Document:

0NEITHER THIS WARRANT NOR ANY OF THE
SECURITIES ISSUABLE HEREUNDER HAVE BEEN REGISTERED UNDER THE SECURITIES ACT (AS DEFINED BELOW), OR APPLICABLE STATE SECURITIES
LAWS, AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER THE SECURITIES ACT, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS
NOT REQUIRED UNDER SAID ACT (II) UNLESS SOLD OR TRANSFERRED TO A "QUALIFIED INSTITUTIONAL BUYER" WITHIN THE MEANING
OF RULE 144A UNDER THE SECURITIES ACT OR (III) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY THESE SECURITIES.

 

CROSS BORDER RESOURCES, INC.

 

COMMON STOCK WARRANT

 

THIS
CERTIFIES THAT, for value received, the Holder is entitled to purchase, and Cross Border Resources, Inc., a Nevada corporation
(the "Company"), promises and agrees to sell and issue to the Holder, at any time, or from time to time, during
the Exercise Period, up to 2,136,164 shares of Common Stock, par value $0.001 per share (the "Common Stock"),
of the Company, at the Exercise Price, subject to the provisions and upon the terms and conditions hereinafter set forth. This
Warrant is one of the Unit Warrants issued in the Offering.

 

1.          Definitions
of Certain Terms. In addition to the terms defined elsewhere in this Warrant, the following terms have the following meanings:

 

(a)          "Business
Day" means a day on which banks are open for business in the city of New York.

 

(b)          "Commission"
means the U.S. Securities and Exchange Commission.

 

(c)          "Exchange
Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

(d)          "Exercise
Price" means the price at which the Holder may purchase one share of Common Stock upon exercise of this Warrant as determined
from time to time pursuant to the provisions hereof. The initial Exercise Price is $2.25 per share, subject to adjustment as provided
herein.

 

(e)          "Expiration
Date" means the 54-month anniversary of the Initial Exercise Date.

 

(f)          "Holder"
means a record holder of the Warrant or shares of Common Stock obtained or obtainable upon exercise of the Warrant, as applicable.
The initial Holder is [                     ].

 

    	 

    	 

    

 

(g)          "Initial
Exercise Date" means the six-month anniversary of the Issue Date.

 

(h)          "Issue
Date" means __________ __,2011.

 

(i)          "Offering"
shall have the meaning ascribed to such term in the Purchase Agreement and is incorporated herein by this reference.

 

(j)           "Preferred
Stock" means the preferred stock, par value $0.10 per share, of the Company.

 

(k)          "Purchase
Agreement" means that certain Securities Purchase Agreement, dated as of the Issue Date, between the Company and the purchasers
of Units specified therein.

 

(1)          "Registration
Rights Agreement" means that certain Registration Rights Agreement, dated as of the Issue Date, between the Company and
the purchasers of the Units specified therein.

 

(m)
        "Securities
Act" means the Securities Act of 1933, as amended.

 

(n)          "Unit"
means a unit consisting of (i) one (1) share of Common Stock, and (ii) a warrant to purchase one (1) share of Common Stock, issued
pursuant to the terms of the Purchase Agreement.

 

(o)          "Unit
Warrants" means, collectively, the warrants issued to the investors in the Offering, as more fully described in the Purchase
Agreement.

 

(p)          "Warrant"
means this warrant and any warrant or warrants hereafter issued as a consequence of the exercise or transfer of this warrant in
whole or in part.

 

2.          Exercise
of Warrant.

 

(a)
         Manner
of Exercise,

 

(i)           Cash
Exercise. This Warrant may be exercised, in whole or in part, at any time or from time to time, during the
period commencing as of 9:30:01 a.m., New York time, on the Initial Exercise Date and ending as of 5:30 p.m., New York time,
on the Expiration Date (the "Exercise Period"), for ___________ fully paid and non-assessable shares of
Common Stock (the "Warrant Shares"), for an exercise price per share equal to the Exercise Price, by
delivery to the Company at its headquarters, or at such other place as is designated in writing by the Company,
of:

 

(1)         a
duly executed Notice of Exercise, substantially in the form of Attachment I attached hereto and incorporated by reference
herein;

 

(2)         this
Warrant; and

 

(3)         subject
to Section 2(a)(ii) below, payment of an amount in cash equal to the product of the Exercise Price multiplied by the number
of Warrant Shares being purchased upon such exercise, with such payment being in the form of a wire transfer of funds to an account
designated in writing by the Company.

 

    	-2-

    	 

    

 

The date on which the
Company receives the Notice of Exercise, this Warrant, and the Exercise Price payable with respect to the Warrant Shares being
purchased shall be deemed to be the date of exercise (the "Date of Exercise").

 

(ii)
          Cashless
Exercise. Notwithstanding the provisions of Section 2(a)(i)(3) above (requiring payment by wire transfer), the Company
agrees that, unless otherwise prohibited by applicable law, if at the time of exercise hereof there is no effective registration
statement registering, or the prospectus contained therein is not available for the issuance of the Warrant Shares to the Holder
and all of the Warrant Shares are not then registered for resale by Holder into the market at market prices from time to time on
an effective registration statement for use on a continuous basis (or the prospectus contained therein is not available for use),
then Holder shall have the right at such time to exercise this Warrant in full or in part on a cashless basis, computed using the
following formula:

 

X = Y (A - B)

A

 

Where:

 

X = The number of Warrant
Shares to be issued to the Holder pursuant to this cashless exercise;

 

Y = The number of Warrant
Shares in respect of which the net issue election is made;

 

A = The Fair Market
Value (as defined below) of one Warrant Share at the time the cashless exercise election is made; and

 

B = The Exercise Price
then in effect at the time of such exercise.

 

The term "Fair
Market Value" shall mean, on any given day: (A) if the class of Warrant Shares is exchange-traded, the average of the closing
sales prices per share of the class of Warrant Shares for the ten (10) consecutive trading days ending on the day that is two (2)
trading days prior to the applicable date of determination of Fair Market Value; or (B) if the class of Warrant Shares is not listed
or admitted to trading on any securities exchange but is regularly traded in any over-the-counter market, then the average of the
bid and ask prices per share of the class of Warrant Shares for the ten (10) consecutive trading days ending on the day that is
two (2) trading days prior to the applicable date of determination of Fair Market Value; or (C) if the class of Warrant Shares
is not traded as described in clauses (A) or (B), then the per share fair market value of the class of Warrant Shares as determined
in good faith by the Company's Board of Directors.

 

    	-3-

    	 

    

 

(b)
          Delivery
of Certificates. Subject to the provisions below, upon receipt of the Notice of Exercise, the Company shall immediately instruct
its transfer agent to prepare certificates for the Warrant Shares to be received by the Holder upon such exercise. The Company
shall, at its own cost and expense, cause the transfer agent to deliver such certificates to the Holder (or to such other nominee
as may be designated by the Holder) within three Business Days following the Date of Exercise (the "Delivery Period").
The Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to
which this Warrant has been exercised as of the Date of Exercise, irrespective of the date such certificates are actually delivered
by the transfer agent to the Holder or are credited to the Holder's Depository Trust Company ("DTC") account,
as the case may be. If fewer than all of the Warrant Shares purchasable under the Warrant are purchased, the Company will, upon
such partial exercise, execute and deliver to the Holder a new Warrant (dated as of the Issue Date), in the same form and tenor
as this Warrant, evidencing that portion of the Warrant not exercised.

 

(c)          Delivery
of Electronic Shares. In lieu of delivering physical certificates representing the Warrant Shares issuable upon exercise (provided
that the transfer agent is participating in the DTC Fast Automated Securities Transfer program and provided further that the Holder
provides the transfer agent with information required in order to issue such Warrant Shares to the Holder electronically), upon
the request of the Holder as set forth in the Notice of Exercise, but only if the Warrant Shares may be issued without restrictive
legends, the Company shall cause its transfer agent to electronically transmit, within the Delivery Period, the Warrant Shares
issuable upon exercise to the Holder by crediting Holder's account with DTC through its Deposit Withdrawal Agent Commission system.
Any delivery not effected by electronic transmission shall be effected by delivery of physical certificates.

 

(d)          No
Fractional Shares. If a fractional share of Warrant Shares would, but for the provisions of this Section 2(d), be issuable
upon exercise of the rights represented by this Warrant, the Company shall (i) round a half share or greater to be delivered to
Holder up to the next whole share and (ii) round a less-than-half share to be delivered to Holder down to the nearest whole share.

 

(e)          Buy-In.
Notwithstanding anything else to the contrary contained herein, in addition to any other rights available to the Holder, if the
Company fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the applicable Warrant
Shares purchased upon exercise hereof or credit the Holder's balance account with DTC, as applicable, on or before the end of the
Delivery Period (other than a failure caused by any incorrect or incomplete information provided by Holder to the Company hereunder),
and if after such date the Holder purchases shares of Common Stock to deliver in satisfaction of a sale by the Holder of Warrant
Shares that the Holder anticipated receiving from the Company upon exercise of this Warrant (a "Buy-In"), then
the Company shall, within three Business Days after the Holder's request, (1) pay cash to the Holder the amount by which (x) the
Holder's total purchase price (including commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount
obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with
the exercise at issue, by (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at
the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise
was not honored, or deliver to the Holder the number of Warrant Shares that would have been issued had the Company timely complied
with its exercise and delivery obligations hereunder. The Holder shall provide the Company written notice indicating the amounts
payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested
by the Company. Nothing herein shall limit the Holder's right to pursue any other remedies available to it hereunder, at law or
in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company's
failure to timely deliver certificates representing the Securities as required pursuant to the terms hereof.

