Document:

Exhibit
10.1

 

SECURITIES
PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this
“Agreement”) is dated as of June 12, 2014, between Document Security Systems, Inc., a New York corporation (the
“Company”), and the purchaser identified on the signature page hereto (including its successors and assigns,
the “Purchaser”).

 

WHEREAS, subject to the terms and conditions
set forth in this Agreement and pursuant to an effective registration statement under the Securities Act of 1933, as amended (the
“Securities Act”), the Company desires to issue and sell to the Purchaser, and the Purchaser desires to purchase
from the Company, securities of the Company as more fully described in this Agreement.

 

NOW, THEREFORE, IN CONSIDERATION of the
mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are
hereby acknowledged, the Company and the Purchaser agree as follows:

 

ARTICLE
I.

DEFINITIONS

 

1.1 Definitions. In addition
to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings set
forth in this Section 1.1:

 

“Acquiring Person” shall
have the meaning ascribed to such term in Section 4.5.

 

“Action” shall
have the meaning ascribed to such term in Section 3.1(k).

 

“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person as such terms are used in and construed under Rule 405 under the Securities Act.

 

“Board of Directors”
means the board of directors of the Company.

 

“Business Day”
means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which
banking institutions in the State of New York are authorized or required by law or other governmental action to close.

 

“Closing” means,
collectively, the Initial Closing and each Overallotment Closing.

 

“Closing Date”
means collectively, the Initial Closing Date and each Overallotment Closing Date.

 

“Closing Statement”
means the Closing Statement in the form on Annex A attached hereto.

 

“Commission”
means the United States Securities and Exchange Commission.

 

    	1

    	 

    

 

“Common Stock”
means the common stock of the Company, par value $0.02 per share, and any other class of securities into which such securities
may hereafter be reclassified or changed.

 

“Common Stock Equivalents”
means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible
into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

 

“Evaluation Date”
shall have the meaning ascribed to such term in Section 3.1(s).

 

“Exchange Act”
means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“FCPA” means
the Foreign Corrupt Practices Act of 1977, as amended.

 

“GAAP” shall
have the meaning ascribed to such term in Section 3.1(h).

 

“Indebtedness”
shall have the meaning ascribed to such term in Section 3.1(z).

 

“Initial Closing”
means the closing of the purchase and sale of the Shares pursuant to Section 2.1(a).

 

“Initial Closing Date”
means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto,
and all conditions precedent to (i) the Purchaser’s obligations to pay the Subscription Amount and (ii) the Company’s
obligations to deliver the Shares, in each case, have been satisfied or waived, but in no event later than the third Trading Day
following the date hereof.

 

“Intellectual Property”
shall have the meaning ascribed to such term in Section 3.1(p).

 

“Liens” means
a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

 

“Material Adverse Effect”
shall have the meaning assigned to such term in Section 3.1(b).

 

“Material Permits”
shall have the meaning ascribed to such term in Section 3.1(n).

 

“Overallotment Amount”
means the aggregate amount to be paid for Overallotment Shares purchased hereunder as specified below the Purchaser’s name
on the signature page of its Overallotment Notice and next to the heading “Subscription Amount,” in United States dollars
and in immediately available funds.

 

“Overallotment Closing”
means the closing of the purchase and sale of the Securities pursuant to Section 2.2(a).

 

    	2

    	 

    

 

“Per Share Purchase Price”
equals $1.44, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other
similar transactions of the Common Stock that occur after the date of this Agreement.

 

“Person” means
an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or threatened.

 

“Prospectus”
means the final prospectus filed for the Registration Statement.

 

“Prospectus Supplement”
means the supplement to the Prospectus complying with Rule 424(b) of the Securities Act that is filed with the Commission and delivered
by the Company to the Purchaser at the Initial Closing for the issuance of the Shares and the Overallotment Shares.

 

“Purchaser Party”
shall have the meaning ascribed to such term in Section 4.8.

 

“Registration Statement”
means the effective registration statement with Commission file No. 333-191704 which registers the sale of the Shares to the Purchaser.

 

“Required Approvals”
shall have the meaning ascribed to such term in Section 3.1(e).

 

“Rule 144”
means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time
to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect
as such Rule.

 

“Rule 424”
means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time
to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect
as such Rule.

 

“SEC Reports”
shall have the meaning ascribed to such term in Section 3.1(h).

 

“Securities Act”
means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Shares” means
the shares of Common Stock issued or issuable to the Purchaser pursuant to this Agreement.

 

“Short Sales”
means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to
include the location and/or reservation of borrowable shares of Common Stock).

 

    	3

    	 

    

 

“Subscription Amount”
means the aggregate amount to be paid for Shares purchased hereunder as specified below the Purchaser’s name on the signature
page of this Agreement and next to the heading “Subscription Amount,” in United States dollars and in immediately available
funds.

 

“Subsidiary”
means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company
formed or acquired after the date hereof.

 

“Trading Day”
means a day on which the principal Trading Market is open for trading.

 

“Trading Market”
means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question:
the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange
or the OTC Bulletin Board (or any successors to any of the foregoing).

 

“Transaction Documents”
means this Agreement and any other documents or agreements executed in connection with the transactions contemplated hereunder.

 

“Transfer Agent”
means American Stock Transfer and Trust Company, LLC, the current transfer agent of the Company, and any successor transfer agent
of the Company.

 

ARTICLE
II.

PURCHASE AND SALE

 

2.1Initial Closing. On the Initial
Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery
of this Agreement by the parties hereto, the Company agrees to sell, and the Purchaser agrees to purchase, an aggregate of 209,700
Shares. The Purchaser shall deliver to the Company, via wire transfer or a certified check, immediately available funds equal to
the Purchaser’s Subscription Amount as set forth on the signature page hereto executed by the Purchaser and the Company shall
deliver to the Purchaser its Shares, and the Company and the Purchaser shall deliver the other items set forth in Section 2.3 deliverable
at the Initial Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.3 and 2.4, the Initial Closing
shall occur at such location as the parties shall mutually agree, including the delivery to the Company of immediately available
funds comprising the full Subscription Amounts.

 

    	4

    	 

    

 

2.2Overallotment Right.

 

(a)From the date of the Initial
Closing until ninety (90) days after the Initial Closing Date, the Purchaser may, in its sole determination, elect to purchase,
in whole or in part, through one or more purchases up to 209,700 additional Shares in the aggregate (the “Overallotment
Shares” and such right to receive the Overallotment Shares pursuant to this Section 2.2, the “Overallotment
Right”). Notwithstanding anything herein to the contrary, to the extent that the Registration Statement (or another registration
statement registering the Overallotment Shares) is suspended or unavailable for the issuance of the Overallotment Shares during
the term of the Overallotment Right, the term of the Overallotment Right shall be extended by an equivalent number of days and
in no event shall the Overallotment Right terminate on a Trading Day during the term of the Overallotment Right on which the Registration
Statement is suspended or unavailable. The Overallotment Shares shall be on the same terms and conditions as the sale of the Shares
at the Initial Closing except that the price per Overallotment Share shall be $1.60 (subject to adjustment for reverse and
forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the
date of this Agreement). Subject to the terms of this Agreement, each Overallotment Closing shall occur within 3 Trading Days of
a duly delivered exercise notice by the exercising party (each such notice, an “Overallotment Notice” and each
such Overallotment Closing following delivery of an Overallotment Notice, an “Overallotment Closing Date”).
Upon the issuance and sale of the Overallotment Shares, the Overallotment Shares shall be deemed Shares for the purposes of this
Agreement.

 

(b)If on or after the fifth
Trading Day following delivery of an Overallotment Notice, provided that the Purchaser shall have paid the purchase price of the
Overallotment Shares, the Company has failed to deliver the Overallotment Shares and the Purchaser purchases (in an open market
transaction or otherwise) Common Stock to deliver in satisfaction of a sale by the Purchaser of all or any portion of the number
of Common Stock, or a sale of a number of Common Stock equal to all or any portion of the number of Overallotment Shares that the
Purchaser anticipated receiving from the Company in connection with any such Overallotment Right, then, in addition to all other
remedies available to the Purchaser, the Company shall, within three (3) Trading Days after the Purchaser’s request and in
the Purchaser’s sole discretion, either (i) pay cash to the Purchaser in an amount equal to the Purchaser’s total purchase
price (including brokerage commissions and other out-of-pocket expenses, if any) for the Common Stock so purchased (including brokerage
commissions and other out-of-pocket expenses, if any) (the “Buy-In Price”), at which point the Company’s
obligation to so deliver such certificate or credit the Purchaser’s balance account shall terminate and such shares shall
be cancelled, or (ii) promptly honor its obligation to so deliver to the Purchaser a certificate or certificates or credit the
Purchaser’s DTC account representing such number of Overallotment Shares that would have been so delivered if the Company
timely complied with its obligations hereunder and pay cash to the Purchaser in an amount equal to the excess (if any) of the Buy-In
Price over the product of (A) such number of Overallotment Shares (as the case may be) that the Company was required to deliver
to the Purchaser by such Overallotment Closing Date multiplied by (B) the lowest volume-weighted average price on any Trading Day
during the period commencing on the fifth Trading Day following delivery of such Overallotment Notice and ending on the date of
such delivery and payment under this clause (ii).

 

2.3Deliveries.

 

(a)On or prior to each Closing
Date (except as noted), the Company shall deliver or cause to be delivered to the Purchaser the following:

 

    	5

    	 

    

 

(i)As to the Initial Closing,
this Agreement duly executed by the Company;

 

(ii)As to the Initial Closing,
a copy of the instructions to the Transfer Agent instructing the Transfer Agent to deliver the Shares on an expedited basis via
The Depository Trust Company Deposit or Withdrawal at Custodian system (“DWAC”), registered in the name of the
Purchaser;

 

(iii)as to each Overallotment
Closing, a copy of the instructions to the Transfer Agent instructing the Transfer Agent to deliver on an expedited basis via DWAC
Overallotment Shares as set forth on the Purchaser’s Overallotment Notice;

 

(iv)as to each Overallotment
Closing, an officer’s certificate setting forth the Company’s compliance with its Representations and Warranties; and

 

(v)the Prospectus and Prospectus
Supplement (which may be delivered in accordance with Rule 172 under the Securities Act).

 

(b)On or prior to the applicable
Closing Date, the Purchaser shall deliver or cause to be delivered to the Company, the following:

 

(i)as to the Initial Closing,
this Agreement duly executed by the Purchaser; and

 

(ii)the Purchaser’s Subscription
Amount, as to the Initial Closing, or the Purchaser’s Overallotment Amount set forth on an Overallotment Notice, as to any
Overallotment Closing, by wire transfer to the account specified in writing by the Company.

 

2.4Closing Conditions. 

 

(a)The obligations of the
Company hereunder in connection with each Closing are subject to the following conditions being met:

 

(i)the accuracy in all material
respects on the applicable Closing Date of the representations and warranties of the Purchaser contained herein (unless as of a
specific date therein in which case they shall be accurate as of such date);

 

(ii)all obligations, covenants
and agreements of the Purchaser required to be performed at or prior to the applicable Closing Date shall have been performed;
and

 

(iii)the delivery by the Purchaser
of the items set forth in Section 2.3(b) of this Agreement.

 

(b)The obligations of the
Purchaser hereunder in connection with each Closing are subject to the following conditions being met:

 

    	6

    	 

    

 

(i)the accuracy in all material
respects when made and on the applicable Closing Date of the representations and warranties of the Company contained herein (unless
as of a specific date therein);

 

(ii)all obligations, covenants
and agreements of the Company required to be performed at or prior to such Closing Date shall have been performed;

 

(iii)the Shares shall have been
approved for listing on the Trading Market.

 

(iv)the delivery by the Company
of the items set forth in Section 2.3(a) of this Agreement;

 

(v)there shall have been no
Material Adverse Effect with respect to the Company since the date hereof; and

 

(vi)from the date hereof to
the applicable Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s
principal Trading Market, and, at any time prior to the applicable Closing Date, trading in securities generally as reported by
Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose
trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the
United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or
other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market
which, in each case, in the reasonable judgment of the Purchaser, makes it impracticable or inadvisable to purchase the Shares
at the applicable Closing.

 

ARTICLE
III.

REPRESENTATIONS AND WARRANTIES

 

3.1Representations and Warranties
of the Company. Except as set forth in the last Annual Report on Form 10-K and the last Quarterly Report on Form 10-Q, as supplemented
by the Prospectus Supplement, or in a disclosure schedule delivered by the Company to the Purchaser prior to the execution of this
Agreement, which reports and disclosure schedule shall be deemed a part hereof and shall qualify any representation or otherwise
made herein to the extent of the disclosure contained therein, the Company hereby makes the following representations and warranties
to the Purchaser:

 

(a)Subsidiaries. The
Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any
Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights to subscribe for or purchase securities. If the Company has no subsidiaries,
all other references to the Subsidiaries or any of them in the Transaction Documents shall be disregarded.

 

    	7

    	 

    

 

(b)Organization and Qualification.
The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use
its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation
nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational
or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as
a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it
makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could
not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of any
Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial
or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s
ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or
(iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction revoking,
limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

 

(c)Authorization; Enforcement.
The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this
Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The
execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by it
of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company
and no further action is required by the Company, the Board of Directors or the Company’s stockholders in connection herewith
or therewith other than in connection with the Required Approvals. This Agreement and each other Transaction Document to which
it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the
terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance
with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification
and contribution provisions may be limited by applicable law.

 

    	8

    	 

    

 

(d)No Conflicts. The
execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to which it is a party,
the issuance and sale of the Shares and the consummation by it of the transactions contemplated hereby and thereby do not and will
not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation,
bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets
of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or
without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary
debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of
the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation
of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to
which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property
or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could
not have or reasonably be expected to result in a Material Adverse Effect.

 

(e)Filings, Consents and
Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make
any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection
with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the filings required
pursuant to Section 4.4 of this Agreement, (ii) the filing with the Commission of the Prospectus Supplement, (iii) application(s)
to each applicable Trading Market for the listing of the Shares for trading thereon in the time and manner required thereby and
(iv) such filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).

 

(f)Issuance of the Shares;
Registration. The Shares are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents,
will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The Company
has reserved from its duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to this Agreement.
The Company has prepared and filed the Registration Statement in conformity with the requirements of the Securities Act, which
became effective on November 1, 2013 (the “Effective Date”), including the Prospectus, and such amendments
and supplements thereto as may have been required to the date of this Agreement. The Registration Statement is effective under
the Securities Act, including, without limitation, with respect to the issuance or resale of the Overallotment Shares pursuant
to the Overallotment Right, and no stop order preventing or suspending the effectiveness of the Registration Statement or suspending
or preventing the use of the Prospectus has been issued by the Commission and no proceedings for that purpose have been instituted
or, to the knowledge of the Company, are threatened by the Commission. The Company, if required by the rules and regulations of
the Commission, shall file the Prospectus with the Commission pursuant to Rule 424(b). At the time the Registration Statement and
any amendments thereto became effective, at the date of this Agreement and at each Closing Date, the Registration Statement and
any amendments thereto conformed and will conform in all material respects to the requirements of the Securities Act and did not
and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; and the Prospectus and any amendments or supplements thereto, at time
the Prospectus or any amendment or supplement thereto was issued and at each Closing Date, conformed and will conform in all material
respects to the requirements of the Securities Act and did not and will not contain an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were
made, not misleading.

 

    	9

    	 

    

 

(g)Capitalization.
The Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant
to the exercise of employee stock options under the Company’s stock option plans, the issuance of shares of Common Stock
to employees pursuant to the Company’s employee stock purchase plans and pursuant to the conversion and/or exercise of Common
Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act, except as disclosed
in the most recently filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive right,
right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents except
for any such rights that have been waived. Except as a result of the purchase and sale of the Shares or payment of the contractor
invoices in whole or in part in Shares in the ordinary course of business, there are no outstanding options, warrants, scrip rights
to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible
into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock,
or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue
additional shares of Common Stock or Common Stock Equivalents. The issuance and sale of the Shares will not obligate the Company
to issue shares of Common Stock or other securities to any Person (other than the Purchaser) and will not result in a right of
any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All
of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable, have
been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation
of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any
stockholder, the Board of Directors or others is required for the issuance and sale of the Shares. There are no stockholders agreements,
voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party
or, to the knowledge of the Company, between or among any of the Company’s stockholders.

 

    	10

    	 

    

 

(h)SEC Reports; Financial
Statements. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the
Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years
preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the
foregoing materials, including the exhibits thereto and documents incorporated by reference therein, together with the Prospectus
and the Prospectus Supplement, being collectively referred to herein as the “SEC Reports”) on a timely basis
or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such
extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities
Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading. The Company has never been an issuer subject to Rule
144(i) under the Securities Act. The financial statements of the Company included in the SEC Reports comply in all material respects
with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the
time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles
applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in
such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required
by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as
of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments.

 

(i)S-3 Eligibility.
The Company meets the requirements for use of Form S-3 under the Securities Act under the transaction requirements set forth in
General Instruction 1.B.6 of such form.

 

(j)Material Changes; Undisclosed
Events, Liabilities or Developments. Since the date of the latest audited financial statements included within the SEC Reports,
except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof, (i) there has been no event, occurrence
or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not
incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary
course of business consistent with past practice (B) liabilities not required to be reflected in the Company’s financial
statements pursuant to GAAP or disclosed in filings made with the Commission and (C) non-cash accounting measures that have effect
of reducing shareholder equity, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or
made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director
or Affiliate, except pursuant to existing Company stock option plans. The Company does not have pending before the Commission any
request for confidential treatment of information. No event, liability, fact, circumstance, occurrence or development has occurred
or exists or is reasonably expected to occur or exist with respect to the Company or its Subsidiaries or their respective businesses,
prospects, properties, operations, assets or financial condition that would be required to be disclosed by the Company under applicable
securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least one Trading
Day prior to the date that this representation is made.

 

    	11

    	 

    

 

(k)Litigation. There
is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened
against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental
or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”)
which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Shares
or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither
the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim
of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been,
and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company
or any current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending
the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities
Act.

 

(l)Labor Relations.
No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company, which
could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’ employees
is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither the
Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good. To the knowledge of the Company, no executive officer of the Company or
any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure
or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant
in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of
its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance
with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and
conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

(m)Compliance. Neither
the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been waived
that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company
or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or
credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether
or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any court, arbitrator
or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental
authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection,
occupational health and safety, product quality and safety and employment and labor matters, except in each case as could not have
or reasonably be expected to result in a Material Adverse Effect.

 

    	12

    	 

    

  

(n)Regulatory Permits.
The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state,
local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except
where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material
Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation
or modification of any Material Permit.

 

(o)Title to Assets.
The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable
title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case
free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and (ii) Liens for the
payment of federal, state or other taxes, for which appropriate reserves have been made in accordance with GAAP and, the payment
of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the
Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in
compliance.

 

(p)Intellectual Property.
The Company and its Subsidiaries own or possess adequate rights to use all patents, patent applications, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, trademark registrations, service marks, service mark registrations, trade names,
mask work rights and other intellectual property necessary to carry on the business now operated by it or proposed to be operated
by it as described in the SEC Reports (collectively, “Intellectual Property”), except where the lack of such
ownership or rights to use would not have a Material Adverse Effect. There is no litigation or other proceeding pending or, to
the Company’s knowledge, threatened and no claims are presently being asserted by any third party challenging or questioning
the ownership, validity, or enforceability of the Company's right to use or own any Intellectual Property or asserting that the
use of the Company’s Intellectual Property by the Company or the operation of the Company’s business infringes upon
or misappropriates the Intellectual Property of any third party, and the Company is unaware of any facts which would form a reasonable
basis for any such claim. None of, and neither the Company nor any Subsidiary has received a notice (written or otherwise) that
any of, the Intellectual Property has expired, terminated or been abandoned, or is essential for the Company’s business and
is expected to expire or terminate or be abandoned within two (2) years from the date of this Agreement. The Company is not otherwise
aware of any infringement of or conflict with asserted rights of others with respect to any of the Company's Intellectual Property
or the operation of the Company’s business. The Company is not otherwise aware of any facts or circumstances which would
render any of the Company's Intellectual Property invalid or inadequate to protect the interests of the Company therein, or with
respect to the patent applications contained in the Intellectual Property, unpatentable. Except as would not, individually or in
the aggregate have a Material Adverse Effect, to the best of the Company’s knowledge, (i) there is no infringement by third
parties engaged in commercial activity of any Intellectual Property of the Company relating to the Company’s business and
(ii) there are no non-commercial activities being performed by any third parties which, upon commercialization thereof, could reasonably
be expected to infringe on the Intellectual Property of the Company. The Company and its subsidiaries have taken all steps necessary
to perfect its ownership of and interest in the Intellectual Property.

 

    	13

    	 

    

 

(q)Insurance. The Company
and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts
as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including, but not limited
to, directors and officers insurance coverage at least equal to $5,000,000. Neither the Company nor any Subsidiary has any reason
to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business without a significant increase in cost.

 

(r)Transactions With Affiliates
and Employees. None of the officers or directors of the Company or any Subsidiary and, to the knowledge of the Company, none
of the employees of the Company or any Subsidiary is presently a party to any transaction with the Company or any Subsidiary (other
than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal property to or from, providing for the borrowing of money
from or lending of money to or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge
of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director,
trustee, stockholder, member or partner, in each case in excess of $120,000 other than for (i) payment of salary or consulting
fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits,
including stock option or incentive agreements under any stock option or incentive plan of the Company.

 

(s)Sarbanes-Oxley; Internal
Accounting Controls. The Company and the Subsidiaries are in compliance with any and all applicable requirements of the Sarbanes-Oxley
Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the Commission
thereunder that are effective as of the date hereof and as of each Closing Date. The Company and the Subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company and the Subsidiaries
have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company
and the Subsidiaries and designed such disclosure controls and procedures to ensure that information required to be disclosed by
the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the
time periods specified in the Commission’s rules and forms. The Company’s certifying officers have evaluated the effectiveness
of the disclosure controls and procedures of the Company and the Subsidiaries as of the end of the period covered by the most recently
filed periodic report under the Exchange Act (such date, the “Evaluation Date”). The Company presented in its
most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of
the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have
been no changes in the internal control over financial reporting (as such term is defined in the Exchange Act) of the Company and
its Subsidiaries that have materially affected, or are reasonably likely to materially affect, the internal control over financial
reporting of the Company and its Subsidiaries.

 

    	14

    	 

    

 

(t)Certain Fees. No
brokerage or finder’s fees or commissions are or will be payable by the Company or any Subsidiary to any broker, financial
advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated
by the Transaction Documents. The Purchaser shall have no obligation with respect to any fees or with respect to any claims made
by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions
contemplated by the Transaction Documents.

 

(u)Investment Company.
The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Shares, will not be or be an Affiliate
of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended. The Company shall
conduct its business in a manner so that it will not become an “investment company” subject to registration under the
Investment Company Act of 1940, as amended.

 

(v)Registration Rights.
No Person has any right to cause the Company or any Subsidiary to effect the registration under the Securities Act of any securities
of the Company or any Subsidiary.

 

(w)Listing and Maintenance
Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken
no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock
under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration.
The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Common Stock
is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements
of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be,
in compliance with all such listing and maintenance requirements.

 

    	15

    	 

    

 

(x)Disclosure. Except
with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms
that neither it nor any other Person acting on its behalf has provided the Purchaser or its agents or counsel with any information
that it believes constitutes or might constitute material, non-public information which is not otherwise disclosed in the Prospectus
Supplement. The Company understands and confirms that the Purchaser will rely on the foregoing representation in effecting transactions
in securities of the Company. All of the disclosure furnished by or on behalf of the Company to the Purchaser regarding the Company
and its Subsidiaries, their respective businesses and the transactions contemplated hereby is true and correct and does not contain
any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading. The Company acknowledges and agrees that Purchaser does
not make and has not made any representations or warranties with respect to the transactions contemplated hereby other than those
specifically set forth in Section 3.2 hereof.

 

(y)No Integrated Offering.
Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section 3.2, neither the Company, nor
any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under circumstances that would cause this offering of the Shares to be integrated
with prior offerings by the Company for purposes of any applicable shareholder approval provisions of any Trading Market on which
any of the securities of the Company are listed or designated.

 

(z)Solvency. Based
on the consolidated financial condition of the Company as of each Closing Date, after giving effect to the receipt by the Company
of the proceeds from the sale of the Shares hereunder, (i) the fair saleable value of the Company’s assets exceeds the amount
that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known
contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on
its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital
requirements of the business conducted by the Company, consolidated and projected capital requirements and capital availability
thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate
all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in
respect of its liabilities when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability
to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).
The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation
under the bankruptcy or reorganization laws of any jurisdiction within one year from Initial Closing Date. The SEC Reports sets
forth as of the date hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the
Company or any Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness” means (x) any
liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary
course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether
or not the same are or should be reflected in the Company’s consolidated balance sheet (or the notes thereto), except guaranties
by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business;
and (z) the present value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance
with GAAP. Neither the Company nor any Subsidiary is in default with respect to any Indebtedness.

 

    	16

    	 

    

 

(aa)Tax Status. Except
for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect,
the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local income and all foreign income
and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes
and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports
and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for periods
subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary know of no
basis for any such claim.

 

(bb)Foreign Corrupt Practices.
Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any agent or other person acting
on behalf of the Company or any Subsidiary, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment
or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed
to disclose fully any contribution made by the Company or any Subsidiary (or made by any person acting on its behalf of which the
Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of FCPA.

 

(cc)Accountants. To
the knowledge and belief of the Company, the Company’s accounting firm (i) is a registered public accounting firm as required
by the Exchange Act and (ii) has expressed, in the Company’s most recent Form 10-K, its opinion with respect to the financial
statements to be included in the Company’s Annual Report for the fiscal year ended December 31, 2013.

 

(dd) Acknowledgment Regarding
Purchaser’s Purchase of Shares. The Company acknowledges and agrees that the Purchaser is acting solely in the capacity
of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby. The Company
further acknowledges that the Purchaser is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity)
with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by the Purchaser or any
of its respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby
is merely incidental to the Purchaser’s purchase of the Shares. The Company further represents to the Purchaser that the
Company’s decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent
evaluation of the transactions contemplated hereby by the Company and its representatives.

 

    	17

    	 

    

 

(ee)Regulation M Compliance. 
The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed
to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or
resale of any of the Shares, (ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any of the Shares,
or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company.

 

(ff)Office of Foreign Assets
Control. Neither the Company nor any Subsidiary nor, to the Company's knowledge, any director, officer, agent, employee or
affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department (“OFAC”).

 

(gg)Money Laundering.
The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with applicable financial
record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable
money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering Laws”),
and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving
the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge of the Company or any Subsidiary,
threatened.

 

3.2Representations and Warranties
of the Purchaser. The Purchaser hereby represents and warrants as of the date hereof and as of each Closing Date to the Company
as follows (unless as of a specific date therein):

 

(a)Organization; Authority.
The Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company or
similar power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry
out its obligations hereunder and thereunder. The execution and delivery of this Agreement and performance by the Purchaser of
the transactions contemplated by this Agreement have been duly authorized by all necessary corporate, partnership, limited liability
company or similar action, as applicable, on the part of the Purchaser. Each Transaction Document to which it is a party has been
duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid
and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by
general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by
applicable law.

 

    	18

    	 

    

 

(b)Understandings or Arrangements.
The Purchaser is acquiring the Shares as principal for its own account and has no direct or indirect arrangement or understandings
with any other persons to distribute or regarding the distribution of such Shares (this representation and warranty not limiting
the Purchaser’s right to sell the Shares pursuant to the Registration Statement or otherwise in compliance with applicable
federal and state securities laws). The Purchaser is acquiring the Shares hereunder in the ordinary course of its business.

 

(c)Purchaser Status.
At the time the Purchaser was offered the Shares, it was, and as of each Closing Date, it will be an “accredited investor”
as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act.

 

(d)Experience of the Purchaser.
The Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Shares, and has
so evaluated the merits and risks of such investment. The Purchaser is able to bear the economic risk of an investment in the Shares
and, at the present time, is able to afford a complete loss of such investment.

 

(e)Certain Transactions and
Confidentiality. Other than consummating the transactions contemplated hereunder, the Purchaser has not, nor has any Person
acting on behalf of or pursuant to any understanding with the Purchaser, directly or indirectly executed any purchases or sales,
including Short Sales, of the securities of the Company during the period commencing as of the time that the Purchaser first
received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material
terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding the foregoing,
in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions
of the Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio
managers managing other portions of the Purchaser’s assets, the representation set forth above shall only apply with respect
to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Shares covered by this
Agreement. Other than to other Persons party to this Agreement, the Purchaser has maintained the confidentiality of all disclosures
made to it in connection with this transaction (including the existence and terms of this transaction). Notwithstanding the foregoing,
for avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect
to the identification of the availability of, or securing of, available shares to borrow in order to effect Short Sales or similar
transactions in the future.

 

(f)Access to Information.
The Purchaser acknowledges that it has had the opportunity to review the Transaction Documents (including all exhibits and schedules
thereto) and the SEC Reports and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and
to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Shares and the
merits and risks of investing in the Shares; (ii) access to information about the Company and its financial condition, results
of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense
that is necessary to make an informed investment decision with respect to the investment.

 

    	19

    	 

    

 

The Company acknowledges and agrees that the
representations contained in Section 3.2 shall not modify, amend or affect the Purchaser’s right to rely on the Company’s
representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction
Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of
the transaction contemplated hereby.

 

ARTICLE
IV.

OTHER AGREEMENTS OF THE PARTIES

 

4.1Registration Statement. The
Company shall use best efforts to keep a registration statement (including the Registration Statement) registering the issuance
or resale of the Shares (including the issuance of Overallotment Shares pursuant to the Overallotment Right) effective during the
term of the Overallotment Right.

 

4.2Furnishing of Information.
Until the time that the Purchaser owns no Shares, the Company covenants to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to
the Exchange Act.

 

4.3Integration. The Company shall
not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of
the Securities Act) that would be integrated with the offer or sale of the Shares for purposes of the rules and regulations of
any Trading Market such that it would require shareholder approval prior to the closing of such other transaction unless shareholder
approval is obtained before the closing of such subsequent transaction.

 

4.4Securities Laws Disclosure; Publicity.
The Company shall file a Current Report on Form 8-K, including descriptions of the Transaction Documents or including the Transaction
Documents as exhibits thereto, with the Commission within the time required by the Exchange Act. The Company and the Purchaser
shall consult with each other in issuing any press releases with respect to the transactions contemplated hereby. Notwithstanding
the foregoing, the Company shall not publicly disclose the name of the Purchaser, or include the name of the Purchaser in any filing
with the Commission or any regulatory agency or Trading Market, without the prior written consent of the Purchaser, except (a)
as required by federal securities law in connection with the filing of final Transaction Documents with the Commission and (b)
to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchaser
with prior notice of such disclosure permitted under this clause (b).

 

    	20

    	 

    

 

4.5Shareholder Rights Plan. No
claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that the Purchaser is an “Acquiring
Person” under any control share acquisition, business combination, poison pill (including any distribution under a rights
agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that the Purchaser could
be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Shares under the Transaction Documents
or under any other agreement between the Company and the Purchaser.

 

4.6Non-Public Information. Except
with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company covenants
and agrees that neither it, nor any other Person acting on its behalf will provide the Purchaser or its agents or counsel with
any information that the Company believes constitutes material non-public information, unless prior thereto the Purchaser shall
have entered into a written agreement with the Company regarding the confidentiality and use of such information. The Company understands
and confirms that the Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.

 

4.7Use of Proceeds. Except as
set forth in the Prospectus Supplement, the Company shall use the net proceeds from the sale of the Shares hereunder for working
capital purposes and shall not use such proceeds: (a) for the satisfaction of any portion of the Company’s debt (other than
payment of trade payables in the ordinary course of the Company’s business and prior practices), (b) for the redemption of
any Common Stock or Common Stock Equivalents, (c) for the settlement of any outstanding litigation or (d) in violation of FCPA
or OFAC regulations.

 

4.8Indemnification of Purchaser.
Subject to the provisions of this Section 4.8, the Company will indemnify and hold the Purchaser and its directors, officers, shareholders,
members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who controls the Purchaser (within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners
or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack
of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any
and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party
may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements
made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the Purchaser
Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate
of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless such action
is based upon a breach of such Purchaser Party’s representations, warranties or covenants under the Transaction Documents
or any agreements or understandings such Purchaser Party may have with any such stockholder or any violations by such Purchaser
Party of state or federal securities laws or any conduct by such Purchaser Party which constitutes fraud, gross negligence, willful
misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought
pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right
to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party
shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically
authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and
to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue
between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for
the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party
under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which
shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability
is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by
such Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification required by this Section 4.8
shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are
received or are incurred. The indemnity agreements contained herein shall be in addition to any cause of action or similar right
of any Purchaser Party against the Company or others and any liabilities the Company may be subject to pursuant to law.

 

    	21

    	 

    

 

4.9Reservation of Common Stock.
As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available at all times, free
of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company to issue Shares pursuant
to this Agreement. 

 

4.10Listing of Common Stock.
The Company hereby agrees to use best efforts to maintain the listing or quotation of the Common Stock on the Trading Market on
which it is currently listed. The Company further agrees, if the Company applies to have the Common Stock traded on any other Trading
Market, it will then use best efforts to include in such application all of the Shares, and will take such other action as is necessary
to cause all of the Shares to be listed or quoted on such other Trading Market as promptly as possible. The Company will then take
all action reasonably necessary to continue the listing and trading of its Common Stock on a Trading Market and will comply in
all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market.

 

4.11Certain Transactions and Confidentiality.
The Purchaser covenants that neither it nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute
any purchases or sales, including Short Sales of any of the Company’s securities during the period commencing with the execution
of this Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly announced pursuant
to the initial press release as described in Section 4.4.  The Purchaser covenants that until such time as the transactions
contemplated by this Agreement are publicly disclosed by the Company pursuant to the initial press release as described in Section
4.4, the Purchaser will maintain the confidentiality of the existence and terms of this transaction.  Notwithstanding the
foregoing and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees
that (i) the Purchaser makes no representation, warranty or covenant hereby that it will not engage in effecting transactions in
any securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced
pursuant to the initial press release as described in Section 4.4, (ii) the Purchaser shall not be restricted or prohibited from
effecting any transactions in any securities of the Company in accordance with applicable securities laws from and after the time
that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described
in Section 4.4 and (iii) the Purchaser shall not have any duty of confidentiality to the Company or its Subsidiaries after the
issuance of the initial press release as described in Section 4.4.  Notwithstanding the foregoing, in the case of a Purchaser
that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of the Purchaser’s
assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing
other portions of the Purchaser’s assets, the covenant set forth above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision to purchase the Shares covered by this Agreement.

 

    	22

    	 

    

 

ARTICLE
V.

MISCELLANEOUS

 

5.1Termination.  This Agreement
may be terminated by the Purchaser, or terminated by the Company, by written notice to the other parties, if the Initial Closing
has not been consummated without breach hereof by the terminating party on or before June 27, 2014; provided, however,
that no such termination will affect the right of any party to sue for any breach by any other party (or parties).

 

5.2Fees and Expenses. Except
as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees (including, without limitation,
any fees required for same-day processing of any instruction letter delivered by the Company), stamp taxes and other taxes and
duties levied in connection with the delivery of any Shares to the Purchaser.

 

5.3Entire Agreement. The Transaction
Documents, together with the exhibits and schedules thereto, the Prospectus and the Prospectus Supplement, contain the entire understanding
of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral
or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

 

5.4Notices. Any and all notices
or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given
and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile, with
confirmation of delivery, at the facsimile number set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New
York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered
via facsimile, with confirmation of delivery, at the facsimile number set forth on the signature pages attached hereto on a day
that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) upon delivery if sent by U.S. nationally
recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address
for such notices and communications shall be as set forth on the signature pages attached hereto.

 

    	23

    	 

    

 

5.5Amendments; Waivers. No provision
of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment,
by the Company and the Purchaser or, in the case of a waiver, by the party against whom enforcement of any such waived provision
is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to
be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement
hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such
right.

 

5.6Headings. The headings herein
are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions
hereof.

 

5.7Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company
may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser (other
than by merger). The Purchaser may assign any or all of its rights under this Agreement (other than the Overallotment Right, which
shall be non-transferrable) to any Person to whom the Purchaser assigns or transfers any Shares, provided that such transferee
agrees in writing to be bound, with respect to the transferred Shares, by the provisions of the Transaction Documents that apply
to the “Purchaser.”

 

5.8No Third-Party Beneficiaries.
This Agreement is intended for the benefit of the parties hereto, and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section
4.8.

 

5.9Governing Law. All questions
concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law
thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates,
directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient
venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served
in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof, effective upon receipt. Nothing contained herein shall be deemed to
limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action, suit
or proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company under
Section 4.8, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for its reasonable
attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action
or proceeding.

 

    	24

    	 

    

 

5.10Survival. The representations
and warranties contained herein shall survive the Closings and the delivery of the Shares.

 

5.11Execution. This Agreement
may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood
that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or
by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.

 

5.12Severability. If any term,
provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void
or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force
and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable
efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would
have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.

 

5.13Rescission and Withdrawal Right.
Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the other Transaction
Documents, whenever the Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does
not timely perform its related obligations within the periods therein provided, then the Purchaser may rescind or withdraw, in
its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in
part without prejudice to its future actions and rights.

 

5.14Replacement of Shares. If
any certificate or instrument evidencing any Shares is mutilated, lost, stolen or destroyed, the Company shall issue or cause to
be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable
third-party costs (including customary indemnity) associated with the issuance of such replacement Shares.

 

    	25

    	 

    

 

5.15Remedies. In addition to
being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Purchaser and the Company
will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree
to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would
be adequate.

 

5.16Payment Set Aside. To the
extent that the Company makes a payment or payments to the Purchaser pursuant to any Transaction Document or the Purchaser enforces
or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required
to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including,
without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any
such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such enforcement or setoff had not occurred.

 

5.17Saturdays, Sundays, Holidays,
etc.If the last or appointed day for the taking of any action or the expiration of any right required or granted herein
shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

 

5.18Construction. The parties
agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction Documents
and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and every
reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse and
forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the
date of this Agreement.

 

5.19WAIVER OF JURY TRIAL.
IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ONE PARTY AGAINST THE OTHER PARTY, THE PARTIES EACH KNOWINGLY
AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY
WAIVES FOREVER TRIAL BY JURY. 

 

    	26

    	 

    

 

IN WITNESS WHEREOF, the parties hereto have
caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated
above.

 

 

	DOCUMENT SECURITY SYSTEMS, INC.

	 	
        Address for Notice:

        First Federal Plaza, Suite 1525

        28 East Main Street

        Rochester, NY 14614

	
        By: 
	 	 	Fax: (585) 325-2977
	
         

         

         

         
	
        Name:

        Title:

         
	 	 

 

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

    	27

    	 

    

 

[PURCHASER SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned has
caused this Securities Purchase Agreement to be duly executed by its respective authorized signatory as of the date first indicated
above.

 

	Name of Purchaser:	 

 

	Signature of Authorized Signatory of Purchaser:	 

 

	Name of Authorized Signatory:	 

 

	Title of Authorized Signatory:	 

 

	Email Address of Authorized Signatory:	 

 

	Facsimile Number of Authorized Signatory:	 

 

	Address for Notice to Purchaser:	 

 

 

 

Address for Delivery of Shares to Purchaser (if not same as
address for notice):

 

 

 

 

	Subscription Amount:	$_________________

  

	Shares:	_________________

  

	Overallotment Shares:	_______________

  

	EIN Number:	_______________________

 

o
Notwithstanding anything contained in this Agreement to the contrary, by checking this box (i) the obligations of the above-signed
to purchase the securities set forth in this Agreement to be purchased from the Company by the above-signed, and the obligations
of the Company to sell such securities to the above-signed, shall be unconditional and all conditions to Initial Closing shall
be disregarded, (ii) the Initial Closing shall occur on the third (3rd) Trading Day following the date of this Agreement
and (iii) any condition to Initial Closing contemplated by this Agreement (but prior to being disregarded by clause (i) above)
that required delivery by the Company or the above-signed of any agreement, instrument, certificate or the like or purchase price
(as applicable) shall no longer be a condition and shall instead be an unconditional obligation of the Company or the above-signed
(as applicable) to deliver such agreement, instrument, certificate or the like or purchase price (as applicable) to such other
party on the Initial Closing Date.

