Document:

Exhibit 10.1

		
			Exhibit 10.1
		

		
			 
		

		
			THE MICHAELS COMPANIES, INC.
SECOND  AMENDED AND RESTATED 2014 OMNIBUS LONG-TERM INCENTIVE PLAN
		

			
	
			
				 1.
			DEFINED TERMS

		
			Exhibit A, which is incorporated by reference, defines the terms used in the Plan and sets forth certain operational rules related to those terms. 
		

			
	
			
				 2.
			PURPOSE

		
			The Plan is an amendment and restatement of the 2006 Plan, effective as of the Date of Adoption with respect to Awards granted prior to, on or after such date, subject only to Section 9 of the 2006 Plan, and is further amended and restated effective as of the Second Restatement Date; provided, for the avoidance of doubt, that as to Stock Options granted prior to the Date of Adoption, no provision of this amendment and restatement shall have effect to the extent it would result (as determined by the Administrator) in a deemed new grant for purposes of Sections 409A or 422 of the Code.  The Plan has been established to advance the interests of the Company by providing for the grant to Participants of Stock-based and other incentive Awards.
		

			
	
			
				 3.
			ADMINISTRATION

		
			The Administrator has discretionary authority, subject only to the express provisions of the Plan, to interpret the Plan; determine eligibility for and grant Awards; determine, modify or waive the terms and conditions of any Award; prescribe forms, rules and procedures relating to the Plan; and otherwise do all things necessary or appropriate to carry out the purposes of the Plan.  Determinations of the Administrator made under the Plan will be conclusive and will bind all parties.
		

			
	
			
				 4.
			LIMITS ON AWARDS UNDER THE PLAN

			
	
			
				 (a)
			Number of Shares.  The maximum number of shares of Stock that may be delivered in satisfaction of Awards under the Plan (including, for the avoidance of doubt, Awards granted prior to, on or after the Second Restatement Date) is 28,553,765.  Up to the total number of shares available for Awards to employee Participants may be issued in satisfaction of ISOs, but nothing in this Section 4(a) will be construed as requiring that any, or any fixed number of, ISOs be awarded under the Plan.  For purposes of this Section 4(a), the number of shares of Stock delivered in satisfaction of Awards will be determined by treating (i) as not having been delivered any shares of Stock underlying the portion of an Award that is settled in cash or the portion of any Award that expires, terminates or is forfeited prior to the issuance of Stock thereunder, and (ii) as having been delivered any shares of Stock withheld by the Company from any Award in payment of the exercise price of any Award requiring exercise or in satisfaction of the tax withholding requirements with respect to any Award.

			
	
			
				 (b)
			Type of Shares.  Stock delivered by the Company under the Plan may be authorized but unissued Stock or previously issued Stock acquired by the Company.  No fractional shares of Stock will be delivered under the Plan.

			
	
			
				 (c)
			Section 162(m) Limits.  The following additional limits will apply to Awards of the specified type granted, or in the case of Cash Awards payable, to any person in any calendar year:

			
	
			
				 (1)
			Stock Options:  5,000,000 shares of Stock. 

			
	
			
				 (2)
			SARs:  5,000,000 shares of Stock.

			
	
			
				 (3)
			Awards other than Stock Options, SARs or Cash Awards:  5,000,000 shares of Stock.

			
	
			
				 (4)
			Cash Awards:  $10,000,000. 

		
			

		 

		

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			In applying the foregoing limits, (i) all Awards of the specified type granted to the same person in the same calendar year will be aggregated and made subject to one limit; (ii) the limits applicable to Stock Options and SARs refer to the number of shares of Stock subject to those Awards; (iii) the share limit under clause (3) refers to the maximum number of shares of Stock that may be delivered, or the value of which could be paid in cash or other property, under an Award or Awards of the type specified in clause (3) assuming a maximum payout; and (iv) the dollar limit under clause (4) refers to the maximum dollar amount payable under an Award or Awards of the type specified in clause (4) assuming a maximum payout.  The foregoing provisions will be construed in a manner consistent with Section 162(m), including, without limitation, where applicable, the rules under Section 162(m) pertaining to permissible deferrals of exempt awards.
		

			
	
			
				 (d)
			Other Limitations.  (i) No portion of any grant of Restricted Stock may be scheduled to vest prior to the date that is one year following the date the Restricted Stock is granted; (ii) no portion of any grant of a Stock Option or SAR may be scheduled to become exercisable prior to the date that is one year following the date the Stock Option or SAR is granted; (iii) no portion of any grant of a Restricted Stock Unit, Performance Award or Cash Award may be scheduled to vest or be settled, paid or distributed prior to the date that is one year following the date the applicable Restricted Stock Unit, Performance Award or Cash Award is granted; provided, however, that Awards that result in the issuance (as determined in accordance with the rules set forth in Section 4(a)) of an aggregate of up to five percent of the shares of Stock reserved for issuance under Section 4(a) may be granted to eligible persons without regard to the minimum vesting, exercisability, settlement, payment and distribution provisions of this Section 4(d).

			
	
			
				 5.
			ELIGIBILITY AND PARTICIPATION

		
			The Administrator will select Participants from among key Employees of, directors of, and consultants and advisors to, the Company and its Affiliates.  Eligibility for ISOs is limited to individuals described in the first sentence of this Section 5 who are employees of the Company or of a “parent corporation” or “subsidiary corporation” of the Company as those terms are defined in Section 424 of the Code.  Eligibility for Stock Options other than ISOs is limited to individuals described in the first sentence of this Section 5 who are providing direct services on the date of grant of the Stock Option to the Company or to a subsidiary of the Company that would be described in the first sentence of Treas. Regs. §1.409A-1(b)(5)(iii)(E).
		

			
	
			
				 6.
			RULES APPLICABLE TO AWARDS

			
	
			
				 (a)
			All Awards.

			
	
			
				 (1)
			Award Provisions.  The Administrator will determine the terms of all Awards, subject to the terms and limitations provided herein.  By accepting (or, under such rules as the Administrator may prescribe, being deemed to have accepted) an Award, the Participant will be deemed to have agreed to the terms of the Award and the Plan.  Notwithstanding any provision of this Plan to the contrary, awards of an acquired company that are converted, replaced or adjusted in connection with the acquisition may contain terms and conditions that are inconsistent with the terms and conditions specified herein, as determined by the Administrator.

			
	
			
				 (2)
			Term of Plan.  No Awards may be made after ten years from the Date of Adoption, but previously granted Awards may continue beyond that date in accordance with their terms.

			
	
			
				 (3)
			Transferability.  Neither ISOs nor, except as the Administrator otherwise expressly provides in accordance with the second sentence of this Section 6(a)(3), other Awards may be transferred other than by will or by the laws of descent and distribution.  During a Participant’s lifetime, ISOs (and, except as the Administrator otherwise expressly provides in accordance with the second sentence of this Section 6(a)(3), SARs and NSOs) may be exercised only by the Participant.  The Administrator may permit the gratuitous transfer (i.e., transfer not for value) of Awards other than ISOs to any transferee eligible to be covered by the provisions of Form S-8 (under the Securities Act of 1933), subject to such limitations and exceptions as the Administrator may impose.

			
	
			
				 (4)
			Vesting, etc.   The Administrator will determine the time or times at which an Award will vest or become exercisable and the terms on which a Stock Option or SAR will remain exercisable.  Without limiting the foregoing, the Administrator may at any time accelerate the vesting or exercisability of an Award, regardless of any adverse or potentially adverse tax or other consequences resulting from such acceleration.  Unless the Administrator expressly provides otherwise, however, the following rules will apply if a Participant’s Employment ceases:

		
			

		 

		

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				 (A)
			Immediately upon the cessation of the Participant’s Employment and except as provided in (B) and (C) below, each Stock Option and SAR that is then held by the Participant or by the Participant’s permitted transferees, if any, will cease to be exercisable and will terminate and all other Awards that are then held by the Participant or by the Participant’s permitted transferees, if any, to the extent not already vested will be forfeited.

			
	
			
				 (B)
			Subject to (C) and (D) below, all Stock Options and SARs held by the Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Employment, to the extent then exercisable, will remain exercisable for the lesser of (i) a period of sixty (60) days or (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 6(a)(4), and will thereupon immediately terminate.

			
	
			
				 (C)
			All Stock Options and SARs held by a Participant or the Participant’s permitted transferees, if any, immediately prior to the Participant’s death or Disability, to the extent then exercisable, will remain exercisable for the lesser of (i) the one-year period ending with the first anniversary of the Participant’s death or Disability, as the case may be, or (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 6(a)(4), and will thereupon immediately terminate.

			
	
			
				 (D)
			All Stock Options and SARs (whether or not exercisable) held by a Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Employment will immediately terminate upon such cessation of Employment if the termination is for Cause or occurs in circumstances that in the sole determination of the Administrator would have constituted grounds for the Participant’s Employment to be terminated for Cause.

			
	
			
				 (5)
			Additional Restrictions.  The Administrator may cancel, rescind, withhold or otherwise limit or restrict any Award at any time if the Participant is not in compliance with all applicable provisions of the Award agreement and the Plan, or if the Participant breaches any agreement with the Company or its Affiliates with respect to non-competition, non-solicitation or confidentiality.  Without limiting the generality of the foregoing, the Administrator may recover Awards made under the Plan and payments under or gain in respect of any Award to the extent required to comply with Section 10D of the Securities Exchange Act of 1934, as amended, or any stock exchange or similar rule adopted under said Section.

			
	
			
				 (6)
			Taxes.  The delivery, vesting and retention of Stock, cash or other property under an Award are conditioned upon full satisfaction by the Participant of all tax withholding requirements with respect to the Award.  The Administrator will prescribe such rules for the withholding of taxes as it deems necessary.  The Administrator may, but need not, hold back shares of Stock from an Award or permit a Participant to tender previously owned shares of Stock in satisfaction of tax withholding requirements (but not in excess of the minimum withholding required by law).