 

    	-4-

    	 

    

 

(f)          No
Charge to Holder Upon Issuance. The issuance of Warrant Shares upon exercise of this Warrant shall be made without charge to
Holder for any issuance tax in respect thereof or other cost incurred by the Company in connection with such exercise and the related
issuance of Warrant Shares (other than any transfer taxes resulting from the issuance of Warrant Shares to any person other than
Holder).

 

(g)          Reservation
of Shares. During the Exercise Period, the Company shall reserve and keep available out of its authorized but unissued Common
Stock such number of Warrant Shares issuable upon the full exercise of this Warrant. All Warrant Shares which are so issuable shall,
when issued and upon the payment of the applicable Exercise Price, be duly and validly issued, fully paid and nonassessable and
free from all taxes, liens and charges and not subject to the pre-emptive rights of any holder of Common Stock or any other class
or series of stock of the Company. During the Exercise Period, the Company shall not take any action which would cause the number
of authorized but unissued Common Stock to be less than the number of such shares required to be reserved hereunder for issuance
upon exercise of this Warrant.

 

(h)          Limitations
on Exercises. Notwithstanding anything to the contrary contained in this Warrant, this Warrant shall not be exercisable by
the Holder hereof to the extent (but only to the extent) that the Holder with any of its affiliates would beneficially own in excess
of 9.98% (the "Maximum Percentage") of the Common Stock. To the extent the above limitation applies, the determination
of whether this Warrant shall be exercisable (vis-a-vis other convertible, exercisable or exchangeable securities owned by the
Holder or any of its affiliates) and of which such securities shall be exercisable (as among all such securities owned by the Holder)
shall, subject to such Maximum Percentage limitation, be determined on the basis of the first submission to the Company for conversion,
exercise or exchange (as the case may be). No prior inability to exercise this Warrant pursuant to this paragraph shall have any
effect on the applicability of the provisions of this paragraph with respect to any subsequent determination of exercisability.
For the purposes of this paragraph, beneficial ownership and all determinations and calculations (including, without limitation,
with respect to calculations of percentage ownership) shall be determined in accordance with Section 13(d) of the Exchange Act.
The limitations contained in this paragraph shall apply to a successor Holder of this Warrant. For any reason at any time, upon
the written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and in writing to the Holder
the number of shares of Common Stock then outstanding, including by virtue of any prior conversion or exercise of convertible or
exercisable securities into Common Stock. Notwithstanding anything else set forth herein, in no event shall this Warrant be exercisable
by the Holder to the extent that the Holder with any of its affiliates would beneficially own in excess of 19.99% of the number
of shares of the Company's Common Stock outstanding as of the Issue Date unless any issuances in excess of the foregoing limitation
are approved by the Company's common stockholders.

 

    	-5-

    	 

    

 

3.
          Adjustments
in Certain Events. The number, class, and price of Warrant Shares for which this Warrant may be exercised are subject to adjustment
from time to time upon the happening of certain events as follows:

 

(a)          Subdivisions,
Combinations and Other Issuances. If the outstanding shares of the Company's Common Stock are divided into a greater number
of shares, by forward stock split or otherwise, or a dividend in stock is paid on the Common Stock, then the number of shares of
Warrant Shares for which the Warrant is then exercisable will be proportionately increased and the Exercise Price will be proportionately
reduced. Conversely, if the outstanding shares of Common Stock are combined into a smaller number of shares of Common Stock, by
reverse stock split or otherwise, then the number of Warrant Shares for which the Warrant is then exercisable will be proportionately
reduced and the Exercise Price will be proportionately increased. The increases and reductions provided for in this Section
3(a) will be made with the intent and, as nearly as practicable, the effect that neither the percentage of the total equity
of the Company obtainable on exercise of the Warrants nor the price payable for such percentage upon such exercise will be affected
by any event described in this Section 3(a).

 

(b)          Merger,
Consolidation, Reclassification, Reorganization, Etc. In case of any change in the Common Stock through merger, consolidation,
reclassification, reorganization, partial or complete liquidation, purchase of all or substantially all the assets of the Company,
or other change in the capital structure of the Company, then, as a condition of such change, lawful and adequate provision will
be made so that the Holder will have the right thereafter to receive upon the exercise of the Warrant the kind and amount of shares
of stock or other securities or property to which he would have been entitled if, immediately prior to such event, he had held
the number of Warrant Shares obtainable upon the exercise of the Warrant. In any such case, appropriate adjustment will be made
in the application of the provisions set forth herein with respect to the rights and interest thereafter of the Holder, to the
end that the provisions set forth herein will thereafter be applicable, as nearly as reasonably may be, in relation to any shares
of stock or other property thereafter deliverable upon the exercise of the Warrant. The Company will not permit any change in its
capital structure to occur unless the issuer of the shares of stock or other securities to be received by the Holder, if not the
Company, agrees to be bound by and comply with the provisions of this Warrant.

 

(c)          Notice
of Record Date, Etc. In the event the Company shall propose to take any action of the types requiring an adjustment pursuant
to this Section 3 or a dissolution, liquidation or winding up of the Company shall be proposed, the Company shall give notice
to Holder as provided in Section 6 below, which notice shall specify the record date, if any, with respect to any such action
and the date on which such action is to take place. Such notice shall also set forth such facts with respect thereto as shall be
reasonably necessary to indicate the effect of such action (to the extent such effect may be known at the date of such notice)
on the Exercise Price and the number, kind or class of shares or other securities or property which shall be deliverable or purchasable
upon the occurrence of such action or deliverable upon the exercise of the Warrant. In the case of any action which will require
the fixing of a record date, unless otherwise provided in this Warrant, such notice shall be given at least twenty (20) days prior
to the date so fixed, and in case of all other action, such notice shall be given at least thirty (30) days prior to the taking
of such proposed action.

 

    	-6-

    	 

    

 

(d)
          Stock
Dividends. If securities of the Company or securities of any subsidiary of the Company are distributed pro rata to holders
of Common Stock, such number of securities will be distributed to the Holder or its assignee upon exercise of its rights hereunder
as such Holder or assignee would have been entitled to if this Warrant had been exercised prior to the record date for such distribution.
The provisions with respect to adjustment of the Common Stock provided in this Section 3 will also apply to the securities
to which the Holder or its assignee is entitled under this Section 3(d).

 

4.          No
Rights as a Stockholder. Except as otherwise provided herein, the Holder will not, by virtue of ownership of the Warrant, be
entitled to any rights of a stockholder of the Company but will, upon written request to the Company, be entitled to receive such
quarterly or annual reports as the Company distributes to its stockholders.

 

5.          Restrictions
on Transfer; Legends.

 

(a)          Registration
or Exemption Required. Assuming the accuracy of the representations and warranties of the Holder contained in the Purchase
Agreement, this Warrant has been issued in a transaction exempt from the registration requirements of the Securities Act by virtue
of Regulation D and exempt from state registration or qualification under applicable state laws. Neither this Warrant nor the Warrant
Shares may be pledged, transferred, sold or assigned except pursuant to an effective registration statement or an exemption to
the registration requirements of the Securities Act and applicable state laws. If, at the time of the surrender of this Warrant
in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective
registration statement under the Securities Act and under applicable state securities or blue sky laws, the Company may require,
as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the
Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in
comparable transactions) to the effect that such transfer may be made without registration under the Securities Act and under applicable
state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in
form and substance acceptable to the Company and (iii) that the transferee be an "accredited investor" as defined in
Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated under the Securities Act or a "qualified institutional buyer"
as defined in Rule 144A(a) under the Securities Act.

 

(b)          Restrictive
Legend. The Holder understands that until such time as the Warrant Shares have been registered under the Securities Act as
contemplated by the Registration Rights Agreement, or otherwise may be sold pursuant to Rule 144 under the Securities Act or an
exemption from registration under the Securities Act without any restriction as to the number of securities as of a particular
date that can then be immediately sold, this Warrant and the Warrant Shares, as applicable, shall bear a restrictive legend in
substantially the form set forth on the cover page of this Warrant (and a stop-transfer order may be placed against transfer of
the certificates for such securities).

