Document:

Camber Energy, Inc. 8-K

 

Exhibit 10.1

 

AGREEMENT IN CONNECTION WITH THE LOAN

 

This Agreement in Connection
with the Loan (this “Agreement”) dated effective August 1, 2018 (the “Effective Date”), is made by and
between the following:

 

Camber Energy, Inc., a
Nevada corporation (“Borrower”), f/k/a Lucas Energy, Inc., a Nevada corporation, whose mailing address is 1415 Louisiana
Street, Suite 3500, Houston, Texas 77002; and

 

International Bank of Commerce,
a Texas state banking corporation (“Lender”), whose mailing address is 130 E. Travis St., San Antonio, Texas 78205.

 

REFERENCE IS HEREBY
MADE FOR ALL PURPOSES TO that certain loan from Lender to Borrower (the “Loan”) evidenced by a Real Estate Lien
Note dated August 25, 2016 (the “Note”) in the original principal amount of $40,000,000.00, executed by Borrower, and
made payable to the order of Lender, and any and all documents which affect and/or secure the payment of the Note or were otherwise
executed in connection with the Loan are herein collectively referred to as the “Loan Instruments,” including without
limitation, that certain Loan Agreement dated August 25, 2016 (the “Loan Agreement”) by and among Lender and Borrower.
All capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Loan Agreement.

 

RECITALS

 

		1.	Borrower is indebted to Lender pursuant to the terms of the Loan Instruments.

 

		2.	Several payment defaults and covenant defaults (collectively, the “Defaults”) have
occurred and are continuing as referenced in that certain letter dated September 8, 2017, from Martin & Drought, P.C., on behalf
of Lender to Borrower (the “Demand Letter”).

 

		3.	Additionally, Defaults have occurred since the date of the Demand Letter up to the date of this
Agreement.

 

		4.	So that Borrower may have time to cure the Defaults and to release Lender from any and all claims
regarding the Loan and to memorialize the terms of a resolution of the Defaults under the Loan, Borrower and Lender have entered
into this Agreement.

 

AGREEMENT

 

NOW THEREFORE, for
and in consideration of these premises and for other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged and confessed, Lender and Borrower (collectively, the “Parties,” and individually, a “Party”)
agree as follows:

 

		1.	Recitals True, Correct, and Accurate. Borrower acknowledges and agrees that the recitals
set forth above are true, correct and accurate.

 

    Page 1

     

    

 

		2.	Claims against Lender.

 

		a.	Borrower hereby represents and warrants that there are no known claims, causes of action, suits,
debts, liens, obligations, liabilities, demands, losses, costs and expenses (including attorneys’ fees) of any kind, character
or nature whatsoever, fixed or contingent, which Borrower may have or claim to have against Lender, which might arise out of or
be connected with any act of commission or omission of Lender existing or occurring on or prior to the Effective Date, including,
without limitation, any claims, liabilities or obligations arising with respect to the Loan or arising under any of the Loan Instruments.

 

		b.	In consideration of Lender’s agreements as provided herein, Borrower hereby releases, acquits,
waives and forever discharges Lender, its partners, affiliates, subsidiaries and related parties and their respective directors,
officers, employees, agents, predecessors, successors, assigns, attorneys, and representatives (collectively the “Lender
Parties”) from any and all claims, demands, cross-actions, cause or causes of action, at law or in equity, costs and expenses,
including legal expenses, as well as any other kind or character of claim or action, in each case to the extent held by Borrower
on or before the Effective Date, whether based upon tort, fraud, breach of any duty of fair dealing, breach of confidence, undue
influence, duress, economic coercion, conflict of interest, negligence, bad faith, intentional or negligent infliction of mental
distress, tortious interference with contractual relations, tortious interference with corporate governance or prospective business
advantage, breach of contract, deceptive trade practices, libel, slander, conspiracy, contract, usury, common law or statutory
right, known or unknown, arising, directly or indirectly, proximately or remotely, out of any of the Loan Instruments or any of
the documents, instruments or any other transactions relating thereto, solely with respect to such claims, which arise in connection
with events which occurred on or prior to the Effective Date (collectively, the “Released Claims”), to the fullest
and maximum extent permitted by applicable law. Without limiting the generality of the foregoing, this release shall include all
aspects of the negotiations between and among Borrower and Lender. This release is intended to release all liability of any character
claimed for damages, of any type or nature, for injunctive or other relief, for attorneys’ fees, interest or any other liability
whatsoever, whether statutory, contractual or tort in character, or of any other nature or character, now or henceforth in any
way related to the Released Claims, including, without limitation, any loss, cost or damage in connection with, or based upon,
any breach of fiduciary duty, breach of any duty of fair dealing or good faith, breach of confidence, breach of funding commitment,
breach of any other duty, breach of any statutory right, fraud, usury, undue influence, duress, economic coercion, conflict of
interest, negligence, bad faith, malpractice, violations of the Racketeer Influenced and Corrupt Organizations Act, intentional
or negligent infliction of mental distress, tortious interference with corporate or other governance or prospective business advantage,
breach of contract, deceptive trade practices, libel, slander, conspiracy, or any other cause of action, any of which arise in
connection with events which occurred on or prior to the Effective Date. Borrower understands and agrees that this is a full, final
and complete release of the Released Claims and agrees that this release may be pleaded as an absolute and final bar to any or
all suit or suits pending or which may hereafter be filed or prosecuted by Borrower, or anyone claiming, by, through or under Borrower
in respect of the Released Claims, and that no recovery on account of the Released Claims may hereafter be had from anyone whomsoever,
and that the consideration given for this release is no admission of liability and that Borrower, nor those claiming under Borrower
will ever claim that it is.

 

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		3.	Insolvency Provisions. In the event any proceeding (an “Insolvency Proceeding”)
is brought by or against Borrower and/or the Mortgaged Properties under or pursuant to any bankruptcy, insolvency, receivership
or similar law or laws of the United States or any other state or other jurisdiction, including the Bankruptcy Code, and any other
law or laws of the United States or any other state or other jurisdiction which affect the rights of debtors and/or creditors generally,
including, without limitation: (i) any proceeding seeking to appoint or appointing a receiver or trustee; (ii) any proceeding filed
by or against Borrower under the Bankruptcy Code; (iii) any assignment by Borrower of all or substantially all of their respective
assets for the benefit of creditors; and (iv) any proceeding or other action wherein all or substantially all of Borrower’s
assets are attached, seized, subjected to a writ or distress warrant, or otherwise levied upon, Borrower hereby agrees as follows:

 

		a.	Venue for an Insolvency Proceeding, without waiving the provisions requiring arbitration as set
forth in the Loan Instruments, shall lie exclusively in the United States Bankruptcy Court for the Western District of Texas, San
Antonio Division.

 

		b.	Borrower agrees that, subject to court approval, Lender shall be deemed pursuant to this Agreement
to have and be entitled to relief from the automatic stay under Section 362 of the Bankruptcy Code, and Borrower hereby unconditionally
and irrevocably consents to the granting to Lender of relief from the automatic stay under Section 362 of the Bankruptcy Code to
permit Lender to exercise any and all of its rights, recourses and remedies under the Loan Instruments, at law and/or in equity,
including, without limitation, foreclosure of the Mortgage and sale of the Mortgaged Properties pursuant thereto and/or collection
of the rents, income, revenue from oil and gas production or in relation thereto, proceeds, and profits directly by Lender. Further,
if Lender requests such relief, Borrower shall not object to or oppose Lender’s request for immediate relief from the automatic
stay for purposes of exercising any and all rights, recourses, remedies and benefits Lender may have under the Loan Instruments,
at law and/or in equity, including, without limitation, foreclosure of the Mortgage and sale of the Mortgaged Properties pursuant
thereto and/or collection of the rents and profits directly by Lender.

 

		c.	Borrower hereby acknowledges and agrees that Lender has a properly perfected, valid and enforceable
lien upon and security interest in all or any portion of the Mortgaged Properties, except as provided or otherwise granted in this
Agreement and pursuant to the terms of this Agreement, including, without limitation, the leases, rents, income, revenue from oil
and gas production or in relation thereto, and profits, and Borrower will acknowledge the same in any Insolvency Proceeding. Further,
Borrower shall not contest that Lender holds a properly perfected, valid and enforceable first priority lien on and security interest
in each and every portion of the Mortgaged Properties, including, without limitation, the leases, rents, income, and profits.

 

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		d.	Subject to court approval, the value of the Mortgaged Properties alone without other collateral,
cash, or other assets satisfactory to Lender, in its reasonable discretion, is not adequate to offer adequate protection to Lender
in the event Borrower, or any one of them seeks financing as a debtor in possession. Borrower specifically agrees not to seek debtor
in possession financing without providing adequate protection reasonably satisfactory to Lender.

 

		e.	Borrower hereby agrees to indemnify, defend and hold Lender harmless from and against any and all
loss, cost, liability, damage or expense Lender may suffer or incur as a result of Borrower’s breach of their respective
obligations, covenants and agreements only under this Section, which indemnification obligations shall expire and be of no force
and effect upon the earlier of two (2) years after (a) the Camber Assets Sale Date; or (b) the Surrender Transfer Date (defined
below) (collectively, the “Transfer Date”).

 

		4.	Standstill. Subject to the conditions below (collectively, the “Standstill Conditions”),
Lender agrees to stand still and not to take any action to collect the Indebtedness from Borrower, or to enforce or foreclose on
the Mortgage and sale of the Mortgaged Properties (the “Standstill”) prior to the earlier of (i) September 30, 2018,
unless the Camber Assets Sale Effective Date is required to be extended due to no fault of the Borrower, due to the regulatory
requirements of the Securities and Exchange Commission and/or NYSE American, in which case such date shall be automatically extended
to no later than October 31, 2018 unless extended by both parties; or (ii) a default of the Standstill Conditions as determined
by Lender in its reasonable discretion (collectively, the “Standstill Date”).

 

The Standstill Conditions are
as follows:

 

		a.	On or before 5:00 pm San Antonio, Texas time on Tuesday, August 7, 2018 (the “Deadline”),
Borrower shall use commercially reasonable efforts to ensure that all of Borrower’s funds over $5,000.00 are deposited with
International Bank of Commerce at 130 East Travis Street, San Antonio, Texas 78205, provided that if any such funds are not deposited
with accounts held by the Borrower with International Bank of Commerce, such funds shall be transferred to International Bank of
Commerce within two business days thereafter (subject to customary bank timing for the transfer of funds)(the “Funds Transfer
Requirements”). Borrower confirms and acknowledges that subsequent to the Deadline it will not make any deposits or disbursements
into or from its bank account at Frost Bank; however, if a third party makes a deposit into a bank account at Frost Bank, such
funds shall be transferred to International Bank of Commerce consistent with the above provision;

 

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		b.	On or before the Deadline, Borrower and/or the owner thereof shall have pledged to Lender eighty-seven
and one-half percent (87.5%) of all of the right, title and interest of Borrower and/ or the owner thereof in those certain assets
more particularly described on Exhibit “A” and Exhibit “B,” both attached hereto and incorporated herein
for all purposes (collectively, the “Orion Assets”) whereby Lender shall receive from Borrower a perfected security
interest in an 87.5% working interest in each of the oil and gas leases constituting the Orion Assets, subject to the Orion Production
Payment and Orion ORRI defined below;

 

		c.	On or before the Deadline, Borrower shall pay to Lender all expenses due under the Note, including
without limitation, Lender’s reasonable legal fees to date;

 

		d.	On or before the Deadline, Borrower shall pay to Lender the sum of TWO HUNDRED THIRTY-ONE THOUSAND
NINE HUNDRED TWENTY-THREE AND 82/100 Dollars ($231,923.82) representing the interest payment due under the Note for June 2018;

 

		e.	On or before the Deadline, Borrower shall pay to Lender the sum of TWO HUNDRED THIRTY-ONE THOUSAND
NINE HUNDRED TWENTY-THREE AND 82/100 Dollars ($231,923.82) representing an approximation of the interest payment due under the
Note for July 2018;

 

		f.	Borrower shall not pledge any assets, either real or personal, of Borrower or in which Borrower
has any interest, now or in the future and howsoever evidenced, to any other party besides Lender provided however, that nothing
herein shall limit the ability of Borrower to grant a purchase money security interest on newly acquired assets so long as such
assets are not located in the State of Oklahoma;

 

		g.	Borrower shall not pay nor provide any monetary distribution whatsoever to any current officer,
director or employee of Borrower outside of the normal course of business, and as to directors of Borrower, no more than a total
of $40,000.00 in monetary distributions to such directors shall be made during the Standstill (which limitation shall not apply
to stock distributions or stock payments);

 

		h.	During the Standstill, the interest rate shall be floating at three percent (3%) per annum above
the New York Prime Rate, as defined in the Note, as it fluctuates from time to time; provided, however, that in no event shall
the rate of interest to be paid on the unpaid principal of the Note be less than five and one half percent (5.5%) per annum, nor
more than the maximum legal rate allowed by applicable law and the starting interest rate as of the Effective Date shall be eight
percent (8.0%) per annum; and

 

		i.	During the term of the Standstill, the only events of default under this agreement shall be (A)
a default of Sections (i) through (vii) of Section 4 hereof by Borrower, and (B) the occurrence of a material adverse event involving
the Camber Assets as reasonably determined by Lender, including, but not limited to, failure to pay and maintain insurance.