			
	
			
				 (7)
			Dividend Equivalents, Etc.  The Administrator may provide for the payment of amounts (on terms and subject to conditions established by the Administrator) in lieu of cash dividends or other cash distributions with respect to Stock subject to an Award whether or not the holder of such Award is otherwise entitled to share in the actual dividend or distribution in respect of such Award; provided, however, that (A) dividends or dividend equivalents relating to an Award that, at the dividend payment date, remains unvested or otherwise subject to a risk of forfeiture (whether service-based or performance-based) shall be subject to the same risk of forfeiture as applies to the underlying Award, and (B) no dividends or dividend equivalents shall be payable with respect to Options or SARs.  Any entitlement to dividend equivalents or similar entitlements will be established and administered either consistent with an exemption from, or in compliance with, the requirements of Section 409A.  

			
	
			
				 (8)
			Rights Limited.  Nothing in the Plan will be construed as giving any person the right to continued employment or service with the Company or its Affiliates, or any rights as a stockholder except as to shares of Stock actually issued under the Plan.  The loss of existing or potential profit in Awards will not constitute an element of damages in the event of termination of Employment for any reason, even if the termination is in violation of an obligation of the Company or any Affiliate to the Participant.

		
			

		 

		

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				 (9)
			Section 162(m).  In the case of any Performance Award (other than a Stock Option or SAR) intended to qualify for the performance-based compensation exception under Section 162(m), the Administrator will establish the applicable Performance Criterion or Criteria in writing no later than ninety (90) days after the commencement of the period of service to which the performance relates (or at such earlier time as is required to qualify the Award as performance-based under Section 162(m)) and, prior to the event or occurrence (grant, vesting or payment, as the case may be) that is conditioned on the attainment of such Performance Criterion or Criteria, will certify whether it or they have been attained.  The preceding sentence will not apply to an Award eligible (as determined by the Administrator) for exemption from the limitations of Section 162(m) by reason of the post-initial public offering transition relief in Section 1.162-27(f) of the Treasury Regulations.

			
	
			
				 (10)
			Coordination with Other Plans.   Awards under the Plan may be granted in tandem with, or in satisfaction of or substitution for, other Awards under the Plan or awards made under other compensatory plans or programs of the Company or its Affiliates.  For example, but without limiting the generality of the foregoing, awards under other compensatory plans or programs of the Company or its Affiliates may be settled in Stock (including, without limitation, Unrestricted Stock) if the Administrator so determines, in which case the shares delivered will be treated as awarded under the Plan (and will reduce the number of shares thereafter available under the Plan in accordance with the rules set forth in Section 4).  In any case where an award is made under another plan or program of the Company or its Affiliates and such award is intended to qualify for the performance-based compensation exception under Section 162(m), and such award is settled by the delivery of Stock or another Award under the Plan, the applicable Section 162(m) limitations under both the other plan or program and under the Plan will be applied to the Plan as necessary (as determined by the Administrator) to preserve the availability of the Section 162(m) performance-based compensation exception with respect thereto.

			
	
			
				 (11)
			Section 409A.  Each Award will contain such terms as the Administrator determines, and will be construed and administered, such that the Award either qualifies for an exemption from the requirements of Section 409A or satisfies such requirements.

			
	
			
				 (12)
			Fair Market Value.   In determining the fair market value of any share of Stock under the Plan, the Administrator will make the determination in good faith consistent with the rules of Section 422 and Section 409A to the extent applicable.

			
	
			
				 (b)
			Stock Options and SARs.

			
	
			
				 (1)
			Time And Manner Of Exercise.   Unless the Administrator expressly provides otherwise, no Stock Option or SAR will be deemed to have been exercised until the Administrator receives a notice of exercise (in form acceptable to the Administrator), which may be an electronic notice, signed (including electronic signature in form acceptable to the Administrator) by the appropriate person and accompanied by any payment required under the Award.  A Stock Option or SAR exercised by any person other than the Participant will not be deemed to have been exercised until the Administrator has received such evidence as it may require that the person exercising the Award has the right to do so.

			
	
			
				 (2)
			Exercise Price.  The exercise price (or the base value from which appreciation is to be measured) of each Award requiring exercise will be no less than 100% (or in the case of an ISO granted to a ten-percent shareholder within the meaning of subsection (b)(6) of Section 422, 110%) of the fair market value of the Stock subject to the Award, determined as of the date of grant, or such higher amount as the Administrator may determine in connection with the grant.  Except in connection with a corporate transaction involving the Company (which term shall include, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), the terms of outstanding Awards may not be amended to reduce the exercise prices of outstanding Stock Options or the base values from which appreciation under outstanding SARs are to be measured, nor may the Company cancel, exchange, substitute, buyout or surrender outstanding Stock Options or SARs in exchange for cash, Stock Options with an exercise price that is less than the exercise price of the original Stock Options, SARs with a base value that is less than the base value of the original SARs, or other Awards, other than in accordance with the stockholder approval requirements of The Nasdaq Global Select Market.  Fair market value will be determined by the Administrator consistent with the applicable requirements of Section 422 and Section 409A. 

		
			

		 

		

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				 (3)
			Payment Of Exercise Price.  Where the exercise of an Award is to be accompanied by payment, payment of the exercise price will be by cash or check acceptable to the Administrator or by such other legally permissible means, if any, as may be acceptable to the Administrator.

			
	
			
				 (4)
			Maximum Term.  Stock Options and SARs will have a maximum term not to exceed ten (10) years from the date of grant (or five (5) years from the date of grant in the case of an ISO granted to a ten-percent shareholder described in Section 6(b)(2) above); provided, however, that, if a Participant still holding an outstanding but unexercised NSO or SAR ten (10) years from the date of grant (or, in the case of an NSO or SAR with a maximum term of less than ten (10) years, such maximum term) is prohibited by applicable law or a written policy of the Company applicable to similarly situated employees from engaging in any open-market sales of Stock, and if at such time the Stock is publicly traded (as determined by the Administrator), the maximum term of such Award will instead be deemed to expire on the thirtieth (30th) day following the date the Participant is no longer prohibited from engaging in such open market sales.

			
	
			
				 7.
			EFFECT OF CERTAIN TRANSACTIONS

			
	
			
				 (a)
			Mergers, etc.    Except as otherwise provided in an Award agreement, the following provisions will apply in the event of a Covered Transaction:

			
	
			
				 (1)
			Assumption or Substitution.  If the Covered Transaction is one in which there is an acquiring or surviving entity, the Administrator may (but, for the avoidance of doubt, need not) provide (i) for the assumption or continuation of some or all outstanding Awards or any portion thereof or (ii) for the grant of new awards in substitution therefor by the acquirer or survivor or an affiliate of the acquirer or survivor.

			
	
			
				 (2)
			Cash-Out of Awards.   Subject to Section 7(a)(5) below the Administrator may (but, for the avoidance of doubt, need not) provide for payment (a “cash-out”), with respect to some or all Awards or any portion thereof, equal in the case of each affected Award or portion thereof to the excess, if any, of (A) the fair market value of one share of Stock (as determined by the Administrator in its reasonable discretion) times the number of shares of Stock subject to the Award or such portion, over (B) the aggregate exercise or purchase price, if any, under the Award or such portion (in the case of an SAR, the aggregate base value above which appreciation is measured), in each case on such payment terms (which need not be the same as the terms of payment to holders of Stock) and other terms, and subject to such conditions, as the Administrator determines.

			
	
			
				 (3)
			Acceleration of Certain Awards.   Subject to Section 7(a)(5) below, the Administrator may (but, for the avoidance of doubt, need not) provide that any Award requiring exercise will become exercisable, in full or in part and/or that the delivery of any shares of Stock remaining deliverable under any outstanding Award of Stock Units (including Restricted Stock Units and Performance Awards to the extent consisting of Stock Units) will be accelerated in full or in part, in each case on a basis that gives the holder of the Award a reasonable opportunity, as determined by the Administrator, following exercise of the Award or the delivery of the shares, as the case may be, to participate as a stockholder in the Covered Transaction. 

			
	
			
				 (4)
			Termination of Awards Upon Consummation of Covered Transaction.  Except as the Administrator may otherwise determine in any case, each Award will automatically terminate (and in the case of outstanding shares of Restricted Stock, will automatically be forfeited) upon consummation of the Covered Transaction, other than Awards assumed pursuant to Section 7(a)(1) above.

			
	
			
				 (5)
			Additional Limitations.  Any share of Stock and any cash or other property delivered pursuant to Section 7(a)(2) or Section 7(a)(3) above with respect to an Award may, in the discretion of the Administrator, contain such restrictions, if any, as the Administrator deems appropriate to reflect any performance or other vesting conditions to which the Award was subject and that did not lapse (and were not satisfied) in connection with the Covered Transaction.  For purposes of the immediately preceding sentence, a cash-out under Section 7(a)(2) above or acceleration under Section 7(a)(3) above will not, in and of itself, be treated as the lapsing (or satisfaction) of a performance or other vesting condition.  In the case of Restricted Stock that does not vest and is not forfeited in connection with the Covered Transaction, the Administrator may require that any amounts delivered, exchanged or otherwise paid in respect of such Stock in connection with the Covered Transaction be placed in escrow or otherwise made subject to such restrictions as the Administrator deems appropriate to carry out the intent of the Plan.

		
			

		 

		

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				 (b)
			Changes in and Distributions With Respect to Stock.

