Document:

GULFSLOPE ENERGY, INC. - 8-K

Exhibit 10.3

 

Execution Version

 

SUBORDINATION AGREEMENT 

 

in relation to the Loan Agreement 

 

Dated as of March 1, 2019 

 

among

 

GULFSLOPE ENERGY, INC., 

 

as Borrower 

 

JOHN N. SEITZ 

 

as Subordinated Lender 

 

and 

 

DELEK GOM INVESTMENTS, LLC 

 

as Senior Lender

 

    

    

    

 

TABLE OF CONTENTS

 

Page

 

	Article I Definitions; Rules of Interpretation	3
	Section 1.01     Incorporation of Terms; Rules of Interpretation	3
	Section 1.02     Certain Defined Terms	3
	Article II Agreement to Subordinate	4
	Section 2.01     No Collateral; Consent to Security	4
	Section 2.02     Subordination and Proceedings Against Borrower	4
	Section 2.03     Payment Upon Dissolution, Etc.	6
	Section 2.04     Defenses Waived	7
	Section 2.05     Subrogation	7
	Section 2.06     Consents, Waivers and Covenants of Subordinated Lender	7
	Section 2.07     Negative Covenants of the Subordinated Lender	8
	Section 2.08     Senior Obligations Unconditional	9
	Section 2.09     Representations and Warranties	10
	Section 2.10     No Representation by Senior Lender	11
	Section 2.11     Notices; Disclosure	11
	Section 2.12     No Waiver	11
	Section 2.13     Waiver of Claims	11
	Section 2.14     Additional Provisions Applicable After Bankruptcy Event or Bankruptcy Proceeding	12
	Section 2.15     Further Assurances	13
	Section 2.16     Reinstatement	13
	Section 2.17     Expenses	13
	Section 2.18     Provisions Define Relative Rights	13
	Section 2.19     Legend	13
	Section 2.20     Powers Coupled With An Interest	13
	Section 2.21     Authority of Senior Lender	13
	Section 2.22     Notices	14
	Section 2.23     Amendments	15
	Section 2.24     Successors and Assigns	15
	Section 2.25     Captions	15
	Section 2.26     Counterparts; Integration; Effectiveness	15
	Section 2.27     Severability	16
	Section 2.28     GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS	16

 

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THIS SUBORDINATION
AGREEMENT (this “Agreement,” as it may be amended, restated, amended and restated, supplemented
or otherwise modified from time to time as provided below), dated as of March 1 2019, is entered into by and among GulfSlope
Energy, Inc., a Delaware corporation, with its principal place of business at 1331 Lamar St., Suite 1665, Houston,
Texas 77010 (the “Borrower”), JOHN
N. SEITZ, a citizen of the United States, (the “Subordinated Lender”), and Delek
GOM Investments, LLC, a Delaware limited liability company, with a registered
office address c/o Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, as Senior Lender (as defined below).

 

RECITALS

 

WHEREAS, the Borrower
and the Senior Lender have entered into a Loan Agreement dated on or about the date hereof (as amended, amended and restated, supplemented
or otherwise modified from time to time, the “Loan Agreement”), pursuant to which the Senior Lender (as
defined below) shall extend credit and other financial accommodations (“Loans”) to the Borrower in an
aggregate principal amount not exceeding $11,000,000, on the terms and conditions as set forth therein;

 

WHEREAS, as a condition
to the incurrence and continued availability of the Loans, the Borrower has entered into security documents and other ancillary
financing documents for the benefit of the Senior Lender, pursuant to which the Borrower has pledged all or substantially all of
its assets as collateral to secure its obligations under the Senior Loan Documents (as defined below);

 

WHEREAS, the Subordinated
Lender will indirectly benefit from the financing accommodations made by the Senior Lender to the Borrower under the Senior Loan
Documents;

 

WHEREAS, each of the
Subordinated Lender and the Borrower desires to enter into this Agreement in order to induce the Senior Lender to enter into the
Senior Loan Documents and in satisfaction of the related condition to the incurrence and continued availability of the Loans;

 

WHEREAS, the Subordinated
Lender acknowledges that the Senior Lender would not enter into the Senior Loan Documents but for the execution of this Agreement;

 

WHEREAS, the Senior
Lender and the Subordinated Lender wish to set forth in this Agreement their relative rights to seek repayment from the Borrower
and to pursue claims against the Borrower and its assets;

 

WHEREAS, the Subordinated
Lender has received a copy of each of the Senior Loan Documents and is aware of the terms thereof;

 

WHEREAS, the Subordinated
Lender has taken independent legal advice with respect to the implications and legal effect of this Agreement;

 

NOW THEREFORE, in consideration
of the foregoing, to induce the Senior Lender to enter into the Senior Loan Documents and to extend credit to the Borrower thereunder,
and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:

 

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Article
I

Definitions; Rules of Interpretation

 

Section 1.01          
Incorporation of Terms; Rules of Interpretation

 

(a)          
Capitalized terms used but not defined herein (including, without limitation, in the introductory paragraph and recitals
above) shall have the meanings given such terms in the Loan Agreement.

 

(b)          
The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine, feminine, and neuter forms. The words “include”,
“includes”, and “including” shall be deemed to be followed by the phrase “without limitation”.
The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the
context requires otherwise, (a) any definition of or reference to any agreement, instrument, or other document herein shall be
construed as referring to such agreement, instrument, or other document as from time to time amended, supplemented, or otherwise
modified (subject to any restrictions on such amendments, supplements, or modifications set forth herein), (b) any reference herein
to any Person shall be construed to include such Person’s permitted successors and permitted assigns, (c) the words “herein”,
“hereof”, and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in
its entirety and not to any particular provision hereof, (d) all references herein to Sections, Annexes, Exhibits, and Schedules
shall be construed to refer to Sections of, Annexes, Exhibits, and Schedules to, this Agreement, (e) any reference to any law or
regulation herein shall, unless otherwise specified, refer to such law or regulation as amended, supplemented, or otherwise modified
from time to time, and (f) the words “asset” and “property” shall be construed to have the same meaning
and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts, and
contract rights.

 

Section 1.02          
Certain Defined Terms

 

As used in this Agreement,
the following terms shall have the following meanings:

 

“Agreement”
has the meaning set forth in the introduction hereto.

 

“Bankruptcy
Event” has the meaning given to such term in the Loan Agreement.

 

“Bankruptcy
Proceeding” means the occurrence or commencement of any proceeding specified in clause (a) or (b) in the definition
of “Bankruptcy Event” as defined in the Loan Agreement.

 

“Borrower”
has the meaning set forth in the introduction hereto.

 

“Collateral”
means any and all property from time to time subject to Liens or other security interests to secure the payment or performance
of the Senior Obligations.

 

“Loan Agreement”
has the meaning set forth in the recitals to this Agreement.

 

“Loans”
has the meaning set forth in the recitals to this Agreement.

 

“Senior
Lender” means the “Lender” under the Loan Agreement and each other
holder of a Senior Obligation and each of their respective successors and assigns.

 

“Senior
Loan Documents” means, collectively, the Loan Agreement and other “Loan
Documents” (as such term is defined in the Loan Agreement) and all other documents, instruments and agreements that from
time to time evidence the Senior Obligations or secure or support payment or performance of such Senior Obligations, as the same
may be amended, amended and restated, modified or

 

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supplemented
from time to time, including, without limitation, amendments, modifications, supplements and restatements thereof giving effect
to increases, renewals, extensions, refundings, deferrals, restructurings, replacements or refinancings of, or additions to, the
arrangements provided therein (whether provided by the Senior Lender under the Loan Agreement as of the date hereof or any successor
Lender), but excluding, in any event, any documentation evidencing Subordinated Obligations.

 

“Senior
Obligations” means collectively, the “Obligations” (as such
term is defined in the Loan Agreement) including, without limitation, all principal, interest, fees, expenses, indemnities and
reimbursement obligations (including, without limitation, attorney costs) at any time owed by the Borrower to the Senior Lender
pursuant to the terms of the Senior Loan Documents, in each instance, whether before or after the commencement of a Bankruptcy
Proceeding and without regard to whether or not any such obligation is an allowed claim, and all obligations and liabilities incurred
with respect to any refinancing of such obligations, together with any amendments, amendment and restatements, modifications, renewals
or extensions thereof.

 

“Subordinated
Debt” has the meaning given to such term in the Loan Agreement.

 

“Subordinated
Lender” is defined in the parties hereto.

 

“Subordinated
Obligations” means, collectively, the unpaid principal of and interest on any Subordinated Debt and all other Indebtedness
of the Borrower owing to the Subordinated Lender (including, without limitation, interest accruing at the then applicable rate
set forth in the Subordinated Loan Documents after the maturity of the Subordinated Debt and interest accruing at the then applicable
rate in respect of the Subordinated Debt after the filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, the Subordinated Debt, this Agreement, or any other Subordinated
Loan Document, in each case whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses
or otherwise (including, without limitation, attorney costs incurred by the Subordinated Lender that are required to be paid by
the Borrower pursuant to the terms of any other Subordinated Loan Document).

 

“Subordinated
Loan Documents” means, collectively, any notes, documents, agreements or instruments that from time to time evidence
or otherwise relate to Subordinated Obligations.