 

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		5.	Standstill Date. On and following the Standstill Date, Lender shall be free to be take any
action to collect the Indebtedness from Borrower, or to enforce its rights under the Loan Instruments, including without limitation
any and all rights to foreclose on the Mortgage and sale of the Mortgaged Properties, as Lender, in its sole discretion shall elect,
unless Borrower shall, prior to the Standstill Date, cure all outstanding Defaults upon such terms and conditions as Lender may
approve in its sole and absolute discretion.

 

Notwithstanding the foregoing,
Borrower has the option during the Standstill to sell the Collateral, including without limitation, the Mortgaged Properties and
the “Assets”, as defined in the APA (as defined in the Loan Agreement) SAVE AND EXCEPT the West Texas Properties (as
defined in the Loan Agreement) (collectively, the “Camber Assets”), to a third party in an arm’s length transaction
approved by Lender in its sole discretion (the “Third Party Buyer”) effective as of August 1, 2018 (the “Camber
Assets Sale Effective Date”, and the date of closing such Camber Assets sale, the “Camber Asset Sale Date”),
subject to (i) any and all liens and security interests of Lender, including without limitation, the Mortgage, (ii) the assumption
by the Third Party Buyer of the Indebtedness and the execution of such Loan Instruments as Lender may require in its sole discretion
upon such terms as Lender may require in its sole discretion to memorialize the assumption of the Indebtedness by the Third Party
Buyer; and (iii) the consent, authorization and confirmations by Richard N. Azar, II, RAD2 Minerals, Ltd., a Texas limited partnership,
Donnie B. Seay, and DBS Investments, Ltd., a Texas limited partnership, and acknowledgement of all continuing obligations of Guarantor
upon such terms and memorialized by such Loan Instruments as Lender may require. The Camber Assets to be sold to the Third Party
Buyer shall expressly be deemed to include certain non-operated interests operated by Equal Energy, Inc, and Bear Energy, Inc.,
including without limitation, all infrastructure, right of ways, easements, salt water disposal wells and all other non-operated
assets in connection therewith. The Camber Assets shall also expressly be deemed to include all of the following:

 

		a.	All of Borrower’s right, title and interest in and to the “Many Drinks” disposal
well and equipment, all associated agreements and other property or assets located on and/or associated with the “Many Drinks”
disposal well owned by Borrower;

 

		b.	All of Borrower’s right, title and interest in and to the Leasehold Estate acquired around
the Temporarily Abandoned Wells previously operated by and formerly owned by Midstates Petroleum or Equal Energy, Inc. or its subsidiary
Petroflow Energy Corporation (collectively, the “TAW Leases”), and all other property and assets located on and/or
associated therewith, subject to the TAW ORRI, defined below, owned as of the applicable Transfer Date; and

 

		c.	The Orion Assets, provided that the Borrower shall have the right to reserve (a) the Orion ORRI,
defined below; and (b) the Orion Production Payment, defined below.

 

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In the event of a sale by Borrower
during the Standstill and subject to Lender’s prior written consent, which shall not be unreasonably withheld, conditioned
or delayed, and Borrower’s compliance with all of the terms as set forth herein, Borrower shall assign and convey to the
Third Party Buyer the Camber Assets subject to a production payment reserved by Borrower in the amount of $2,500,000.00 burdening
solely 1/8 (12.5%) of the Orion Assets, in the form of Exhibit “C” hereto (the “Orion Production Payment”).
In addition to the Orion Production Payment, the Borrower will be provided a three percent (3%) overriding royalty interest reserved
by Borrower burdening all of Borrower’s right, title and interest in and to the oil and gas leases constituting the Orion
Assets (the “Orion ORRI”), in the form of Exhibit “D” hereto. If the Orion ORRI results in the Third Party
Buyer receiving less than a 75.0% net revenue interest in any of the oil and gas leases constituting the Orion Assets, the Orion
ORRI shall be reduced as to such oil and gas lease(s) assigned so that the Third Party Buyer shall not receive less than a 75.0%
net revenue interest therein. The proceeds from the Orion ORRI shall be credited towards the Orion Production Payment. The Orion
ORRI shall continue to remain in effect after the Orion Production Payment has been paid in full.

 

Furthermore, the Orion ORRI will
be subject to the following (collectively, the “ORRI Burdens”):

 

		a.	The Orion ORRI shall bear all costs born under the oil and gas leases constituting the Orion Assets,
including without limitation, taxes and treating, transportation, and marketing costs of the minerals produced thereunder;

 

		b.	The Orion ORRI shall include a proportionate reduction clause whereby if (i) the oil and gas leases
assigned cover less than the entire mineral interest, and/or (ii) the interest of Borrower in the oil and gas leases assigned cover
less than the entire leasehold interest, the Orion ORRI will be proportionately reduced;

 

		c.	The Orion ORRI shall contain a provision expressly permitting pooling without the consent of Borrower,
and except for the extensions and renewals of the current oil and gas leases constituting the Orion Assets, the Orion ORRI shall
not apply to new oil and gas leases covering the same lands burdened by the Orion ORRI obtained after the oil and gas leases burdened
by the Orion ORRI have terminated; and

 

		d.	Any implied covenants regarding the Orion ORRI shall be expressly waived by Borrower.

 

Furthermore, Borrower shall reserve
in the TAW Leases an overriding royalty interest in whatever leases remain at the closing of the Asset Purchase Agreement with
N&B Energy, Inc. (the “TAW ORRI”), in the form of Exhibit “E” hereto, equal to the difference between
existing oil and gas lease burdens, both contractual and of record, in the TAW Leases and an 81.125% net revenue interest. Like
the Orion ORRI, the TAW ORRI will be subject to the ORRI Burdens, and if the reservation of the TAW ORRI results in the Third Party
Buyer receiving less than an 81.125% net revenue interest in any of the oil and gas leases constituting the TAW Leases, the TAW
ORRI shall be reduced as to such oil and gas lease(s) assigned so that the Third Party Buyer shall not receive less than a 81.125%
net revenue interest therein. The TAW ORRI may be transferred prior to the applicable Transfer Date.

 

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As a part of the consideration
for the sale of the Camber Assets within the Standstill, Lender shall agree to release solely the West Texas Properties from Lender’s
liens and security interests, which Borrower shall retain and not convey to the Third Party Buyer. Additionally, immediately before
the Camber Assets Sale Effective Date, Borrower shall pledge to Lender the remaining right, title and interest of Borrower and/
or the owner thereof in the Orion Assets twelve and one-half percent (12.5%) so that Lender shall then have a perfected security
interest in 100% of the working interest in each of the oil and gas leases constituting the Orion Assets. Between the Effective
Date and the Camber Assets Sale Effective Date, Borrower covenants and agrees that it shall not burden the Orion Assets with any
additional lease burdens, including without limitation, any additional overriding royalty interests, which do not burden the oil
and gas leases constituting the Orion Assets as of the Effective Date SAVE AND EXCEPT the Orion Production Payment and the Orion
ORRI.

 

In the event that Borrower is
ready, willing and able to close on the sale of the Camber Assets, and either the Third Party Buyer is not ready, willing and able
to close and purchase the Camber Assets on or before the Standstill Date, or any reasonable extension agreed upon by Borrower and
the Third Party Buyer and approved by Lender in writing, or the Borrower has not received shareholder approval by the Standstill
Date or will not be able to hold a shareholder vote by such Standstill Date due to regulatory review of the proxy, Borrower shall
surrender the Camber Assets to Lender or Lender’s designee as of the Camber Assets Sale Effective Date, subject to any and
all security interests and liens of Lender and subject to the Orion ORRI, the TAW ORRI and the Orion Production Payment upon ten
(10) days following the Standstill Date or any agreed-upon extension (collectively, the “Surrender Right” and the “Asset
Surrender”). Lender shall, concurrently with its entry into this Agreement, designate an entity to hold the assets surrendered
pursuant to the Asset Surrender. The assignment and conveyance instruments for the Asset Surrender shall be in a form approved
by Lender in its reasonable discretion. The date that the Camber Assets are transferred to Lender is referred to herein as the
“Surrender Transfer Date.” Upon exercising the Surrender Right, Lender shall determine, in its sole discretion, the
value of the Camber Assets as of the Surrender Transfer Date (the “Camber Assets Value”), and the amount of the Indebtedness
shall be reduced by the amount of the Camber Assets Value. The amount of the remaining Indebtedness (after deduction of the Camber
Assets Value) is referred to herein as the “Post-Transfer Deficiency.” The transactions described in this paragraph,
if consummated, shall constitute an assignment and conveyance in lieu of foreclosure and not in any way a retention of collateral
in full or partial satisfaction of debt under Sections 9.620 of the Texas Business & Commerce Code (the “Code”).
Borrower hereby irrevocably and unconditionally waives, to the maximum extent allowed by law, any and all rights under Sections
9.620, 9.621 or 9.623 of the Code.

 

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In the event that Borrower complies
with the terms of this Agreement and (a) assigns the Camber Assets to a Third Party Buyer, the Lender agrees to only pursue the
Camber Assets, the Third Party Buyer and the Guarantor for the repayment of amounts owed under the Loan Instruments (including,
but not limited to principal, interest and fees due thereunder) and including the Post Transfer Deficiency, and to provide Borrower
a novation and release from any and all liability in connection with the Loan Instruments in a form reasonably approved by Lender;
or (b) the Lender exercises the Surrender Right, the Lender agrees to pursue only the Camber Assets and the Guarantor for the repayment
of amounts owed under the Loan Instruments (including, but not limited to principal, interest and fees due thereunder) and including
the Post Transfer Deficiency, and to provide Borrower a novation and release from any and all liability in connection with the
Loan Instruments in a form reasonably approved by Lender. In either case, the Borrower, and its current, past and future shareholders,
officers, and directors, except to the extent such are a Guarantor, shall have no liability for any amounts owed under the Loan
Instruments effective upon the Camber Assets Sale Effective Date or date of the Asset Surrender, as applicable. It is understood
and agreed that any and all protections and benefits under any asset purchase agreement for the sale of the Camber Assets from
Borrower to a Third Party Buyer approved by Lender, including without limitation, that certain Asset Purchase Agreement dated July
12, 2018 (the “N&B APA”), by and between Borrower, as Seller, and N&B Energy, LLC, as Buyer, are deemed incorporated
herein such that if Lender exercises the Surrender Right, all liabilities of Borrower under such asset purchase agreement, including
without limitation, the Excluded Liabilities, as defined in the N&B APA, shall remain with Borrower after Lender exercises
the Surrender Right.