			
	
			
				 (1)
			Basic Adjustment Provisions.  In the event of a stock dividend, stock split or combination of shares (including a reverse stock split), recapitalization or other change in the Company’s capital structure that constitutes an equity restructuring within the meaning of FASB ASC 718, the Administrator will make appropriate adjustments to the maximum number of shares specified in Section 4(a) that may be delivered under the Plan and to the maximum share limits described in Section 4(c), and will also make appropriate adjustments to the number and kind of shares of stock or securities subject to Awards then outstanding or subsequently granted, any exercise prices relating to Awards and any other provision of Awards affected by such change. 

			
	
			
				 (2)
			Certain Other Adjustments.  The Administrator may also make adjustments of the type described in Section 7(b)(1) above to take into account distributions to stockholders other than those provided for in Section 7(a) and 7(b)(1), or any other event, if the Administrator determines that adjustments are appropriate to avoid distortion in the operation of the Plan, having due regard for the qualification of ISOs under Section 422, the requirements of Section 409A, and for the performance-based compensation rules of Section 162(m), where applicable.

			
	
			
				 (3)
			Continuing Application of Plan Terms.  References in the Plan to shares of Stock will be construed to include any stock or securities resulting from an adjustment pursuant to this Section 7.

			
	
			
				 8.
			LEGAL CONDITIONS ON DELIVERY OF STOCK

		
			The Company will not be obligated to deliver any shares of Stock pursuant to the Plan or to remove any restriction from shares of Stock previously delivered under the Plan until: (i) the Company is satisfied that all legal matters in connection with the issuance and delivery of such shares have been addressed and resolved; (ii) if the outstanding Stock is at the time of delivery listed on any stock exchange or national market system, the shares to be delivered have been listed or authorized to be listed on such exchange or system upon official notice of issuance; and (iii) all conditions of the Award have been satisfied or waived.  The Company may require, as a condition to exercise of the Award, such representations or agreements as counsel for the Company may consider appropriate to avoid violation of the Securities Act of 1933 or any applicable state or non-U.S. securities law.  Any Stock required to be issued to Participants under the Plan will be evidenced in such manner as the Administrator may deem appropriate, including book-entry registration or delivery of stock certificates.  In the event that the Administrator determines that Stock certificates will be issued to Participants under the Plan, the Administrator may require that certificates evidencing Stock issued under the Plan bear an appropriate legend reflecting any restriction on transfer applicable to such Stock, and the Company may hold the certificates pending lapse of the applicable restrictions.
		

			
	
			
				 9.
			AMENDMENT AND TERMINATION

		
			The Administrator may at any time or times amend the Plan or any outstanding Award for any purpose which may at the time be permitted by law, and may at any time terminate the Plan as to any future grants of Awards; provided, that except as otherwise expressly provided in the Plan the Administrator may not, without the Participant’s consent, alter the terms of an Award so as to affect materially and adversely the Participant’s rights under the Award, unless the Administrator expressly reserved the right to do so at the time the Award was granted.  Any amendments to the Plan will be conditioned upon stockholder approval only to the extent, if any, such approval is required by law (including the Code and applicable stock exchange requirements), as determined by the Administrator. 
		

			
	
			
				 10.
			OTHER COMPENSATION ARRANGEMENTS

		
			The existence of the Plan or the grant of any Award will not in any way affect the Company’s right to Award a person bonuses or other compensation in addition to Awards under the Plan.
		

			
	
			
				 11.
			MISCELLANEOUS

			
	
			
				 (a)
			Arbitration.  The Company agrees, and each Participant agrees as a condition to accepting an Award hereunder, to attempt in good faith to resolve any controversy or claim arising out of or relating to this Plan or any Award hereunder promptly by negotiations between themselves or their representatives who have authority to settle the controversy.  If the matter has not been resolved within sixty (60) days of the initiation of such procedure, the applicable Participant or the Company may require that the matter be submitted to final and binding arbitration under the 

		 

		

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	Employment Arbitration Rules and Mediation Procedures of American Arbitration Association (the “AAA”).  The arbitration shall be held before a single arbitrator mutually agreed upon by the Parties, and if no agreement can be reached within thirty (30) days after names of potential arbitrators have been proposed by the AAA, then before a single arbitrator having reasonable experience in corporate incentive plans of the type provided for in this Plan and who is chosen by the AAA.  The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. Section 1, et seq. (the “FAA”), and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.  Any award of the arbitrator shall be final and binding upon such Parties (subject only to judicial review of the award under and in accordance with the FAA).  The place of arbitration shall be Dallas, Texas, or any other location mutually agreed to between the applicable Parties.  The arbitrator shall state, in writing, the reasoning on which the award rests.  Arbitration under this paragraph shall be the sole and exclusive remedy for any disputes arising out of relating to this Plan or any Award hereunder; provided, however, that this paragraph shall not preclude any Party from pursuing a court action for the sole purpose of obtaining a temporary restraining order or a preliminary or permanent injunction with respect to the enforcement of obligations of non-competition, non-solicitation, confidentiality and/or similar restrictions.  As a condition to accepting an Award hereunder, each Participant expressly waives any rights he or she may have to bring any claim arising out of or relating to this Plan or any Award hereunder to arbitration on a class or collective basis and agrees that an arbitrator will not have the authority to consolidate any such claims in a single proceeding.

			
	
			
				 (b)
			Limitation of Liability.  Notwithstanding anything to the contrary in the Plan, neither the Company, nor any Affiliate, nor the Administrator, nor any person acting on behalf of the Company, any Affiliate, or the Administrator, will be liable to any Participant or to the estate or beneficiary of any Participant or to any other holder of an Award by reason of any acceleration of income, or any additional tax (including any interest and penalties), asserted by reason of the failure of an Award to satisfy the requirements of Section 422 or Section 409A or by reason of Section 4999 of the Code, or otherwise asserted with respect to the Award; provided, that nothing in this Section 11(c) will limit the ability of the Administrator or the Company, in its discretion, to provide by separate express written agreement with a Participant for any payment in connection with any such acceleration of income or additional tax. 

			
	
			
				 12.
			ESTABLISHMENT OF SUB-PLANS

		
			The Administrator may from time to time establish one or more sub-plans under the Plan for purposes of satisfying applicable blue sky, securities or tax laws of various jurisdictions.  The Administrator will establish such sub-plans by adopting supplements to the Plan setting forth (i) such limitations on the Administrator’s discretion under the Plan as it deems necessary or desirable and (ii) such additional terms and conditions not otherwise inconsistent with the Plan as it deems necessary or desirable.  All supplements so established will be deemed to be part of the Plan, but each supplement will apply only to Participants within the affected jurisdiction (as determined by the Administrator).
		

			
	
			
				 13.
			GOVERNING LAW

			
	
			
				 (a)
			Certain Requirements of Corporate Law.  Awards will be granted and administered consistent with the requirements of applicable Delaware law relating to the issuance of stock and the consideration to be received therefor, and with the applicable requirements of the stock exchanges or other trading systems on which the Stock is listed or entered for trading, in each case as determined by the Administrator.

			
	
			
				 (b)
			Other Matters.  Except as otherwise provided by the express terms of an Award agreement, under a sub-plan described in Section 12 or as provided in Section 13(a) above, the provisions of the Plan and of Awards under the Plan and all claims or disputes arising out of our based upon the Plan or any Award under the Plan or relating to the subject matter hereof or thereof will be governed by and construed in accordance with the domestic substantive laws of the State of Texas without giving effect to any choice or conflict of laws provision or rule that would cause the application of the domestic substantive laws of any other jurisdiction.

			
	
			
				 (c)
			Jurisdiction.  By accepting an Award, each Participant will be deemed to (a) have submitted irrevocably and unconditionally to the jurisdiction of the federal and state courts located within the geographic boundaries of  the United States District Court for the Northern District of Texas for the purpose of any suit, action or other proceeding arising out of or based upon the Plan or any Award; (b) agree not to commence any suit, action or other proceeding arising out of or based upon the Plan or an Award, except in the federal and state courts located within the geographic boundaries of the United States District Court for the Northern District of Texas; and (c)  waive, and agree not to assert, by way of motion as a defense or otherwise, in any such suit, action or proceeding, any claim that it is not 

		 

		

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	subject personally to the jurisdiction of the above-named courts that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that the Plan or an Award or the subject matter thereof may not be enforced in or by such court.

		
			 
		

		
			 
		

		
			

		 

		

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			EXHIBIT A
		

		
			Definition of Terms
		

		
			The following terms, when used in the Plan, will have the meanings and be subject to the provisions set forth below:
		

		
			“2006 Plan”: The Plan (formerly known as The Michaels Stores, Inc. 2006 Equity Incentive Plan and later renamed The Michaels Companies, Inc. Equity Incentive Plan) as in effect from time to time prior to the Date of Adoption.
		

		
			“Administrator”:  The Compensation Committee, except that the Compensation Committee may delegate (i) to one or more of its members (or one or more other members of the Board (including the full Board)) such of its duties, powers and responsibilities as it may determine; (ii) to one or more officers of the Company the power to grant Awards to the extent permitted by Section 157(c) of the Delaware General Corporation Law; and (iii) to such Employees or other persons as it determines such ministerial tasks as it deems appropriate.  In the event of any delegation described in the preceding sentence, the term “Administrator” will include the person or persons so delegated to the extent of such delegation.
		

		
			“Affiliate”:  Any corporation or other entity that stands in a relationship to the Company that would result in the Company and such corporation or other entity being treated as one employer under Section 414(b) and Section 414(c) of the Code.
		

		
			“Award”:  Any or a combination of the following:
		

		
			(i) Stock Options. 
		

		
			(ii) SARs.  
		

		
			(iii) Restricted Stock.
		

		
			(iv) Unrestricted Stock.
		

		
			(v) Stock Units, including Restricted Stock Units.
		

		
			(vi) Performance Awards.
		

		
			(vii) Cash Awards.
		

		
			(viii) Awards (other than Awards described in (i) through (vii) above) that are convertible into or otherwise based on Stock. 
		