 

Article
II

Agreement to Subordinate

 

Section 2.01         
No Collateral; Consent to Security. The Subordinated Lender is an unsecured creditor
of the Borrower and has not taken and shall not take any Lien or other collateral security or any other credit support of any kind
from the Borrower for any reason, including to secure the Borrower’s obligations with respect to the Subordinated Obligations.
The Subordinated Lender acknowledges and consents to the pledge by the Borrower of all or substantially all of its assets as collateral
to secure its obligations under the Senior Loan Documents.

 

Section 2.02          
Subordination and Proceedings Against Borrower

 

(a)          
The Subordinated Lender agrees that (i) the payment of the principal of, interest on, and all other amounts in respect of,
the Subordinated Obligations, and all rights of the Subordinated Lender against the Borrower, are expressly made subordinate and
subject in right of payment to the prior indefeasible and unconditional payment in full of all Senior Obligations, (ii) that it
will not, directly or

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indirectly
ask, demand, sue for, take, accept or receive from the Borrower, by set-off or in any other manner, or accept or retain payment
(in whole or in part) of the Subordinated Obligations from the Borrower, unless and until all of the Senior Obligations have been
paid in full and the commitments thereunder have expired or been terminated and (iii) no holder of the Subordinated Obligations
shall have any claim to any assets of the Borrower on a parity with or prior to the claim of any holder of the Senior Obligations.

 

(b)          
In furtherance of the foregoing Section 2.02(a), and notwithstanding anything in the Senior Loan Documents to the
contrary, the Subordinated Lender shall not, until all of the Senior Obligations have been paid in full and the commitments thereunder
terminated:

 

(i)           
directly or indirectly, take, demand, accept or receive from the Borrower or any other Person, in cash or other property
or by setoff or in any other manner, payment of all or any of the Subordinated Obligations; except that nothing herein shall prohibit
the Subordinated Lender from converting any of the Subordinated Obligations into common stock of Borrower, nor prohibit the Borrower
from permitting conversion of any Subordinated Obligations into common stock of Borrower;

 

(ii)          
take any action to collect all or any portion of the Subordinated Obligations, to accelerate or demand payment of all or
any portion of the Subordinated Obligations or to enforce any of the rights and remedies of any holder of any of the Subordinated
Obligations, either pursuant to the Subordinated Loan Documents, at Law, or in equity; except that nothing herein shall prohibit
the Subordinated Lender from converting any of the Subordinated Obligations into common stock of Borrower, nor prohibit the Borrower
from permitting conversion of any Subordinated Obligations into common stock of Borrower;

 

(iii)           take, pursue, or commence or otherwise engage, undertake, or institute any judicial or other steps, action, or proceedings
against the Borrower (whether by itself or joined with any other creditor), with a view to commencing any insolvency or other proceedings
for the winding up or liquidation of the Borrower (including without limitation the appointing of, or procuring the appointment
of, an administrator or administrative receiver, liquidator, receiver, trustee in bankruptcy, or other such enforcement officer
in respect of the Borrower or any of its assets);

 

(iv)           take
any steps to enforce any judgment or order obtained by it in respect of any obligations or liabilities of the Borrower;

 

(v)          
commence any judicial action or proceeding to collect payment of principal of, interest on, and other amounts in respect
of the Subordinated Obligations; or

 

(vi)          take
any Lien or other collateral security or any other credit support of any kind for the Subordinated Obligations.

 

The expressions “prior
payment in full,” “payment in full,” “paid in full” and any other similar terms or phrases when
used herein with respect to the Senior Obligations shall mean (i) the indefeasible payment in full, in immediately available funds,
of all of the Senior Obligations and the performance in full of all of the Senior Obligations, (ii) the termination or expiration
of all Senior Loan Documents, and (iii) termination of any and all commitments to lend under the Senior Loan Documents. Senior
Obligations shall be considered to be outstanding whenever any loan commitment under any Senior Loan Document is outstanding. 

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(c)          
The Senior Lender and each holder of Senior Obligations, whether now outstanding or hereafter created, incurred, assumed
or guaranteed, shall be deemed to have acquired Senior Obligations in reliance upon the provisions contained in this Agreement.

 

(d)          
Notwithstanding anything to the contrary in this Agreement, the Borrower shall not make, give or permit, directly or indirectly,
by setoff, redemption, purchase or in any other manner, any payment of or with respect to, or any collateral or other security
for, the whole or any part of the Subordinated Obligations, including, without limitation, any guarantee, letter of credit or similar
credit support to support payment of any of the Subordinated Obligations, except that nothing herein shall prohibit the Subordinated
Lender from converting any of the Subordinated Obligations into common stock of Borrower, nor prohibit the Borrower from permitting
conversion of any Subordinated Obligations into common stock of Borrower.

 

(e)          
The Subordinated Lender and the Borrower hereby agree that all Senior Obligations shall be paid in full before any payment
or distribution is made with respect to any of the Subordinated Obligations.

 

Section 2.03          
Payment Upon Dissolution, Etc.

 

(a)          
Without in any way limiting the provisions of Section 2.02, upon the occurrence of any Bankruptcy Event in respect
of the Borrower:

 

(i)           
the Subordinated Lender and Borrower agree that:

 

(A)          
the Senior Lender shall be entitled to receive payment in full of all amounts due or to become due on or in respect of all
of the Senior Obligations before the Subordinated Lender shall be entitled to receive any payment on account of the Subordinated
Obligations (whether in respect of principal, interest, premium, fees, indemnities, commissions, or otherwise); and

 

(B)          
any payment or distribution of assets of the Borrower of any kind or character, whether in cash, property or securities,
to which Subordinated Lender would be entitled, shall be paid or delivered by the Borrower, or any receiver, trustee in bankruptcy,
liquidating trustee, disbursing agent or other Person making such payment or distribution, directly to the Senior Lender for application
against the Senior Obligations (in accordance with the terms of the Senior Loan Documents), to the extent necessary to pay in full
all Senior Obligations, before any payment or distribution shall be made to Subordinated Lender, and (x) Subordinated Lender hereby
unconditionally authorizes, empowers and directs all trustees, receivers, custodians, conservators, or any other Persons having
authority over the property of the Borrower to effect delivery of all such payments and distributions to the Senior Lender and
(y) Subordinated Lender agrees to execute and deliver to the Senior Lender such further instruments as may be requested by the
Senior Lender to confirm the authorization referred to in the foregoing clause (x); and

 

(ii)          
the Subordinated Lender irrevocably authorizes and empowers the Senior Lender to:

 

(A)          demand,
sue for, collect and receive every payment or distribution on account of any of the Subordinated Obligations payable or deliverable
in connection with such event or proceeding, until the Senior Obligations are paid in full, and give acquittance therefor;
and

 

(B)          
file claims and proofs of claim in any such Bankruptcy Proceeding and take such other actions, in its own name, or in the
name of the

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Subordinated Lender or otherwise, as the Senior Lender may deem necessary or advisable for the enforcement of the provisions
of this Agreement; and, in furtherance thereof, the Subordinated Lender shall execute and deliver such powers of attorney,
assignments or proofs of claim or other instruments as the Senior Lender may request;

 

provided that,
in each case, the foregoing authorization and empowerment imposes no obligation on the Senior Lender to take any such action.

 

(b)          
If any payment or distribution, whether consisting of money, property or securities, shall be collected or received by or
come into the custody, control or possession of the Subordinated Lender in respect of the Subordinated Debt, the Subordinated Lender
shall forthwith deliver the same to the Senior Lender for application against the Senior Obligations, in the exact form received,
duly endorsed to the Senior Lender, if required, in each case to be applied to the payment or prepayment of the applicable Senior
Obligations in accordance with the terms of the applicable Senior Loan Documents until such Senior Obligations are paid in full.
Until so delivered, such payment or distribution shall be held in trust by the Subordinated Lender as the property of the Senior
Lender, segregated from other funds and property held by the Subordinated Lender.

 

Section 2.04     
    Defenses Waived. The Subordinated Lender hereby absolutely, unconditionally, and irrevocably
waives, to the fullest extent permitted by law, (a) any defense based on the adequacy of a remedy at law which might be asserted
as a bar to the remedy of specific performance hereof in any action brought therefor by the Senior Lender and (b) any requirement
that the Senior Lender protect, secure, perfect, or insure any collateral security or any property subject thereto or exhaust any
right or take any action against the Borrower or any other Person or any collateral.

 

Section 2.05         
Subrogation. The Subordinated Lender hereby agrees that until the indefeasible payment
in full of all the Senior Obligations, the Subordinated Lender shall not exercise any right or remedy arising by way of subrogation,
contribution, reimbursement, indemnity, security, guarantee, or otherwise against the Borrower (whether under Law or otherwise).

 

Section 2.06          
Consents, Waivers and Covenants of Subordinated Lender

 

(a)          
The Subordinated Lender consents and agrees that, without the necessity of any reservation of rights against Subordinated
Lender, and without notice to or further assent by the Subordinated Lender:

 

(i)          
any demand for payment of any Senior Obligations made by the Senior Lender may be rescinded in whole or in part by such
Senior Lender, and any Senior Obligation may be continued, and the Senior Obligations, or the liability of the Borrower or any
guarantor or any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset
with respect thereto, or any obligation or liability of the Borrower or any other party under any Senior Loan Document, or any
other agreement, may, from time to time, in whole or in part, be amended, restated, renewed, extended, increased, modified, accelerated,
compromised, restructured, waived, surrendered, or released by the Senior Lender;

 

(ii)          
the Senior Loan Documents and the Senior Obligations may be amended, restated, modified, extended, increased, renewed, restructured,
supplemented or terminated, in whole or in part, as the Senior Lender may deem advisable from time to time, and any collateral
security at any time held by the Senior Lender for the payment of any of the Senior Obligations may be sold, exchanged, restructured,
waived, surrendered or released, in each case all without notice to or further assent by Subordinated Lender, which will remain
bound under this Agreement, and the Senior Lender shall have the

 

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right to grant waivers or consents to the Borrower with respect
to any of the Senior Obligations or any Senior Loan Document in any manner whatsoever, all without impairing, abridging, releasing
or affecting the subordination provided for herein; and

 

(iii)           any
refinancing of the Senior Obligations may be consummated by the Borrower.

