Document:

Exhibit
10.1

 

CREDIT
AGREEMENT

 

 

 

among

 

 

 

CARBON NATURAL GAS COMPANY,

as Borrower

 

 

 

THE LENDERS FROM TIME TO TIME PARTY HERETO

 

 

 

and

 

 

 

LEGACYTEXAS BANK,

as Administrative Agent and L/C Issuer

 

 

 

LEGACYTEXAS BANK,

as Sole Lead Arranger and Sole Book Runner

 

 

 

DATED AS OF OCTOBER 3, 2016

 

    

     

    

 

TABLE
OF CONTENTS

 

	 	Page
	ARTICLE
    1 DEFINITIONS	1
	Section
    1.1   Definitions	1
	Section
    1.2   Accounting Matters	27
	Section
    1.3   ERISA Matters	28
	Section
    1.4   Letter of Credit Amounts	28
	Section
    1.5   Other Definitional Provisions	28
	Section
    1.6   Interpretative Provision	28
	Section
    1.7   Times of Day	28
	Section
    1.8   Other Loan Documents	28
	ARTICLE
    2 THE COMMITMENTS AND CREDIT EXTENSIONS	29
	Section
    2.1   The Loans	29
	Section
    2.2   Letters of Credit	30
	Section
    2.3   Fees	37
	Section
    2.4   Payments Generally; Administrative Agent’s Clawback	38
	Section
    2.5   Evidence of Debt	39
	Section
    2.6   Cash Collateral	39
	Section
    2.7   Interest; Payment Terms	40
	Section
    2.8   Voluntary Termination or Reduction of Commitments; Prepayments	42
	Section
    2.9   Borrowing Base	43
	ARTICLE
    3 TAXES, YIELD PROTECTION AND INDEMNITY	47
	Section
    3.1   Increased Costs	47
	Section
    3.2   Illegality	48
	Section
    3.3   Inability to Determine Rates	49
	Section
    3.4   Taxes	49
	Section
    3.5   Compensation for Losses	53
	Section
    3.6   Mitigation of Obligations; Replacement of Lenders	53
	Section
    3.7   Survival	54
	ARTICLE
    4 SECURITY	54
	Section
    4.1   Mortgaged Properties	54
	Section
    4.2   Collateral	55
	Section
    4.3   Setoff	55
	Section
    4.4   Authorization to File Financing Statements	55
	ARTICLE
    5 CONDITIONS PRECEDENT	56
	Section
    5.1   Initial Extension of Credit	56
	Section
    5.2   All Extensions of Credit	58
	ARTICLE
    6 REPRESENTATIONS AND WARRANTIES	59
	Section
    6.1   Entity Existence	59
	Section
    6.2   Financial Statements; Etc	59
	Section
    6.3   Action; No Breach	60
	Section
    6.4   Operation of Business	60
	Section
    6.5   Litigation and Judgments	60
	Section
    6.6   Rights in Properties; Liens	60

 

    i

     

    

 

	Section
    6.7    Enforceability	61
	Section
    6.8    Approvals	61
	Section
    6.9    Taxes	61
	Section
    6.10   Use of Proceeds; Margin Securities	62
	Section
    6.11   ERISA	62
	Section
    6.12   Disclosure	62
	Section
    6.13   Subsidiaries	62
	Section
    6.14   Agreements	63
	Section
    6.15   Compliance with Laws	63
	Section
    6.16   Inventory	63
	Section
    6.17   Regulated Entities	63
	Section
    6.18   Environmental Matters	63
	Section
    6.19   Intellectual Property	64
	Section
    6.20   Anti-Corruption Laws and Sanctions	64
	Section
    6.21   Patriot Act	64
	Section
    6.22   Insurance	64
	Section
    6.23   Solvency	65
	Section
    6.24   Security Documents	65
	Section
    6.25   Businesses	65
	Section
    6.26   Labor Matters	65
	Section
    6.27   Gas Balancing Agreements and Advance Payment Contracts	65
	Section
    6.28   Material Agreements	65
	Section
    6.29   Hedging Agreements and Transactions	65
	Section
    6.30   Flood Matters	65
	ARTICLE
    7 AFFIRMATIVE COVENANTS	66
	Section
    7.1    Reporting Requirements	66
	Section
    7.2    Maintenance of Existence; Conduct of Business	68
	Section
    7.3    Maintenance and Operation of Properties	69
	Section
    7.4    Taxes and Claims	69
	Section
    7.5    Insurance	70
	Section
    7.6    Inspection Rights	71
	Section
    7.7    Keeping Books and Records	71
	Section
    7.8    Compliance with Laws	71
	Section
    7.9    Compliance with Agreements	71
	Section
    7.10   Further Assurances	71
	Section
    7.11   ERISA	71
	Section
    7.12   Depository Relationship	71
	Section
    7.13   Additional Guarantors	72
	Section
    7.14   Title Assurances	72
	Section
    7.15   Commodity Hedging Transactions	72
	Section
    7.16   Concerning Operator’s Liens	73
	Section
    7.17   Post-Closing Obligation	73
	ARTICLE
    8 NEGATIVE COVENANTS	73
	Section
    8.1    Debt	73
	Section
    8.2    Limitation on Liens	73
	Section
    8.3    Mergers, Etc	76
	Section
    8.4    Restricted Payments	76
	Section
    8.5    Loans and Investments	77
	Section
    8.6    Limitation on Issuance of Equity	78