		
			“Board”:  The Board of Directors of the Company.
		

		
			“Cash Award”:  An Award denominated in cash.
		

		
			“Cause”:  With respect to any Participant, the following events or conditions, as determined by the Administrator in its reasonable judgment:  (i) the refusal or failure to perform (other than by reason of disability), or material negligence in the performance of such Participant’s duties and responsibilities to the Company or any of its Affiliates, or refusal or failure to follow or carry out any reasonable direction of the Board, and the continuance of such refusal, failure or negligence for a period of 10 days after written notice delivered by the Company to such Participant that specifically identifies the manner in which the Participant has refused or failed to perform, or been negligent in performing, his or her duties; (ii) the material breach by such Participant of any provision of any material agreement between such Participant and the Company or any of its Affiliates; (iii) fraud, embezzlement, theft or other dishonesty by such Participant with respect to the Company or any of its Affiliates; (iv) the conviction of, or a plea of nolo contendere by, such Participant to any felony or any other crime involving dishonesty or moral turpitude; and (v) any other conduct that involves a breach of fiduciary duty to the Company on the part of such Participant.
		

		
			“Change of Control”:  (i) Whenever used in an Award granted prior to the Date of Adoption, a “Change of Control” as defined in the Amended and Restated Stockholders Agreement among Michaels Stores, Inc. and Certain Stockholders of Michaels Stores, Inc., originally dated as of October 31, 2006 and as amended from time to time and in effect (unless otherwise defined in the documentation specifying the terms of such Award, in which case such other definition shall control), and (ii) in every other case, a “Change of Control” as defined in the relevant Award documentation.
		

		
			

		 

		

			A-1

		

 

		

		
			“Code”:  The U.S. Internal Revenue Code of 1986 as from time to time amended and in effect, or any successor statute as from time to time in effect.
		

		
			“Compensation Committee”:  The Compensation Committee of the Board. 
		

		
			“Company”:  The Michaels Companies, Inc.
		

		
			“Covered Transaction”:  Any of (i) a consolidation, merger, or similar transaction or series of related transactions, including a sale or other disposition of stock, in which the Company is not the surviving corporation or which results in the acquisition of all or substantially all of the Company’s then outstanding common stock by a single person or entity or by a group of persons and/or entities acting in concert, (ii) a sale or transfer of all or substantially all the Company’s assets, or (iii) a dissolution or liquidation of the Company.  Where a Covered Transaction involves a tender offer that is reasonably expected to be followed by a merger described in clause (i) (as determined by the Administrator), the Covered Transaction will be deemed to have occurred upon consummation of the tender offer.
		

		
			“Date of Adoption”:  May 20, 2014
		

		
			“Disability”:  In the case of any Participant who is a party to an employment or severance-benefit agreement that contains a definition of “Disability,” (or words with similar or correlative meanings) the definition set forth in such agreement will apply with respect to such Participant under the Plan.  In the case of any other Participant, “Disability” will mean a disability that would entitle a Participant to long-term disability benefits under the Company’s long-term disability plan to which the Participant participates.  Notwithstanding the foregoing, in any case in which a benefit that constitutes or includes “nonqualified deferred compensation” subject to Section 409A would be payable by reason of Disability, the term “Disability” will mean a disability described in Treas. Regs. Section 1.409A-3(i)(4)(i)(A).
		

		
			“Employee”:  Any person who is employed by the Company or an Affiliate.
		

		
			“Employment”:  A Participant’s employment or other service relationship with the Company and its Affiliates.  Employment will be deemed to continue, unless the Administrator expressly provides otherwise, so long as the Participant is employed by, or otherwise is providing services in a capacity described in Section 5 to the Company or an Affiliate.  If a Participant’s employment or other service relationship is with an Affiliate and that entity ceases to be an Affiliate, the Participant’s Employment will be deemed to have terminated when the entity ceases to be an Affiliate unless the Participant transfers Employment to the Company or its remaining Affiliates.  Notwithstanding the foregoing and the definition of “Affiliate” above, in construing the provisions of any Award relating to the payment of “nonqualified deferred compensation” (subject to Section 409A) upon a termination or cessation of Employment, references to termination or cessation of employment, separation from service, retirement or similar or correlative terms will be construed to require a “separation from service” (as that term is defined in Section 1.409A-1(h) of the Treasury Regulations) from the Company and from all other corporations and trades or businesses, if any, that would be treated as a single “service recipient” with the Company under Section 1.409A-1(h)(3) of the Treasury Regulations.  The Company may, but need not, elect in writing, subject to the applicable limitations under Section 409A, any of the special elective rules prescribed in Section 1.409A-1(h) of the Treasury Regulations for purposes of determining whether a “separation from service” has occurred.  Any such written election will be deemed a part of the Plan.
		

		
			“ISO”:  A Stock Option intended to be an “incentive stock option” within the meaning of Section 422.  Each Stock Option granted pursuant to the Plan will be treated as providing by its terms that it is to be an NSO unless, as of the date of grant, it is expressly designated as an ISO.
		

		
			“NSO”:  A Stock Option that is not intended to be an “incentive stock option” within the meaning of Section 422.  
		

		
			“Participant”:  A person who is granted an Award under the Plan.
		

		
			“Performance Award”:  An Award subject to Performance Criteria.  The Administrator in its discretion may grant Performance Awards that are intended to qualify for the performance-based compensation exception under Section 162(m) and Performance Awards that are not intended so to qualify.
		

		
			“Performance Criteria”:  Specified criteria, other than the mere continuation of Employment or the mere passage of time, the satisfaction of which is a condition for the grant, exercisability, vesting, payment or full enjoyment of an Award.  For purposes of Awards that are intended to qualify for the performance-based compensation exception under Section 162(m), a Performance Criterion will mean an objectively determinable measure or objectively determinable measures of performance relating to any or any combination of the following (measured absolutely, by reference to an index or indices, or relative to a peer group, and determined either on a consolidated basis or, as the context permits, on a divisional, subsidiary, line of business, project or geographical basis or in 

		 

		

			A-2

		

 

combinations thereof): sales; net sales; comparable store sales; sales by location or store type; revenues; assets; expenses; earnings before or after deduction for all or any portion of interest, taxes, depreciation, and/or amortization, whether or not on a continuing operations or an aggregate or per share basis; return on equity, investment, capital or assets; one or more operating ratios; borrowing levels, leverage ratios or credit rating; market share; capital expenditures; cash flow; operating efficiencies; operating income; stock price; stockholder return; sales of particular products or services; customer acquisition or retention; buyer contribution; acquisitions and divestitures (in whole or in part); joint ventures and strategic alliances; spin-offs, split-ups and the like; reorganizations; or recapitalizations, restructurings, financings (issuance of debt or equity) or refinancings.  A Performance Criterion and any targets with respect thereto determined by the Administrator need not be based upon an increase, a positive or improved result or avoidance of loss.  To the extent consistent with the requirements for satisfying the performance-based compensation exception under Section 162(m), the Administrator may provide in the case of any Award intended to qualify for such exception that one or more of the Performance Criteria applicable to such Award will be adjusted in an objectively determinable manner to reflect events (for example, but without limitation, acquisitions or dispositions) occurring during the performance period that affect the applicable Performance Criterion or Criteria.
		

		
			“Plan”:  The Michaels Companies, Inc. 2014 Omnibus Long-Term Incentive Plan as from time to time amended and in effect.
		

		
			“Restricted Stock”:  Stock subject to restrictions requiring that it be redelivered or offered for sale to the Company if specified conditions are not satisfied.
		

		
			“Restricted Stock Unit”:  A Stock Unit that is, or as to which the delivery of Stock or cash in lieu of Stock is, subject to the satisfaction of specified performance or other vesting conditions.
		

		
			“SAR”:  A right entitling the holder upon exercise to receive an amount (payable in cash or in shares of Stock of equivalent value) equal to the excess of the fair market value of the shares of Stock subject to the right over the base value from which appreciation under the SAR is to be measured.
		

		
			“Second Restatement Date”:  June 7, 2017.
		

		
			“Section 409A”:  Section 409A of the Code.
		

		
			“Section 422”:  Section 422 of the Code.
		

		
			“Section 162(m)”:  Section 162(m) of the Code.
		

		
			“Stock”:  Common stock of the Company, par value $0.10 per share.
		

		
			“Stock Option”:  An option entitling the holder to acquire shares of Stock upon payment of the exercise price.
		

		
			“Stock Unit”:  An unfunded and unsecured promise, denominated in shares of Stock, to deliver Stock or cash measured by the value of Stock in the future.
		

		
			“Unrestricted Stock”:  Stock not subject to any restrictions under the terms of the Award.
		

		
			 
		

		
			 
		

		 

		

			A-3Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This Employment
Agreement (“Agreement”) is executed and agreed to as of June 5, 2017 by and between Rosehill Operating
Company, LLC, a Delaware limited liability company (the “Company”), and Craig Owen (“Employee”).

 

1.            Employment.
During the Employment Period (as defined in Section 4), the Company shall employ Employee, and Employee shall serve, as
Chief Financial Officer of the Company and in such other position or positions as may be assigned from time to time, with Employee’s
consent, by the Company.

 

		2.	Duties and Responsibilities of Employee.

 

(a)          During
the Employment Period, Employee shall devote Employee’s full business time, attention and best efforts to the business of the Parent
(as defined below) and its direct and indirect subsidiaries, including the Company (collectively, the “Company Group”)
as may be requested by the Company from time to time. Employee’s duties shall include those normally incidental to the position(s)
identified in Section 1, as well as such additional duties as may be assigned to Employee by the Company from time to time,
which duties may include providing services to other members of the Company Group in addition to the Company. Employee may, without
violating this Agreement, (i) as a passive investment, own publicly traded securities in such form or manner as will not require
any services by Employee in the operation of the entities in which such securities are owned; (ii) engage in charitable and civic
activities; or (iii) with the prior written consent of the board of directors (the “Board”) of Rosehill Resources
Inc., a Delaware corporation and parent of the Company (the “Parent”), engage in other personal and passive
investment activities, in each case, so long as such interests or activities do not interfere with Employee’s ability to fulfill
Employee’s duties and responsibilities under this Agreement and are not inconsistent with Employee’s obligations to the Company
Group or competitive with the business of the Company Group.

