgagee and for such other Person or Persons as may from time to time become or be the
holders of any of the Secured Indebtedness, and this Mortgage shall be transferable and negotiable, with the same force and effect
and to the same extent as the Secured Indebtedness may be transferable.

 

9.11.Article and
Section Headings. The article and section headings in this instrument are inserted for convenience and shall not be considered
a part of this Mortgage or used in its interpretation.

 

9.12.Counterpart.
This Mortgage may be executed in any number of counterparts, each of which shall for all purposes be deemed to be an original,
and all of which are identical except that, to facilitate recordation in any particular county or parish, counterpart portions
of Exhibit A which describe properties situated in parishes or counties other than the county or parish in which such counterpart
is to be recorded may be omitted. Exhibit A might not be paginated and any pagination might not be consecutive. Exhibit A
may also contain language indicating that it is attached to a document other than this Mortgage or that a particular page is the
end of Exhibit A, when neither is applicable. Such language shall be ignored for the purposes of interpreting this
Mortgage.

 

9.13.Special Filing
as Financing Statement.

 

9.13.1. This Mortgage
shall likewise be a Security Agreement and a Financing Statement and Mortgagor, as debtor (the “Debtor”), hereby
grants to the Mortgagee, its successors and assigns, as secured party (hereinafter, the “Secured Party”), a
security interest in all personal Property, fixtures, as-extracted collateral, accounts, equipment, inventory, contract rights
and general intangibles described or referred to in granting Sections 2.1.1 through 2.1.11 of Article II
hereof and all proceeds and products from the sale, lease or other disposition of the Mortgaged Property or any part thereof. The
addresses shown in Section 9.14 hereof are the addresses of the Debtor and Secured Party and information concerning
the security interest may be obtained from the Secured Party at its address. Without in any manner limiting the generality of any
of the foregoing provisions hereof: (a) some portion of the goods described or to which reference is made herein are or are to
become fixtures on the Lands described or to which reference is made herein; (b) the minerals and the like (including oil and gas)
included in the Mortgaged Property and the accounts resulting from the sale thereof will be financed at the wellhead(s) or minehead(s)
of the well(s) or mine(s) located on the Lands described or to which reference is made herein; and (c) this Mortgage is to be filed
of record, among other places, in the real estate records of each county in which the Lands, or any part thereof, are situated,
as a financing statement, but the failure to do so will not otherwise affect the validity or enforceability of this instrument.

 

9.13.2. The charter/file/organizational
I.D. number of the Mortgagor is as set forth on the cover page hereof.

 

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9.13.3. The Mortgagee
is authorized to complete and file financing statements naming the Mortgagor as debtor.

 

9.13.4. Following the
occurrence of any Event of Default specified in Section 7.1, or at any time thereafter, in addition to all other rights,
powers and remedies herein conferred or conferred by operation of Law, the Mortgagee shall have all of the rights and remedies
of an assignee and secured party granted by applicable Law, including but not limited to, the Code as then in effect.

 

9.14.Notices.
Whenever this Mortgage requires or permits any consent, approval, notice, request, or demand from one party to another, the consent,
approval, notice, or demand must be in writing to be effective and shall be personally delivered or sent to the party to be notified
at the address or facsimile number stated below (or such other address as may have been designated by written notice by the party
pursuant to this Section 9.14):

 

	MORTGAGOR-DEBTOR	 	MORTGAGEE-SECURED
    PARTY
	 	 	 
	LILIS ENERGY, INC.	 	HEARTLAND BANK
	1900 Grant Street, #920	 	One Information Way, Suite 300
	Denver, Colorado 80203	 	Little Rock, Arkansas 72202
	Attention: Chief Financial Officer	 	Attention: Greg White
	Telephone: 303-951-7920	 	Telephone: 501-734-0125

 

Each such notice, request
or other communication shall be effective (i) if given by facsimile transmission, when transmitted to the facsimile number specified
in this Section and confirmation of receipt is received (the receipt thereof shall be deemed to have been acknowledged upon
the sending Person’s receipt of its facsimile machine’s confirmation of successful transmission; provided that if the
day on which such facsimile is received is not a Business Day or is after 4:00 p.m. on a Business Day, then the receipt of such
facsimile shall be deemed to have been acknowledged on the next following Business Day), (ii) if given by mail, three (3) Business
Days after such communication is deposited in the mail with first class postage prepaid, addressed as aforesaid, or (iii) if given
by any other means, when delivered at the address specified in this Section.

 

9.15.No Waiver by
Mortgagee. No course of dealing on the part of Mortgagee, its officers or employees, nor any failure or delay by Mortgagee
with respect to exercising any of its rights or remedies hereunder shall operate as a waiver thereof nor shall the exercise or
partial exercise of any such right or remedy preclude the subsequent exercise thereof or the exercise of any other right or remedy.