 

    ii

     

    

 

	Section
    8.7    Transactions With Affiliates	78
	Section
    8.8    Disposition of Assets	78
	Section
    8.9    Sale and Leaseback	79
	Section
    8.10   Prepayment of Debt	79
	Section
    8.11   Nature of Business	79
	Section
    8.12   Environmental Protection	79
	Section
    8.13   Accounting	80
	Section
    8.14   Burdensome Agreements	80
	Section
    8.15   Subsidiaries	80
	Section
    8.16   Amendments of Constituent Documents	80
	Section
    8.17   Hedging Agreements and Transactions	80
	Section
    8.18   Gas Balancing Agreements and Advance Payment Contracts	81
	Section
    8.19   Certain Accounts Payable	81
	Section
    8.20   Use of Proceeds	81
	Section
    8.21   Joint Operating Agreements	81
	Section
    8.22   Excluded Subsidiaries	81
	ARTICLE
    9 FINANCIAL COVENANTS	82
	Section
    9.1    Leverage Ratio	82
	Section
    9.2    Current Ratio	82
	ARTICLE
    10 DEFAULT	82
	Section
    10.1   Events of Default	82
	Section
    10.2   Remedies Upon Default	84
	Section
    10.3   Application of Funds	85
	Section
    10.4   Performance by Administrative Agent	85
	ARTICLE
    11 AGENCY	86
	Section
    11.1    Appointment and Authority	86
	Section
    11.2    Rights as a Lender	86
	Section
    11.3    Exculpatory Provisions	87
	Section
    11.4    Reliance by Administrative Agent	88
	Section
    11.5    Delegation of Duties	88
	Section
    11.6    Resignation of Administrative Agent	88
	Section
    11.7    Non-Reliance on Administrative Agent and Other Lenders	90
	Section
    11.8    Administrative Agent May File Proofs of Claim	90
	Section
    11.9    Collateral and Guaranty Matters	91
	Section
    11.10  Bank Product Agreements	91
	ARTICLE
    12 MISCELLANEOUS	92
	Section
    12.1    Expenses	92
	Section
    12.2    INDEMNIFICATION	93
	Section
    12.3    Limitation of Liability	94
	Section
    12.4    No Duty	94
	Section
    12.5    Lenders Not Fiduciary	94
	Section
    12.6    Equitable Relief	94
	Section
    12.7    No Waiver; Cumulative Remedies	94
	Section
    12.8    Successors and Assigns	95
	Section
    12.9    Survival	98
	Section
    12.10  Amendment	99
	Section
    12.11  Notices	100

 

    iii

     

    

 

	Section
    12.12   Governing Law; Venue; Service of Process	101
	Section
    12.13   Counterparts	102
	Section
    12.14   Severability	102
	Section
    12.15   Headings	102
	Section
    12.16   Construction	102
	Section
    12.17   Independence of Covenants	102
	Section
    12.18   WAIVER OF JURY TRIAL	102
	Section
    12.19   Additional Interest Provision	103
	Section
    12.20   Ceiling Election	104
	Section
    12.21   USA Patriot Act Notice	104
	Section
    12.22   Defaulting Lenders	104
	Section
    12.23   Sharing of Payments by Lenders	106
	Section
    12.24   Payments Set Aside	107
	Section
    12.25   Confidentiality	107
	Section
    12.26   Electronic Execution of Assignments and Certain Other Documents	108
	Section
    12.27   Intercreditor Agreement	108
	Section
    12.28   NOTICE OF FINAL AGREEMENT	108

 

    iv

     

    

 

INDEX
TO SCHEDULES

 

	Schedule	 	Description
    of Schedule	 	Section
	2.1	 	Commitments
    and Applicable Percentages	 	2.1
	6.5	 	Litigation
    and Judgments	 	6.5
	6.6(b)	 	Oil
    and Gas Properties	 	6.6(b)
	6.13	 	Subsidiaries	 	6.13
	6.13(b)	 	Excluded
    Subsidiaries	 	6.13(b)
	6.18	 	Environmental
    Matters	 	6.18
	6.19	 	Intellectual
    Property	 	6.19
	6.28	 	Material
    Agreements	 	6.28
	6.29	 	Hedging
    Agreements and Hedging Transactions	 	6.29
	8.1	 	Existing
    Debt	 	8.1
	8.2	 	Existing
    Liens	 	8.2
	8.5	 	Existing
    Investments	 	8.5
	12.11	 	Notices	 	12.11