 

(b)          Employee
hereby represents and warrants that Employee is not the subject of, or a party to, any employment agreement, non-competition, non-solicitation,
restrictive covenant, non-disclosure agreement, or any other agreement, obligation, restriction or understanding that would prohibit
Employee from executing this Agreement or fully performing each of Employee’s duties and responsibilities hereunder, or would in
any manner, directly or indirectly, limit or affect any of the duties and responsibilities that may now or in the future be assigned
to Employee hereunder. Employee expressly acknowledges and agrees that Employee is strictly prohibited from using or disclosing
any confidential information belonging to any prior employer (excluding any member of the Company Group) in the course of performing
services for any member of the Company Group, and Employee shall not do so. Employee shall not introduce documents or other materials
containing confidential information of any such prior employer to the premises or property (including computers and computer systems)
of any member of the Company Group.

 

(c)          Employee
owes each member of the Company Group fiduciary duties (including (i) duties of loyalty and disclosure and (ii) such fiduciary
duties that an officer of the Company would have if the Company were a corporation organized under the laws of the State of Delaware),
and the obligations described in this Agreement are in addition to, and not in lieu of, the obligations Employee owes each member
of the Company Group under statutory and common law.

 

    	 	 	1

     

    

  

		3.	Compensation.

 

(a)          Base
Salary. During the Employment Period, the Company shall pay to Employee an annualized base salary of $480,000 (the “Base
Salary”) in consideration for Employee’s services under this Agreement, payable in substantially equal installments
in conformity with the Company’s customary payroll practices for similarly situated employees as may exist from time to time, but
no less frequently than monthly.

 

(b)          Annual
Bonus. Employee shall be eligible for discretionary bonus compensation for each complete calendar year that Employee is employed
by the Company hereunder (the “Annual Bonus”). The performance targets that must be achieved in order to
be eligible for certain bonus levels shall be established by the Board (or a committee thereof) annually, in its sole discretion,
and communicated to Employee within the first ninety (90) days of the applicable calendar year (the “Bonus Year”).
Notwithstanding the foregoing, Employee shall be eligible to receive a discretionary, pro rata bonus for the portion of
the 2017 calendar year that Employee is employed by the Company hereunder (the “2017 Bonus”). Each Annual
Bonus (including the 2017 Bonus), if any, shall be paid as soon as administratively feasible after the Board (or a committee thereof)
certifies whether the applicable performance targets for the applicable Bonus Year have been achieved, but in no event later than
March 15 following the end of such Bonus Year. Notwithstanding anything in this Section 3(b) to the contrary, no Annual
Bonus (including the 2017 Bonus), if any, nor any portion thereof, shall be payable for any Bonus Year unless Employee remains
continuously employed by the Company from the Effective Date (as defined below) through the last day of the applicable Bonus Year,
except that, in the event that Employee’s employment terminates pursuant to Section 7(b), 7(c) or 7(d) or upon the
expiration of the then-existing Initial Term or Renewal Term, as applicable, as a result of a non-renewal of this Agreement by
the Company pursuant to Section 4, Employee shall be eligible to receive a pro rata bonus for the calendar year in
which such termination occurs, payable on the date annual bonuses are paid to similarly situated employees who have continued employment
with the Company; provided that Employee executes on or before the Release Expiration Date (as defined below), and does
not revoke within the time provided by the Company to do so, a Release (as defined below).

 

(c)          Long-Term
Incentive Plan Awards. Employee shall be eligible to receive annual awards under the Rosehill Resources Inc. Long-Term Incentive
Plan (the “LTIP”) on such terms and conditions as the Board (or a committee thereof) shall determine from time
to time. All awards granted to Employee under the LTIP, if any, shall be subject to and governed by the terms and provisions of
the LTIP as in effect from time to time and the award agreements evidencing such awards. Nothing herein shall be construed to give
Employee any rights to any amount or type of grant or award except as provided in a written award agreement provided to Employee
and authorized by the Board (or a committee thereof).

 

    	 	 	2

     

    

 

4.            Term
of Employment. The initial term of Employee’s employment under this Agreement shall be for the period beginning
on June 26, 2017 (the “Effective Date”) and ending on the second anniversary of the Effective Date (the
“Initial Term”). On the second anniversary of the Effective Date and on each subsequent anniversary
thereafter, the term of Employee’s employment under this Agreement shall automatically renew and extend for a period of
twelve (12) months (each such twelve-month period being a “Renewal Term”) unless written notice of non-renewal
is delivered by either party to the other not less than thirty (30) days prior to the expiration of the then-existing Initial
Term or Renewal Term, as applicable. Notwithstanding any other provision of this Agreement, Employee’s employment pursuant
to this Agreement may be terminated at any time in accordance with Section 7. The period from the Effective Date through
the expiration of this Agreement or, if sooner, the termination of Employee’s employment pursuant to this Agreement, regardless
of the time or reason for such termination, shall be referred to herein as the “Employment Period.”

 

5.            Business
Expenses. Subject to Section 22 and the Company’s policies then in effect, the Company shall reimburse Employee
for Employee’s reasonable out-of-pocket business-related expenses actually incurred in the performance of Employee’s duties under
this Agreement so long as Employee timely submits all documentation for such reimbursement, as required by Company policy in effect
from time to time. Any such reimbursement of expenses shall be made by the Company upon or as soon as practicable following receipt
of such documentation (but in any event not later than the close of Employee’s taxable year following the taxable year in which
the expense is incurred by Employee). In no event shall any reimbursement be made to Employee for such expenses incurred after
the date of Employee’s termination of employment with the Company.

 

		6.	Benefits; Vacation.

 

(a)            Benefits.
During the Employment Period, Employee shall be eligible to participate in the same benefit plans and programs in which other similarly
situated Company employees are eligible to participate, subject to the terms and conditions of the applicable plans and programs
in effect from time to time. The Company shall not, however, by reason of this Section 6, be obligated to institute, maintain,
or refrain from changing, amending, or discontinuing, any such plan or policy, so long as such changes are similarly applicable
to similarly situated Company employees generally.

 

(b)           Vacation.
Employee shall be eligible to take up to four (4) weeks paid vacation each complete calendar year (an aggregate of two (2)
weeks (which equals 10 days) of which may be carried forward to succeeding calendar years), which shall accrue and be taken, and
which may increase, in accordance with the Company’s vacation policy as in effect from time to time. For the avoidance of
doubt, Employee’s vacation shall be pro-rated for the calendar year that includes the Effective Date. Employee shall cease
accruing vacation as of any time that Employee has accrued five (5) weeks of unused vacation, and Employee shall resume accruing
vacation in accordance with this Section 6(b) only after Employee’s accrued, unused vacation is less than five (5) weeks.

 

    	 	 	3

     

    

  

		7.	Termination of Employment.

 

(a)          Company’s
Right to Terminate Employee’s Employment for Cause. The Company shall have the right to terminate Employee’s employment hereunder
at any time for “Cause.” For purposes of this Agreement, “Cause” shall mean:

 

(i)          Employee’s
material breach of this Agreement or any other written agreement between Employee and one or more members of the Company Group,
including Employee’s breach of any material representation, warranty or covenant made under any such agreement, or Employee’s breach
of any policy or code of conduct established by a member of the Company Group and applicable to Employee;

 

(ii)         the
commission of an act of gross negligence, willful misconduct, breach of fiduciary duty, fraud, theft or embezzlement on the part
of Employee;

 

(iii)        the
commission by Employee of, or conviction or indictment of Employee for, or plea of nolo contendere by Employee to, any felony
(or state law equivalent) or any crime involving moral turpitude; or

 

(iv)        Employee’s
willful failure or refusal, other than due to Disability, to perform Employee’s obligations pursuant to this Agreement or to follow
any lawful directive from the Company, as determined by the Company; provided, however, that if Employee’s actions or omissions
as set forth in this Section 7(a)(iv) are of such a nature that the Company determines that they are curable by Employee,
such actions or omissions must remain uncured thirty (30) days after the Company has provided Employee written notice of the obligation
to cure such actions or omissions.

 

(b)         Company’s
Right to Terminate for Convenience. The Company shall have the right to terminate Employee’s employment for convenience at
any time and for any reason, or no reason at all, upon written notice to Employee.

 

(c)         Employee’s
Right to Terminate for Good Reason. Employee shall have the right to terminate Employee’s employment with the Company at any
time for “Good Reason.” For purposes of this Agreement, “Good Reason” shall mean:

 

(i)          a
material diminution in Employee’s Base Salary (other than an across-the-board reduction that affects similarly-situated employees
in substantially the same proportion as Employee) or authority, duties and responsibilities with the Company or its Subsidiaries;
provided, however, that if Employee is serving as an officer or member of the board of directors (or similar governing body)
of any member of the Company Group or any other entity in which a member of the Company Group holds an equity interest, in no event
shall the removal of Employee as an officer or board member, regardless of the reason for such removal, constitute Good Reason;

 

(ii)          a
material breach by the Company of any of its covenants or obligations under this Agreement; or

 

    	 	 	4

     

    

  

(iii)          the
relocation of the geographic location of Employee’s principal place of employment by more than seventy-five (75) miles from the
location of Employee’s principal place of employment as of the Effective Date.