 

    	28Exhibit 10.3

 

Execution Counterpart

	 

 

Credit
Agreement

 

Dated
as of

August
10, 2011

 

among

 

Yuma
Exploration and Production Company, inc.,

as
Borrower,

 

Amegy
Bank National Association,

as
Administrative Agent,

 

and

 

The
Lenders Party Hereto

 

Sole
Lead Arranger and Sole Bookrunner

 

Amegy
Bank National Association

	 

 

    	 

    	 

    

 

TABLE OF CONTENTS

 

	 	 	Page
	 	 	 
	ARTICLE I
	Definitions and Accounting
    Matters
	 	 	 
	Section 1.01.	Terms Defined Above	1
	Section 1.02.	Certain Defined Terms	1
	Section 1.03.	Types of Loans and Borrowings	17
	Section 1.04.	Terms Generally; Rules of Construction	18
	Section 1.05.	Accounting Terms and Determinations; GAAP	18
	Section 1.06.	Amounts of Letters of Credit	18
	Section 1.07.	Joint Preparation; Construction of Indemnities and Releases	18
	 	 	 
	ARTICLE II
	The Credits
	 	 	 
	Section 2.01.	Commitments	19
	Section 2.02.	Loans and Borrowings.	19
	Section 2.03.	Requests for Borrowings	19
	Section 2.04.	Interest Elections.	19
	Section 2.05.	Funding of Borrowings.	21
	Section 2.06.	Termination and Reduction of Aggregate Maximum Credit Amounts.	22
	Section 2.07.	Borrowing Base.	22
	Section 2.08.	Letters of Credit.	25
	Section 2.09.	Collateral.	29
	Section 2.10.	Additional Conditions for Future Acquisitions	30
	Section 2.11.	Defaulting Lenders.	31
	 	 	 
	ARTICLE III
	Payments of Principal and
    Interest; Prepayments; Fees
	 	 	 
	Section 3.01.	Repayment of Loans	33
	Section 3.02.	Interest.	33
	Section 3.03.	Alternate Rate of Interest	34
	Section 3.04.	Prepayments.	34
	Section 3.05.	Fees.	36
	 	 	 
	ARTICLE IV
	Payments; Pro Rata Treatment;
    Sharing of Payments
	 	 	 
	Section 4.01.	Payments Generally; Pro Rata Treatment; Sharing of Payments.	37
	Section 4.02.	Presumption of Payment by the Borrower	38
	Section 4.03.	Certain Deductions by the Administrative Agent	38
	Section 4.04.	Disposition of Proceeds	38
	 	 	 
	ARTICLE V
	Increased Costs; Break Funding
    Payments; Taxes; Illegality
	 	 	 
	Section 5.01.	Increased Costs.	38
	Section 5.02.	Break Funding Payments	39
	Section 5.03.	Taxes.	40
	Section 5.04.	Mitigation Obligations; Replacement of Lenders.	41
	Section 5.05.	Illegality	41

 

    	i

    	 

    

 

	ARTICLE VI
	Conditions Precedent
	 	 	 
	Section 6.01.	Effective Date	42
	Section 6.02.	Each Credit Event	44
	 	 	 
	ARTICLE VII
	Representations and Warranties
	 	 	 
	Section 7.01.	Organization; Powers	45
	Section 7.02.	Authority; Enforceability	45
	Section 7.03.	Approvals; No Conflicts	45
	Section 7.04.	Financial Condition; No Material Adverse Change.	45
	Section 7.05.	Litigation.	46
	Section 7.06.	Environmental Matters	47
	Section 7.07.	Compliance with the Laws and Agreements; No Defaults.	47
	Section 7.08.	Investment Company Act	47
	Section 7.09.	Taxes	47
	Section 7.10.	ERISA.	47
	Section 7.11.	Disclosure; No Material Misstatements	48
	Section 7.12.	Insurance	49
	Section 7.13.	Restriction on Liens	49
	Section 7.14.	Subsidiaries	49
	Section 7.15.	Location of Business and Offices	49
	Section 7.16.	Properties; Titles, Etc.	49
	Section 7.17.	Maintenance of Properties	50
	Section 7.18.	Gas Imbalances, Prepayments	50
	Section 7.19.	Marketing of Production	51
	Section 7.20.	Swap Agreements	51
	Section 7.21.	Use of Loans and Letters of Credit	51
	Section 7.22.	Sanctioned Persons	51
	Section 7.23.	Security Instruments	51
	 	 	 
	ARTICLE VIII
	Affirmative Covenants
	 	 	 
	Section 8.01.	Financial Statements; Other Information	52
	Section 8.02.	Notices of Material Events	54
	Section 8.03.	Existence; Conduct of Business	54
	Section 8.04.	Payment of Obligations	54
	Section 8.05.	Performance of Obligations under Loan Documents	55
	Section 8.06.	Operation and Maintenance of Properties	55
	Section 8.07.	Insurance	56
	Section 8.08.	Books and Records; Inspection Rights	56
	Section 8.09.	Compliance with Laws	56
	Section 8.10.	Environmental Matters.	56
	Section 8.11.	Further Assurances.	57
	Section 8.12.	Reserve Reports.	57
	Section 8.13.	Title Information.	58
	Section 8.14.	Additional Collateral; Additional Guarantors.	59
	Section 8.15.	ERISA Compliance	59
	Section 8.16.	Administrative Agent as Principal Depository	60

 

    	ii

    	 

    

 

	ARTICLE IX
	Negative Covenants
	 	 	 
	Section 9.01.	Financial Covenants.	60
	Section 9.02.	Debt	60
	Section 9.03.	Liens	61
	Section 9.04.	Dividends, Distributions and Redemptions	62
	Section 9.05.	Investments, Loans and Advances	62
	Section 9.06.	Nature of Business; International Operations	63
	Section 9.07.	Limitation on Leases	63
	Section 9.08.	Proceeds of Notes	63
	Section 9.09.	ERISA Compliance	63
	Section 9.10.	Sale or Discount of Receivables	64
	Section 9.11.	Mergers, Etc	64
	Section 9.12.	Sale of Properties	65
	Section 9.13.	Environmental Matters	65
	Section 9.14.	Transactions with Affiliates	65
	Section 9.15.	Subsidiaries	65
	Section 9.16.	Negative Pledge Agreements; Dividend Restrictions	65
	Section 9.17.	Gas Imbalances, Take-or-Pay or Other Prepayments	65
	Section 9.18.	Swap Agreements	65
	Section 9.19.	Marketing Activities	66
	 	 	 
	ARTICLE X
	Events of Default; Remedies
	 	 	 
	Section 10.01.	Events of Default	66
	Section 10.02.	Remedies.	67
	 	 	 
	ARTICLE XI
	The Agents
	 	 	 
	Section 11.01.	Appointment; Powers	69
	Section 11.02.	Duties and Obligations of Administrative Agent	69
	Section 11.03.	Action by Administrative Agent	70
	Section 11.04.	Reliance by Administrative Agent	70
	Section 11.05.	Subagents	70
	Section 11.06.	Resignation or Removal of Administrative Agent	71
	Section 11.07.	Agents as Lenders	71
	Section 11.08.	No Reliance.	71
	Section 11.09.	Administrative Agent May File Proofs of Claim	72
	Section 11.10.	Authority of Administrative Agent to Release Collateral and Liens	72
	Section 11.11.	The Arranger, Bookrunner, Etc	73
	Section 11.12.	Swap Lenders and Secured Cash Management Agreements	73
	 	 	 
	ARTICLE XII
	Miscellaneous
	 	 	 
	Section 12.01.	Notices.	73
	Section 12.02.	Waivers; Amendments.	74
	Section 12.03.	Expenses, Indemnity; Damage Waiver.	76
	Section 12.04.	Successors and Assigns.	77
	Section 12.05.	Survival; Revival; Reinstatement.	80
	Section 12.06.	Counterparts; Integration; Effectiveness.	80
	Section 12.07.	Severability	81
	Section 12.08.	Right of Setoff	81

 

    	iii

    	 

    

 

	Section 12.09.	Governing Law; Jurisdiction; Consent to Service
    of Process.	81
	Section 12.10.	Headings	82
	Section 12.11.	Confidentiality	82
	Section 12.12.	Interest Rate Limitation	83
	Section 12.13.	EXCULPATION PROVISIONS	83
	Section 12.14.	Collateral Matters; Swap Agreements; Cash Management Agreements	83
	Section 12.15.	No Third Party Beneficiaries	84
	 	 	 
	ARTICLE XIII
	Arbitration
	 	 	 
	Section 13.01.	Dispute Resolution	84
	Section 13.02.	Jury Trial Waiver; Class Action Waiver	84
	Section 13.03.	Arbitration	84
	Section 13.04.	Reliance	85
	 	 	 
	ARTICLE XIV
	Notices
	 	 	 
	Section 14.01.	USA Patriot Act Notice	85
	Section 14.02.	ENTIRE AGREEMENT	85

 

    	iv

    	 

    

 

 

ANNEXES, EXHIBITS AND SCHEDULES

 

	Annex I	List of Maximum Credit Amounts
	Exhibit A	Form of Note
	Exhibit B	Form of Borrowing Request
	Exhibit C	Form of Interest Election Request
	Exhibit D	Form of Compliance Certificate
	Exhibit E	Security Instruments
	Exhibit F	Form of Assignment and Assumption
	Exhibit G	Affidavit of Payment of Trade Bills
	Exhibit H	Property Certificate
	Exhibit I	Reconciliation Schedule
	 	 
	Schedule 7.05	Litigation
	Schedule 7.06	Environmental
	Schedule 7.12	Insurance
	Schedule 7.14	Subsidiaries and Partnerships
	Schedule 7.15	Locations
	Schedule 7.18	Gas Imbalances
	Schedule 7.19	Marketing Contracts
	Schedule 7.20	Existing Swap Agreements
	Schedule 9.02	Existing Debt
	Schedule 9.03	Existing Liens
	Schedule 9.05	Investments

 

    	v

    	 

    

 

THIS CREDIT AGREEMENT dated as of August
10, 2011 is among YUMA EXPLORATION AND PRODUCTION COMPANY, INC., a corporation duly formed and existing under the laws of
the State of Delaware (the "Borrower"); each of the Lenders from time to time party hereto; and AMEGY
BANK NATIONAL ASSOCIATION (in its individual capacity, "Amegy Bank"), as administrative agent for the
Lenders (in such capacity, together with its successors in such capacity, the "Administrative Agent").

 

RECITALS

 

A.           The
Borrower has requested that the Lenders provide certain loans to and extensions of credit on behalf of the Borrower.

 

B.           The
Lenders have agreed to make such loans and extensions of credit subject to the terms and conditions of this Agreement.

 

C.           In
consideration of the mutual covenants and agreements herein contained and of the loans, extensions of credit and commitments hereinafter
referred to, the parties hereto agree as follows:

 

ARTICLE
I

Definitions and Accounting Matters

 

Section 1.01.         Terms
Defined Above. As used in this Agreement, each term defined above has the meaning indicated
above.

 

Section 1.02.         Certain
Defined Terms. As used in this Agreement, the following terms have the meanings specified
below: 

 

"ABR" when used
in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.

 

"Act" has the meaning
set forth in Section 14.01.

 

"Adjusted LIBO Rate"
means, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/100 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.

 

"Administrative Agent"
has the meaning set forth in the Preamble.

 

"Administrative Questionnaire"
means an Administrative Questionnaire in a form supplied from time to time by the Administrative Agent.

 

"Administrator"
has the meaning set forth in Section 13.03.

 

"Affected Loans"
has the meaning assigned such term in Section 5.05.

 

"Affidavit of Payment of Trade
Bills" has the meaning assigned such term in Section 6.01(n).

 

"Affiliate" means,
with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or
is Controlled by or is under common Control with the Person specified.

 

"Agents" means,
collectively, the Administrative Agent and other agents subsequently named; and "Agent" shall mean either the Administrative
Agent or such other agent, as the context requires.

 

"Aggregate Maximum Credit Amounts"
at any time shall equal the sum of the Maximum Credit Amounts of the respective Lenders, as the same may be reduced or terminated
pursuant to Section 2.06. The initial Aggregate Maximum Credit Amount is $125,000,000.

 

    	CREDIT AGREEMENT - Page 1

    	 

    

 

"Agreement" means
this Credit Agreement with Schedules and Exhibits, as the same may from time to time be amended, modified, supplemented or restated.

 

"Alternate Base Rate"
means, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1⁄2 of 1%. Any change in the Alternate Base Rate due to a change in the Prime Rate
or the Federal Funds Effective Rate shall be effective from and including the effective date of such change in the Prime Rate or
the Federal Funds Effective Rate, respectively.

 

"Amegy Bank" has
the meaning set forth in the Preamble.

 

"Applicable Margin"
means, for any day, with respect to any ABR Loan or Eurodollar Loan, or with respect to the Commitment Fee Rate, as the case may
be, the rate per annum set forth in the Borrowing Base Utilization Grid below based upon the Borrowing Base Utilization Percentage
then in effect:

 

	Borrowing Base Utilization Grid
	Level	 	Borrowing Base
 Utilization Percentage	 	Eurodollar
 Loans	 	 	ABR
 Loans	 	 	Commitment
 Fee Rate	 	 	Letter of
 Credit Fee	 
	1	 	<25%	 	 	2.750	%	 	 	0.500	%	 	 	0.500	%	 	 	2.000	%
	2	 	>25% <50%	 	 	3.000	%	 	 	0.750	%	 	 	0.500	%	 	 	2.000	%
	3	 	>50% <75%	 	 	3.250	%	 	 	1.000	%	 	 	0.500	%	 	 	2.000	%
	4	 	>75%	 	 	3.500	%	 	 	1.250	%	 	 	0.500	%	 	 	2.000	%

 

Each change in the Applicable Margin shall
apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective
date of the next such change, provided, however, that if at any time the Borrower fails to deliver a Reserve Report pursuant
to Section 8.12(a), then the "Applicable Margin" means the rate per annum set forth on the grid
when the Borrowing Base Utilization Percentage is at its highest level until such time as such Reserve Report has been delivered.

 

"Applicable Percentage"
means, with respect to any Lender, the percentage of the Aggregate Maximum Credit Amounts represented by such Lender's Maximum
Credit Amount as such percentage is set forth on Annex I or in any Assignment and Assumption pursuant to which any Lender
became a party hereto, as may be adjusted pursuant to any assignment or amendment to this Agreement. If the Maximum Credit Amounts
have terminated or expired, the Applicable Percentages shall be determined based upon the Maximum Credit Amounts most recently
in effect, giving effect to any assignments.

 

"Approved Counterparty"
means any counterparty to a Swap Agreement with the Borrower or any Subsidiary that is (a) a Lender or any Affiliate of a Lender,
or (b) BP North America Inc., or (c) any other Person engaged in the business of writing Swap Agreements whose long term senior
unsecured debt rating is BBB by S&P or Moody's (or their equivalent) or higher and that is acceptable to the Administrative
Agent, or (c) any other Person from time to time approved by the Majority Lenders.

 

"Approved Fund"
means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or investing in bank
loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

 

"Approved Petroleum Engineers"
means any independent petroleum engineers acceptable to the Administrative Agent.

 

"Arbitration Order"
has the meaning set forth in Section 13.02.

 

"Arranger" means
Amegy Bank, in its capacities as the sole lead arranger and sole bookrunner hereunder.

 

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

 

    	CREDIT AGREEMENT - Page 2

    	 

    

 

"Asset Disposition"
means the sale, assignment, lease, license, transfer, exchange or other disposition by any Loan Party of any Oil and Gas Property
included in the Borrowing Base, provided that the sale of the Hydrocarbons in the ordinary course of business shall not
be deemed to be an Asset Disposition.

 

"Assignment and Assumption"
means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent
is required by Section 12.04(b)), and accepted by the Administrative Agent, in the form of Exhibit F or any other
form approved by the Administrative Agent.

 

"Availability Period"
means the period from and including the Effective Date to but excluding the Termination Date.

 

"Board" means the
Board of Governors of the Federal Reserve System of the United States of America or any successor Governmental Authority.

 

"Borrower" has the
meaning set forth in the Preamble.

 

"Borrowing" means
Loans of the same Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single
Interest Period is in effect.

 

"Borrowing Base"
has the meaning set forth in Section 2.07.

 

"Borrowing Base Deficiency"
occurs if at any time the total Revolving Credit Exposures exceeds the Borrowing Base then in effect.

 

"Borrowing Base Utilization Percentage"
means, as of any day, the fraction expressed as a percentage, the numerator of which is the sum of the Revolving Credit Exposures
of the Lenders on such day, and the denominator of which is the Borrowing Base in effect on such day.

 

"Borrowing Request"
means a request by the Borrower for a Borrowing in accordance with Section 2.03.

 

"Business Day" means
any day that is not a Saturday, Sunday or other day on which commercial banks in Houston, Texas are authorized or required by law
to remain closed; and if such day relates to a Borrowing or continuation of, a payment or prepayment of principal of or interest
on, or a conversion of or into, or the Interest Period for, a Eurodollar Loan or a notice by the Borrower with respect to any such
Borrowing or continuation, payment, prepayment, conversion or Interest Period, any day which is also a day on which dealings in
dollar deposits are carried out in the London interbank market.

 

"Capital Expenditures"
means, in respect of any Person, for any period, the aggregate (determined without duplication) of all exploration and development
expenditures and costs that are capital in nature and any other expenditures that are capitalized on the balance sheet of such
Person in accordance with GAAP.

 

"Capital Leases"
means, in respect of any Person, all leases which shall have been, or should have been, in accordance with GAAP, recorded as capital
leases on the balance sheet of the Person liable (whether contingent or otherwise) for the payment of rent thereunder.

 

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

 

"Cash Management Agreement"
means any agreement to provide cash management services, including treasury, depositing, overdraft, credit or debit card, electronic
funds transfer and other cash management arrangements.

 

    	CREDIT AGREEMENT - Page 3

    	 

    

 

"Cash Management Party"
means any Person that is a Lender or an Affiliate of a Lender, in its capacity as a party to such Cash Management Agreement.

 

"Casualty Event"
means any loss, casualty or other insured damage to, or any nationalization, taking under power of eminent domain or by condemnation
or similar proceeding of, any Property of the Borrower or any of its Subsidiaries having a fair market value in excess of $500,000.

 

"Change in Control"
means the holders of the Equity Interests of such Person as of the date hereof cease to own and control, directly or indirectly,
at least 66.67% of such Person's Equity Interests.

 

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

 

"Code" means the
Internal Revenue Code of 1986, as amended from time to time, and any successor statute.

 

"Commitment" means,
with respect to each Lender, the commitment of such Lender to make Loans and to acquire participations in Letters of Credit hereunder,
expressed as an amount representing the maximum aggregate amount of such Lender's Revolving Credit Exposure hereunder, as such
commitment may be (a) modified from time to time pursuant to Section 2.06 and (b) modified from time to time pursuant to
assignments by or to such Lender pursuant to Section 12.04(b), and "Commitments" means the aggregate
amount of the Commitments of all of the Lenders. The amount representing each Lender's Commitment shall at all times be the lesser
of such Lender's Maximum Credit Amount and such Lender's Applicable Percentage of the then effective Borrowing Base.

 

"Commitment Fee Rate"
has the meaning set forth in the definition of "Applicable Margin".

 

"Consolidated Subsidiaries"
means each Subsidiary of the Borrower (whether now existing or hereafter created or acquired) the financial statements of which
shall be (or should have been) consolidated with the financial statements of the Borrower in accordance with GAAP.

 

"Control" means
the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise. For the purposes of this definition, and without
limiting the generality of the foregoing, any Person that owns directly or indirectly 25% or more of the Equity Interests having
ordinary voting power for the election of the managers or other governing body of a Person (other than as a limited partner of
such other Person) will be deemed to "control" such other Person. "Controlling" and "Controlled"
have meanings correlative thereto.

 

    	CREDIT AGREEMENT - Page 4

    	 

    

 

"Debt" means, for
any Person, the sum of the following (without duplication): (a) all obligations of such Person for borrowed money or evidenced
by bonds, bankers' acceptances, debentures, notes or other similar instruments; (b) all obligations of such Person (whether contingent
or otherwise) in respect of letters of credit, surety or other bonds and similar instruments; (c) all accounts payable and all
accrued expenses, liabilities or other obligations of such Person to pay the deferred purchase price of Property or services; (d)
all obligations under Capital Leases; (e) all obligations under Synthetic Leases; (f) all Debt (as defined in the other clauses
of this definition) of others secured by (or for which the holder of such Debt has an existing right, contingent or otherwise,
to be secured by) a Lien on any Property of such Person, whether or not such Debt is assumed by such Person; (g) all Debt (as defined
in the other clauses of this definition) of others guaranteed by such Person or in which such Person otherwise assures a creditor
against loss of the Debt (howsoever such assurance shall be made) to the extent of the lesser of the amount of such Debt and the
maximum stated amount of such guarantee or assurance against loss; (h) all obligations or undertakings of such Person to maintain
or cause to be maintained the financial position or covenants of others or to purchase the Debt or Property of others; (i) obligations
to deliver commodities, goods or services, including, without limitation, Hydrocarbons, in consideration of one or more advance
payments, other than gas balancing arrangements in the ordinary course of business; (j) obligations to pay for goods or services
even if such goods or services are not actually received or utilized by such Person; (k) any Debt of a partnership for which such
Person is liable either by agreement, by operation of law or by a Governmental Requirement but only to the extent of such liability;
(l) Disqualified Capital Stock; and (m) the undischarged balance of any production payment created by such Person or for the creation
of which such Person directly or indirectly received payment. The Debt of any Person shall include all obligations of such Person
of the character described above to the extent such Person remains legally liable (other than through endorsement of negotiable
instruments for collection in the ordinary course of business) in respect thereof notwithstanding that any such obligation is not
included as a liability of such Person under GAAP.

 

"Debtor Relief Laws"
means the Bankruptcy Code of the United States of America, and all other liquidation, conservatorship, bankruptcy, assignment for
the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of
the United States or other applicable jurisdictions from time to time in effect.

 

"Default" means
any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.

 

"Defaulting Lender"
means, subject to Section 2.11(b), any Lender that (a) has failed to (i) fund all or any portion of its Loans within
two Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent
and the Borrower in writing that such failure is the result of such Lender's determination that one or more conditions precedent
to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such
writing) has not been satisfied, or (ii) pay to the Administrative Agent, any Issuing Bank or any other Lender any other amount
required to be paid by it hereunder (including in respect of its participation in Letters of Credit) within two Business Days of
the date when due, (b) has notified the Borrower, the Administrative Agent or any Issuing Bank in writing that it does not intend
to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public
statement relates to such Lender's obligation to fund a Loan hereunder and states that such position is based on such Lender's
determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be
specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after
written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower
that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting
Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or
(d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law,
or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors
or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance
Corporation or any other state or federal regulatory authority acting in such a capacity; provided that a Lender shall not
be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or
indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such
Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of
attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any
contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender
under clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be
a Defaulting Lender (subject to Section 2.11(b)) upon delivery of written notice of such determination to the Borrower,
each Issuing Bank and each Lender.

 

"Dispute" has the
meaning set forth in Section 13.03.

 

    	CREDIT AGREEMENT - Page 5

    	 

    

 

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

 

"dollars" or "$"
refers to lawful money of the United States of America.

 

"Domestic Subsidiary"
means any Subsidiary that is organized under the laws of the United States of America or any state thereof or the District of Columbia.

 

"EBITDA" means,
for any twelve-month period (except as otherwise expressly provided) ending on the last day of any fiscal quarter, consolidated
net income, excluding any non-cash revenue or expense associated with Swap Agreements resulting from ASC 815, plus without
duplication and to the extent deducted from revenues in determining consolidated net income, the sum of (a) the aggregate amount
of consolidated Interest Expense for such period, (b) the aggregate amount of income tax expense for such period, (c) all amounts
attributable to depletion, depreciation and amortization for such period, and (d) all other non-cash charges, all determined on
a consolidated basis with respect to Borrower and its Subsidiaries in accordance with GAAP, using the results of the twelve-month
period ending with that reporting period (except as otherwise herein provided).

 

"Effective Date"
means the date on which the conditions specified in Section 6.01 are satisfied (or waived in accordance with Section
12.02).

 

"Eligible Assignee"
means (subject to the proviso below) (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund, and (d) any other Person
(other than a natural person) approved by (i) the Administrative Agent and the Issuing Bank, and (ii) unless an Event of Default
has occurred and is continuing, the Borrower (each such approval not to be unreasonably withheld or delayed); provided
that, notwithstanding the foregoing, (1) the Borrower shall have deemed to have consented to any such assignment unless it shall
object thereto by written notice to the Administrative Agent within five Business Days after having received notice thereof, (2)
the consent of the Administrative Agent and the Issuing Bank (such consent not to be unreasonably withheld or delayed) shall be
required for assignments in respect of Loans if such assignment is to a Person that is not a Lender with a Commitment, an Affiliate
of such Lender or an Approved Fund with respect to such Lender, (3) "Eligible Assignee" shall not include the Borrower
or any of the Borrower's Affiliates or Subsidiaries, and (4) the Borrower's consent shall not be required during the primary syndication
of the Loans.

 

"Engineering Reports"
has the meaning assigned such term in Section 2.07(c)(i).

 

"Environmental Laws"
means any and all Governmental Requirements pertaining in any way to health, safety, the environment or the preservation or reclamation
of natural resources, in effect in any and all jurisdictions in which the Borrower or any Subsidiary is conducting or at any time
has conducted business, or where any Property of the Borrower or any Subsidiary is located, including without limitation, the Oil
Pollution Act of 1990 ("OPA"), as amended, the Clean Air Act, as amended, the Comprehensive Environmental,
Response, Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the Federal Water Pollution Control
Act, as amended, the Occupational Safety and Health Act of 1970, as amended, the Resource Conservation and Recovery Act of 1976
("RCRA"), as amended, the Safe Drinking Water Act, as amended, the Toxic Substances Control Act, as amended,
the Superfund Amendments and Reauthorization Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended, and
other environmental conservation or protection Governmental Requirements. The term "oil" shall have the meaning specified
in OPA, the terms "hazardous substance" and "release" (or "threatened release") have the meanings
specified in CERCLA, the terms "solid waste" and "disposal" (or "disposed") have the meanings specified
in RCRA and the term "oil and gas waste" shall have the meaning specified in Section 91.1011 of the Texas Natural Resources
Code ("Section 91.1011"); provided, however, that (a) in the event either OPA, CERCLA, RCRA or Section
91.1011 is amended so as to broaden the meaning of any term defined thereby, such broader meaning shall apply subsequent to the
effective date of such amendment and (b) to the extent the laws of the state or other jurisdiction in which any Property of the
Borrower or any Subsidiary is located establish a meaning for "oil," "hazardous substance," "release,"
"solid waste," "disposal" or "oil and gas waste" which is broader than that specified in either OPA,
CERCLA, RCRA or Section 91.1011, such broader meaning shall apply.

 

    	CREDIT AGREEMENT - Page 6

    	 

    

 

"Equity Interests"
means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests
in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof
to purchase or acquire any such Equity Interest.

 

"ERISA" means the
Employee Retirement Income Security Act of 1974, as amended, and any successor statute.

 

"ERISA Affiliate"
means each trade or business (whether or not incorporated) which together with the Borrower or a Subsidiary would be deemed to
be a "single employer" within the meaning of section 4001(b)(1) of ERISA or subsections (b), (c), (m) or (o) of section
414 of the Code.

 

"ERISA Event" means
(a) a "Reportable Event" described in section 4043 of ERISA and the regulations issued thereunder, (b) the withdrawal
of the Borrower, a Subsidiary or any ERISA Affiliate from a Plan during a plan year in which it was a "substantial employer"
as defined in section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate a Plan or the treatment of a Plan
amendment as a termination under section 4041 of ERISA, (d) the institution of proceedings to terminate a Plan by the PBGC, (e)
receipt of a notice of withdrawal liability pursuant to Section 4202 of ERISA or (f) any other event or condition which might constitute
grounds under section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan.

 

"Eurodollar" when
used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Adjusted LIBO Rate.

 

"Event of Default"
has the meaning assigned such term in Section 10.01.

 

"Excepted Liens"
means: (a) Liens for Taxes, assessments or other governmental charges or levies which are not delinquent or which are being contested
in good faith by appropriate action and for which adequate reserves have been established and maintained in accordance with GAAP;
(b) Liens arising as a matter of law in the ordinary course of business or incidental to the operation of the Properties, including
Liens in connection with workers' compensation, unemployment insurance or other social security, old age pension or public liability
obligations which are not delinquent or which are being contested in good faith by appropriate action and for which adequate reserves
have been established and maintained in accordance with GAAP; (c) statutory landlord's liens, operators', vendors', carriers',
warehousemen's, repairmen's, mechanics', suppliers', workers', materialmen's, construction or other like Liens arising by operation
of law in the ordinary course of business or incident to the exploration, development, operation and maintenance of Oil and Gas
Properties each of which is in respect of obligations that are not delinquent or which are being contested in good faith by appropriate
action and for which adequate reserves have been established and maintained in accordance with GAAP; (d) contractual Liens which
arise in the ordinary course of business under operating agreements, joint venture agreements, oil and gas partnership agreements,
oil and gas leases, farm-out agreements, division orders, contracts for the sale, transportation or exchange of oil and natural
gas, unitization and pooling declarations and agreements, area of mutual interest agreements, overriding royalty agreements, marketing
agreements, processing agreements, net profits agreements, exploration agreements, development agreements, gas balancing or deferred
production agreements, injection, repressuring and recycling agreements, salt water or other disposal agreements, seismic or other
geophysical permits or agreements, and other agreements which are usual and customary in the oil and gas business and are for claims
which are not delinquent or which are being contested in good faith by appropriate action and for which adequate reserves have
been established and maintained in accordance with GAAP, provided that any such Lien referred to in this clause does not
materially impair the use of the Property covered by such Lien for the purposes for which such Property is held by the Borrower
or any Subsidiary or materially impair the value of such Property subject thereto; (e) Liens arising solely by virtue of any statutory
or common law provision relating to banker's liens, rights of set-off or similar rights and remedies and burdening only deposit
accounts or other funds maintained with a creditor depository institution, provided that no such deposit account is a dedicated
cash collateral account or is subject to restrictions against access by the depositor in excess of those set forth by regulations
promulgated by the Board and no such deposit account is intended by Borrower or any of its Subsidiaries to provide collateral to
the depository institution; (f) survey exceptions, easements, restrictions, servitudes, permits, conditions, covenants, exceptions
or reservations in any Property of the Borrower or any Subsidiary for the purpose of roads, pipelines, transmission lines, transportation
lines, distribution lines for the removal of gas, oil, coal or other minerals or timber, and other like purposes, or for the joint
or common use of real estate, rights of way, facilities and equipment, which do not secure any monetary obligations and which in
the aggregate do not materially impair the use of such Property for the purposes of which such Property is held by the Borrower
or any Subsidiary or materially impair the value of such Property subject thereto; (g) minor defects and irregularities in title
to any Property which do not secure any monetary obligations and which in the aggregate do not materially impair use of such Property
for the purposes for which such Property is held by the Borrower and any Subsidiary or materially impair the value of such Property
subject thereto; (h) Liens on cash or securities pledged to secure performance of tenders, surety and appeal bonds, government
contracts, performance and return of money bonds, bids, trade contracts, leases, statutory obligations, regulatory obligations
and other obligations of a like nature incurred in the ordinary course of business and (i) judgment and attachment Liens not giving
rise to an Event of Default, provided that any appropriate legal proceedings which may have been duly initiated for the
review of such judgment shall not have been finally terminated or the period within which such proceeding may be initiated shall
not have expired and no action to enforce such Lien has been commenced; provided, further that Liens described in clauses
(a) through (e) shall remain "Excepted Liens" only for so long as no action to enforce such Lien has been commenced and
no intention to subordinate the first priority Lien granted in favor of the Administrative Agent and the Lenders is to be hereby
implied or expressed by the permitted existence of such Excepted Liens.

 

    	CREDIT AGREEMENT - Page 7

    	 

    

 

"Excluded Taxes"
means, with respect to the Administrative Agent, any Lender, the Issuing Bank or any other recipient of any payment to be made
by or on account of any obligation of the Borrower or any Guarantor hereunder or under any other Loan Document, (a) taxes imposed
on or measured by its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes),
by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits
taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the Borrower or any
Guarantor is located and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under
Section 5.04(b)), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Lender's failure
to comply with Section 5.03(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at
the time of designation of a new lending office (or assignment), to receive additional amounts with respect to such withholding
tax pursuant to Section 5.03(a) or Section 5.03(c).

 

"Existing Credit Agreement"
means that certain Loan Agreement originally dated June 8, 2010, by and between the Borrower and Whitney Bank, as amended.

 

"Federal Funds Effective Rate"
means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day,
the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received
by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

 

"Financial Officer"
means, for any Person, the chief financial officer, principal accounting officer, treasurer or controller of such Person. Unless
otherwise specified, all references herein to a Financial Officer means a Financial Officer of the Borrower.

 

"Financial Statements"
means the financial statement or statements of the Borrower and its Consolidated Subsidiaries referred to in Section 7.04(a).

 

"Foreign Lender"
means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes.
For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed
to constitute a single jurisdiction.

 

"Foreign Subsidiary"
means any Subsidiary that is not a Domestic Subsidiary.

 

    	CREDIT AGREEMENT - Page 8

    	 

    

 

"Fronting Exposure"
means, at any time there is a Defaulting Lender, with respect to any Issuing Bank, such Defaulting Lender's Applicable Percentage
of the outstanding LC Exposure with respect to Letters of Credit issued by such Issuing Bank other than LC Exposure as to which
such Defaulting Lender's participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with
the terms hereof.

 

“Funded Debt”
means all outstanding liabilities for borrowed money and other interest-bearing liabilities, including current and long term liabilities.

 

"Future Acquisition Documents"
has the meaning assigned such term in Section 2.10(a).

 

"GAAP" means generally
accepted accounting principles in the United States of America as in effect from time to time subject to the terms and conditions
set forth in Section 1.05.

 

"Governmental Authority"
means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supranational
bodies such as the European Union or the European Central Bank).

 

"Governmental Requirement"
means any law, statute, code, ordinance, order, determination, rule, regulation, judgment, decree, injunction, franchise, permit,
certificate, license, authorization or other directive or requirement, whether now or hereinafter in effect, including, without
limitation, Environmental Laws, energy regulations and occupational, safety and health standards or controls, of any Governmental
Authority.

 

"Guarantors" means
(a) The Yuma Companies, Inc., the parent of Borrower, (b) each other Subsidiary that guarantees the Indebtedness pursuant to Section
8.14(b), and (c) each other Person that guarantees the Indebtedness.

 

"Guaranty Agreement"
means an agreement executed by one or more of the Guarantors in form and substance satisfactory to the Administrative Agent, unconditionally
guarantying on a joint and several basis, payment of the Indebtedness, as the same may be amended, modified or supplemented from
time to time.

 

"Highest Lawful Rate"
means, with respect to each Lender, the maximum nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Notes or on other Indebtedness under laws applicable to such Lender
which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and
which allow a higher maximum nonusurious interest rate than applicable laws allow as of the date hereof.

 

"Hydrocarbon Interests"
means all rights, titles, interests and estates now or hereafter acquired in and to oil and gas leases, oil, gas and mineral leases
(excluding coal and timber), or other liquid or gaseous hydrocarbon leases, mineral fee interests, overriding royalty and royalty
interests, net profit interests and production payment interests, including any reserved or residual interests of whatever nature.
Unless other indicated herein, each reference to the term "Hydrocarbon Interests" shall mean Hydrocarbon
Interests of the Borrower and its Subsidiaries.

 

"Hydrocarbons" means
oil, gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and
all products refined or separated therefrom. Unless otherwise indicated herein, each reference to the term "Hydrocarbons"
shall mean Hydrocarbons of the Borrower and its Subsidiaries.

 

"Indebtedness" means
any and all amounts owing or to be owing by the Borrower, any Subsidiary or any Guarantor (whether direct or indirect (including
those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising): (a) to the Administrative
Agent, the Issuing Bank or any Lender under any Loan Document; (b) to any Lender or any Affiliate of a Lender under any Lender
Swap Agreement (which shall be deemed to be the Swap Termination Value as of the date the amount of Indebtedness is being determined);
(c) to any Cash Management Party under any Secured Cash Management Agreement; and (d) all renewals, extensions and/or rearrangements
of any of the above.

 

    	CREDIT AGREEMENT - Page 9

    	 

    

 

"Indemnified Taxes"
means Taxes other than Excluded Taxes.

 

"Indemnitees" has
the meaning set forth in Section 12.03(b).

 

"Information" has
the meaning set forth in Section 12.11.

 

"Initial Reserve Report"
means the report of Pressler Petroleum Consultants, Inc. dated as of July 1, 2011.

 

"Interest Election Request"
means a request by the Borrower to convert or continue a Borrowing in accordance with Section 2.04.

 

"Interest Expense"
means, for any period, the sum (determined without duplication) of the gross interest expense of the Borrower for such period,
including to the extent included in interest expense under GAAP: (a) amortization of debt discount, (b) capitalized interest and
(c) the portion of any payments or accruals under Capital Leases allocable to interest expense, minus (i) the portion of any payments
or accruals under Synthetic Leases allocable to interest expense, and (ii) and any imputed interest pursuant to asset retirement
obligations whether or not the same constitutes interest expense under GAAP.

 

"Interest Payment Date"
means (a) with respect to any ABR Loan, the last day of each calendar month and (b) with respect to any Eurodollar Loan, the last
day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing
with an Interest Period of more than three months' duration, each day prior to the last day of such Interest Period that occurs
at intervals of three months' duration after the first day of such Interest Period.

 

"Interest Period"
means with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months thereafter, as the Borrower may elect; provided,
that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (b) any Interest Period pertaining to a Eurodollar Borrowing that commences
on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar
month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. Interest
shall accrue from and including the first day of an Interest Period to but excluding the last day of such Interest Period. For
purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the
effective date of the most recent conversion or continuation of such Borrowing.

 

"Interim Redetermination"
has the meaning assigned such term in Section 2.07(b).

 

"Interim Redetermination Date"
means the date on which a Borrowing Base that has been redetermined pursuant to an Interim Redetermination becomes effective as
provided in Section 2.07(d).

 

"Investment" means,
for any Person: (a) the acquisition (whether for cash, Property, services or securities or otherwise) of Equity Interests of any
other Person or any agreement to make any such acquisition (including, without limitation, any "short sale" or any sale
of any securities at a time when such securities are not owned by the Person entering into such short sale) or any capital contribution
to any other Persons; (b) the making of any deposit with, or advance, loan or capital contribution to, assumption of Debt of, purchase
or other acquisition of any other Debt or equity participation or interest in, or other extension of credit to, any other Person
(including the purchase of Property from another Person subject to an understanding or agreement, contingent or otherwise, to resell
such Property to such Person, but excluding any such advance, loan or extension of credit having a term not exceeding ninety (90)
days representing the purchase price of inventory or supplies sold by such Person in the ordinary course of business); (c) the
purchase or acquisition (in one or a series of transactions) of Property of another Person that constitutes a business unit or
(d) the entering into of any guarantee of, or other contingent obligation (including the deposit of any Equity Interests to be
sold) with respect to, Debt or other liability of any other Person and (without duplication) any amount committed to be advanced,
lent or extended to such Person.

 

    	CREDIT AGREEMENT - Page 10

    	 

    

 

"Issuing Bank" means
Amegy Bank, in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section
2.08(i). The Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of the
Issuing Bank, in which case the term "Issuing Bank" shall include any such Affiliate with respect to Letters
of Credit issued by such Affiliate.

 

"LC Collection Account"
has the meaning assigned such term in Section 2.08(j).

 

"LC Commitment"
at any time means $2,000,000.

 

"LC Disbursement"
means a payment made by the Issuing Bank pursuant to a Letter of Credit.

 

"LC Exposure" means,
at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure
of any Lender at any time shall be its Applicable Percentage of the total LC Exposure at such time. For purposes of computing the
amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance
with Section 1.06. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by
its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit
shall be deemed to be "outstanding" in the amount so remaining available to be drawn.

 

"Lender Swap Agreement"
means any Swap Agreement between the Borrower or any Subsidiary and any Swap
Lender.

 

"Lenders" means
the Persons listed on Annex I and any Person that shall have become a party hereto pursuant to an Assignment and Assumption,
other than any such Person that ceases to be a party hereto.

 

"Letter of Credit"
means any letter of credit issued pursuant to this Agreement.

 

"Letter of Credit Agreements"
means all letter of credit applications and other agreements (including any amendments, modifications or supplements thereto) submitted
by the Borrower, or entered into by the Borrower (whether for itself or any Subsidiary as the account party), with the Issuing
Bank relating to any Letter of Credit.

 

"LIBO Rate" means,
with respect to any Eurodollar Borrowing for any Interest Period, the rate appearing on Reuters Screen LIBOR01 Page (or on any
successor or substitute page of such Service, or any successor to or substitute for such Service, providing rate quotations comparable
to those currently provided on such page of such Service, as determined by the Administrative Agent from time to time for purposes
of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00
a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the
"LIBO Rate" with respect to such Eurodollar Borrowing for such Interest Period shall be the rate at which
dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office
of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.

 

"Lien" means any
interest in Property securing an obligation owed to, or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and whether such obligation or claim is fixed or contingent, and including
but not limited to (a) the lien or security interest arising from a mortgage, encumbrance, pledge, security agreement, conditional
sale or trust receipt or a lease, consignment or bailment for security purposes or (b) production payments and the like payable
out of Oil and Gas Properties. The term "Lien" shall include easements, restrictions, servitudes, permits,
conditions, covenants, exceptions or reservations. For the purposes of this Agreement, the Borrower and its Subsidiaries, as applicable,
shall be deemed to be the owner of any Property which they have acquired or hold subject to a conditional sale agreement, or leases
under a financing lease or other arrangement pursuant to which title to the Property has been retained by or vested in some other
Person in a transaction intended to create a financing.

 

    	CREDIT AGREEMENT - Page 11

    	 

    

 

"Loan Documents"
means this Agreement, the Notes, the Letter of Credit Agreements, the Letters of Credit, the Affidavit of Payment of Trade Bills,
the Property Certificate, the Reconciliation Schedule, and the Security Instruments, together with any and all renewals, extensions
and restatements of, and amendments and modifications to, any such agreements, documents and instruments, but excluding any Lender
Swap Agreements.

 

“Loan Parties”
means, collectively, the Borrower and each Person (other than the Administrative Agent, the Arranger, the Issuing Bank, or any
Lender) executing a Loan Document including, without limitation, each Guarantor and each Person executing a Security Instrument.

 

"Loans" means the
loans made by the Lenders to the Borrower pursuant to this Agreement.

 

"Majority Lenders"
means, at any time, Lenders having Loans, LC Exposure and unused Commitments representing more than 51% of the sum of all Loans
outstanding, LC Exposure and unused Commitments at such time (without regard to any sale by a Lender of a participation in any
Loan under Section 12.04(c)); provided that the Loans, LC Exposure and Commitment of any Defaulting Lender shall
be disregarded for purposes of making a determination of Majority Lenders.