 

    v

     

    

 

INDEX
TO EXHIBITS

 

	Exhibit	 	Description
    of Exhibit	 	Section
	A	 	Assignment
    and Assumption	 	1.1
	B	 	Compliance
    Certificate	 	1.1
	C	 	Borrowing
    Request	 	1.1
	D	 	Note	 	1.1
	E	 	Tax
    forms	 	3.4(g)
	F	 	Borrowing
    Base Adjustment Letter	 	2.9(d)

 

    vi

     

    

 

CREDIT
AGREEMENT

 

THIS
CREDIT AGREEMENT, dated as of October 3, 2016, is among CARBON NATURAL GAS COMPANY, a Delaware corporation (“Borrower”),
the lenders from time to time party hereto (collectively, “Lenders” and individually, a “Lender”),
and LEGACYTEXAS BANK, a Texas state bank, as Administrative Agent and L/C Issuer.

 

RECITALS

 

Borrower
has requested that Lenders extend credit to Borrower as described in this Agreement. Lenders are willing to make such credit available
to Borrower upon and subject to the provisions, terms and conditions hereinafter set forth.

 

NOW
THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties hereto agree as follows:

 

ARTICLE
1

DEFINITIONS

 

Section
1.1Definitions. As used in this Agreement, all exhibits, appendices and schedules hereto and in any note, certificate,
report or other Loan Documents made or delivered pursuant to this Agreement, the following terms will have the meanings given
such terms in this Section 1.1 or in the provision, section or recital referred to below:

 

“Acceptable
Commodity Hedging Transactions” means:

 

(a)       Commodity
Hedging Transactions meeting each of the following criteria unless a variation therefrom is consented to in writing by Administrative
Agent:

 

(i)       The
quantity of gaseous and liquid hydrocarbons owned by Borrower and its Subsidiaries subject to Commodity Hedging Transactions (other
than floors covered by clause (b) below) at the time of entering into such Commodity Hedging Transactions shall not, without
the prior written approval of Administrative Agent, be greater than (A) for natural gas, 90% of the monthly Projected Production
of natural gas from the Oil and Gas Properties of Borrower and its Subsidiaries used in determining the Borrowing Base and not
the subject of Commodity Hedging Transactions under clause (b) below, (B) for oil, 90% of the monthly Projected Production
of oil from the Oil and Gas Properties of Borrower and its Subsidiaries used in determining the Borrowing Base and not the subject
of Commodity Hedging Transactions under clause (b) below and (C) for condensate and natural gas liquids, including gas
processing plant products, 90% of the monthly Projected Production of such liquids from the Oil and Gas Properties of Borrower
and its Subsidiaries used in determining the Borrowing Base and not the subject of Commodity Hedging Transactions under clause
(b) below.

 

(ii)       The
“strike prices” under any Commodity Hedging Transactions (and the “strike price ceiling” under any collar),
at the time of entering into such Commodity Hedging Transactions, shall not be less than the lowest prices utilized in the most
recent base case evaluation of the Oil and Gas Properties used by Administrative Agent in determining the Borrowing Base, except
that under certain downside conditions such lower strike price as Administrative Agent may approve in writing following a written
request by Borrower may be used.

 

    	CREDIT AGREEMENT - Page 1	 

     

    

 

(iii)       The
counterparty or counterparties thereunder must be Approved Commodity Swap Counterparties.

 

(iv)       The
Commodity Hedging Transaction is a standard commodity hedging arrangement entered into in the ordinary course of business for
the principal purpose of protecting against fluctuations in commodity prices or commodity basis risk and not for the purpose of
speculation.

 

(v)       The
Commodity Hedging Transaction does not have a term longer than 4 years.

 

(vi)       The
Commodity Hedging Transaction is unsecured except as specifically permitted by the Loan Documents or the Intercreditor Agreement.

 

(vii)       The
Commodity Hedging Transaction is otherwise acceptable to Administrative Agent in its reasonable discretion.

 

(b)       Commodity
Hedging Transactions in the form of minimum price guarantees or “floors,” limited to 100% (or such greater percentage
as Administrative Agent may approve in writing from time to time) of the monthly Projected Production from any commodity category
of Borrower’s and its Subsidiaries’ Proved Oil and Gas Properties not subject to Commodity Hedging Transactions under
clause (a) above and otherwise satisfying the requirements of subclauses (ii) through (vii) of clause
(a) of this definition.

 

“Account”
means an account, as defined in the UCC.

 

“Acquisition”
means the acquisition by any Person of (a) a majority of the Equity Interests of another Person, (b) all or substantially
all of the assets of another Person or (c) all or substantially all of a business unit or line of business of another Person,
in each case (i) whether or not involving a merger or consolidation with such other Person and (ii) whether in one transaction
or a series of related transactions.

 

“Acquisition
Agreement” means that certain Purchase and Sale Agreement, dated as of the Closing Date, by and among the Sellers, as
sellers, and Nytis, as buyer, and all modifications, supplements and amendments thereof.