 

9.16.Governing Agreement.
This Mortgage is made pursuant and subject to the terms and provisions of the Credit Agreement. In the event of a direct conflict
between the terms and provisions of this Mortgage and those of the Credit Agreement, the terms and provisions of the Credit Agreement
shall govern and control, except that if the two documents contain different formal definitions for the same term or terms, the
formal definition of such term or terms herein shall be applicable in construing this Mortgage. The inclusion in this Mortgage
of provisions not addressed in the Credit Agreement shall not be deemed a conflict, and all such additional provisions contained
herein shall be given full force and effect. The indemnification and releases contained herein are in addition to any indemnification
or releases contained in the Credit Agreement.

 

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9.17.Drafting of
Mortgage. Mortgagor declares that it has contributed to the drafting of this Mortgage or has had the opportunity to have it
reviewed by its counsel before signing it and agrees that it has been purposefully drawn and correctly reflects its understanding
of the transaction that it contemplates.

 

9.18.Execution by
Mortgagee; Corrections. The Mortgagee may at any time without obtaining the consent of the Mortgagor execute this Mortgage
(and have such execution witnessed or acknowledged) for any purposes which it deems necessary or appropriate and, if deemed appropriate,
subsequently file this Mortgage of record. Additionally, in the event it is determined that Exhibit A contains any errors
or inaccurate or incomplete descriptions of the Oil and Gas Leases and Lands intended to be covered hereby or referred to in any
Certificates of Ownership Interests, the Mortgagee may, without obtaining the consent of the Mortgagor, attempt to correct any
such errors or omissions and make accurate and complete any such inaccuracies, omissions or misdescriptions and, if deemed appropriate,
subsequently file or re-file this Mortgage of record.

 

9.19.Governing Law.
This Mortgage is intended to be performed in the State of Colorado and the substantive Laws of such State and or the United States
of America shall govern the validity, construction, enforcement and interpretation of this Mortgage, except that to the extent
that the Law of a State in which a portion of Mortgaged Property is located (or which is otherwise applicable to a portion of the
Mortgaged Property) necessarily governs with respect to procedural and substantive matters relating to the creation, perfection,
priority and enforcement of the liens, security interests and other rights and remedies of the Mortgagee granted herein, the Law
of such State shall apply as to that portion of the Mortgaged Property located in (or which is otherwise subject to the Laws of)
such State.

 

9.20.Credit Agreement.
This Mortgage shall be deemed to be encompassed by the definition of “Security Documents” as such term is defined and
used in any Credit Agreement that may be in effect from time to time.

 

9.21.NOTICE:
THIS DOCUMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.

 

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BLANK]

 

    	25

    	 

    

 

IN WITNESS WHEREOF, the
Mortgagor has executed or caused to be executed this Mortgage as of the date first set forth above.

 

		MORTGAGOR:
	 	 	 
	 	LILIS ENERGY, INC.,
	 	a Nevada corporation
	 	 	 
	 	By:	
	 	Name:	
	 	Title:	

 

ACKNOWLEDGEMENT

 

	STATE OF	 	§
	 	 	§
	COUNTY OF	 	§

 

The foregoing instrument
was acknowledged before me this ____ day of January, 2015, by _________________, _________________ of Lilis Energy, Inc.,
a Nevada corporation, on behalf of said corporation.

 

	Witness my hand and seal.	 	 
	 	 	 
	 	 	Notary Public in and for the State of _____
	[NOTARIAL SEAL]	 	My Commission Expires:  _____________

 

    	 

    	 

    

 

EXHIBIT A

TO MORTGAGE, SECURITY AGREEMENT,

FIXTURE FILING AND FINANCING STATEMENT

 

This Exhibit A sets
forth the description of certain Property interests covered by the Mortgage in Carbon County, Wyoming. All of the terms defined
in the Mortgage are used in this Exhibit A with the same meanings given therein.

 

This Exhibit A and the
Mortgage cover and include the following:

 

(a)All right, title and
interest, whether now owned and existing or hereafter acquired or arising, of Mortgagor in and to the oil, gas and mineral leases
described herein and/or lands described in and subject to such oil, gas and mineral leases (regardless, as to such leases and/or
lands, of any surface acreage and/or depth limitations set forth in any description of any of such oil, gas and mineral leases),
and all right, title and interest, whether now owned and existing or hereafter acquired or arising, of Mortgagor in and to any
of the oil, gas and minerals in, on or under the lands, if any, described on this Exhibit, including, without limitation, all contractual
rights, fee interests, leasehold interests, overriding royalty interests, non-participating royalty interests, mineral interests,
production payments, net profits interests or any other interest measured by or payable out of production of oil, gas or other
minerals from the oil, gas and mineral leases and/or lands described herein; and

 

(b)All of the foregoing
interests of Mortgagor as such interests may be enlarged by the discharge of any payments out of production or by the removal of
any charges or encumbrances, together with all interests, whether now owned and existing or hereafter acquired or arising, of Mortgagor
in, to and under or derived from all renewals and extensions of any oil, gas and mineral leases described herein, it being specifically
intended hereby that any new oil and gas lease (i) in which an interest is acquired by Mortgagor after the termination or expiration
of any oil and gas lease, the interests of Mortgagor in, to and under or derived from which are subject to the lien and security
interest hereof, and (ii) that covers all or any part of the Property described in and covered by such terminated or expired leases,
shall, to the extent, and only to the extent such new oil and gas lease may cover such Property, be considered a renewal or extension
of such terminated or expired lease; and