 

"Material Adverse Effect"
means (a) a material adverse change in, or material adverse effect on (i) the business, operations, Property, condition (financial
or otherwise) or prospects of the Borrower and the Subsidiaries taken as a whole, (ii) the ability of the Borrower, any Subsidiary
or any Guarantor to perform any of its obligations under any Loan Document, (iii) the validity or enforceability of any Loan Document
or (d) the rights and remedies of or benefits available to the Administrative Agent, any other Agent, the Issuing Bank or any Lender
under any Loan Document, or (b) any disruption in, or adverse change to the condition of, the financial, banking or capital markets
generally or the markets for loans or debt securities.

 

"Material Gas Imbalance"
means, with respect to all gas balancing agreements to which the Borrower or any Subsidiary is a party or by which any mineral
interest owned by the Borrower or any Subsidiary is bound, a net gas imbalance to the Borrower or any Subsidiary, individually
or taken as a whole in excess of $500,000. Gas imbalances will be determined based on written agreements, if any, specifying the
method of calculation thereof, or, alternatively, if no such agreements are in existence, gas imbalances will be calculated by
multiplying (x) the volume of gas imbalance as of the date of calculation (expressed in thousand cubic feet) by (y) the heating
value in Btu's per thousand cubic feet, times the Henry Hub average daily spot price for the month immediately preceding
the date of calculation.

 

"Material Indebtedness"
means Debt (other than the Loans and Letters of Credit but including obligations in respect of one or more Swap Agreements) of
any one or more of the Borrower and its Subsidiaries in an aggregate principal amount exceeding $250,000. For purposes of determining
Material Indebtedness, the "principal amount" of the obligations of the Borrower or any Subsidiary in respect of any
Swap Agreement at any time shall be the Swap Termination Value.

 

"Maturity Date"
means August 10, 2015.

 

"Maximum Credit Amount"
means, as to each Lender, the amount set forth opposite such Lender's name on Annex I under the caption "Maximum Credit
Amounts", as the same may be (a) reduced or terminated from time to time in connection with a reduction or termination of
the Aggregate Maximum Credit Amounts pursuant to Section 2.06(b), or (b) modified from time to time pursuant to any assignment
permitted by Section 12.04(b).

 

"Minimum Collateral Amount"
means, at any time, (i) with respect to Cash Collateral consisting of cash or deposit account balances, an amount equal to 50%
of the Fronting Exposure of the Issuing Bank with respect to Letters of Credit issued and outstanding at such time and (ii) otherwise,
an amount determined by the Administrative Agent and the Issuing Bank in their sole discretion.

 

    	CREDIT AGREEMENT - Page 12

    	 

    

 

"Monthly Reduction Amount"
has the meaning assigned such term in Section 2.07(e).

 

"Moody's" means
Moody's Investors Service, Inc. and any successor thereto that is a nationally recognized rating agency.

 

"Mortgaged Property"
means any Property owned by the Borrower or any Guarantor which is subject to the Liens existing and to exist under the terms of
the Security Instruments.

 

"Mortgages" means
the mortgages, deeds of trust, leasehold mortgages, assignments of leases and rents, assignments of proceeds of production, security
documents and the like (including all amendments, modifications and supplements thereto) delivered pursuant to this Agreement.

 

"Multiemployer Plan"
means a Plan which is a multiemployer plan as defined in Section 3(37) or 4001 (a)(3) of ERISA.

 

"New Borrowing Base Notice"
has the meaning assigned such term in Section 2.07(d).

 

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

 

"Notes" means the
promissory notes of the Borrower described in Section 2.02(d) and being substantially in the form of Exhibit A, together
with all amendments, modifications, replacements, extensions and rearrangements thereof.

 

"OFAC" has the meaning
set forth in Section 7.22.

 

"Oil and Gas Properties"
means (a) Hydrocarbon Interests; (b) the Properties now or hereafter pooled or unitized with Hydrocarbon Interests; (c) all presently
existing or future unitization, pooling agreements and declarations of pooled units and the units created thereby (including without
limitation all units created under orders, regulations and rules of any Governmental Authority) which may affect all or any portion
of the Hydrocarbon Interests; (d) all operating agreements, contracts and other agreements, including production sharing contracts
and agreements, which relate to any of the Hydrocarbon Interests or the production, sale, purchase, exchange or processing of Hydrocarbons
from or attributable to such Hydrocarbon Interests; (e) all Hydrocarbons in and under and which may be produced and saved or attributable
to the Hydrocarbon Interests, including all oil in tanks, and all rents, issues, profits, proceeds, products, revenues and other
incomes from or attributable to the Hydrocarbon Interests; (f) all tenements, hereditaments, appurtenances and Properties in any
manner appertaining, belonging, affixed or incidental to the Hydrocarbon Interests and (g) all Properties, rights, titles, interests
and estates described or referred to above, including any and all Property, real or personal, now owned or hereafter acquired and
situated upon, used, held for use or useful in connection with the operating, working or development of any of such Hydrocarbon
Interests or Property (excluding drilling rigs, automotive equipment, rental equipment or other personal Property which may be
on such premises for the purpose of drilling a well or for other similar temporary uses) and including any and all oil wells, gas
wells, injection wells or other wells, buildings, structures, fuel separators, liquid extraction plants, plant compressors, pumps,
pumping units, field gathering systems, tanks and tank batteries, fixtures, valves, fittings, machinery and parts, engines, boilers,
meters, apparatus, equipment, appliances, tools, implements, cables, wires, towers, casing, tubing and rods, surface leases, rights-of-way,
easements and servitudes together with all additions, substitutions, replacements, accessions and attachments to any and all of
the foregoing. Unless otherwise indicated herein, each reference to the term "Oil and Gas Properties" shall
mean Oil and Gas Properties of the Borrower and its Subsidiaries.

 

"Organizational Documents"
mean, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable
constitutive documents with respect to any non US jurisdiction); (b) with respect to any limited liability company, the certificate
or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust
or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and
any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles
of formation or organization of such entity.

 

    	CREDIT AGREEMENT - Page 13

    	 

    

 

"Other Taxes" means
any and all present or future stamp or documentary taxes or any other excise or Property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement
and any other Loan Document.

 

"Participant" has
the meaning set forth in Section 12.04(c)(i).

 

"PBGC" means the
Pension Benefit Guaranty Corporation, or any successor thereto.

 

"Person" means any
natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

 

"Plan" means any
employee pension benefit plan, as defined in section 3(2) of ERISA, which (a) is currently or hereafter sponsored, maintained or
contributed to by the Borrower, a Subsidiary or an ERISA Affiliate or (b) was at any time during the six calendar years preceding
the date hereof, sponsored, maintained or contributed to by the Borrower or a Subsidiary or an ERISA Affiliate.

 

"Pledge Agreements"
means one or more pledge agreements in form and substance satisfactory to the Administrative Agent pursuant to which the Equity
Interests of a Subsidiary are pledged to the Administrative Agent for the ratable benefit of the Lenders to secure the payment
of the Indebtedness and the reimbursement of obligations under the Letters of Credit, as such agreements may be amended, modified
or supplemented from time to time.

 

"Prime Rate" means
a fluctuating rate of interest equal to the highest quoted annual rate of interest which is published from time to time in the
"Money Rates" section of The Wall Street Journal as the prime rate (or, if such source is not available, such
alternate source as determined by the Administrative Agent), as adjusted from time to time in the Administrative Agent's sole discretion
for reserve requirements, deposit insurance assessment rates and other regulatory costs. Any change in the rate will take effect
on the effective date as indicated in The Wall Street Journal. Interest will accrue on any non-banking day at the rate in
effect on the immediately preceding banking day.

 

"Projected Production"
means, for any calendar month, the internally forecasted, reasonably anticipated projected production of crude oil, natural gas
and natural gas liquids from all Oil and Gas Properties of the Borrower and its Subsidiaries for such calendar month, as determined
by the Administrative Agent or the Majority Lenders.

 

"Property" means
any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, including, without limitation,
cash, securities, accounts and contract rights.

 

"Property Certificate"
has the meaning assigned such term in Section 6.01(o).

 

"Proposed Borrowing Base"
has the meaning assigned to such term in Section 2.07(c)(i).

 

"Proposed Borrowing Base Notice"
has the meaning assigned to such term in Section 2.07(c)(ii).

 

"Proved Developed Producing Reserves"
means Proved Reserves which are categorized as both "Developed" and "Producing" in the Reserve Definitions.

 

"Proved Reserves" means
"Proved Reserves" as defined in the Reserve Definitions.

 

"Recognized Value"
means the value determined by the Lenders attributed to the Oil and Gas Properties in the most recent determination of the Borrowing
Base, based upon the discounted present value of the estimated net cash flow to be realized from the production of Hydrocarbons
from such interests and the other standards specified in Section 2.07.

 

    	CREDIT AGREEMENT - Page 14

    	 

    

 

"Reconciliation Schedule"
has the meaning assigned such term in Section 6.01(p).

 

"Redemption" means
with respect to any Debt, the repurchase, redemption, prepayment, repayment, defeasance or any other acquisition or retirement
for value (or the segregation of funds with respect to any of the foregoing) of such Debt. "Redeem" has
the correlative meaning thereto.

 

"Redetermination Date"
means, with respect to any Scheduled Redetermination or any Interim Redetermination, the date that the redetermined Borrowing Base
related thereto becomes effective pursuant to Section 2.07(d).

 

"Register" has the
meaning assigned such term in Section 12.04(b)(iv).

 

"Regulation D" means
Regulation D of the Board, as the same may be amended, supplemented or replaced from time to time.

 

"Related Parties"
means, with respect to any specified Person, such Person's Affiliates and the respective partners, directors, managers, officers,
employees, agents, trustees, administrators, representatives and advisors (including attorneys, accountants and experts) of such
Person and such Person's Affiliates.

 

"Remedial Work"
has the meaning assigned such term in Section 8.10(a).

 

"Reserve Definitions"
means, at any time, the Definitions for Oil and Gas Reserves promulgated by the Society of Petroleum Engineers (or any generally
recognized successor) as in effect at such time and acceptable to the Administrative Agent.

 

"Reserve Report"
means the Initial Reserve Report and each other report, in form and substance satisfactory to the Administrative Agent, setting
forth the oil and gas reserves attributable to the Oil and Gas Properties of the Borrower and the Subsidiaries, together with a
projection of the rate of production and future net income, taxes, operating expenses and Capital Expenditures with respect thereto
as of such date, based upon the economic and pricing assumptions consistent with the Administrative Agent's lending requirements
at the time.

 

"Responsible Officer"
means, as to any Person, the chief executive officer, the president, any Financial Officer or any vice president of such Person.
Unless otherwise specified, all references to a Responsible Officer herein shall mean a Responsible Officer of the Borrower.

 

"Restricted Payment"
means any dividend or other distribution (whether in cash, securities or other Property other than dividends payable solely in
Equity Interests of such Person) with respect to any Equity Interests in the Borrower or any of its Subsidiaries, or any payment
(whether in cash, securities or other Property), including any sinking fund or similar deposit, on account of the purchase, Redemption,
retirement, acquisition, cancellation or termination of any such Equity Interests in the Borrower or any of its Subsidiaries or
any option, warrant or other right to acquire any such Equity Interests in the Borrower or any of its Subsidiaries.

 

"Revolving Credit Exposure"
means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender's Loans and its LC Exposure
at such time.

 

"Scheduled Redetermination"
has the meaning assigned such term in Section 2.07(b).

 

"Scheduled Redetermination Date"
means the date on which a Borrowing Base that has been redetermined pursuant to a Scheduled Redetermination becomes effective as
provided in Section 2.07(d).

 

"SEC" means the
Securities and Exchange Commission or any successor Governmental Authority.

 

"Secured Cash Management Agreement"
means any Cash Management Agreement that is entered into by and between the Borrower and any Cash Management Party.

 

    	CREDIT AGREEMENT - Page 15

    	 

    

 

"Secured Parties"
means the Administrative Agent, each Lender, each Swap Lender and each Cash Management Party.

 

"Security Agreements"
means one or more security agreements in form and substance satisfactory to the Administrative Agent pursuant to which a security
interest in all of the assets of the Borrower or a Subsidiary is granted to the Administrative Agent for the ratable benefit of
the Lenders to secure the payment of the Indebtedness and the reimbursement of obligations under the Letters of Credit, as such
agreements may be amended, modified or supplemented from time to time.

 

"Security Instruments"
means the Guaranty Agreements, the Security Agreements, the Pledge Agreements, the Mortgages, and other agreements, instruments
or certificates described or referred to in Exhibit E-1, and any and all other agreements, instruments, consents or certificates
now or hereafter executed and delivered by the Borrower or any other Person (other than Lender Swap Agreements and participation
or similar agreements between any Lender and any other lender or creditor with respect to any Indebtedness pursuant to this Agreement)
in connection with, or as security for or to guarantee the payment or performance of the Indebtedness, the Notes, this Agreement,
or reimbursement obligations under the Letters of Credit, as such agreements may be amended, modified, supplemented or restated
from time to time.

 

"S&P" means
Standard & Poor's Ratings Group, a division of The McGraw-Hill Companies, Inc., and any successor thereto that is a nationally
recognized rating agency.

 

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

 

"Subsidiary" means:
(a) any Person of which at least a majority of the outstanding Equity Interests having by the terms thereof ordinary voting power
to elect a majority of the board of directors, board of managers or other governing body of such Person (irrespective of whether
or not at the time Equity Interests of any other class or classes of such Person shall have or might have voting power by reason
of the happening of any contingency) is at the time directly or indirectly owned or controlled by the Borrower or one or more of
its Subsidiaries or by the Borrower and one or more of its Subsidiaries and (b) any partnership of which the Borrower or any of
its Subsidiaries is a general partner. Unless otherwise indicated herein, each reference to the term "Subsidiary" shall
mean a Subsidiary of the Borrower. Notwithstanding the foregoing, Yuma Production 1985, Ltd. shall not be deemed to be a Subsidiary
for purposes of this Agreement and the other Loan Documents.

 

"Swap Agreement"
means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity
swaps, commodity options, forward commodity contracts, forward sale of production, equity or equity index swaps or options, bond
or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest
rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions,
cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of
any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed
by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject
to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives
Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement,
together with any related schedules, a "Master Agreement"), including any such obligations or liabilities
under any Master Agreement.

 

    	CREDIT AGREEMENT - Page 16

    	 

    

 

"Swap Lender" means
any Person that is a counterparty to a Swap Agreement with the Borrower or any Subsidiary that is (a) an Approved Counterparty
that has entered into an intercreditor agreement acceptable to the Majority Lenders, and (b) a Lender or an Affiliate of a Lender
or was a Lender or an Affiliate of a Lender at the time such Swap Agreement was entered into.

 

"Swap Termination Value"
means, in respect of any one or more Swap Agreements, after taking into account the effect of any legally enforceable netting agreement
relating to such Swap Agreements, (a) for any date on or after the date such Swap Agreements have been closed out and termination
value(s) determined in accordance therewith, such termination value(s) and (b) for any date prior to the date referenced in clause
(a), the amount(s) determined as the mark-to-market value(s) for such Swap Agreements, as determined by the counterparties to such
Swap Agreements.

 

"Synthetic Lease"
means, as to any Person, any lease (including a lease that may be terminated by the lessee at any time) of any Property (whether
real, personal or mixed) (a) that is accounted for as an operating lease under GAAP and (b) in respect of which the lessee retains
or obtains ownership of the Property so leased for U.S. Federal income tax purposes, other than any such lease under which such
Person is the lessor.

 

"Taxes" means any
and all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed
by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

 

"Termination Date"
means the earlier of the Maturity Date and the date of termination of the Commitments.

 

"Transactions" means,
with respect to (a) the Borrower, the execution, delivery and performance by the Borrower of this Agreement, and each other Loan
Document to which it is a party, the borrowing of Loans, the use of the proceeds thereof and the issuance of Letters of Credit
hereunder, and the grant of Liens by the Borrower on Mortgaged Properties and other Properties pursuant to the Security Instruments
and (b) each Guarantor, the execution, delivery and performance by such Guarantor of each Loan Document to which it is a party,
the guaranteeing of the Indebtedness and the other obligations under the Guaranty Agreement by such Guarantor and such Guarantor's
grant of the security interests and provision of collateral under the Security Instruments, and the grant of Liens by such Guarantor
on Mortgaged Properties and other Properties pursuant to the Security Instruments.

 

"Type" when used
in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing,
is determined by reference to the Alternate Base Rate or the Adjusted LIBO Rate.

 

"Wholly-Owned Subsidiary"
means (a) any Subsidiary of which all of the outstanding Equity Interests, on a fully-diluted basis, are owned by the Borrower
or one or more of the Wholly-Owned Subsidiaries or are owned by the Borrower and one or more of the Wholly-Owned Subsidiaries or
(b) if permitted by this Agreement, any Subsidiary that is organized in a foreign jurisdiction and is required by the applicable
laws and regulations of such foreign jurisdiction to be partially owned by the government of such foreign jurisdiction or individual
or corporate citizens of such foreign jurisdiction, provided that the Borrower, directly or indirectly, owns the remaining
Equity Interests in such Subsidiary and, by contract or otherwise, controls the management and business of such Subsidiary and
derives economic benefits of ownership of such Subsidiary to substantially the same extent as if such Subsidiary were a Wholly-Owned
Subsidiary.

 

Section 1.03.         Types
of Loans and Borrowings. For purposes of this Agreement, Loans and Borrowings, respectively,
may be classified and referred to by Type (e.g., a "Eurodollar Loan" or a "Eurodollar Borrowing").

 

    	CREDIT AGREEMENT - Page 17

    	 

    

 

Section 1.04.         Terms
Generally; Rules of Construction. The definitions of terms herein shall apply equally
to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed
to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning
and effect as the word "shall". Unless the context requires otherwise (a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time
to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications
set forth in the Loan Documents), (b) any reference herein to any law or regulation shall be construed as referring to such law
or regulation as amended, modified, codified, supplemented or reenacted, in whole or in part, and in effect from time to time,
(c) any reference herein to any Person shall be construed to include such Person's successors and assigns (subject to the restrictions
contained in the Loan Documents), (d) the words "herein", "hereof" and "hereunder", and words of
similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (e) except
as otherwise specified herein, with respect to the determination of any time period, the word "from" means "from
and including" and the word "to" means "to and including", (f) any reference herein to Articles, Sections,
Annexes, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Annexes, Exhibits and Schedules to,
this Agreement and (g) the words "asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties, including, cash, securities, accounts and contract rights.
References in this Agreement and the other Loan Documents to "reasonable", "reasonably" and words of similar
import when applied to any request or demand which the Lender is permitted to make hereunder or under any other Loan Document or
as applied to a determination of the reasonableness of the amount or the incurrence of any expense shall be interpreted and construed
from the perspective of a lender in a senior credit facility where such lender is regulated by various governmental agencies, seeks
a high level of assurance regarding the operations, collateral position, condition (financial or otherwise) and Properties of the
Borrower and other Persons guaranteeing or otherwise connected to such facility and seeks a high level of assurance and advice
regarding its rights and duties under the Loan Documents, and the Borrower and any other Person guaranteeing or otherwise connected
to such facility shall comply with such request or demand or accept such determination unless the Borrower or such other Person
proves that such request, demand or determination is or was unreasonable. 

 

For purposes of Section 10.01, a
breach of a financial covenant contained in Section 9.01 shall be deemed to have occurred as of any date of determination
thereof by the Administrative Agent or as of the last date of any specified measuring period, regardless of when the financial
statements or the Compliance Certificate reflecting such breach are delivered to the Administrative Agent and the Lenders.

 

Section 1.05.         Accounting
Terms and Determinations; GAAP. Unless otherwise specified herein, all accounting terms
used herein shall be interpreted, all determinations with respect to accounting matters hereunder shall be made, and all financial
statements and certificates and reports as to financial matters required to be furnished to the Administrative Agent or the Lenders
hereunder shall be prepared, in accordance with GAAP, applied on a basis consistent with the Financial Statements except for changes
in which the Borrower's independent certified public accountants concur and which are disclosed to Administrative Agent on the
next date on which financial statements are required to be delivered to the Lenders pursuant to Section
8.01(a); provided that, unless the Borrower and the Majority Lenders shall otherwise agree in writing, no such
change shall modify or affect the manner in which compliance with the covenants contained herein is computed such that all such
computations shall be conducted utilizing financial information presented consistently with prior periods.

 

Section 1.06.         Amounts
of Letters of Credit. Unless otherwise specified herein, the amount of a Letter of Credit
at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided, however,
that with respect to any Letter of Credit that, by its terms or the terms of any document related thereto, provides for one or
more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated
amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect
at such time.

 

Section 1.07.         Joint
Preparation; Construction of Indemnities and Releases. This Agreement and the other Loan Documents have been reviewed and negotiated
by sophisticated parties with access to legal counsel, and no rule of construction shall apply hereto or thereto which would require
or allow any Loan Document to be construed against any party because of its role in drafting such Loan Document. All indemnification
and release of liability provisions of this Agreement shall be construed broadly (and not narrowly) in favor of the Persons receiving
indemnification or releases of liability.

 

    	CREDIT AGREEMENT - Page 18

    	 

    

 

ARTICLE
II

The Credits

 

Section 2.01.         Commitments.
Subject to the terms and conditions and relying upon the representations and warranties herein set forth, each Lender agrees to
make Loans to the Borrower during the Availability Period in an aggregate principal amount that will not result in (a) such Lender's
Revolving Credit Exposure exceeding such Lender's Commitment or (b) the total Revolving Credit Exposures exceeding the total Commitments.
Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, repay and reborrow
the Loans.

 

Section 2.02.         Loans
and Borrowings. 

 

(a)          Borrowings;
Several Obligations. Each Loan shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance
with their respective Commitments. The failure of any Lender to make any Loan required to be made by it shall not relieve any other
Lender of its obligations hereunder; provided that the Commitments are several and no Lender shall be responsible for any
other Lender's failure to make Loans as required.

 

(b)          Types
of Loans. Subject to Section 3.03, each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the
Borrower may request in accordance herewith. Each Lender at its option may make any Eurodollar Loan by causing any domestic or
foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect
the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.

 

(c)          Minimum
Amounts; Limitation on Number of Borrowings. At the commencement of each Interest Period for any Eurodollar Borrowing, such
Borrowing shall be in an aggregate amount that is an integral multiple of $100,000 and not less than $1,000,000. At the time that
each ABR Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $50,000 and not less
than $100,000; provided that an ABR Borrowing may be in an aggregate amount that is equal to the entire unused balance of
the total Commitments or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.08(e).
Borrowings of more than one Type may be outstanding at the same time, provided that there shall not at any time be more
than a total of five (5) Eurodollar Borrowings outstanding. Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect
thereto would end after the Maturity Date.

 

(d)          Notes.
The Loans made by each Lender shall be evidenced by a single promissory note of the Borrower in substantially the form of Exhibit
A, dated, in the case of (i) any Lender party hereto as of the date of this Agreement, as of the date of this Agreement, or
(ii) any Lender that becomes a party hereto pursuant to an Assignment and Assumption, as of the effective date of the Assignment
and Assumption, payable to the order of such Lender in a principal amount equal to its Maximum Credit Amount as in effect on such
date, and otherwise duly completed. In the event that any Lender's Maximum Credit Amount increases or decreases for any reason
(whether pursuant to Section 2.06, Section 12.04(b) or otherwise), the Borrower shall deliver or cause to be delivered
on the effective date of such increase or decrease, a new Note payable to the order of such Lender (or at the option of each Lender,
a modification of the existing Note payable to the order of such Lender) in a principal amount equal to its Maximum Credit Amount
after giving effect to such increase or decrease, and otherwise duly completed. The date, amount, Type, interest rate and, if applicable,
Interest Period of each Loan made by each Lender, and all payments made on account of the principal thereof, shall be recorded
by such Lender on its books for its Note, and, prior to any transfer, may be endorsed by such Lender on a schedule attached to
such Note or any continuation thereof or on any separate record maintained by such Lender. Failure to make any such notation or
to attach a schedule shall not affect any Lender's or the Borrower's rights or obligations in respect of such Loans or affect the
validity of such transfer by any Lender of its Note. 

 

    	CREDIT AGREEMENT - Page 19

    	 

    

 

Section 2.03.         Requests
for Borrowings. To request a Borrowing, the Borrower shall notify the Administrative Agent
of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., Houston, Texas time, three Business
Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 11:00 a.m., Houston, Texas
time, on the date of the proposed Borrowing; provided that no such notice shall be required for any deemed request of an
ABR Borrowing to finance the reimbursement of an LC Disbursement as provided in Section
2.08(e). Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery
or telecopy to the Administrative Agent of a written Borrowing Request in substantially the form of Exhibit B and signed
by the Borrower. Each such telephonic and written Borrowing Request shall specify the following information in compliance with
Section 2.02:

 

(i)          the
aggregate amount of the requested Borrowing;

 

(ii)         the
date of such Borrowing, which shall be a Business Day;

 

(iii)        whether
such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;

 

(iv)        in
the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated
by the definition of the term "Interest Period";

 

(v)         the
amount of the then effective Borrowing Base, the current total Revolving Credit Exposures (without regard to the requested Borrowing)
and the pro forma total Revolving Credit Exposures (giving effect to the requested Borrowing); and

 

(vi)        the
location and number of the Borrower's account to which funds are to be disbursed, which shall comply with the requirements of Section
2.05.

 

If no election as to the Type of Borrowing is specified, then
the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar
Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month's duration. Each Borrowing Request
shall constitute a representation that the amount of the requested Borrowing shall not cause the total Revolving Credit Exposures
to exceed the total Commitments (i.e., the lesser of the Aggregate Maximum Credit Amounts and the then effective Borrowing Base).

 

Promptly following receipt of a Borrowing Request in accordance
with this Section 2.03, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such
Lender's Loan to be made as part of the requested Borrowing.

 

Section 2.04.          Interest
Elections. 

 

(a)          Conversion
and Continuance. Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case
of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Borrower
may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing,
may elect Interest Periods therefor, all as provided in this Section 2.04. The Borrower may elect different options with
respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders
holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.

 

(b)          Interest
Election Requests. To make an election pursuant to this Section 2.04, the Borrower shall notify the Administrative Agent
of such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if the Borrower
were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such
telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative
Agent of a written Interest Election Request in substantially the form of Exhibit C and signed by the Borrower.

 

    	CREDIT AGREEMENT - Page 20

    	 

    

 

(c)          Information
in Interest Election Requests. Each telephonic and written Interest Election Request shall specify the following information
in compliance with Section 2.02:

 

(i)          the
Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified
pursuant to Section 2.04(c)(iii) and (iv) shall be specified for each resulting Borrowing);

 

(ii)         the
effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

 

(iii)        whether
the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

 

(iv)        if
the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election,
which shall be a period contemplated by the definition of the term "Interest Period".

 

If any such Interest Election Request requests a Eurodollar
Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one
month's duration. If such Interest Election Request does not specify a Type, then the Borrower shall be deemed to have selected
a Type of ABR Borrowing.

 

(d)          Notice
to Lenders by the Administrative Agent. Promptly following receipt of an Interest Election Request, the Administrative Agent
shall advise each Lender of the details thereof and of such Lender's portion of each resulting Borrowing.

 

(e)          Effect
of Failure to Deliver Timely Interest Election Request and Events of Default and Borrowing Base Deficiencies on Interest Election.
If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of
the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period
such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default or
a Borrowing Base Deficiency has occurred and is continuing: (i) no outstanding Borrowing may be converted to or continued as a
Eurodollar Borrowing (and any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any
Borrowing as, a Eurodollar Borrowing shall be ineffective) and (ii) unless repaid, each Eurodollar Borrowing shall be converted
to an ABR Borrowing at the end of the Interest Period applicable thereto.

 

Section 2.05.          Funding
of Borrowings. 

 

(a)          Funding
by Lenders. Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately
available funds by 1:00 p.m., Houston, Texas time, to the account of the Administrative Agent most recently designated by it for
such purpose by notice to the Lenders. The Administrative Agent will make such Loans available to the Borrower by promptly crediting
the amounts so received, in like funds, to an account of the Borrower maintained with the Administrative Agent and designated by
the Borrower in the applicable Borrowing Request; provided that ABR Loans made to finance the reimbursement of an LC Disbursement
as provided in Section 2.08(e) shall be remitted by the Administrative Agent to the Issuing Bank. Nothing herein shall be
deemed to obligate any Lender to obtain the funds for its Loan in any particular place or manner or to constitute a representation
by any Lender that it has obtained or will obtain the funds for its Loan in any particular place or manner.

 

    	CREDIT AGREEMENT - Page 21

    	 

    

 

(b)          Presumption
of Funding by the Lenders. Unless the Administrative Agent shall have received notice from a Lender (x) in the case of ABR
Loans, prior to 12:00 noon on the date of the proposed Borrowing and (y) otherwise, prior to the proposed date of any Borrowing
that such Lender will not make available to the Administrative Agent such Lender's share of such Borrowing, the Administrative
Agent may assume that such Lender has made such share available on such date in accordance with Section 2.05(a) and may,
in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in
fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower
severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative
Agent, at (i) in the case of a payment to be made by such Lender, the greater of the Federal Funds Effective Rate and a rate determined
by the Administrative Agent in accordance with banking industry rules on interbank compensation and (ii) in the case of a payment
to be made by the Borrower, the interest rate applicable to ABR Loans. If the Borrower and such Lender shall pay such interest
to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower
the amount of such interest paid by the Borrower for such period. If such Lender pays its share of the applicable Borrowing to
the Administrative Agent, then the amount so paid shall constitute such Lender's Loan included in such Borrowing. Any payment by
the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such
payment to the Administrative Agent.

 

Section 2.06.          Termination
and Reduction of Aggregate Maximum Credit Amounts. 

 

(a)          Scheduled
Termination of Commitments. Unless previously terminated, the Commitments shall terminate on the Maturity Date. If at any time
the Aggregate Maximum Credit Amounts or the Borrowing Base is terminated or reduced to zero, then the Commitments shall terminate
on the effective date of such termination or reduction.

 

(b)          Optional
Termination and Reduction of Aggregate Credit Amounts. 

 

(i)          The
Borrower may at any time terminate, or from time to time reduce, the Aggregate Maximum Credit Amounts; provided that (A)
each reduction of the Aggregate Maximum Credit Amounts shall be in an amount that is an integral multiple of $500,000 and not less
than $2,500,000 and (B) the Borrower shall not terminate or reduce the Aggregate Maximum Credit Amounts if, after giving effect
to any concurrent prepayment of the Loans in accordance with Section 3.04(c), the total Revolving Credit Exposures would
exceed the total Commitments.

 

(ii)         The
Borrower shall notify the Administrative Agent of any election to terminate or reduce the Aggregate Maximum Credit Amounts under
Section 2.06(b)(i) at least three Business Days prior to the effective date of such termination or reduction, specifying
such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section 2.06(b)(ii) shall be irrevocable.
Any termination or reduction of the Aggregate Maximum Credit Amounts shall be permanent and may not be reinstated. Each reduction
of the Aggregate Maximum Credit Amounts shall be made ratably among the Lenders in accordance with each Lender's Applicable Percentage.

 

Section 2.07.          Borrowing
Base. 

 

(a)          Initial
Borrowing Base. The term "Borrowing Base" means, as of the date of the determination thereof, the designated
loan value as calculated by the Lenders in their sole discretion assigned to the discounted present value of future net income
accruing to the Mortgaged Property, based upon the Lenders' in-house evaluation of the Mortgaged Property. The Lenders' determination
of the Borrowing Base will be made in accordance with then-current practices, economic and pricing parameters, methodology, assumptions,
and customary procedures and standards established by each Lender from time to time for its petroleum industry customers. The Borrower
acknowledges that the determination of the Borrowing Base contains an equity cushion (market value in excess of loan amount) which
the Borrower acknowledges to be essential for the adequate protection of the Lenders. For the period from and including the Effective
Date to but excluding the first Redetermination Date, the amount of the Borrowing Base shall be $20,000,000. 

 

    	CREDIT AGREEMENT - Page 22

    	 

    

 

(b)          Scheduled
and Interim Redeterminations. The Borrowing Base shall be redetermined semi-annually in accordance with this Section 2.07
(a "Scheduled Redetermination"), and, subject to Section 2.07(d), such redetermined Borrowing Base
shall become effective and applicable to the Borrower, the Agents, the Issuing Bank and the Lenders on March 1st and September
1st of each year, commencing March 1, 2012. In addition, the Borrower may, by notifying the Administrative Agent thereof, twice
during any twelve month period, and the Administrative Agent may twice during the twelve month period following the closing date
and one time during any twelve month period thereafter, at the direction of the Majority Lenders, by notifying the Borrower thereof,
each elect to cause the Borrowing Base to be redetermined between Scheduled Redeterminations (an "Interim Redetermination")
in accordance with this Section 2.07. In addition, the Administrative Agent may, by notifying the Borrower thereof, elect
to cause an Interim Redetermination of the Borrowing Base any time (i) a prepayment made by the Borrower pursuant to Section
3.04(c)(iv) exceeds five percent (5%) of the Borrowing Base then existing at the time of prepayment, and (ii) any time the
Recognized Value of the assets included in an Asset Disposition permitted by Section 9.12(d) exceeds twenty percent (20%).

 

(c)          Scheduled
and Interim Redetermination Procedure. 

 

(i)          Each
Scheduled Redetermination and each Interim Redetermination shall be effectuated as follows: Upon receipt by the Administrative
Agent of (A) the Reserve Report and the certificate required to be delivered by the Borrower to the Administrative Agent, in the
case of a Scheduled Redetermination, pursuant to Section 8.12(a) and (c), and, in the case of an Interim Redetermination,
pursuant to Section 8.12(b) and (c), and (B) such other reports, data and supplemental information, including, without
limitation, the information provided pursuant to Section 8.12(c), as may, from time to time, be reasonably requested by
the Majority Lenders (the Reserve Report, such certificate and such other reports, data and supplemental information being the
"Engineering Reports"), the Administrative Agent shall evaluate the information contained in the Engineering
Reports and shall, in good faith, propose a new Borrowing Base (the "Proposed Borrowing Base") based upon
such information and such other information (including, without limitation, the status of title information with respect to the
Oil and Gas Properties as described in the Engineering Reports and the existence of any other Debt) as the Administrative Agent
deems appropriate in its sole discretion and consistent with its normal oil and gas lending criteria as it exists at the particular
time. In no event shall the Proposed Borrowing Base exceed the Aggregate Maximum Credit Amounts.

 

(ii)         The
Administrative Agent shall notify the Borrower and the Lenders of the Proposed Borrowing Base (the "Proposed Borrowing
Base Notice"): 

 

(A)         in
the case of a Scheduled Redetermination (1) if the Administrative Agent shall have received the Engineering Reports required to
be delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and complete manner, then on or before
the March 1st and September 1st of such year following the date of delivery or (2) if the Administrative Agent shall not have received
the Engineering Reports required to be delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely
and complete manner, then promptly after the Administrative Agent has received complete Engineering Reports from the Borrower and
has had a reasonable opportunity to determine the Proposed Borrowing Base in accordance with Section 2.07(c)(i), and in
any event, within thirty (30) days after the Administrative Agent has received the required Engineering Reports; and

 

    	CREDIT AGREEMENT - Page 23

    	 

    

 

(B)         in
the case of an Interim Redetermination, promptly, and in any event, within fifteen (15) days after the Administrative Agent has
received the required Engineering Reports.

 

(iii)        Any
Proposed Borrowing Base that would increase the Borrowing Base then in effect must be approved or deemed to have been approved
by all of the Lenders as provided in this Section 2.07(c)(iii); and any Proposed Borrowing Base that would decrease or maintain
the Borrowing Base then in effect must be approved or be deemed to have been approved by the Majority Lenders as provided in this
Section 2.07(c)(iii). Upon receipt of the Proposed Borrowing Base Notice, each Lender shall have fifteen (15) days to agree
with the Proposed Borrowing Base or disagree with the Proposed Borrowing Base by proposing an alternate Borrowing Base. If at the
end of such fifteen (15) days, any Lender has not communicated its approval or disapproval in writing to the Administrative Agent,
such silence shall be deemed to be an approval of the Proposed Borrowing Base. If, at the end of such 15-day period, all of the
Lenders, in the case of a Proposed Borrowing Base that would increase the Borrowing Base then in effect, or the Majority Lenders,
in the case of a Proposed Borrowing Base that would decrease or maintain the Borrowing Base then in effect, have approved or deemed
to have approved, as aforesaid, then the Proposed Borrowing Base shall become the new Borrowing Base, effective on the date specified
in Section 2.07(d). If, however, at the end of such 15-day period, all of the Lenders or the Majority Lenders, as applicable,
have not approved or deemed to have approved, as aforesaid, the Proposed Borrowing Base, then the Administrative Agent shall poll
the Lenders to ascertain the highest Borrowing Base then acceptable to all of the Lenders or the Majority Lenders, as applicable,
and such amount shall become the new Borrowing Base, effective on the date specified in Section 2.07(d).

 

(d)          Effectiveness
of a Redetermined Borrowing Base. After a redetermined Borrowing Base is approved or is deemed to have been approved by all
of the Lenders or the Majority Lenders, as applicable, pursuant to Section 2.07(c)(iii), the Administrative Agent shall
notify the Borrower and the Lenders of the amount of the redetermined Borrowing Base (the "New Borrowing Base Notice"),
and such amount shall become the new Borrowing Base, effective and applicable to the Borrower, the Administrative Agent, the Issuing
Bank and the Lenders:

 

(i)          in
the case of a Scheduled Redetermination, (A) if the Administrative Agent shall have received the Engineering Reports required to
be delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and complete manner, then on the March
1st or September 1st, as applicable, following such notice, or (B) if the Administrative Agent shall not have received the Engineering
Reports required to be delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and complete manner,
then on the Business Day next succeeding delivery of such notice; and

 

(ii)         in
the case of an Interim Redetermination, on the Business Day next following delivery of such notice. 

 

Such amount shall then become the Borrowing Base
until the next Scheduled Redetermination Date, the next Interim Redetermination Date or the next adjustment to the Borrowing Base
under Section 8.13(c) or Section 9.12, whichever occurs first.

 

(e)          Borrowing
Base Reductions. 

 

(i)          At
the time of any Scheduled Redetermination or Interim Redetermination, Lenders reserve the right to establish an amount (the "Monthly
Reduction Amount") by which the Borrowing Base shall be automatically reduced effective on the first day of each successive
calendar month until the next Borrowing Base redetermination. Lenders' determination of the Monthly Reduction Amount shall be made
in accordance with the standards specified in Section 2.07(a) hereof and the procedures specified in Section 2.07(c)
hereof. Initially, the Monthly Reduction Amount will be set at zero dollars ($0). If a Borrowing Base Deficiency exists solely
because of the reduction of the Borrowing Base by the Monthly Reduction Amount, Borrower shall promptly make a single lump sum
payment in an amount equal to the Borrowing Base Deficiency.

 

    	CREDIT AGREEMENT - Page 24

    	 

    

 

(ii)         If
any Swap Agreement is terminated or not fully performed for any reason, the Borrowing Base shall be reduced by the amount of the
Recognized Value given such Swap Agreement in the then current Borrowing Base as determined by the Administrative Agent or the
Majority Lenders in their discretion in accordance with the standards set forth in Section 2.07(a). Any such redetermination
shall not be considered a special determination requested by the Administrative Agent within the meaning specified in Section
2.07(b).

 

(iii)        The
Borrowing Base shall be reduced in the event of an Asset Disposition as provided in Section 9.12(d). Any such redetermination
shall not be considered a special determination requested by the Administrative Agent within the meaning of Section 2.07(b).

 

(iv)        The
Borrowing Base may be reduced as provided in Section 8.13(c).

 

Section 2.08.       Letters
of Credit. 

 

(a)         General.
Subject to the terms and conditions set forth herein, the Borrower may request the issuance of dollar denominated Letters of Credit
for its own account or for the account of any of its Subsidiaries, in a form acceptable to the Administrative Agent and the Issuing
Bank, at any time and from time to time during the Availability Period; provided that (i) the Borrower may not request the
issuance, amendment, renewal or extension of Letters of Credit hereunder if a Borrowing Base Deficiency exists at such time or
would exist as a result thereof and (ii) the minimum amount of any such Letter of Credit shall be $20,000. In the event of any
inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application
or other agreement submitted by the Borrower to, or entered into by the Borrower with, the Issuing Bank relating to any Letter
of Credit, the terms and conditions of this Agreement shall control.

 

(b)         Notice
of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic
communication, if arrangements for doing so have been approved by the Issuing Bank) to the Issuing Bank and the Administrative
Agent (not less than three (3) Business Days in advance of the requested date of issuance, amendment, renewal or extension) a notice:

 

(i)          requesting
the issuance of a Letter of Credit or identifying the Letter of Credit to be amended, renewed or extended;

 

(ii)         specifying
the date of issuance, amendment, renewal or extension (which shall be a Business Day);

 

(iii)        specifying
the date on which such Letter of Credit is to expire (which shall comply with Section 2.08(c));

 

(iv)        specifying
the amount of such Letter of Credit;

 

(v)         specifying
the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend
such Letter of Credit; and

 

(vi)        specifying
the amount of the then effective Borrowing Base and whether a Borrowing Base Deficiency exists at such time, the current total
Revolving Credit Exposures (without regard to the requested Letter of Credit or the requested amendment, renewal or extension of
an outstanding Letter of Credit) and the pro forma total Revolving Credit Exposures (giving effect to the requested Letter of Credit
or the requested amendment, renewal or extension of an outstanding Letter of Credit).

 

    	CREDIT AGREEMENT - Page 25

    	 

    

 

Each notice shall constitute a representation that
after giving effect to the requested issuance, amendment, renewal or extension, as applicable, (i) the LC Exposure shall not exceed
the LC Commitment and (ii) the total Revolving Credit Exposures shall not exceed the total Commitments (i.e. the lesser of the
Aggregate Maximum Credit Amounts and the then effective Borrowing Base).

 

If requested by the Issuing Bank, the Borrower also
shall submit a letter of credit application on the Issuing Bank's standard form in connection with any request for a Letter of
Credit.