 

		6.	Default. Failure or refusal of Borrower to (i) comply with any of the requirements hereunder,
or (ii) perform any of its obligations hereunder, or the breach of the representations or covenants of this Agreement by Borrower
(a “New Default”) shall constitute a default of this Agreement, the Note, the Loan Agreement, and the other Loan Instruments,
and the undersigned will be liable for Lender’s attorney’s fees and related costs or expenses in enforcing this Agreement.
Furthermore, if any default occurs during the Standstill under this Agreement, subject to written notice thereof provided by the
Lender to the Borrower and the Borrower being provided two business days in the event of a default in the Funds Transfer Requirements
and/or the payment of any amount due hereunder to the Lender in cash, and ten calendar days in the event of any other default hereunder,
to cure any such default, the Standstill shall immediately terminate.

 

Upon the happening of any New
Default, the Standstill shall terminate, and Lender may declare the entire outstanding principal amount of the Note, all accrued
and unpaid interest and all accrued and unpaid late charges thereunder and all other indebtedness of Borrower to Lender, to be
immediately due and payable, and the same shall thereupon become and be immediately due and payable without further notice and
presentment, demand, notice of intent to accelerate, notice of actual acceleration, protest, notice of protest or other notice
of default or dishonor of any kind, all of which are hereby expressly waived by Borrower. Borrower expressly waives the Grace and
Curative Period for any default under this Agreement whatsoever.

 

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		7.	No Oral Agreements, Amendments. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT
AMONG THE PARTIES AS OF THIS DATE AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. This Agreement may be amended only by a writing that ratifies, confirms and incorporates as a part thereof
the provisions of this Agreement not thereby amended. Each such amendment must be executed and delivered by Borrower and Lender.

 

		8.	Notices. Any notice, request, consent, instrument or other communication required or permitted
under this Agreement shall be in writing and shall be deemed to have been duly given on the third calendar day after being sent
by registered or certified mail, return receipt requested, postage prepaid, to the respective addresses of Borrower and Lender
set forth in the introductory paragraph on Page 1 hereof. Any party hereto may change its mailing address by providing written
notice to the other parties hereto.

 

		9.	Governing Law and Venue. Subject to Section 13 below, (i) this Agreement shall in
all respects be governed by, and construed in accordance with the laws of the State of Texas, without reference to the conflicts
of law rules thereof, and (ii) venue for any legal action involving this Agreement shall be in Bexar County, Texas.

 

		10.	Severability. Each section and subsection of this Agreement constitutes a separate and distinct
provision hereof. If any provision of this Agreement shall be adjudicated to be invalid, ineffective or unenforceable, the remaining
provisions shall not be affected thereby. The invalid, ineffective or unenforceable provision shall, without further action by
the Parties, be automatically construed to affect the original purpose and intent of the invalid, ineffective or unenforceable
provision.

 

		11.	Headings; Gender. The section headings in this Agreement have been inserted for convenience
of reference only and shall not constitute a part, or be given any effect in the construction or interpretation of this Agreement.
All references in this Agreement as to gender shall be interpreted in the applicable gender of the parties.

 

		12.	Counterparts. This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, and all of which together shall constitute but one and the same Agreement, and facsimile, PDF/Document
Imaging or other electronic signatures shall be just as binding as originals.

 

		13.	Arbitration.

 

BINDING ARBITRATION AGREEMENT

PLEASE READ THIS CAREFULLY. IT AFFECTS
YOUR RIGHTS.

 

BORROWER AND LENDER
AGREE TO ARBITRATION AS FOLLOWS (hereinafter referred to as the “Arbitration Provisions”): 

 

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		I.	Special Provisions and Definitions applicable to both CONSUMER DISPUTES and BUSINESS DISPUTES:

 

		(a)	Informal Resolution of Customer Concerns. Most customer concerns can be resolved
quickly and to the customer’s satisfaction by contacting your account officer, branch manager or by calling the Customer
Service Department in your region. The region and numbers are:

 

	1.      Laredo	 956-722-7611

	2.      Austin	 512-397-4506 

	3.      Brownsville 	956-547-1000

	4.      Commerce Bank 	956-724-1616

	5.      Corpus Christi 	361-888-4000

	6.      Eagle Pass	 830-773-2313

	7.      Houston 	713-526-1211

	8.      McAllen	 956-686-0263

	9.      Oklahoma	 405-841-2100

	10.    Port Lavaca	 361-552-9771

	11.    San Antonio	 210-518-2500

	12.    Zapata	 956-765-8361

 

In
the unlikely event that your account officer, branch manager or the customer service department is unable to resolve a complaint
to your satisfaction or if Lender has not been able to resolve a dispute it has with you after attempting to do so informally,
you and Lender agree to resolve those disputes through binding arbitration or small claims court instead of in courts of general
jurisdiction.

 

		(b)	Sending Notice of Dispute. If either you or Lender intend to seek arbitration, then
you or Lender must first send to the other by certified mail, return receipt requested, a written Notice of Dispute. The Notice
of Dispute to Lender should be addressed to: Dennis E. Nixon, President, at International Bancshares Corporation, P.O. Drawer 1359,
Laredo, Texas 78042-1359 or if by email, ibcchairman@ibc.com. The Notice of Dispute must (a) describe the nature and basis of the
claim or dispute; and (b) explain specifically what relief is sought. You may download a copy of the Notice of Dispute at www.ibc.com
or you may obtain a copy from your account officer or branch manager.

 

		(c)	If the Dispute is not Informally Resolved. If you and Lender do not reach an agreement
to resolve the claim or dispute within thirty (30) days after the Notice of Dispute is received, you or Lender may commence a binding
arbitration proceeding. During the binding arbitration proceeding, any settlement offers made by you or Lender shall not be disclosed
to the Arbitrator.

 

		(d)	“DISPUTE(S)”. As used herein, the word “DISPUTE(S)” includes
any and all controversies or claims between the PARTIES of whatever type or manner, including without limitation, any and
all claims arising out of or relating to this Agreement, compliance with applicable laws and/or regulations, any and all services
or products provided by Lender, any and all past, present and/or future Loan, lines of credit, letters of credit, credit facilities
or other form of indebtedness and/or agreements involving the PARTIES, any and all transactions between or involving the
PARTIES, and/or any and all aspects of any past or present relationship of the PARTIES, whether banking or otherwise,
specifically including but not limited to any claim founded in contract, tort, fraud, fraudulent inducement, misrepresentation
or otherwise, whether based on statute, regulation, common law or equity.

 

    Page 11

     

    

 

		(e)	“CONSUMER DISPUTE” and “BUSINESS DISPUTE”.
As used herein, “CONSUMER DISPUTE” means a DISPUTE relating to an account (including a deposit account),
agreement, extension of credit, loan, service or product provided by Lender that is primarily for personal, family or household
purposes. “BUSINESS DISPUTE” means any DISPUTE that is not a CONSUMER DISPUTE.

 

		(f)	“PARTIES” or “PARTY”. As used in these Arbitration
Provisions, the term “PARTIES” or “PARTY” means Borrower, Lender, and each and all persons
and entities signing this Agreement or any other agreements between or among any of the PARTIES as part of this transaction.
“PARTIES” or “PARTY” shall be broadly construed and include individuals, beneficiaries, partners,
limited partners, limited liability members, shareholders, subsidiaries, parent companies, affiliates, officers, directors, employees,
heirs, agents and/or representatives of any party to such documents, any other person or entity claiming by or through one of the
foregoing and/or any person or beneficiary who receives products or services from Lender and shall include any other owner and
holder of this Agreement. Throughout these Arbitration Provisions, the term “you” and “your”
refer to Borrower, and the term “Arbitrator” refers to the individual arbitrator or panel of arbitrators, as
the case may be, before which the DISPUTE is arbitrated.

 

		(g)	BINDING ARBITRATION. The PARTIES agree that any DISPUTE between the
PARTIES shall be resolved by mandatory binding arbitration pursuant to these Arbitration Provisions at the election of either
PARTY. BY AGREEING TO RESOLVE A DISPUTE IN ARBITRATION, THE PARTIES ARE WAIVING THEIR RIGHT TO A JURY TRIAL OR TO LITIGATE
IN COURT (except for matters that may be taken to small claims court for a CONSUMER DISPUTE as provided below).

 

		(h)	CLASS ACTION WAIVER. The PARTIES agree that (i) no arbitration proceeding
hereunder whether a CONSUMER DISPUTE or a BUSINESS DISPUTE shall be certified as a class action or proceed as a class
action, or on a basis involving claims brought in a purported representative capacity on behalf of the general public, other customers
or potential customers or persons similarly situated, and (ii) no arbitration proceeding hereunder shall be consolidated with,
or joined in any way with, any other arbitration proceeding. THE PARTIES AGREE TO ARBITRATE A CONSUMER DISPUTE OR BUSINESS DISPUTE
ON AN INDIVIDUAL BASIS AND EACH WAIVES THE RIGHT TO PARTICIPATE IN A CLASS ACTION.

 

    Page 12

     

    

 

		(i)	FEDERAL ARBITRATION ACT AND TEXAS LAW. The PARTIES acknowledge that this Agreement
evidences a transaction involving interstate commerce. The Federal Arbitration Act shall govern (i) the interpretation and enforcement
of these Arbitration Provisions, and (ii) all arbitration proceedings that take place pursuant to these Arbitration Provisions.
THE PARTIES AGREE THAT, EXCEPT AS OTHERWISE EXPRESSLY AGREED TO BY THE PARTIES IN WRITING, OR UNLESS EXPRESSLY PROHIBITED BY
LAW, TEXAS SUBSTANTIVE LAW (WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES) WILL APPLY IN ANY BINDING ARBITRATION PROCEEDING
OR SMALL CLAIMS COURT ACTION REGARDLESS OF WHO INITIATES THE PROCEEDING, WHERE YOU RESIDE OR WHERE THE DISPUTE AROSE. 

 

		II.	Provisions applicable only to a CONSUMER DISPUTE: 

 

		(a)	Any and all CONSUMER DISPUTES shall be resolved by arbitration administered by the American
Arbitration Association (“AAA”) under the Commercial Arbitration Rules and the Supplemental Procedures for Resolution
of Consumer Disputes and Consumer Due Process Protocol (which are incorporated herein for all purposes). It is intended by the
PARTIES that these Arbitration Provisions meet and include all fairness standards and principles of the American Arbitration
Association’s Consumer Due Process Protocol and due process in predispute arbitration. If a CONSUMER DISPUTE is for
a claim of actual damages above $250,000 it shall be administered by the AAA before three neutral arbitrators at the request of
any PARTY.

 

		(b)	Instead of proceeding in arbitration, any PARTY hereto may pursue its claim in your local
small claims court, if the CONSUMER DISPUTE meets the small claims court’s jurisdictional limits. If the small claims
court option is chosen, the PARTY pursuing the claim must contact the small claims court directly. The PARTIES agree
that the class action waiver provision also applies to any CONSUMER DISPUTE brought in small claims court.

 

		(c)	For any claim for actual damages that does not exceed $2,500, Lender will pay all arbitration fees
and costs provided you submitted a Notice of Dispute with regard to the CONSUMER DISPUTE prior to initiation of arbitration.
For any claim for actual damages that does not exceed $5,000, Lender also agrees to pay your reasonable attorney’s fees and
reasonable expenses your attorney charges you in connection with the arbitration (even if the Arbitrator does not award those to
you) plus an additional $2,500 if you obtain a favorable arbitration award for your actual damages which is greater than any written
settlement offer for your actual damages made by Lender to you prior to the selection of the Arbitrator.