 

    	-7-

    	 

    

 

(c)          Removal
of Restrictive Legends. The certificates evidencing the Warrant Shares shall not contain any legend restricting the transfer
thereof: (A) while a registration statement (including a Registration Statement, as defined in the Registration Rights Agreement)
covering the sale or resale of the Warrant Shares is effective under the Securities Act, or (B) following any sale of such Warrant
Shares pursuant to Rule 144, or (C) if such Warrant Shares are eligible for sale under Rule 144(b)(1), or (D) if such legend is
not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued
by the staff of the Commission) and the Company shall have received an opinion of counsel to the Holder in form reasonably acceptable
to the Company to such effect (collectively, the "Unrestricted Conditions"), The Company shall cause its counsel
to issue a legal opinion to its transfer agent if required by the transfer agent to effect the issuance of the Warrant Shares,
as applicable, without a restrictive legend or removal of the legend hereunder. The Company agrees that at such time as the Unrestricted
Conditions are met, it will, no later than three (3) Trading Days following the delivery by the Holder to the Company or the transfer
agent of a certificate representing Warrant Shares, issued with a restrictive legend, deliver or cause to be delivered to such
Holder a certificate (or electronic transfer) representing such Warrant Shares that is free from all restrictive and other legends.

 

6.          Notices;
Adjustments.

 

(i)          All
notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (i) upon personal delivery to
the party to be notified; (ii) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the
recipient, and if not, then on the next business day; (iii) two (2) Business Days after having been sent by registered or certified
mail, return receipt requested, postage prepaid; or (iv) one (1) Business Day after deposit with a nationally recognized overnight
courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the Company or
to Holder, as applicable, at the respective addresses set forth on the signature page to the Purchase Agreement or at such other
address(es) as they may designate, respectively, by ten (10) days advance written notice to the other party hereto.

 

(ii)         Upon
the occurrence of any adjustments pursuant to Section 3 hereof, the Company at its expense shall, as promptly as reasonably practicable
but in any event not later than 10 days thereafter, compute such adjustment in accordance with the terms hereof and furnish to
Holder a certificate setting forth such adjustment and showing in detail the facts upon which such adjustment is based.

 

7.          Non-Circumvention.
The Company hereby covenants and agrees that the Company will not, by amendment of its articles of incorporation, bylaws or through
any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities,
or any other action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will at all
times in good faith carry out all the provisions of this Warrant and take all action as may be reasonably required to protect the
rights of the Holder.

 

8.          Governing
Law. This Warrant shall be governed by and construed in accordance with the laws of the State of New York, without regard to
conflict of law principles, and notwithstanding the fact that one or more counterparts hereof may be executed outside of the state,
or one or more of the obligations of the parties hereunder are to be performed outside of the state.

 

    	-8-

    	 

    

 

9.          Loss,
Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant, and, in the case of loss, theft, or destruction, of indemnity reasonably satisfactory
to it, and, if mutilated, upon surrender and cancellation of this Warrant, the Company will execute and deliver a new Warrant,
having terms and conditions identical to this Warrant, in lieu hereof.

 

10.         Modification
and Waiver. The Warrant and any provision hereof may be amended, waived, discharged or terminated only by an instrument in
writing signed by the Company and the Holder of the Warrant.

 

11.         Successors.
This Warrant shall be binding and inure to the benefit of the parties and their respective successors and assigns hereunder; provided
that this Warrant may be assigned by Holder only in compliance with the conditions specified in and in accordance with all of the
terms of this Warrant. This Warrant does not create and shall not be construed as creating any rights enforceable by any other
person or corporation.

 

12.         Headings.
The headings used in this Warrant are used for convenience only and are not to be considered in construing or interpreting this
Warrant.

 

13.         Saturdays,
Sundays, Holidays. If the last or appointed day for the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday in the State of New York, then such action may be taken or such
right may be exercised on the next succeeding day not a legal holiday.

 

14.         Severability.
If any provision of this Warrant shall be held to be invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provisions of this Warrant.

 

15.         Execution
and Counterparts. This Warrant may be executed in any number of counterparts, each of which when so executed and delivered
shall be deemed an original, and such counterparts together shall constitute only one instrument. Any one of such counterparts
shall be sufficient for the purpose of proving the existence and terms of this Warrant, and no party shall be required to produce
an original or all of such counterparts in making such proof.

 

[THE REMAINDER OF THIS PAGE INTENTIONALLY
LEFT BLANK]

 

    	-9-

    	 

    

 

IN WITNESS WHEREOF,
each of the Company and Holder have each caused this Warrant to be executed and delivered as of the Issue Date by an officer thereunto
duly authorized.

 

	 	CROSS BORDER RESOURCES, INC.
	 	 
	 	By:	/s/ P. Mark Stark
	 	 
	 	Name:	P. Mark Stark
	 	 
	 	Title:	Chief Financial Officer & Treasure 

 

Acknowledged and Agreed to as of the Issue
Date:

 

	Name of Purchaser:	 	 
	 	 	 
	Signature, of Authorized Signatory of Purchaser.	 	 
	 	 	 
	Name of Authorized Signatory:	 	 
	 	 	 
	Title of Authorized Signatory:	 	 

 

    	 

    	 

    

 

IN WITNESS WHEREOF, each of the Company and
Holder have each caused this Warrant to be executed and delivered as of the Issue Date by an officer thereunto duly authorized.

 

	 	CROSS BORDER RESOURCES, INC.
	 	 
	 	By:	 
	 	 
	 	Name:	 
	 	 
	 	Title:	 

 

	Acknowledged and Agreed to as of the Issue Date:	 
	 	 	 
	Name of Purchaser: 	Black Rock Capital, LLC	 
	 	 	 
	Signature of Authorized Signatory of Purchaser:	/s/ Alan W. Barksdale	 
	 	 	 
	Name of Authorized Signatory:	Alan W. Barksdale	 
	 	 	 
	Title of Authorized Signatory: 	Managing Member	 

 

    	 

    	 

    

 

ATTACHMENT I

 

NOTICE OF EXERCISE

 

CROSS BORDER RESOURCES, INC.

 

Attention:                             

 

The undersigned hereby
elects to purchase, pursuant to the provisions of the Common Stock Warrant issued by Cross Border Resources, Inc. as of                   ,
2011, and held by the undersigned, the original of which is attached hereto, and (check the applicable box):

 

		 ̈	Tenders herewith payment of the
                                                                                                         Exercise Price in the form of cash, via wire transfer of immediately available funds, in the amount
                                                                                                         of $                   
                                                                                                          for                  shares of
                                                                                                         Common
                                                                                                         Stock.

 

		 ̈	Elects
                                                                                                         the cashless exercise
                                                                                                         option pursuant to Section
                                                                                                         2(a)(ii) of the Warrant,
                                                                                                         and accordingly requests
                                                                                                         delivery of                
                                                                                                         shares of Common
                                                                                                         Stock, net, pursuant
                                                                                                         to the following calculation:

 

X = Y (A-B)/A

 

(          )=(          )[(          )
-
(          )]/(          )

 

Where

 

X =The
number of shares of Common Stock to be issued to the Holder pursuant to this cashless exercise;

 

Y =The
number of shares of Common Stock in respect of which the net issue election is made;

 

A =The
Fair Market Value of one share of Common Stock, as calculated per the terms of the Warrant; and

 

B =The
Exercise Price then in effect as of the date of exercise.

 

		 ̈	If this box is checked, as long as the
Company's transfer agent participates in the DTC Fast Automated Securities Transfer program ("FAST"), and except as otherwise
provided in the next following sentence, the Company shall effect delivery of the shares of Common Stock to the Holder by crediting
to the account of the Holder or its nominee at DTC (as specified in this Exercise Notice) with the number of shares of Common Stock
required to be delivered. In the event that the Company's transfer agent is not a participant in FAST, or if the shares of Common
Stock are not otherwise eligible for delivery through FAST, the Company shall effect delivery of the shares of Common Stock by
delivering to Holder or its nominee physical certificates representing such shares.

 

    	 

    	 

    

 

Information for Delivery of uncertificated
Shares by DWAC:

 

	Account Number:	 
	Account Name:	 
	DTC Number:	 

 

	 	HOLDER:	 
	 	 	 
	 	 	 
	 	Name:	 
	 	Title:	 
	 	 	 
	 	Date:	 	 

 

    	-12-LOAN NUMBER	LOAN NAME	ACCT. NUMBER	NOTE DATE	INITIALS
	176761	
        BLACK ROCK CAPITAL

        LLC
	 	06/18/10	DRE
	 	 	 	 	 
	NOTE AMOUNT	INDEX (W/Margin)	RATE	MATURITY DATE	LOAN PURPOSE
	$3,475,304.58	
        First State Bank

        Reference Rate plus

        2.750%
	
        6.039%

         
	06/18/13	Commercial
	 	 	 	 	 
	 	 	Creditor Use Only	 	 

 

PROMISSORY NOTE AND SECURITY AGREEMENT

(Commercial - Draw) 

 

 

DATE AND PARTIES. The date of this
Promissory Note and Security Agreement (Loan Agreement) is June 18, 2010. The parties and their addresses are:

 

LENDER:

FIRST STATE BANK 

101 S Center

P O Box 320

Lonoke, AR 72086

Telephone: (501)
676-3106

 

BORROWER:

BLACK ROCK CAPITAL LLC

an Arkansas Limited Liability
Company

101 SOUTH CENTER

LONOKE, AR 72086

 

ERNEST A. BARTLETT 

24224 KANIS ROAD

LITTLE ROCK, AR 72223

 

ALAN W BARKSDALE

141 FALATA CIRCLE

LITTLE ROCK, AR 72223

 

1. DEFINITIONS. As used in this
Loan Agreement, the terms have the following meanings:

 

A. Pronouns.  The
pronouns “I,” “ma,” and "my" refer to each Borrower signing this Loan Agreement, individually
and together. "You" and "Your" refer to the tender.