 

(c)          Expiration
Date. Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year after
the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal
or extension) and (ii) the date that is five Business Days prior to the Maturity Date; provided, however, that a Letter
of Credit may, upon the request of the Borrower, include a provision whereby such Letter of Credit shall be renewed automatically
for additional consecutive periods of 12 months or less (but not beyond the date that is five Business Days prior to the Maturity
Date) unless the Issuing Bank notifies the beneficiary thereof at least 30 days (or such longer period as may be specified in such
Letter of Credit) prior to the then-applicable expiration date that such Letter of Credit will not be renewed. 

 

(d)          Participations.
By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further
action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants to each Lender, and each Lender hereby acquires
from the Issuing Bank, a participation in such Letter of Credit equal to such Lender's Applicable Percentage of the aggregate amount
available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Lender hereby absolutely
and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Lender's Applicable Percentage
of each LC Disbursement made by the Issuing Bank and not reimbursed by the Borrower on the date due as provided in Section 2.08(e),
or of any reimbursement payment required to be refunded to the Borrower for any reason. Each Lender acknowledges and agrees that
its obligation to acquire participations pursuant to this Section 2.08(d) in respect of Letters of Credit is absolute and
unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter
of Credit or the occurrence and continuance of a Default, the existence of a Borrowing Base Deficiency or reduction or termination
of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

 

(e)          Reimbursement.
If the Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement
by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 12:00 noon, Houston, Texas time, on
the date that such LC Disbursement is made, if the Borrower shall have received notice of such LC Disbursement prior to 10:00 a.m.,
Houston, Texas time, on such date, or, if such notice has not been received by the Borrower prior to such time on such date, then
not later than 12:00 noon, Houston, Texas time, on (i) the Business Day that the Borrower receives such notice, if such notice
is received prior to 10:00 a.m., Houston, Texas time, on the day of receipt, or (ii) the Business Day immediately following the
day that the Borrower receives such notice, if such notice is not received prior to such time on the day of receipt; provided
that if such LC Disbursement is not less than $50,000, the Borrower shall, subject to the conditions to Borrowing set forth herein,
be deemed to have requested, and the Borrower does hereby request under such circumstances, that such payment be financed with
an ABR Borrowing in an equivalent amount and, to the extent so financed, the Borrower's obligation to make such payment shall be
discharged and replaced by the resulting ABR Borrowing. If the Borrower fails to make such payment when due, the Administrative
Agent shall notify each Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and
such Lender's Applicable Percentage thereof. Promptly following receipt of such notice, each Lender shall pay to the Administrative
Agent its Applicable Percentage of the payment then due from the Borrower, in the same manner as provided in Section 2.05
with respect to Loans made by such Lender (and Section 2.05 shall apply, mutatis mutandis, to the payment obligations of
the Lenders), and the Administrative Agent shall promptly pay to the Issuing Bank the amounts so received by it from the Lenders.
Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this Section 2.08(e),
the Administrative Agent shall distribute such payment to the Issuing Bank or, to the extent that Lenders have made payments pursuant
to this Section 2.08(e) to reimburse the Issuing Bank, then to such Lenders and the Issuing Bank as their interests may
appear. Any payment made by a Lender pursuant to this Section 2.08(e) to reimburse the Issuing Bank for any LC Disbursement
(other than the funding of ABR Loans as contemplated above) shall not constitute a Loan and shall not relieve the Borrower of its
obligation to reimburse such LC Disbursement.

 

    	CREDIT AGREEMENT - Page 26

    	 

    

 

(f)          Obligations
Absolute. The Borrower's obligation to reimburse LC Disbursements as provided in Section 2.08(e) shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all
circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit, any Letter of
Credit Agreement or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter
of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any
respect, (iii) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that does
not comply with the terms of such Letter of Credit or any Letter of Credit Agreement, or (iv) any other event or circumstance whatsoever,
whether or not similar to any of the foregoing, that might, but for the provisions of this Section 2.08(f), constitute a
legal or equitable discharge of, or provide a right of setoff against, the Borrower's obligations hereunder. Neither the Administrative
Agent, the Lenders nor the Issuing Bank, nor any of their Related Parties shall have any liability or responsibility by reason
of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or
delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including
any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising
from causes beyond the control of the Issuing Bank; provided that the foregoing shall not be construed to excuse the Issuing
Bank from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect
of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused
by the Issuing Bank's failure to exercise care when determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct
on the part of the Issuing Bank (as finally determined by a court of competent jurisdiction), the Issuing Bank shall be deemed
to have exercised all requisite care in each such determination. In furtherance of the foregoing and without limiting the generality
thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance
with the terms of a Letter of Credit, the Issuing Bank may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept
and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

 

(g)          Disbursement
Procedures. The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. The Issuing Bank shall promptly notify the Administrative Agent and the Borrower by
telephone (confirmed by telecopy) of such demand for payment and whether the Issuing Bank has made or will make an LC Disbursement
thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation
to reimburse the Issuing Bank and the Lenders with respect to any such LC Disbursement. 

 

(h)          Interim
Interest. If the Issuing Bank shall make any LC Disbursement, then, until the Borrower shall have reimbursed the Issuing Bank
for such LC Disbursement (either with its own funds or a Borrowing under Section 2.08(e)), the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Borrower
reimburses such LC Disbursement, at the rate per annum then applicable to ABR Loans. Interest accrued pursuant to this Section
2.08(h) shall be for the account of the Issuing Bank, except that interest accrued on and after the date of payment by any
Lender pursuant to Section 2.08(e) to reimburse the Issuing Bank shall be for the account of such Lender to the extent of
such payment.

 

    	CREDIT AGREEMENT - Page 27

    	 

    

 

(i)          Replacement
of the Issuing Bank. The Issuing Bank may be replaced at any time by written agreement among the Borrower, the Administrative
Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such
replacement of the Issuing Bank. At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees
accrued for the account of the replaced Issuing Bank pursuant to Section 3.05(b). From and after the effective date of any
such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the Issuing Bank under this Agreement
with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term "Issuing Bank" shall
be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the
context shall require. After the replacement of the Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto
and shall continue to have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit
issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit.

 

(j)          Cash
Collateral - Default. If (i) any Event of Default shall occur and be continuing and the Borrower receives notice from the Administrative
Agent or the Majority Lenders demanding the deposit of cash collateral pursuant to this Section 2.08(j), or (ii) the Borrower
is required to pay to the Administrative Agent the excess attributable to an LC Exposure in connection with any prepayment pursuant
to Section 3.04(c), then the Borrower shall deposit, in an account with the Administrative Agent (the "LC Collection
Account"), in the name of the Administrative Agent and for the benefit of the Lenders, an amount in cash equal to,
in the case of an Event of Default, the LC Exposure, and in the case of a payment required by Section 3.04(c), the amount
of such excess as provided in Section 3.04(c), as of such date plus any accrued and unpaid interest thereon; provided
that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately
due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the Borrower
or any Subsidiary described in Section 10.01(h) or Section 10.01(i). The Borrower hereby grants to the Administrative
Agent, for the benefit of the Issuing Bank and the Lenders, an exclusive first priority and continuing perfected security interest
in and Lien on the LC Collection Account and all cash, checks, drafts, certificates and instruments, if any, from time to time
deposited or held in the LC Collection Account, all deposits or wire transfers made thereto, any and all investments purchased
with funds deposited in such account, all interest, dividends, cash, instruments, financial assets and other Property from time
to time received, receivable or otherwise payable in respect of, or in exchange for, any or all of the foregoing, and all proceeds,
products, accessions, rents, profits, income and benefits therefrom, and any substitutions and replacements therefor. The Borrower's
obligation to deposit amounts pursuant to this Section 2.08(j) shall be absolute and unconditional, without regard to whether
any beneficiary of any such Letter of Credit has attempted to draw down all or a portion of such amount under the terms of a Letter
of Credit, and, to the fullest extent permitted by applicable law, shall not be subject to any defense or be affected by a right
of set-off, counterclaim or recoupment which the Borrower or any of its Subsidiaries may now or hereafter have against any such
beneficiary, the Issuing Bank, the Administrative Agent, the Lenders or any other Person for any reason whatsoever. Such deposit
shall be held as collateral securing the payment and performance of the Borrower's and the Guarantors' obligations under this Agreement
and the other Loan Documents. The Administrative Agent shall have exclusive dominion and control, including the exclusive right
of withdrawal, over the LC Collection Account. Other than any interest earned on the investment of such deposits, which investments
shall be made at the option and sole discretion of the Administrative Agent and at the Borrower's risk and expense, such deposits
shall not bear interest. Interest or profits, if any, on such investments shall accumulate in the LC Collection Account. Moneys
in the LC Collection Account shall be applied by the Administrative Agent to reimburse the Issuing Bank for LC Disbursements for
which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations
of the Borrower for the LC Exposure at such time or, if the maturity of the Loans has been accelerated, be applied to satisfy other
obligations of the Borrower and the Guarantors under this Agreement or the other Loan Documents. If the Borrower is required to
provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, and the Borrower is not otherwise
required to pay to the Administrative Agent the excess attributable to an LC Exposure in connection with any prepayment pursuant
to Section 3.04(c), then such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three
Business Days after all Events of Default have been cured or waived. If the Borrower is required to provide an amount in cash collateral
hereunder as a result of any prepayment pursuant to Section 3.04(c) and the Borrower is not otherwise required to pay to
the Administrative Agent an amount equal to the LC Exposure as a result of the occurrence of an Event of Default, then if the total
Revolving Credit Exposure is reduced (whether pursuant to Section 3.04(a), the expiration of Letters of Credit or otherwise)
and/or the Borrowing Base is increased in accordance with Section 2.07, as a result of which a Borrowing Base Deficiency
no longer exists and so long no Default has occurred and is continuing, the Administrative Agent shall return to the Borrower such
amount but only to the extent that the then effective Borrowing Base exceeds the total Revolving Credit Exposures by not less than
$100,000.

 

    	CREDIT AGREEMENT - Page 28

    	 

    

 

(k)          Cash
Collateral – Defaulting Lender. At any time that there shall exist a Defaulting Lender, within one Business Day following
the written request of the Administrative Agent or the Issuing Bank (with a copy to the Administrative Agent) the Borrower shall
Cash Collateralize the Issuing Bank's Fronting Exposure with respect to such Defaulting Lender (determined after giving effect
to Section 2.11(a)(iv) and any cash collateral provided by such Defaulting Lender) in an amount not less than the Minimum
Collateral Amount.

 

(i)          Grant
of Security Interest. The Borrower, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grants
to the Administrative Agent, for the benefit of the Issuing Bank, and agrees to maintain, a first priority security interest in
all such cash collateral as security for the Defaulting Lenders' obligation to fund participations in respect of LC Exposure, to
be applied pursuant to clause (ii) below. If at any time the Administrative Agent determines that cash collateral is subject to
any right or claim of any Person other than the Administrative Agent and the Issuing Bank as herein provided, or that the total
amount of such cash collateral is less than the Minimum Collateral Amount, the Borrower will, promptly upon demand by the Administrative
Agent, pay or provide to the Administrative Agent additional cash collateral in an amount sufficient to eliminate such deficiency
(after giving effect to any cash collateral provided by the Defaulting Lender).

 

(ii)         Application.
Notwithstanding anything to the contrary contained in this Agreement, cash collateral provided under this Section 2.08(k)
or Section 2.11 in respect of Letters of Credit shall be applied to the satisfaction of the Defaulting Lender's obligation
to fund participations in respect of LC Exposure (including, as to cash collateral provided by a Defaulting Lender, any interest
accrued on such obligation) for which the cash collateral was so provided, prior to any other application of such property as may
otherwise be provided for herein.

 

(iii)        Termination
of Requirement. Cash collateral (or the appropriate portion thereof) provided to reduce the Issuing Bank's Fronting Exposure
shall no longer be required to be held as cash collateral pursuant to this Section 2.08(k) following (i) the elimination
of the applicable Fronting Exposure (including by the termination of Defaulting Lender status of the applicable Lender), or (ii)
the determination by the Administrative Agent and the Issuing Bank that there exists excess cash collateral; provided that,
subject to Section 2.11, the Person providing cash collateral and the Issuing Bank may agree that cash collateral shall
be held to support future anticipated Fronting Exposure or other obligations and provided further that to the extent that
such cash collateral was provided by the Borrower, such cash collateral shall remain subject to the security interest granted pursuant
to the Loan Documents.

 

Section 2.09.       Collateral.

 

(a)          Mortgaged
Property. The payment and performance of the Notes and all of the other Indebtedness hereunder and under the Loan Documents
and under the Lender Swap Agreements, and the reimbursement obligations under the Letters of Credit, shall be secured by a first
and superior Lien against the interest of the Borrower and each Subsidiary in their Oil and Gas Properties which represents at
least 80% of the Recognized Value of all of their Oil and Gas Properties, pursuant to the terms of one or more Mortgages in favor
of the Administrative Agent for the ratable benefit of the Lenders, which Mortgages shall be satisfactory in form and substance
to the Administrative Agent.

 

    	CREDIT AGREEMENT - Page 29

    	 

    

 

(b)          Personal
Property. The payment and performance of the Notes and all of the other Indebtedness hereunder and under the Loan Documents,
and under the Lender Swap Agreements and the reimbursement obligations under the Letters of Credit, shall be secured by a first
priority Lien against the personal property assets of the Borrower and each Subsidiary pursuant to one or more Security Agreements.

 

(c)          Guarantees
and Pledges of Equity Interests. The payment and performance of the Notes and all of the other Indebtedness hereunder and under
the Loan Documents, and under the Lender Swap Agreements and the reimbursement obligations under the Letters of Credit, (A) shall
be unconditionally guaranteed by each Subsidiary pursuant to one or more Guaranty Agreements, and (B) shall be secured by a first
priority Lien against the Equity Interests of each Subsidiary pursuant to a Pledge Agreement. Reference is made to Section 8.14
of this Agreement for further provisions with respect to additional Guarantors and additional collateral.

 

(d)          Negative
Pledge. The Borrower agrees that, for so long as any part of the Indebtedness of Borrower owed to Lenders hereunder
remains outstanding, the Borrower will not, without first obtaining the prior written consent of Administrative Agent, create or
permit any Lien of any kind to exist on or against any of the Borrower's Oil and Gas Properties that are not covered by a Mortgage,
except Liens permitted in Section 9.03.

 

Section 2.10.        Additional
Conditions for Future Acquisitions. The obligation of the Lenders to make Loans to the Borrower for the future acquisition
of interests in Oil and Gas Properties shall be further subject, on the funding date, to the satisfaction (in the opinion of the
Administrative Agent), unless waived in writing by the Administrative Agent, of each of the following conditions:

 

(a)          Future
Acquisition Documents. The Administrative Agent shall have received (i) a true and complete executed copy of each of the acquisition
documents for such transaction (the "Future Acquisition Documents"); (ii) original counterparts
or copies, certified as true and complete, of the assignments, deeds and leases for all of the Properties subject to the Future
Acquisition Documents; and (iii) such other related documents and information as the Administrative Agent shall have requested
with respect to the transaction contemplated by the Future Acquisition Documents.

 

(b)          Certificates.
Lender shall have received a certificate of the Borrower certifying (i) that Borrower is concurrently consummating the acquisition
contemplated by the Future Acquisition Documents and all material conditions precedent thereto have been satisfied in all material
respects by all of the parties thereto; (ii) as to the amount of the final purchase price for the Properties subject to the Future
Acquisition Documents after giving effect to all adjustments as of the closing date as contemplated by the Future Acquisition Documents
and specifying, by category, the amount of such adjustment; (iii) that attached thereto is a true and complete list of all of the
Properties subject to the Future Acquisition Documents which are being acquired by the Borrower; (iv) that attached thereto is
a true and complete list of Properties subject to the Future Acquisition Documents which have been excluded from the acquisition
pursuant to the terms of the Future Acquisition Documents, specifying with respect thereto the basis of exclusion as (1) title
defect, (2) preferential purchase right, (3) environmental, (4) casualty loss, or (5) other (which is to be explained); (v) that
attached thereto is a true and complete list of all Properties subject to the Future Acquisition Documents for which any seller
has elected to cure a title defect, specifying the nature of that title defect and the time frame within which it is expected to
be cured, (vi) that attached thereto is a true and complete list of all Properties subject to the Future Acquisition Documents
for which any seller has elected to remediate an adverse environmental condition; and (vii) that attached thereto is a true and
complete list of all Properties subject to the Future Acquisition Documents which are currently pending final decision by a third
party regarding purchase of such Property in accordance with any preferential right. The Borrower shall deliver a preliminary draft
of such certificate not less than three (3) days prior to the proposed closing of the acquisition. In addition, if requested by
the Administrative Agent, the Borrower shall provide the Property Certificate in the form of Exhibit G, the Reconciliation
Schedule in the form of Exhibit H and the Affidavit of Payment of Trade Bills in the form of Exhibit I.

 

    	CREDIT AGREEMENT - Page 30

    	 

    

 

(c)          Mortgage
of Acquired Properties. The Borrower shall have mortgaged the Properties acquired by the Future Acquisition Documents to the
Administrative Agent pursuant to the terms of one or more Mortgages. In connection therewith, the Administrative Agent shall have
received evidence satisfactory to it that all liens against such Properties have been released or terminated and that arrangements
satisfactory to the Administrative Agent have been made for recording and filing of such releases.

 

(d)          Title
Assurances. The Borrower shall have delivered to the Administrative Agent title information and data acceptable to the Administrative
Agent relating to title to the Mineral Interests in the Properties being acquired pursuant to the Future Acquisition Documents.
These title assurances shall include a title indemnity, and such post closing title work as the Administrative Agent may request.

 

Section 2.11.       Defaulting
Lenders.

 

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

 

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

 

(ii)         Defaulting
Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account
of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article X or otherwise) or received
by the Administrative Agent from a Defaulting Lender pursuant to Section 12.08 shall be applied at such time or times as
may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting
Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting
Lender to the Issuing Bank hereunder; third, to Cash Collateralize the Issuing Bank's Fronting Exposure with respect to
such Defaulting Lender in accordance with Section 2.08(k); fourth, as the Borrower may request (so long as no Default
exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required
by this Agreement, as determined by the Administrative Agent; fifth, if so determined by the Administrative Agent and the
Borrower, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender's potential future
funding obligations with respect to Loans under this Agreement and (y) Cash Collateralize the Issuing Bank's future Fronting Exposure
with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in accordance with
Section 2.08(k); sixth, to the payment of any amounts owing to the Lenders or the Issuing Bank as a result of any
judgment of a court of competent jurisdiction obtained by any Lender or the Issuing Bank against such Defaulting Lender as a result
of such Defaulting Lender's breach of its obligations under this Agreement; seventh, so long as no Default exists, to the
payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower
against such Defaulting Lender as a result of such Defaulting Lender's breach of its obligations under this Agreement; and eighth,
to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment
is a payment of the principal amount of any Loans or LC Disbursements in respect of which such Defaulting Lender has not fully
funded its appropriate share, and (y) such Loans were made or the related Letters of Credit were issued at a time when the conditions
set forth in Section 6.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and LC Disbursements
owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or LC Disbursements
owed to, such Defaulting Lender until such time as all Loans and funded and unfunded participations in LC Exposure are held by
the Lenders pro rata in accordance with the Commitments without giving effect to Section 2.11(a)(iv). Any payments, prepayments
or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or
to post cash collateral pursuant to this Section 2.11(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender,
and each Lender irrevocably consents hereto.

 

    	CREDIT AGREEMENT - Page 31

    	 

    

 

(iii)        Certain
Fees. 

 

(A)         
No Defaulting Lender shall be entitled to receive any commitment fee under Section 3.05(a) for any period during which that
Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required
to have been paid to that Defaulting Lender). 

 

(B)         Each
Defaulting Lender shall be entitled to receive fees under Section 3.05(b) for any period during which that Lender is a Defaulting
Lender only to the extent allocable to its Applicable Percentage of the stated amount of Letters of Credit for which it has Cash
Collateralized Fronting Exposure pursuant to Section 2.08(k). 

 

(C)         With
respect to any fee not required to be paid to any Defaulting Lender pursuant to clause (A) or (B) above, the Borrower shall (x)
pay to each Non-Defaulting Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such
Defaulting Lender's participation in LC Exposure that has been reallocated to such Non-Defaulting Lender pursuant to clause (iv)
below, (y) pay to the Issuing Bank the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable
to such Issuing Bank's Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any
such fee.

 

(iv)        Reallocation
of Participations to Reduce Fronting Exposure. All or any part of such Defaulting Lender's participation in LC Exposure shall
be reallocated among the Non-Defaulting Lenders in accordance with their respective Applicable Percentages (calculated without
regard to such Defaulting Lender's Commitment) but only to the extent that (x) the conditions set forth in Section 6.02
are satisfied at the time of such reallocation (and, unless the Borrower shall have otherwise notified the Administrative Agent
at such time, the Borrower shall be deemed to have represented and warranted that such conditions are satisfied at such time),
and (y) such reallocation does not cause the aggregate Revolving Credit Exposure of any Non-Defaulting Lender to exceed such Non-Defaulting
Lender's Maximum Credit Amount. No reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder
against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting
Lender as a result of such Non-Defaulting Lender's increased exposure following such reallocation.

 

(v)         Cash
Collateral. If the reallocation described in clause (iv) above cannot, or can only partially, be effected, the Borrower shall,
without prejudice to any right or remedy available to it hereunder or under law, Cash Collateralize the Issuing Bank's Fronting
Exposure in accordance with the procedures set forth in Section 2.08(k).

 

(b)          Defaulting
Lender Cure. If the Borrower, the Administrative Agent and Issuing Bank agree in writing that a Lender is no longer a Defaulting
Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice
and subject to any conditions set forth therein (which may include arrangements with respect to any cash collateral), that Lender
will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions
as the Administrative Agent may determine to be necessary to cause the Loans and funded and unfunded participations in Letters
of Credit to be held pro rata by the Lenders in accordance with the Commitments (without giving effect to Section 2.11(a)(iv)),
whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with
respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided,
further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender
to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender's having been a Defaulting
Lender.

 

    	CREDIT AGREEMENT - Page 32

    	 

    

 

(c)          New
Letters of Credit. So long as any Lender is a Defaulting Lender, the Issuing Bank shall not be required to issue, extend, renew
or increase any Letter of Credit unless it is satisfied that it will have no Fronting Exposure after giving effect thereto.

 

ARTICLE
III

Payments of Principal and Interest; Prepayments; Fees

 

Section 3.01.        Repayment
of Loans. The Borrower hereby unconditionally promises to pay to the Administrative Agent
for the account of each Lender the then unpaid principal amount of each Loan on the Termination Date.

 

Section 3.02.        Interest.

 

(a)          ABR
Loans. The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate plus the Applicable Margin, but
in no event to exceed the Highest Lawful Rate.

 

(b)          Eurodollar
Loans. The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period
in effect for such Borrowing plus the Applicable Margin, but in no event to exceed the Highest Lawful Rate.

 

(c)          Post-Default
Rate. Notwithstanding the foregoing, (i) if an Event of Default has occurred and is continuing, or if any principal of or interest
on any Loan or any fee or other amount payable by the Borrower or any Guarantor hereunder or under any other Loan Document is not
paid when due, whether at stated maturity, upon acceleration or otherwise, and including any payments in respect of a Borrowing
Base Deficiency under Section 3.04(c), then, at the option of the Majority Lenders, all Loans outstanding, in the case of
an Event of Default, and such overdue amount, in the case of a failure to pay amounts when due, shall bear interest, after as well
as before judgment, at a rate per annum equal to two percent (2%) plus the rate applicable to ABR Loans as provided in Section
3.02(a), but in no event to exceed the Highest Lawful Rate, and (ii) during any Borrowing Base Deficiency (after the expiration
of the 30-day or 90-day period provided in Section 3.04(c)(ii), as applicable), all Loans outstanding at such time shall
bear interest, after as well as before judgment, at the rate then applicable to such Loans, plus the Applicable Margin, if any,
plus an additional two percent (2%), but in no event to exceed the Highest Lawful Rate.

 

(d)          Interest
Payment Dates. Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and on
the Termination Date; provided that (i) interest accrued pursuant to Section 3.02(c) shall be payable on demand,
(ii) in the event of any repayment or prepayment of any Loan (other than an optional prepayment of an ABR Loan prior to the Termination
Date), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment,
and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued
interest on such Loan shall be payable on the effective date of such conversion.

 

(e)          Interest
Rate Computations. All interest hereunder shall be computed on the basis of a year of 360 days, unless such computation would
exceed the Highest Lawful Rate, in which case interest shall be computed on the basis of a year of 365 days (or 366 days in a leap
year), except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on
the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable
for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate,
Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent
manifest error, and be binding upon the parties hereto.

 

    	CREDIT AGREEMENT - Page 33

    	 

    

 

(f)          No
Fees Paid to Defaulting Lenders. Notwithstanding any provision of this Agreement to the contrary, if a Lender becomes a Defaulting
Lender, then all fees shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Lender.

 

Section 3.03.        Alternate
Rate of Interest. If prior to the commencement of any Interest Period for a Eurodollar
Borrowing:

 

(a)          the
Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means
do not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate for such Interest Period; or

 

(b)          the
Administrative Agent is advised by the Majority Lenders that the Adjusted LIBO Rate or LIBO Rate, as applicable, for such Interest
Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing
for such Interest Period;

 

then the Administrative Agent shall give notice thereof to the
Borrower and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies
the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request
that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
(and shall be deemed to be a request for an ABR Borrowing), and (ii) if any Borrowing Request requests a Eurodollar Borrowing,
such Borrowing shall be made as an ABR Borrowing.

 

Section 3.04.       Prepayments.

 

(a)          Optional
Prepayments. The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part,
subject to prior notice in accordance with Section 3.04(b).

 

(b)          Notice
and Terms of Optional Prepayment. The Borrower shall notify the Administrative Agent by telephone (confirmed by telecopy) of
any prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., Houston, Texas time,
three Business Days before the date of prepayment, or (ii) in the case of prepayment of an ABR Borrowing, not later than 11:00
a.m. Houston, Texas time, one Business Day before the date of prepayment. Each such notice shall be irrevocable and shall specify
the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid. Promptly following receipt of
any such notice relating to a Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof. Each partial
prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same
Type as provided in Section 2.02. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid
Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 3.02 and by any break
funding payments as required by Section 5.02. 

 

(c)         Mandatory
Prepayments.

 

(i)          If,
after giving effect to any termination or reduction of the Aggregate Maximum Credit Amounts pursuant to Section 2.06(b),
the total Revolving Credit Exposures exceeds the total Commitments, then the Borrower shall (A) prepay the Borrowings on the date
of such termination or reduction in an aggregate principal amount equal to such excess, and (B) if any excess remains after prepaying
all of the Borrowings as a result of an LC Exposure, pay to the Administrative Agent on behalf of the Lenders an amount equal to
such excess to be held as cash collateral as provided in Section 2.08(j).

 

    	CREDIT AGREEMENT - Page 34

    	 

    

 

(ii)         If,
upon any redetermination of or adjustment to the amount of the Borrowing Base in accordance with Section 2.07 or pursuant
to Section 8.13(c), a Borrowing Base Deficiency exists, then the Borrower shall either prepay the Borrowings in an aggregate
principal amount equal to such Borrowing Base Deficiency, or provide additional Mortgaged Property to secure Indebtedness having
a fair market value equal to or greater than the amount of such Borrowing Base Deficiency (or the remaining balance of such Borrowing
Base Deficiency after any prepayments), and if any Borrowing Base Deficiency remains after prepaying all of the Borrowings or providing
additional Mortgaged Property as a result of any LC Exposure, the Borrower shall pay to the Administrative Agent on behalf of the
Lenders an amount equal to such Borrowing Base Deficiency to be held as cash collateral as provided in Section 2.08(j).
The Borrower shall be obligated to make any such principal prepayment or deposit of cash collateral in an amount equal to such
Borrowing Base Deficiency within 90 days following its receipt of the New Borrowing Base Notice in accordance with Section 2.07(d)
or the date the adjustment occurs, and/or to provide additional Mortgaged Property within 90 days following its receipt of such
New Borrowing Base Notice or the date such adjustment occurs; provided that all payments and/or deposits required to be made pursuant
to this Section 3.04(c)(ii) must be made on or prior to the Termination Date.

 

(iii)        If,
upon any adjustments to the Borrowing Base pursuant to Section 9.12, a Borrowing Base Borrowing Base Deficiency exists,
then the Borrower shall (A) prepay the Borrowings in an aggregate principal amount equal to such Borrowing Base Deficiency, and
(B) if any Borrowing Base Deficiency remains after prepaying all of the Borrowings as a result of an LC Exposure, pay to the Administrative
Agent on behalf of the Lenders an amount equal to such Borrowing Base Deficiency to be held as cash collateral as provided in Section
2.08(j). The Borrower shall be obligated to make such prepayment and/or deposit of cash collateral on the date it or any Subsidiary
receives cash proceeds as a result of such disposition; provided that all payments required to be made pursuant to this
Section 3.04(c)(iii) must be made on or prior to the Termination Date.

 

(iv)        If
any Swap Agreement is closed out and the Swap Termination Value determined in accordance therewith is paid to the Borrower or any
Subsidiary, then (A) the Borrower shall prepay the Borrowings in an aggregate principal amount equal to such Swap Termination Value,
and (B) if any excess remains after prepaying all such Borrowings, the Borrower shall then pay to the Administrative Agent on behalf
of all of the Lenders an amount equal to such excess to be held as cash collateral as provided in Section 2.08(j). The Borrower
shall be obligated to make such prepayment and/or deposit of cash collateral on the date it or any Subsidiary receives the cash
payment of the Swap Termination Value for the closed out Swap Agreement.

 

(v)         Each
prepayment of Borrowings pursuant to this Section 3.04(c) shall be applied, first, ratably to any ABR Borrowings then outstanding,
and, second, to any Eurodollar Borrowings then outstanding, and if more than one Eurodollar Borrowing is then outstanding, to each
such Eurodollar Borrowing in order of priority beginning with the Eurodollar Borrowing with the least number of days remaining
in the Interest Period applicable thereto and ending with the Eurodollar Borrowing with the most number of days remaining in the
Interest Period applicable thereto. 

 

(vi)        Each
prepayment of Borrowings pursuant to this Section 3.04(c) shall be applied ratably to the Loans included in the prepaid
Borrowings. Prepayments pursuant to this Section 3.04(c) shall be accompanied by accrued interest to the extent required
by Section 3.02.

 

(d)          No
Premium or Penalty. Prepayments permitted or required under this Section 3.04 shall be without premium or penalty, except
as required under Section 5.02.

 

(e)          No
Effect on Swap Agreements. Prepayments permitted or required under this Section 3.04 shall not affect the Borrower's
obligation to continue making payments under any Swap Agreement, which shall remain in full force and effect notwithstanding such
prepayment, subject to the terms of such Swap Agreement.

 

    	CREDIT AGREEMENT - Page 35

    	 

    

 

Section 3.05.        Fees.

 

(a)          Commitment
Fees. The Borrower agrees to pay to the Administrative Agent for the account of each Lender a commitment fee, which shall accrue
at the applicable Commitment Fee Rate on the average daily amount of the unused amount of the Commitment of such Lender during
the period from and including the Effective Date to but excluding the Termination Date. Accrued commitment fees shall be payable
in arrears on the last day of March, June, September and December of each year and on the Termination Date, commencing on the first
such date to occur after the date hereof. All commitment fees shall be computed on the basis of a year of 360 days, unless such
computation would exceed the Highest Lawful Rate, in which case interest shall be computed on the basis of a year of 365 days (or
366 days in a leap year), and shall be payable for the actual number of days elapsed (including the first day but excluding the
last day).

 

(b)          Letter
of Credit Fees. The Borrower agrees to pay (i) to the Administrative Agent for the account of each Lender a participation fee
with respect to its participations in Letters of Credit, which shall be equal to the greater of $350 or the Applicable Margin on
the average daily amount of such Lender's LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the Effective Date to but excluding the later of the date on which such Lender's Commitment
terminates and the date on which such Lender ceases to have any LC Exposure, (ii) to the Issuing Bank a fronting fee, which shall
accrue at the rate of 0.25% per annum on the average daily amount of the LC Exposure (excluding any portion thereof attributable
to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date
of termination of the Commitments and the date on which there ceases to be any LC Exposure, and (iii) to the Issuing Bank, for
its own account, its standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing
of drawings thereunder. Participation fees and fronting fees accrued through and including the last day of March, June, September
and December of each year shall be payable on the third Business Day following such last day, commencing on the first such date
to occur after the Effective Date; provided that all such fees shall be payable on the Termination Date and any such fees
accruing after the Termination Date shall be payable on demand. Any other fees payable to the Issuing Bank pursuant to this Section
3.05(b) shall be payable within 10 days after demand. All participation fees and fronting fees shall be computed on the basis
of a year of 360 days, unless such computation would exceed the Highest Lawful Rate, in which case interest shall be computed on
the basis of a year of 365 days (or 366 days in a leap year), and shall be payable for the actual number of days elapsed (including
the first day but excluding the last day).

 

(c)          Administrative
Agent Fees. The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at
the times separately agreed upon between the Borrower and the Administrative Agent.

 

(d)          Borrowing
Base Increase Fee. The Borrower agrees to pay the Administrative Agent for the account of each Lender a fee for each incremental
increase in the new Borrowing Base over the previously existing Borrowing Base. The amount of each such fee shall be three quarters
of one percent (0.75%) of the incremental increase. There shall be no obligation imposed upon the Borrower to accept any Proposed
Borrowing Base that would increase the Borrowing Base. However, if the Borrower accepts the increase in the Borrowing Base, the
fee shall be due and payable immediately and without regard as to the whether the Borrower ever borrows the increased amount available
under such new Borrowing Base. The determinations of when a fee is due and payable shall be made by the Administrative Agent and
shall be conclusive and binding upon the parties absent manifest error.

 

    	CREDIT AGREEMENT - Page 36

    	 

    

 

ARTICLE
IV

Payments; Pro Rata Treatment; Sharing of Payments

 

Section 4.01.       Payments
Generally; Pro Rata Treatment; Sharing of Payments. 

 

(a)          Payments
by the Borrower. The Borrower shall make each payment required to be made by it hereunder (whether of principal, interest,
fees or reimbursement of LC Disbursements, or of amounts payable under Section 5.01, Section 5.02, Section 5.03
or otherwise) prior to 11:00 a.m. Houston Texas time, on the date when due, in immediately available funds, without defense, deduction,
recoupment, set-off or counterclaim. Fees, once paid, shall be fully earned and shall not be refundable under any circumstances.
Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received
on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative
Agent at its offices specified in Section 12.01, except payments to be made directly to the Issuing Bank as expressly provided
herein and except that payments pursuant to Section 5.01, Section 5.02, Section 5.03 and Section 12.03
shall be made directly to the Persons entitled thereto. The Administrative Agent shall distribute any such payments received by
it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder
shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and,
in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments
hereunder shall be made in dollars.

 

(b)          Application
of Insufficient Payments. If at any time insufficient funds are received by and available to the Administrative Agent to pay
fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with
the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal and unreimbursed LC Disbursements
then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC
Disbursements then due to such parties.

 

(c)          Sharing
of Payments by Lenders. If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment
in respect of any principal of or interest on any of its Loans or participations in LC Disbursements or other obligations hereunder
resulting in such Lender receiving payment of a proportion of the aggregate amount of its Loans and participations in LC Disbursements
and accrued interest thereon or other such obligations greater than its pro rata share thereof as provided herein, then the Lender
receiving such greater proportion shall (a) notify the Administrative Agent of such fact and (b) purchase (for cash at face value)
participations in the Loans and participations in LC Disbursements and such other obligations of the other Lenders, or make such
other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance
with the aggregate amount of principal of and accrued interest on their respective Loans and participations in LC Disbursements
and other amounts owing them; provided that (i) if any such participations are purchased and all or any portion of the payment
giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such
recovery, without interest, and (ii) the provisions of this Section 4.01(c) shall not be construed to apply to (x) any payment
made by the Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds
arising from the existence of a Defaulting Lender) or (y) or any payment obtained by a Lender as consideration for the assignment
of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or Participant, other than
to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this Section 4.01(c) shall apply).
The Borrower, each Subsidiary and each Guarantor consents to the foregoing and agrees, to the extent it may effectively do so under
applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower,
each Subsidiary and each Guarantor rights of set-off and counterclaim with respect to such participation as fully as if such Lender
were a direct creditor of the Borrower, each Subsidiary and each Guarantor in the amount of such participation.

 

    	CREDIT AGREEMENT - Page 37

    	 

    

 

Section 4.02.         Presumption
of Payment by the Borrower. Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the
Issuing Bank that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such
payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing
Bank, as the case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders
or the Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so
distributed to such Lender or Issuing Bank with interest thereon, for each day from and including the date such amount is distributed
to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and
a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

 

Section 4.03.         Certain
Deductions by the Administrative Agent. If any Lender shall fail to make any payment required
to be made by it pursuant to Section 2.05(a), Section
2.08(d), Section 2.08(e) or Section
4.02 then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any
amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender's obligations under
such Sections until all such unsatisfied obligations are fully paid.

 

Section 4.04.         Disposition
of Proceeds. The Security Instruments contain an assignment by the Borrower and/or the
Guarantors unto and in favor of the Administrative Agent for the benefit of the Lenders of all of the Borrower's or each Guarantor's
interest in and to production and all proceeds attributable thereto which may be produced from or allocated to the Mortgaged Property.
The Security Instruments further provide in general for the application of such proceeds to the satisfaction of the Indebtedness
and other obligations described therein and secured thereby. Notwithstanding the assignment contained in such Security Instruments,
until the occurrence of an Event of Default, (a) the Administrative Agent and the Lenders agree that they will neither notify the
purchaser or purchasers of such production nor take any other action to cause such proceeds to be remitted to the Administrative
Agent or the Lenders, but the Lenders will instead permit such proceeds to be paid to the Borrower and its Subsidiaries and (b)
the Lenders hereby authorize the Administrative Agent to take such actions as may be necessary to cause such proceeds to be paid
to the Borrower and/or such Subsidiaries.

 

ARTICLE
V

Increased Costs; Break Funding Payments; Taxes; Illegality

 

Section 5.01.       Increased
Costs. 

 

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

 

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

 

(ii)         subject
any Lender or the Issuing Bank to any tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any participation
in a Letter of Credit or any Eurodollar Loan made by it, or change the basis of taxation of payments to such Lender or the Issuing
Bank in respect thereof (except for Indemnified Taxes or Other Taxes covered by Section 5.03 and the imposition of, or any
change in the rate of, any Excluded Tax payable by such Lender or the Issuing Bank); or

 

(iii)        impose
on any Lender or the Issuing Bank or the London interbank market any other condition, cost or expense affecting this Agreement
or Eurodollar Loans made by such Lender or any Letter of Credit or participation therein;

 

    	CREDIT AGREEMENT - Page 38

    	 

    

 

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

 

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

 

(c)          Certificates
for Reimbursement. A certificate of a Lender or the Issuing Bank setting forth the amount or amounts necessary to compensate
such Lender or the Issuing Bank or its holding company, as the case may be, as specified in Section 5.01(a) or (b)
shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender or the Issuing
Bank, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.

 

(d)          Delay
in Requests. Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this Section
5.01 shall not constitute a waiver of such Lender's or the Issuing Bank's right to demand such compensation; provided
that the Borrower shall not be required to compensate a Lender or the Issuing Bank pursuant to this Section 5.01 for any
increased costs incurred or reductions suffered more than nine months prior to the date that such Lender or the Issuing Bank, as
the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender's
or the Issuing Bank's intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased
costs or reductions is retroactive, then such nine-month period referred to above shall be extended to include the period of retroactive
effect). 

 

Section 5.02.         Break
Funding Payments. In the event of (a) the payment of any principal of any Eurodollar Loan
other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion
of any Eurodollar Loan into an ABR Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to
borrow, convert, continue or prepay any Eurodollar Loan on the date specified in any notice delivered pursuant hereto, (d) the
assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request
by the Borrower pursuant to Section 5.04(b), then, in any
such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of
a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be
the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event
not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event
to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for
the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period,
for dollar deposits of a comparable amount and period from other banks in the eurodollar market. 

 

    	CREDIT AGREEMENT - Page 39

    	 

    

 

A certificate of any Lender setting forth
any amount or amounts that such Lender is entitled to receive pursuant to this Section 5.02 shall be delivered to the Borrower
and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate
within 10 days after receipt thereof.

 

Section 5.03.       Taxes.

 

(a)          Payments
Free of Taxes. Any and all payments by or on account of any obligation of the Borrower or any Guarantor hereunder or under
any other Loan Document shall be made free and clear of and without reduction or withholding for any Indemnified Taxes or Other
Taxes; provided that if the Borrower or any Guarantor shall be required by applicable law to deduct any Indemnified Taxes
(including any Other Taxes) from such payments, then (i) the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable under this Section 5.03(a)), the Administrative
Agent, Lender or Issuing Bank (as the case may be) receives an amount equal to the sum it would have received had no such deductions
been made, (ii) the Borrower or such Guarantor shall make such deductions and (iii) the Borrower or such Guarantor shall timely
pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

 

(b)          Payment
of Other Taxes by the Borrower. Without limiting the provisions of paragraph (a) preceding, the Borrower shall timely pay any
Other Taxes to the relevant Governmental Authority in accordance with applicable law.

 

(c)          Indemnification
by the Borrower. The Borrower shall indemnify the Administrative Agent, each Lender and the Issuing Bank, within 10 days after
demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed
or asserted on or attributable to amounts payable under this Section 5.03) paid by the Administrative Agent, such Lender
or the Issuing Bank, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or Issuing Bank (with
a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender or the Issuing Bank,
shall be conclusive absent manifest error.

 

(d)          Evidence
of Payments. As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower or a Guarantor to
a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt
issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of
such payment satisfactory to the Administrative Agent.