 

(b)          
The Subordinated Lender waives any and all notice of the creation, renewal, extension, increase, or accrual of any of the
Senior Obligations and notice of or proof of reliance by the Senior Lender upon this Agreement. The Senior Obligations shall be
deemed conclusively to have been created, contracted or incurred in reliance upon this Agreement, and all dealings between the
Borrower and Senior Lender shall be deemed to have been consummated in reliance upon this Agreement. The Subordinated Lender acknowledges
and agrees that the Senior Lender has relied upon the subordination provided for herein in entering into the Senior Loan Documents
and in making funds available to Borrower thereunder. Subordinated Lender waives notice of or proof of reliance on this Agreement
and protest, demand for payment and notice of default.

 

(c)          
The Subordinated Lender hereby consents to the Liens on the Collateral created in favor of Senior Lender under the Senior
Loan Documents, and agrees and acknowledges the grant, perfection, priority and existence of such Liens, which shall be senior
in respect of priority, ranking and security to any Subordinated Loan Document.

 

(d)          
Notwithstanding anything in the Subordinated Loan Documents or any other agreement or instrument to the contrary, the Subordinated
Lender and Borrower hereby acknowledge and agree that the maturity date of each of the Subordinated Obligations shall be no earlier
than the date upon which the Senior Obligations are paid in full.

 

Section 2.07          
Negative Covenants of the Subordinated Lender. Until the payment in full of the Senior
Obligations, the Subordinated Lender shall not, without the prior written consent of the Senior Lender:

 

(a)          
sell, assign, or otherwise transfer, in whole or in part, the Subordinated Obligations or any interest therein to any other
Person or create, incur or suffer to exist any security interest, Lien, charge or other encumbrance whatsoever upon any of the
Subordinated Obligations or under any Subordinated Loan Document in favor of any other Person;

 

(b)          
permit any of the Subordinated Loan Documents or the Subordinated Obligations to be amended, restated, amended and restated,
renewed, restructured, increased, extended, supplemented or otherwise modified in any respect, except that nothing herein shall
prohibit the Subordinated Lender from converting any of the Subordinated Obligations into common stock of Borrower, nor prohibit
the Borrower from permitting conversion of any Subordinated Obligations into common stock of Borrower;

 

(c)          
permit or require the Borrower to create any Lien on any of its assets or properties or provide any other collateral security
or credit support of any kind, in any such case to secure the payment or performance of any of the Subordinated Obligations;

 

(d)          
commence, or join with any creditors (other than Senior Lender) in commencing, or otherwise cause, any Bankruptcy Proceeding;

 

(e)          
challenge the validity, enforceability, priority of, or any other term or provision of, any Senior Loan Document;

 

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(f)          
challenge the extent, validity, creation, perfection or priority of, any Lien created or purported to be created pursuant
to any Senior Loan Document or seek to avoid or subordinate any such Lien; or

 

(g)          
interfere in any respect with the exercise by the Senior Lender of any right or remedy under any Senior Loan Document or
Applicable Law,

 

provided that
a transfer by operation of Law to the estate of a deceased Subordinated Lender shall not be a default hereunder; provided, further,
that it is the express intent of all parties hereto that such transfer shall be expressly subject to this Agreement, and that the
transferee of the estate expressly acknowledges to the Senior Lender, by a written agreement in form and substance satisfactory
to the Senior Lender or by delivery of an executed counterpart of this Agreement or a subordination agreement substantially identical
to this Agreement, the subordination provided for herein and agrees to be bound by all of the terms and provisions hereof.

 

Section 2.08         
Senior Obligations Unconditional. All obligations and agreements of the Subordinated
Lender hereunder shall be irrevocable, unconditional, continuing and absolute. All rights and interests of the Senior Lender hereunder,
and all agreements and obligations of the Subordinated Lender and the Borrower, shall remain in full force and effect irrespective
of:

 

(a)          
any lack of validity or enforceability of any Senior Loan Document or if all or any portion of the Senior Obligations and/or
the Liens securing same are subordinated, set aside, avoided or disallowed, in each case pursuant to a Bankruptcy Event or otherwise
(as a result of the fraudulent transfer provisions under the Bankruptcy Code, under any state fraudulent conveyance or fraudulent
transfer statute, or otherwise);

 

(b)          
any change in the time, manner or place of payment of, or in any other term of, all or any of the Senior Obligations, or
any amendment or waiver or other modification, whether by course of conduct or otherwise, of the terms of any Senior Loan Document,
including, without limitation, any increase in any of the Senior Obligations resulting from the extension of additional credit
to the Borrower or otherwise;

 

(c)          
any exchange, release or nonperfection of any Lien upon any Collateral, or any release, amendment, waiver or other modification,
whether in writing or by course of conduct or otherwise, of all or any of the Senior Obligations or any guarantee thereof;

 

(d)          
the existence of any claim, set-off, defense, counterclaim or other right that the Subordinated Lender, the Borrower or
any other Person may have against any Person, including, without limitation, the Senior Lender;

 

(e)          
any manner of application of Collateral or any other collateral or credit support, or proceeds thereof, to all or any of
the Senior Obligations, or any manner of sale or other disposition of any Collateral or any other collateral for all or any of
the Senior Obligations or any obligations of the Borrower under the Senior Loan Documents or any other assets of the Borrower;

 

(f)          
any change, restructuring or termination of the corporate or other organizational structure or existence of the Borrower;

 

(g)          
any failure of the Senior Lender to disclose to the Subordinated Lender any information relating to the business, condition
(financial or otherwise), operations, performance, properties or prospects of Borrower or any of its Affiliates now or hereafter
known to the Senior Lender (the Subordinated Lender hereby waiving any duty on the part of the Senior Lender to disclose such information);
or

 

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(h)          
any other event or circumstance which otherwise might constitute a defense or counterclaim available to, or a discharge
of, the Borrower in respect of any of the Senior Obligations, or of the Subordinated Lender or the Borrower in respect of this
Agreement.

 

Section 2.09          
Representations and Warranties. The Subordinated Lender represents and warrants to
the Senior Lender that:

 

(a)          
he is a natural person who is competent to execute and deliver this Agreement;

 

(b)          
he is a citizen solely of the United States of America and he has legal domicile in the United States of America;

 

(c)          
he has had due opportunity to (i) study the terms of this Agreement and understands this Agreement and (ii) take separate
independent legal advice on the effect of this Agreement, and has taken such legal advice, and, in any case, understands and has
received advice in respect of, without limitation: (A) the consequences of entering into this Subordination Agreement as regards
the treatment of the Subordinated Obligations owed to the Subordinated Lender by the Borrower as compared to the Senior Obligations
owed to the Senior Lender by the Borrower, and (B) the extent of his potential liabilities under this Agreement;

 

(d)          
the Subordinated Obligations: (i) have been issued to him for good and valuable consideration; (ii) are owned by him
free and clear of any security interests, Liens, charges or encumbrances whatsoever, other than the interests of Senior Lender
under this Agreement; (iii) are payable solely and exclusively to him and to no other Person and are payable without deduction
for any defense, recoupment, offset or counterclaim, and (iv) constitute the only evidence of the obligations evidenced thereby;

 

(e)          
he has the power, authority and legal right to execute and deliver and to perform his obligations under this Agreement and
has taken all necessary action to authorize his execution, delivery and performance of this Agreement;

 

(f)          
this Agreement has been duly executed and delivered by him and constitutes a legal, valid and binding obligation, enforceable
against him in accordance with its terms;

 

(g)          
the execution, delivery and performance of this Agreement will not violate any provision of any requirement of Law applicable
to him or any of his other contractual obligations and will not result in the creation or imposition of any Lien on any of his
properties or revenues pursuant to any requirement of Law affecting him, or any of his contractual obligations, except the interest
of the Senior Lender under this Agreement;

 

(h)          
no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or Governmental Authority
or any other Person (including, without limitation, any of his creditors), is required in connection with the execution, delivery,
performance, validity or enforceability of this Agreement;

 

(i)          
no pending or, to the best of its knowledge, threatened litigation, arbitration or other proceedings if adversely determined
would in any way prevent the performance of the terms of this Agreement;

 

(j)          
as of the date hereof, the Borrower is indebted to him under the Subordinated Loan Documents in the aggregate amount of
$10,500,000;

 

(k)          
he has full knowledge of the commercial and legal implications of entering into the transactions contemplated by this Agreement
and he is willingly entering into such transactions

 

    10

    

    

 

without
being unduly influenced by any other party to this Agreement or the Senior Loan Documents; and

 

(l)           
in entering into this Agreement, he is acting as principal and for his own account and not as agent or trustee or in any
other capacity for a third party.