 

B. Loan Agreement. Loan
Agreement refers to this combined Note and Security Agreement and any extensions, renewals, modifications and substitutions of
this Loan Agreement.

 

C. Loan. Loan refers to
this transaction generally, including obligations and duties arising from the terms of all documents prepared or submitted for
this transaction such as applications, security agreements, disclosures or notes, and this Loan Agreement.

 

D. Loan Documents. Loan
Documents refer to all the documents executed as a part of or in connection with the Loan.

 

E. Property. Property is
any property, real, personal or Intangible, that secures my performance of the obligations of this Loan.

 

F. Percent. Rates and rate
change limitations are expressed as annualized percentages.

 

2. PROMISE TO PAY. For value received,
I promise to pay you or your order, at your address, or at such other location as you may designate, amounts advanced from time
to time under the terms of this Loan Agreement up to the maximum total principal balance of $3,475,304.58 (Principal),
plus interest from the date of disbursement, on the unpaid outstanding Principal balance until this Loan Agreement is paid in
full and you have no further obligations to make advances to me under the Loan.

 

All advances made will be made subject to all other terms and conditions
of the Loan.

 

3. INTEREST. Interest will accrue
on the unpaid Principal balance of this Loan Agreement at the rate of 6.039 percent (Interest Rate) until June 19, 2010, after
which time it may change as described in the Variable Rate subsection.

 

A. Interest After Default.
If you declare a default under the terms of the Loan, including for failure to pay in full at maturity, you may increase the Interest
Rate payable on the outstanding Principal balance of this Loan Agreement. In such event, interest will accrue on the outstanding
Principal balance at 18.000 percent until paid in full.

 

B. Maximum Interest Amount.
Any amount assessed or collected as interest under the terms of this Loan Agreement will be limited to the maximum lawful amount
of interest allowed by state or federal law, whichever is greater. Amounts collected in excess of the maximum lawful amount will
be applied first to the unpaid Principal balance. Any remainder will be refunded to me.

 

C. Statutory Authority. The
amount assessed or collected on this Loan Agreement is authorized by the Arkansas usury laws under Ark. Const, art, XIX,
§ 13(d)(i), provided such laws are not otherwise preempted by federal laws and regulations.

 

D. Accrual. Interest accrues
using an Actual/360 days counting method.

 

E. Variable Rate. The Interest
Rate may change during the term of this transaction.

 

(1) Index. Beginning with the
first Change Date, the Interest Rate will be based on the following index: First State Bank Reference Rate.

 

The Current Index is the most
recent index figure available on each Change Date. You do not guaranty by selecting this Index, or the margin, that the Interest
Rate on this Loan Agreement will be the same rate you charge on any other loans or class of loans you make to me or other borrowers.
If this Index is no longer available, you will substitute a similar index, You will give me notice of your choice.

 

	BLACK ROCK CAPITAL LLC 	 	
	Arkansas Promissory Note and Security Agreement 	 	 Initials_____
	AR/4apearson00139700006828031061710N	Wolters Kluwer Financial Services ©1996, 2010 Bankers SystemsTM	Page 1

 

    	 

    	 

    

 

(2) Change Date. Each date on
which the Interest Rate may change is called a Change Date. The Interest Rate may change June 19, 2010 and daily thereafter.

 

(3) Calculation Of Change. On
each Change Date you will calculate the Interest Rate, which will be the Current Index plus 2.750 percent. The result of this calculation
will be rounded to the nearest .001 percent. Subject to any limitations, this will be the Interest Rate until the next Change Date. The new Interest Rate will become effective on each Change Date. The Interest Rate and other charges on this Loan Agreement will
never exceed the highest rate or charge allowed by law for this Loan Agreement.

 

(4) Limitations. The Interest
Rate changes are subject to the following limitations:

 

(a) Lifetime. The Interest Rate
will never be greater than 25.000 percent.

 

(5) Effect Of Variable Rate.
A change in the Interest Rate will have the following effect on the payments: The amount of scheduled payments will change.

 

4. ADDITIONAL CHARGES. As additional
consideration, I agree to pay, or have paid, the fees and charges listed on the APPENDIX: FEES AND CHARGES, which is attached to
and made part of this Loan Agreement.

 

5. REMEDIAL CHARGES. In
addition to interest or other finance charges, I agree that I will pay these additional fees based on my method and pattern
of payment. Additional remedial charges may be described elsewhere in this Loan Agreement.

 

A. Late Charge. If a payment
is more than 10 days late, I will be charged 10.000 percent of the Amount of Payment or $20.00, whichever is greater. However,
this charge will not be greater than $200.00. I will pay this late charge promptly but only once for each late payment.

 

6. GOVERNING AGREEMENT. This Loan
Agreement is further governed by the Commercial Loan Agreement executed between you and me as a part of this Loan, as modified,
amended or supplemented. The Commercial Loan Agreement states the terms and conditions of this Loan Agreement, including the terms
and conditions under which the maturity of this Loan Agreement may be accelerated. When I sign this Loan Agreement, I represent
to you that I have reviewed and am in compliance with the terms contained in the Commercial Loan Agreement.

 

7. PURCHASE MONEY SECURITY INTEREST.
This Loan creates a Purchase Money Security Interest to the extent you are making advances or giving value to me to acquire rights
in or the use of collateral and I in fact use the value given for that purpose. Purchase Money Loan means any loan or advance used
to acquire rights in or the use of any Property. The portion of the Property purchased with loan proceeds will remain subject to
the Purchase Money Security Interest until the Secured Debts are paid in full. I authorize you, at your option, to disburse the
loan proceeds directly to the seller of the Property. Payments on any non-Purchase Money Loan also secured by this Loan will not
be applied to the Purchase Money Loan. Payments on the Purchase Money Loan will be applied first to the non-purchase money portion
of the loan, if any, and then to the purchase money portion in the order in which the purchase money Property was acquired. If
the purchase money Property was acquired at the same time, then payments will be applied in the order you select. No security interest
will be terminated by application of this formula. You may include the name of the seller on the check or draft for this Loan Agreement.

 

8. PAYMENT. I agree to pay
this Loan Agreement on demand, but if no demand is made, I agree to pay as follows: This loan agreement is due and payable in
three (3) annual installment payments of principal, plus accrued interest. The payments are based on a seven (7) year
amortization. The first payment will be due and payable on June 18, 2011 In the sum of $1,000,000.00 principal and interest.
The second payment will be due and payable on June 18, 2012 in the sum of $1,100,000.00 principal and interest. The final
payment of all remaining principal, interest and fees will be due and payable on demand, but if no demand is made, on June
18, 2013

 

Payments will be rounded to the nearest $.01. With the final payment also agree to pay any additional fees or
charges owing and the amount of any advances you have made to others on my behalf. Payments scheduled to be paid on the 29th,
30th or 31st day of a month that contains no such day will instead be made on the last day of such month.

 

9. PREPAYMENT. I may prepay this
Loan in full or in part at any time. Any partial prepayment will not excuse any later scheduled payments until I pay in full.

 

10. LOAN PURPOSE. The purpose of
this Loan is PURCHASE WORKING INTEREST IN VILLARREAL OIL & GAS WELLS IN ZAPATA COUNTY TEXAS.

 

11. ADDITIONAL TERMS. 1. THE UNDERSIGNED
AGREES THAT THIS NOTE AND ALL PROVISIONS THEREOF SHALL BE GOVERNED BY THE LAWS OF THE STATE OF ARKANSAS AND FEDERAL LAW, INCLUDING,
BUT NOT LIMITED TO, THE MAXIMUM INTEREST RATE OR AMOUNT OF INTEREST, DISCOUNT POINTS, FINANCE CHARGES, OR OTHER SIMILAR CHARGES
ALLOWED BY THE PROVISIONS OF SECTION 731 OF THE GRAMM-LEACH-BLILEY ACT OF 1999, WHICH AMENDED SECTION 44 OF THE FEDERAL DEPOSIT
INSURANCE ACT, BEING CODIFIED AT 12 U.S.C. 1831U(F).

 

2. BANK AND BORROWER AGREE THAT BANK WILL
LOCK BOX ALL THE FUNDS FROM NET PRODUCTION DUE BLACK ROCK CAPITAL, LLC. FUNDS RECEIVED ABOVE THE MINIMUM PAYMENTS DUE AS STATED
IN THE PROMISSORY NOTE DATED JUNE 18, 2010 WILL BE PLACED IN AN INTEREST BEARING ACCOUNT WITH FIRST STATE BANK. ON A QUARTERLY
BASIS, BEGINNING SEPTEMBER 18, 2010, FIRST STATE BANK WILL REVIEW THE DEPOSIT ACCOUNT AND EXTRA FUNDS WILL BE DISBURSED TO FIRST
STATE BANK DEBT IN THE NAME OF BAMCO GAS, LLC. AS GAS PRICES INCREASE OR DECREASE, THE BANK WILL MAKE THE CHANGES TO THE PAYMENT
STREAM TO MAINTAIN THE MINIMUM PAYMENTS.