 

Notwithstanding the foregoing
provisions of this Section 7(c) or any other provision of this Agreement to the contrary, any assertion by Employee of a
termination for Good Reason shall not be effective unless all of the following conditions are satisfied: (A) the condition described
in Section 7(c)(i), (ii) or (iii) giving rise to Employee’s termination of employment must have arisen without Employee’s
consent; (B) Employee must provide written notice to the Board of the existence of such condition(s) within thirty (30) days of
the initial existence of such condition(s); (C) the condition(s) specified in such notice must remain uncorrected for thirty (30)
days following the Board’s receipt of such written notice; and (D) the date of Employee’s termination of employment must
occur within sixty (60) days after the initial existence of the condition(s) specified in such notice.

 

(d)        Death
or Disability. Upon the death or Disability of Employee, Employee’s employment with Company shall terminate with no further
obligation under this Agreement of either party hereunder except as provided in Section 3(b). For purposes of this Agreement,
a “Disability” shall exist if Employee is unable to perform the essential functions of Employee’s position
(after accounting for reasonable accommodation, if applicable), due to an illness or physical or mental impairment or other incapacity
that continues, or can reasonably be expected to continue, for a period in excess of one hundred-twenty (120) consecutive days
or one hundred-eighty (180) days in any twelve (12)-month period, whether or not consecutive. The determination of whether Employee
has incurred a Disability shall be made in good faith by the Board.

 

(e)        Employee’s
Right to Terminate for Convenience.          In addition to Employee’s right
to terminate Employee’s employment for Good Reason, Employee shall have the right to terminate Employee’s employment with the Company
for convenience at any time and for any other reason, or no reason at all, upon thirty (30) days’ advance written notice to the
Company; provided, however, that if Employee has provided notice to the Company of Employee’s termination of employment,
the Company may determine, in its sole discretion, that such termination shall be effective on any date prior to the effective
date of termination provided in such notice (and, if such earlier date is so required, then it shall not change the basis for Employee’s
termination of employment nor be construed or interpreted as a termination of employment pursuant to Section 7(b)).

 

    	 	 	5

     

    

  

		(f)	Effect of Termination.

 

(i)          If
Employee’s employment hereunder is terminated by the Company without Cause pursuant to Section 7(b) (including upon
the expiration of the then-existing Initial Term or Renewal Term, as applicable, as a result of a non-renewal of this Agreement
by the Company pursuant to Section 4), or is terminated by Employee for Good Reason pursuant to Section 7(c), then
so long as (and only if) Employee: (A) executes on or before the Release Expiration Date, and does not revoke within the time
provided by the Company to do so, a release of all claims in a form acceptable to the Company (the “Release”),
which Release shall release each member of the Company Group and their respective affiliates, and the foregoing entities’
respective shareholders, members, partners, officers, managers, directors, fiduciaries, employees, representatives, agents and
benefit plans (and fiduciaries of such plans) from any and all claims, including any and all causes of action arising out of Employee’s
employment with the Company and any other member of the Company Group or the termination of such employment, but excluding all
claims to severance payments Employee may have under this Section 7; and (B) abides by the terms of each of Sections
9, 10 and 11, then the Company shall make a severance payment to Employee in a total amount equal to twelve (12) months’
worth of Employee’s Base Salary for the year in which such termination occurs (such total severance payments being referred
to as the “Severance Payment”). The Severance Payment will be paid in a single lump sum on the first business
day of the Company that is on or after the date that is sixty (60) days after the date on which Employee’s employment terminates
(the “Termination Date”).

 

(ii)          Notwithstanding
anything herein to the contrary, the Severance Payment (and any portion thereof) shall not be payable if (A) Employee’s employment
hereunder terminates upon the expiration of the then-existing Initial Term or Renewal Term, as applicable, as a result of a non-renewal
of this Agreement by Employee pursuant to Section 4, or (B) if Employee fails to assume employment with the Company as of
the Effective Date for any reason.

 

(iii)          If
the Release is not executed and returned to the Company on or before the Release Expiration Date, or the required revocation period
has not fully expired without revocation of the Release by Employee, then Employee shall not be entitled to any portion of the
Severance Payment. As used herein, the “Release Expiration Date” is that date that is twenty-one (21) days
following the date upon which the Company delivers the Release to Employee (which shall occur no later than seven (7) days after
the Termination Date) or, in the event that such termination of employment is “in connection with an exit incentive or other
employment termination program” (as such phrase is defined in the Age Discrimination in Employment Act of 1967, as amended),
the date that is forty-five (45) days following such delivery date.

 

(g)        After-Acquired
Evidence.          Notwithstanding any provision of this Agreement to
the contrary, in the event that the Company determines that Employee is eligible to receive the Severance Payment pursuant to Section
7(f) but, after such determination, the Company subsequently acquires evidence or determines that: (i) Employee has
failed to abide by the terms of Sections 9, 10 or 11; or (ii) a Cause condition existed prior to the Termination Date
that, had the Company been fully aware of such condition, would have resulted in the termination of Employee’s employment
pursuant to Section 7(a), then the Company shall have the right to cease the payment of any portion of the Severance
Payment that has not been paid and Employee shall promptly return to the Company any portion of the Severance Payment
received by Employee prior to the date that the Company determines that the conditions of this Section 7(g) have been
satisfied.

 

8.          Disclosures.
Promptly (and in any event, within three business days) upon becoming aware of (a) any actual or potential Conflict of
Interest or (b) any lawsuit, claim or arbitration filed against or involving Employee or any trust or vehicle owned or controlled
by Employee, in each case, Employee shall disclose such actual or potential Conflict of Interest or such lawsuit, claim or arbitration
to the Board. A “Conflict of Interest” shall exist when Employee engages in, or plans to engage in,
any activities, associations, or interests that conflict with Employee’s duties, responsibilities, authorities, or obligations
for and to the Company Group. 

 

    	 	 	6

     

    

  

9.            Confidentiality.
In the course of Employee’s employment with the Company and the performance of Employee’s duties on behalf of the Company Group
hereunder, Employee will be provided with, and will have access to, Confidential Information (as defined below). In consideration
of Employee’s receipt and access to such Confidential Information and in exchange for other valuable consideration provided hereunder,
and as a condition of Employee’s employment, Employee shall comply with this Section 9.

 

(a)         Both
during the Employment Period and thereafter, except as expressly permitted by this Agreement or by directive of the Board, Employee
shall not disclose any Confidential Information to any person or entity and shall not use any Confidential Information except for
the benefit of the Company Group. Employee acknowledges and agrees that Employee would inevitably use and disclose Confidential
Information in violation of this Section 9 if Employee were to violate any of the covenants set forth in Section 10.
Employee shall follow all Company policies and protocols regarding the physical security of all documents and other material containing
Confidential Information (regardless of the medium on which Confidential Information is stored). The covenants of this Section
9(a) shall apply to all Confidential Information, whether now known or later to become known to Employee during the period
that Employee is employed by or affiliated with the Company or any other member of the Company Group.

 

(b)        Notwithstanding
any provision of Section 9(a) to the contrary, Employee may make the following disclosures and uses of Confidential Information:

 

(i)         disclosures
to other employees of the Company Group who have a need to know the information in connection with the businesses of the Company
Group;

 

(ii)       disclosures
to customers and suppliers when, in the reasonable and good faith belief of Employee, such disclosure is in connection with Employee’s
performance of Employee’s duties under this Agreement and is in the best interests of the Company Group;

 

(iii)       disclosures
and uses that are approved in writing by the Board; or

 

(iv)      disclosures
to a person or entity that has (x) been retained by a member of the Company Group to provide services to one or more members of
the Company Group and (y) agreed in writing to abide by the terms of a confidentiality agreement.

 

(c)        Upon
the expiration of the Employment Period and at any other time upon request of the Company, Employee shall promptly surrender and
deliver to the Company all documents (including electronically stored information) and all copies thereof and all other materials
of any nature containing or pertaining to all Confidential Information in Employee’s possession, custody or control and Employee
shall not retain any such document or other materials.

 

    	 	 	7

     

    

  

Within five (5) business days
of any such request, Employee shall certify to the Company in writing that all such documents and materials have been returned
to the Company. Notwithstanding any provision herein to the contrary, if Employee and the Company are involved in a dispute at
the expiration of the Employment Period or at any other time that a return of documents or other materials is requested by the
Company, Employee shall be entitled to deliver a record copy of any documents and materials relevant to such dispute to Employee’s
attorney for retention until such time as such dispute is resolved; provided, that Employee’s attorney agrees in writing
to be bound by the confidentiality obligations set forth in this Section 9.

 

(d)          All
trade secrets, non-public information, designs, ideas, concepts, improvements, product developments, discoveries and inventions,
whether patentable or not, that are conceived, made, developed or acquired by or disclosed to Employee, individually or in conjunction
with others, during the period that Employee is employed by the Company or any other member of the Company Group (whether during
business hours or otherwise and whether on the Company’s premises or otherwise) that relate to any member of the Company Group’s
businesses or properties, products or services (including all such information relating to business opportunities, operations,
future plans, methods of doing business, business plans, strategies for developing business and market share, research, financial
and sales data, pricing terms, evaluations, opinions, interpretations, analyses, compilations, forecasts, studies, geophysical
data, engineering analyses or reports, geological maps and data, well logs, cartographic data, reserve engineering data, samples,
acquisition prospects, lists of mineral interests and lease holders, project costs and related details, the identity of customers,
producers, gatherers or service providers or their requirements, the identity of key contacts within the organizations of customers,
producers, gatherers, service providers or acquisition prospects, or marketing and merchandising techniques, prospective names
and marks) is defined as “Confidential Information.” Moreover, all documents, videotapes, written presentations,
brochures, drawings, memoranda, notes, records, files, correspondence, manuals, models, specifications, computer programs, e-mail,
voice mail, electronic databases, maps, drawings, architectural renditions, models and all other writings or materials of any type
including or embodying any of such information, ideas, concepts, improvements, discoveries, inventions and other similar forms
of expression are and shall be the sole and exclusive property of the Company Group and be subject to the same restrictions on
disclosure applicable to all Confidential Information pursuant to this Agreement. For purposes of this Agreement, Confidential
Information shall not include any information that (i) is or becomes generally available to the public other than as a result of
a disclosure or wrongful act of Employee or any of Employee’s agents; (ii) was available to Employee on a non-confidential basis
before its disclosure by a member of the Company Group; or (iii) becomes available to Employee on a non-confidential basis from
a source other than a member of the Company Group; provided, however, such source is not bound by a confidentiality agreement
with, or other obligation with respect to confidentiality to, a member of the Company Group.