 

Section 2.10 
        No Representation by Senior Lender. The
Senior Lender has not made, and the Senior Lender does not hereby nor otherwise make to the Subordinated Lender, any
representations or warranties, express, or implied, nor does the Senior Lender assume any liability or obligation to or of
the Subordinated Lender with respect to, without limitation:

 

(a)          
the financial or other condition of the Borrower or any other obligors under any instruments of guarantee with respect to
the Senior Obligations;

 

(b)          
the enforceability, validity, value or collectability of any of the Senior Obligations or the Subordinated Obligations,
any collateral therefor, or any guarantee or security which may have been granted in connection with any of the Senior Obligations
or the Subordinated Obligations; or

 

(c)          
the title or right of the Borrower or any other Person to transfer any collateral or security.

 

Section 2.11          
Notices; Disclosure

 

The Subordinated Lender
agrees, promptly upon obtaining actual knowledge thereof, that he will give the Senior Lender notice of any default by the Borrower
in respect of the Subordinated Obligations.

 

Section 2.12         
No Waiver. No failure on the part of the Senior Lender,
and no delay in exercising any right, remedy, or power hereunder or under any Senior Loan Document, shall operate as a waiver thereof
by the Senior Lender, nor shall any single or partial exercise by the Senior Lender
of any right, remedy, or power hereunder or under any Senior Loan Document preclude any other or future exercise of any other right,
remedy or power. Each and every right, remedy, and power hereby granted to the Senior Lender
or allowed to the Senior Lender by law or other agreement shall be cumulative and not exclusive
of any other, and may be exercised by the Senior Lender from time to time. Without in any
way limiting the generality of the foregoing, the Senior Lender may, at any time and from
time to time, without the consent of or notice to the Subordinated Lender, without incurring responsibility to the Subordinated
Lender, and without impairing or releasing the subordination provided herein or the obligations hereunder of the Subordinated Lender,
do any one or more of the following: (a) change the manner, place, or terms of payment of, or extend the time of payment of, or
renew or alter, the Senior Obligations under the Senior Loan Documents, or otherwise amend or supplement in any manner the Senior
Loan Documents or any instruments evidencing the same or any agreement under which the obligations under the Senior Loan Documents
are outstanding; (b) sell, exchange, release, or otherwise deal with any property pledged, mortgaged, or otherwise securing the
obligations owed to the Senior Lender under the Senior Loan Documents; and (c) exercise or
refrain from exercising any rights against the Borrower or any other Person.

 

Section 2.13         
Waiver of Claims. To the maximum extent permitted by Law, the Subordinated Lender waives
any claim it might have against the Senior Lender with respect to, or arising out of, any action or failure to act or any error
of judgment, negligence, or mistake or oversight whatsoever on the part of the Senior Lender or its affiliates, directors, officers,
employees, advisors, attorneys or agents with respect to any exercise of any rights or remedies under any of the Senior Loan Documents
or any transaction relating to any of the Collateral or any guarantee. Neither the Senior Lender nor any of its affiliates, directors,
officers, employees, advisors, attorneys or agents shall be liable for failure to demand, collect or realize upon any of the Collateral
or any guarantee or for any delay in doing so or shall be under

 

    11

    

    

 

any
obligation to sell or otherwise dispose of any Collateral or realize upon any guarantee upon the request of the Borrower or the
Subordinated Lender or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof
or any guarantee.

 

Section 2.14          
Additional Provisions Applicable After Bankruptcy Event or Bankruptcy Proceeding. Without
limiting any other term or provision in this Agreement or any Senior Loan Document:

 

(a)          
The provisions of this Agreement shall continue in full force and effect notwithstanding the occurrence of any Bankruptcy
Event or Bankruptcy Proceeding.

 

(b)          
The Subordinated Lender agrees that it will not, directly or indirectly (including, without limitation, as a member of any
unsecured creditors’ committee), take any action in or relating to any proceeding arising from, as a result of, in connection
with or relating to any Bankruptcy Proceeding or Bankruptcy Event to challenge, contest or object in any manner to (i) the extent,
validity, creation, enforceability, perfection or priority of any of the Senior Obligations or any Senior Loan Document or any
Liens or security interests created under any Senior Loan Document, or any term or provision of this Agreement or the Subordinated
Lender’s obligations, undertakings, acknowledgments and agreements set forth in this Agreement; (ii) any pleading, motion,
notice, objection or argument of or made by or on behalf of any holder of any of the Senior Obligations based on, under or in respect
of Section 361, 362, 363 or 364 of the Bankruptcy Code, including, without limitation, in respect of permitting the use of
any cash or other collateral by, or providing any financing to, the Borrower under either Section 363 or 364 of the Bankruptcy
Code (including, without limitation, any request for adequate protection, or in respect of the sale or other disposition of any
property by the Borrower under Section 363 of the Bankruptcy Code or pursuant to a plan of reorganization or any other arrangement
(and Subordinated Lender shall be deemed to have consented to any such sale or disposition and all of the terms applicable thereto);
or (iii) the payment of interest, fees, expenses or other amounts to the Senior Lender under Sections 506(b) or 506(c) of the Bankruptcy
Code or otherwise. The Subordinated Lender agrees that it will not seek relief from the automatic stay or from any other stay in
any Bankruptcy Proceeding or take any action in derogation thereof, without the prior written consent of Lender.

 

(c)          
The Subordinated Lender shall not support or vote in favor of any plan of reorganization (and they shall be deemed to have
voted to reject any plan of reorganization) unless such plan (i) pays off in full, in cash, all Senior Obligations or (ii) is accepted
by the Senior Lender, provided that this undertaking is not intended and shall not be construed to limit any fiduciary obligations
of the Subordinated Lender in its capacity as the Chief Executive Officer of GulfSlope Energy, Inc. This Agreement, which the parties
hereto expressly acknowledge is a “subordination agreement” under Section 510(a) of the Bankruptcy Code, shall be effective,
during and after the commencement of a Bankruptcy Proceeding.

 

    12

    

    

 

Section 2.15          
Further Assurances. The Subordinated Lender and the Borrower, at their own sole cost
and expense and at any time from time to time, upon the written request of Lender, will promptly and duly execute and deliver such
further instruments and documents and take such further actions as the Senior Lender reasonably may request for the purposes of
obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted. Without limiting the generality
of the foregoing, in the event of an assignment pursuant to any Senior Loan Document or in the event of a refinancing of the Senior
Obligations, the Subordinated Lender and the Borrower shall, upon the request of the Senior Lender, execute a new subordination
agreement upon the same terms as this Agreement to further evidence and confirm that the Subordinated Debt are and shall remain
junior and subordinate in right of payment to the Senior Obligations.

 

Section 2.16         
Reinstatement. The terms and provisions of this Agreement shall continue to be effective
or be reinstated, and the Senior Obligations shall not be deemed to be paid in full, as the case may be, if at any time any payment
of any of the Senior Obligations is rescinded or avoided, or must otherwise be returned by the Senior Lender pursuant to any Bankruptcy
Proceeding or otherwise, all as though such payment had not been made.

 

Section 2.17          
Expenses. The Subordinated Lender shall pay or reimburse the Senior Lender, upon demand,
for all of its reasonable and documented costs and expenses incurred in connection with the enforcement of any rights and remedies
with respect to the Subordinated Lender under this Agreement, including, without limitation, attorney costs of the Senior Lender.

 

Section 2.18          
Provisions Define Relative Rights. This Agreement is intended solely for the purpose
of defining the relative rights of the Senior Lender, on the one hand, and the Subordinated Lender, on the other, and the obligations
of Borrower in connection with the foregoing and no other Person shall have any right, benefit or other interest under this Agreement.
The Borrower hereby agrees that it will not make any payment on or in respect of any of the Subordinated Obligations, or take any
other actions, in contravention of the provisions of this Agreement.

 

Section 2.19          
Legend. Prior to any assignment of any Subordinated Loan Document, the Subordinated
Lender will cause each Subordinated Loan Document (and each other Subordinated Loan Document as Lender shall request) to bear upon
its face the following legend:

 

“ALL INDEBTEDNESS EVIDENCED
BY THIS AGREEMENT IS SUBORDINATED TO CERTAIN SENIOR RANKING INDEBTEDNESS PURSUANT TO, AND TO THE EXTENT PROVIDED IN, AND IS OTHERWISE
SUBJECT TO THE TERMS OF, THE SUBORDINATION AGREEMENT, DATED AS OF MARCH 1, 2019 (THE “SUBORDINATION AGREEMENT”), AS
THE SAME MAY BE AMENDED, AMENDED AND RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, BY AND AMONG GULFSLOPE ENERGY,
INC., AS BORROWER, DELEK GOM INVESTMENTS, LLC, AS SENIOR LENDER, AND THE HOLDERS FROM TIME TO TIME OF THE OBLIGATIONS ARISING UNDER
THE SUBORDINATED LOAN DOCUMENTS REFERRED TO IN SUCH SUBORDINATION AGREEMENT, INCLUDING, WITHOUT LIMITATION, THIS AGREEMENT, AND
EACH HOLDER HEREOF, BY ITS ACCEPTANCE HEREOF, ACKNOWLEDGES AND AGREES TO BE BOUND BY THE PROVISIONS OF THE SUBORDINATION AGREEMENT.”

 

Section 2.20          
Powers Coupled With An Interest. All powers, authorizations and agencies contained
in this Agreement are coupled with an interest and are irrevocable until the Senior Obligations are paid in full.