 

12. SECURITY. The Loan Is secured
by Property described in the SECURITY AGREEMENT section, and by separate security Instruments prepared together with this Loan
Agreement as follows:

 

	Document Name	Parties to Document	Date of Security Document
	 	 	 
	Security Agreement - BLACK ROCK CAPITAL LLC	BLACK ROCK CAPITAL LLC	June 18, 2010
	 	 	 
	Deed Of Trust	BLACK ROCK CAPITAL LLC	June 18, 2010
	 	 	 
	Mortgage -	FEQ REALTY LLC	June 18, 2010

 

13. SECURITY AGREEMENT.

 

A. Secured Debts. This Security
Agreement will secure the following debts (Secured Debts), together with all extensions, renewals, refinancings, modifications
and replacements of these debts:

 

(1) Sums Advanced under the
terms of this Loan Agreement. All sums advanced and expenses incurred by you under the terms of this Loan Agreement.

 

	BLACK ROCK CAPITAL LLC	 	
	Arkansas Promissory Note and Security Agreement 	 	 Initials_____
	AR/4apearson00139700006828031061710N	Wolters Kluwer Financial Services ©1996, 2010 Bankers SystemsTM	Page 2

 

    	 

    	 

    

 

(2) All Debts. All present and
future debts of all Borrowers owing to you, even if this Security Agreement is not specifically referenced, the future debts are
also secured by other collateral, or if the future debt is unrelated to or of a different type than this debt. If more than one
person signs this Security Agreement, each agrees that it will secure debts incurred either individually or with others who may
not sign this Security Agreement. Nothing in this Security Agreement constitutes a commitment to make additional or future loans
or advances. Any such commitment must be in writing.

 

This Security Agreement will
not secure any debt for which you fail to give any required notice of the right of rescission. This Security Agreement will not
secure any debt for which a non-possessory, non-purchase money security interest is created in "household goods" in connection
with a "consumer loan," as those terms are defined by federal law governing unfair and deceptive credit practices.

 

B. Security Interest. To secure
the payment and performance of the Secured Debts, I give you a security interest in all of the Property described in this Security
Agreement that I own or have sufficient rights In which to transfer an Interest, now or in the future, wherever the Property is
or will be located, and all proceeds and products from the Property (including, but not limited to, all parts, accessories, repairs,
replacements, improvements, and accessions to the Property), Property is all the collateral given as security for the Secured Debts
and described in this Security Agreement, and Includes all obligations that support the payment or performance of the Property.
"Proceeds" Includes anything acquired upon the sale, lease, license, exchange, or other disposition of the Property;
any rights and claims arising from the Property; and any collections and distributions on account of the Property.

 

This Security Agreement remains In effect
until terminated in writing, even if the Secured Debts are paid and you are no longer obligated to advance funds to me under any
loan or credit agreement.

 

C. Property Description. The Property
subject to this Security Agreement is described as follows:

 

(1) Accounts and Other Rights
to Payment. All rights I have now or in the future to payments including, but not limited to, payment for property or services
sold, leased, rented, licensed, or assigned, whether or not I have earned such payment by performance. This Includes any rights
and interests (including all liens and security interests) which I may have by law or agreement against any Account Debtor or obligor
of mine.

 

(2) Minerals. All minerals and
as-extracted collateral. Including oil and gas, and mineral rights of every type I own now or In the future. The oil and gas will
be financed at the wellhead or minehead of the well or mine located on: SEE EXHIBIT A ATTACHED HERETO AND INCORPORATED BY REFERENCE
HEREIN.,

 

(3) Specific Property. THE
OIL AND GAS LEASES, LEASEHOLD INTERESTS, RIGHTS AND INTERESTS ATTRIBUTABLE OR ALLOCABLE TO THE OIL AND GAS LEASES OR
LEASEHOLD INTERESTS BY VIRTUE OF POOLING, UNITIZATION, COMMUNITIZATION, AND OPERATING AGREEMENTS, LICENSES, PERMITS AND
OTHER AGREEMENTS, ALL MORE PARTICULARLY DESCRIBED ON EXHIBIT "A" HERETO, LIMITED AS TO THE LANDS AND DEPTHS
INDICIATED ON EXHIBIT "A" (COLLECTIVELY, THE "LEASES"), TOGETHER WITH ASSIGNORS INTEREST IN AND TO ALL
THE PROPERTY AND RIGHTS INCIDENT THERETO, INCLUDING BUT NOT LIMITED TO, ALL RIGHTS IN, TO AND UNDER ALL AGREEMENTS, PRODUCT
PURCHASE AND SALE CONTRACTS, LEASES, PERMITS, RIGHTS-OF-WAY, EASEMENTS, LICENSES, FARMOUTS, OPTIONS, ORDERS, AND OTHER
CONTRACTS OR AGREEMENTS OF A SIMILAR NATURE TO THE EXTENT SAME RELATE TO THE LEASES;

 

THE WELLS, EQUIPMENT, MATERIALS
AND OTHER PERSONAL PROPERTY, FIXTURES AND IMPROVEMENTS ON THE LEASES AS OF THE EFFECTIVE DATE (AS HEREINAFTER DEFINED), APPURTENANT
THERETO OR USED OR OBTAINED IN CONNECTION WITH THE LEASES OR WITH THE PRODUCTION, TREATMENT, SALE OR DISPOSAL OF HYDROCARBONS OR
WASTE PRODUCED. THEREFROM OR ATTRIBUTABLE THERETO, AND ALL OTHER APPURTENANCES THEREUNTO BELONGING (THE "EQUIPMENT")
PROVIDED, HOWEVER, THE EQUIPMENT SHALL NOT INCLUDE VEHICLES, COMMUNICATIONS EQUIPMENT, TOOLS, WAREHOUSE STOCK, COMPRESSORS OR LEASED
EQUIPMENT LOCATED ON THE LEASES;

 

ALL UTILIZATION, COMMUNITIZATION,
POOLING, AND OEPRATING AGREEMENTS, AND THE UNITS CREATED THEREBY WHICH RELATE TO THE LEASES OR INTERESTS THEREIN DESCRIBED ON EXHIBIT
"A" OR WHICH RELATE TO ANY UNITS OR WELLS LOCATED ON THE LEASES, INCLUDING ANY AND ALL UNITS FORMED UNDER ORDERS. REGULATIONS,
RULES, AND OTHER OFFICIAL ACTS OF THE GOVERNMENT AUTHORITY HAVING JURISDICTION, TOGETHER WITH ANY RIGHT, TITLE AND INTEREST CREATED
THEREBY IN THE LEASES;

 

ALL OF ASSIGNORS RIGHTS TO CLAIM
REVENUES OR GAS RESULTING FROM ANY UNDERPRODUCTION ATTRIBUTABLE TO ASSIGNOR'S INTEREST IN THE LEASES

 

ALL INTEREST IN EXISTING OIL
AND GAS LEASES, ASSIGNMENTS, OPERATING AGREEMENTS, PRODUCT PURCHASE AND SALE CONTRACTS, LEASES, PREMITS, RIGHTS OF WAY, LICENSES,
EASEMENTS, OPTIONS, ORDERS AND ANY AND ALL OTHER AGREEMENTS OR CONTRACTS ATTRIBUTABLE TO AND AFFECTING THE INTERESTS, INCLUDING
BUT NOT LIMITED TO, ANY AND ALL OBLIGATIONS TO PAY AND DELIVER ROYALTIES, OVERRIDING ROYALTIES, NON-PARTICIPATING ROYALTIES. THE
OIL AND GAS LEASES, LEASEHOLD INTERESTS, RIGHTS AND INTERESTS ATTRIBUTABLE OR ALLOCABLE TO THE OIL AND GAS LEASES OR LEASEHOLD
INTERESTS BY VIRTUE OF POOLING, UNITIZATION, COMMUNITIZATION, AND OPERATING AGREEMENTS, LICENSES, PERMITS AND OTHER AGREEMENTS, ALL
MORE PARTICULARLY DESCRIBED ON EXHIBIT "A" HERETO, LIMITED AS TO THE LANDS AND DEPTHS INDICIATED ON EXHIBIT "A"
(COLLECTIVELY, THE "LEASES"), TOGETHER WITH ASSIGNORS INTEREST IN AND TO ALL THE PROPERTY AND RIGHTS INCIDENT THERETO,
INCLUDING BUT NOT LIMITED TO, ALL RIGHTS IN, TO AND UNDER ALL AGREEMENTS, PRODUCT PURCHASE AND SALE CONTRACTS, LEASES, PERMITS,
RIGHTS-OF-WAY, EASEMENTS, LICENSES, FARMOUTS, OPTIONS, ORDERS, AND OTHER CONTRACTS OR AGREEMENTS OF A SIMILAR NATURE TO THE EXTENT
SAME RELATE TO THE LEASES;