 

(e)          Foreign
Lenders. Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction
in which the Borrower is resident for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments
hereunder or under any other Loan Document shall deliver to the Borrower (with a copy to the Administrative Agent), at the time
or times prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent, such properly completed
and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced
rate of withholding. In addition, any Lender, if requested by the Borrower or the Administrative Agent, shall deliver such other
documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the
Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting
requirements.

 

    	CREDIT AGREEMENT - Page 40

    	 

    

 

(f)          Treatment
of Certain Refunds. If the Administrative Agent, a Lender or the Issuing Bank determines, in its sole discretion, that it has
received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to this Section, it shall pay to the Borrower an amount equal to such refund (but
only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section with respect to the
Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent, such Lender or
the Issuing Bank, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority
with respect to such refund), provided that the Borrower, upon the request of the Administrative Agent, such Lender or the
Issuing Bank, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the Administrative Agent, such Lender or the Issuing Bank in the event the Administrative Agent,
such Lender or the Issuing Bank is required to repay such refund to such Governmental Authority. This paragraph shall not be construed
to require the Administrative Agent, any Lender or the Issuing Bank to make available its tax returns (or any other information
relating to its taxes that it deems confidential) to the Borrower or any other Person.

 

Section 5.04.       Mitigation
Obligations; Replacement of Lenders. 

 

(a)          Designation
of Different Lending Office. If any Lender requests compensation under Section 5.01, or gives a notice pursuant to Section
5.05, or requires the Borrower to pay additional amounts to any Lender or any Governmental Authority for the account of any
Lender pursuant to Section 5.03, then such Lender shall (at the request of the Borrower) use reasonable efforts to designate
a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another
of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate
or reduce amounts payable pursuant to Section 5.01 or Section 5.03, as the case may be, in the future and (ii) would
not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

 

(b)          Replacement
of Lenders. If (i) any Lender requests compensation under Section 5.01, (ii) the Borrower is required to pay additional
amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 5.03, and in each
case of (i) or (ii) above, such Lender has declined or is unable to designate a different lending office in accordance with paragraph
(a) preceding, or (iii) any Lender is a Defaulting Lender hereunder, then the Borrower may, at its sole expense and effort, upon
notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance
with and subject to the restrictions contained in, and consents required by, Section 12.04(b)), all of its interests, rights
and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations
(which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Borrower shall have received
the prior written consent of the Administrative Agent and paid to the Administrative Agent the assignment fee specified in Section
12.04, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations
in LC Disbursements, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan
Documents (including any amounts under Section 5.02), from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or the Borrower (in the case of all other amounts) (iii) in the case of any such assignment resulting
from a claim for compensation under Section 5.01 or payments required to be made pursuant to Section 5.03, such assignment
will result in a reduction in such compensation or payments thereafter, and (iv) such assignment does not conflict with the applicable
law.  A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver
by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

 

Section 5.05.         Illegality.
Notwithstanding any other provision of this Agreement, in the event that it becomes unlawful for any Lender or its applicable lending
office to honor its obligation to make or maintain Eurodollar Loans either generally or having a particular Interest Period hereunder,
then (a) such Lender shall promptly notify the Borrower and the Administrative Agent thereof and such Lender's obligation to make
such Eurodollar Loans shall be suspended (the "Affected Loans") until such time as such Lender may again
make and maintain such Eurodollar Loans and (b) all Affected Loans which would otherwise be made by such Lender shall be made instead
as ABR Loans (and, if such Lender so requests by notice to the Borrower and the Administrative Agent, all Affected Loans of such
Lender then outstanding shall be automatically converted into ABR Loans on the date specified by such Lender in such notice) and,
to the extent that Affected Loans are so made as (or converted into) ABR Loans, all payments of principal which would otherwise
be applied to such Lender's Affected Loans shall be applied instead to its ABR Loans.

 

    	CREDIT AGREEMENT - Page 41

    	 

    

 

ARTICLE
VI

Conditions Precedent

 

Section 6.01.         Effective
Date. The obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters
of Credit hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived
in accordance with Section 12.02):

 

(a)          The
Administrative Agent, the Arranger and the Lenders shall have received all commitment, facility and agency fees and all other fees
and amounts due and payable on or prior to the Effective Date, including, (1) an upfront fee to each Lender in an amount equal
to 75 basis points of its allocated amount of the Borrowing Base established as of the closing date of this Agreement, and (2)
to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower
hereunder (including, without limitation, the fees and expenses of Winstead PC, counsel to the Administrative Agent). 

 

(b)          The
Borrower shall have deposited $5,000 with Winstead PC, counsel for the Administrative Agent, to be held by such counsel and applied
toward payment of costs and expenses for recordation of the Mortgages, as provided pursuant to Section 12.03(a). If such
deposit exceeds the amount of such costs and expenses, the excess shall be returned to the Borrower. If such deposit is less than
such costs and expenses, the deficit shall be paid by Borrower pursuant to Section 12.03(a).

 

(c)          The
Administrative Agent shall have received a certificate of the Secretary, an Assistant Secretary or other duly authorized officer
satisfactory to the Administrative Agent of the Borrower and each Guarantor setting forth (i) resolutions of its board of directors
or board of managers (or equivalent body) or its managing member authorizing the execution, delivery and performance of the Loan
Documents to which it is a party and, in the case of the Borrower, the borrowings hereunder, and that such resolutions have not
been modified, rescinded or amended and are in full force and effect, (ii) the officers of the Borrower or such Guarantor (y) who
are authorized to sign the Loan Documents to which the Borrower or such Guarantor is a party and (z) who will, until replaced by
another officer or officers duly authorized for that purpose, act as its representative for the purposes of signing documents and
giving notices and other communications in connection with this Agreement and the transactions contemplated hereby, (iii) specimen
signatures of such authorized officers, and (iv) the articles or certificate of incorporation and bylaws or certificate of formation
and partnership agreement or certificate of formation and limited liability company agreement (as the case may be) of the Borrower,
and each Guarantor, certified as being true and complete. The Administrative Agent and the Lenders may conclusively rely on such
certificate until the Administrative Agent receives notice in writing from the Borrower to the contrary.

 

(d)          The
Administrative Agent shall have received certificates of the appropriate State agencies with respect to the existence, qualification
and good standing of the Borrower and each Guarantor.

 

(e)          The
Administrative Agent shall have received from each party hereto counterparts (in such number as may be requested by the Administrative
Agent) of this Agreement signed on behalf of such party.

 

(f)          The
Administrative Agent shall have received duly either executed Notes payable to the order of each Lender in a principal amount equal
to its Maximum Credit Amount dated as of the date hereof or modifications of existing Notes to reflect the Maximum Credit Amount
of each Lender requesting a modification instead of a new Note, as applicable.

 

    	CREDIT AGREEMENT - Page 42

    	 

    

 

(g)          The
Administrative Agent shall have received from each party thereto duly executed counterparts (in such number as may be requested
by the Administrative Agent) of the Security Instruments, including the Guaranty Agreement and the other Security Instruments described
on Exhibit E-1. In connection with the execution and delivery of the Security Instruments, the Administrative Agent shall:

 

(i)          be
satisfied that the Security Instruments create first priority, perfected Liens (subject only to Excepted Liens identified in clauses
(a), (b), (c) and (f) of the definition thereof, but subject to the provisos at the end of such definition) on at least 80% of
the total Recognized Value of the Oil and Gas Properties evaluated in the Initial Reserve Report; and

 

(ii)         have
received certificates, together with undated, blank stock powers (if applicable) for each such certificate, representing all of
the certificated issued and outstanding Equity Interest of each Person the Equity Interest of which are required to be pledged
pursuant to the Loan Documents.

 

(h)          The
Administrative Agent shall have received an opinion of (A) Brewer & Pritchard, P.C., special counsel to the Borrower, in form
and substance satisfactory to the Administrative Agent and (B) local counsel in Louisiana, Oklahoma and any other jurisdictions
requested by the Administrative Agent, in form and substance satisfactory to the Administrative Agent.

 

(i)          The
Administrative Agent shall have received a certificate of insurance coverage of the Borrower evidencing that the Borrower is carrying
insurance in accordance with Section 7.13.

 

(j)          The
Administrative Agent shall have received title opinions and other title information and data as the Administrative Agent may reasonably
request satisfactory to the Administrative Agent setting forth the status of title to at least 80% of the total value of the Oil
and Gas Properties evaluated in the Initial Reserve Report.

 

(k)          The
Administrative Agent shall be satisfied with the environmental condition of the Oil and Gas Properties of the Borrower and its
Subsidiaries.

 

(l)          The
Administrative Agent shall have received a certificate of a Responsible Officer of the Borrower certifying that the Borrower has
received all consents and approvals required by Section 7.03.

 

(m)          The
Administrative Agent shall have received appropriate landman's certificates reflecting no prior Liens encumbering the Properties
of the Borrower and the Subsidiaries for each of the following jurisdictions: Louisiana, Oklahoma and Texas and any other jurisdiction
requested by the Administrative Agent; other than those being assigned or released on or prior to the Effective Date or Liens permitted
by Section 9.03.

 

(n)          The
Administrative Agent shall have received an affidavit in the form of Exhibit G attached hereto (the "Affidavit
of Payment of Trade Bills") containing the information as provided therein.

 

(o)          The
Administrative Agent shall have received certificates (whether one or more, the "Property Certificate")
for each Oil and Gas Property described as an exhibit to a Mortgage, which Property Certificates shall be in the form of Exhibit
H attached hereto containing the information as provided therein.

 

(p)          The
Administrative Agent shall have received a schedule (the "Reconciliation Schedule") in the form of Exhibit
I confirming that, except as otherwise shown on the Reconciliation Schedule, (i) each well or unit described on the exhibits
to the Mortgages is also included in the Initial Reserve Report, and (ii) the respective net revenue interests and working interests
for each well or unit described on the exhibits to the Mortgages are also the net revenue interests and working interests for the
same well or unit included in the Initial Reserve Report.

 

    	CREDIT AGREEMENT - Page 43

    	 

    

 

(q)          The
Administrative Agent shall have received evidence of (1) the payment in full of all amounts due under the Existing Credit Agreement
and the termination of all commitments to lend thereunder, and (2) the agreement of Whitney Bank, upon such pay-off, to execute
and delivery to the Administrative Agent endorsements and assignments of the Borrower's indebtedness to Whitney Bank and Whitney
Bank's Lien against the Mortgaged Properties as are acceptable to the Administrative Agent.

 

(r)          The
Administrative Agent shall have received such other documents as the Administrative Agent or special counsel to the Administrative
Agent may reasonably request.

 

The Administrative Agent shall notify the
Borrower and the Lenders of the Effective Date, and such notice shall be conclusive and binding. Notwithstanding the foregoing,
the obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not become effective
unless each of the foregoing conditions is satisfied (or waived pursuant to Section 12.02) at or prior to 2:00 p.m., Houston,
Texas time, on August 31, 2011 (and, in the event such conditions are not so satisfied or waived, the Commitments shall terminate
at such time).

 

Without limiting the generality of the provisions
of Section 11.04, for purposes of determining compliance with the conditions specified in this Section 6.01, each
Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless
the Administrative Agent shall have received notice from such Lender prior to the proposed closing date specifying its objection
thereto.

 

Section 6.02.       Each
Credit Event. The obligation of each Lender to make a Loan on the occasion of any Borrowing
(including the initial funding), and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit, is subject to the
satisfaction of the following conditions:

 

(a)          At
the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter
of Credit, as applicable, no Default shall have occurred and be continuing.

 

(b)          At
the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter
of Credit, as applicable, no event, development or circumstance has occurred or shall then exist that has resulted in, or could
reasonably be expected to have, a Material Adverse Effect.

 

(c)          The
representations and warranties of the Borrower and the Guarantors set forth in this Agreement and in the other Loan Documents shall
be true and correct on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter
of Credit, as applicable, except to the extent any such representations and warranties are expressly limited to an earlier date,
in which case, on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter
of Credit, as applicable, such representations and warranties shall continue to be true and correct as of such specified earlier
date.

 

(d)          The
making of such Loan or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, would not conflict
with, or cause any Lender or the Issuing Bank to violate or exceed, any applicable Governmental Requirement, and no Change in Law
shall have occurred, and no litigation shall be pending or threatened, which does or, with respect to any threatened litigation,
seeks to, enjoin, prohibit or restrain, the making or repayment of any Loan, the issuance, amendment, renewal, extension or repayment
of any Letter of Credit or any participations therein or the consummation of the transactions contemplated by this Agreement or
any other Loan Document.

 

    	CREDIT AGREEMENT - Page 44

    	 

    

 

(e)          The
receipt by the Administrative Agent of a Borrowing Request in accordance with Section 2.03 or a request for a Letter of
Credit in accordance with Section 2.08(b), as applicable.

 

Each request for a Borrowing and each request
for the issuance, amendment, renewal or extension of any Letter of Credit shall be deemed to constitute a representation and warranty
by the Borrower on the date thereof as to the matters specified in Section 6.02(a) through (e).

 

ARTICLE
VII

Representations and Warranties

 

The Borrower represents and warrants to
the Administrative Agent, the Issuing Bank and the Lenders that:

 

Section 7.01.        Organization;
Powers. Each of the Borrower and the Subsidiaries is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority, and has all
material governmental licenses, authorizations, consents and approvals necessary, to own its assets and to carry on its business
as now conducted, and is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is
required, except where failure to have such power, authority, licenses, authorizations, consents, approvals and qualifications
could not reasonably be expected to have a Material Adverse Effect. 

 

Section 7.02.        Authority;
Enforceability. The Transactions are within the Borrower's and each Guarantor's powers
under its Organizational Documents and have been duly authorized by all necessary action (including, without limitation, any action
required to be taken by any class of managers, directors, partners or owners of Equity Interests of the Borrower or any other Person,
whether interested or disinterested, in order to ensure the due authorization of the Transactions). Each Loan Document to which
the Borrower and each Guarantor is a party has been duly executed and delivered by the Borrower and such Guarantor and constitutes
a legal, valid and binding obligation of the Borrower and such Guarantor, as applicable, enforceable in accordance with its terms,
subject to Debtor Relief Laws or other laws affecting creditors' rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.

 

Section 7.03.        Approvals;
No Conflicts. The Transactions (a) do not require any consent or approval of, registration
or filing with, or any other action by, any Governmental Authority or any other third Person (including members, shareholders,
partners or any class of managers, directors, or partners, whether interested or disinterested, of the Borrower or any other Person),
nor is any such consent, approval, registration, filing or other action necessary for the validity or enforceability of any Loan
Document or the consummation of the transactions contemplated thereby, except such as have been obtained or made and are in full
force and effect other than (i) the recording and filing of the Security Instruments as required by this Agreement, (ii) those
third party approvals or consents which, if not made or obtained, would not cause a Default hereunder, could not reasonably be
expected to have a Material Adverse Effect or do not have an adverse effect on the enforceability of the Loan Documents, and (iii)
consents by, required notices to, or other actions by state and federal governmental entities in connection with the assignment
of state and federal oil and gas leases or other interests therein that are customarily obtained subsequent to such assignments,
(b) will not violate any applicable law or Organizational Documents of the Borrower or any Subsidiary or any order of any Governmental
Authority, (c) will not violate or result in a default under any indenture, agreement or other instrument binding upon the Borrower
or any Subsidiary or its Properties, or give rise to a right thereunder to require any payment to be made by the Borrower or such
Subsidiary and (d) will not result in the creation or imposition of any Lien on any Property of the Borrower or any Subsidiary
(other than the Liens created by the Loan Documents).

 

Section 7.04.       Financial
Condition; No Material Adverse Change. 

 

(a)          The
financial statements of Borrower heretofore furnished to the Lenders present fairly, in all material respects, the financial condition
and results of operations and cash flows of the Borrower and its Consolidated Subsidiaries as of such dates and for such periods
in accordance with GAAP, subject to year-end audit adjustments and the absence of footnotes in the case of the unaudited quarterly
financial statements. Such balance sheets and the notes thereto disclose all material liabilities, direct or contingent, of the
Borrower and its Consolidated Subsidiaries as of the dates thereof.

 

    	CREDIT AGREEMENT - Page 45

    	 

    

 

(b)          Since
March 31, 2011, (i) there has been no event, development or circumstance that has had or could reasonably be expected to have a
Material Adverse Effect and (ii) the business of the Borrower and its Subsidiaries has been conducted only in the ordinary course
consistent with past business practices.

 

(c)          Neither
the Borrower nor any Subsidiary has on the date hereof any material Debt (including Disqualified Capital Stock) or any contingent
liabilities, off-balance sheet liabilities or partnerships, liabilities for taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments, except as referred to or reflected or provided for in the Financial
Statements.

 

Section 7.05.       Litigation.

 

(a)          Except
as set forth on Schedule 7.05, there are no actions, suits, investigations or proceedings by or before any arbitrator or
Governmental Authority pending against or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any
Subsidiary (i) not fully covered by insurance (except for normal deductibles) as to which there is a reasonable possibility of
an adverse determination that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result
in a Material Adverse Effect, or (ii) that involve any Loan Document or the Transactions.

 

(b)          Since
the date of this Agreement, there has been no change in the status of the matters disclosed in Schedule 7.05 that, individually
or in the aggregate, has resulted in, or materially increased the likelihood of, a Material Adverse Effect.

 

Section 7.06.       Environmental
Matters. Except as set forth in Schedule
7.06 and as could not be reasonably expected to have a Material Adverse Effect (or with respect to (c), (d) and (e)
below, where the failure to take such actions could not be reasonably expected to have a Material Adverse Effect):

 

(a)          neither
any Property of the Borrower or any Subsidiary nor the operations conducted thereon violate any order or requirement of any court
or Governmental Authority or any Environmental Laws;

 

(b)          no
Property of the Borrower or any Subsidiary nor the operations currently conducted thereon or, to the knowledge of the Borrower,
by any prior owner or operator of such Property or operation, are in violation of or subject to any existing, pending or threatened
action, suit, investigation, inquiry or proceeding by or before any court or Governmental Authority or to any remedial obligations
under Environmental Laws;

 

(c)          all
notices, permits, licenses, exemptions, approvals or similar authorizations, if any, required to be obtained or filed in connection
with the operation or use of any and all Property of the Borrower and each Subsidiary, including, without limitation, past or present
treatment, storage, disposal or release of a hazardous substance, oil and gas waste or solid waste into the environment, have been
duly obtained or filed, and the Borrower and each Subsidiary are in compliance with the terms and conditions of all such notices,
permits, licenses and similar authorizations;

 

(d)          all
hazardous substances, solid waste and oil and gas waste, if any, generated at any and all Property of the Borrower or any Subsidiary
have in the past been transported, treated and disposed of in accordance with Environmental Laws and so as not to pose an imminent
and substantial endangerment to public health or welfare or the environment, and, to the knowledge of the Borrower, all such transport
carriers and treatment and disposal facilities have been and are operating in compliance with Environmental Laws and so as not
to pose an imminent and substantial endangerment to public health or welfare or the environment, and are not the subject of any
existing, pending or threatened action, investigation or inquiry by any Governmental Authority in connection with any Environmental
Laws;

 

    	CREDIT AGREEMENT - Page 46

    	 

    

 

(e)          the
Borrower has taken all steps reasonably necessary to determine and has determined that no oil, hazardous substances, solid waste
or oil and gas waste, have been disposed of or otherwise released and there has been no threatened release of any oil, hazardous
substances, solid waste or oil and gas waste on or to any Property of the Borrower or any Subsidiary except in compliance with
Environmental Laws and so as not to pose an imminent and substantial endangerment to public health or welfare or the environment;

 

(f)          to
the extent applicable, all Property of the Borrower and each Subsidiary currently satisfies all design, operation, and equipment
requirements imposed by the OPA, and the Borrower does not have any reason to believe that such Property, to the extent subject
to the OPA, will not be able to maintain compliance with the OPA requirements during the term of this Agreement; and 

 

(g)          neither
the Borrower nor any Subsidiary has any known contingent liability or Remedial Work in connection with any release or threatened
release of any oil, hazardous substance, solid waste or oil and gas waste into the environment.

 

Section 7.07.        Compliance
with the Laws and Agreements; No Defaults. 

 

(a)          Each
of the Borrower and each Subsidiary is in compliance with all Governmental Requirements applicable to it or its Property and all
agreements and other instruments binding upon it or its Property, and possesses all licenses, permits, franchises, exemptions,
approvals and other governmental authorizations necessary for the ownership of its Property and the conduct of its business, except
where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse
Effect.

 

(b)          Neither
the Borrower nor any Subsidiary is in default nor has any event or circumstance occurred which, but for the expiration of any applicable
grace period or the giving of notice, or both, would constitute a default or would require the Borrower or a Subsidiary to Redeem
or make any offer to Redeem under any indenture, note, credit agreement or instrument pursuant to which any Material Indebtedness
is outstanding or by which the Borrower or any Subsidiary or any of their Properties is bound.

 

(c)          No
Default has occurred and is continuing.

 

Section 7.08.        Investment
Company Act. Neither the Borrower nor any Subsidiary is an "investment company"
or a company "controlled" by an "investment company," within the meaning of, or subject to regulation under,
the Investment Company Act of 1940, as amended.

 

Section 7.09.        Taxes.
Each of the Borrower and its Subsidiaries has timely filed or caused to be filed all Tax returns and reports required to have been
filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in
good faith by appropriate proceedings and for which the Borrower or such Subsidiary, as applicable, has set aside on its books
adequate reserves in accordance with GAAP or (b) to the extent that the failure to do so could not reasonably be expected to result
in a Material Adverse Effect. The charges, accruals and reserves on the books of the Borrower and its Subsidiaries in respect of
Taxes and other governmental charges are adequate. No Tax Lien has been filed and, to the knowledge of the Borrower, no claim is
being asserted with respect to any such Tax or other such governmental charge.

 

Section 7.10.        ERISA.

 

(a)          The
Borrower, the Subsidiaries and each ERISA Affiliate have complied in all material respects with ERISA and, where applicable, the
Code regarding each Plan.

 

    	CREDIT AGREEMENT - Page 47

    	 

    

 

(b)          Each
Plan is, and has been, maintained in substantial compliance with ERISA and, where applicable, the Code.

 

(c)          No
act, omission or transaction has occurred which could result in imposition on the Borrower, any Subsidiary or any ERISA Affiliate
(whether directly or indirectly) of (i) either a civil penalty assessed pursuant to subsections (c), (i) or (l) of section 502
of ERISA or a tax imposed pursuant to Chapter 43 of Subtitle D of the Code or (ii) breach of fiduciary duty liability damages under
section 409 of ERISA.

 

(d)          No
Plan (other than a defined contribution plan) or any trust created under any such Plan has been terminated since September 2, 1974.
No liability to the PBGC (other than for the payment of current premiums which are not past due) by the Borrower, any Subsidiary
or any ERISA Affiliate has been or is expected by the Borrower, any Subsidiary or any ERISA Affiliate to be incurred with respect
to any Plan. No ERISA Event with respect to any Plan has occurred.

 

(e)          Full
payment when due has been made of all amounts which the Borrower, the Subsidiaries or any ERISA Affiliate is required under the
terms of each Plan or applicable law to have paid as contributions to such Plan as of the date hereof, and no accumulated funding
deficiency (as defined in section 302 of ERISA and section 412 of the Code), whether or not waived, exists with respect to any
Plan.

 

(f)          The
actuarial present value of the benefit liabilities under each Plan which is subject to Title IV of ERISA does not, as of the end
of the Borrower's most recently ended fiscal year, exceed the current value of the assets (computed on a plan termination basis
in accordance with Title IV of ERISA) of such Plan allocable to such benefit liabilities. The term "actuarial present value
of the benefit liabilities" shall have the meaning specified in section 4041 of ERISA.

 

(g)          Neither
the Borrower, the Subsidiaries nor any ERISA Affiliate sponsors, maintains, or contributes to an employee welfare benefit plan,
as defined in section 3(1) of ERISA, including, without limitation, any such plan maintained to provide benefits to former employees
of such entities, that may not be terminated by the Borrower, a Subsidiary or any ERISA Affiliate in its sole discretion at any
time without any material liability.

 

(h)          Neither
the Borrower, the Subsidiaries nor any ERISA Affiliate sponsors, maintains or contributes to, or has at any time in the six-year
period preceding the date hereof sponsored, maintained or contributed to, any Multiemployer Plan.

 

(i)          Neither
the Borrower, the Subsidiaries nor any ERISA Affiliate is required to provide security under section 401(a)(29) of the Code due
to a Plan amendment that results in an increase in current liability for the Plan.

 

Section 7.11.      Disclosure;
No Material Misstatements. The Borrower has disclosed to the Administrative Agent and
the Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject,
and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect. None of the other reports, financial statements, certificates or other information furnished by or on behalf of
the Borrower or any Subsidiary to the Administrative Agent or any Lender or any of their Affiliates in connection with the negotiation
of this Agreement or any other Loan Document or delivered hereunder or under any other Loan Document (as modified or supplemented
by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that,
with respect to projected financial information, the Borrower represents only that such information was prepared in good faith
based upon assumptions believed to be reasonable at the time. There is no fact peculiar to the Borrower or any Subsidiary which
could reasonably be expected to have a Material Adverse Effect or in the future is reasonably likely to have a Material Adverse
Effect and which has not been set forth in this Agreement or the Loan Documents or the other documents, certificates and statements
furnished to the Administrative Agent or the Lenders by or on behalf of the Borrower or any Subsidiary prior to, or on, the date
hereof in connection with the transactions contemplated hereby. There are no statements or conclusions in any Reserve Report which
are based upon or include misleading information or fail to take into account material information regarding the matters reported
therein, it being understood that projections concerning volumes attributable to the Oil and Gas Properties and production and
cost estimates contained in each Reserve Report are necessarily based upon professional opinions, estimates and projections and
that the Borrower and the Subsidiaries do not warrant that such opinions, estimates and projections will ultimately prove to have
been accurate.

 

    	CREDIT AGREEMENT - Page 48

    	 

    

 

Section 7.12.         Insurance.
Schedule 7.12 sets forth a true, complete and correct description
of all insurance maintained by the Borrower or by the Borrower for its Subsidiaries as of the date hereof and the Effective Date.
The Borrower has, and has caused all of its Subsidiaries to have, (a) all insurance policies sufficient for the compliance by each
of them with all material Governmental Requirements and all material agreements and (b) insurance coverage in at least amounts
and against such risk (including, without limitation, public liability) that are commercially reasonable and usually insured against
by companies similarly situated and engaged in the same or a similar business for the assets and operations of the Borrower and
its Subsidiaries. The Administrative Agent has been named as an additional insured in respect of such liability insurance policies,
and the Administrative Agent has been named as loss payee with respect to Property loss insurance.

 

Section 7.13.         Restriction
on Liens. Neither the Borrower nor any of the Subsidiaries is a party to any material
agreement or arrangement (other than Capital Leases creating Liens permitted by Section
9.03(c), but then only on the Property subject of such Capital Lease), or subject to any order, judgment, writ or decree,
which either restricts or purports to restrict its ability to grant Liens to the Administrative Agent and the Lenders on or in
respect of their Properties to secure the Indebtedness and the Loan Documents.

 

Section 7.14.         Subsidiaries.
Except as set forth on Schedule 7.14 or as disclosed in
writing to the Administrative Agent (which shall promptly furnish a copy to the Lenders), which shall be a supplement to Schedule
7.14, the Borrower has no Subsidiaries and the Borrower has no Foreign Subsidiaries. Each Subsidiary on such schedule
is a Wholly-Owned Subsidiary and a disregarded entity for federal income tax purposes. 

 

Section 7.15.         Location
of Business and Offices. The Borrower's jurisdiction of organization is Delaware; the
name of the Borrower as listed in the public records of its jurisdiction of organization is Yuma Exploration and Production Company,
Inc.; and the organizational identification number of the Borrower in its jurisdiction of organization is 2282392 (or, in each
case, as set forth in a notice delivered to the Administrative Agent pursuant to Section
8.01(n) in accordance with Section 12.01). The
Borrower's principal place of business and chief executive offices are located at the address specified in Section
12.01 (or as set forth in a notice delivered pursuant to Section
8.01(n) and Section 12.01(c)). Each Subsidiary's
jurisdiction of organization, name as listed in the public records of its jurisdiction of organization, organizational identification
number in its jurisdiction of organization, and the location of its principal place of business and chief executive office is stated
on Schedule 7.15 (or as set forth in a notice delivered
pursuant to Section 8.01(n)).

 

Section 7.16.       Properties;
Titles, Etc. 

 

(a)          Each
of the Borrower and the Subsidiaries has good and defensible title to the Oil and Gas Properties evaluated in the most recently
delivered Reserve Report and good title to all its personal Properties, in each case, free and clear of all Liens except Liens
permitted by Section 9.03. After giving full effect to the Excepted Liens, the Borrower or the Subsidiary specified as the
owner owns the net interests in production attributable to the Hydrocarbon Interests as reflected in the most recently delivered
Reserve Report, and the ownership of such Properties shall not in any material respect obligate the Borrower or such Subsidiary
to bear the costs and expenses relating to the maintenance, development and operations of each such Property in an amount in excess
of the working interest of each Property set forth in the most recently delivered Reserve Report that is not offset by a corresponding
proportionate increase in the Borrower's or such Subsidiary's net revenue interest in such Property. The ownership by the Borrower
or any Subsidiary of the Hydrocarbons and the undivided interests therein specified on the exhibits to the Mortgages are the same
interests reflected in the most recently delivered Reserve Report.

 

    	CREDIT AGREEMENT - Page 49

    	 

    

 

(b)          All
material leases and agreements necessary for the conduct of the business of the Borrower and the Subsidiaries are valid and subsisting,
in full force and effect, and there exists no default or event or circumstance which with the giving of notice or the passage of
time or both would give rise to a default under any such lease or leases, which could reasonably be expected to have a Material
Adverse Effect.

 

(c)          The
rights and Properties presently owned, leased or licensed by the Borrower and the Subsidiaries including, without limitation, all
easements and rights of way, include all rights and Properties necessary to permit the Borrower and the Subsidiaries to conduct
their business in all material respects in the same manner as its business has been conducted prior to the date hereof.

 

(d)          All
of the Properties of the Borrower and the Subsidiaries which are reasonably necessary for the operation of their businesses are
in good working condition and are maintained in accordance with prudent business standards.

 

(e)          The
Borrower and each Subsidiary owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual
Property material to its business, and the use thereof by the Borrower and such Subsidiary does not infringe upon the rights of
any other Person, except for any such infringements that, in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect. The Borrower and its Subsidiaries either own or have valid licenses or other rights to use all databases, geological
data, geophysical data, engineering data, seismic data, maps, interpretations and other technical information used in their businesses
as presently conducted, subject to the limitations contained in the agreements governing the use of the same, which limitations
are customary for companies engaged in the business of the exploration and production of Hydrocarbons, with such exceptions as
could not reasonably be expected to have a Material Adverse Effect.

 

Section 7.17.       Maintenance
of Properties. Except for such acts or failures to act as could not be reasonably expected
to have a Material Adverse Effect, and subject to the prior rights and limitations of Borrower as an owner of non-operated working
interests, the Oil and Gas Properties (and Properties unitized therewith) of the Borrower and its Subsidiaries have been maintained,
operated and developed in a good and workmanlike manner and in conformity with all Governmental Requirements and in conformity
with the provisions of all leases, subleases or other contracts comprising a part of the Hydrocarbon Interests and other contracts
and agreements forming a part of the Oil and Gas Properties of the Borrower and its Subsidiaries. Specifically in connection with
the foregoing, except for those as could not be reasonably expected to have a Material Adverse Effect, (i) no Oil and Gas Property
of the Borrower or any Subsidiary is subject to having allowable production reduced below the full and regular allowable (including
the maximum permissible tolerance) because of any overproduction (whether or not the same was permissible at the time) and (ii)
none of the wells comprising a part of the Oil and Gas Properties (or Properties unitized therewith) of the Borrower or any Subsidiary
is deviated from the vertical more than the maximum permitted by Governmental Requirements (except with respect to horizontal wells
permitted by Governmental Authority), and such wells are, in fact, bottomed under and are producing from, and the well bores are
wholly within, the Oil and Gas Properties (or in the case of wells located on Properties unitized therewith, such unitized Properties)
of the Borrower or such Subsidiary. All pipelines, wells, gas processing plants, platforms and other material improvements, fixtures
and equipment owned in whole or in part by the Borrower or any of its Subsidiaries that are necessary to conduct normal operations
are being maintained in a state adequate to conduct normal operations, and with respect to such of the foregoing which are operated
by the Borrower or any of its Subsidiaries, in a manner consistent with the Borrower's or its Subsidiaries' past practices (other
than those the failure of which to maintain in accordance with this Section
7.18 could not reasonably be expected to have a Material Adverse Effect).

 

Section 7.18.       Gas
Imbalances, Prepayments. Except as set forth on Schedule
7.18 or on the most recent certificate delivered pursuant to Section
8.12(c), on a net basis there are no Material Gas Imbalances, take or pay or other prepayments which would require the
Borrower or any of its Subsidiaries to deliver Hydrocarbons produced from the Oil and Gas Properties at some future time without
then or thereafter receiving full payment therefor.

 

    	CREDIT AGREEMENT - Page 50

    	 

    

 

Section 7.19.         Marketing
of Production. Except for contracts listed and in effect on the date hereof on Schedule
7.19, and thereafter either disclosed in writing to the Administrative Agent or included in the most recently delivered
Reserve Report (with respect to all of which contracts the Borrower represents that it or its Subsidiaries are receiving a price
for all production sold thereunder which is computed substantially in accordance with the terms of the relevant contract and are
not having deliveries curtailed substantially below the subject Property's delivery capacity), no material agreements exist which
are not cancelable on 60 days' notice or less without penalty or detriment for the sale of production from the Borrower's or its
Subsidiaries' Hydrocarbons (including, without limitation, calls on or other rights to purchase, production, whether or not the
same are currently being exercised) that (a) pertain to the sale of production at a fixed price and (b) have a maturity or expiry
date of longer than six (6) months from the date hereof.

 

Section 7.20.         Swap
Agreements. Schedule 7.20,
as of the date hereof, and after the date hereof, each report required to be delivered by the Borrower pursuant to Section
8.01(f), sets forth, a true and complete list of all Swap Agreements of the Borrower and each Subsidiary, the material
terms thereof (including the type, term, effective date, termination date and notional amounts or volumes), the net mark to market
value thereof, all credit support agreements relating thereto (including any margin required or supplied) and the counterparty
to each such agreement.

 

Section 7.21.         Use
of Loans and Letters of Credit. The proceeds of the Loans and the Letters of Credit shall
be used to refinance Debt under the Existing Credit Agreement, to finance permitted acquisitions of Oil and Gas Properties and
other assets related to the exploration, production and development of Oil and Gas Properties, to provide working capital for exploration
and production operations, and for general corporate purposes; provided that the phrase “general corporate purposes”
shall not include any aspect of the business or activities of Yuma Production 1985, Ltd. and no such proceeds of Loans and the
Letters of Credit shall be used for any aspect of the business or activities of Yuma Production 1985, Ltd. The Borrower and its
Subsidiaries are not engaged principally, or as one of its or their important activities, in the business of extending credit for
the purpose, whether immediate, incidental or ultimate, of buying or carrying margin stock (within the meaning of Regulation T,
U or X of the Board). No part of the proceeds of any Loan or Letter of Credit will be used for any purpose which violates the provisions
of Regulations T, U or X of the Board.

 

Section 7.22.         Sanctioned
Persons. Neither the Borrower or any Subsidiary nor, to the knowledge of the Borrower,
any director, officer, agent, employee or Affiliate of the Borrower or any Subsidiary is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S. Treasury Department ("OFAC"); and the
Borrower will not directly or indirectly use the proceeds of the Loans or the Letters of Credit or otherwise make available such
proceeds to any Person or entity, for the purpose of financing the activities of any Person currently subject to any U.S. sanctions
administered by OFAC.

 

Section 7.23.         Security
Instruments. The Mortgages are effective to create in favor of the Administrative Agent,
for the ratable benefit of the Secured Parties, a legal, valid and enforceable Lien on all of the Borrower's and each Guarantor's
right, title and interest in and to the Mortgaged Property thereunder and the proceeds thereof, and when the Mortgages are filed
in the appropriate filing offices, the Mortgages shall constitute a fully perfected Lien on, and security interest in, all right,
title and interest of the Borrower and each Guarantor in such Mortgaged Property and the proceeds thereof, in each case prior and
superior in right to any other Person, other than with respect to the rights of persons pursuant to Liens expressly permitted by
Section 9.03.

 

ARTICLE
VIII

Affirmative Covenants

 

Until the Commitments have expired or been
terminated and the principal of and interest on each Loan and all fees payable hereunder and all other amounts payable under the
Loan Documents shall have been paid in full and all Letters of Credit shall have expired or terminated and all LC Disbursements
shall have been reimbursed, the Borrower covenants and agrees with the Lenders that:

 

    	CREDIT AGREEMENT - Page 51

    	 

    

 

Section 8.01.       Financial
Statements; Other Information. The Borrower will furnish to the Administrative Agent and
each Lender:

 

(a)          Annual
Financial Statements. As soon as available, but in any event not later than 120 days after the end of each fiscal year of the
Borrower, its audited consolidated balance sheet and related statements of operations, stockholders' equity and cash flows as of
the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported
on by Pierson & Pierson or other independent public accountants of recognized national standing (without a "going concern"
or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that
such consolidated financial statements present fairly in all material respects the financial condition and results of operations
of the Borrower and its Consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied.

 

(b)          Quarterly
Financial Statements. As soon as available, but in any event not later than 60 days after the end of each fiscal quarter of
each fiscal year of the Borrower, including the last fiscal quarter of each fiscal year (beginning with the second quarter of 2011),
its consolidated and consolidating balance sheet and related statements of operations, stockholders' equity and cash flows as of
the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative
form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous
fiscal year, all certified by one of its Financial Officers as presenting fairly in all material respects the financial condition
and results of operations of the Borrower and its Consolidated Subsidiaries on a consolidated and consolidating basis in accordance
with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes.

 

(c)          Certificate
of Financial Officer — Compliance. Concurrently with any delivery of financial statements under Section 8.01(a)
or Section 8.01(b), a certificate of a Financial Officer in substantially the form of Exhibit D hereto (i) certifying
as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed
to be taken with respect thereto, (ii) setting forth reasonably detailed calculations demonstrating compliance with Section
8.13(b) and Section 9.01 and (iii) stating whether any change in GAAP or in the application thereof has occurred since
the date of the audited financial statements referred to in Section 7.04 (or, if later, the most recently delivered audited
financial statements pursuant to Section 8.01(a)) and, if any such change has occurred, specifying the effect of such change
on the financial statements accompanying such certificate.

 

(d)         Certificate
of Accounting Firm — Defaults. Concurrently with any delivery of financial statements under Section 8.01(a), a
certificate of the accounting firm that reported on such financial statements stating whether they obtained knowledge during the
course of their examination of such financial statements of any Default (which certificate may be limited to the extent required
by accounting rules or guidelines).

 

(e)          Certificate
of Financial Officer — Consolidating Information. If, at any time, all of the Consolidated Subsidiaries of the Borrower
are not Consolidated Subsidiaries, then concurrently with any delivery of financial statements under Section 8.01(a) or
Section 8.01(b), a certificate of a Financial Officer setting forth consolidating spreadsheets that show all Consolidated
Subsidiaries and the eliminating entries, in such form as would be presentable to the auditors of the Borrower.

 

(f)          Certificate
of Financial Officer – Swap Agreements. Concurrently with any delivery of financial statements under Section 8.01(a)
and Section 8.01(b), a certificate of a Financial Officer, in form and substance satisfactory to the Administrative Agent,
having attached thereto an updated, current Schedule 7.20.

 

(g)          Certificate
of Insurer — Insurance Coverage. Concurrently with any delivery of financial statements under Section 8.01(a),
a certificate of insurance coverage from each insurer with respect to the insurance required by Section 8.07, in form and
substance satisfactory to the Administrative Agent, and, if requested by the Administrative Agent or any Lender, all copies of
the applicable policies.

 

    	CREDIT AGREEMENT - Page 52

    	 

    

 

(h)          Other
Accounting Reports. Promptly upon receipt thereof, a copy of each other report or letter submitted to the Borrower or any of
its Subsidiaries by independent accountants in connection with any annual, interim or special audit made by them of the books of
the Borrower or any such Subsidiary, and a copy of any response by the Borrower or any such Subsidiary, or the board of directors
of the Borrower or any such Subsidiary, to such letter or report.

 

(i)          SEC
and Other Filings; Reports to Shareholders. If the Borrower or one of its Subsidiaries becomes a publicly traded company, then
promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials
filed by the Borrower or any Subsidiary with the SEC, or with any national securities exchange, or distributed by the Borrower
to its shareholders generally, as the case may be. 

 

(j)          Notices
Under Material Instruments. Promptly after the furnishing thereof, copies of any financial statement, report or notice furnished
to or by any Person pursuant to the terms of any preferred stock designation, indenture, loan or credit or other similar agreement,
other than this Agreement and not otherwise required to be furnished to the Lenders pursuant to any other provision of this Section
8.01.

 

(k)          Lists
of Purchasers. Concurrently with the delivery of any Reserve Report to the Administrative Agent pursuant to Section 8.12,
a list of the names and addresses of the Persons purchasing Hydrocarbons from the Borrower or any Subsidiary per Section 8.12(c)(v).

 

(l)          Notice
of Sales of Oil and Gas Properties. In the event the Borrower or any Subsidiary intends to sell, transfer, assign or otherwise
dispose of any Oil or Gas Properties or any Equity Interests in any Subsidiary in accordance with Section 9.12, prior written
notice of such disposition, the price thereof and the anticipated date of closing and any other details thereof requested by the
Administrative Agent or any Lender.

 

(m)          Notice
of Casualty Events. Prompt written notice, and in any event within three Business Days, of the occurrence of any Casualty Event
or the commencement of any action or proceeding that could reasonably be expected to result in a Casualty Event.