 

(c)All right, title and
interest, whether now owned and existing or hereafter acquired or arising, of Mortgagor in, to and under or derived from any operating,
farmout and bidding agreements, assignments and subleases, whether or not described in this Exhibit, to the extent, and only to
the extent, that such agreements, assignments and subleases (i) cover or include any present right, title and interest of Mortgagor
in and to the leases and/or lands described in this Exhibit, or (ii) cover or include any other undivided interests now or hereafter
held by Mortgagor in, to and under the described leases and/or lands, including, without limitation, any future operating, farmout
and bidding agreements, assignments, subleases and pooling, unitization and communitization agreements and the units created thereby
(including, without limitation, all units formed under orders, regulations, rules or other official acts of any governmental body
or agency having jurisdiction) to the extent and only to the extent that such agreements, assignments, subleases, or units cover
or include the described leases and/or lands; and

 

    	 

    	 

    

 

(d)All right, title and
interest, whether now owned and existing or hereafter acquired or arising, of Mortgagor in, to and under or derived from all presently
existing and future advance payment agreements, oil, casinghead gas and gas sales, exchange and processing contracts and agreements,
including, without limitation, those contracts and agreements that are described on this Exhibit, to the extent, and only to the
extent, those contracts and agreements cover or include the described leases and/or lands; and

 

(e)All right, title and
interest, whether now owned and existing or hereafter acquired or arising, of Mortgagor in, to and under or derived from all existing
and future permits, licenses, easements and similar rights and privileges that relate to or are appurtenant to any of the described
leases and/or lands.

 

Notwithstanding the intention
of the Mortgage to cover all of the right, title and interest of Mortgagor in and to the described leases and/or lands, whether
now owned and existing or hereafter acquired or arising, Mortgagor hereby specifically warrants and represents that the interests
covered by this Exhibit are not greater than the working interest nor less than the net revenue interest, overriding royalty interest,
net profit interest, production payment interest, royalty interest or other interest payable out of or measured by production set
forth in connection with each oil and gas well described in this Exhibit. In the event Mortgagor owns any other or greater interest,
such additional interest shall also be covered by and included in the Mortgage.

 

Any reference herein to Wells
or Units is for warranty of interest, administrative convenience and identification and is not intended to limit or restrict the
right, title, interest of properties covered by the Mortgage and all of Mortgagor’s right, title and interest in the Lands,
Subject Interests and Mortgaged Property described herein are and shall be subject to the Mortgage, regardless of the presence
of any Units or Wells not herein referenced.

 

The Leases covered by the
Mortgage shall include all leases and force pooled interests now or thereafter owned by Mortgagor included within the geographic
areas set forth in this Exhibit whether or not the schedules of leases included in this Exhibit list all such leases.

 

No depth limitation exception
contained in any description of leases and other real Property interests set forth in this Exhibit shall exclude from the grants
of the Mortgaged Property and collateral contained in the Mortgage any depth owned by Mortgagor within the geographic area described
in this Exhibit for such leases and other real Property interests.

 

    	 

    	 

    

 

The designation “Working
Interest” or “W.I.” when used in this Exhibit means an interest owned in an oil, gas, and mineral
lease that determines the cost-bearing percentage of the owner of such interest. The designation “Net Revenue Interest”
or “N.R.I.” means that portion of the production attributable to the owner of a working interest after deduction
for all royalty burdens, overriding royalty burdens or other burdens on production, except severance, production, and other similar
taxes. The designation “Overriding Royalty Interest” or “ORRI” means an interest in production
which is free of any obligation for the expense of exploration, development, and production, bearing only its pro rata share of
severance, production, and other similar taxes and, in instances where the document creating the overriding royalty interest so
provides, costs associated with compression, dehydration, other treating or processing, or transportation of production of oil,
gas, or other minerals relating to the marketing of such production. The designation “Royalty Interest” or “RI”
means an interest in production which results from an ownership in the mineral fee estate or royalty estate in the relevant land
and which is free of any obligation for the expense of exploration, development, and production, bearing only its pro rata share
of severance, production, and other similar taxes and, in instances where the document creating the royalty interest so provides,
costs associated with compression, dehydration, other treating or processing or transportation of production of oil, gas, or other
minerals relating to the marketing of such production.

 

The references to book
or volume and page herein refer to the recording location of each respective Mortgaged Property described herein in the county/parish
where the land covered by the Mortgaged Property is located.

 

This Mortgage covers all
lands, leases and properties of the Mortgagor, whether now owned or hereafter acquired, located in any county/parish identified
elsewhere in this Exhibit or located in any county/parish wherein this Mortgage has been recorded.

 

(Exhibit A continues on next page)

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