 

    Page 13

     

    

 

		(d)	Under the AAA’s Supplemental Procedures for Consumer Disputes, if your claim for actual damages
does not exceed $10,000, you shall only be responsible for paying up to a maximum of $125 in arbitration fees and costs. If your
claim for actual damages exceeds $10,000 but does not exceed $75,000, you shall only be responsible for paying up to a maximum
of $375 in arbitration fees and costs. For any claim for actual damages that does not exceed $75,000, Lender will pay all other
arbitrator’s fees and costs imposed by the administrator of the arbitration. With regard to a CONSUMER DISPUTE for
a claim of actual damages that exceeds $75,000, or if the claim is a non-monetary claim, Lender agrees to pay all arbitration fees
and costs you would otherwise be responsible for that exceed $1,000. The fees and costs stated above are subject to any amendments
to the fee and cost schedules of the AAA. The fee and cost schedule in effect at the time you submit your claim shall apply. The
AAA rules also permit you to request a waiver or deferral of the administrative fees and costs of arbitration if paying them would
cause you financial hardship.

 

		(e)	Although under some laws, Lender may have a right to an award of attorney’s fees and expenses
if it prevails in arbitration, Lender agrees that it will not seek such an award in a binding arbitration proceeding with regard
to a CONSUMER DISPUTE for a claim of actual damages that does not exceed $75,000.

 

		(f)	To request information on how to
                                         submit an arbitration claim, or to request a copy of the AAA rules or fee schedule, you
                                         may contact the AAA at 1-800-778-7879 (toll free) or at www.adr.org.

 

		III.	Provisions applicable only to a BUSINESS DISPUTE:

 

		(a)	Any and all BUSINESS DISPUTES between the PARTIES shall be resolved by arbitration
in accordance with the Commercial Arbitration Rules of the AAA in effect at the time of filing, as modified by, and subject to,
these Arbitration Provisions. A BUSINESS DISPUTE for a claim of actual damages that exceeds $250,000 shall be administered
by AAA before at least three (3) neutral arbitrators at the request of any PARTY. In the event the aggregate of all affirmative
claims asserted exceeds $500,000, exclusive of interest and attorney’s fees, or upon the written request of any PARTY,
the arbitration shall be conducted under the AAA Procedures for Large, Complex Commercial Disputes. If the payment of arbitration
fees and costs will cause you extreme financial hardship you may request that AAA defer or reduce the administrative fees or request
Lender to cover some of the arbitration fees and costs that would be your responsibility.

 

		(b)	The PARTIES shall have the right to (i) invoke self-help remedies (such as setoff, notification
of account debtors, seizure and/or foreclosure of collateral, and nonjudicial sale of personal property and real property collateral)
before, during or after any arbitration, and/or (ii) request ancillary or provisional judicial remedies (such as garnishment, attachment,
specific performance, receiver, injunction or restraining order, and sequestration) before or after the commencement of any arbitration
proceeding (individually, and not on behalf of a class). The PARTIES need not await the outcome of the arbitration proceeding
before using self-help remedies. Use of self-help or ancillary and/or provisional judicial remedies shall not operate as a waiver
of either PARTY’s right to compel arbitration. Any ancillary or provisional judicial remedy which would be available
from a court at law shall be available from the Arbitrator. The PARTIES agree that the AAA Optional Rules for Emergency
Measures of Protection shall apply in an arbitration proceeding where emergency interim relief is requested.

 

    Page 14

     

    

 

		(c)	Except to the extent the recovery of any type or types of damages or penalties may not by waived
under applicable law, the Arbitrator shall not have the authority to award either PARTY (i) punitive, exemplary, special
or indirect damages, (ii) statutory multiple damages, or (iii) penalties, statutory or otherwise.

 

		(d)	The Arbitrator may award attorney’s fees and costs including the fees, costs and expenses
of arbitration and of the Arbitrator as the Arbitrator deems appropriate to the prevailing PARTY. The Arbitrator shall retain
jurisdiction over questions of attorney’s fees for fourteen (14) days after entry of the decision.

 

		IV.	General provisions applicable to both CONSUMER DISPUTES and BUSINESS
DISPUTES:

 

		(a)	The Arbitrator is bound by the terms of these Arbitration Provisions. The Arbitrator shall have
exclusive authority to resolve any DISPUTES relating to the scope or enforceability of these Arbitration Provisions, including
(i) all arbitrability questions, and (ii) any claim that all or a part of these Arbitration Provisions are void or voidable (including
any claims that they are unconscionable in whole or in part).

 

		(b)	These Arbitration Provisions shall survive any termination, amendment, or expiration of this
Agreement, unless all of the PARTIES otherwise expressly agree in writing.

 

		(c)	If a PARTY initiates legal proceedings, the failure of the initiating PARTY to request
arbitration pursuant to these Arbitration Provisions within 180 days after the filing of the lawsuit shall be deemed a waiver of
the initiating PARTY’S right to compel arbitration with respect to the claims asserted in the litigation. The failure
of the defending PARTY in such litigation to request arbitration pursuant to these Arbitration Provisions within 180 days
after the defending PARTY’S receipt of service of judicial process, shall be deemed a waiver of the right of
the defending PARTY to compel arbitration with respect to the claims asserted in the litigation. If a counterclaim, cross-claim
or third party action is filed and properly served on a PARTY in connection with such litigation, the failure of such PARTY
to request arbitration pursuant to these Arbitration Provisions within ninety (90) days after such PARTY’S receipt
of service of the counterclaim, cross-claim or third party claim shall be deemed a waiver of such PARTY’S right to
compel arbitration with respect to the claims asserted therein. The issue of waiver pursuant to these Arbitration Provisions is
an arbitrable dispute. Active participation in any pending litigation described above by a PARTY shall not in any event
be deemed a waiver of such PARTY’S right to compel arbitration. All discovery obtained in the pending litigation may
be used in any subsequent arbitration proceeding.

 

    Page 15

     

    

 

		(d)	Any PARTY seeking to arbitrate shall serve a written notice of intent to any and all opposing
PARTIES after a DISPUTE has arisen. The PARTIES agree a timely written notice of intent to arbitrate by either
PARTY pursuant to these Arbitration Provisions shall stay and/or abate any and all action in a trial court, save and except
a hearing on a motion to compel arbitration and/or the entry of an order compelling arbitration and staying and/or abating the
litigation pending the filing of the final award of the Arbitrator.

 

		(e)	Any Arbitrator selected shall be knowledgeable in the subject matter of the DISPUTE and
be licensed to practice law.

 

		(f)	For a one (1) member arbitration panel, the PARTIES are limited to an equal number of strikes
in selecting the arbitrator from the AAA neutral list, such that at least one arbitrator remains after the PARTIES exercise
all of their respective strikes. For a three (3) member arbitration panel, the PARTIES are limited to an equal number of
strikes in selecting the arbitrators from the AAA neutral list, such that at least three arbitrators remain after the PARTIES
exercise all of their respective strikes. After exercising all of their allotted respective strikes, the PARTIES shall rank
those potential arbitrators remaining numerically in order of preference (with “1” designating the most preferred).
The AAA shall review the PARTIES rankings and assign a score to each potential arbitrator by adding together the ranking
given to such potential arbitrator by each PARTY. The arbitrator(s) with the lowest score total(s) will be selected. In
the event of a tie or ties for lowest score total and if the selection of both or all of such potential arbitrators is not possible
due to the required panel size, the AAA shall select the arbitrator(s) it believes to be best qualified.

 

		(g)	The PARTIES and the Arbitrator shall treat all aspects of the arbitration proceedings, including,
without limitation, any documents exchanged, testimony and other evidence, briefs and the award, as strictly confidential; provided,
however, that a written award or order from the Arbitrator may be filed with any court having jurisdiction to confirm and/or enforce
such award or order.

 

		(h)	Any statute of limitation which would otherwise be applicable shall apply to any claim asserted
in any arbitration proceeding under these Arbitration Provisions, and the commencement of any arbitration proceeding tolls such
statute of limitations.

 

		(i)	If the AAA is unable for any reason to provide arbitration services, then the PARTIES agree
to select another arbitration service provider that has the ability to arbitrate the DISPUTE pursuant to and consistent
with these Arbitration Provisions. If the PARTIES are unable to agree on another arbitration service provider, any PARTY
may petition a court of competent jurisdiction to appoint an Arbitrator to administer the arbitration proceeding pursuant to and
consistent with these Arbitration Provisions.

 

    Page 16

     

    

 

		(j)	The award of the Arbitrator shall be final and Judgment upon
any such award may be entered in any court of competent jurisdiction. The arbitration award shall be in the form of a written reasoned
decision and shall be based on and consistent with applicable law.

 

		(k)	Unless the PARTIES mutually agree to hold the binding arbitration proceeding elsewhere,
venue of any arbitration proceeding under these Arbitration Provisions shall be in the county and state where Lender is located,
which is Lender’s address set out in the first paragraph on page 1 hereof.

 

		(l)	If any of these Arbitration Provisions are held to be invalid or unenforceable, the remaining provisions
shall be enforced without regard to the invalid or unenforceable term or provision.

 

JURY
WAIVER: IF A DISPUTE BETWEEN YOU AND LENDER PROCEEDS IN COURT RATHER THAN THROUGH MANDATORY BINDING ARBITRATION, THEN YOU AND LENDER
BOTH WAIVE THE RIGHT TO A JURY TRIAL, AND SUCH DISPUTE WILL BE TRIED BEFORE A JUDGE ONLY.

 

		14.	Time of the Essence. Time is of the essence as to all provisions of this Agreement.

 

		15.	Authority. Each person executing this Agreement on behalf of a Party represents to the other
Party that such person is duly authorized and has the legal capacity to execute and deliver this Agreement. Each Party executing
this Agreement represents to the other Parties that this Agreement is valid and binding on the Party executing this Agreement,
enforceable in accordance with its terms.

 

		16.	No Admission; Buy Peace. This Agreement shall not in any manner be construed as or be deemed
to be an admission of any liability on the part of Lender. Instead, this Agreement represents the intent of the Parties to enter
into a private compromise in the nature of a workout or voluntary reorganization. The Parties have contemplated the cost of litigation
of any dispute between Parties and have determined that it would be cost effective and in their respective best interest to enter
into this Agreement. It is the intent of the Parties to buy peace and by this Agreement to avoid the necessity for litigation and
to avoid the possibility of bankruptcy of Borrower if possible. The covenants and agreements herein are not mere recitals, but
rather the contractual agreement of the Parties with the express desire that they be honored and enforced as written. Each Party
has read this entire Agreement and has full knowledge of its effect and acknowledges that it is executing same for the purposes
set forth herein with such knowledge and of its own free will. Borrower acknowledges that the relationship of Borrower and Lender
is that of borrower and lender and that no special relationship exists which would contradict that relationship and that there
is no fiduciary relationship or duty arising from such relationship.

 

    Page 17

     

    

 

		17.	Guarantors. It is understood and agreed by Borrower that Guarantor is in no way whatsoever
released from their Guaranty Agreements by this Agreement, as Lender has the right, but not the obligation, at any time and from
time to time, without prejudice to any claim against Guarantor, and without notice to Guarantor, to enter into this Agreement without
waiving any of Lender’s rights against Guarantor, including without limitation, to collect from Guarantor any and all deficiencies
on the Indebtedness as determined by Lender in its sole discretion. Borrower also acknowledges and agrees that the Guaranty Agreements
signed by the Guarantor contain guaranties of payment, under which Lender at its sole discretion may elect to pursue remedies for
collection of debt or deficiencies of any obligations owed by Borrower or Guarantors, jointly or severally at any time upon default,
and Lender may make determinations in its sole discretion whether to seek collection of any amount of the Indebtedness from one
or all obligors, whether Borrower or Guarantor.

 

[Signatures are on the following pages.]

 

    Page 18

     

    

 

EXECUTED as of the
Effective Date.