 

		(e)	Notwithstanding the rest of this Section 9:

 

(i)        Employee
shall not be prevented from, nor shall Employee be criminally or civilly liable under any federal or state trade secret law for,
making a disclosure of trade secrets or other Confidential Information that is: (A) made (x) in confidence to a federal, state
or local government official, either directly or indirectly, or to an attorney, and (y) solely for the purpose of reporting or
investigating a suspected violation of applicable law; (B) made in a complaint or other document filed in a lawsuit or other proceeding,
if such filing is made under seal; or (C) protected under the whistleblower provisions of applicable law; and

 

    	 	 	8

     

    

 

(ii)          in
the event Employee files a lawsuit for retaliation by the Company for Employee’s reporting of a suspected violation of law, Employee
may (A) disclose a trade secret to Employee’s attorney and (B) use the trade secret information in the court proceeding related
to such lawsuit, in each case, if Employee (x) files any document containing such trade secret under seal; and (y) does not otherwise
disclose such trade secret, except pursuant to court order.

 

		10.	Non-Competition; Non-Solicitation.

 

(a)          The
Company shall provide Employee access to Confidential Information for use only during the Employment Period, and Employee acknowledges
and agrees that the Company Group will be entrusting Employee, in Employee’s unique and special capacity, with developing the goodwill
of the Company Group, and in consideration thereof and in consideration of the Company providing Employee with access to Confidential
Information and as an express incentive for the Company to enter into this Agreement and employ Employee, Employee has voluntarily
agreed to the covenants set forth in this Section 10. Employee agrees and acknowledges that the limitations and restrictions
set forth herein, including geographical and temporal restrictions on certain competitive activities, are reasonable in all respects,
will not cause Employee undue hardship, and are material and substantial parts of this Agreement intended and necessary to prevent
unfair competition and to protect the Company Group’s Confidential Information, goodwill and substantial and legitimate business
interests.

 

(b)          During
the Prohibited Period, Employee shall not, without the prior written approval of the Board, directly or indirectly, for Employee
or on behalf of or in conjunction with any other person or entity of any nature:

 

(i)          engage
in or participate within the Market Area in competition with any member of the Company Group in any aspect of the Business, which
prohibition shall prevent Employee from directly or indirectly owning, managing, operating, joining, becoming an officer, director,
employee or consultant of, or loaning money to, or selling or leasing equipment or real estate to or otherwise being affiliated
with any person or entity engaged in, or planning to engage in, the Business in the Market Area in competition, or anticipated
competition, with any member of the Company Group;

 

(ii)         appropriate
any Business Opportunity of, or relating to, the Company Group located in the Market Area;

 

(iii)         solicit,
canvass, approach, encourage, entice or induce any customer or supplier of any member of the Company Group to cease or lessen such
customer’s or supplier’s business with the Company Group; or

 

(iv)        solicit,
canvass, approach, encourage, entice or induce any employee or contractor of the Company Group to terminate his, her or its employment
or engagement with any member of the Company Group.

 

    	 	 	9

     

    

 

(c)        Because
of the difficulty of measuring economic losses to the Company Group as a result of a breach or threatened breach of the covenants
set forth in Section 9 and in this Section 10, and because of the immediate and irreparable damage that would be
caused to the members of the Company Group for which they would have no other adequate remedy, the Company and each other member
of the Company Group shall be entitled to enforce the foregoing covenants, in the event of a breach or threatened breach, by injunctions
and restraining orders from any court of competent jurisdiction, without the necessity of showing any actual damages or that money
damages would not afford an adequate remedy, and without the necessity of posting any bond or other security. The aforementioned
equitable relief shall not be the Company’s or any other member of the Company Group’s exclusive remedy for a breach but instead
shall be in addition to all other rights and remedies available to the Company and each other member of the Company Group at law
and equity.

 

(d)        The
covenants in this Section 10, and each provision and portion hereof, are severable and separate, and the unenforceability
of any specific covenant (or portion thereof) shall not affect the provisions of any other covenant (or portion thereof). Moreover,
in the event any arbitrator or court of competent jurisdiction shall determine that the scope, time or territorial restrictions
set forth are unreasonable, then it is the intention of the parties that such restrictions be enforced to the fullest extent which
such arbitrator or court deems reasonable, and this Agreement shall thereby be reformed.

 

		(e)	The following terms shall have the following meanings:

 

(i)          “Business”
shall mean the business and operations that are the same or similar to those performed by the Company and any other member of the
Company Group for which Employee provides services or about which Employee obtains Confidential Information during the Employment
Period, which business and operations include the exploration or production of oil or natural gas.

 

(ii)         “Business
Opportunity” shall mean any commercial, investment or other business opportunity relating to the Business.

 

(iii)        “Market
Area” shall mean: (a) Texas, Loving, Reeves, Culberson, Pecos, Ward, Winkler counties in the State of Texas; (b) Lea
and Eddy counties in the State of New Mexico; (c) Wise County, Texas (for so long as a member of the Company Group owns or leases
any assets within such county); and (d) any other county in which any member of the Company Group conducts Business during the
Employment Period.

 

(iv)         “Prohibited
Period” shall mean the period during which Employee is employed by the Company or any other member of the Company
Group and continuing for a period of twelve (12) months following the date that Employee is no longer employed by the Company or
any other member of the Company Group.

 

    	 	 	10

     

    

 

11.        Ownership of Intellectual Property. Employee agrees that
the Company shall own, and Employee shall (and hereby does) assign, all right, title and interest (including patent rights, copyrights,
trade secret rights, mask work rights, trademark rights, and all other intellectual and industrial property rights of any sort
throughout the world) relating to any and all inventions (whether or not patentable), works of authorship, mask works, designs,
know-how, ideas and information authored, created, contributed to, made or conceived or reduced to practice, in whole or in part,
by Employee during the period in which Employee is or has been employed by or affiliated with the Company or any other member of
the Company Group that either (a) relate, at the time of conception, reduction to practice, creation, derivation or development,
to any member of the Company Group’s businesses or actual or anticipated research or development, or (b) were developed on any
amount of the Company’s or any other member of the Company Group’s time or with the use of any member of the Company Group’s equipment,
supplies, facilities or trade secret information (all of the foregoing collectively referred to herein as “Company Intellectual
Property”), and Employee shall promptly disclose all Company Intellectual Property to the Company. All of Employee’s
works of authorship and associated copyrights created during the period in which Employee is employed by or affiliated with the
Company or any member of the Company Group and in the scope of Employee’s employment shall be deemed to be “works made for
hire” within the meaning of the Copyright Act. Employee shall perform, during and after the period in which Employee is or
has been employed by or affiliated with the Company or any other member of the Company Group, all reasonable acts deemed necessary
by the Company to assist the Company Group, at the Company’s expense, in obtaining and enforcing its rights throughout the world
in the Company Intellectual Property. Such acts may include execution of documents and assistance or cooperation (i) in the filing,
prosecution, registration, and memorialization of assignment of any applicable patents, copyrights, mask work, or other applications,
(ii) in the enforcement of any applicable patents, copyrights, mask work, moral rights, trade secrets, or other proprietary rights,
and (iii) in other legal proceedings related to the Company Intellectual Property.

 

12.        Defense
of Claims. During the Employment Period and thereafter, upon request from the Company, Employee shall cooperate with the
Company Group in the defense of any claims or actions that may be made by or against any member of the Company Group that relate
to Employee’s actual or prior areas of responsibility. The Company shall pay or reimburse Employee for all of Employee’s reasonable
travel and other direct expenses reasonably incurred, to comply with Employee’s obligations under this Section 12, so long
as Employee provides reasonable documentation of such expenses and obtains the Company’s prior approval before incurring such expenses.

 

13.        Withholdings;
Deductions. The Company may withhold and deduct from any benefits and payments made or to be made pursuant to this Agreement
(a) all federal, state, local and other taxes as may be required pursuant to any law or governmental regulation or ruling and (b)
any deductions consented to in writing by Employee.

 

    	 	 	11

     

    

  

14.        Title
and Headings; Construction. Titles and headings to Sections hereof are for the purpose of reference only and shall in no
way limit, define or otherwise affect the provisions hereof. Any and all Exhibits or Attachments referred to in this Agreement
are, by such reference, incorporated herein and made a part hereof for all purposes. Unless the context requires otherwise, all
references herein to an agreement, instrument or other document shall be deemed to refer to such agreement, instrument or other
document as amended, supplemented, modified and restated from time to time to the extent permitted by the provisions thereof. All
references to “dollars” or “$” in this Agreement refer to United States dollars. The words “herein”,
“hereof”, “hereunder” and other compounds of the word “here” shall refer to the entire Agreement,
including all Exhibits attached hereto, and not to any particular provision hereof. Wherever the context so requires, the masculine
gender includes the feminine or neuter, and the singular number includes the plural and conversely. All references to the word
“including” shall be construed as meaning “including without limitation.” Neither this Agreement nor any uncertainty
or ambiguity herein shall be construed or resolved against any party hereto, whether under any rule of construction or otherwise.
On the contrary, this Agreement has been reviewed by each of the parties hereto and shall be construed and interpreted according
to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of the parties hereto.