 

“Acquisition
Documents” means the Acquisition Agreement and all agreements, assignments, deeds, conveyances, certificates or other
documents and instruments now or hereafter executed and delivered by any Seller and/or Nytis pursuant to the Acquisition Agreement
or in connection with the transactions contemplated by the Acquisition Agreement.

 

“Adjusted
LIBOR” means, with respect to any LIBOR Portion for any Interest Period or day, as applicable, an interest rate per
annum equal to LIBOR for such Interest Period or day multiplied by the Statutory Reserve Rate.

 

“Administrative
Agent” means LegacyTexas Bank, in its capacity as administrative agent under any of the Loan Documents, until the appointment
of a successor administrative agent pursuant to the terms of this Agreement and, thereafter, shall mean such successor administrative
agent.

 

“Administrative
Questionnaire” means an administrative questionnaire in a form supplied by Administrative Agent.

 

    	CREDIT AGREEMENT - Page 2	 

     

    

 

“Advance
Payment Contract” means any take-or-pay or similar contract whereby Borrower or any of its Subsidiaries agrees to accept
a defined payment (whether at the time the contract is entered into or in the future) as payment-in-full for the purchase of present
or future production of Hydrocarbons from its Oil and Gas Properties (each, an “Advance Payment”) and to deliver
such Hydrocarbons at some future time without then or thereafter receiving full payment therefor at the prevailing market price
for such Hydrocarbons as of the date of delivery thereof.

 

“Affiliate”
means, as to any Person, any other Person (a) that directly or indirectly, through one or more intermediaries, Controls or
is Controlled by, or is under common Control with, such Person; (b) that directly or indirectly beneficially owns or holds
10% or more of any class of voting Equity Interests of such Person; or (c) 10% or more of the voting Equity Interests of
which is directly or indirectly beneficially owned or held by such Person; provided, however, in no event shall
any Lender be deemed an Affiliate of Borrower or any of its Subsidiaries or Affiliates.

 

“Agent
Parties” means, collectively, Administrative Agent and its Related Parties.

 

“Aggregate
Commitments” means, at any time, the aggregate amount of the Commitments of the Lenders at such time, which aggregate
amount shall be the lesser of (a) the aggregate amount set forth on Schedule 2.1 and (b) the Borrowing Base in effect
at such time.

 

“Aggregate
Revolving Credit Exposure” means, at any time, the aggregate Revolving Credit Exposures of all Lenders at such time.

 

“Agreement”
means this Credit Agreement, together with all schedules, exhibits and appendices attached to or otherwise identified herewith,
in each case as amended, restated supplemented or otherwise modified from time to time.

 

“Anti-Corruption
Laws” means all Laws, rules, and regulations of any jurisdiction applicable to Borrower and its Affiliates from time
to time concerning or relating to bribery or corruption.

 

“Applicable
Margin” means the applicable percentages per annum set forth below based upon the Utilization applicable from time to
time. The Applicable Margin shall immediately and automatically change when and as the Utilization changes.

 

	Pricing Level	 	Utilization	 	Base Rate Portion	 	 	LIBOR Portion and Letter of Credit Fee	 	 	Commitment Fee	 
	1	 	< 25%	 	 	0.50	%	 	 	3.50	%	 	 	0.50	%
	2	 	> 25% but < 50%	 	 	0.75	%	 	 	3.75	%	 	 	0.50	%
	3	 	> 50% but < 75%	 	 	1.00	%	 	 	4.00	%	 	 	0.50	%
	4	 	> 75% but < 90%	 	 	1.25	%	 	 	4.25	%	 	 	0.50	%
	5	 	> 90%	 	 	1.50	%	 	 	4.50	%	 	 	0.50	%

 

    	CREDIT AGREEMENT - Page 3	 

     

    

 

“Applicable
Percentage” means, with respect to any Lender at any time, the percentage (carried out to the ninth decimal place) of
the Aggregate Commitments represented by such Lender’s Commitment at such time; provided that if the Aggregate Commitments
have been terminated pursuant to the terms hereof, then the Applicable Percentage of each Lender shall be determined based upon
the Applicable Percentage of such Lender immediately prior to such termination and after giving effect to any subsequent assignments
made pursuant to the terms hereof.

 

“Applicable
Rate” means (a) in the case of a Portion bearing interest based upon the Base Rate, the Base Rate plus the
Applicable Margin; and (b) in the case of a Portion bearing interest based upon LIBOR, Adjusted LIBOR plus the Applicable
Margin.

 

“Approved
Commodity Swap Counterparty” means (a) each Bank Product Provider, (b) BP Energy Company, a Delaware corporation,
and (c) each other swap counterparty approved in writing from time to time by Administrative Agent; provided, however,
Administrative Agent may, by giving written notice to Borrower (with respect to clauses (b) and (c)), elect to revoke
such swap counterparty’s status as an Approved Commodity Swap Counterparty for purposes of any Commodity Hedging Transactions
entered into following such notice if the Administrative Agent has any concerns about the long or short term financial well-being
or creditworthiness of such swap counterparty.