 

BORROWER:

 

CAMBER ENERGY, INC. f/k/a LUCAS ENERGY,
INC.,

a Nevada corporation

 

	By:	/s/ Louis G. Schott	 

	Printed Name: 	Louis G. Schott	 

	Title:	Interim Chief Executive Officer	 

 

 

LENDER:

 

INTERNATIONAL BANK OF COMMERCE,

a Texas state banking corporation

 

	By:	/s/ Bernardo De La Garza	 
	 	Bernardo De La Garza,
Vice President	 

 

Signature Page

 

     

     

    

 

EXHIBIT “A”

 

THE ORION ASSETS

 

[see following page]

 

    Exhibit A, Page 1

     

    

 

 

    Exhibit A, Page 2

     

    

 

EXHIBIT “B”

 

THE ORION ASSETS

 

[see following pages]

 

    Exhibit B, Page 1

     

    

 

 

    Exhibit B, Page 2

     

    

 

 

    Exhibit B, Page 3

     

    

 

 

    Exhibit B, Page 4

     

    

 

 

    Exhibit B, Page 5

     

    

 

 

    Exhibit B, Page 6

     

    

 

 

    Exhibit B, Page 7

     

    

 

 

    Exhibit B, Page 8

     

    

 

 

    Exhibit B, Page 9

     

    

 

 

    Exhibit B, Page 10

     

    

 

EXHIBIT “C”

 

FORM OF PRODUCTION PAYMENT AGREEMENT

 

[see following pages]

 

    Exhibit C, Page 1

     

    

 

ASSIGNMENT OF PRODUCTION PAYMENT

 

	STATE OF
OKLAHOMA	§	 
	 	§	KNOW
ALL MEN BY THESE PRESENTS:
	COUNTY OF OKFUSKEE	§	 

 

This Assignment of Production
Payment (the “Assignment”), dated as of August 1, 2018 the (“Effective Date”), is by and
among N&B ENERGY, LLC, whose address is [________________] (“Assignor”); and CE Operating, LLC,
whose address is 1415 Louisiana Street, Suite 3500 Houston, Texas 77002 (“CE Operating”) or CE Operating’s designee
(collectively, “Assignee”). Assignor and Assignee are collectively the “Parties”.

 

NOW THEREFORE, in consideration
of the mutual obligations contained herein, the Parties agree as follows:

 

Definitions.
When used in this Assignment, the following terms shall have the meanings indicated below:

 

“Gross Proceeds”
for each calendar month or portion thereof during the term of this Assignment means the amounts actually received during such period
by Assignor or any successor or assignee of Assignor as revenues from the sale of Hydrocarbons (determined before calculating payments
hereunder).

 

“Hydrocarbons”
means all oil, gas, and other gaseous and liquid hydrocarbons or any combination of one or more of such substances in and under,
and which may be produced, saved, and sold from, and which shall accrue and be attributable to, the Leases described on Exhibit
“A”, and all unitization and pooling agreements and the units created thereby which cover or include such Leases or
portions thereof.

 

“Leases”
means those leases described on Exhibit “A”, attached hereto and incorporated herein for all purposes.

 

“Production
Costs” are those costs, charges, and expenses incurred by Assignor subsequent to the Effective Date and prior to expiration
of the term of this Assignment in connection with the Leases and wells listed on Exhibit “A”, expressly limited to:

 

(1)       costs
and expenses incurred in drilling, deepening, side-tracking, plugging--back, coring, testing, logging, completing and equipping
for production (including, the cost of wellhead facilities, storage tanks, separators, pumping equipment, flow lines, salt water
disposal equipment, and other similar production facilities), all wells now or hereafter located on the lands covered by the Leases
or on lands pooled or unitized therewith;

 

(2)       expenditures
made and costs incurred in connection with the operation and maintenance of the Leases and the production and marketing of Hydrocarbons
therefrom, such items of cost to include: (i) all costs of complying with legal requirements; (ii) all costs of lifting, producing,
and handling Hydrocarbons from the Leases, including but not limited to all costs of labor, fuel, repairs, hauling, materials,
supplies, utility charges, water and other costs incident thereto; (iii) costs of gathering, compressing, dehydrating, separating,
treating, processing, disposing, transporting, and marketing Hydrocarbons produced from the Leases, including the cost of constructing
and installing pipelines and other facilities necessary in connection therewith; (iv) all delay rentals, shut-in well payments,
minimum royalties and other payments made in connection with the maintenance of the Leases; (v) the costs of all workover and other
remedial well servicing operations; and (vi) the cost of all fluid injection, pressure maintenance, secondary recovery, recycling,
and other enhanced recovery operations; and

 

    Exhibit C, Page 2

     

    

 

(3)       all
insurance premiums to the extent insurance is maintained with respect to the Leases.

 

The term “Production
Costs” shall not include any administrative charges or any overhead charges paid, directly or indirectly, to the
operator or operators of the Leases.

 

Conveyance.

 

Assignor, for and in
consideration of Ten and No/100 Dollars ($10.00) and other good and valuable consideration, the receipt of which is hereby acknowledged,
does hereby assign, transfer and convey unto Assignee this Production Payment in the amount(s) set forth below.

 

The Production Payment
shall be twelve and five tenths (12.5%) percent of the Net Revenue (as defined below) attributable to and to the extent of any
leasehold interest of Assignor in and to all production from the Leases, and in each case after deducting therefrom the following:
(a) royalties reserved in said Lease(s); (b) all severance, production, excise, or other similar taxes measured by the Production
Payment for that particular month, limited to the amount of or the value of such production; and (c) any third-party lender’s
or investor’s recorded interest, including principal and interest, to the extent it encumbers the leasehold interests or
extends into the Net Revenue. Any investments, loans or other contributions received by Assignor, any of its affiliates, from third
parties for the purpose of drilling or operating costs which is not expended on direct drilling or operating costs, shall not be
included in Production Costs as a deduction against Gross Proceeds from which the Production Payment is payable. The 12.5%
share of Assignor’s net revenue interest out of which the Production Payment shall be made will not be burdened by administrative
overhead costs.

 

The Production Payment
shall be payable each month running from the Effective Date of this Assignment until Assignee has received Two Million Five Hundred
Thousand and No/100 Dollars ($2,500,000.00). Assignor shall also receive credit towards the Two Million Five Hundred Thousand and
No/100 Dollars ($2,500,000.00) for the amounts received by Assignee or its designee for the proceeds of the three (3.0) percent
overriding royalty interest it has on the same leases and wells listed on Exhibit “A” derived under that certain Assignment
of Overriding Royalty Interest dated _______________ 2018, from Assignor to Assignee, recorded as Document No. _____________________
in the Real Property Records of Okfuskee County, Oklahoma.

 

    Exhibit C, Page 3

     

    

 

Net Revenue Account.
Assignor shall establish and maintain a Net Revenue account (“Net Revenue Account”) in accordance with consistently
applied generally accepted accounting practices and the provisions of this Assignment, as follows:

 

(a)       The
Net Revenue Account shall be credited with all Gross Proceeds;

 

(b)       The
Net Revenue Account shall be debited for all Production Costs and taxes; and

 

(c)       The
balance in the Net Revenue Account, shall be determined as of the end of each calendar month, and, if positive, shall be deemed
“Net Revenue” for purposes of this Assignment.

 

Monthly Statement;
Payment. On or before the last business day of the month following the close of each calendar month, (a) Assignor shall deliver
to Assignee a statement showing, in reasonable detail, the balance of the Net Revenue Account as of the end of such calendar month,
and (b) Assignor shall pay to Assignee an amount equal to 12.50% of the Net Revenue, if any, for such calendar month (the “Production
Payment”). Assignee and its representatives shall have the right to audit the Net Revenue Account and records relating
to the Net Revenue Account upon request, such request not to be made more than once annually, to be performed at the sole cost
and expense of Assignee, except as provided below. Upon such a request, Assignor shall make available to Assignee or its designated
representative all records of account and supporting documentation within thirty (30) days. Assignee may specify the time period
for such audit, not to exceed twenty-four (24) months. In the event the Assignee finds any discrepancy of more than 5% in the amount
of proceeds paid to Assignee and the amount of proceeds which were due to Assignee, the Assignor shall pay all of the costs and
expenses of the audit. The Assignor shall promptly pay the amount of any deficiency in the proceeds paid to the Assignee hereunder
which are discovered as a result of any audit, from the date originally due.

 

In accordance with
Section 2.7(b) of that certain Asset Purchase Agreement dated July 10, 2018, between Assignor and Camber Energy, Inc., the parent
company of Assignee (the “APA”), and provided the Closing (as defined in the APA) occurs and Assignee fails to pay
any Unpaid Bills (as defined in the APA), Assignor may be entitled to pay such expenses and deduct the amount of such expenses
from any sums payable to Assignee hereunder.

 

Sales Contracts.
Assignor shall use commercially reasonable efforts to market or cause to be marketed all commercial quantities of Hydrocarbons.
Assignor may enter into one or more Hydrocarbon processing, sales or exchange contracts (“Marketing Contracts”)
under such terms as are acceptable to Assignor in its reasonable judgment; provided Assignor shall not enter into a Marketing Contract
with an affiliate, whether wholly or partially owned, by Assignor unless such Marketing Contract is on substantially the same material
terms and prices prevailing in the area in marketing contracts entered into by unaffiliated third parties in arm’s-length
transactions.

 

Assignee agrees to
execute such documents as may be reasonably requested by Assignor or its permitted successors in interest, from time to time, including
to evidence the unliquidated balance of the Production Payment or to evidence the termination of same upon the Production Payment
having been paid in full.

 

    Exhibit C, Page 4

     

    

 

Assignor reserves the
right to pre-pay to Assignee the unpaid balance of the Production Payment at any time and, upon such payment, the Production Payment
shall be in all things satisfied and terminated. A recordable release of the Production Payment shall be prepared to the reasonable
satisfaction of Assignor, executed by Assignee, and held in escrow by an escrow officer appointed by Assignor and shall be filed
of record within fourteen (14) days of the Production Payment’s termination.

 

Nothing contained herein
shall be deemed to constitute or create a joint venture or partnership between the parties hereto.

 

Assignee may convey
its rights under this Assignment and the Production Payment set forth herein to another party with written notice to Assignor.

 

TO HAVE AND TO HOLD
the Production Payment assigned herein unto Assignee, its successors and assigns forever, subject to the terms and provisions hereof.

 

The parties agree to
take all such further actions and to execute, acknowledge and deliver all such further documents that are reasonably necessary
or useful in carrying out the purposes of this Assignment.

 

IN WITNESS WHEREOF,
this Assignment is executed on the dates set forth below.

 

ASSIGNOR:

N&B ENERGY, LLC

 

	BY:	 	 
	 	____________________, Managing Member	 

 

 

ASSIGNEE:

CAMBER ENERGY, INC.

 

	BY:	 	 
	ITS:	 	 	 

 

    Exhibit C, Page 5

     

    

 

	THE STATE OF TEXAS	§	 
	 	§	 
	COUNTY OF ______________ 	§	 

 

This instrument was
acknowledged before me on this ____ day of _________________, 2018, by _____________, as Managing Member of the Assignor set forth
above and on behalf of each such entity.

 

	 	 
	 	Notary Public, in and for The State of Texas

 

  

	THE STATE OF TEXAS	§	 
	 	§	 
	COUNTY OF ______________ 	§	 

 

This instrument was
acknowledged before me on this ____ day of ______________________, 2018, by _______________, as ___________________________________ of the Assignee
set forth above and on behalf of each such entity.