 

(n)          Information
Regarding Borrower and Guarantors. Prompt written notice (and in any event within thirty (30) days prior thereto) of any change
(i) in the Borrower or any Guarantor's corporate name or in any trade name used to identify such Person in the conduct of its business
or in the ownership of its Properties, (ii) in the location of the Borrower or any Guarantor's chief executive office or principal
place of business, (iii) in the Borrower or any Guarantor's identity or corporate structure or in the jurisdiction in which such
Person is incorporated or formed, (iv) in the Borrower or any Guarantor's jurisdiction of organization or such Person's organizational
identification number in such jurisdiction of organization, and (v) in the Borrower or any Guarantor's federal taxpayer identification
number, if any.

 

(o)          Production
Reports and Lease Operating Statements. Within 45 days after the end of each fiscal quarter, a report setting forth, for each
calendar month during the then current fiscal year to date, (i) the volume of production and sales attributable to production (and
the prices at which such sales were made and the revenues derived from such sales) for each such calendar month from the Oil and
Gas Properties, individually and in the aggregate, and (ii) the related ad valorem, severance and production taxes and lease operating
expenses attributable thereto and incurred for each such calendar month.

 

(p)          Gas
Balancing Reports. Within 45 days after the end of each fiscal quarter, a report setting forth, for the quarter during the
then current fiscal year to date, the existence of any Material Gas Imbalances listed on a property-by-property basis.

 

(q)          Notices
of Certain Changes. Promptly, but in any event within five (5) Business Days after the execution thereof, copies of any amendment,
modification or supplement to the Organizational Documents of the Borrower or any Subsidiary.

 

    	CREDIT AGREEMENT - Page 53

    	 

    

 

(r)          Ratings
Change. If the Borrower or one of its Subsidiaries becomes a publicly traded company, promptly after Moody's or S&P shall
have announced a change in the rating of the Borrower or one of its Subsidiaries, written notice of such rating change.

 

(s)          
PATRIOT Act. Promptly after the request by any Lender, all documentation and other information that such Lender reasonably
requests in order to comply with its ongoing obligations under applicable "know your customer" and anti-money laundering
rules and regulations, including the USA PATRIOT Act.

 

(t)          Other
Requested Information. Promptly following any request therefor, such other information regarding the operations, business affairs
and financial condition of the Borrower or any Subsidiary or Affiliate (including, without limitation, any Plan or Multiemployer
Plan and any reports or other information required to be filed under ERISA), or compliance with the terms of this Agreement or
any other Loan Document, as the Administrative Agent or any Lender may reasonably request.

 

Section 8.02.       Notices
of Material Events. The Borrower will furnish to the Administrative Agent and each Lender
prompt written notice of the following:

 

(a)          the
occurrence of any Default;

 

(b)          the
filing or commencement of, or the threat in writing of, any action, suit, proceeding, investigation or arbitration by or before
any arbitrator or Governmental Authority against or affecting the Borrower or any Affiliate thereof not previously disclosed in
writing to the Lenders or any material adverse development in any action, suit, proceeding, investigation or arbitration (whether
or not previously disclosed to the Lenders) that, in either case, if adversely determined, could reasonably be expected to result
in a Material Adverse Effect;

 

(c)          the
occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably be expected
to result in liability of the Borrower and its Subsidiaries in an aggregate amount exceeding $500,000; and

 

(d)          any
other development that results in, or could reasonably be expected to result in, a Material Adverse Effect.

 

Each notice delivered under this Section 8.02 shall be
accompanied by a statement of a Responsible Officer setting forth the details of the event or development requiring such notice
and any action taken or proposed to be taken with respect thereto.

 

Section 8.03.       Existence;
Conduct of Business. The Borrower will, and will cause each Subsidiary to, do or cause
to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses,
permits, privileges and franchises material to the conduct of its business and maintain, if necessary, its qualification to do
business in each other jurisdiction in which its Oil and Gas Properties is located or the ownership of its Properties requires
such qualification, except where the failure to so qualify could not reasonably be expected to have a Material Adverse Effect;
provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section
9.11.

 

Section 8.04.       Payment
of Obligations. The Borrower will, and will cause each Subsidiary to, pay its obligations,
including Tax liabilities of the Borrower and all of its Subsidiaries before the same shall become delinquent or in default, except
where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the Borrower or such
Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make
payment pending such contest could not reasonably be expected to result in a Material Adverse Effect or result in the seizure or
levy of any Property of the Borrower or any Subsidiary.

 

    	CREDIT AGREEMENT - Page 54

    	 

    

 

 

Section 8.05.       Performance
of Obligations under Loan Documents. The Borrower will pay the Notes
according to the reading, tenor and effect thereof, and the Borrower will, and will cause each Subsidiary to, do and perform every
act and discharge all of the obligations to be performed and discharged by them under the Loan Documents, including, without limitation,
this Agreement, at the time or times and in the manner specified.

 

Section 8.06.       Operation
and Maintenance of Properties. The Borrower, at its own expense,
will, and will cause each Subsidiary to:

 

(a)          operate
its Oil and Gas Properties and other material Properties or cause such Oil and Gas Properties and other material Properties to
be operated in a careful and efficient manner in accordance with the practices of the industry and in compliance with all applicable
contracts and agreements and in compliance with all Governmental Requirements, including, without limitation, applicable pro ration
requirements and Environmental Laws, and all applicable laws, rules and regulations of every other Governmental Authority from
time to time constituted to regulate the development and operation of its Oil and Gas Properties and the production and sale of
Hydrocarbons and other minerals therefrom, except, in each case, where the failure to comply could not reasonably be expected
to have a Material Adverse Effect.

 

(b)          operate
and maintain in a careful and efficient manner in accordance with the practices of the industry and in compliance with all applicable
contracts and agreements and in compliance with all Governmental Requirements, including, without limitation, all applicable laws,
rules and regulations of every other Governmental Authority from time to time constituted to regulate the gathering, transportation
or processing of Hydrocarbons and other minerals therefrom, except, in each case, where the failure to comply could not reasonably
be expected to have a Material Adverse Effect, all pipelines, compressor stations, wells, gas or crude oil processing facilities,
field gathering systems, tanks, tank batteries, pumps, pumping units, fixtures, valves, fittings, machinery, parts, engines, boilers,
meters, apparatus, appliances, tools, implements, casing, tubing, rods, cables, wires, towers, surface and other material improvements,
fixtures and equipment owned in whole or in part by the Borrower or any of its Subsidiaries that are useful or necessary to conduct
normal operations relating to gathering, transportation, processing or removal of Hydrocarbons and other minerals or CO2
therefrom.

 

(c)          keep
and maintain all Property material to the conduct of its business in good working order and condition, ordinary wear and tear
excepted, and preserve, maintain and keep in good repair, working order and efficiency (ordinary wear and tear excepted) all of
its material Oil and Gas Properties, all gas or crude oil processing facilities and other material Properties, including, without
limitation, all equipment, machinery and facilities.

 

(d)          promptly
pay and discharge, or make reasonable and customary efforts to cause to be paid and discharged, all delay rentals, royalties,
expenses and indebtedness accruing under the leases or other agreements affecting or pertaining to its Oil and Gas Properties
or gas or crude oil processing facilities and will do all other things necessary to keep unimpaired their rights with respect
thereto and prevent any forfeiture thereof or default thereunder.

 

(e)          promptly
perform or make reasonable and customary efforts to cause to be performed, in accordance with industry standards, the obligations
required by each and all of the assignments, deeds, leases, sub-leases, contracts and agreements affecting its interests in its
Oil and Gas Properties, all gas or crude oil processing facilities and other material Properties.

 

(f)          operate
its Oil and Gas Properties, all gas or crude oil processing facilities and other material Properties or cause or make reasonable
and customary efforts to cause such Oil and Gas Properties, gas or crude oil processing facilities and other material Properties
to be operated in accordance with the practices of the industry and in material compliance with all applicable contracts and agreements
and in compliance in all material respects with all Governmental Requirements. 

 

To the extent
the Borrower is not the operator of any Property, the Borrower shall use reasonable efforts to cause the operator to comply with
this Section 8.06.

 

    	CREDIT AGREEMENT – Page 55

    	 

    

 

Section 8.07.       Insurance.
The Borrower will, and will cause each Subsidiary to, maintain, with financially sound and reputable insurance companies, insurance
in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating
in the same or similar locations. The loss payable clauses or provisions in said insurance policy or policies insuring any of
the collateral for the Loans shall be endorsed in favor of and made payable to the Administrative Agent as its interests may appear
and such policies shall name the Administrative Agent and the Lenders as "additional insureds" and provide that the
insurer will endeavor to give at least 30 days prior notice of any cancellation to the Administrative Agent.

 

Section 8.08.       Books
and Records; Inspection Rights. The Borrower will, and will cause
each Subsidiary to, keep proper books of record and account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities, in accordance with GAAP. The Borrower will, and will cause each Subsidiary
to, permit any representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice, to visit and
inspect its Properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition
with its officers and independent accountants, all at such reasonable times and as often as reasonably requested.

 

Section 8.09.       Compliance
with Laws. The Borrower will, and will cause each Subsidiary to,
comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its Property, except where
the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

 

Section 8.10.       Environmental
Matters. 

 

(a)          The
Borrower shall at its sole expense: (i) comply, and shall cause its Properties and operations and each Subsidiary and each Subsidiary's
Properties and operations to comply, with all applicable Environmental Laws, the breach of which could be reasonably expected
to have a Material Adverse Effect; (ii) not dispose of or otherwise release, and shall cause each Subsidiary not to dispose of
or otherwise release, any oil, oil and gas waste, hazardous substance, or solid waste on, under, about or from any of the Borrower's
or its Subsidiaries' Properties or any other Property to the extent caused by the Borrower's or any of its Subsidiaries' operations
except in compliance with applicable Environmental Laws, the disposal or release of which could reasonably be expected to have
a Material Adverse Effect; (iii) timely obtain or file, and shall cause each Subsidiary to timely obtain or file, all notices,
permits, licenses, exemptions, approvals, registrations or other authorizations, if any, required under applicable Environmental
Laws to be obtained or filed in connection with the operation or use of the Borrower's or its Subsidiaries' Properties, which
failure to obtain or file could reasonably be expected to have a Material Adverse Effect; (iv) promptly commence and diligently
prosecute to completion, and shall cause each Subsidiary to promptly commence and diligently prosecute to completion, any assessment,
evaluation, investigation, monitoring, containment, cleanup, removal, repair, restoration, remediation or other remedial obligations
(collectively, the "Remedial Work") in the event any Remedial Work is required or reasonably necessary
under applicable Environmental Laws because of or in connection with the actual or suspected past, present or future disposal
or other release of any oil, oil and gas waste, hazardous substance or solid waste on, under, about or from any of the Borrower's
or its Subsidiaries' Properties, which failure to commence and diligently prosecute to completion could reasonably be expected
to have a Material Adverse Effect; and (v) establish and implement, and shall cause each Subsidiary to establish and implement,
such procedures as may be necessary to continuously determine and assure that the Borrower's and its Subsidiaries' obligations
under this Section 8.10(a) are timely and fully satisfied, which failure to establish and implement could reasonably be
expected to have a Material Adverse Effect.

 

(b)          The
Borrower will promptly, but in no event later than five days of the occurrence of a triggering event, notify the Administrative
Agent and the Lenders in writing of any threatened action, investigation or inquiry by any Governmental Authority or any threatened
demand or lawsuit by any landowner or other third party against the Borrower or its Subsidiaries or their Properties of which
the Borrower has knowledge in connection with any Environmental Laws (excluding routine testing and corrective action) if the
Borrower reasonably anticipates that such action will result in liability (whether individually or in the aggregate) in excess
of $500,000, not fully covered by insurance, subject to normal deductibles.

 

    	CREDIT AGREEMENT – Page 56

    	 

    

 

(c)          The
Borrower will, and will cause each Subsidiary to, provide environmental audits and tests in accordance with American Society of
Testing Materials standards upon request by the Administrative Agent and the Lenders in connection with any future acquisitions
of Oil and Gas Properties or other Properties.

 

Section 8.11.       Further
Assurances. 

 

(a)          The
Borrower at its sole expense will, and will cause each Subsidiary to, promptly execute and deliver to the Administrative Agent
all such other documents, agreements and instruments reasonably requested by the Administrative Agent to comply with, cure any
defects or accomplish the conditions precedent, covenants and agreements of the Borrower or any Subsidiary, as the case may be,
in the Loan Documents, including the Notes, or to further evidence and more fully describe the collateral intended as security
for the Indebtedness, or to correct any omissions in this Agreement or the Security Instruments, or to state more fully the obligations
secured therein, or to perfect, protect or preserve any Liens created pursuant to this Agreement or any of the Security Instruments
or the priority thereof, or to make any recordings, file any notices or obtain any consents, all as may be necessary or appropriate,
in the sole discretion of the Administrative Agent, in connection therewith.

 

(b)          The
Borrower hereby authorizes the Administrative Agent to file one or more financing or continuation statements, and amendments thereto,
relative to all or any part of the Mortgaged Property or other Property covered by the Lien of the Security Instruments without
the signature of the Borrower or any other Guarantor where permitted by law. A carbon, photographic or other reproduction of the
Security Instruments or any financing statement covering the Mortgaged Property such other Property or any part thereof shall
be sufficient as a financing statement where permitted by law.

 

Section 8.12.       Reserve
Reports. 

 

(a)          On
or before February 1st and August 1st of each year, commencing February 1, 2012, the Borrower shall furnish to the Administrative
Agent and the Lenders a Reserve Report evaluating the Oil and Gas Properties of the Borrower and its Subsidiaries with an “as
of” date acceptable to the Administrative Agent. The Reserve Report to be delivered by February 1 of each year shall be
prepared by one or more Approved Petroleum Engineers, and the Reserve Report to be delivered by August 1 of each year shall be
prepared by or under the supervision of the chief engineer or chief operating officer of the Borrower who shall certify such Reserve
Report to be true and accurate and to have been prepared in accordance with the procedures used in the immediately preceding Reserve
Report.

 

(b)          In
the event of an Interim Redetermination, the Borrower shall furnish to the Administrative Agent and the Lenders a Reserve Report
prepared by or under the supervision of the chief engineer or chief operating officer of the Borrower who shall certify such Reserve
Report to be true and accurate and to have been prepared in accordance with the procedures used in the immediately preceding January
1 Reserve Report. For any Interim Redetermination requested by the Administrative Agent or the Borrower pursuant to Section
2.07(b), the Borrower shall provide such Reserve Report with an "as of" date as required by the Administrative Agent
as soon as possible, but in any event no later than thirty (30) days following the receipt of such request.

 

    	CREDIT AGREEMENT – Page 57

    	 

    

 

(c)          With
the delivery of each Reserve Report, the Borrower shall provide to the Administrative Agent and the Lenders a certificate from
a Responsible Officer certifying that: (i) the information contained in the Reserve Report and any other information delivered
in connection therewith is true and correct in all material respects, (ii) the Borrower or its Subsidiaries own good and defensible
title to the Oil and Gas Properties evaluated in such Reserve Report and such Properties are free of all Liens except for Liens
permitted by Section 9.03, (iii) except as set forth on an exhibit to the certificate, on a net basis there are no Material
Gas Imbalances, take or pay or other prepayments in excess of the volume specified in Section 7.19 with respect to its
Oil and Gas Properties evaluated in such Reserve Report which would require the Borrower or any Subsidiary to deliver Hydrocarbons
either generally or produced from such Oil and Gas Properties at some future time without then or thereafter receiving full payment
therefor, (iv) none of their Oil and Gas Properties have been sold since the date of the last Borrowing Base determination except
as set forth on an exhibit to the certificate, which certificate shall list all of its Oil and Gas Properties sold and in such
detail as required by the Administrative Agent, (v) attached to the certificate is a list of all marketing agreements entered
into subsequent to the later of the date hereof or the most recently delivered Reserve Report which the Borrower could reasonably
be expected to have been obligated to list on Schedule 7.20 had such agreement been in effect on the date hereof, (vi)
attached to the certificate is a list of the names and addresses of the purchasers which accounted for at least 75% of the total
natural gas and oil revenues of the Borrower and its Subsidiaries during the twelve month period ended as of the immediately preceding
January 1 or July 1, as applicable and (vii) attached thereto is a schedule of the Oil and Gas Properties evaluated by
such Reserve Report that are Mortgaged Properties and demonstrating the percentage of the total value of the Oil and Gas Properties
that the value of such Mortgaged Properties represent in compliance with Section 8.14(a).

 

Section 8.13.       Title
Information.

 

(a)          On
or before the delivery to the Administrative Agent and the Lenders of each Reserve Report required by Section 8.12(a),
the Borrower will deliver title information in form and substance acceptable to the Administrative Agent covering enough of the
Oil and Gas Properties evaluated by such Reserve Report that were not included in the immediately preceding Reserve Report, so
that the Administrative Agent shall have received together with title information previously delivered to the Administrative Agent,
satisfactory title information on at least 80% of the total value of the Oil and Gas Properties evaluated by such Reserve Report.

 

(b)          If
the Borrower has provided title information for additional Properties under Section 8.13(a), the Borrower shall, within
60 days of notice from the Administrative Agent that title defects or exceptions exist with respect to such additional Properties,
either (i) cure any such title defects or exceptions (including defects or exceptions as to priority) which are not permitted
by Section 9.03 raised by such information, (ii) substitute acceptable Mortgaged Properties with no title defects or exceptions
except for Excepted Liens (other than Excepted Liens described in clauses (e), (g) and (h) of such definition) having an equivalent
value or (iii) deliver title information in form and substance acceptable to the Administrative Agent so that the Administrative
Agent shall have received, together with title information previously delivered to the Administrative Agent, satisfactory title
information on at least 80% of the value of the Oil and Gas Properties evaluated by such Reserve Report.

 

(c)          If
the Borrower is unable to cure any title defect requested by the Administrative Agent or the Lenders to be cured within the 60-day
period or the Borrower does not comply with the requirements to provide acceptable title information covering 80% of the value
of the Oil and Gas Properties evaluated in the most recent Reserve Report, such default shall not be a Default, but instead the
Administrative Agent and/or the Majority Lenders shall have the right to exercise the following remedy in their sole discretion
from time to time, and any failure to so exercise this remedy at any time shall not be a waiver as to future exercise of the remedy
by the Administrative Agent or the Lenders. To the extent that the Administrative Agent or the Majority Lenders are not satisfied
with title to any Mortgaged Property after the 60-day period has elapsed, such unacceptable Mortgaged Property shall not count
towards the 80% requirement, and the Administrative Agent may send a notice to the Borrower and the Lenders that the then outstanding
Borrowing Base shall be reduced by an amount as determined by the Majority Lenders to cause the Borrower to be in compliance with
the requirement to provide acceptable title information on 80% of the value of the Oil and Gas Properties. This new Borrowing
Base shall become effective immediately after receipt of such notice.

 

    	CREDIT AGREEMENT – Page 58

    	 

    

 

Section 8.14.       Additional
Collateral; Additional Guarantors. 

 

(a)          In
connection with each redetermination of the Borrowing Base, the Borrower shall review the Reserve Report and the list of current
Mortgaged Properties (as described in Section 8.12(c)(vi)) to ascertain whether the Mortgaged Properties represent at least
85% of the total value of the Oil and Gas Properties evaluated in the most recently completed Reserve Report after giving effect
to exploration and production activities, acquisitions, dispositions and production. In the event that the Mortgaged Properties
do not represent at least 85% of such total value, then the Borrower shall, and shall cause its Subsidiaries to, grant, within
thirty (30) days of delivery of the certificate required under Section 8.12(c), to the Administrative Agent as security
for the Indebtedness a first-priority Lien interest (provided that Excepted Liens of the type described in clauses (a)
to (d) and (f) of the definition thereof may exist, but subject to the provisos at the end of such definition) on additional Oil
and Gas Properties not already subject to a Lien of the Security Instruments such that after giving effect thereto, the Mortgaged
Properties will represent at least 85% of such total value. All such Liens will be created and perfected by and in accordance
with the provisions of Mortgages, deeds of trust, Security Agreements and financing statements or other Security Instruments,
all in form and substance satisfactory to the Administrative Agent and in sufficient executed (and acknowledged where necessary
or appropriate) counterparts for recording purposes. In order to comply with the foregoing, if any Subsidiary places a Lien on
its Oil and Gas Properties and such Subsidiary is not a Guarantor, then it shall become a Guarantor and comply with Section
8.14(b).

 

(b)          The
Borrower shall promptly cause each Subsidiary to guarantee the Indebtedness pursuant to a Guaranty Agreement. In connection with
any such guaranty, the Borrower shall, or shall cause such Subsidiary to, (A) pledge all of the Equity Interests of such new Subsidiary
pursuant to a Pledge Agreement (including, without limitation, delivery of original stock certificates, if any, evidencing the
Equity Interests of such Subsidiary, together with an appropriate undated stock powers for each certificate duly executed in blank
by the registered owner thereof) and (B) execute and deliver such other additional closing documents, certificates and legal opinions
as shall reasonably be requested by the Administrative Agent.

 

(c)          If
the Borrower elects to provide additional Mortgaged Properties in lieu of making any mandatory prepayment pursuant to Section
3.04(c), then the Borrower shall, or shall cause its Subsidiaries to, grant to the Administrative Agent as security for the
Indebtedness a first-priority Lien interest (subject only to Excepted Liens) on additional Oil and Gas Properties not already
subject to a Lien of the Security Instruments. All such Liens will be created and perfected by and in accordance with the provisions
of Mortgages, deeds of trust, security agreements and financing statements or other Security Instruments, all in form and substance
satisfactory to the Administrative Agent and in sufficient executed (and acknowledged where necessary or appropriate) counterparts
for recording purposes. In order to comply with the foregoing, if any Subsidiary places such a Lien on its Oil and Gas Properties
and such Subsidiary is not a Guarantor, then it shall become a Guarantor and comply with Section 8.14(b).

 

Section 8.15.       ERISA
Compliance. The Borrower will promptly furnish and will cause the
Subsidiaries and any ERISA Affiliate to promptly furnish to the Administrative Agent (i) promptly after the filing thereof with
the United States Secretary of Labor, the Internal Revenue Service or the PBGC, copies of each annual and other report with respect
to each Plan or any trust created thereunder, (ii) immediately upon becoming aware of the occurrence of any ERISA Event or of
any "prohibited transaction," as described in section 406 of ERISA or in section 4975 of the Code, in connection with
any Plan or any trust created thereunder, a written notice signed by the President or the principal Financial Officer, the Subsidiary
or the ERISA Affiliate, as the case may be, specifying the nature thereof, what action the Borrower, the Subsidiary or the ERISA
Affiliate is taking or proposes to take with respect thereto, and, when known, any action taken or proposed by the Internal Revenue
Service, the Department of Labor or the PBGC with respect thereto, and (iii) immediately upon receipt thereof, copies of any notice
of the PBGC's intention to terminate or to have a trustee appointed to administer any Plan. With respect to each Plan (other than
a Multiemployer Plan), the Borrower will, and will cause each Subsidiary and ERISA Affiliate to, (i) satisfy in full and in a
timely manner, without incurring any late payment or underpayment charge or penalty and without giving rise to any lien, all of
the contribution and funding requirements of section 412 of the Code (determined without regard to subsections (d), (e), (f) and
(k) thereof) and of section 302 of ERISA (determined without regard to sections 303, 304 and 306 of ERISA), and (ii) pay, or cause
to be paid, to the PBGC in a timely manner, without incurring any late payment or underpayment charge or penalty, all premiums
required pursuant to sections 4006 and 4007 of ERISA.

 

    	CREDIT AGREEMENT – Page 59

    	 

    

 

Section 8.16.       Administrative
Agent as Principal Depository. The Borrower shall maintain the Administrative
Agent as its principal depository bank, including for the maintenance of business, cash management, operating and administrative
deposit accounts.

 

ARTICLE
IX

Negative Covenants

 

Until the Commitments
have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents have been paid in full and all Letters of Credit have expired or terminated and all LC Disbursements
shall have been reimbursed, the Borrower covenants and agrees with the Lenders that:

 

Section 9.01.       Financial
Covenants. 

 

(a)          Interest
Coverage Ratio. The Borrower will not, as of the last day of any fiscal quarter beginning with the fiscal quarter ending June
30, 2011, permit its ratio of EBITDA to Interest Expense to be less than 2.5 to 1.0. For purposes of calculating this ratio for
the period ending June 30, 2011, EBITDA shall be calculated by annualizing the EBITDA for such period by multiplying EBITDA for
the first quarter ended June 30, 2011 by 4. For purposes of calculating this ratio for the period ending September 30, 2011, EBITDA
shall be calculated by annualizing the EBITDA for such period by multiplying EBITDA for the first two quarters ended September
30, 2011 by 2. For purposes of calculating this ratio for the period ending December 31, 2011, EBITDA shall be calculated by annualizing
the EBITDA for such period by multiplying EBITDA for the first three quarters ended December 31, 2011 by 4/3. Thereafter, EBITDA
shall be calculated at the end of each fiscal quarter using the results of the twelve-month period ending with that fiscal quarter
end.

 

(b)          Ratio
of Funded Debt to EBITDA. The Borrower will not, as of the last day of any fiscal quarter beginning with the fiscal quarter
ending June 30, 2011, permit its ratio of Funded Debt as of such time to EBITDA to exceed 3.5 to 1.0. For purposes of calculating
this ratio for the period ending June 30, 2011, EBITDA shall be calculated by annualizing the EBITDA for such period by multiplying
EBITDA for the first quarter ended June 30, 2011 by 4. For purposes of calculating this ratio for the period ending September
30, 2011, EBITDA shall be calculated by annualizing the EBITDA for such period by multiplying EBITDA for the first two quarters
ended September 30, 2011 by 2. For purposes of calculating this ratio for the period ending December 31, 2011, EBITDA shall be
calculated by annualizing the EBITDA for such period by multiplying EBITDA for the first three quarters ended December 31, 2011
by 4/3. Thereafter, EBITDA shall be calculated at the end of each fiscal quarter using the results of the twelve-month period
ending with that fiscal quarter end.

 

(c)          Current
Ratio. The Borrower will not permit at any time its ratio of (i) current assets (including the unused amount of the total
Commitments, but excluding non-cash assets under ASC 815) to (ii) current liabilities (excluding non-cash obligations under ASC
815 and current maturities under this Agreement and intercompany payables which the Borrower owes The Yuma Companies, Inc.) to
be less than 1.0 to 1.0. This ratio shall be calculated on a consolidating basis for the Borrower only.

 

Section 9.02.       Debt.
The Borrower will not, and will not permit any Subsidiary to, incur, create, assume or suffer to exist any Debt, except:

 

(a)          the
Notes or other Indebtedness arising under the Loan Documents or any guaranty of or suretyship arrangement for the Notes or other
Indebtedness arising under the Loan Documents.

 

    	CREDIT AGREEMENT – Page 60

    	 

    

 

(b)          accounts
payable and accrued expenses, liabilities or other obligations to pay the deferred purchase price of Property or services, from
time to time incurred in the ordinary course of business which are not greater than sixty (60) days past the date of invoice or
delinquent or which are being contested in good faith by appropriate action and for which adequate reserves have been maintained
in accordance with GAAP.

 

(c)          Debt
under Capital Leases not to exceed $500,000.

 

(d)          Debt
associated with bonds or surety obligations required by Governmental Requirements in connection with the operation of the Oil
and Gas Properties.

 

(e)          intercompany
Debt between the Borrower and any Subsidiary or between Subsidiaries to the extent permitted by Section 9.05(g); provided
that such Debt is not held, assigned, transferred, negotiated or pledged to any Person other than the Borrower or one of its
Wholly-Owned Subsidiaries, and, provided further, that any such Debt owed by either the Borrower or a Guarantor shall be
subordinated to the Indebtedness on terms satisfactory to the Administrative Agent.

 

(f)          endorsements
of negotiable instruments for collection in the ordinary course of business.

 

(g)          Debt
existing on the date hereof and disclosed to the Lenders on Schedule 9.02.

 

(h)          other
Debt, including purchase-money obligations, not to exceed $500,000 in the aggregate at any one time outstanding.

 

(i)          other
Debt approved by the Majority Lenders and subordinated to Borrower's obligations to Lenders in a manner acceptable to Administrative
Agent in its sole discretion.

 

(j)          Debt
arising under Swap Agreements permitted under Section 9.18 hereof.

 

Section 9.03.       Liens.
The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Lien on any of its
Properties (now owned or hereafter acquired), except:

 

(a)          Liens
securing the payment of any Indebtedness.

 

(b)          Excepted
Liens.

 

(c)          Liens
securing Capital Leases permitted by Section 9.02(c) but only on the Property under lease.

 

(d)          Liens
on any Property of the Borrower and its Subsidiaries existing on the date hereof and set forth on Schedule 9.03; provided
that such Liens shall secure only those obligations which they secure on the date hereof.

 

(e)          Liens
in favor of BP Corporation North America, Inc. or another counterparty acceptable to the Majority Lenders under any Swap Agreement
permitted by Section 9.18, which Lien shall be pari passu with Liens on Property securing the payment of any Indebtedness.

 

(f)          Liens
securing Debt, including purchase-money obligations, permitted by Section 9.02(h).

 

    	CREDIT AGREEMENT – Page 61

    	 

    

 

Section 9.04.       Dividends,
Distributions and Redemptions. The Borrower will not, and will not
permit any of its Subsidiaries to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, return
any capital to its stockholders, members or partners or make any distribution of its Property to its Equity Interest holders,
provided that so long as no Default has occurred and is continuing or will result therefrom and no Borrowing Base Deficiency
then exists and the Borrowing Base Utilization Percentage is 90% or less after giving effect thereto, then (i) the Borrower may
declare and pay cash distributions to its Equity Interest holders to permit such holders to pay federal and state taxes due with
respect to the income of the Borrower, (ii) the Borrower may declare and pay dividends with respect to its Equity Interests payable
solely in additional shares of its Equity Interests (other than Disqualified Capital Stock), (iii) Subsidiaries may declare and
pay dividends ratably with respect to their Equity Interests, and (iv) the Borrower may make Restricted Payments pursuant to and
in accordance with stock option plans or other benefit plans for management or employees of the Borrower and its Subsidiaries.

 

Section 9.05.       Investments,
Loans and Advances. The Borrower will not, and will not permit any
Subsidiary to, make or permit to remain outstanding any Investments in or to any Person, except that the foregoing restriction
shall not apply to:

 

(a)          Investments
reflected in the Financial Statements or which are disclosed to the Lenders in Schedule 9.05.

 

(b)          accounts
receivable arising in the ordinary course of business.

 

(c)          direct
obligations of the United States or any agency thereof, or obligations guaranteed by the United States or any agency thereof,
in each case maturing within one year from the date of creation thereof.

 

(d)          commercial
paper maturing within one year from the date of creation thereof rated in the highest grade by S&P or Moody's.

 

(e)          deposits
maturing within one year from the date of creation thereof with, including certificates of deposit issued by, any Lender or any
office located in the United States of any other bank or trust company which is organized under the laws of the United States
or any state thereof, has capital, surplus and undivided profits aggregating at least $100,000,000 (as of the date of such bank
or trust company's most recent financial reports) and has a short term deposit rating of no lower than A2 or P2, as such rating
is set forth from time to time, by S&P or Moody's, respectively or, in the case of any Foreign Subsidiary, a bank organized
in a jurisdiction in which the Foreign Subsidiary conducts operations having assets in excess of $500,000,000 (or its equivalent
in another currency).

 

(f)          deposits
in money market funds investing exclusively in Investments described in Section 9.05(c), Section 9.05(d) or Section
9.05(e).

 

(g)          Investments
(i) made by the Borrower in or to the Guarantors, (ii) made by any Subsidiary in or to the Borrower or any Guarantor and (iii)
made by the Borrower or any Subsidiary in or to all other Domestic Subsidiaries which are not Guarantors in an aggregate amount
at any one time outstanding not to exceed $1,000,000.

 

(h)          Investments
(including, without limitation, capital contributions) in general or limited partnerships or other types of entities (each a "venture")
entered into by the Borrower or a Subsidiary with others in the ordinary course of business; provided that (i) any such
venture is engaged exclusively in oil and gas exploration, development, production, processing and related activities, including
transportation, (ii) the interest in such venture is acquired in the ordinary course of business and on fair and reasonable terms
and (iii) such venture interests acquired and capital contributions made (valued as of the date such interest was acquired or
the contribution made) do not exceed, in the aggregate at any time outstanding an amount equal to $250,000.

 

(i)          Investments
made by the Borrower or a Guarantor in direct ownership interests in additional Oil and Gas Properties and gas gathering systems
related thereto or related to farm-out, farm-in, joint operating, joint venture or area of mutual interest agreements, gathering
systems, pipelines or other similar arrangements which are usual and customary in the oil and gas exploration and production business
located within the geographic boundaries of the United States of America, provided that (A) the Borrower shall be in compliance,
on a pro forma basis after giving effect to any such Investment, with the financial covenants set forth in Section 9.01
recomputed as at the last day of the most recently ended fiscal quarter of the Borrower for which financial statements are available,
and (B) no Default shall have occurred and be continuing or would result therefrom.

 

    	CREDIT AGREEMENT – Page 62

    	 

    

 

(j)          loans
or advances to employees, managers, officers or directors in the ordinary course of business of the Borrower or any of its Subsidiaries,
in each case only as permitted by applicable law, including Section 402 of the Sarbanes Oxley Act of 2002, but in any event not
to exceed $250,000 in the aggregate at any time.

 

(k)          Investments
in stock, obligations or securities received in settlement of debts arising from Investments permitted under this Section 9.05
owing to the Borrower or any Subsidiary as a result of a bankruptcy or other insolvency proceeding of the obligor in respect
of such debts or upon the enforcement of any Lien in favor of the Borrower or any of its Subsidiaries; provided that the
Borrower shall give the Administrative Agent prompt written notice in the event that the aggregate amount of all Investments held
at any one time under this Section 9.05(k) exceeds $250,000.

 

(l)          other
Investments not to exceed $250,000 in the aggregate at any time.

 

Section 9.06.       Nature
of Business; International Operations. The Borrower will not, and
will not permit any Subsidiary to, allow any material change to be made in the character of its business as currently conducted
by it and business activities reasonably incidental thereto as an independent oil and gas exploration and production company with
operations in the continental United States. From and after the date hereof, the Borrower and its Subsidiaries will not acquire
or make any other expenditure (whether such expenditure is capital, operating or otherwise) in or related to, any Oil and Gas
Properties not located within the geographical boundaries of the United States.

 

Section 9.07.       Limitation
on Leases. The Borrower will not, and will not permit any Subsidiary
to, create, incur, assume or suffer to exist any obligation for the payment of rent or hire of Property of any kind whatsoever
(real or personal but excluding Capital Leases and leases of Hydrocarbon Interests), under leases or lease agreements which would
cause the aggregate amount of all payments made by the Borrower and the Subsidiaries pursuant to all such leases or lease agreements,
including, without limitation, any residual payments at the end of any lease, to exceed $250,000 in any period of twelve consecutive
calendar months during the life of such leases.

 

Section 9.08.       Proceeds
of Notes. The Borrower will not permit the proceeds of the Notes
to be used for any purpose other than those permitted by Section 7.21.
Neither the Borrower nor any Person acting on behalf of the Borrower has taken or will take any action which might cause any of
the Loan Documents to violate Regulations T, U or X or any other regulation of the Board or to violate Section 7 of the Securities
Exchange Act of 1934 or any rule or regulation thereunder, in each case as now in effect or as the same may hereinafter be in
effect. If requested by the Administrative Agent, the Borrower will furnish to the Administrative Agent and each Lender a statement
to the foregoing effect in conformity with the requirements of FR Form U-1 or such other form referred to in Regulation U, Regulation
T or Regulation X of the Board, as the case may be.

 

Section 9.09.       ERISA
Compliance. The Borrower will not, and will not permit any Subsidiary
to, at any time:

 

(a)          engage
in, or permit any ERISA Affiliate to engage in, any transaction in connection with which the Borrower, a Subsidiary or any ERISA
Affiliate could be subjected to either a civil penalty assessed pursuant to subsections (c), (i) or (l) of section 502 of ERISA
or a tax imposed by Chapter 43 of Subtitle D of the Code.

 

(b)          terminate,
or permit any ERISA Affiliate to terminate, any Plan in a manner, or take any other action with respect to any Plan, which could
result in any liability of the Borrower, a Subsidiary or any ERISA Affiliate to the PBGC.

 

    	CREDIT AGREEMENT – Page 63

    	 

    

 

(c)          fail
to make, or permit any ERISA Affiliate to fail to make, full payment when due of all amounts which, under the provisions of any
Plan, agreement relating thereto or applicable law, the Borrower, a Subsidiary or any ERISA Affiliate is required to pay as contributions
thereto.

 

(d)          permit
to exist, or allow any ERISA Affiliate to permit to exist, any accumulated funding deficiency within the meaning of section 302
of ERISA or section 412 of the Code, whether or not waived, with respect to any Plan.

 

(e)          permit,
or allow any ERISA Affiliate to permit, the actuarial present value of the benefit liabilities under any Plan maintained by the
Borrower, a Subsidiary or any ERISA Affiliate which is regulated under Title IV of ERISA to exceed the current value of the assets
(computed on a plan termination basis in accordance with Title IV of ERISA) of such Plan allocable to such benefit liabilities.
The term "actuarial present value of the benefit liabilities" shall have the meaning specified in section 4041 of ERISA.

 

(f)          contribute
to or assume an obligation to contribute to, or permit any ERISA Affiliate to contribute to or assume an obligation to contribute
to, any Multiemployer Plan.

 

(g)          acquire,
or permit any ERISA Affiliate to acquire, an interest in any Person that causes such Person to become an ERISA Affiliate with
respect to the Borrower or a Subsidiary or with respect to any ERISA Affiliate of the Borrower or a Subsidiary if such Person
sponsors, maintains or contributes to, or at any time in the six-year period preceding such acquisition has sponsored, maintained,
or contributed to, (1) any Multiemployer Plan, or (2) any other Plan that is subject to Title IV of ERISA under which the actuarial
present value of the benefit liabilities under such Plan exceeds the current value of the assets (computed on a plan termination
basis in accordance with Title IV of ERISA) of such Plan allocable to such benefit liabilities.

 

(h)          incur,
or permit any ERISA Affiliate to incur, a liability to or on account of a Plan under sections 515, 4062, 4063, 4064, 4201 or 4204
of ERISA.

 

(i)          contribute
to or assume an obligation to contribute to, or permit any ERISA Affiliate to contribute to or assume an obligation to contribute
to, any employee welfare benefit plan, as defined in section 3(1) of ERISA, including, without limitation, any such plan maintained
to provide benefits to former employees of such entities, that may not be terminated by such entities in their sole discretion
at any time without any material liability.

 

(j)          amend,
or permit any ERISA Affiliate to amend, a Plan resulting in an increase in current liability such that the Borrower, a Subsidiary
or any ERISA Affiliate is required to provide security to such Plan under section 401(a)(29) of the Code.

 

Section 9.10.       Sale
or Discount of Receivables. Except for receivables obtained by the
Borrower or any Subsidiary out of the ordinary course of business or the settlement of joint interest billing accounts in the
ordinary course of business or discounts granted to settle collection of accounts receivable or the sale of defaulted accounts
arising in the ordinary course of business in connection with the compromise or collection thereof and not in connection with
any financing transaction, the Borrower will not, and will not permit any Subsidiary to, discount or sell (with or without recourse)
any of its notes receivable or accounts receivable.

 

Section 9.11.       Mergers,
Etc. Neither the Borrower not any of its Subsidiaries will merge
into or with or consolidate with any other Person, or sell, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its Property to any other Person, except that any Wholly-Owned Subsidiary
may merge with any other Wholly-Owned Subsidiary and the Borrower may merge with any Wholly-Owned Subsidiary so long as the Borrower
is the survivor.

 

    	CREDIT AGREEMENT – Page 64

    	 

    

 

Section 9.12.       Sale
of Properties. The Borrower will not, and will not permit any Subsidiary
to, sell, assign, farm-out, convey or otherwise transfer any Property except for (a) the sale of Hydrocarbons in the ordinary
course of business; (b) farmouts of undeveloped acreage and assignments in connection with such farmouts; (c) the sale or transfer
of equipment that is no longer necessary for the business of the Borrower or such Subsidiary or is replaced by equipment of at
least comparable value and use; and (d) so long as no Event of Default is then continuing or will result therefrom, Asset Dispositions;
provided that (1) all of the consideration received in respect to such Asset Disposition shall be cash, (2) the consideration
received shall be equal to or greater than the fair market value thereof (as reasonably determined by the Borrower and, if requested
by the Administrative Agent, the Borrower shall deliver a certificate of a Responsible Officer of the Borrower certifying to that
affect), and (3) the Borrowing Base shall be reduced by the amount of the Recognized Value of the assets included in such Asset
Disposition in the then current Borrowing Base as determined by the Administrative Agent or the Majority Lenders in their discretion
in accordance with the standards set forth in Section 2.07(a).

 

Section 9.13.       Environmental
Matters. The Borrower will not, and will not permit any Subsidiary
to, cause or permit any of its Property which it or a Subsidiary operates to be in violation of, or do anything or permit anything
to be done which will subject any such Property to any Remedial Work under any Environmental Laws, assuming disclosure to the
applicable Governmental Authority of all relevant facts, conditions and circumstances, if any, pertaining to such Property where
such violations or remedial obligations could reasonably be expected to have a Material Adverse Effect. The Borrower will use
its best efforts to cause the operator of Properties which the Borrower or any Subsidiary does not operate to comply with the
terms and provisions of this Section 9.13.

 

Section 9.14.       Transactions
with Affiliates. The Borrower will not, and will not permit any
Subsidiary to, enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of Property or
the rendering of any service, with any Affiliate (other than the Guarantors and Wholly-Owned Subsidiaries of the Borrower) unless
such transactions are otherwise permitted under this Agreement and are upon fair and reasonable terms no less favorable to it
than it would obtain in a comparable arm's length transaction with a Person not an Affiliate.