 

THE WELLS, EQUIPMENT, MATERIALS
AND OTHER PERSONAL PROPERTY, FIXTURES AND IMPROVEMENTS ON THE LEASES AS OF THE EFFECTIVE DATE (AS HEREINAFTER DEFINED), APPURTENANT
THERETO OR USED OR OBTAINED IN CONNECTION WITH THE LEASES OR WITH THE PRODUCTION, TREATMENT, SALE OR DISPOSAL OF HYDROCARBONS OR
WASTE PRODUCED THEREFROM OR ATTRIBUTABLE THERETO, AND ALL OTHER APPURTENANCES THEREUNTO BELONGING (THE "EQUIPMENT");
PROVIDED, HOWEVER, THE EQUIPMENT SHALL NOT INCLUDE VEHICLES, COMMUNICATIONS EQUIPMENT, TOOLS, WAREHOUSE STOCK, COMPRESSORS OR LEASED
EQUIPMENT LOCATED ON THE LEASES;

 

ALL UTILIZATION, COMMUNITIZATION,
POOLING, AND OEPRATING AGREEMENTS, AND THE UNITS CREATED THEREBY WHICH RELATE TO THE LEASES OR INTERESTS THEREIN DESCRIBED ON EXHIBIT
"A" OR WHICH RELATE TO ANY UNITS OR WELLS LOCATED ON THE LEASES, INCLUDING ANY AND ALL UNITS FORMED UNDER ORDERS, REGULATIONS,
RULES, AND OTHER OFFICIAL ACTS OF THE GOVERNMENT AUTHORITY HAVING JURISDICTION, TOGETHER WITH ANY RIGHT, TITLE AND INTEREST CREATED
THEREBY IN THE LEASES;

 

ALL OF ASSIGNORS RIGHTS TO CLAIM
REVENUES OR GAS RESULTING FROM ANY UNDERPRODUCTION ATTRIBUTABLE TO ASSIGNOR'S INTEREST IN THE LEASES

 

ALL INTEREST IN EXISTING OIL
AND GAS LEASES, ASSIGNMENTS, OPERATING AGREEMENTS, PRODUCT PURCHASE AND SALE CONTRACTS, LEASES, PREMITS, RIGHTS OF WAY, LICENSES,
EASEMENTS, OPTIONS, ORDERS AND ANY AND ALL OTHER
AGREEMENTS OR CONTRACTS ATTRIBUTABLE TO AND AFFECTING THE INTERESTS, INCLUDING BUT NOT LIMITED TO, ANY AND ALL OBLIGATIONS TO PAY
AND DELIVER ROYALTIES, OVERRIDING ROYALTIES, NON-PARTICIPATING ROYALTIES.

 

	BLACK ROCK CAPITAL LLC	 	
	Arkansas Promissory Note and Security Agreement 	 	Initials_____
	AR/4apearson00139700006828031061710N	Wolters Kluwer Financial Services ©1996, 2010 Bankers SystemsTM	Page 3

 

    	 

    	 

    

  

D. Duties Toward Property.

 

(1) Protection of Secured Party's
Interest. I will defend the Property against any other claim. I agree to do whatever you require to protect your security interest
and to keep your claim in the Property ahead of the claims of other creditors. I will not do anything to harm your position.

 

I will keep books, records and
accounts about the Property and my business in general. I will let you examine these and make copies at any reasonable time. I
will prepare any report or accounting you request which deals with the Property.

 

(2) Use, Location, and Protection
of the Property. I will keep the Property in my possession and in good repair. I will use it only for commercial purposes. I will
not change this specified use without your prior written consent. You have the right of reasonable access to inspect the Property
and I will immediately inform you of any loss or damage to the Property. I will not cause or permit waste to the Property.

 

At my expense, I will do all
acts necessary to preserve and protect the Property. I will prepare the Property for market and, when it is ready for market, promptly
notify you and follow any Instructions you may have regarding holding, shipping, storing and marketing the Property. You will be
given prompt notice of any damage to the Property or to the land or any building or improvement on the land.

 

I will keep the Property
at my address listed in the DATE AND PARTIES section unless we agree I may keep it at another location. If the Property is to
be used in other states, I will give you a list of those states. The location of the Property is given to aid in the
identification of the Property. It does not in any way limit the scope of the security interest granted to you. I will notify
you in writing and obtain your prior written consent to any change in location of any of the Property. I will not use the
Property in violation of any law. I will notify you in writing prior to any change in my address, name or, if an organization, any change in my identity or structure.

 

Until the Secured Debts are
fully paid and this Security Agreement is terminated, I will not grant a security interest in any of the Property without your
prior written consent. I will pay all taxes and assessments levied or assessed against me or the Property and provide timely proof
of payment of these taxes and assessments upon request.

 

(3) Selling, Leasing or
Encumbering the Property. I will not sell, offer to sell, lease, or otherwise transfer or encumber the Property without your
prior written permission. Any disposition of the Property contrary to this Security Agreement will violate your rights. Your
permission to sell the Property may be reasonably withheld without regard to the creditworthiness of any buyer or transferee.
I will not permit the Property to be the subject of any court order affecting my rights to the Property in any action by
anyone other than you. If the Property includes chattel paper or instruments, either as original collateral or as proceeds of
the Property, I will note your security interest on the face of the chattel paper or instruments.

 

(4) Additional Duties
Specific to Accounts. I will not settle any Account for less than its full value without your written permission. Until you
tell me otherwise, I will collect all Accounts in the ordinary course of business. I will not dispose of the Accounts by
assignment without your prior written consent. I will keep the proceeds from all the Accounts and any goods which are
returned to me or which I take back. I will not commingle them with any of my other property. I will deliver the Accounts to
you at your request. If you ask me to pay you the full price on any returned items or items retaken by me, I will do so. I
will make no material change to the terms of any Account, and I will give you any statements, reports, certificates, lists of
Account Debtors (showing names, addresses and amounts owing), invoices applicable to each Account, and other data in any way
pertaining to the Accounts as you may request.

 

E. Collection Rights Of the Secured
Party.. Account Debtors means the person who is obligated on an account, chattel paper, or general intangible. I authorize
you to notify my Account Debtors of your security interest and to deal with the Account Debtors' obligations at your discretion.
You may enforce the obligations of an Account Debtor, exercising any of my rights with respect to the Account Debtors' obligations
to make payment or otherwise render performance to me, including the enforcement of any security interest that secures such obligations.
You may apply proceeds received from the Account Debtors to the Secured Debts or you may release such proceeds to me.

 

I specifically and irrevocably authorize
you to exercise any of the following powers at my expense, without limitation, until the Secured Debts are paid in full:

 

(1) demand payment and enforce
collection from any Account Debtor or Obligor by suit or otherwise.

 

(2) enforce any security interest,
lien or encumbrance given to secure the payment or performance of any Account Debtor or any obligation constituting Property.

 

(3) file proofs of claim or
similar documents in the event of bankruptcy, insolvency or death of any person obligated as an Account Debtor.

 

(4) compromise, release, extend,
or exchange any indebtedness of an Account Debtor.

 

(5) take control of any proceeds
of the Account Debtors' obligations and any returned or repossessed goods.

 

(6) endorse all payments by
any Account Debtor which may come into your possession as payable to me.

 

(7) deal in all respects as
the holder and owner of the Account Debtors' obligations.

 

F. Authority To Perform. I
authorize you to do anything you deem reasonably necessary to protect the Property, and perfect and continue your security
interest in the Property, If I fail to perform any of my duties under this Loan Agreement or any other security interest,
you are authorized, without notice to me, to perform the duties or cause them to be performed.

 

These authorizations include, but are not
limited to, permission to:

 

(1) pay and discharge taxes,
liens, security interests or other encumbrances at any time levied or placed on the Property.

 

(2) pay any rents or other charges
under any lease affecting the Property.

 

(3) order and pay for the repair,
maintenance and preservation of the Property.

 

(4) file any financing statements
on my behalf and pay for filing and recording fees pertaining to the Property.

 

(5) place a note on any chattel
paper indicating your interest in the Property.

 

(6) take any action you feel
necessary to realize on the Property, including performing any part of a contract or endorsing it in my name.

 

(7) handle any suits or other
proceedings involving the Property in my name.

 

(8) prepare, file, and sign
my name to any necessary reports or accountings.

 

(9) make an entry on my books
and records showing the existence of this Agreement.

 

	BLACK ROCK CAPITAL LLC	 	
	Arkansas Promissory Note and Security Agreement 	 	 Initials_____
	AR/4apearson00139700006828031061710N	Wolters Kluwer Financial Services ©1996, 2010 Bankers SystemsTM	Page 4

 

    	 

    	 

    

 

(10) notify any Account Debtor
of your interest in the Property and tell the Account Debtor to make payments to you or someone else you name.