 

	 	 
	 	Notary Public, in and for The State of Texas

 

    Exhibit C, Page 6

     

    

 

EXHIBIT A

 

    Exhibit C, Page 7

     

    

 

EXHIBIT “D”

 

FORM OF ORION ORRI

 

[see following pages]

 

    Exhibit D, Page 1

     

    

 

ASSIGNMENT OF OVERRIDING ROYALTY INTEREST

 

	STATE OF OKLAHOMA	§	 
	 	§	KNOW ALL MEN BY THESE PRESENTS:
	COUNTY OF OKFUSKEE	§	 

 

That CE Operating,
LLC having a mailing address at 1415 Louisiana Street, Suite 3500, Houston, Texas 77002 (hereinafter “Assignor”),
for and in consideration of one dollar ($1.00) and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, does hereby assign, transfer, sell and convey unto Camber Royalties, LLC having a mailing address
at 1415 Louisiana Street, Suite 3500 Houston, Texas 77002 (hereinafter “Assignee”) an Overriding Royalty Interest
equal to three percent of eight-eights (the “Overriding Royalty Interest”) in and to those Oil and Gas Leases and
Orders which cover the lands and wells described on Exhibit “A-1” and Exhibit “B” in Lincoln County, State
of Oklahoma.

 

The Overriding Royalty
Interest assigned herein applies to all oil, gas, casinghead gas or other hydrocarbon substances which may be produced, saved and
marketed from the lands under the terms of the Oil and Gas Leases described on Exhibit “A-1” or the wells described
on Exhibit “B”, if, as and when produced, saved, sold and marketed, but not otherwise, insofar and only insofar as
the Oil and Gas Leases cover the lands specifically described on Exhibit “A-1” and the wells on Exhibit “B”,
and subject to the provisions and conditions herein set forth. The Overriding Royalty Interest herein shall bear all costs borne
under the oil and gas leases constituting the Oil and Gas Leases described on Exhibit “A-1”, including without limitation,
taxes and treating, transportation, and marketing costs of the minerals produced thereunder and pay currently its proportionate
share of gross production, severance, pipeline taxes and other taxes which may be assessed or levied against said Overriding Royalty
Interest or the production attributable thereto. The Overriding Royalty Interest assigned herein shall not impose upon Assignor
herein, or Assignor’s successors and assigns, any duty or obligation to develop or operate the lands covered by the Oil and
Gas Leases which cover the lands described on Exhibit “A-1” for oil, gas or other hydrocarbons other than as required
by the provisions of the Oil and Gas Leases, nor to maintain the Oil and Gas Leases in effect by the payment of delay rentals.

 

In the event the Oil
and Gas Leases cover less than the entire interest in the oil, gas and other hydrocarbons in the lands covered thereby, the Overriding
Royalty Interest assigned herein shall be reduced proportionately and shall be payable to Assignee in the proportion which the
interests in the oil, gas and other hydrocarbons in the lands covered by the Oil and Gas Leases bear to the entire estate in the
oil, gas and other hydrocarbons in and under said lands described on Exhibit “A-1”.

 

In accordance with
Section 2.7(b) of that certain Asset Purchase Agreement dated July 10, 2018, between Camber Energy, Inc. and N&B Energy, LLC
(the “APA”), and provided the Closing (as defined in the APA) of such APA occurs and Assignee fails to pay any Unpaid
Bills (as defined in the APA), N&B Energy, LLC may be entitled to pay such expenses and deduct the amount of such expenses
from any sums payable to Assignee hereunder.

 

    Exhibit D, Page 2

     

    

 

This Overriding Royalty
Interest shall attach and apply to all extensions and renewals of the Oil and Gas Leases covering any of the wells described on
Exhibit “B”; however, this Overriding Royalty Interest shall expressly not apply to new oil and gas leases covering
the same lands burdened by the Overriding Royalty Interest obtained after the Oil and Gas Leases described on Exhibit “A-1”
have terminated.

 

Assignor is hereby
authorized to create or form pooled units and thereby pool or unitize the Overriding Royalty Interest in the same manner and to
the same extent as provided in the Oil and Gas Leases and Orders which cover the lands and wells described on Exhibit “A-1”
and Exhibit “B”, without any further consent of, or consultation with, Assignee. In the event of such pooling or unitization,
Assignee shall receive only such proportion of the Overriding Royalty Interest stipulated herein as the amount of the acreage covered
by the Oil and Gas Leases and Orders which cover the lands and wells described on Exhibit “A-1” and Exhibit “B”,
and placed in the unit bears to the total acreage in the unit. The Overriding Royalty Interests are subject to any and all amendments
of the Oil and Gas Leases and Orders, now and in the future.

 

If the assignment of
the Overriding Royalty Interest herein conveyed results in Assignor, or any third-party buyer of Assignor’s interest in the
Oil and Gas Leases and Orders which cover the lands and wells described on Exhibit “A-1” and Exhibit “B”,
receiving less than a 75.0% net revenue interest in any of the Oil and Gas Leases and Orders which cover the lands and wells described
on Exhibit “A-1” and Exhibit “B”, the Overriding Royalty Interest shall apply to such oil and gas lease(s)
assigned only to the extent necessary for Assignor or any third-party buyer of Assignor’s interest to receive no less than
a 75.0% net revenue interest in any of the Oil and Gas Leases and Orders.

 

If (i) the Oil and
Gas Leases described on Exhibit “A-1” or the wells described on Exhibit “B” cover less than the entire
mineral interest, and/or (ii) the interest of Assignor in the Oil and Gas Leases described on Exhibit “A-1” or the
wells described on Exhibit “B” cover less than the entire leasehold interest, the overriding royalty interest shall
be proportionately reduced.

 

This Assignment is
made without warranty of title, either express or implied. Provided, however, Assignor makes a special limited warranty to Assignee
that the interests assigned herein are not subject to any Agreement which has not been disclosed to Assignee which would adversely
affect the interests assigned herein. ANY AND ALL IMPLIED COVENANTS RELATING TO THE OVERRIDING ROYALTY INTEREST ASSIGNED HEREBY
ARE EXPRESSLY WAIVED BY ASSIGNEE AND OF NO FORCE OR EFFECT.

 

All of the terms, provisions,
covenants and agreements herein contained shall extend to and be binding upon the parties hereto, their respective successors and
assigns.

 

    Exhibit D, Page 3

     

    

 

Executed this ____
day of ________________, and effective ________________.

 

Assignor:

CE OPERATING, LLC 

	 	 	 
	By:	 	 

 

 

 

	STATE OF TEXAS	§	 
	 	§	 
	COUNTY OF BEXAR	§	 

 

Before me, the undersigned,
a Notary Public, in and for said County and State on this ____ day of June, 2018, personally appeared _____________________________________________,
to me known to be the identical person who subscribed the name of the maker thereof to the within and foregoing instrument,
and acknowledged to me that he/she executed the same as his/her free and voluntary act and deed, and the free and voluntary act
and deed of such limited liability company for the uses and purposes therein set forth.

 

IN WITNESS WHEREOF,
I have hereunto set my official signature and affixed my official seal the day and year first above written. 

	 	 
	 	Notary Public, State of ________________
	 	Commission No.: __________________
	 	My Commission expires on: __________________
	 	 
	 	(SEAL)

 

    Exhibit D, Page 4

     

    

 

EXHIBIT “A-1”

 

SCHEDULE OF LEASES

 

    Exhibit D, Page 5

     

    

 

EXHIBIT “B”

 

SCHEDULE OF WELLS

 

    Exhibit D, Page 6

     

    

 

EXHIBIT “E”

 

FORM OF TAW ORRI

 

[see following pages]

 

    Exhibit E, Page 1

     

    

 

ASSIGNMENT OF OVERRIDING ROYALTY INTEREST

 

	STATE OF OKLAHOMA	§	 
	 	§	KNOW ALL MEN BY THESE PRESENTS:
	COUNTY OF LINCOLN	§	 

 

That __________________
having a mailing address at ____________________________________ (hereinafter “Assignor”), for and in consideration
of one dollar ($1.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
does hereby assign, transfer, sell and convey unto Camber Royalties, LLC having a mailing address at 1415 Louisiana Street,
Suite 3500, Houston, Texas 77002 (hereinafter “Assignee”) an Overriding Royalty Interest equal to the difference
between existing burdens and eighteen and eight hundred seventy-five one thousands percent (18.875%) (the “Overriding Royalty
Interest”) in and to those Oil and Gas Leases and Orders which cover the lands and wells described on Exhibit “A-1”
and Exhibit “B” in Lincoln County, State of Oklahoma.

 

The Overriding Royalty
Interest assigned herein applies to all oil, gas, casinghead gas or other hydrocarbon substances which may be produced, saved and
marketed from the lands under the terms of the Oil and Gas Leases described on Exhibit “A-1” or the Wells described
on Exhibit “B”, if, as and when produced, saved, sold and marketed, but not otherwise, insofar and only insofar as
the Oil and Gas Leases cover the lands specifically described on Exhibit “A-1” and the Wells on Exhibit “B”,
and subject to the provisions and conditions herein set forth. The Overriding Royalty Interest herein shall bear all costs borne
under the oil and gas leases constituting the Oil and Gas Leases described on Exhibit “A-1”, including without limitation,
taxes and treating, transportation, and marketing costs of the minerals produced thereunder and pay currently its proportionate
share of gross production, severance, pipeline taxes and other taxes which may be assessed or levied against said Overriding Royalty
Interest or the production attributable thereto. The Overriding Royalty Interest assigned herein shall not impose upon Assignor
herein, or Assignor’s successors and assigns, any duty or obligation to develop or operate the lands covered by the Oil and
Gas Leases which cover the lands described on Exhibit “A-1” for oil, gas or other hydrocarbons other than as required
by the provisions of the Oil and Gas Leases nor to maintain the Oil and Gas Leases in effect by the payment of delay rentals.

 

In the event the Oil
and Gas Leases cover less than the entire interest in the oil, gas and other hydrocarbons in the lands covered thereby, the Overriding
Royalty Interest assigned herein shall be reduced proportionately and shall be payable to Assignee in the proportion which the
interests in the oil, gas and other hydrocarbons in the lands covered by the Oil and Gas Leases bear to the entire estate in the
oil, gas and other hydrocarbons in and under said lands described on Exhibit “A-1”.

 

In accordance with
Section 2.7(b) of that certain Asset Purchase Agreement dated July 10, 2018, between Camber Energy, Inc. and N&B Energy, LLC
(the “APA”), and provided the Closing (as defined in the APA) of such APA occurs and Assignee fails to pay any Unpaid
Bills (as defined in the APA), N&B Energy, LLC may be entitled to pay such expenses and deduct the amount of such expenses
from any sums payable to Assignee hereunder.

 

    Exhibit E, Page 2

     

    

 

This Overriding Royalty
Interest shall attach and apply to all extensions and renewals of the Oil and Gas Leases covering any of the wells described on
Exhibit “B”; however, this Overriding Royalty Interest shall expressly not apply to new oil and gas leases covering
the same lands burdened by the Overriding Royalty Interest obtained after the Oil and Gas Leases described on Exhibit “A-1”
have terminated.

 

If the assignment of
the Overriding Royalty Interest herein conveyed results in Assignor, or any third-party buyer of Assignor’s interest in the
Oil and Gas Leases and Orders which cover the lands and wells described on Exhibit “A-1” and Exhibit “B”,
receiving less than an 81.125% net revenue interest in any of the Oil and Gas Leases and Orders which cover the lands and wells
described on Exhibit “A-1” and Exhibit “B”, the Overriding Royalty Interest shall apply to such oil and
gas lease(s) assigned only to the extent necessary for Assignor or any third-party buyer of Assignor’s interest to receive
no less than an 81.125% net revenue interest in any of the Oil and Gas Leases and Orders.

 

If (i) the Oil and
Gas Leases described on Exhibit “A-1” or the wells described on Exhibit “B” cover less than the entire
mineral interest, and/or (ii) the interest of Assignor in the Oil and Gas Leases described on Exhibit “A-1” or the
wells described on Exhibit “B” cover less than the entire leasehold interest, the overriding royalty interest shall
be proportionately reduced.