 

Section 9.15.       Subsidiaries.
The Borrower will not, and will not permit any Subsidiary to, create or acquire any additional Subsidiary unless the Borrower
gives written notice to the Administrative Agent of such creation or acquisition and complies with Section
8.14(b) and Section 8.14(c). The Borrower shall
not, and shall not permit any Subsidiary to, sell, assign or otherwise dispose of any Equity Interests in any Subsidiary except
in compliance with Section 9.12(d). Neither the Borrower
nor any Subsidiary shall have any Foreign Subsidiaries.

 

Section 9.16.       Negative
Pledge Agreements; Dividend Restrictions. The Borrower will not,
and will not permit any Subsidiary to, create, incur, assume or suffer to exist any contract, agreement or understanding (other
than this Agreement, the Security Instruments or Capital Leases creating Liens permitted by Section
9.03(c)) which in any way prohibits or restricts the granting, conveying, creation or imposition of any Lien on any
of its Property in favor of the Administrative Agent and the Lenders or restricts any Subsidiary from paying dividends or making
distributions to the Borrower or any Guarantor, or which requires the consent of or notice to other Persons in connection therewith.

 

Section 9.17.       Gas
Imbalances, Take-or-Pay or Other Prepayments. The Borrower will
not, and will not permit any Subsidiary to, (a) incur, become or remain liable for, any Material Gas Imbalance, or (b) allow take-or-pay
or other prepayments with respect to the Oil and Gas Properties of the Borrower or any Subsidiary that would require the Borrower
or such Subsidiary to deliver Hydrocarbons at some future time without then or thereafter receiving full payment therefor.

 

Section 9.18.       Swap
Agreements. The Borrower will not, and will not permit any Subsidiary
to, enter into any Swap Agreements with any Person other than (a) Swap Agreements in respect of commodities (i) which are for
combined durations of not more than forty-eight (48) months, (ii) with an Approved Counterparty and (iii) the notional volumes
for which (when aggregated with other commodity Swap Agreements then in effect other than basis differential swaps on volumes
already hedged pursuant to other Swap Agreements) do not exceed, as of the date such Swap Agreement is executed, 85% of the reasonably
anticipated Projected Production from Proved Developed Producing Reserves during the period during which such Swap Agreement is
in effect for each of crude oil and natural gas, calculated separately and (b) Swap Agreements in respect of interest rates with
an Approved Counterparty with the purpose and effect of fixing interest rates on a principal amount of indebtedness of the Borrower
that is accruing interest at a variable rate, provided that (i) the aggregate notional amount of such contracts never exceeds
75% of the anticipated outstanding principal balance of the indebtedness to be hedged by such contracts or an average of such
principal balances calculated by using a generally accepted method of matching interest swap contracts to declining principal
balances, and (ii) the floating rate index of each such contract generally matches the index used to determine the floating rates
of interest on the corresponding indebtedness to be hedged by such contract.

 

    	CREDIT AGREEMENT – Page 65

    	 

    

 

Section 9.19.       Marketing
Activities. The Borrower will not, and will not permit any of its
Subsidiaries to, engage in marketing activities for any Hydrocarbons or enter into any contracts related thereto other than (i)
contracts for the sale of Hydrocarbons scheduled or reasonably estimated to be produced from their proved Oil and Gas Properties
during the period of such contract, (ii) contracts for the sale of Hydrocarbons scheduled or reasonably estimated to be produced
from proved Oil and Gas Properties of third parties during the period of such contract associated with the Oil and Gas Properties
of the Borrower and its Subsidiaries that the Borrower or one of its Subsidiaries has the right to market pursuant to joint operating
agreements, unitization agreements or other similar contracts that are usual and customary in the oil and gas business and (iii)
other contracts for the purchase and/or sale of Hydrocarbons of third parties (A) which have generally offsetting provisions (i.e.
corresponding pricing mechanics, delivery dates and points and volumes) such that no "position" is taken and (B) for
which appropriate credit support has been taken to alleviate the material credit risks of the counterparty thereto.

 

ARTICLE
X

Events of Default; Remedies

 

Section 10.01.     Events
of Default. One or more of the following events shall constitute
an "Event of Default":

 

(a)          the
Borrower shall fail to pay any principal of any Loan or any reimbursement obligation in respect of any LC Disbursement when and
as the same shall become due and payable (other than LC Disbursements which are repaid through an ABR Borrowing as permitted by
Section 2.8(e) hereof), whether at the due date thereof or at a date fixed for prepayment thereof, by acceleration or otherwise.

 

(b)          the
Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in Section
10.01(a)) payable under any Loan Document, when and as the same shall become due and payable, and such failure shall continue
unremedied for a period of three Business Days.

 

(c)          any
representation or warranty made or deemed made by or on behalf of the Borrower or any Subsidiary in or in connection with any
Loan Document or any amendment or modification of any Loan Document or waiver under such Loan Document, or in any report, certificate,
financial statement or other document furnished pursuant to or in connection with any Loan Document or any amendment or modification
thereof or waiver thereunder, shall prove to have been incorrect when made or deemed made.

 

(d)          the
Borrower or any Subsidiary shall fail to observe or perform any covenant, condition or agreement contained in Section 3.04(c),
Section 8.01(j), Section 8.01(n), Section 8.01(q), Section 8.02, Section 8.03, Section 8.14,
Section 8.15 or in Article IX.

 

(e)          the
Borrower or any Subsidiary shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other
than those specified in Section 10.01(a), Section 10.01(b) or Section 10.01(d)) or any other Loan Document,
and such failure shall continue unremedied for a period of 30 days after the earlier to occur of (A) notice thereof from the Administrative
Agent to the Borrower (which notice will be given at the request of any Lender) or (B) a Responsible Officer of the Borrower or
such Subsidiary otherwise becoming aware of such default.

 

(f)          the
Borrower or any Subsidiary shall fail to make any payment (whether of principal or interest and regardless of amount) in respect
of any Material Indebtedness, when and as the same shall become due and payable (after giving effect to any applicable notice
and cure period).

 

    	CREDIT AGREEMENT – Page 66

    	 

    

 

(g)          any
event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables
or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any Material Indebtedness
or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the Redemption
thereof or any offer to Redeem to be made in respect thereof, prior to its scheduled maturity or require the Borrower or any Subsidiary
to make an offer in respect thereof.

 

(h)          an
involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or
other relief in respect of the Borrower or any Subsidiary or its debts, or of a substantial part of its assets, under any Debtor
Relief Laws whether Federal, state or foreign, or similar law, now or hereafter in effect or (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Subsidiary or for a substantial part
of its assets, and, in any such case, such proceeding or petition shall continue undismissed for 30 days or an order or decree
approving or ordering any of the foregoing shall be entered.

 

(i)          the
Borrower or any Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization
or other relief under any Debtor Relief Law, whether Federal, state or foreign, or similar law, now or hereafter in effect, (ii)
consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in
Section 10.01(h), (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator
or similar official for the Borrower or any Subsidiary or for a substantial part of its assets, (iv) file an answer admitting
the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit
of creditors or (vi) take any action for the purpose of effecting any of the foregoing.

 

(j)          the
Borrower or any Subsidiary shall become unable, admit in writing its inability or fail generally to pay its debts as they become
due.

 

(k)          (i)
one or more judgments for the payment of money in an aggregate amount in excess of $100,000 (to the extent not covered by independent
third party insurance provided by insurers of the highest claims paying rating or financial strength as to which the insurer does
not dispute coverage and is not subject to an insolvency proceeding) or (ii) any one or more non-monetary judgments that have,
or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, shall be rendered against
the Borrower, any Subsidiary or any combination thereof and the same shall remain undischarged for a period of 30 consecutive
days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach
or levy upon any assets of the Borrower or any Subsidiary to enforce any such judgment.

 

(l)          the
Loan Documents after delivery thereof shall for any reason, except to the extent permitted by the terms thereof, cease to be in
full force and effect and valid, binding and enforceable in accordance with their terms against the Borrower or a Guarantor party
thereto or shall be repudiated by any of them, or cease to create a valid and perfected Lien of the priority required thereby
on any of the collateral purported to be covered thereby, except to the extent permitted by the terms of this Agreement, or the
Borrower or any Subsidiary or any of their Affiliates shall so state in writing.

 

(m)          an
ERISA Event shall have occurred that, in the opinion of the Majority Lenders, when taken together with all other ERISA Events
that have occurred, could reasonably be expected to result in liability of the Borrower and its Subsidiaries in an aggregate amount
exceeding $100,000 in any year.

 

(n)          There
occurs under any Swap Agreement an early Termination Date (as defined in such Swap Agreement) resulting from (i) any event of
default under such Swap Agreement to which the Borrower or any Subsidiary is the Defaulting Party (as defined in such Swap Agreement),
or (ii) any Termination Event (as so defined) under such Swap Agreement as to which the Borrower or any Subsidiary is an Affected
Party (as so defined) and, in either event, the Swap Termination Value owed by the Borrower or such Subsidiary as a result thereof
constitutes Material Indebtedness.

 

    	CREDIT AGREEMENT – Page 67

    	 

    

 

(o)          a
Change in Control shall occur.

 

Section 10.02.     Remedies.

 

(a)          In
the case of an Event of Default other than one described in Section 10.01(h), Section 10.01(i) or Section 10.01(j),
at any time thereafter during the continuance of such Event of Default, the Administrative Agent may, and at the request of the
Majority Lenders, shall, by notice to the Borrower, take either or both of the following actions, at the same or different times:
(i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Notes and the Loans
then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable
may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable,
together with accrued interest thereon and all fees and other obligations other than Indebtedness outstanding under Lender Swap
Agreements of the Borrower and the Guarantors accrued hereunder and under the Notes and the other Loan Documents (including, without
limitation, the payment of cash collateral to secure the LC Exposure as provided in Section 2.08(j)), shall become due
and payable immediately, without presentment, demand, protest, notice of intent to accelerate, notice of acceleration or other
notice of any kind, all of which are hereby waived by the Borrower and each Guarantor; and in case of an Event of Default described
in Section 10.01(h), Section 10.01(i) or Section 10.01(j), the Commitments shall automatically terminate
and the Notes and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and the other
obligations other than Indebtedness outstanding under Lender Swap Agreements of the Borrower and the Guarantors accrued hereunder
and under the Notes and the other Loan Documents (including, without limitation, the payment of cash collateral to secure the
LC Exposure as provided in Section 2.08(j)), shall automatically become due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower and each Guarantor.

 

(b)          In
the case of the occurrence of an Event of Default, the Administrative Agent and the Lenders will have all other rights and remedies
available at law and equity.

 

(c)          All
proceeds realized from the liquidation or other disposition of collateral or otherwise received after maturity of the Notes, whether
by acceleration or otherwise, shall be applied:

 

(i)          first,
to payment or reimbursement of that portion of the Indebtedness constituting fees, expenses and indemnities payable to the Administrative
Agent in its capacity as such;

 

(ii)         second,
pro rata to payment or reimbursement of that portion of the Indebtedness constituting fees, expenses and indemnities payable to
the Lenders;

 

(iii)        third,
pro rata to payment of accrued interest on the Loans; 

 

(iv)        fourth,
pro rata to payment of principal outstanding on the Loans, Indebtedness owing to any Swap Lender, and Indebtedness owed to any
Cash Management Party;

 

(v)         fifth,
pro rata to any other Indebtedness;

 

(vi)        sixth,
to serve as cash collateral to be held by the Administrative Agent to secure the LC Exposure; and 

 

(vii)       seventh,
any excess, after all of the Indebtedness shall have been indefeasibly paid in full in cash, shall be paid to the Borrower or
as otherwise required by any Governmental Requirement.

 

    	CREDIT AGREEMENT – Page 68

    	 

    

 

Notwithstanding the foregoing,
Indebtedness owing to any Swap Lender and Indebtedness arising under Secured Cash Management Agreements shall be excluded from
the application described above if the Administrative Agent has not received written notice thereof, together with such supporting
documentation as the Administrative Agent may request, from the applicable Swap Lender or Cash Management Party, as the case may
be. Each Swap Lender and Cash Management Party not a party to this Agreement that has given the notice contemplated by the preceding
sentence shall, by such notice, be deemed to have acknowledged and accepted the appointment of the Administrative Agent pursuant
to the terms of Article XI hereof for itself and its Affiliates as if a “Lender” party hereto.

 

ARTICLE
XI

The Agents

 

Section 11.01.     Appointment;
Powers. Each of the Lenders and the Issuing Bank hereby irrevocably
appoints the Administrative Agent as its agent and authorizes the Administrative Agent to take such actions on its behalf and
to exercise such powers as are delegated to the Administrative Agent by the terms hereof and the other Loan Documents, together
with such actions and powers as are reasonably incidental thereto. The Administrative Agent shall also act as the “collateral
agent” under the Loan Documents, and each of the Lenders (including in its capacity as a potential Swap Lender and a potential
Cash Management Party) and the Issuing Bank hereby irrevocably appoints and authorizes the Administrative Agent to act as agent
of such Lender and the Issuing Bank for purposes of acquiring, holding and enforcing any and all Liens on collateral granted by
any of the Loan Parties to secure any of the Indebtedness, together with such powers and discretion as are reasonably incidental
thereto. The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders, the Issuing Bank,
the Swap Lenders and the Cash Management Parties, and neither the Borrower nor any other Loan Party shall have rights as a third
party beneficiary of any of such provisions.

 

Section 11.02.     Duties
and Obligations of Administrative Agent. The Administrative Agent
shall not have any duties or obligations except those expressly set forth in the Loan Documents. Without limiting the generality
of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether
a Default has occurred and is continuing (the use of the term "agent" herein and in the other Loan Documents with reference
to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law; rather, such term is used merely as a matter of market custom, and is intended to create or reflect
only an administrative relationship between independent contracting parties), (b) the Administrative Agent shall have no duty
to take any discretionary action or exercise any discretionary powers, except as provided in Section
11.03, and (c) except as expressly set forth herein, the Administrative Agent shall not have any duty to disclose,
and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Subsidiaries that
is communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any capacity. The Administrative
Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Majority Lenders
(or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good
faith shall be necessary, under the circumstances as provided in Sections
10.02 and 12.02) or (ii) in the absence of its
own gross negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge of any Default unless
and until written notice thereof is given to the Administrative Agent by the Borrower or a Lender, and shall not be responsible
for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with
this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder
or under any other Loan Document or in connection herewith or therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein or in any other Loan Document, (iv) the validity, enforceability, effectiveness
or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, (v) the satisfaction
of any condition set forth in Article VI or elsewhere herein, other than to confirm receipt of items expressly required
to be delivered to the Administrative Agent or as to those conditions precedent expressly required to be to the Administrative
Agent's satisfaction, (vi) the existence, value, perfection or priority of any collateral security or the financial or other condition
of the Borrower and its Subsidiaries or any other obligor or guarantor, or (vii) any failure by the Borrower or any other Person
(other than itself) to perform any of its obligations hereunder or under any other Loan Document or the performance or observance
of any covenants, agreements or other terms or conditions set forth herein or therein. For purposes of determining compliance
with the conditions specified in Article VI, each Lender shall be deemed to have consented to, approved or accepted or
to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory
to a Lender unless the Administrative Agent shall have received written notice from such Lender prior to the proposed closing
date specifying its objection thereto.

 

    	CREDIT AGREEMENT – Page 69

    	 

    

 

Section 11.03.     Action
by Administrative Agent. The Administrative Agent shall have no
duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated
hereby or by the other Loan Documents that the Administrative Agent is required to exercise in writing as directed by the Majority
Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section
12.02) and in all cases the Administrative Agent shall be fully justified in failing or refusing to act hereunder or
under any other Loan Documents unless it shall (a) receive written instructions from the Majority Lenders or the Lenders, as applicable,
(or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section
12.02) specifying the action to be taken and (b) be indemnified to its satisfaction by the Lenders against any and
all liability and expenses which may be incurred by it by reason of taking or continuing to take any such action. The instructions
as aforesaid and any action taken or failure to act pursuant thereto by the Administrative Agent shall be binding on all of the
Lenders. If a Default has occurred and is continuing, then the Administrative Agent shall take such action with respect to such
Default as shall be directed by the requisite Lenders in the written instructions (with indemnities) described in this Section
11.03, provided that, unless and until the Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default as
it shall deem advisable in the best interests of the Lenders. In no event, however, shall the Administrative Agent be required
to take any action which exposes the Administrative Agent to personal liability or which is contrary to this Agreement, the Loan
Documents or applicable law. The Administrative Agent shall not be liable for any action taken or not taken by it with the consent
or at the request of the Majority Lenders or the Lenders (or such other number or percentage of the Lenders as shall be necessary
under the circumstances as provided in Section 12.02),
and otherwise the Administrative Agent shall not be liable for any action taken or not taken by it hereunder or under any other
Loan Document or under any other document or instrument referred to or provided for herein or therein or in connection herewith
or therewith INCLUDING ITS OWN ORDINARY NEGLIGENCE, except to the extent such liability is determined by a court of competent
jurisdiction by final and non-appealable judgment to have resulted primarily from its own gross negligence or willful misconduct.

 

Section 11.04.     Reliance
by Administrative Agent. The Administrative Agent shall be entitled
to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument,
document or other writing (including electronic message, Internet or intranet web posting or other distribution) believed by it
to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may
rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur
any liability for relying thereon and each of the Borrower, the Lenders and the Issuing Bank hereby waives the right to dispute
the Administrative Agent's record of such statement, except in the case of gross negligence or willful misconduct by the Administrative
Agent. In determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit,
that by its terms must be fulfilled to the satisfaction of a Lender or the Issuing Bank, the Administrative Agent may presume
that such condition is satisfactory to such Lender or the Issuing Bank unless the Administrative Agent shall have received notice
to the contrary from such Lender or the Issuing Bank prior to the making of such Loan or the issuance of such Letter of Credit.
The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other
experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts. The Administrative Agent may deem and treat the payee of any Note as the holder thereof for all
purposes hereof unless and until a written notice of the assignment or transfer thereof permitted hereunder shall have been filed
with the Administrative Agent.

 

Section 11.05.     Subagents.
The Administrative Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all its duties and
exercise its rights and powers through their respective Related Parties. The exculpatory provisions of the preceding Sections
of this Article XI shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such
sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent.

 

    	CREDIT AGREEMENT – Page 70

    	 

    

 

Section 11.06.     Resignation
or Removal of Administrative Agent. Subject to the appointment and
acceptance of a successor Administrative Agent as provided in this Section
11.06, the Administrative Agent may resign at any time by notifying the Lenders, the Issuing Bank and the Borrower.
Upon any such resignation or removal, the Majority Lenders shall have the right, in consultation with the Borrower, to appoint
a successor; provided that, no consultation with the Borrower shall be required if an Event of Default has occurred and
is continuing. If no successor shall have been so appointed by the Majority Lenders and shall have accepted such appointment within
30 days after the retiring Agent gives notice of its resignation or removal of the retiring Administrative Agent, then the retiring
Administrative Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor Administrative Agent meeting the
qualifications set forth above; provided that if the retiring Administrative Agent shall notify the Borrower and the Lenders
that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance
with such notice and (1) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under
the other Loan Documents ,and (2) all payments, communications and determinations provided to be made by, to or through the Administrative
Agent shall instead be made by or to each Lender and the Issuing Bank directly, until such time as the Majority Lenders appoint
a successor Administrative Agent as provided for above in this paragraph. Upon the acceptance of its appointment as Agent hereunder
by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder (if
not already discharged as provided for above in this paragraph). The fees payable by the Borrower to a successor Administrative
Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After
the Administrative Agent's resignation hereunder, the provisions of this Article XI and Section
12.03 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective
Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Administrative Agent.

 

Section 11.07.     Agents
as Lenders. The Person serving as the Administrative Agent hereunder
shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were
not the Administrative Agent and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated
or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity.
Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory
capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if
such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.

 

Section 11.08.     No
Reliance. 

 

(a)          Each
Lender acknowledges that it has, independently and without reliance upon the Administrative Agent, any other Agent or any other
Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to
enter into this Agreement and each other Loan Document to which it is a party. Each Lender also acknowledges that it will, independently
and without reliance upon the Administrative Agent, any other Agent or any other Lender and based on such documents and information
as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any other Loan Document, any related agreement or any document furnished hereunder or thereunder. The Agents
shall not be required to keep themselves informed as to the performance or observance by the Borrower or any of its Subsidiaries
of this Agreement, the Loan Documents or any other document referred to or provided for herein or to inspect the Properties or
books of the Borrower or its Subsidiaries. Except for notices, reports and other documents and information expressly required
to be furnished to the Lenders by the Administrative Agent hereunder, no Agent or the Arranger shall have any duty or responsibility
to provide any Lender with any credit or other information concerning the affairs, financial condition or business of the Borrower
(or any of its Affiliates) which may come into the possession of such Agent or any of its Affiliates. In this regard, each Lender
acknowledges that Winstead PC is acting in this transaction as special counsel to the Administrative Agent only, except to the
extent otherwise expressly stated in any legal opinion or any Loan Document. Each other party hereto will consult with its own
legal counsel to the extent that it deems necessary in connection with the Loan Documents and the matters contemplated therein.

 

    	CREDIT AGREEMENT – Page 71

    	 

    

 

(b)          The
Lenders acknowledge that the Administrative Agent and the Arranger are acting solely in administrative capacities with respect
to the structuring and syndication of this facility and have no duties, responsibilities or liabilities under this Agreement and
the other Loan Documents other than their administrative duties, responsibilities and liabilities specifically as set forth in
the Loan Documents and in their capacity as Lenders hereunder. In structuring, arranging or syndicating this facility, each Lender
acknowledges that the Administrative Agent and/or Arranger may be an agent or lender under these Notes, other loans or other securities
and waives any existing or future conflicts of interest associated with the their role in such other debt instruments. If in its
administration of this facility or any other debt instrument, the Administrative Agent determines (or is given written notice
by any Lender) that a conflict exists, then it shall eliminate such conflict within 90 days or resign pursuant to Section 11.06
and shall have no liability for action taken or not taken while such conflict existed.

 

Section 11.09.     Administrative
Agent May File Proofs of Claim. In case of the pendency of any receivership,
insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative
to the Borrower or any of its Subsidiaries under any Debtor Relief Law, the Administrative Agent (irrespective of whether the
principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether
the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such
proceeding or otherwise: 

 

(a)          to
file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other
Indebtedness that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the
claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements
and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the
Lenders and the Administrative Agent under Section 12.03) allowed in such judicial proceeding; and

 

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

 

and any custodian, receiver, assignee,
trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender
to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making
of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses,
disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative
Agent under Section 12.03.

 

Nothing contained herein shall be
deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the Indebtedness or the rights of any Lender or to authorize
the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.

 

Section 11.10.     Authority
of Administrative Agent to Release Collateral and Liens. Each Lender
and the Issuing Bank hereby authorizes the Administrative Agent to release any collateral that is permitted to be sold or released
pursuant to the terms of the Loan Documents. Each Lender and the Issuing Bank hereby authorizes the Administrative Agent to execute
and deliver to the Borrower, at the Borrower's sole cost and expense, any and all releases of Liens, termination statements, assignments
or other documents reasonably requested by the Borrower in connection with any sale or other disposition of Property to the extent
such sale or other disposition is permitted by the terms of Section
9.12 or is otherwise authorized by the terms of the Loan Documents. Each Lender and the Issuing Bank hereby authorizes
the Administrative Agent to release any Lien on any Property granted to or held by the Administrative Agent under any Loan Document
upon the termination of all Commitments and payment in full of all Indebtedness (other than (i) contingent indemnification obligations
and (ii) obligations and liabilities under Lender Swap Agreements and Secured Cash Management Agreements as to which arrangements
satisfactory to the applicable Swap Lender or Cash Management Party shall have been made) and the expiration or termination of
all Letters of Credit (other than Letters of Credit as to which other arrangements satisfactory to the Issuing Bank shall have
been made).

 

    	CREDIT AGREEMENT – Page 72

    	 

    

 

Section 11.11.     The
Arranger, Bookrunner, Etc. Anything herein to the contrary notwithstanding,
none of the Arrangers, shall have any powers, duties, responsibilities or liabilities under this Agreement and the other Loan
Documents other than its powers, duties, responsibilities and liabilities in its capacity, as applicable, as the Administrative
Agent, a Lender or the Issuing Bank hereunder.

 

Section 11.12.     Swap
Lenders and Secured Cash Management Agreements. In the absence of any written agreement between any Swap Lender or Cash Management
Party and the Lenders to the contrary, no Swap Lender or Cash Management Party that obtains the benefits of Section 10.02(c),
any Guaranty or any collateral by virtue of the provisions hereof or of any Guaranty or any Loan Document shall have any right
to notice of any action or to consent to, direct or object to any action hereunder or under any other Loan Document or otherwise
in respect of the collateral (including the release or impairment of any collateral) other than in its capacity as a Lender and,
in such case, only to the extent expressly provided by the Loan Documents. Notwithstanding any other provisions of this Article
XI to the contrary, the Administrative Agent shall not be required to verify the payment of, or that other satisfactory arrangements
have been made with respect to, Indebtedness arising under Lender Swap Agreements and Secured Cash Management Agreements unless
the Administrative Agent has received written notice of such Indebtedness, together with supporting documentation as the Administrative
Agent may request, from the applicable Swap Lender or Cash Management Party, as the case may be.

 

ARTICLE
XII

Miscellaneous

 

Section 12.01.     Notices.

 

(a)          Except
in the case of notices and other communications expressly permitted to be given by telephone (and subject to Section 12.01(b)),
all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy, as follows:

 

		(i)	if
                                         to the Borrower, to it at

 

Yuma Exploration and Production
Company, Inc.

1177 West Loop South, Suite 1825

Houston, TX 77027

Attention: Kirk Sprunger

Telecopy: 713-968-7015

Telephone: 713-968-7037

 

if to the Administrative
Agent, to it at

Amegy Bank National Association

4400 Post Oak Parkway

Houston TX 77027

Attention: Mr. Bill Robinson

Telecopy: 713-561-0345

Telephone: 713-232-2198

 

    	CREDIT AGREEMENT – Page 73

    	 

    

 

		(ii)	if
                                         to the Issuing Bank, to it at

 

Amegy Bank National Association

4400 Post Oak Parkway

Houston TX 77027

Attention: Jackie Cooper

Telecopy: 713-561-0345

Telephone: 713-232-1193

 

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

 

Notices sent by hand or
overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices
sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the
recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices
delivered through electronic communications to the extent provided in paragraph (b) below, shall be effective as provided in said
paragraph (b).

 

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

 

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

 

(c)          Any
party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties
hereto. 

 

Section 12.02.     Waivers;
Amendments. 

 

(a)          No
failure on the part of the Administrative Agent, any other Agent, the Issuing Bank or any Lender to exercise and no delay in exercising,
and no course of dealing with respect to, any right, power or privilege, or any abandonment or discontinuance of steps to enforce
such right, power or privilege, under any of the Loan Documents shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege under any of the Loan Documents preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies of the Administrative Agent, any other Agent, the Issuing
Bank and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies
that they would otherwise have. No waiver of any provision of this Agreement or any other Loan Document or consent to any departure
by the Borrower therefrom shall in any event be effective unless the same shall be permitted by Section 12.02(b), and then
such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting
the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of
any Default, regardless of whether the Administrative Agent, any other Agent, any Lender or the Issuing Bank may have had notice
or knowledge of such Default at the time.

 

    	CREDIT AGREEMENT – Page 74

    	 

    

 

Notwithstanding
anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder
and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and
proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent
in accordance with Section 10.02 for the benefit of all the Lenders and the Issuing Bank; provided, however, that
the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure
to its benefit (solely in its capacity as the Administrative Agent) hereunder and under the other Loan Documents, (b) the Issuing
Bank from exercising the rights and remedies that inure to its benefit (solely in its capacity as Issuing Bank) hereunder and
under the other Loan Documents, (c) any Lender from exercising setoff rights in accordance with Section 12.08 (subject
to the terms of Section 4.01), or (d) any Lender from filing proofs of claim or appearing and filing pleadings on its own
behalf during the pendency of a proceeding relative to any Loan Party under any debtor relief law; and provided, further,
that if at any time there is no Person acting as the Administrative Agent hereunder and under the other Loan Documents, then (i)
the Majority Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 10.02 and
(ii) in addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso and subject to Section 4.01,
any Lender may, with the consent of the Majority Lenders, enforce any rights and remedies available to it and as authorized by
the Majority Lenders.

 

(b)          Neither
this Agreement nor any provision hereof nor any Security Instrument nor any provision thereof may be waived, amended or modified,
except pursuant to an agreement or agreements in writing entered into by the Borrower and the Majority Lenders or by the Borrower
and the Administrative Agent with the consent of the Majority Lenders; provided that no such agreement shall (i) increase
the Commitment or the Maximum Credit Amount of any Lender without the written consent of such Lender, (ii) increase the Borrowing
Base without the written consent of each Lender, or decrease or maintain the Borrowing Base without the consent of the Majority
Lenders, (iii) reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any
fees payable hereunder, or reduce any other Indebtedness hereunder or under any other Loan Document, without the written consent
of each Lender affected thereby, (iv) postpone the scheduled date of payment or prepayment of the principal amount of any Loan
or LC Disbursement, or any interest thereon, or any fees payable hereunder, or any other Indebtedness hereunder or under any other
Loan Document, or reduce the amount of, waive or excuse any such payment, or postpone or extend the Termination Date without the
written consent of each Lender affected thereby, (v) change Section 4.01(b) or Section 4.01(c) or Section 10.02(c)
in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender
and if applicable, each Swap Lender and each Cash Management Party, (vi) waive or amend Section 10.02(c) or Section
12.14 without the written consent of each Lender, (vii) release all or substantially all of the collateral (other than as
provided in Section 11.10), without the written consent of each Lender, or (viii) change any of the provisions of this
Section 12.02(b) or the definition of "Majority Lenders" or any other provision hereof specifying the number
or percentage of Lenders required to waive, amend or modify any rights hereunder or under any other Loan Documents, without the
written consent of each Lender; provided further that (A) no such agreement shall amend, modify or otherwise affect the
rights or duties of the Administrative Agent, any other Agent, or the Issuing Bank hereunder or under any other Loan Document
without the prior written consent of the Administrative Agent, such other Agent or the Issuing Bank, as the case may be, and (B)
nothing in this Section 12.02 shall cause any waiver, amendment, modification or consent to (I) any fee letter between
the Borrower and any Lender, Agent or the Administrative Agent or Issuing Bank to require the consent of the Majority Lenders,
(II) any Letter of Credit Agreements between the Borrower or any Subsidiary of the Borrower and the Issuing Bank to require the
consent of the Majority Lenders, (III) any Letter of Credit issued by the Issuing Bank pursuant to the terms of this Agreement
to require the consent of the Majority Lenders except as specifically required by Section 2.08 and (IV) any Lender Swap
Agreement, to require the consent of the Majority Lenders.

 

    	CREDIT AGREEMENT – Page 75

    	 

    

 

(c)          Notwithstanding
anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove of any amendment, waiver or
consent hereunder, except that the Commitment of such Lender may not be increased or extended without the consent of such Lender.

 

Section 12.03.     Expenses,
Indemnity; Damage Waiver. 

 

(a)          The
Borrower shall pay (i) all out-of-pocket expenses incurred by the Administrative Agent and its Affiliates, including, without
limitation, the reasonable fees, charges and disbursements of counsel and other outside consultants for the Administrative Agent,
the reasonable travel, photocopy, mailing, courier, telephone and other similar expenses, and the cost of environmental audits
and surveys and appraisals, in connection with the syndication of the credit facilities provided for herein, the preparation,
negotiation, execution, delivery and administration (both before and after the execution hereof and including advice of counsel
to the Administrative Agent as to the rights and duties of the Administrative Agent and the Lenders with respect thereto) of this
Agreement and the other Loan Documents and any amendments, modifications or waivers of or consents related to the provisions hereof
or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all costs, expenses, Taxes,
assessments and other charges incurred by any Agent or any Lender in connection with any filing, registration, recording or perfection
of any security interest contemplated by this Agreement or any Security Instrument or any other document referred to therein,
(iii) all out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance, amendment, renewal or extension
of any Letter of Credit or any demand for payment thereunder, (iv) all out-of-pocket expenses incurred by any Agent, the Issuing
Bank or any Lender, including the fees, charges and disbursements of any counsel for any Agent, the Issuing Bank or any Lender,
in connection with the enforcement or protection of its rights in connection with this Agreement or any other Loan Document, including
its rights under this Section 12.03, or in connection with the Loans made or Letters of Credit issued hereunder, including,
without limitation, all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such
Loans or Letters of Credit.

 

(b)          THE
BORROWER SHALL INDEMNIFY THE ADMINISTRATIVE AGENT (AND ANY SUB-AGENT THEREOF), EACH LENDER AND THE ISSUING BANK, AND EACH RELATED
PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH PERSON BEING CALLED AN "INDEMNITEE") AGAINST, AND HOLD
EACH INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED EXPENSES (INCLUDING THE FEES, CHARGES
AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE), AND SHALL INDEMNIFY AND HOLD HARMLESS EACH INDEMNITEE FROM ALL FEES AND
TIME CHARGES AND DISBURSEMENTS FOR ATTORNEYS WHO MAY BE EMPLOYEES OF ANY INDEMNITEE, INCURRED BY ANY INDEMNITEE OR ASSERTED AGAINST
ANY INDEMNITEE BY ANY THIRD PARTY OR BY THE BORROWER OR ANY OTHER LOAN PARTY ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT
OF (I) THE EXECUTION OR DELIVERY OF THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY
OR THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER OR THE CONSUMMATION
OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, (II) ANY LOAN OR LETTER OF CREDIT OR THE USE OR PROPOSED USE OF THE PROCEEDS
THEREFROM (INCLUDING ANY REFUSAL BY THE ISSUING BANK TO HONOR A DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT IF THE DOCUMENTS PRESENTED
IN CONNECTION WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER OF CREDIT), (III) ANY ACTUAL OR ALLEGED PRESENCE
OR RELEASE OF HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY OWNED OR OPERATED BY THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR ANY
ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR (IV) ANY ACTUAL OR PROSPECTIVE CLAIM,
LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY,
WHETHER BROUGHT BY A THIRD PARTY OR BY THE BORROWER OR ANY OTHER LOAN PARTY, AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY
THERETO, PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS,
DAMAGES, LIABILITIES OR RELATED EXPENSES (X) ARE DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT
TO HAVE RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE OR (Y) RESULT FROM A CLAIM BROUGHT BY THE
BORROWER OR ANY OTHER LOAN PARTY AGAINST AN INDEMNITEE FOR BREACH IN BAD FAITH OF SUCH INDEMNITEE'S OBLIGATIONS HEREUNDER OR UNDER
ANY OTHER LOAN DOCUMENT, IF THE BORROWER OR SUCH LOAN PARTY HAS OBTAINED A FINAL AND NONAPPEALABLE JUDGMENT IN ITS FAVOR ON SUCH
CLAIM AS DETERMINED BY A COURT OF COMPETENT JURISDICTION.

 

    	CREDIT AGREEMENT – Page 76

    	 

    

 

(c)          To
the extent that the Borrower fails to indefeasibly pay any amount required to be paid by it to any Agent, the Arranger or the
Issuing Bank under Section 12.03(a) or (b), each Lender severally agrees to pay to such Agent (or any sub-agent), the Issuing
Bank, or such Related Party as the case may be, such Lender's Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified
loss, claim, damage, liability, penalty or related expense, as the case may be, was incurred by or asserted against the Administrative
Agent (or any sub-agent) or the Issuing Bank in its capacity as such, or against any Related Party of any of the foregoing acting
for the Administrative Agent (or any such sub-agent) or Issuing Bank in connection with such capacity. The obligations of the
Lenders under this paragraph (c) are several and not joint.

 

(d)          To
the fullest extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee,
on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument
contemplated hereby or thereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee
referred to in paragraph (b) above shall be liable for any damages arising from the use by unintended recipients of any information
or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection
with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.

 

(e)          All
amounts due under this Section 12.03 shall be payable promptly, but in any event not later than three Business Days after
written demand therefor.

 

(f)          The
provisions of this Section 12.03 shall remain operative and in full force and effect regardless of the expiration of the
term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the expiration
of the Commitments, the expiration of any Letter of Credit, the invalidity or unenforceability of any term or provision of this
Agreement or any other Loan Document, or any investigation made by or on behalf of the Administrative Agent, any Lender or the
Issuing Bank.

 

Section 12.04.     Successors
and Assigns. 

 

(a)          The
provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors
and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), except that (i) the
Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of
each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no
Lender may assign or otherwise transfer its rights or obligations hereunder except (i) to an assignee in accordance with the provisions
of paragraph (b) of this Section, (ii) by way of participation in accordance with the provisions of paragraph (d) of this Section
or (iii) by way of pledge or assignment of a security interest subject to the restrictions of paragraph (f) of this Section (and
any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns
permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), Participants (to the extent provided
in Section 12.04(c)) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative
Agent, the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

 

    	CREDIT AGREEMENT – Page 77

    	 

    

 

(b)          (i)
Subject to the conditions set forth in Section 12.04(b)(ii), any Lender may assign to one or more Eligible Assignees all
or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at
the time owing to it) with the prior written consent (such consent not to be unreasonably withheld or delayed) of:

 

(A)         the
Borrower, provided that no consent of the Borrower shall be required if such assignment is to a Lender, an Affiliate of
a Lender, an Approved Fund or, if an Event of Default has occurred and is continuing, is to any other assignee; and 

 

(B)         the
Administrative Agent, provided that no consent of the Administrative Agent shall be required for an assignment to an assignee
that is a Lender immediately prior to giving effect to such assignment.

 

(ii)         Assignments
shall be subject to the following additional conditions: 

 

(A)         except
in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning
Lender's Commitment or Loans, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined
as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not
be less than $5,000,000 unless each of the Borrower and the Administrative Agent otherwise consent, provided that no such
consent of the Borrower shall be required if an Event of Default has occurred and is continuing;

 

(B)         each
partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations
under this Agreement;

 

(C)         the
parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a
processing and recordation fee of $3,500 (which fee may be waived or reduced in the sole discretion of the Administrative Agent);
and

 

(D)         the
assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

 

(iii)        Subject
to Section 12.04(b)(iv) and the acceptance and recording thereof by the Administrative Agent, from and after the effective
date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations
under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender's rights and obligations
under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Section
5.01, Section 5.02, Section 5.03 and Section 12.03). Any assignment or transfer by a Lender of rights
or obligations under this Agreement that does not comply with this Section 12.04 shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 12.04(c).

 

    	CREDIT AGREEMENT – Page 78

    	 

    

 

(iv)        The
Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at one of its offices a copy
of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders,
and the Maximum Credit Amount of, and principal amount of the Loans and LC Disbursements owing to, each Lender pursuant to the
terms hereof from time to time (the "Register"). The entries in the Register shall be conclusive, and
the Borrower, the Administrative Agent, the Issuing Bank and the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.
The Register shall be available for inspection by the Borrower, the Issuing Bank and any Lender, at any reasonable time and from
time to time upon reasonable prior notice. In connection with any changes to the Register, if necessary, the Administrative Agent
will reflect the revisions on Annex I and forward a copy of such revised Annex I to the Borrower, the Issuing Bank
and each Lender.

 

(v)         Upon
its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred
to in Section 12.04(b) and any written consent to such assignment required by Section 12.04(b), the Administrative
Agent shall accept such Assignment and Assumption and record the information contained therein in the Register. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this Section 12.04(b).

 

(c)          (i)          Any
Lender may, without the consent of the Borrower, the Administrative Agent or the Issuing Bank, sell participations to one or more
banks or other entities other than the Borrower, any Guarantor and their Affiliates (a "Participant")
in all or a portion of such Lender's rights and obligations under this Agreement (including all or a portion of its Commitment
and the Loans owing to it); provided that (A) such Lender's obligations under this Agreement shall remain unchanged, (B)
such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrower,
the Administrative Agent, the Issuing Bank and the other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender
sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve
any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described
in the proviso to Section 12.02 that affects such Participant. In addition such agreement must provide that the Participant
be bound by the provisions of Section 12.03. Subject to Section 12.04(c)(ii), the Borrower agrees that each Participant
shall be entitled to the benefits of Section 5.01, Section 5.02 and Section 5.03 to the same extent as if
it were a Lender and had acquired its interest by assignment pursuant to Section 12.04(b). To the extent permitted by law,
each Participant also shall be entitled to the benefits of Section 12.08 as though it were a Lender, provided such
Participant agrees to be subject to Section 4.01(c) as though it were a Lender.

 

(ii)         A
Participant shall not be entitled to receive any greater payment under Section 5.01 or Section 5.03 than the applicable
Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the
participation to such Participant is made with the Borrower's prior written consent. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 5.03 unless the Borrower is notified of the participation
sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 5.03(e) as
though it were a Lender.

 

(d)          Any
Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including, without limitation, any pledge or assignment to secure obligations to a Federal Reserve
Bank, and this Section 12.04(d) shall not apply to any such pledge or assignment of a security interest; provided
that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute
any such pledgee or assignee for such Lender as a party hereto.

 

    	CREDIT AGREEMENT – Page 79

    	 

    

 

(e)          Notwithstanding
any other provisions of this Section 12.04, no transfer or assignment of the interests or obligations of any Lender or
any grant of participations therein shall be permitted if such transfer, assignment or grant would require the Borrower and the
Guarantors to file a registration statement with the SEC or to qualify the Loans under the "Blue Sky" laws of any state.

 

Section 12.05.     Survival;
Revival; Reinstatement. 

 

(a)          All
covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments
delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied
upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Loans and
issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding
that the Administrative Agent, any other Agent, the Issuing Bank or any Lender may have had notice or knowledge of any Default
or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect
as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is
outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated. The
provisions of Section 5.01, Section 5.02, Section 5.03 and Section 12.03 and Article XI shall
survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment
of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement,
any other Loan Document or any provision hereof or thereof.