 

“Approved
Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an
entity or an Affiliate of an entity that administers or manages a Lender.

 

“Arranger”
means LegacyTexas Bank in its capacity as sole lead arranger and sole book runner.

 

“ASC
410” means the Accounting Standards Codification No. 410 (Asset Retirement and Environmental Obligations), as issued
by the Financial Accounting Standards Board, as amended.

 

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

 

“ASC
825” means the Accounting Standards Codification No. 825 (Financial Instruments), as issued by the Financial Accounting
Standards Board, as amended.

 

“Assignment
and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent
of any party whose consent is required by Section 12.8), and accepted by Administrative Agent, in substantially the
form of Exhibit A or any other form approved by Administrative Agent.

 

“Bank
Product Agreements” means those certain agreements entered into from time to time between any Obligated Party and a
Bank Product Provider in connection with any Bank Products, including without limitation, Hedging Agreements.

 

“Bank
Product Obligations” means all obligations, liabilities, contingent reimbursement obligations, fees, and expenses owing
by any Obligated Party to any Bank Product Provider pursuant to or evidenced by any Bank Product Agreement and irrespective of
whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter
arising, and including all such amounts that an Obligated Party is obligated to reimburse to any Bank Product Provider as a result
of such Bank Product Provider purchasing participations or executing indemnities or reimbursement obligations with respect to
the Bank Products provided to any Obligated Party pursuant to a Bank Product Agreement. For the avoidance of doubt, the Bank Product
Obligations arising under any Hedging Transaction shall be determined by the Hedge Termination Value thereof.

 

    	CREDIT AGREEMENT - Page 4	 

     

    

 

“Bank
Product Provider” means any Person that, at the time it enters into a Bank Product Agreement is a Lender or an Affiliate
of a Lender, in its capacity as a party to such Bank Product Agreement.

 

“Bank
Products” means any service provided to, facility extended to, or transaction entered into with any Obligated Party
by any Bank Product Provider consisting of (a) deposit accounts, (b) cash management services, including treasury, depository,
return items, overdraft, controlled disbursement, merchant store value cards, e-payables services, electronic funds transfer,
interstate depository network, automatic clearing house transfer (including the Automated Clearing House processing of electronic
funds transfers through the direct Federal Reserve Fedline system) and other cash management arrangements maintained with any
Bank Product Provider, (c) debit cards, stored value cards, and credit cards (including commercial credit cards (including
so-called “procurement cards” or “P-cards”)) and debit card and credit card processing services or (d) Hedging
Agreements.

 

“Base
Rate” means, for any day, a per annum interest rate equal to the highest of (a) the Prime Rate for such day; (b) the
sum of the Federal Funds Rate for such day plus 0.50%; and (c) Adjusted LIBOR for such day plus 1.00%.

 

“Base
Rate Portion” means each Portion bearing interest based on the Base Rate.

 

“Board
of Governors” means the Board of Governors of the Federal Reserve System of the United States.

 

“Borrower”
means the Person identified as such in the introductory paragraph hereto, and its successors and assigns to the extent permitted
by Section 12.8.

 

“Borrowing”
means a borrowing consisting of simultaneous Loans made by each of the Lenders pursuant to Section 2.1.

 

“Borrowing
Base” means, as of any date, the loan amount that may be supported by the Oil and Gas Properties of Borrower and its
Subsidiaries, as determined by Administrative Agent and approved by the Required Lenders, or all of the Lenders, as applicable,
as set forth in Section 2.9.

 

“Borrowing
Base Adjustment Letter” means a borrowing base adjustment letter substantially in the
form of Exhibit F attached hereto.

 

“Borrowing
Base Deficiency” means the amount by which the Aggregate Revolving Credit Exposure exceeds the amount of the Borrowing
Base.

 

“Borrowing
Base Deficiency Notice” means a notice from Administrative Agent to Borrower that a Borrowing Base Deficiency exists
because of a periodic or special redetermination made pursuant to Section 2.9(b) or Section 2.9(c)(i).

 

“Borrowing
Request” means a writing, substantially in the form of Exhibit C, properly completed and signed by a Responsible
Officer of Borrower, requesting a Borrowing.

 

“Brushy
Gap” means Brushy Gap Coal & Gas, Inc., a Kentucky corporation.

 

“BTU”
means a British thermal unit.

 

    	CREDIT AGREEMENT - Page 5	 

     

    

 

“Business
Day” means (a) for all purposes, a weekday, Monday through Friday, except a legal holiday or a day on which banking
institutions in Dallas, Texas are authorized or required by Law to be closed, and (b) for purposes of any LIBOR Portion,
a day that satisfies the requirements of clause (a) and that is a day on which commercial banks in the City of London,
England are open for business and dealing in offshore Dollars. Unless otherwise provided, the term “days” when used
herein means calendar days.