 

Assignor is hereby
authorized to create or form pooled units and thereby pool or unitize the Overriding Royalty Interest in the same manner and to
the same extent as provided in the Oil and Gas Leases and Orders which cover the lands and wells described on Exhibit “A-1”
and Exhibit “B”, without any further consent of, or consultation with, Assignee. In the event of such pooling or unitization,
Assignee shall receive only such proportion of the Overriding Royalty Interest stipulated herein as the amount of the acreage covered
by the Oil and Gas Leases and Orders which cover the lands and wells described on Exhibit “A-1” and Exhibit “B”,
and placed in the unit bears to the total acreage in the unit. The Overriding Royalty Interests are subject to any and all amendments
of the Oil and Gas Leases and Orders, now and in the future.

 

This Assignment is
made without warranty of title, either express or implied. Provided, however, Assignor makes a special limited warranty to Assignee
that the interests assigned herein are not subject to any Agreement which has not been disclosed to Assignee which would adversely
affect the interests assigned herein. ANY AND ALL IMPLIED COVENANTS RELATING TO THE OVERRIDING ROYALTY INTEREST ASSIGNED HEREBY
ARE EXPRESSLY WAIVED BY ASSIGNEE AND OF NO FORCE OR EFFECT.

 

All of the terms, provisions,
covenants and agreements herein contained shall extend to and be binding upon the parties hereto, their respective successors and
assigns.

 

    Exhibit E, Page 3

     

    

 

Executed this ____
day of _______________, but effective ________________________.

 

Assignor: 

	 	 	 
	By:	 	 

 

	STATE OF TEXAS	§	 
	 	§	 
	COUNTY OF __________	§	 

 

Before me, the undersigned,
a Notary Public, in and for said County and State on this ____ day of __________, 20___, personally appeared ______________________________________.
to me known to be the identical person who subscribed the name of the maker thereof to the within and foregoing instrument,
and acknowledged to me that he/she executed the same as his/her free and voluntary act and deed, and the free and voluntary act
and deed of such limited liability company for the uses and purposes therein set forth.

 

IN WITNESS WHEREOF,
I have hereunto set my official signature and affixed my official seal the day and year first above written.

 

	 	 	 	 
	 	 	 	Notary Public, State of ________________
	 	 	 	Commission No.:  __________________
	 	 	 	My Commission expires on: __________________
	 	 	 	 
	 	 	 	(SEAL)

  

    Exhibit E, Page 4

     

    

 

EXHIBIT “A-1”

 

SCHEDULE OF LEASES

 

    Exhibit E, Page 5

     

    

 

EXHIBIT “B”

 

SCHEDULE OF WELLS

 

    Exhibit E, Page 6sien-ex103_290.htm

Exhibit 10.3

SIENTRA, INC.

EMPLOYMENT AGREEMENT

 

Paul Little

 

This Executive Employment Agreement (the “Agreement”), made between Sientra, Inc., a Delaware company (the “Company”), and Paul Little (“Executive”) (collectively, the “Parties”), and shall be effective as of August 8, 2018 (the “Effective Date”). 

Whereas, the Company desires to employ Executive pursuant to the terms, provisions and conditions set forth in this Agreement; and

Whereas, Executive desires to accept his employment on the terms, provisions and conditions set forth in this Agreement. 

Now, Therefore, in consideration of the promises and the mutual covenants herein contained, the Parties hereby agree as follows:

1.Employment by the Company.

1.1Position.  Executive shall serve as Chief Financial Officer, Senior Vice President, and Treasurer of the Company.  During the term of Executive’s employment with the Company, Executive will devote Executive’s diligent efforts to the business of the Company.  

1.2Duties and Location.  Executive shall perform such duties as are required by the Company’s Chief Executive Officer, to whom Executive will report.  Executive’s primary office location shall be the Company’s Santa Barbara office.  The Company reserves the right to reasonably require Executive to perform Executive’s duties at places other than Executive’s primary office location from time to time, and to require reasonable business travel.  Executive shall devote substantially all of Executive’s business time and attention to the performance of Executive’s duties hereunder, except for approved vacation periods and reasonable periods of illness or other incapacities permitted by the Company’s general employment policies.  Executive shall not engage in any other business, profession or occupation for compensation or otherwise that would conflict or interfere with the rendition of services to the Company, either directly or indirectly; provided that nothing in this Agreement shall preclude Executive from (i) managing personal investments, (ii) serving on civic or charitable boards or committees, (iii) engaging in business or professional activities for compensation from a third party, for 40 or fewer hours per calendar year, so long as such activities do not compete with the Company, and (iv) with the prior approval from the Chief Executive Officer (not to be unreasonably withheld or delayed), serving on the board of directors of one other for-profit company that does not compete with the Company, so long as all such activities described in clauses (i) through (iv) herein do not materially interfere with the performance of Executive’s duties and responsibilities under this Agreement. Executive has provided to the Chief Executive Officer a written list of all boards of directors (whether for-profit or non-profit) of which he is a member.

1.3Policies and Procedures.  The employment relationship between the Parties shall be governed by the general employment policies and practices of the Company, except that when the terms of this Agreement differ from or are in conflict with the Company’s general employment policies or practices, this Agreement shall control.  Executive’s employment constitutes “at-will” employment and the employment relationship may be terminated by the Company or Executive at any time, with or without notice, subject to the provisions of this Agreement.

1.

 

2.Compensation.

2.1Salary.  As of the Effective Date, Executive’s base salary is payable at the annualized rate of $350,000 per year (the “Base Salary”), subject to standard payroll deductions and withholdings and payable in accordance with the Company’s regular payroll schedule.  

2.2Performance Bonus.  For each full calendar year during the Executive’s employment, Executive will be eligible to earn a performance bonus of up to 50% of the Executive’s Base Salary (the “Performance Bonus”) based upon the following criteria: (i) attainment of corporate objective(s) according to the milestones as determined by the Compensation Committee of the Board of Directors (the “Committee”) and communicated to the Executive in writing; and (ii) attainment of personal performance objectives according to the milestones as determined by the Chief Executive Officer in consultation with the Committee and communicated to the Executive in writing. The achievement of and amount of the Performance Bonus as measured by the foregoing criterion shall be determined by the Committee in its sole and absolute discretion.  For the 2018 partial year period, the Performance Bonus as will be paid on a pro-rata basis to the extent that it is determined by the Committee to have been earned based on the criteria as previously established by the Committee.  Any subsequent year Performance Bonus criteria will be determined by the Committee and shall supersede any prior criteria.  Executive must remain an active employee through and including the end of any given Performance Bonus determination period and any such bonus will be paid on or before February 15 of the year following the year in which the Executive’s right to such amount became vested.  Executive will not be eligible for, and will not earn, any Performance Bonus (including any prorated amounts) if Executive’s employment terminates for any reason before the end of the calendar year, except as expressly contemplated in in this Agreement.

2.3Equity Award.  It will be recommended to the Board of Sientra that you receive a grant of 50,000 Restricted Stock Units (“RSU”) in Sientra, which shall vest over a three-year time period commencing on the first business day of the month after the Effective Date (the “Vesting Calculation Date”), with one-third (1/3) vesting on the first anniversary of the Vesting Calculation Date, one-third (1/3) vesting on the second anniversary of the Vesting Calculation Date, and the remaining one-third (1/3) vesting on the third anniversary of the Vesting Calculation Date.  Such grant shall be subject to your execution of Sientra’s standard RSU agreement and your continued service with the Company.  The restricted stock units shall be governed by the RSU agreement and related equity incentive plan of the Company, respectively.

2.4Relocation Expenses.  The Company will reimburse Employee up to a total of $100,000 for reasonable out-of-pocket costs associated with moving Employee’s primary residence to Santa Barbara County within twelve months of the Effective Date

2.5Company Benefits. Executive shall be entitled to participate in all employee benefit programs for which Executive is eligible under the terms and conditions of the benefit plans that may be in effect from time to time and provided by the Company to its senior executive employees. The Company reserves the right to cancel or change the benefit plans or programs it offers to its employees at any time.   

3.Paid Time Off.  Executive shall be entitled to accrue and use paid time off in accordance with the terms of the Company’s policies and practices, however, that in no event will Employee’s paid time off accrual rate be lower than thirteen and thirty-three (13.33) hours per month.

2.

 

4.Expenses.  The Company will reimburse Executive for reasonable travel, entertainment, or other expenses incurred by Executive in furtherance or in connection with the performance of Executive’s duties hereunder, in accordance with the Company’s expense reimbursement policy as in effect from time to time. 

5.Termination of Employment; Severance.

5.1At-Will Employment.  Executive’s employment relationship is at-will.  Either Executive or the Company may terminate the employment relationship at any time, with or without Cause or advance notice.  

5.2Termination; Resignation; Death or Disability.

(a)The Company may terminate Executive’s employment with the Company at any time with or without Cause (as defined below).  Further, Executive may resign at any time, with or without Good Reason (as defined below).  Executive’s employment with the Company may also be terminated due to Executive’s death or disability.  

(b)Except as provided in Section 5.3 and Section 5.4 below, if Executive resigns or the Company terminates Executive’s employment, or upon Executive’s death or disability, then (i) Executive will no longer vest in any equity awards, (ii) all payments of compensation by the Company to Executive hereunder will terminate immediately, and (iii) Executive will not be entitled to any severance benefits.  In addition, Executive shall resign from all positions and terminate any relationships as an employee, advisor, officer or director with the Company and any of its affiliates, each effective on the date of termination. 

5.3Termination without Cause.  In the event Executive’s employment with the Company is terminated by the Company without Cause (and other than as result of death or disability), then provided such termination constitutes a “separation from service” (as defined under Treasury Regulation Section 1.409A-1(h), without regard to any alternative definition thereunder, a “Separation from Service”), and provided that Executive remains in compliance with the terms of this Agreement, the Company shall provide Executive with the following severance benefits (collectively, the “Severance Benefits”):

(a)The Company shall pay Executive, an amount equal to (i) twelve (12) months of Executive’s then-current Base Salary paid in equal installments on the Company’s normal payroll schedule over the twelve (12) month period immediately following the date of Separation from Service, and (ii) a lump sum payment equal to the pro-rata portion, if any, of the then-current Performance Bonus earned as of the date of Separation from Service as measured by both Company and individual performance.

(b)Provided that Executive timely elects continued coverage under COBRA, the Company shall pay Executive’s COBRA premiums to continue Executive’s coverage (including coverage for eligible dependents, if applicable) (“COBRA Premiums”) through the period (the “COBRA Premium Period”) starting on the Executive’s Separation from Service and ending on the earliest to occur of: (i) twelve (12) months following Executive’s Separation from Service; (ii) the date Executive becomes eligible for group health insurance coverage through a new employer; or (iii) the date Executive ceases to be eligible for COBRA continuation coverage for any reason, including plan termination.  In the event Executive becomes covered under another employer's group health plan or otherwise cease to be eligible for COBRA during the COBRA Premium Period, Executive must immediately notify the Company of such event.  Notwithstanding the foregoing, if the Company 

3.

 

determines, in its sole discretion, that it cannot pay the COBRA Premiums without a substantial risk of violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company shall in lieu thereof provide to Executive a taxable monthly payment in an amount equal to the monthly COBRA premium that Executive would be required to pay to continue Executive’s group health coverage in effect on the date of Executive’s employment termination (which amount shall be based on the premium for the first month of COBRA coverage), which payments shall be made on the last day of each month regardless of whether Executive elects COBRA continuation coverage and shall end on the earlier of (x) the date upon which Executive obtains other employment or (y) the last day of the 12th calendar month following Executive’s Separation from Service date.