 

Section 2.21         
Authority of Senior Lender. Each of the Borrower and the Subordinated Lender acknowledges
and agrees that the rights and responsibilities of the Senior Lender under this Agreement

 

    13

    

    

 

with
respect to any action taken by the Senior Lender or the exercise or non-exercise by the Senior Lender of any option, request,
judgment or other right or remedy provided for herein or resulting or arising out of this Agreement shall be governed by the Senior
Loan Documents and by such other agreements with respect thereto as may exist from time to time among, but, as between the Senior
Lender, on the one hand, and the Borrower and the Subordinated Lender, on the other hand, the Senior Lender shall be conclusively
presumed to be acting with full and valid authority so to act or refrain from acting, and neither the Borrower nor the Subordinated
Lender shall be under any obligation, or entitlement, to make any inquiry respecting such authority.

 

Section 2.22          
Notices

 

(a)          
All notices, demands, requests, consents, and other communications provided for in this Agreement shall be given in writing,
or by any telecommunication device capable of creating a written record (including electronic mail), and addressed to the party
to be notified as follows:

 

		(i)	If to the Borrower, at:

 

1331 Lamar Street

Suite 1665

Houston, Texas 77010

John Malanga, Chief Financial Officer

Tel: (281) 918-4103

Email:john.malanga@gulfslope.com

 

with a copy to:

 

Mayer Brown LLP

Attention: Tristan Propst

Suite 3400

700 Louisiana Street

Tel: (713) 238-2657

Fax: (713) 238-4657

Email: tprobst@mayerbrown.com

 

		(ii)	if to the Senior Lender:

 

c/o Corporation
Trust Center

1209 Orange Street

Wilmington, Delaware 19801

 

and a copy to:

 

Leora Pratt
Levin 

VP & General
Counsel 

Delek Group
Ltd 

19, Abba Eban
blvd. P.O.B 2054 

Herzliya 4612001,
Israel 

Tel: (+972 9)
8638492 

Direct: (+972
9) 8638491 

Fax: (+972 9)
8854955 

E-mail: leorapl@delek-group.com

 

    14

    

    

 

		(iii)	if to the Subordinated Lender:

 

John Seitz 

5602 Orchard Valley
Court 

Kingwood TX 77345 

Direct: 281-918-4101 

Mobile: 713-203-3303 

E-mail: jnseitz@gulfslope.com

 

(b)          
Any such notice shall be deemed to have been given or made or to have become effective on the terms set forth in Section
8.01 of the Loan Agreement.

 

Section 2.23          
Amendments

 

This Agreement may
not be amended, modified or supplemented without the prior written consent of each of the parties hereto.

 

Section 2.24          
Successors and Assigns

 

The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

 

Section 2.25          
Captions

 

The table of contents
and captions and section headings appearing herein are included solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Agreement.

 

Section 2.26          
Counterparts; Integration; Effectiveness.

 

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

 

(b)          
This Agreement constitutes the entire contract among the parties relating to the subject matter herein and supersede any
and all previous agreements and understandings, oral or written, relating to such subject matter. This Agreement represent the
final agreement among the parties hereto and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements
of the parties. There are no unwritten oral agreements between the parties.

 

(c)          
This Agreement shall become effective when it shall have been executed by the Senior Lender and when the Senior Lender shall
have received counterparts that, when taken together, bear the signatures of each of the other parties to this Agreement, and thereafter
shall be binding upon and inure to the benefit of the parties to this Agreement and their respective successors and assigns. Delivery
of an executed counterpart of a signature page of this Agreement by telecopy or electronic mail shall be effective as delivery
of a manually executed counterpart of this Agreement.

    15

    

    

 

Section 2.27          
Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable
in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of the invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining provisions of this Agreement; and the invalidity of
a particular provision in a particular jurisdiction shall not invalidate that provision in any other jurisdiction.

 

Section 2.28          
GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.

 

(a)          
EXCEPT TO THE EXTENT (IF ANY) PROVIDED OTHERWISE IN A PARTICULAR SENIOR LOAN DOCUMENT, THIS AGREEMENT AND THE OTHER SENIOR
LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

(b)          
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE SENIOR LOAN DOCUMENTS MAY BE BROUGHT, IF AT ALL, IN THE COURTS OF
THE STATE OF NEW YORK AND OF ANY FEDERAL COURT LOCATED IN THE STATE OF NEW YORK (OR ANY APPELLATE COURT FROM ANY THEREOF), AND,
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY TO THIS AGREEMENT HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT PERMITTED
BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THOSE COURTS. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, THAT
IT NOW OR SUBSEQUENTLY MAY HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT. IN THE CASE OF THE BORROWER
ONLY, THIS SUBMISSION TO JURISDICTION IS NON-EXCLUSIVE AND DOES NOT PRECLUDE A PARTY FROM OBTAINING JURISDICTION OVER THE BORROWER
IN ANY OTHER COURT OTHERWISE HAVING JURISDICTION.

 

(c)          
EACH PARTY TO THIS AGREEMENT HEREBY (i) KNOWINGLY, VOLUNTARILY, INTENTIONALLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT AND FOR ANY COUNTERCLAIM IN ANY SUCH PROCEEDING; (ii) CERTIFIES THAT NO PARTY TO THIS AGREEMENT OR ANY REPRESENTATIVE
OR AGENT OR COUNSEL FOR ANY PARTY TO THIS AGREEMENT HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, (iii) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT, THE LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS CONTAINED IN THIS SECTION 2.28(C), AND (IV) ACKNOWLEDGES THAT THIS SECTION 2.28(C) \ WAS NEGOTIATED BY IT
AND THAT ITS COUNSEL HAS HAD AN OPPORTUNITY TO REVIEW THIS AGREEMENT.

 

[SIGNATURE PAGES TO FOLLOW]

 

    16

    

    

IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written.

 

 

	 	GulfSlope Energy, Inc., as Borrower
	 	 	 
	 	By:	/s/ John N. Seitz 
	 	Name:	John N. Seitz
	 	Title: 	CEO

 

 

    17

    

    

 

	 	John N. Seitz., as Subordinated Lender
	 	 	 
	 	By:	/s/ John N. Seitz 
	 	Name:	 John N. Seitz
	 	Title:	CEO

 

Witnessed

 

	 	}	
        /s/ Charles Kelley

         

	 	 	 
	
        Witness
Name: Charles Kelley

        Witness Occupation: Attorney 

        Witness Address: 700 Louisiana St., Suite 3400, Houston,
        TX 77002

         
	 	 

 

    18

    

    

 

	 	Delek GOM Investments, LLC, as Senior Lender
	 	 	 
	 	By:	/s/ Leora Pratt Levin 
	 	Name:	Leora Pratt Levin
	 	Title: 	Authorized Person

 

 

    19GULFSLOPE ENERGY, INC. - 8-K

Exhibit 10.4

 

Execution
Version

 

SECURITY AGREEMENT

 

dated as of

 

March 1, 2019

 

among

 

GulfSlope
Energy, Inc.,

 

as Debtor,

 

and

 

Delek
GOM Investments, LLC,

 

as Lender

  

     

    	 

    

TABLE OF CONTENTS

 

	Article
    I DEFINITIONS	1
	Section
    1.01    Term Loan Agreement	1
	Section
    1.02    Other Defined Terms	1
	Article
    II SECURITY INTERESTS IN PERSONAL PROPERTY	3
	Section
    2.01    Security Interest	3
	Section
    2.02    Representations and Warranties	4
	Section
    2.03    Covenants	5
	Section
    2.04    Other Actions	5
	Article
    III REMEDIES	6
	Section
    3.01    Remedies upon Default	6
	Section
    3.02    Application of Proceeds	8
	Article
    IV MISCELLANEOUS	8
	Section
    4.01    Notices	8
	Section
    4.02    Security Interest Absolute	8
	Section
    4.03    Survival of Agreement	9
	Section
    4.04    Binding Effect	9
	Section
    4.05    Successors and Assigns	9
	Section
    4.06    Lender’s Fees and Expenses; Indemnification	9
	Section
    4.07    Lender Appointed Attorney-in-Fact	10
	Section
    4.08    GOVERNING LAW	10
	Section
    4.09    Termination or Release	10
	Section
    4.10    Miscellaneous	10

 

     

    	 

    

 

This SECURITY AGREEMENT
(this “Agreement”), dated as of March 1, 2019, by and between GulfSlope Energy, Inc., a Delaware
corporation, with its principal place of business at 1331 Lamar Street, Suite 1665, Houston Texas, 77010, (the “Debtor”),
and Delek GOM Investments, LLC, a Delaware limited liability company, with a registered office address c/o Corporation Trust Center,
1209 Orange Street, Wilmington, Delaware 19801, as lender under the Term Loan Agreement described below (in such capacity,
the “Lender”).

 

RECITALS

 

Reference is made to
the Term Loan Agreement dated as of March 1, 2019 (as amended, supplemented or otherwise modified from time to time,
the “Term Loan Agreement”), among the Debtor and the Lender.

 

The Lender has agreed
to make loans to the Debtor pursuant to, and upon the terms and conditions specified in, the Term Loan Agreement. The obligations
of the Lender to make loans to the Debtor are conditioned upon, among other things, the execution and delivery of this Agreement
by the Debtor and Lender.