 

15.        Applicable
Law; Submission to Jurisdiction. This Agreement shall in all respects be construed according to the laws of the State of
Texas without regard to its conflict of laws principles that would result in the application of the laws of another jurisdiction.
With respect to any claim or dispute related to or arising under this Agreement, the parties hereby consent to the exclusive jurisdiction,
forum and venue of the state and federal courts (as applicable) located in the Houston, Texas.

 

16.          Entire
Agreement and Amendment. This Agreement contains the entire agreement of the parties with respect to the matters covered
herein and supersedes all prior and contemporaneous agreements and understandings, oral or written, between the parties hereto
concerning the subject matter hereof. This Agreement may be amended only by a written instrument executed by both parties hereto.

 

17.          Waiver
of Breach. Any waiver of this Agreement must be executed by the party to be bound by such waiver. No waiver by either party
hereto of a breach of any provision of this Agreement by the other party, or of compliance with any condition or provision of this
Agreement to be performed by such other party, will operate or be construed as a waiver of any subsequent breach by such other
party or any similar or dissimilar provision or condition at the same or any subsequent time. The failure of either party hereto
to take any action by reason of any breach will not deprive such party of the right to take action at any time.

 

18.          Assignment.
This Agreement is personal to Employee, and neither this Agreement nor any rights or obligations hereunder shall be assignable
or otherwise transferred by Employee. The Company may assign this Agreement without Employee’s consent, including to any member
of the Company Group and to any successor (whether by merger, purchase or otherwise) to all or substantially all of the equity,
assets or businesses of the Company.

 

19.          Notices.
Notices provided for in this Agreement shall be in writing and shall be deemed to have been duly received (a) when delivered in
person, (b) when sent by facsimile transmission (with confirmation of transmission) on a Business Day to the number set forth below,
if applicable; provided, however, that if a notice is sent by facsimile transmission after normal business hours of the
recipient or on a non-Business Day, then it shall be deemed to have been received on the next Business Day after it is sent, (c)
on the first Business Day after such notice is sent by express overnight courier service, or (d) on the second Business Day following
deposit with an internationally-recognized second-day courier service with proof of receipt maintained, in each case, to the following
address, as applicable:

 

    	 	 	12

     

    

 

If to the Company, addressed to:

 

Rosehill Operating Company, LLC

16200 Park Row, Suite 300

Houston, TX 77084

Facsimile: (281) 829-0856

Attention: J. Alan Townsend

 

With a copy (which shall not itself
constitute notice) to:

 

Chairman of the Board of Directors of
Parent

811 Main Street, 18th Floor

Houston, TX 77002

Facsimile: (713) 654-9090

Attention: Gary C. Hanna

 

If to Employee, addressed to:

 

Employee’s last known address on file
with the Company.

 

20.          Counterparts.
This Agreement may be executed in any number of counterparts, including by electronic mail or facsimile, each of which when so
executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument. Each
counterpart may consist of a copy hereof containing multiple signature pages, each signed by one party, but together signed by
both parties hereto.

 

21.          Deemed
Resignations. Except as otherwise determined by the Board or as otherwise agreed to in writing by Employee and any member
of the Company Group prior to the termination of Employee’s employment with the Company or any member of the Company Group, any
termination of Employee’s employment shall constitute, as applicable, an automatic resignation of Employee: (a) as an officer of
the Company and each member of the Company Group; (b) from the Board; and (c) from the board of directors or board of managers
(or similar governing body) of any member of the Company Group and from the board of directors or board of managers (or similar
governing body) of any corporation, limited liability entity, unlimited liability entity or other entity in which any member of
the Company Group holds an equity interest and with respect to which board of directors or board of managers (or similar governing
body) Employee serves as such Company Group member’s designee or other representative.

 

		22.	Section 409A.

 

(a)            Notwithstanding
any provision of this Agreement to the contrary, all provisions of this Agreement are intended to comply with Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”), and the applicable Treasury regulations and administrative
guidance issued thereunder (collectively, “Section 409A”) or an exemption therefrom and shall be construed
and administered in accordance with such intent. Any payments under this Agreement that may be excluded from Section 409A either
as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A
to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this Agreement shall be treated
as a separate payment. Any payments to be made under this Agreement upon a termination of Employee’s employment shall only
be made if such termination of employment constitutes a “separation from service” under Section 409A.

 

    	 	 	13

     

    

 

(b)          To
the extent that any right to reimbursement of expenses or payment of any benefit in-kind under this Agreement constitutes nonqualified
deferred compensation (within the meaning of Section 409A), (i) any such expense reimbursement shall be made by the Company no
later than the last day of the taxable year following the taxable year in which such expense was incurred by Employee, (ii) the
right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (iii) the amount
of expenses eligible for reimbursement or in-kind benefits provided during any taxable year shall not affect the expenses eligible
for reimbursement or in-kind benefits to be provided in any other taxable year; provided, that the foregoing clause shall
not be violated with regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code solely because such
expenses are subject to a limit related to the period in which the arrangement is in effect.

 

(c)          Notwithstanding
any provision in this Agreement to the contrary, if any payment or benefit provided for herein would be subject to additional taxes
and interest under Section 409A if Employee’s receipt of such payment or benefit is not delayed until the earlier of (i) the date
of Employee’s death or (ii) the date that is six (6) months after the Termination Date (such date, the “Section 409A
Payment Date”), then such payment or benefit shall not be provided to Employee (or Employee’s estate, if applicable)
until the Section 409A Payment Date. Notwithstanding the foregoing, the Company makes no representations that the payments and
benefits provided under this Agreement are exempt from, or compliant with, Section 409A and in no event shall any member of the
Company Group be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by Employee
on account of non-compliance with Section 409A.

 

23.          Certain
Excise Taxes. Notwithstanding anything to the contrary in this Agreement, if Employee is a “disqualified
individual” (as defined in Section 280G(c) of the Code), and the payments and benefits provided for in this Agreement,
together with any other payments and benefits which Employee has the right to receive from the Company or any of its
affiliates, would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Code), then the
payments and benefits provided for in this Agreement shall be either (i) reduced (but not below zero) so that the present
value of such total amounts and benefits received by Employee from the Company or any of its affiliates shall be one dollar
($1.00) less than three times Employee’s “base amount” (as defined in Section 280G(b)(3) of the Code) and
so that no portion of such amounts and benefits received by Employee shall be subject to the excise tax imposed by Section
4999 of the Code or (ii) paid in full, whichever produces the better net after-tax position to Employee (taking into account
any applicable excise tax under Section 4999 of the Code and any other applicable taxes). The reduction of payments and
benefits hereunder, if applicable, shall be made by reducing, first, payments or benefits to be paid in cash hereunder in the
order in which such payment or benefit would be paid or provided (beginning with such payment or benefit that would be
made last in time and continuing, to the extent necessary, through to such payment or benefit that would be made first in
time) and, then, reducing any benefit to be provided in-kind hereunder in a similar order. The determination as to whether
any such reduction in the amount of the payments and benefits provided hereunder is necessary shall be made by the Company in
good faith. If a reduced payment or benefit is made or provided and through error or otherwise that payment or benefit, when
aggregated with other payments and benefits from the Company or any of its affiliates used in determining if a
“parachute payment” exists, exceeds one dollar ($1.00) less than three times Employee’s base amount, then
Employee shall immediately repay such excess to the Company upon notification that an overpayment has been made. Nothing in
this Section 24 shall require the Company to be responsible for, or have any liability or obligation with respect to,
Employee’s excise tax liabilities under Section 4999 of the Code.

 

    	 	 	14

     

    

  

24.          Clawback.
To the extent required by applicable law or any applicable securities exchange listing standards, or as otherwise determined by
the Board (or a committee thereof), amounts paid or payable under this Agreement shall be subject to the provisions of any applicable
clawback policies or procedures adopted by the Company, which clawback policies or procedures may provide for forfeiture and/or
recoupment of amounts paid or payable under this Agreement. Notwithstanding any provision of this Agreement to the contrary, the
Company reserves the right, without the consent of Employee, to adopt any such clawback policies and procedures, including such
policies and procedures applicable to this Agreement with retroactive effect.

 

25.          Effect
of Termination. The provisions of Sections 7, 9-13 and 21 and those provisions necessary to interpret and enforce
them, shall survive any termination of this Agreement and any termination of the employment relationship between Employee and the
Company.

 

26.          Third-Party
Beneficiaries. Each member of the Company Group that is not a signatory to this Agreement shall be a third-party beneficiary
of Employee’s obligations under Sections 8, 9, 10, 11 and 12 and shall be entitled to enforce such obligations as if a party
hereto.

 

27.          Severability.
If an arbitrator or court of competent jurisdiction determines that any provision of this Agreement (or portion thereof) is invalid
or unenforceable, then the invalidity or unenforceability of that provision (or portion thereof) shall not affect the validity
or enforceability of any other provision of this Agreement, and all other provisions shall remain in full force and effect.

 

[Remainder
of Page Intentionally Blank; 

Signature Page Follows]

 

    	 	 	15

     

    

  

IN
WITNESS WHEREOF, Employee and the Company each have caused this Agreement to be executed and effective as of the date first above
written.

 

	 	EMPLOYEE
	 	 
	 	/s/ Craig Owen
	 	Craig Owen
	 	 
	 	ROSEHILL OPERATING COMPANY, LLC
	 	 
	 	By:	/s/ J. Alan Townsend
	 	 	Name: J. Alan Townsend
	 	 	Title: President and Chief Executive
Officer

 

Signature
Page to

Employment
Agreement

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