 

“Capitalized
Lease Obligation” means, with respect to any Person, the amount of Debt under a lease of Property by such Person that
would be shown as a liability on a balance sheet of such Person prepared for financial reporting purposes in accordance with GAAP.

 

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

 

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

 

“Change
of Control” means an event or series of events by which:

 

(a)       the
acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the
Securities Exchange Act of 1934 and the rules of the Securities Exchange Commission thereunder as in effect on the date hereof)
of Equity Interests representing more than 25% of the aggregate ordinary voting power represented by the issued and outstanding
Equity Interests of Borrower;

 

(b)       a
majority of the seats (other than vacant seats) on the board of directors of Borrower are occupied by Persons who were neither
(i) nominated by the board of directors of Borrower nor (ii) appointed by directors so nominated; or

 

(c)       Patrick
McDonald ceases for any reason to be active in the day to day management of Borrower and shall not be replaced within 180 days
by another Person acceptable to Administrative Agent in its sole discretion.

 

“Closing
Date” means the first date all the conditions precedent in Section 5.1 are satisfied or waived in accordance
with Section 12.10.

 

    	CREDIT AGREEMENT - Page 6	 

     

    

 

“Code”
means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

 

“Collateral”
means substantially all of the Property of Borrower and its Subsidiaries as described in the Security Documents, together with
any other Property and collateral described in the Security Documents, including, among other things, the Mortgaged Properties
and any other Property which may now or hereafter secure the Obligations or any part thereof.

 

“Commitment”
means, as to each Lender, its obligation to (a) make Loans to Borrower pursuant to Section 2.1(a), and (b) purchase
participations in L/C Obligations pursuant to Section 2.2, in an aggregate principal amount at any one time outstanding
not to exceed the lesser of (i) the amount set forth opposite such Lender’s name on Schedule 2.1 under the caption
“Commitment” or opposite such caption in the Assignment and Assumption pursuant to which such Lender becomes a party
hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement and (ii) such Lender’s
Applicable Percentage of the Borrowing Base in effect from time to time.

 

“Commodity
Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and
any successor statute.

 

“Commodity
Hedging Transaction” means any swap transaction, cap, floor, collar, exchange transaction, forward transaction or other
exchange or protection transaction relating to Hydrocarbons or any option with respect to any such transaction, including derivative
financial instruments.

 

“Communications”
means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of Borrower
pursuant to any Loan Document or the transactions contemplated therein which is distributed to Administrative Agent, any Lender,
or L/C Issuer by means of electronic communications pursuant to Section 12.11(d), including through the Platform.

 

“Compliance
Certificate” means a certificate, substantially in the form of Exhibit B, or in any other form agreed to by Borrower
and Administrative Agent, prepared by and certified by a Responsible Officer of Borrower.

 

“Connection
Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that
are franchise Taxes or branch profits Taxes.

 

“Constituent
Documents” means (a) in the case of a corporation, its articles or certificate of incorporation or certificate
of formation, as applicable, and bylaws; (b) in the case of a general partnership, its partnership agreement; (c) in
the case of a limited partnership, its certificate of limited partnership or certificate of formation, as applicable, and partnership
agreement; (d) in the case of a trust, its trust agreement; (e) in the case of a joint venture, its joint venture agreement;
(f) in the case of a limited liability company, its articles of organization or certificate of formation, as applicable,
operating agreement, regulations and/or other organizational and governance documents and agreements; and (g) in the case
of any other entity, its organizational and governance documents and agreements.

 

“Control”
means the possession, directly or indirectly, of the power to direct or cause direction of the management or policies of a Person,
whether through the ownership of voting securities, by contract, or otherwise, and the terms “Controlling”
and “Controlled” have meanings correlative thereto.

 

“Crawford
Company” means Crawford Gas Gathering Company, LLC, an Indiana limited liability company.

 

    	CREDIT AGREEMENT - Page 7	 

     

    

 

“Credit
Extension” means each of (a) a Borrowing and (b) an L/C Credit Extension.

 

“Current
Ratio” means, with respect to Borrower and its Subsidiaries on a consolidated basis as of any date of determination
thereof, the ratio of (a) the sum of current assets (but excluding the amount of any non-cash items as a result of the application
of ASC 410 and ASC 815) plus the Revolving Credit Availability on such date to (b) current liabilities (but excluding the
amount of any liabilities respecting any non-cash items as a result of the application of ASC 410 and ASC 815) excluding (i) the
current portion of the Obligations on such date and (ii) during the period from the Closing Date until December 31, 2017, to the
extent such liabilities are non-cash items, firm transportation contract obligations resulting from a purchase accounting allocation
in connection with a previous Acquisition by Nytis, in each case for purposes of this definition, determined in accordance with
GAAP.