 

If you perform for me, you will
use reasonable care. If you exercise the care and follow the procedures that you generally apply to the collection of obligations
owed to you, you will be deemed to be using reasonable care. Reasonable care will not include: any steps necessary to preserve
rights against prior parties; the duty to send notices, perform services or take any other action in connection with the management
of the Property; or the duty to protect, preserve or maintain any security interest given to others by me or other parties. Your
authorization to perform for me will not create an obligation to perform and your failure to perform will not preclude you from
exercising any other rights under the law or this Loan Agreement. All cash and non-cash proceeds of the Property may be applied
by you only upon your actual receipt of cash proceeds against such of the Secured Debts, matured or unmatured, as you determine
in your sole discretion.

 

If you come into actual or constructive
possession of the Property, you will preserve and protect the Property. For purposes of this paragraph, you will be in actual possession
of the Property only when you have physical, immediate and exclusive control over the Property and you have affirmatively accepted
that control. You will be in constructive possession of the Property only when you have both the power and the intent to exercise
control over the Property.

 

G. Name and Location. My
name indicated in the DATE AND PARTIES section is my exact legal name. I am an entity organized and registered under the laws
of Arkansas. I will provide verification of registration and location upon your request. I will provide you with at least 30 days
notice prior to any change in my name, address, or state of organization or registration.

 

H. Perfection of Security Interest.
I authorize you to file a financing statement covering the Property. I will comply with, facilitate, and otherwise assist
you in connection with obtaining perfection or control over the Property for purposes of perfecting your security interest under
the Uniform Commercial Code. I agree to pay all actual costs of terminating your security interest.

 

14. DUE ON SALE OR ENCUMBRANCE.
You may, at your option, declare the entire balance of this Loan Agreement to be immediately due and payable upon the creation
of, or contract for the creation of, any lien, encumbrance, transfer or sale of all or any part of the Property. This right is
subject to the restrictions imposed by federal law (12 C.F.R. 591), as applicable.

 

15. WAIVERS AND CONSENT. To the
extent not prohibited by law, I waive protest, presentment for payment, demand, notice of acceleration, notice of intent to accelerate
and notice of dishonor.

 

A. Additional Waivers By Borrower.
In addition, I, and any party to this Loan Agreement, to the extent permitted by law, consent to certain actions you may take,
and generally waive defenses that may be available based on these actions or based on the status of a party to this Loan Agreement.

 

(1) You may renew or extend
payments on this Loan Agreement, regardless of the number of such renewals or extensions.

 

(2) You may release any Borrower,
endorser, guarantor, surety, accommodation maker or any other co-signer.

 

(3) You may release, substitute
or impair any Property securing this Loan Agreement.

 

(4) You, or any institution
participating in this Loan Agreement, may invoke your right of set-off.

 

(5) You may enter into any sales,
repurchases or participations of this Loan Agreement to any person in any amounts and I waive notice of such sales repurchases
or participations.

 

(6) I agree that any of us signing
this Loan Agreement as a Borrower is authorized to modify the terms of this Loan Agreement or any instrument securing guarantying
or relating to this Loan Agreement.

 

B. No Waiver By Lender.
Your course of dealing, or your forbearance from, or delay in, the exercise of any of your rights, remedies, privileges or right
to insist upon my strict performance of any provisions contained in this Loan Agreement, shall not be construed as a waiver try
you unless any such waiver is in voting and as  signed by you.

 

C. Waiver of Claims. I waive
all claims for loss or damage caused by your acts or omissions where you acted reasonably and in good faith.

 

16. COMMISSIONS. I understand and
agree that you (or your affiliate) will earn commissions or fees on any insurance products, and may earn such fees on other services
that I buy through you or your affiliate.

 

17. APPLICABLE LAW. This Loan Agreement
is governed by the laws of Arkansas, the United States of America, and to the extent required, by the laws of the jurisdiction
where the Property is located, except to the extent such state laws are preempted by federal law.

 

18. JOINT AND INDIVIDUAL LIABILITY AND
SUCCESSORS. My obligation to pay the Loan is independent of the obligation of any other person who has also agreed to pay it.
You may sue me alone, or anyone else who is obligated on the Loan, or any number of us together, to collect the Loan. Extending the Loan or new obligations under the Loan, will not affect my duty under the Loan and I will still be obligated to pay the Loan.
This Loan Agreement shall inure to the benefit of and be enforceable by you and your successors and assigns and shall be binding
upon and enforceable against me and my personal representatives, successors, heirs and assigns.

 

19. AMENDMENT, INTEGRATION AND SEVERABILITY.
This Loan Agreement may not be amended or modified by oral agreement. No amendment or modification of this Loan Agreement is effective
unless made in writing and executed by you and me. This Loan Agreement and the other Loan Documents are the complete and final
expression of the agreement. If any provision of this Loan Agreement is unenforceable, then the unenforceable provision will be
severed and the remaining provisions will still be enforceable. No present or future agreement securing any other debt I owe you
will secure the payment of this Loan if, with respect to this loan, you fail to fulfill any necessary requirements or limitations
of Sections 19(a), 32 or 35 of Regulation Z or if, as a result, this Loan would become subject to Section 670 of the John Warner
National Defense Authorization Act for Fiscal Year 2007.

 

20. INTERPRETATION. Whenever used,
the singular includes the plural and the plural includes the singular. The section headings are for convenience only and are not
to be used to interpret or define the terms of this Loan Agreement.

 

21. NOTICE, FINANCIAL REPORTS AND ADDITIONAL
DOCUMENTS. Unless otherwise required by law, any notice will be given by delivering it or mailing it by first class mail to
the appropriate party's address listed in the DATE AND PARTIES section, or to any other address designated in writing. Notice to
one Borrower will be deemed to be notice to all Borrowers. I will inform you in writing of any change in my name, address or other
application information. I agree to sign, deliver, and file any additional documents or certifications that you may consider necessary
to perfect, continue, and preserve my obligations under this Loan and to confirm your lien status on any Property. Time is of the
essence.

 

22. CREDIT INFORMATION. I agree
to supply you with whatever information you reasonably request. You will make requests for this information without undue frequency,
and will give me reasonable time in which to supply the information. 

 

	BLACK ROCK CAPITAL LLC	 	
	Arkansas Promissory Note and Security Agreement 	 	 Initials_____
	AR/4apearson00139700006828031061710N	Wolters Kluwer Financial Services ©1996, 2010 Bankers SystemsTM	Page 5

 

    	 

    	 

    

 

23. ERRORS AND OMISSIONS. I
agree, if requested by you, to fully cooperate in the correction, if necessary, in the reasonable discretion of you of any
and all loan closing documents so that all documents accurately describe the loan between you and me. I agree to assume all
costs including by way of illustration and not limitation, actual expenses, legal fees and marketing losses for failing to
reasonably comply with your requests within thirty (30) days.

 

24. NON-BORROWER SECURITY.

 

THIRD PARTY AGREEMENT

 

In this section, I, me, or my means the
party or parties signing within this Third Party Agreement and you means the Lender.

 

I agree to give you a security interest
in the Property identified in the Security Agreement section of this Loan Agreement. I agree to the terms of this Loan Agreement,
and unless I have separately guaranteed the debt described herein, I am not personally liable for payment. This means that if any
Borrower defaults, my interest in the Property may be used to satisfy the Borrower's debt. I agree that you may, without releasing
me or the Property from this Third Party Agreement and without notice or demand upon me, extend new credit to any Borrower, renew
or change this Loan Agreement one or more times and for any term, or fail to perfect your security interest in, impair, or release
any security (including guaranties) for the obligations of any Borrower.

 

I HAVE RECEIVED A COPY OF THIS LOAN
AGREEMENT. 

 

	OWNER:	 
	 	 	 
	FEQ REALTY LLC	 
	 	 	 
	By FEQ GAS LLC, MANAGER	 
	 	 	 	 
	 	By	/S/ ERNEST A. BARTLETT	 
	 	FEQ INVESTMENTS, INC, MANAGER, ERNEST A. BARTLETT, PRESDIENT

 

25. SIGNATURES. By signing, I
agree to the terms contained in this Loan Agreement. I also acknowledge receipt of a copy of this Loan Agreement.

 

	BORROWER:	 
	 	 	 
	 	BLACK ROCK CAPITAL LLC	 
	 	 	 
	 	 	By	/s/ ALAN BARKSDALE	 
	 	 	ALAN BARKSDALE, MANAGER MEMBER	 
	 	 	 	 	 
	 	/s/ ERNEST A. BARTLETT	 
	 	ERNEST A. BARTLETT	 
	 	Individually	 
	 	 	 
	 	/s/ ALAN W BARKSDALE	 
	 	ALAN W BARKSDALE	 
	 	Individually	 
	 	 	 
	LENDER:	 
	 	 	 
	 	First State Bank	 
	 	 	 
	 	 	By	/s/ DAVID ESTES	 
	 	 	DAVID ESTES, PRESIDENT/CEO	 

 

	BLACK ROCK CAPITAL LLC	 	
	Arkansas Promissory Note and Security Agreement 	 	 Initials_____
	AR/4apearson00139700006828031061710N	Wolters Kluwer Financial Services ©1996, 2010 Bankers SystemsTM	Page 6

 

    	 

    	 

    

 

APPENDIX: FEES AND CHARGES

 

As described in the ADDITIONAL CHARGES
section of the attached Loan Agreement, I agree to pay, or have paid, these additional fees and charges.