 

NOW, THEREFORE, in
consideration of the foregoing, the Debtor and the Lender, intending to be legally bound, agree as follows:

 

Article
I

DEFINITIONS

 

Section 1.01        
Term Loan Agreement. (a) Capitalized terms used in this Agreement and not otherwise defined herein have
the meanings assigned to those terms in the Term Loan Agreement. Unless defined herein or under the Term Loan Agreement, capitalized
terms used in this Agreement have the meanings assigned to those terms in the Uniform Commercial Code.

 

(b)          
The rules of construction specified in Section 1.02 of the Term Loan Agreement also apply to this Agreement.

 

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

 

“Assigned
Contracts” means, collectively, all of the Debtor’s rights and remedies under, and all moneys and claims for
money due or to become due to the Debtor under, the Operative Documents and any other contracts, and any and all amendments, supplements,
extensions and renewals thereof, including all rights and claims of the Debtor now or hereafter existing: (a) under any insurance,
indemnities, warranties and guarantees provided for or arising out of or in connection with any of the foregoing agreements; (b) for
any damages arising out of or for breach or default under or in connection with any of the foregoing contracts; (c) to all other
amounts from time to time paid or payable under or in connection with any of the foregoing agreements; or (d) to exercise or enforce
any and all covenants, remedies, powers and privileges thereunder.

 

“Collateral”
is defined in Section 2.01(a).

 

    1

     

    

 

“Debtor”
is defined in the introduction to this Agreement.

 

“Excluded
Assets” shall mean the following:

 

(a)     any assets (including
Excepted Liens) over which the granting of Liens under the Security Documents in such assets would be prohibited by contract or
agreement (to the extent existing (x) on the Closing Date or (y) at the time such assets are acquired and not entered into in contemplation
of such acquisition), Applicable Law or regulation (other than to the extent that such prohibition would be rendered ineffective
pursuant to Section 9-406, 9-407, 9-408 or 9-409 of the UCC of any relevant jurisdiction or any other Applicable Law) or would
require the consent of any Person (other than the Debtor or any of its Affiliates) that has not been obtained (to the extent such
consent right (x) existed on the Closing Date or (y) at the time such assets are acquired and not in contemplation thereof) or
would require the consent of any Governmental Authority or regulatory body unless such consent has been obtained (in each case,
other than to the extent that such consent requirement would be rendered ineffective pursuant to Section 9-406, 9-407, 9-408 or
9-409 of the UCC of any relevant jurisdiction or any other Applicable Law); provided that any such asset or, to the extent
severable, any portion thereof, will be an Excluded Asset only to the extent and for so long as such prohibition or consent requirement
is effective and will cease to be an Excluded Asset and will become subject to the Lien granted under the Security Documents, immediately
and automatically, at such time as such prohibition or consent requirement is no longer effective;

 

(b)     any lease, license,
contract, property right, general intangible, agreement, asset or property to which the Debtor is a party or has rights, or which
is otherwise subject to a purchase money security interest or similar arrangement, or any of its rights or interests thereunder,
if and only for so long as the grant of a Lien under the Security Documents would constitute or result in a breach, termination
or default under, or would invalidate, any such lease, license, contract, property right, general intangible, agreement, asset
or property or purchase money arrangement or create a right of termination in favor of any party thereto (other than the Debtor)
(other than to the extent that any term of such lease, license, contract, property right, general intangible, agreement, asset
or property or purchase money arrangement would be rendered ineffective pursuant to Section 9-406, 9-407, 9-408 or 9-409 of the
UCC of any relevant jurisdiction or any other Applicable Law); provided that such lease, license, contract, property right
or agreement or purchase money arrangement or, to the extent severable, any portion thereof, will be an Excluded Asset only to
the extent and for so long as the consequences specified above will result and will cease to be an Excluded Asset and will become
subject to the Lien granted under the Security Documents, immediately and automatically, at such time as such consequences will
no longer result;

 

(c)     any intent-to-use
application trademark application prior to the filing of a “Statement of Use” or “Amendment to Allege Use”
with respect thereto, to the extent, if any, that, and solely during the period, if any, in which, the grant of a security interest
therein would impair the validity or enforceability of such intent-to-use trademark application under applicable federal Law;

 

(d)     any governmental
permits, franchises, approvals, charters, authorizations or licenses or state or local permits, franchises, approvals, charters,
authorizations or licenses, to the extent a grant of a Lien under the Security Documents in any such permit, franchise, approval,
charter, authorization or license is prohibited or restricted thereby (other than to the extent that any such prohibition or restriction
would be rendered ineffective pursuant to Section 9-406, 9-407, 9-408 or 9-409 of the UCC of any relevant jurisdiction or any other
Applicable Law); provided that any such permit, franchise, approval, charter, authorization or license or, to the extent
severable, any portion thereof, will be an Excluded Asset only to

 

    2

     

    

 

the extent and for so long as such prohibition or restriction
is effective and will cease to be an Excluded Asset and will become subject to the Lien granted under the Security Documents, immediately
and automatically, at such time as such prohibition is no longer effective;

 

(e)     that certain Oil
and Gas Lease of Submerged Lands under the Outer Continental Shelf Lands Act bearing Serial Number OCS-G 36357, dated effective
as of December 1, 2018, by and between the United States of America, as Lessor, and GulfSlope Energy, Inc., as Lessee, covering
all of Block 376, Vermilion Area, South Addition, OCS Leasing Map, Louisiana Map No. 3B, containing approximately 5,000.00 acres;
and

 

(f)      that certain Oil
and Gas Lease of Submerged Lands under the Outer Continental Shelf Lands Act bearing Serial Number OCS-G 36361, dated effective
as of November 1, 2018, by and between the United States of America, as Lessor, and GulfSlope Energy, Inc., as Lessee, covering
all of Block 371, Eugene Island Area, South Addition, OCS Leasing Map, Louisiana Map No. 4A, containing approximately 5,000.00
acres.

 

“Lender”
is defined in the recitals to this Agreement.

 

“Lender
Parties” means the Lender, its Indemnitees, and successors and assigns of each of the foregoing.

 

“Proceeds”
shall mean: (i) all “proceeds” as defined in the Uniform Commercial Code, payments or distributions made with
respect to any Investment Property and (ii) whatever is receivable or received when Collateral or proceeds are sold, exchanged,
collected or otherwise disposed of, whether such disposition is voluntary or involuntary.

 

“Security
Interest” is defined in Section 2.01.

 

“Term Loan
Agreement” is defined in the recitals to this Agreement.

 

“Uniform
Commercial Code” means the Uniform Commercial Code of the State of New York or of any other state the laws of which
are required as a result thereof to be applied in connection with the perfection or priority of, or remedies with respect to, the
Lender’s Security Interest on any Collateral, in each case as amended, modified, codified or reenacted, in whole or in part,
and in effect from time to time.

 

Article
II

SECURITY INTERESTS IN PERSONAL PROPERTY

 

Section 2.01        
Security Interest. (a) As security for the payment or performance, as the case may be, in full of the Obligations,
the Debtor hereby assigns and pledges to the Lender and its successors and assigns, and hereby grants to the Lender and its successors
and assigns, a security interest (the “Security Interest”), in all right, title or interest in or to
any and all of the following assets and properties now owned or at any time hereafter acquired by the Debtor or in which the Debtor
now has or at any time in the future may acquire any right, title or interest (collectively, the “Collateral”),
including without limitation, all: (i) oil, gas, and other minerals before extraction and As-extracted Collateral; (ii) Accounts;
(iii) Chattel Paper; (iv) Money and Deposit Accounts; (v) Documents; (vi) all General Intangibles; (vii) Goods; (viii) Assigned

 

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Contracts; (ix) Permits; (x) Instruments; (xi) Investment Property; (xii) Letter-of-Credit Rights and letters of credit; (xiii)
Commercial Tort Claims; and (xiv) to the extent not otherwise included, all Supporting Obligations and all Proceeds and products
of any and all of the foregoing and all collateral security and guarantees given by any person with respect to any of the foregoing,
provided that, notwithstanding anything to the contrary, (x) in no event shall the Collateral include, nor shall the security
interest or Lien granted under Section 2.01 constitute (or be deemed to constitute) a grant of a security interest in or
Lien on, any Excluded Assets, and (y) the Debtor shall not be required to take any action intended to cause any Excluded Asset
to constitute Collateral.

 

(b)          
The Debtor hereby irrevocably authorizes the Lender at any time and from time to time to file in any relevant jurisdiction
any initial financing statements (including fixture filings and as-extracted collateral filings) with respect to the Collateral
or any part thereof and amendments thereto that (i) indicate the Collateral as “all assets of the Debtor, whether now owned
or hereafter acquired” or words of similar effect, and (ii) contain the information required by Article 9 of the Uniform
Commercial Code of each applicable jurisdiction for the filing of any financing statement or amendment. The Debtor agrees to provide
such information to the Lender promptly upon request. The Debtor also ratifies its authorization for the Lender to file in any
relevant jurisdiction any initial financing statements or amendments thereto if filed prior to the date hereof.

 

(c)          
The Security Interest is granted as security only and shall not subject the Lender or any other Lender Party to, or in any
way alter or modify, any obligation or liability of the Debtor with respect to or arising out of the Collateral.

 

Section 2.02        
Representations and Warranties. The Debtor represents and warrants to the Lender Parties that on and as of the
Closing Date:

 

(a)          
Each of the representations and warranties of the Debtor in the Term Loan Agreement is true and correct.

 

(b)          
The Debtor has good and valid rights in and title to the Collateral with respect to which it has purported to grant a Security
Interest hereunder and has full power and authority to grant to the Lender the Security Interest in such Collateral pursuant hereto,
subject to Excepted Liens.