 

“Debt”
means, with respect to any Person as of any date of determination thereof, without duplication, (a) all obligations of such
Person for borrowed money; (b) all obligations of such Person evidenced by bonds, notes, debentures, or other similar instruments;
(c) all obligations of such Person to pay the deferred purchase price of Property or services, except trade accounts payable
of such Person arising in the ordinary course of business that are not past due by more than 90 days, unless such payables are
being contested in good faith by appropriate proceedings and adequate reserves for such items have been made in accordance with
GAAP; (d) all Capitalized Lease Obligations of such Person; (e) all Debt or other obligations of others Guaranteed by
such Person; (f) all obligations secured by a Lien existing on Property owned by such Person, whether or not the obligations
secured thereby have been assumed by such Person or are non-recourse to the credit of such Person; (g) any other obligation
for borrowed money or other financial accommodations which in accordance with GAAP would be shown as a liability on the balance
sheet of such Person; (h) any repurchase obligation or liability of a Person with respect to Accounts, chattel paper or notes
receivable sold by such Person; (i) any liability under a sale and leaseback transaction that is not a Capitalized Lease
Obligation; (j) any obligation under any so called “synthetic leases”; (k) any obligation arising with respect
to any other transaction that is the functional equivalent of borrowing but which does not constitute a liability on the balance
sheets of a Person; (l) all payment and reimbursement obligations of such Person (whether contingent or otherwise) in respect
of letters of credit, bankers’ acceptances, surety or other bonds and similar instruments; (m) all liabilities of such
Person in respect of unfunded vested benefits under any Plan; (n) all net Hedge Obligations of such Person, valued at the
Hedge Termination Value thereof; (o) the undischarged balance of any production payment created by such Person or for the
creation of which such Person directly or indirectly received payment; and (p) all obligations
of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interests in such Person
or any other Person prior to the date that is 90 days after the Maturity Date, valued, in the case of redeemable preferred stock
interests, at the greater of its voluntary or involuntary liquidation preference plus all accrued and unpaid dividends.

 

For
all purposes, the Debt of any Person shall include the Debt of any partnership or joint venture (other than a joint venture that
is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such
Debt is expressly made non-recourse to such Person.

 

“Debtor
Relief Laws” means Title 11 of the United States Code, as now or hereafter in effect, or any other applicable Law,
domestic or foreign, as now or hereafter in effect, relating to bankruptcy, insolvency, liquidation, receivership, reorganization,
assignment for the benefit of creditors, moratorium, arrangement or composition, extension or adjustment of debts, or similar
Laws affecting the rights of creditors.

 

“Default”
means an Event of Default or the occurrence of an event or condition which with notice or lapse of time or both would become an
Event of Default.

 

    	CREDIT AGREEMENT - Page 8	 

     

    

 

“Default
Interest Rate” means (a) when used with respect to Obligations (other than Obligations described in the following
clauses (b) and (c)), an interest rate equal to (i) the Base Rate plus (ii) the Applicable Margin,
if any, applicable to a Base Rate Portion plus (iii) 2.00% per annum; (b) when used with respect to a LIBOR Portion,
an interest rate equal to the interest rate (including any Applicable Margin) otherwise applicable to such LIBOR Portion plus
2.00% per annum; and (c) when used with respect to Letter of Credit Fees, a rate equal to the Applicable Margin plus
2.00% per annum; provided, however, in no event shall the Default Interest Rate exceed the Maximum Rate.

 

“Defaulting
Lender” means, subject to Section 12.22(b), any Lender that (a) has failed to (i) fund all or
any portion of its Loans within two Business Days of the date such Loans were required to be funded hereunder unless such Lender
notifies Administrative Agent and Borrower in writing that such failure is the result of such Lender’s determination that
one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be
specifically identified in such writing) has not been satisfied, or (ii) pay to Administrative Agent or any other Lender
any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit) within two
Business Days of the date when due, (b) has notified Borrower, Administrative Agent, or L/C Issuer in writing that it does
not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing
or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based
on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable
default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within
three Business Days after written request by Administrative Agent or Borrower to confirm in writing to Administrative Agent and
Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease
to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by Administrative
Agent and Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding
under any Debtor Relief Law, or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee
for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including
the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity; provided
that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any Equity Interest in
that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does
not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement
of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate,
disavow or disaffirm any contracts or agreements made with such Lender. Any determination by Administrative Agent that a Lender
is a Defaulting Lender under any one or more of clauses (a) through (d) above shall be conclusive and binding
absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 12.22(b)) upon
delivery of written notice of such determination to Borrower and each Lender which notice shall be promptly provided by the Administrative
Agent.

 

“Disposition”
means any sale, lease, sub-lease, transfer, assignment, conveyance, release, loss or other disposition, or the entry into any
contract, including any Farmout, the performance of which would result in any of the foregoing, of any interest in Property (including
any Oil and Gas Property), or of any Equity Interest in a Subsidiary that owns Property (including, but not limited to, any Oil
and Gas Property), in any transaction or event or series of transactions or events, and “Dispose” has the correlative
meaning thereto.