 

Nonrefundable Fees and Charges.
The following fees are earned when collected and will not be refunded if I prepay this Loan Agreement before the scheduled maturity
date.

 

State UCC filing-Texas.
A(n) State UCC filing-Taxes fee of $30.00 payable from separate funds on or before today's date.

State UCC Filing - Arkansas.
A(n) State UCC Filing - Arkansas fee of $17.50 payable from separate funds on or before today's date.

Recording - Mortgage.
A(n) Recording - Mortgage fee of $70.00 payable from separate funds on or before today's date.

Recording - Deed. A(n)
Recording - Deed fee of $80.00 payable from separate funds on or before today's date.

Processing fee. A(n)
Processing fee fee of $300.00 payable from separate funds on or before today's date.

 

	BLACK ROCK CAPITAL LLC	 	
	Arkansas Promissory Note and Security Agreement 	 	 Initials_____
	AR/4apearson00139700006828031061710N	Wolters Kluwer Financial Services ©1996, 2010 Bankers SystemsTM	Page 7

 

    	 

    	 

    

 

EXHIBIT A

 

To Mortgage, Deed of Trust, Security Agreement,
Financing Statement and Assignment dated as of June 18, 2010 from Black Rock Capital, LLC, as Trustor and Debtor, to David R. Estes,
Trustee, for and on behalf of First State Bank, as Beneficiary and Secured Party:

 

All of Trustor and Debtor's right, title
and interest in and to the following:

 

ZAPATA COUNTY

 

	 	Entity Name	 	API No.	 
	 	 	 	 	 
	 	Villarreal #1	 	42-505-35317 (Wellbore Only)	 
	 	Villarreal #3	 	42-505-35476 (Wellbore Only)	 
	 	Villarreal #6	 	42-505-36020 (Wellbore Only)	 

 

The Northeast 1099.165 acres of land out
of a 2323.76 acre tract, commonly known as Las Avispas Ranch Tract, and more particularly described in two tracts of 549.89 acres
each, as set out below:

 

Tract One: 

The South or Southeast 549.89 acres of
the Northeast 1069.65 acres of said 2323.76-acre tract, set aside to Ricardo Villarreal under the Last Will and Testament of Eduardo
Villarreal, deceased, out of said "Las Avispas Ranch" tract lying between the Northeast lines of Tracts M and N shown
on the Alfredo Barrera Map, and the Northeast line of "Las Avispas Ranch" tract; said 549.89 acres as shown above mentioned
map prepared by the said Alfredo Barrera dated June 30, 1975, are described by metes and bounds as follows:

 

BEGINNING at a point on the S.E. boundary
line of "Las Avispas Ranch: tract, which point is the Bast corner of the Tract "N" on the said Alfredo Barrera Map dated August 24, 1953, for the South corner hereof;

THENCE N. 54-40 E. 923'9;;02 feet, along
the Southeast line of "Las Avispas Ranch" tract to fence corner for the Bast corner hereof;

THENCE N. 35-12 W. along N.E. line of "Las
Avispas Ranch" tract, 2426.04 feet to a pipe set for the North corner hereof;

THENCE S. 54-35 W. 8976.35 feet 19 a 3/8"
iron rod for a corner hereof;

THENCE S. 02-35 W. 627.7 feet to fence
corner;

THENCE N. 87-30 W. 730.0 feet to fence
corner;

THENCE S. 02-33 W. l000.00 feet to fence
corner;

THENCE S. 75-01-42 R., 2048.1 feet to place
of beginning.

 

Tract Two:

549.89 acre tract out of the The North
Or Northwest one-half of the Northeast 1099.65 acres of said 2323.76-acre tract, set aside to Gustavo Villarreal under the Last
Will and Testament of Ednardo Villarreal deceased, out of "Las Avispas Ranch" tract lying between the Northeast lines
of tracts M and N as shown on the Alfredo Barrera Map, and the Northeast line of "Las Avispas Ranch" tract and described
by metes and bounds as follows:

 

Beginning at a point
on the Northwest line of said 2323.76-acre "Las Avispas Ranch" tract, which point is the North corner of Tract M of the
above mentioned Alfredo Barrera Map dated August 24, 1973, for the West corer hereof;

THENCE S. 34-59 E. 1116.42 feet to a pipe;
for a corner hereof;

THENCE S. 57-14 W. 1649.4 feet to a fence corner;

THENCE S. 15-05 E. 635.0 feet;

THENCE
S. 03-03 W. 836.6 feet; THENCE
N. 79-58 E 50.33 feet

THENCE N. 02-34 B. 879.0 feet;

THENCE S. 87-29 B. 1320.2 feet; a fence
corner;

THENCE S. 02-35 W. 362.3 feet to a 3/8"
iron rod;

THENCE N. 54-35 E. 8976.35 feet to a pipe
set on the N.E. line of "Las Avispas Ranch" tract for the East corner hereof;

THENCE N. 35-12 W.2703.2 feet to the N.W.
line of "Las Avispas Ranch" tract for the North hereof;

THENCE
S. 54-40-28 W. along the N.W. line of "Las Avispas Ranch" tract, 7993.19 feet to the place of beginning.

 

    	 

    	 

    

 

EXHIBIT "A" CONTINUED

 

ZAPATA COUNTY

 

	 	Entity Name	 	API No.	 
	 	 	 	 	 
	 	Villarreal #7	 	42-505-36188	 
	 	Villarreal #8	 	42-505-36190	 
	 	Villarreal #9	 	42-505-36191	 
	 	Villarreal #10	 	42-505-36488	 
	 	Villarreal #12 	 	42-505-36443 	 
	 	Villarreal #11	 	42-505-36511	 

 

The Northeast 1099.165 acres of land out
of a 2323.76 acre tract, commonly known as Las Avispas Ranch Tract, and more particularly described in two tracts of 549.89 acres
each, as set out below:

 

Tract One:

The South or Southeast 549.89 acres
of the Northeast 1069.65 acres of said 2323.76-acre tract, set aside to Ricardo Villarreal under the Last Will and Testament of
Eduardo Villarreal, deceased, out of said "Las Avispas Ranch" tract lying between the Northeast lines of Tracts M and
N shown on the Alfredo Barrera Map, and the Northeast line of "Las Avispas Ranch" tract; said 549.89 acres as shown
above mentioned map prepared by the said Alfredo Barrera dated June 30, 1975, are described by metes and bounds as follows:

 

BEGINNING at a point on the S.E. boundary
line of "Las Avispas Ranch: tract, which point is the East corner of the Tract "N" on the said Alfredo Barrera Map
dated August 24, 1953, for the South corner hereof;

THENCE N. 54-40 R. 923'9;;02 feet, along
the Southeast be of "Las Avispas Ranch" tract to fence corner for the East corner hereof;

THENCE N. 35-12 W. along N.E. line of "Las
Avispas Ranch" tract, 2426.04 feet to a pipe set for the North corner hereof;

THENCE S. 54-35 W. 8976.35 feet t9 a 3/8"
Iron rod for a corner hereof;

THENCE S. 02-35 W. 627.7 feet to fence
corner;

THENCE N. 87-30 W. 730.0 feet to fence
corner;

THENCE S. 02-33 W. 1000.00 feet to fence
corner;

THENCE S. 75-01-42 E., 2048.1 feet
to place of beginning.

 

Tract Two:

549.89 acre tract out of the The North
Or Northwest one-half of the Northeast 1099.65 acres of said 2323.76-acre tract, set aside to Gustavo Villarreal under the Last
Will and Testament of Eduardo Villarreal deceased, out of "Las Avispas Ranch" tract lying between the Northeast lines
of tracts M and N as shown on the Alfredo Barrera Map, and the Northeast line of "Las Avispas Ranch" tract and described
by metes and bounds as follows:

 

Beginning at a point on the Northwest line
of said 2323.76-acre "Las Avispas Ranch" tract, which point is the North corner of Tract M of the above mentioned Alfredo
Barrera Map dated August 24, 1973, for the West corer hereof;

THENCE S. 34-59 E. 1116.42 feet to a pipe;
for a corner hereof;

THENCE S. 57.-14 W: 1649.4 feet to a fence corner;

THENCE S. 15-05 E. 635.0 feet;

THENCE S. 03-03 W. 836.6 feet; THENCE N.
79-58 E. 50.33 feet

THENCE N. 02-34 E.
879.0 feet;

THENCE S. 87-29 E. 1320.2 feet; a fence
corner;

THENCE S. 02-35 W. 362.3 feet to a 3/8"
iron rod;

THENCE N. 54-35
E. 8976.35 feet to a pipe set on the N.E. line of "Las Avispas Ranch" tract for the East corner hereof;

THENCE 35-12 W. 2703.2 feet to the N.W.
line of "Las Avispas Ranch" tract for the North, hereof;

THENCE S. 54-40-28 W. along the N.W. line of "Las Avispas
Ranch" tract, 7993.19 feet to the place of beginning.

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