 

(b)          To
the extent that any payments on the Indebtedness or proceeds of any collateral are subsequently invalidated, declared to be fraudulent
or preferential, set aside or required to be repaid to a trustee, debtor in possession, receiver or other Person under any bankruptcy
law, common law or equitable cause, then to such extent, the Indebtedness so satisfied shall be revived and continue as if such
payment or proceeds had not been received and the Administrative Agent's and the Lenders' Liens, security interests, rights, powers
and remedies under this Agreement and each Loan Document shall continue in full force and effect. In such event, each Loan Document
shall be automatically reinstated and the Borrower shall take such action as may be reasonably requested by the Administrative
Agent and the Lenders to effect such reinstatement.

 

Section 12.06.     Counterparts;
Integration; Effectiveness. 

 

(a)          This
Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute
an original, but all of which when taken together shall constitute a single contract.

 

(b)          This
Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent
constitute the entire contract among the parties relating to the subject matter hereof and thereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter hereof and thereof. THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES HERETO AND THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

(c)          Except
as provided in Section 6.01, this Agreement shall become effective when it shall have been executed by the Administrative
Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures
of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall
be effective as delivery of a manually executed counterpart of this Agreement.

 

    	CREDIT AGREEMENT – Page 80

    	 

    

 

(d)          Electronic
Execution of Assignments. The words "execution," "signed," "signature," and words of like import
in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form,
each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic
Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar
state laws based on the Uniform Electronic Transactions Act.

 

Section 12.07.     Severability.
Any provision of this Agreement or any other Loan Document held to be invalid, illegal or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the
validity, legality and enforceability of the remaining provisions hereof or thereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

 

Section 12.08.     Right
of Setoff. If an Event of Default shall have occurred and be continuing,
each Lender, the Issuing Bank, and each of their respective Affiliates are hereby authorized at any time and from time to time,
to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional
or final, in whatever currency) at any time held and other obligations (of whatsoever kind and in whatever currency, including,
without limitation, obligations under Swap Agreements) at any time owing by such Lender or the Issuing Bank, or any such Affiliate,
to or for the credit or the account of the Borrower, any Subsidiary or Guarantor against any and all of the obligations of the
Borrower, any Subsidiary or Guarantor now or hereafter existing under this Agreement or any other Loan Documents to such Lender
or the Issuing Bank or their respective Affiliates, irrespective of whether or not such Lender, Issuing Bank or Affiliate shall
have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower, such Subsidiary
or such Guarantor may be contingent or unmatured or are owed to a branch, office or Affiliate of such Lender or the Issuing Bank
different from the branch, office or Affiliate holding such deposit or obligated on such indebtedness; provided that in
the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately
to the Administrative Agent for further application in accordance with the provisions of Section
2.11 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held
in trust for the benefit of the Administrative Agent, the Issuing Bank, and the Lenders, and (y) the Defaulting Lender shall provide
promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender
as to which it exercised such right of setoff. The rights of each Lender, each Issuing Bank and their respective Affiliates under
this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, the Issuing Bank
or their respective Affiliates may have. The rights of each Lender under this Section
12.08 are in addition to other rights and remedies (including other rights of setoff) which such Lender or its Affiliates
may have. Each Lender and the Issuing Bank agrees to notify the Borrower and the Administrative Agent promptly after any such
setoff and application, provided that the failure to give
such notice shall not affect the validity of such setoff and application.

 

Section 12.09.     Governing
Law; Jurisdiction; Consent to Service of Process.

 

(a)          Governing
Law. This Agreement shall be governed by, and construed in accordance with, the law of the State of Texas.

 

(b)          Submission
to Jurisdiction. The Borrower and each other Loan Party irrevocably and unconditionally submits, for itself and its property,
to the nonexclusive jurisdiction of the courts of the State of Texas sitting in Harris County and of the United States District
Court of the Southern District of Texas, and any appellate court from any thereof, in any action or proceeding arising out of
or relating to this Agreement or any other Loan Document, or for recognition or enforcement of any judgment, and each of the parties
hereto irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined
in such Texas State court or, to the fullest extent permitted by applicable law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this Agreement or in any other Loan Document shall affect
any right that the Administrative Agent, any Lender or the Issuing Bank may otherwise have to bring any action or proceeding relating
to this Agreement or any other Loan Document against the Borrower or any other Loan Party or its properties in the courts of any
jurisdiction.

 

    	CREDIT AGREEMENT – Page 81

    	 

    

 

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

 

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

 

Section 12.10.     Headings.
Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

 

Section 12.11.     Confidentiality.
Each of the Administrative Agent, the Issuing Bank and the Lenders agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its and its Affiliates' respective partners, directors, managers,
officers, advisors, employees and agents, including accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep
such Information confidential), (b) to the extent requested by any regulatory authority, (c) to the extent required by applicable
laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement or any other Loan Document,
(e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any suit, action or proceeding
relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an
agreement containing provisions substantially the same as those of this Section
12.11, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights
or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any Swap Agreement relating
to the Borrower and its obligations, (g) with the consent of the Borrower or (h) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section 12.11
or (ii) becomes available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis from
a source other than the Borrower. For the purposes of this Section
12.11, "Information" means all information received from the Borrower or any Subsidiary relating
to the Borrower or any Subsidiary and their businesses, other than any such information that is available to the Administrative
Agent, the Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by the Borrower or a Subsidiary; provided
that, in the case of information received from the Borrower or any Subsidiary after the date hereof, such information is clearly
identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided
in this Section 12.11 shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information
as such Person would accord to its own confidential information. 

 

    	CREDIT AGREEMENT – Page 82

    	 

    

 

Section 12.12.     Interest
Rate Limitation. It is the intention of the parties hereto that
each Lender shall conform strictly to usury laws applicable to it. Accordingly, if the transactions contemplated hereby would
be usurious as to any Lender under laws applicable to it (including the laws of the United States of America and the State of
Texas or any other jurisdiction whose laws may be mandatorily applicable to such Lender notwithstanding the other provisions of
this Agreement), then, in that event, notwithstanding anything to the contrary in any of the Loan Documents or any agreement entered
into in connection with or as security for the Notes, it is agreed as follows: (i) the aggregate of all consideration which constitutes
interest under law applicable to any Lender that is contracted for, taken, reserved, charged or received by such Lender under
any of the Loan Documents or agreements or otherwise in connection with the Notes shall under no circumstances exceed the maximum
amount allowed by such applicable law, and any excess shall be canceled automatically and if theretofore paid shall be credited
by such Lender on the principal amount of the Indebtedness (or, to the extent that the principal amount of the Indebtedness shall
have been or would thereby be paid in full, refunded by such Lender to the Borrower); and (ii) in the event that the maturity
of the Notes is accelerated by reason of an election of the holder thereof resulting from any Event of Default under this Agreement
or otherwise, or in the event of any required or permitted prepayment, then such consideration that constitutes interest under
law applicable to any Lender may never include more than the maximum amount allowed by such applicable law, and excess interest,
if any, provided for in this Agreement or otherwise shall be canceled automatically by such Lender as of the date of such acceleration
or prepayment and, if theretofore paid, shall be credited by such Lender on the principal amount of the Indebtedness (or, to the
extent that the principal amount of the Indebtedness shall have been or would thereby be paid in full, refunded by such Lender
to the Borrower). All sums paid or agreed to be paid to any Lender for the use, forbearance or detention of sums due hereunder
shall, to the extent permitted by law applicable to such Lender, be amortized, prorated, allocated and spread throughout the stated
term of the Loans evidenced by the Notes until payment in full so that the rate or amount of interest on account of any Loans
hereunder does not exceed the maximum amount allowed by such applicable law. If at any time and from time to time (i) the amount
of interest payable to any Lender on any date shall be computed at the Highest Lawful Rate applicable to such Lender pursuant
to this Section 12.12 and (ii) in respect of any subsequent
interest computation period the amount of interest otherwise payable to such Lender would be less than the amount of interest
payable to such Lender computed at the Highest Lawful Rate applicable to such Lender, then the amount of interest payable to such
Lender in respect of such subsequent interest computation period shall continue to be computed at the Highest Lawful Rate applicable
to such Lender until the total amount of interest payable to such Lender shall equal the total amount of interest which would
have been payable to such Lender if the total amount of interest had been computed without giving effect to this Section
12.12. To the extent that Chapter 303 of the Texas Finance Code is relevant for the purpose of determining the Highest
Lawful Rate applicable to a Lender, such Lender elects to determine the applicable rate ceiling under such Chapter by the weekly
ceiling from time to time in effect. Chapter 346 of the Texas Finance Code does not apply to the Borrower's obligations hereunder.

 

Section 12.13.     EXCULPATION
PROVISIONS. EACH OF THE PARTIES HERETO SPECIFICALLY AGREES THAT
IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE
TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS AGREEMENT AND IS FULLY INFORMED AND HAS FULL
NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL
COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND
HAS RECEIVED THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND THAT IT RECOGNIZES THAT
CERTAIN OF THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT IN SOME
ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO AGREES AND
COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT "CONSPICUOUS."

 

Section 12.14.     Collateral
Matters; Swap Agreements; Cash Management Agreements. The benefit
of the Security Instruments and of the provisions of this Agreement relating to any collateral securing the Indebtedness shall
also extend to and be available to any Swap Lender and any Cash Management Party with respect to amounts payable by the Borrower,
any Subsidiary, and any Guarantor under any Swap Agreement or Secured Cash Management Agreement on a pari passu basis with respect
to repayment of principal outstanding on Loans due under this Agreement. Except as otherwise provided in Section
12.02(b)(v), no Swap Lender or Cash Management Party shall have any voting rights under any Loan Document as a result
of the existence of obligations owed to it under any such Swap Agreements or Secured Cash Management Agreements. All Swap Agreements
between the Borrower or any Subsidiary and any Swap Lender are independent agreements governed by the terms thereof and will remain
in full force and effect, unaffected by any repayment, prepayment, acceleration, reduction, increase or change in the terms of
the Loans created under this Agreement except as otherwise provided in said Swap Agreement, and any payoff statement from any
Lender relating to this Agreement shall not apply to said Swap Agreement with such Swap Lender except as otherwise expressly provided
in such payoff statement. All Secured Cash Management Agreements between the Borrower and any Cash Management Party are independent
agreements governed by the terms thereof and will remain in force and effect, unaffected by any repayment, prepayment, acceleration,
reduction, increase or change in the terms of the Loans created under this Agreement except as otherwise provided in said Secured
Cash Management Agreement, and any payoff statement from any Lender relating to this Agreement shall not apply to said Secured
Cash Management Agreement with such Cash Management Party except as otherwise expressly provided in such payoff statement.

 

    	CREDIT AGREEMENT – Page 83

    	 

    

 

Section 12.15.     No
Third Party Beneficiaries. This Agreement, the other Loan Documents,
and the agreement of the Lenders to make Loans and the Issuing Bank to issue, amend, renew or extend Letters of Credit hereunder
are solely for the benefit of the Borrower, and no other Person (including, without limitation, any Subsidiary of the Borrower,
any obligor, contractor, subcontractor, supplier or materialman) shall have any rights, claims, remedies or privileges hereunder
or under any other Loan Document against the Administrative Agent, any other Agent, the Issuing Bank or any Lender for any reason
whatsoever. There are no third party beneficiaries.

 

ARTICLE
XIII

Arbitration

 

Section 13.01.     Dispute
Resolution. This section contains a jury waiver, arbitration clause, and a class action waiver. READ IT CAREFULLY.

 

This dispute resolution provision
shall supersede and replace any prior "Jury Waiver," "Judicial Reference," "Class Action Waiver,"
"Arbitration," "Dispute Resolution," or similar alternative dispute agreement or provision between or among
the parties.

 

Section 13.02.     Jury
Trial Waiver; Class Action Waiver. As permitted by applicable law, each party
waives their respective rights to a trial before a jury in connection with any Dispute
(as "Dispute" is hereinafter defined), and Disputes shall be resolved by a judge sitting without a jury.
If a court determines that this provision is not enforceable for any reason and at any time prior to trial of the Dispute, but
not later than 30 days after entry of the order determining this provision is unenforceable, any party shall be entitled to move
the court for an order compelling arbitration and staying or dismissing such litigation pending arbitration ("Arbitration
Order"). If permitted by applicable law, each party also waives the right to litigate in court or an arbitration
proceeding any Dispute as a class action, either as a member of a class or as a representative, or to act as a private
attorney general.

 

Section 13.03.     Arbitration.
If a claim, dispute, or controversy arises with respect to this Agreement, related agreements, or any other agreement or business
relationship whether or not related to the subject matter of this Agreement (all of the foregoing, a "Dispute"),
and only if a jury trial waiver is not permitted by applicable law or ruling by a court, either party may require that the Dispute
be resolved by binding arbitration before a single arbitrator. By agreeing to arbitrate a Dispute, each party gives up any
right that party may have to a jury trial, as well as other rights t party would have in court that are not available or are more
limited in arbitration, such as the rights to discovery and to appeal.

 

Arbitration
shall be commenced by filing a petition with, and in accordance with the applicable arbitration rules of, JAMS or National Arbitration
Forum ("Administrator") as selected by the initiating party. If the parties agree, arbitration may be
commenced by appointment of a licensed attorney who is selected by the parties and who agrees to conduct the arbitration without
an Administrator. Disputes include matters (i) relating to a deposit account, application for or denial of credit, enforcement
of any of the obligations either party has to the other, compliance with applicable laws and/or regulations, performance or services
provided under any agreement by any party, (ii) based on or arising from an alleged tort, or (iii) involving either party's employees,
agents, affiliates, or assigns.  However, Disputes do not
include the validity, enforceability, meaning, or scope of this arbitration provision and such matters may be determined
only by a court. If a third party is a party to a Dispute, each
party consents to including the third party in the arbitration proceeding for resolving the Dispute with the third party.
Venue for the arbitration proceeding shall be at a location determined by mutual agreement of the parties or, if no agreement,
in the city and state where lender or the bank is headquartered.

 

    	CREDIT AGREEMENT – Page 84

    	 

    

 

If a court orders
arbitration of a Dispute, the party to the Dispute that did not seek the Arbitration Order shall commence arbitration. The party
that sought the Arbitration Order may commence arbitration, but shall have no obligation to do so, and shall not in any way be
adversely prejudiced by initiating or participating in litigation or electing not to commence arbitration. The arbitrator shall
(i) hear and rule on appropriate dispositive motions for judgment on the pleadings, for failure to state a claim, or for full
or partial summary judgment; (ii) render a decision and any award applying applicable law; (iii) give effect to any limitations
period in determining any Dispute or defense; (iv) enforce the doctrines of compulsory counterclaim, res judicata, and collateral
estoppel, if applicable; (v) with regard to motions and the arbitration hearing, apply rules of evidence governing civil cases;
and (vi) apply the law of the state specified in the agreement giving rise to the Dispute. Filing of a petition for arbitration
shall not prevent any party from (i) seeking and obtaining from a court of competent jurisdiction (notwithstanding ongoing arbitration)
provisional or ancillary remedies including but not limited to injunctive relief, property preservation orders, foreclosure, eviction,
attachment, replevin, garnishment, and/or the appointment of a receiver, (ii) pursuing non-judicial foreclosure, or (iii) availing
itself of any self-help remedies such as setoff and repossession. The exercise of such rights shall not constitute a waiver of
the right to submit any Dispute to arbitration.

 

Judgment upon
an arbitration award may be entered in any court having jurisdiction, except that, if the arbitration award exceeds $4,000,000,
any party shall be entitled to a de novo appeal of the award before a panel of three arbitrators. To allow for such appeal, if
the award (including Administrator, arbitrator, and attorney's fees and costs) exceeds $4,000,000, the arbitrator will issue a
written, reasoned decision supporting the award, including a statement of authority and its application to the Dispute. A request
for de novo appeal must be filed with the arbitrator within 30 days following the date of the arbitration award; if such a request
is not made within that time period, the arbitration decision shall become final and binding. On appeal, the arbitrators shall
review the award de novo, meaning that they shall reach their own findings of fact and conclusions of law rather than deferring
in any manner to the original arbitrator. Appeal of an arbitration award shall be pursuant to the rules of the Administrator or,
if the Administrator has no such rules, then the JAMS arbitration appellate rules shall apply.

 

Arbitration
under this provision concerns a transaction involving interstate commerce and shall be governed by the Federal Arbitration Act,
9 U.S.C. § 1 et seq. This arbitration provision shall survive any termination, amendment, or expiration of this Agreement.
If the terms of this provision vary from the Administrator's rules, this arbitration provision shall control.

 

Section 13.04.     Reliance.
Each party (i) certifies that no one has represented to such party that the other party would not seek to enforce jury and class
action waivers in the event of suit, and (ii) acknowledges that it and the other party have been induced to enter into this Agreement
by, among other things, the mutual waivers, agreements, and certifications in this section.

 

ARTICLE
XIV

Notices

 

Section 14.01.     USA
Patriot Act Notice. Each Lender hereby notifies the Borrower that
pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the "Act"),
it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and
address of the Borrower and other information that will allow such Lender to identify the Borrower in accordance with the Act.

 

Section 14.02.     ENTIRE
AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT
THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

 

[SIGNATURES
BEGIN NEXT PAGE]

 

    	CREDIT AGREEMENT – Page 85

    	 

    

 

The parties
hereto have caused this Agreement to be duly executed as of the day and year first above written.

 

	BORROWER:	YUMA EXPLORATION
    AND PRODUCTION COMPANY, INC.
	 	 
	 	By:	/s/ Kirk Sprunger
	 	Kirk Sprunger
	 	Secretary and Treasurer

 

    	CREDIT AGREEMENT – Signature Page

    	 

    

 

	ADMINISTRATIVE AGENT:	AMEGY BANK NATIONAL ASSOCIATION
	as Administrative Agent	 
	 	 
	 	By:	/s/ William Robinson
	 	William Robinson
	 	Vice President 
	 	 
	LENDER:	AMEGY BANK NATIONAL ASSOCIATION
	 	 
	 	By:	/s/ William Robinson
	 	William Robinson
	 	Vice President

 

    	CREDIT AGREEMENT – Signature Page

    	 

    

 

ANNEX I

LIST OF MAXIMUM CREDIT AMOUNTS

 

Aggregate Maximum Credit Amounts

 

	Name of Lender	 	Applicable Percentage	 	 	Maximum Credit Amount	 
	Amegy Bank National Association	 	 	100.00	%	 	$	125,000,000	 
	TOTAL	 	 	100.00	%	 	$	125,000,000	 

 

    	ANNEX I, List of Maximum Credit Amounts – Solo Page

    	 

    

 

EXHIBIT
A

FORM OF NOTE

 

	$_____________	____________, 20__

 

FOR VALUE RECEIVED,
YUMA EXPLORATION AND PRODUCTION COMPANY, INC., a Delaware corporation (the "Borrower") hereby promises
to pay to the order of _____________________ (the "Lender"), at the principal office of Amegy Bank National
Association (the "Administrative Agent"), the principal sum of _________________ Dollars ($_________)
(or such lesser amount as shall equal the aggregate unpaid principal amount of the Loans made by the Lender to the Borrower under
the Credit Agreement, as hereinafter defined), in lawful money of the United States of America and in immediately available funds,
on the dates and in the principal amounts provided in the Credit Agreement, and to pay interest on the unpaid principal amount
of each such Loan, at such office, in like money and funds, for the period commencing on the date of such Loan until such Loan
shall be paid in full, at the rates per annum and on the dates provided in the Credit Agreement.

 

The date, amount,
Type, interest rate, Interest Period and maturity of each Loan made by the Lender to the Borrower, and each payment made on account
of the principal thereof, shall be recorded by the Lender on its books and, prior to any transfer of this Note, may be endorsed
by the Lender on the schedules attached hereto or any continuation thereof or on any separate record maintained by the Lender.
Failure to make any such notation or to attach a schedule shall not affect any Lender's or the Borrower's rights or obligations
in respect of such Loans or affect the validity of such transfer by any Lender of this Note.

 

This Note is
one of the Notes referred to in the Credit Agreement dated as of August 10, 2011 among the Borrower, the Administrative Agent,
and the other agents and lenders signatory thereto (including the Lender), and evidences Loans made by the Lender thereunder (such
Credit Agreement as the same may be amended, supplemented or restated from time to time, the "Credit Agreement").
Capitalized terms used in this Note have the respective meanings assigned to them in the Credit Agreement.

 

This Note is
issued pursuant to, and is subject to the terms and conditions set forth in, the Credit Agreement and is entitled to the benefits
provided for in the Credit Agreement and the other Loan Documents. The Credit Agreement provides for the acceleration of the maturity
of this Note upon the occurrence of certain events, for prepayments of Loans upon the terms and conditions specified therein and
other provisions relevant to this Note.

 

THIS NOTE SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.

 

	 	YUMA EXPLORATION AND PRODUCTION COMPANY, INC.
	 	 
	 	By:  	 
	 	Name:   	 
	 	Title:  	 

 

    	EXHIBIT A, Form of Note – Page 1

    	 

    

 

EXHIBIT
B

FORM OF BORROWING REQUEST

 

______________,
20__

 

YUMA EXPLORATION
AND PRODUCTION COMPANY, INC., a Delaware corporation (the "Borrower"), pursuant to Section 2.03 of
the Credit Agreement dated as of August 10, 2011 (together with all amendments, restatements, supplements or other modifications
thereto, the "Credit Agreement") among the Borrower, Amegy Bank National Association, as Administrative
Agent and the other agents and lenders (the "Lenders") which are or become parties thereto (unless otherwise
defined herein, each capitalized term used herein is defined in the Credit Agreement), hereby requests a Borrowing as follows:

 

(i)          Aggregate
amount of the requested Borrowing is $__________; 

 

(ii)         Date
of such Borrowing is ______________, 20__;

 

(iii)        Requested
Borrowing is to be [an ABR Borrowing] [a Eurodollar Borrowing];

 

(iv)        In
the case of a Eurodollar Borrowing, the initial Interest Period applicable thereto is _____________;

 

(v)         Amount
of Borrowing Base in effect on the date hereof is $______________;

 

(vi)        Total
Revolving Credit Exposures on the date hereof (i.e., outstanding principal amount of Loans and total LC Exposure) is $_____________;
and

 

(vii)       Pro
forma total Revolving Credit Exposures (giving effect to the requested Borrowing) is $______________; and

 

(viii)      Location
and number of the Borrower's account to which funds are to be disbursed, which shall comply with the requirements of Section
2.05 of the Credit Agreement, is as follows:

 

_____________________________

_____________________________

_____________________________

_____________________________

 

    	EXHIBIT B, Form of Borrowing Request – Page 1

    	 

    

 

The undersigned
certifies that he/she is the _____________ of the Borrower, and that as such he/she is authorized to execute this certificate
on behalf of the Borrower. The undersigned further certifies, represents and warrants on behalf of the Borrower that the Borrower
is entitled to receive the requested Borrowing under the terms and conditions of the Credit Agreement.

 

	 	YUMA EXPLORATION AND PRODUCTION COMPANY, INC.
	 	 
	 	By:  	 
	 	Name:  	 
	 	Title:  	 

 

    	EXHIBIT B, Form of Borrowing Request – Page 2

    	 

    

 

EXHIBIT
C

FORM OF INTEREST ELECTION REQUEST

 

_______________,
20__

 

YUMA EXPLORATION
AND PRODUCTION COMPANY, INC., a Delaware corporation (the "Borrower"), pursuant to Section 2.04 of
the Credit Agreement dated as of August 10, 2011 (together with all amendments, restatements, supplements or other modifications
thereto, the "Credit Agreement") among the Borrower, Amegy Bank National Association, as Administrative
Agent and the other agents and lenders which are or become parties thereto (unless otherwise defined herein, each capitalized
term used herein is defined in the Credit Agreement), hereby makes an Interest Election Request as follows:

 

(i)          The
Borrowing to which this Interest Election Request applies, and if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information specified pursuant
to (iii) and (iv) below shall be specified for each resulting Borrowing) is _______________;

 

(ii)         The
effective date of the election made pursuant to this Interest Election Request is _____________, 20__;[and]

 

(iii)        The
resulting Borrowing is to be [an ABR Borrowing] [a Eurodollar Borrowing][; and]

 

[(iv)       [If
the resulting Borrowing is a Eurodollar Borrowing] The Interest Period applicable to the resulting Borrowing after giving effect
to such election is _______________].

 

The undersigned
certifies that he/she is the _______________ of the Borrower, and that as such he/she is authorized to execute this certificate
on behalf of the Borrower. The undersigned further certifies, represents and warrants on behalf of the Borrower that the Borrower
is entitled to receive the requested continuation or conversion under the terms and conditions of the Credit Agreement.

 

	 	YUMA EXPLORATION AND PRODUCTION COMPANY, INC.
	 	 
	 	By:  	 
	 	Name:  	 
	 	Title:  	 

 

    	EXHIBIT C, Form of Interest Election Request – Page 1

    	 

    

 

EXHIBIT
D

FORM OF

COMPLIANCE CERTIFICATE

 

The undersigned
hereby certifies that he/she is the _____________________________ of YUMA EXPLORATION AND PRODUCTION COMPANY, INC., a Delaware
corporation (the "Borrower"), and that as such he/she is authorized to execute this certificate on behalf
of the Borrower. With reference to the Credit Agreement dated as of August 10, 2011 (together with all amendments, restatements,
supplements or other modifications thereto being the "Agreement") among the Borrower, Amegy Bank National
Association, as Administrative Agent, and the other agents and lenders (the "Lenders") which are or become
a party thereto, and such Lenders, the undersigned represents and warrants as follows (each capitalized term used herein having
the same meaning given to it in the Agreement unless otherwise specified):

 

(a)          The
representations and warranties of the Borrower contained in Article VII of the Agreement and in the Loan Documents and
otherwise made in writing by or on behalf of the Borrower pursuant to the Agreement and the Loan Documents were true and correct
when made, and are repeated at and as of the time of delivery hereof and are true and correct in all material respects at and
as of the time of delivery hereof, except to the extent such representations and warranties are expressly limited to an earlier
date or the Majority Lenders have expressly consented in writing to the contrary.

 

(b)          The
Borrower has performed and complied with all agreements and conditions contained in the Agreement and in the Loan Documents required
to be performed or complied with by it prior to or at the time of delivery hereof [or specify default and describe].

 

(c)          Since
_________________, 20__, no change has occurred, either in any case or in the aggregate, in the condition, financial or otherwise,
of the Borrower or any Subsidiary which could reasonably be expected to have a Material Adverse Effect [or specify event].

 

(d)          There
exists no Default or Event of Default [or specify Default and describe].

 

(e)          Attached
hereto are the detailed computations necessary to determine whether the Borrower is in compliance with Section 9.01 and
Section 8.14 as of the end of the [fiscal quarter][fiscal year] ending _______________.

 

EXECUTED AND
DELIVERED this _________ day of __________, 20__.

 

	 	YUMA EXPLORATION AND PRODUCTION COMPANY, INC.
	 	 
	 	By:  	 
	 	Name:  	 
	 	Title:  	 

 

    	EXHIBIT D, Form of Compliance Certificate – Page 1

    	 

    

 

For the Quarter/Year
ended ___________________("Statement Date")

 

SCHEDULE
2

to the Compliance
Certificate

($ in 000's)

 

	I.	Section 9.01(a) – Interest Coverage Ratio.	 
	 	 	 	 	 
	 	A.	EBITDA	 
	 	 	 	 	 
	 	 	1.	net income, less	$______________
	 	 	 	 	 
	 	 	2.	non-cash revenue or expense associated with Swap
    Agreements resulting from ASC 815, less	($_____________)
	 	 	 	 	 
	 	 	3.	income or plus loss from discontinued operations
    and extraordinary items, plus	($_____________)
	 	 	 	 	 
	 	 	4.	income taxes, plus	$______________
	 	 	 	 	 
	 	 	5.	interest expense, plus	$______________
	 	 	 	 	 
	 	 	6.	depreciation, plus	$______________
	 	 	 	 	 
	 	 	7.	depletion, plus	$______________
	 	 	 	 	 
	 	 	8.	amortization, plus	$______________
	 	 	 	 	 
	 	 	9.	non-cash and extraordinary items	$______________
	 	 	 	 	 
	 	 	10.	Total EBITDA	$______________
	 	 	 	 	 
	 	B.	Interest Expense	$______________
	 	 	 	 	 
	 	C.	Ratio (Line I.A.10  ̧
    Line I.B)	_____ to 1.0
	 	 	 	 
	 	 	Minimum Required:  2.50
    to 1.0	 
	 	 	 	 	 
	II.	Section 9.01(b) – Ratio of Funded
    Debt to EBITDA.	 
	 	 	 	 	 
	 	A.	Funded Debt	 
	 	 	 	 	 
	 	 	1.	All outstanding liabilities for borrowed money plus
    other interest-bearing liabilities, including current and long-term liabilities	$______________
	 	 	 	 	 
	 	B.	EBITDA (amount on Line I.A.10)	$______________
	 	 	 	 
	 	C.	Ratio (Line II.A.1  ̧
    Line II.B)	_____ to 1.0
	 	 	 	 
	 	 	Maximum Permitted:  3.50
    to 1.0	 

 

    	EXHIBIT D, Form of Compliance Certificate – Page 2

    	 

    

 

	III.	Section 9.01(c) –
    Current Ratio	 
	 	 	 	 
	 	A.	Current assets (including Borrowing Base availability):	$______________
	 	 	 	 
	 	B.	Current liabilities (excluding current maturities
    of Indebtedness owed to Lenders and intercompany payables which the Borrower owes The Yuma Companies, Inc.)	$______________
	 	 	 	 
	 	C.	Ratio (Line III.A  ̧
    Line III.B)	_____ to 1.0
	 	 	 	 
	 	 	Minimum Required:  1.0 to 1.0	 

 

    	EXHIBIT D, Form of Compliance Certificate – Page 3

    	 

    

 

EXHIBIT
E

SECURITY INSTRUMENTS

 

		1.	Guaranty Agreement dated as of August
                                         10, 2011 by the Guarantor, in favor of the Administrative Agent and the Lenders.

 

		2.	Security Agreement dated as of August
                                         10, 2011 by Borrower in favor of the Administrative Agent and the Lenders.

 

		3.	Financing Statement in respect of item
                                         2.

 

		4.	Deed of Trust, Mortgage, Assignment of
                                         As-Extracted Collateral, Security Agreement and Financing Statement dated as of August
                                         10, 2011 by the Borrower, as mortgagor, in favor of Stephen Kennedy, as Trustee, for
                                         the benefit the Administrative Agent, the Lenders and others.

 

		5.	Financing Statement in respect of item
                                         5.

 

    	EXHIBIT E, Security Instruments – Page Solo

    	 

    

 

EXHIBIT
F

FORM OF ASSIGNMENT AND ASSUMPTION

 

This Assignment
and Assumption (the "Assignment and Assumption") is dated as of the Effective Date set forth below and
is entered into by and between [Insert name of Assignor] (the "Assignor") and [Insert name of Assignee]
(the "Assignee"). Capitalized terms used but not defined herein shall have the meanings given to them
in the Credit Agreement identified below (as amended, the "Credit Agreement"), receipt of a copy of which
is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby
agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

 

For an agreed
consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases
and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as
of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor's rights and obligations
in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the
extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the
Assignor under the respective facilities identified below (including any letters of credit and guarantees included in such facilities)
and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right
of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with
the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby
or in any way based on or related to any of the foregoing, including contract claims, tort claims, malpractice claims, statutory
claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i)
above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively
as the "Assigned Interest"). Such sale and assignment is without recourse to the Assignor and, except
as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

 

1.         Assignor:                ______________________________

 

2.          Assignee:                ______________________________

   [and is an Affiliate/Approved Fund of [identify Lender]1
]

 

3.          Borrower:                Yuma
Exploration and Production Company, Inc.

 

4.          Administrative
Agent:    Amegy Bank National Association, as the administrative agent under the Credit Agreement

 

		5.
                                     Credit Agreement:	The Credit Agreement dated
as of August 10, 2011 among Yuma Exploration and Production Company, Inc., the Lenders parties thereto, Amegy Bank National Association,
as Administrative Agent, and the other agents parties thereto

 

6.          Assigned
Interest:

 

	Commitment Assigned	 	Aggregate Amount of

    Commitment/Loans for all

    Lenders	 	Amount of

    Commitment/Loans

    Assigned	 	Percentage Assigned of

    Commitment/Loans2
	 	 	$	 	$	 	%
	 	 	$	 	$	 	%
	 	 	$	 	$	 	%

 

 

1
Select as applicable.

2
Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders
thereunder.

 

    	EXHIBIT F, Form of Assignment and Assumption – Page 1

    	 

    

 

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

 

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

 

	 	ASSIGNOR
	 	 
	 	[NAME OF ASSIGNOR]
	 	 	 
	 	By:	 
	 	Name: 	 
	 	Title:	 
	 	 
	 	ASSIGNEE
	 	 
	 	[NAME OF ASSIGNEE]
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 

 

    	EXHIBIT F, Form of Assignment and Assumption – Page 2

    	 

    

 

	[Consented to and]3  Accepted:	 
	 	 
	Amegy Bank National Association, as	 
	  Administrative Agent	 
	 	 	 
	By:	 	 
	Name: 	 	 
	Title:	 	 
	 	 	 
	[Consented to:]4	 
	 	 
	[NAME OF RELEVANT PARTY]	 
	 	 
	By:	 	 
	Name:	 	 
	Title:	 	 

 

 

3
To be added only if the consent of the Administrative Agent is required by the terms of
the Credit Agreement.

4
To be added only if the consent of the Borrower and/or other parties (e.g. Issuing Bank)
is required by the terms of the Credit Agreement.

  

    	EXHIBIT F, Form of Assignment and Assumption – Page 3

    	 

    

 

ANNEX 1

 

STANDARD TERMS
AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

 

1. Representations
and Warranties. 

 

1.1 Assignor.
The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned
Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has
taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated
hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection
with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries
or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower,
any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

 

1.2 Assignee.
The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute
and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under
the Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit Agreement that are required to be satisfied
by it in order to acquire the Assigned Interest and become a Lender, (iii) from and after the Effective Date, it shall be bound
by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations
of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned
Interest and either it, or the person exercising discretion in making its decision to acquire the Assigned Interest, is experienced
in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 8.01 thereof, as applicable, and such other documents and information
as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to
purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance
on the Administrative Agent or any other Lender, and (vi) if it is a Foreign Lender, attached to the Assignment and Assumption
is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed
by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor
or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their
terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

 

2. Payments.
From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including
payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective
Date and to the Assignee for amounts which have accrued from and after the Effective Date.

 

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

  

    	EXHIBIT F, Form of Assignment and Assumption – Page 4

    	 

    

 

EXHIBIT
G

 

AFFIDAVIT
OF PAYMENT OF TRADE BILLS

 

		To:	Amegy Bank National Association,
as Administrative Agent

 

Reference is
made to that certain Credit Agreement among Yuma Exploration and Production Company, Inc., the Lenders from time to time party
thereto, and Amegy Bank National Association, as Administrative Agent dated as of August 10, 2011 (the "Credit Agreement").
The terms used herein shall have the same meanings as provided therefor in the Credit Agreement, unless the context hereof otherwise
requires or provides.

 

The undersigned
_________________, the ________________ of Borrower, HEREBY CERTIFIES individually and on behalf of Borrower to the Administrative
Agent that, after reasonable investigation and except to the extent indicated on Schedule I (if no Schedule I is
attached, then there are no such exceptions), he has no knowledge of the existence of unpaid debts owing to Persons for the furnishing
of goods, labor, services or materials in connection with the Mortgaged Property, which debts are more than 90 days past due and
which debts if unpaid could result in the creation of a lien against such Mortgaged Property.

 

Executed on
the date of the notary certification below to be effective as of ________________, 20__.

 

	 	________________, Individually
    and on behalf of Yuma Exploration and Production Company, Inc.

 

	STATE OF TEXAS	§
	 	§
	COUNTY OF HARRIS	§

 

SWORN TO AND
SUBSCRIBED before me on ________________, 20__, by ______________________________.

 

	 	Notary Public, State of Texas

  

    	EXHIBIT G, Affidavit Of Payment Of Trade Bills – Page Solo

    	 

    

 

EXHIBIT
H

 

PROPERTY
CERTIFICATE

 

		TO:	Amegy Bank National Association,
as Administrative Agent

 

Reference is
made to that certain Credit Agreement dated as of August 10, 2011 (the "Credit Agreement"), among Yuma
Exploration and Production Company, Inc., the Lenders from time to time party thereto, and Amegy Bank National Association, as
Administrative Agent. The defined terms used in this Certificate shall have the same meanings as provided therefor in the Credit
Agreement, unless the context hereof otherwise requires or provides. This is the Property Certificate referred to in the Credit
Agreement.

 

The Borrower
has mortgaged to the Administrative Agent its entire interest in the Mortgaged Property. The Borrower HEREBY CERTIFIES
to the Administrative Agent that true, complete and correct responses for items A through D below for each Mortgaged Property
are described on the exhibit to this Property Certificate:

 

A.           Well,
lease or unit name, as appropriate.

 

B.           Operator's
name and address.

 

C.           First
purchaser's name and address.

 

D.           Lease
number or other designation used by payor to identify lease or leases in accounting for revenues, costs and joint interest transactions.

 

All of the information
listed on the attachments to this Property Certificate is true, complete and correct in all material respects. This Property Certificate
is given for the purpose of inducing the Lenders to enter into the Credit Agreement, and the undersigned recognizes that the Lenders
are relying upon this Property Certificate in connection with the transactions contemplated by the Loan Agreement and that but
for the statements made herein, the Lenders would not enter into the Credit Agreement.

 

EXECUTED on
the date of the notary certification below to be effective as of August 10, 2011.

  

	 	YUMA EXPLORATION AND PRODUCTION COMPANY, INC.
	 	 	 
	 	By	 
	 	Name: 	 
	 	Title:	 

 

SWORN TO AND
SUBSCRIBED before me this _____day of August, 2011, by _________________, the _______________ of Yuma Exploration and Production
Company, Inc., a Delaware corporation, on behalf of said corporation.

 

	 	Notary Public in and for
	 	the State of Texas

  

    	EXHIBIT H, Property Certificate – Page Solo

    	 

    

 

EXHIBIT
I

 

RECONCILIATION
SCHEDULE

 

		TO:	Amegy Bank National Association,
as Administrative Agent

 

Reference is
made to that certain Credit Agreement among Yuma Exploration and Production Company, Inc., the Lenders from time to time party
thereto, and Amegy Bank National Association, as Administrative Agent dated as of August 10, 2011 (the "Credit Agreement").
The defined terms used herein have the same meanings as are provided in the Credit Agreement. This is the Reconciliation Schedule
described in the Credit Agreement.

 

The Borrower
has previously furnished the Administrative Agent with a reserve appraisal prepared by ________________________________, dated
as of __________, 20__ (the "Reserve Appraisal"), which appraises Oil and Gas Properties owned by the
Borrower. The names on the Oil and Gas Properties listed on the Reserve Appraisal vary from the names of the Oil and Gas Properties
mortgaged to the Administrative Agent pursuant to the Mortgages. Attached to this Reconciliation Schedule is a chart which reconciles
the discrepancies in these names. The undersigned certifies individually and on behalf of the Borrower as follows:

 

		(a)	Each well and unit that is described
                                         on the exhibits attached to the Mortgages is also listed in the Reserve Appraisal and
                                         on the attached reconciliation chart.

 

		(b)	The property listed in column A
                                         of the attached reconciliation chart which has the same number as the property listed
                                         in column B of the attached reconciliation chart is one and the same property.

 

IN WITNESS WHEREOF,
the undersigned has executed this Reconciliation Schedule as of ________________, 20__.

 

	 	_________________, Individually
    and as _____________ of Yuma Exploration and Production Company, Inc.

  

    	EXHIBIT I, Reconciliation Schedule Page1

    	 

    

 

PROPERTY
RECONCILIATION CHART

 

The information
listed in column A is reproduced exactly from the Reserve Appraisal. The information listed in column B is reproduced exactly
from the descriptions attached to the Mortgages. The property listed in column A which has the same number as the property listed
in column B is one and the same property. If a property in column B is left blank, it is not mortgaged to Lender.

 

	A

    Reserve Appraisal	 	B

    Mortgage Exhibits
	 	 	Name	 	WI	 	NRI	 	 	 	Name	 	WI	 	NRI
	1.	 	 	 	 	 	 	 	1.	 	 	 	 	 	 
	2.	 	 	 	 	 	 	 	2.	 	 	 	 	 	 
	3.	 	 	 	 	 	 	 	3.	 	 	 	 	 	 
	4.	 	 	 	 	 	 	 	4.	 	 	 	 	 	 
	5.	 	 	 	 	 	 	 	5.	 	 	 	 	 	 
	6.	 	 	 	 	 	 	 	6.	 	 	 	 	 	 
	7.	 	 	 	 	 	 	 	7.	 	 	 	 	 	 
	8.	 	 	 	 	 	 	 	8.	 	 	 	 	 	 
	9.	 	 	 	 	 	 	 	9.	 	 	 	 	 	 
	10.	 	 	 	 	 	 	 	10.	 	 	 	 	 	 
	11.	 	 	 	 	 	 	 	11.	 	 	 	 	 	 
	12.	 	 	 	 	 	 	 	12.	 	 	 	 	 	 
	13.	 	 	 	 	 	 	 	13.	 	 	 	 	 	 
	14.	 	 	 	 	 	 	 	14.	 	 	 	 	 	 
	15.	 	 	 	 	 	 	 	15.	 	 	 	 	 	 
	16.	 	 	 	 	 	 	 	16.	 	 	 	 	 	 
	17.	 	 	 	 	 	 	 	17.	 	 	 	 	 	 
	18.	 	 	 	 	 	 	 	18.	 	 	 	 	 	 
	19.	 	 	 	 	 	 	 	19.	 	 	 	 	 	 
	20.	 	 	 	 	 	 	 	20.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00232-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00232-of-00352.parquet"}]]