5.4Termination in Connection with Change in Control.  If Executive is terminated without Cause (and other than as result of death or disability) or Executive resigns for Good Reason immediately prior to the closing of a Change in Control (as defined below) or within twelve (12) months following the closing of a Change in Control, such termination qualifies as a Separation from Service, and provided that Executive remains in compliance with the terms of this Agreement, then (a) Executive will be entitled to all of the Severance Benefits provided for in Section 5.3 above, and (b) 100% of all of Executive’s then-outstanding unvested Company equity awards will accelerate and will be deemed vested and exercisable as of Executive’s Separation from Service. In addition, if an acquiror does not assume or continue Executive’s then unvested Company equity awards in connection with a Change in Control that also represents a Corporate Transaction (as defined in the Company’s 2014 Equity Incentive Plan), then all such awards shall accelerate in full and will be deemed vested and exercisable as of the closing of the Corporate Transaction.

6.Conditions to Receipt of Severance Benefits.  The receipt of the Severance Benefits provided in Section 5.3 and Section 5.4 above will be subject to Executive signing and not revoking a separation agreement and release of claims in a form reasonably satisfactory to the Company (the “Separation Agreement”) within the time period set forth therein, which shall not exceed 50 days from the date of Executive’s Separation from Service (the “Release Period”).  No Severance Benefits will be paid or provided until the Separation Agreement becomes effective.  If the Release Period described in the preceding sentence spans two calendar years, then payment of Severance Benefits will in any event commence in the second calendar year to the extent required to comply with Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”).  Executive shall also resign from all positions and terminate any relationships as an employee, advisor, officer or director with the Company and any of its affiliates, each effective on the date of termination.

7.Section 409A.   It is intended that all of the severance benefits and other payments payable under this Agreement satisfy, to the greatest extent possible, the exemptions from the application of Code Section 409A provided under Treasury Regulations 1.409A‐1(b)(4), 1.409A‐1(b)(5) and 1.409A‐1(b)(9), and this Agreement will be construed to the greatest extent possible as consistent with those provisions, and to the extent no so exempt, this Agreement (and any definitions hereunder) will be construed in a manner that complies with Section 409A.  For purposes of Code Section 409A (including, without limitation, for purposes of Treasury Regulation Section 1.409A‐2(b)(2)(iii)), Executive’s right to receive any installment payments under this Agreement (whether severance payments, reimbursements or otherwise) shall be treated as a right to receive a series of separate payments and, accordingly, each installment payment hereunder shall at all times be considered a separate and distinct payment.  Notwithstanding any provision to the contrary in this Agreement, if Executive is deemed by the Company at the time of Executive’s Separation from Service to be a “specified employee” for purposes of Code Section 409A(a)(2)(B)(i), and if any of the payments upon Separation from Service set forth herein and/or under any other agreement with the Company are deemed to be “deferred compensation”, then to the extent delayed commencement of any portion of such payments is required in order to avoid a prohibited distribution under Code Section 409A(a)(2)(B)(i) and the related adverse taxation under Section 409A, 

4.

 

such payments shall not be provided to Executive prior to the earliest of (i) the expiration of the six-month period measured from the date of Executive’s Separation from Service with the Company, (ii) the date of Executive’s death or (iii) such earlier date as permitted under Section 409A without the imposition of adverse taxation.  Upon the first business day following the expiration of such time period, all payments deferred pursuant to this Paragraph shall be paid in a lump sum to Executive, and any remaining payments due shall be paid as otherwise provided herein or in the applicable agreement. No interest shall be due on any amounts so deferred.

8.Parachute Payments.  If any payment or benefit (including payments and benefits pursuant to this Agreement) that Executive would receive in connection with a Change in Control from the Company or otherwise (“Transaction Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Company shall cause to be determined, before any amounts of the Transaction Payment are paid to Service Provider, which of the following two alternative forms of payment would result in Service Provider’s receipt, on an after-tax basis, of the greater amount of the Transaction Payment notwithstanding that all or some portion of the Transaction Payment may be subject to the Excise Tax: (1) payment in full of the entire amount of the Transaction Payment (a “Full Payment”), or (2) payment of only a part of the Transaction Payment so that Service Provider receives the largest payment possible without the imposition of the Excise Tax (a “Reduced Payment”).  For purposes of determining whether to make a Full Payment or a Reduced Payment, the Company shall cause to be taken into account all applicable federal, state and local income and employment taxes and the Excise Tax (all computed at the highest applicable marginal rate, net of the maximum reduction in federal income taxes which could be obtained from a deduction of such state and local taxes).  If a Reduced Payment is made, (x) Executive shall have no rights to any additional payments and/or benefits constituting the Transaction Payment, and (y) reduction in payments and/or benefits shall occur in the manner that results in the greatest economic benefit to Executive as determined in this paragraph.  If more than one method of reduction will result in the same economic benefit, the portions of the Transaction Payment shall be reduced pro rata. Unless Executive and the Company otherwise agree in writing, any determination required under this section shall be made in writing by the Company’s independent public accountants (the “Accountants”), whose determination shall be conclusive and binding upon Executive and the Company for all purposes.  For purposes of making the calculations required by this section, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code.  Executive and the Company shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this section.  The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this section as well as any costs incurred by Executive with the Accountants for tax planning under Sections 280G and 4999 of the Code.

9.Definitions.  

9.1Cause.  For purposes of this Agreement, “Cause” for termination will mean:  (a) Executive’s willful failure substantially to perform his duties and responsibilities to the Company or willful, material violation of a policy of the Company; (b) Executive’s commission of any act of fraud, embezzlement, dishonesty or any other willful misconduct that has caused or is reasonably expected to result in material injury to the Company; (c) Executive’s willful breach of any of his obligations under any written agreement or covenant with the Company; (d) Executive’s material and willful violation of a federal or state law or regulation applicable to the business of the Company; and (e) Executive’s conviction or plea of guilty or no contest to a felony.

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9.2Change in Control.  For purposes of this Agreement, “Change in Control” shall have the meaning provided in the Company’s 2014 Equity Incentive Plan.

9.3Good Reason.  For purposes of this Agreement, Executive shall have “Good Reason” for resignation from employment with the Company if any of the following actions are taken by the Company without Executive’s affirmative prior written consent to such adverse change (which specifically acknowledges Executive’s waiver of the Good Reason condition with respect to the individual action that would otherwise form the basis of a resignation for Good Reason):  (a) a material reduction in Executive’s base salary of 10% or more in the aggregate during the 12-month period following the closing of a Change in Control; (b) a material reduction in Executive’s duties (including responsibilities and/or authorities), provided, however, that a change in job position (including a change in title) shall not be deemed a “material reduction” in and of itself unless Executive’s new duties are materially reduced from the prior duties; or (c) relocation of Executive’s principal place of employment to a place that increases Executive’s one-way commute by more than fifty (50) miles as compared to Executive’s then-current principal place of employment immediately prior to such relocation.  In order to resign for Good Reason, Executive must provide written notice to the Company’s Chief Executive Officer within 30 days after the first occurrence of the event giving rise to Good Reason setting forth the basis for Executive’s resignation, allow the Company at least 30 days from receipt of such written notice to cure such event, and if such event is not reasonably cured within such period, Executive must resign from all positions Executive then holds with the Company not later than 60 days after the expiration of the cure period.

10.Proprietary Information Obligations. Regardless of the reason of Executive’s termination of employment with the Company, Executive will continue to comply with the Employee Confidentiality, Inventions and Non-Interference Agreement entered into in connection with the commencement of his employment with the Company (the “Confidentiality Agreement”).

11.No Adverse Interests.  Executive agrees not to acquire, assume or participate in, directly or indirectly, any position, investment or interest known to be adverse or antagonistic to the Company, its business or prospects, financial or otherwise.

12.Non-Solicitation.  Executive agrees that during the period of employment with the Company and for twelve (12) months after the date Executive’s employment is terminated for any reason, Executive will not, either directly or through others, solicit or encourage or attempt to solicit or encourage any employee, independent contractor, or consultant of the Company to terminate his or her relationship with the Company in order to become an employee, consultant or independent contractor to or for any other person or entity.

13.Dispute Resolution.  To ensure the timely and economical resolution of disputes that may arise in connection with Executive’s employment with the Company, Executive and the Company agree that any and all disputes, claims, or causes of action arising from or relating to the enforcement, breach, performance, negotiation, execution, or interpretation of this Agreement, Executive’s employment, or the termination of Executive’s employment, including but not limited to statutory claims, shall be resolved to the fullest extent permitted by law by final, binding and confidential arbitration, by a single arbitrator, in Los Angeles, California, conducted by JAMS, Inc. (“JAMS”) under the then applicable JAMS rules (which can be found at the following web address: http://www.jamsadr.com/rulesclauses).  By agreeing to this arbitration procedure, both Executive and the Company waive the right to resolve any such dispute through a trial by jury or judge or administrative proceeding.  The Company acknowledges that Executive will have the right to be represented by legal counsel at any arbitration proceeding.  The arbitrator shall:  (a) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be permitted by 

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law; and (b) issue a written arbitration decision, to include the arbitrator’s essential findings and conclusions and a statement of the award.  The arbitrator shall be authorized to award any or all remedies that Executive or the Company would be entitled to seek in a court of law.  The Company shall pay all JAMS’ arbitration fees in excess of the amount of court fees that would be required of the Executive if the dispute were decided in a court of law.  Nothing in this Agreement is intended to prevent either Executive or the Company from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration.  Any awards or orders in such arbitrations may be entered and enforced as judgments in the federal and state courts of any competent jurisdiction. 

14.General Provisions.

14.1Notices.  Any notices provided must be in writing and will be deemed effective upon the earlier of personal delivery (including personal delivery by fax) or the next day after sending by overnight carrier, to the Company at its primary office location and to Executive at the address as listed on the Company payroll.

14.2Severability.  Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction to the extent possible in keeping with the intent of the parties.

14.3Waiver.  Any waiver of any breach of any provisions of this Agreement must be in writing to be effective, and it shall not thereby be deemed to have waived any preceding or succeeding breach of the same or any other provision of this Agreement.

14.4Complete Agreement.  This Agreement, together with the Confidentiality Agreement, constitutes the entire agreement between Executive and the Company with regard to this subject matter.  It supersedes all previous agreements and understandings between the parties with respect to the subject matter hereof and is the complete, final, and exclusive embodiment of the Parties’ agreement with regard to this subject matter.  This Agreement is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes any other such promises, warranties or representations.  This Agreement cannot be modified or amended except in a writing signed by a duly authorized officer of the Company.

14.5Counterparts.  This Agreement may be executed in separate counterparts, any one of which need not contain signatures of more than one party, but all of which taken together will constitute one and the same Agreement.

14.6Headings.  The headings of the paragraphs hereof are inserted for convenience only and shall not be deemed to constitute a part hereof nor to affect the meaning thereof.

14.7Successors and Assigns.  This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive and the Company, and their respective successors, assigns, heirs, executors and administrators, except that Executive may not assign any of his duties hereunder and he may not assign any of his rights hereunder without the written consent of the Company, which shall not be withheld unreasonably.

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14.8Tax Withholding and Indemnification.  All payments and awards contemplated or made pursuant to this Agreement will be subject to withholdings of applicable taxes in compliance with all relevant laws and regulations of all appropriate government authorities.  Executive acknowledges and agrees that the Company has neither made any assurances nor any guarantees concerning the tax treatment of any payments or awards contemplated by or made pursuant to this Agreement.  Executive has had the opportunity to retain a tax and financial advisor and fully understands the tax and economic consequences of all payments and awards made pursuant to the Agreement.

14.9Choice of Law.  All questions concerning the construction, validity and interpretation of this Agreement will be governed by the laws of the State of California.  

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In Witness Whereof, the Parties have executed this Agreement on the day and year first written above.

 

	
SIENTRA, INC.

	
 
	
 
	
 

	
By:
	
 
	
/s/ Jeffrey M. Nugent

	
 
	
 
	
Jeffrey M. Nugent

	
 
	
 
	
Chairman and Chief Executive Officer

	
 
	
 
	
 

	
Executive

	
/s/ Paul Little

	
Paul Little

 

[Signature Page to Employment Agreement – Paul Litte]

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