 

(c)          
Except with respect to the Excluded Assets, all actions and consents of Debtor for the exercise by the Lender Parties of
the rights provided for in this Agreement or the exercise of remedies in respect of the Collateral have been made or obtained.

 

(d)          
Upon the filing of Uniform Commercial Code financing statements (including fixture filings and as-extracted collateral filings,
as applicable) or other appropriate filings, recordings or registrations containing a description of the Collateral, based upon
the information provided to the Lender Parties, then all the filings, recordings and registrations shall have been made that are
necessary to publish notice of and protect the validity of and to establish a legal, valid and perfected security interest in favor
of the Lender in respect of all Collateral in which the Security Interest may be perfected by filing, recording or registration
in the United States (or any political subdivision thereof) and its territories and possessions, and no further or subsequent filing,
refiling, recording, rerecording, registration or reregistration is necessary in any such jurisdiction, except as provided under
applicable law with respect to the filing of continuation statements.

 

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(e)          
The Security Interest constitutes (i) a legal and valid security interest in all the Collateral securing the payment and
performance of the Obligations and (ii) subject to the filings described above, a perfected security interest in all Collateral
in which a security interest may be perfected by filing, recording or registering a financing statement or analogous document in
the United States (or any political subdivision thereof) and its territories and possessions pursuant to the Uniform Commercial
Code or other applicable law in such jurisdictions. The Security Interest is and shall be prior to any other Lien on any of the
Collateral, other than Excepted Liens.

 

(f)           
The Collateral is owned by the Debtor free and clear of any Lien, except for Excepted Liens. The Debtor has not filed or
consented to the filing of (i) any financing statement or analogous document under the Uniform Commercial Code or any other applicable
laws covering any Collateral, or (ii) any assignment in which the Debtor assigns any Collateral or any security agreement or similar
instrument covering any Collateral with any foreign governmental, municipal or other office, which financing statement or analogous
document, assignment, security agreement or similar instrument is still in effect, except, in each case, for Excepted Liens.

 

Section 2.03        
Covenants. The Debtor shall, at its own expense, take any and all actions necessary to defend Debtor’s
title to the Collateral against all persons and to defend the Security Interest of the Lender in the Collateral and the priority
thereof against any Lien not expressly permitted pursuant to Section 6.02 of the Term Loan Agreement.

 

Section 2.04        
Other Actions. To further ensure the attachment, perfection and priority of, and the ability of the Lender to
enforce, the Security Interest in the Collateral, and without limiting the covenants of the Debtor in the Term Loan Agreement regarding
investments, the nature of its business or otherwise, the Debtor agrees, in each case at the Debtor’s own expense, to take
the following actions with respect to the following Collateral:

 

(a)          
Deposit Accounts. Debtor shall not (i) establish any Deposit Accounts (other than any Excluded Account) unless the
Debtor has given the Lender at least five Business Days prior written notice of such new Deposit Account and (ii) deposit any amount
into an such new Deposit Account (other than any Excluded Account) in excess of $5,000 until the Debtor, the depositary bank and
Lender enter into an agreement providing for the Lender’s “control” (as described in Section 9-104 of the applicable
Uniform Commercial Code) over each Deposit Account in form and substance satisfactory to Lender.

 

(b)          
Investment Property. If the Debtor shall at any time hold or acquire any certificated securities having an aggregate
fair market value equal to or exceeding $50,000, the Debtor shall forthwith endorse, assign and deliver the same to the Lender,
accompanied by such undated instruments of transfer or assignment duly executed in blank as the Lender may from time to time specify.
If any securities having an aggregate fair market value equal to or exceeding $50,000 now or hereafter acquired by the Debtor are
uncertificated and are issued to the Debtor or its nominee directly by the issuer thereof, the Debtor shall promptly notify the
Lender thereof and, at the Lender’s request and option, pursuant to an agreement in form and substance satisfactory to the
Lender, either (i) cause the issuer to agree to comply with instructions from the Lender as to such securities, without further
consent of the Debtor or such nominee, or (ii) arrange for the Lender to become the registered owner of the securities. If any
securities having an aggregate fair market value equal to or exceeding $50,000, whether certificated or uncertificated, or other
Investment Property now or hereafter acquired by the Debtor are held by the Debtor or its nominee through a Securities Intermediary
or Commodity Intermediary, the Debtor shall promptly notify the Lender

 

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thereof and, at the Lender’s request and option, pursuant
to an agreement in form and substance satisfactory to the Lender, either (i) cause such Securities Intermediary or Commodity Intermediary,
as the case may be, to agree to comply with entitlement orders or other instructions from the Lender to such Securities Intermediary
as to such securities or other Investment Property, or (as the case may be) to apply any value distributed on account of any commodity
contract as directed by the Lender to such Commodity Intermediary, in each case without further consent of the Debtor or such nominee,
or (ii) in the case of Financial Assets (as governed by Article 8 of the Uniform Commercial Code) or other Investment Property
held through a Securities Intermediary, arrange for the Lender to become the Entitlement Holder with respect to such Investment
Property, with the Debtor being permitted, only with the consent of the Lender, to exercise rights to withdraw or otherwise deal
with such Investment Property.

 

(c)          
Commercial Tort Claims. If the Debtor shall at any time hold or acquire a Commercial Tort Claim that could reasonably
be expected to have a claim value exceeding $50,000, the Debtor shall promptly notify the Lender thereof in a writing signed by
the Debtor including a summary description of such claim and grant to the Lender, in such writing a security interest therein and
in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to the
Lender.

 

(d)          
Assigned Contracts. All such obligations of the Debtor shall be and remain enforceable only against the Debtor and
shall not be enforceable against the Lender Parties.

 

Article
III

REMEDIES

 

Section 3.01        
Remedies upon Default. Upon the occurrence and during the continuance of an Event of Default, the Debtor agrees
to assemble and deliver each item of Collateral to the Lender on demand at a place to be designated by Lender, and it is agreed
that the Lender shall have the right to, with or without legal process and with or without prior notice or demand for performance,
to take possession of the Collateral and without liability for trespass to enter any premises where the Collateral may be located
for the purpose of taking possession of or removing the Collateral and, generally, to exercise any and all rights afforded to a
secured party under the Uniform Commercial Code or other applicable law, at the same or different times. Notwithstanding anything
to the contrary in this Agreement or any other Loan Document, any notice or cure period provided for in this Agreement shall run
concurrently with any notice or cure period provided for under Applicable Law. Without limiting the generality of the foregoing,
the Debtor agrees that the Lender shall have the right, subject to the mandatory requirements of applicable law, to sell or otherwise
dispose of all or any part of the Collateral at a public or private sale or at any broker’s board or on any securities exchange,
for cash, upon credit or for future delivery as the Lender shall deem appropriate. The Lender shall be authorized at any such sale
(if it deems it advisable to do so) to restrict the prospective bidders or purchasers to persons who will represent and agree that
they are purchasing the Collateral for their own account for investment and not with a view to the distribution or sale thereof,
and upon consummation of any such sale the Lender shall have the right to assign, transfer and deliver to the purchaser or purchasers
thereof the Collateral so sold. Each such purchaser at any such sale shall hold the property sold absolutely, free from any claim
or right on the part of the Debtor, and the Debtor hereby waives (to the extent

 

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permitted by
law) all rights of redemption, stay and appraisal which the Debtor now has or may at any time in the future have under any rule
of law or statute now existing or hereafter enacted.

 

TO THE EXTENT APPLICABLE,
FOR THE PURPOSES OF LOUISIANA EXECUTORY PROCESS PROCEDURES, DEBTOR DOES HEREBY ACKNOWLEDGE THE OBLIGATIONS AND CONFESS JUDGMENT
IN FAVOR OF LENDER FOR THE FULL AMOUNT OF THE OBLIGATIONS. Debtor does by these presents consent and agree that upon the occurrence
of any Event of Default it shall be lawful for Lender to cause the Collateral and Proceeds to be seized and sold under executory
or ordinary process, at Lender’s sole option, without appraisement, appraisement being hereby expressly waived, in one lot
as an entirety or in separate parcels or portions as Lender may determine, to the highest bidder, and otherwise exercise the rights,
powers and remedies afforded herein and under applicable Louisiana law. Any and all declarations of fact made by authentic act
before a Notary Public in the presence of two witnesses by a person declaring that such facts lie within his knowledge shall constitute
authentic evidence of such facts for the purpose of executory process. Debtor hereby waives in favor of Lender: (a) the benefit
of appraisement as provided in Louisiana Code of Civil Procedure Articles 2332, 2336, 2723 and 2724, and all other laws conferring
the same; (b) the demand and three days delay accorded by Louisiana Code of Civil Procedure Article 2721; (c) the notice
of seizure required by Louisiana Code of Civil Procedure Articles 2293 and 2721; (d) the three days delay provided by Louisiana
Code of Civil Procedure Articles 2331 and 2722; and (e) the benefit of the other provisions of Louisiana Code of Civil Procedure
Articles 2331, 2722 and 2723, not specifically mentioned above. In the event the Collateral (or Proceeds) or any part thereof is
seized as an incident to an action for the recognition or enforcement of this Agreement by executory process, ordinary process,
sequestration, writ of fieri facias, or otherwise, the court issuing any such order shall, if petitioned for by Lender, direct
the applicable sheriff to appoint as a keeper of the Collateral and Proceeds, Lender or any Lender designated by Lender at the
time such seizure is effected. This designation is pursuant to La. R.S. 9:5131-9:5135, and 9:5136-9:5140.2 (inclusive) and
Lender shall be entitled to all the rights and benefits afforded thereunder as the same may be amended. The keeper shall be entitled
to receive its reasonable costs and expenses incurred in the administration or preservation of the Collateral and Proceeds and
compensation in an amount equal to five per cent. Of the gross revenues of the Collateral as approved by the court. The designation
of keeper made herein shall not be deemed to require Lender to seek the appointment of such a keeper.

 

The Lender shall give
the Debtor five days’ written notice of the Lender’s intention to make any sale of Collateral, which the Debtor agrees
is reasonable notice within the meaning of Section 9-611 of the Uniform Commercial Code or its equivalent in other jurisdictions.
Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker’s
board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the
Collateral, or portion thereof, will first be offered for sale at such board or exchange. Any such public sale shall be held at
such time or times within ordinary business hours and at such place or places as the Lender may fix and state in the notice (if
any) of such sale. At any such sale, the Collateral, or portion thereof, to be sold may be sold in one lot as an entirety or in
separate parcels, as the Lender may (in its sole and absolute discretion) determine. The Lender shall not be obligated to make
any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall
have been given. The Lender may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned
from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the
time and place to which the same was so adjourned. In case any sale

 

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of all or any part of the Collateral is made on credit or for
future delivery, the Collateral so sold may be retained by the Lender until the sale price is paid by the purchaser or purchasers
thereof, but the Lender shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for
the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice. At any public sale
made pursuant to this Section 3.01, any Lender Party may bid for or purchase, free (to the extent permitted by law) from any right
of redemption, stay, valuation or appraisal on the part of the Debtor (all such rights being also hereby waived and released to
the extent permitted by law), the Collateral or any part thereof offered for sale and may make payment on account thereof by using
any claim secured by the Collateral then due and payable to such Lender Party from the Debtor as a credit against the purchase
price, and such Lender Party may, upon compliance with the terms of sale, hold, retain and dispose of such property without further
accountability to the Debtor therefor. For purposes hereof, a written agreement to purchase the Collateral or any portion thereof
shall be treated as a sale thereof; the Lender shall be free to carry out such sale pursuant to such agreement and the Debtor shall
not be entitled to the return of the Collateral or any portion thereof subject thereto, notwithstanding the fact that after the
Lender shall have entered into such an agreement all Events of Default shall have been remedied and such obligations paid in full.
As an alternative to exercising the power of sale herein conferred upon it, the Lender may proceed by a suit or suits at law or
in equity to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court
or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any sale pursuant to the provisions
of this Section 3.01 shall be deemed to conform to the commercially reasonable standards as provided in Section 9-61O(b) of the
Uniform Commercial Code or its equivalent in other jurisdictions.

 

Section 3.02        
Application of Proceeds. The Lender shall apply the proceeds of any collection, sale, foreclosure or other realization
upon any Collateral, including any Collateral consisting of cash, in accordance with the provisions of the Term Loan Agreement.
The Lender shall have absolute discretion as to the time of application of any such proceeds, moneys or balances in accordance
with this Agreement and the Term Loan Agreement. Upon any sale of Collateral by the Lender (including pursuant to a power of sale
granted by statute or under a judicial proceeding), the receipt of the Lender or of the officer making the sale shall be a sufficient
discharge to the purchaser or purchasers of the Collateral so sold and such purchaser or purchasers shall not be obligated to see
to the application of any part of the purchase money paid over to the Lender or such officer or be answerable in any way for the
misapplication thereof.

 

Article
IV

MISCELLANEOUS

 

Section 4.01        
Notices. All communications and notices under this Agreement shall (except as otherwise expressly permitted in
this Agreement) be in writing and given as provided in Section 8.01 of the Term Loan Agreement.

 

Section 4.02        
Security Interest Absolute. All rights of the Lender hereunder, the Security Interest and all obligations of
the Debtor hereunder shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the Term
Loan Agreement, any other Loan Document, any agreement with respect to any of the Obligations or any other agreement or instrument
relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in any other term of, ,all or any
of the Obligations, or any other amendment or waiver of or any consent to any departure from the Term

 

    8

     

    

 

Loan Agreement, any other
Loan Document or any other agreement or instrument, (c) any exchange, release or non-perfection of any Lien on other collateral,
or any release or amendment or waiver of or consent under or departure from any guarantee, securing or guaranteeing all or any
of the Obligations, or (d) any other circumstance that might otherwise constitute a defense available to, or a discharge of, the
Debtor in respect of the Obligations or this Agreement.

 

Section 4.03       
Survival of Agreement. (a) All covenants, agreements, representations and warranties made by the Debtor
in the Loan Documents and in the certificates or other instruments prepared or delivered in connection with or pursuant to this
Agreement or any other Loan Document shall be considered to have been relied upon by the Lenders and shall survive the execution
and delivery of the Loan Documents and the making of any Loans, regardless of any investigation made by the Lender or on its behalf
and notwithstanding that the Lender may have had notice or knowledge of any Default or incorrect representation or warranty at
the time any Loan is made under the Term Loan Agreement, and shall continue in full force and effect as long as the principal of
or any accrued interest on any Loan or any fee or any other amount payable under any Loan Document is outstanding and unpaid.

 

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

 

Section 4.04       
Binding Effect. This Agreement shall become effective as to the Debtor when a counterpart hereof executed on
behalf of the Debtor shall have been delivered to the Lender and a counterpart hereof shall have been executed on behalf of the
Lender, and thereafter shall be binding upon the Debtor and the Lender and their respective permitted successors and assigns, and
shall inure to the benefit of the Debtor, the Lender and the other Lender Parties and their respective successors and assigns,
except that the Debtor shall not have the right to assign or transfer its rights or obligations hereunder or any interest herein
or in the Collateral (and any such assignment or transfer shall be void) except as expressly contemplated by this Agreement or
the Term Loan Agreement.

 

Section
4.05     
  Successors and Assigns. Whenever in this Agreement any of the parties hereto is referenced, such
reference shall be deemed to include the permitted successors and assigns of such party; and all covenants, promises and
agreements by or on behalf of the Debtor or the Lender that are contained in this Agreement shall bind and inure to the
benefit of their respective successors and assigns.

 

Section 4.06        
Lender’s Fees and Expenses; Indemnification.

 

(a)          
The Lender Parties shall be entitled to reimbursement of its expenses and to indemnification as provided in the Term Loan
Agreement.

 

(b)          
Any amounts payable under this Agreement shall be additional Obligations secured hereby and by the other Security Documents.
The provisions of this Section 4.06 shall remain operative and in full force and effect regardless of the termination of this Agreement
or any other Loan

 

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Document, the consummation of the transactions contemplated hereby, the repayment of any of the Obligations,
the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of the Lender or any other Lender Party. All amounts due under this Section 4.06 shall be payable on written
demand therefor and shall bear interest at the rate specified in Section 2.05 of the Term Loan Agreement.

 

Section 4.07        
Lender Appointed Attorney-in-Fact. The Debtor hereby appoints the Lender as the attorney-in-fact of the Debtor
for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Lender
may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable and coupled with an interest.
The Lender Parties shall be accountable only for amounts actually received as a result of the exercise of the powers granted to
them herein, and neither they nor their officers, directors, employees or agents shall be responsible to the Debtor for any act
or failure to act hereunder, except for their own gross negligence, willful misconduct or bad faith.

 

Section 4.08        
GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK.

 

Section 4.09        
Termination or Release. This Agreement, the Security Interest and all other security interests granted hereby
shall terminate when all the obligations under the Loan Documents (other than wholly contingent indemnification obligations) then
due and owing have been paid in full and the Lender has no further commitment to lend under the Term Loan Agreement. In addition
to the foregoing, the Lender hereby agrees that the Lien granted to the Lender on any Collateral shall be released (i) upon the
disposition of such Collateral permitted under the Term Loan Agreement (in which case, the Lender agrees to deliver an appropriate
release instrument if reasonably requested by the Debtor), (ii) to the extent such Collateral is comprised of property leased
to the Debtor, upon termination or expiration of such lease, and (iii) if the release of such Lien is approved, authorized or ratified
in writing by the Lender; provided that any such release shall not in any manner discharge, affect, or impair the Obligations or
any Liens (other than those being released), all of which shall continue to constitute part of the Collateral except to the extent
otherwise released in accordance with the provisions of the Loan Documents.

 

Section 4.10        
Miscellaneous. The provisions of Sections 1.02, 1.03, 8.01, 8.02, 8.05, 8.06, 8.07, 8.08, 8.09 (other than Section
8.09(a)), 8.10, 8.11, 8.12, and 8.13 of the Term Loan Agreement apply to this Agreement, mutatis mutandis.

 

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IN WITNESS WHEREOF,
the parties hereto have duly executed this Agreement as of the day and year first above written.

 

	 	DELEK GOM INVESTMENTS, LLC	 
	 	 	 	 
	 	By:	/s/ Leora Pratt Levin	 
	 	Name:	Leora Pratt Levin	 
	 	Title:	Authorized Person	 
	 	 	 	 
	 	GULFSLOPE ENERGY INC.	 
	 	 	 	 
	 	By:	/s/ John N. Seitz	 
	 	Name:	John N. Seitz	 
	 	Title:	CEO	 

 

[Signature Page to Security Agreement]

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