 

    	CREDIT AGREEMENT - Page 9	 

     

    

  

“Dollars”
and “$” mean lawful money of the United States of America.

 

“EBITDA”
means, with respect to Borrower and its Subsidiaries on a consolidated basis as of any applicable date of determination thereof
and for any Test Period, an amount equal to (a) Net Income (excluding any non-cash revenue or expense associated with Hedging
Agreements resulting from ASC 815 and any non-cash charges attributable to the application of ASC 410), plus without duplication
(b) the sum of the following to the extent deducted in the calculation of Net Income: (i) interest expense; (ii) income
taxes; (iii) depreciation; (iv) depletion; (v) amortization; (vi) extraordinary losses determined in accordance
with GAAP; (vii) other non-recurring expenses reducing such Net Income which do not represent a cash item in such Test Period
or any future period; (viii) all other non-cash charges and credits to income including ceiling test impairments under full cost
accounting; (ix) fees paid to the Lenders, L/C Issuer, and Administrative Agent under this Agreement; (x) transaction-related
costs and expenses with respect to this Agreement, the Intercreditor Agreement and the Acquisition Agreement; and (xi) losses
on the sale of assets, minus without duplication (c) the sum of the following to the extent included in the calculation
of Net Income: (i) income tax credits; (ii) extraordinary gains determined in accordance with GAAP; (iii) gains on the
sale of assets; and (iv) all non-recurring, non-cash items increasing Net Income.

 

“Eligible
Assignee” means any Person that meets the requirements to be an assignee under Sections 12.8(b)(iii), 12.8(b)(v)
and 12.8(b)(vi) (subject to such consents, if any, as may be required under Section 12.8(b)(iii)).

 

“Environmental
Laws” means any and all federal, state, and local Laws, regulations, judicial decisions, orders, decrees, plans, rules,
permits, licenses, and other governmental restrictions and requirements pertaining to health, safety, or the environment, including,
without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. § 9601
et seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6901 et seq., the Occupational Safety
and Health Act, 29 U.S.C. § 651 et seq., the Clean Air Act, 42 U.S.C. § 7401 et seq., the Clean
Water Act, 33 U.S.C. § 1251 et seq., and the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq.

 

“Environmental
Liabilities” means, as to any Person, all liabilities, obligations, responsibilities, Remedial Actions, losses, damages,
punitive damages, consequential damages, treble damages, costs, and expenses (including, without limitation, all reasonable fees,
disbursements and expenses of counsel, expert and consulting fees and costs of investigation and feasibility studies), fines,
penalties, sanctions, and interest incurred as a result of any claim or demand, by any Person, whether based in contract, tort,
implied or express warranty, strict liability, criminal or civil statute, including any Environmental Law, permit, order or agreement
with any Governmental Authority or other Person, arising from environmental, health or safety conditions or the Release or threatened
Release of a Hazardous Material into the environment, resulting from the past, present, or future operations of such Person or
its Affiliates.

 

“Equity
Interests” means any and all shares, interests, participations or other equivalents (however designated) of capital
stock or other equivalent ownership (or profit) interests in a Person, securities convertible into or exchangeable for shares
of capital stock of (or other ownership or profit interests in) such Person, and any and all warrants, rights or options to purchase
any of the foregoing, whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests
are authorized or otherwise existing on any date of determination.

 

“ERISA”
means the Employee Retirement Income Security Act of 1974.

 

“ERISA
Affiliate” means any corporation or trade or business which is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the Code) as an Obligated Party or is under common control (within the meaning of
Section 414(c) of the Code and Sections 414(m) and (o) of the Code for purposes of the provisions relating to Section 412
of the Code) with an Obligated Party.

 

    	CREDIT AGREEMENT - Page 10	 

     

    

 

“ERISA
Event” means (a) a Reportable Event with respect to a Plan, (b) a withdrawal by any Obligated Party or any
ERISA Affiliate from a Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as
defined in Section 4001(a)(2) of ERISA) or a cessation of operations which is treated as such a withdrawal under Section 4062(e)
of ERISA, (c) a complete or partial withdrawal by any Obligated Party or any ERISA Affiliate from a Multiemployer Plan or
notification that a Multiemployer Plan is in reorganization, (d) the filing of a notice of intent to terminate, the treatment
of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC
to terminate a Plan or Multiemployer Plan, (e) the occurrence of an event or condition which might reasonably be expected
to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer,
any Plan or Multiemployer Plan, (f) the imposition of any liability to the PBGC under Title IV of ERISA, other than
for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any Obligated Party or any ERISA Affiliate, (g) the
failure of any Obligated Party or ERISA Affiliate to meet any funding obligations with respect to any Plan or Multiemployer Plan,
(h) a Plan becomes subject to the at-risk requirements in Section 303 of ERISA and Section 430 of the Code or (i)
a Multiemployer Plan becomes subject to the requirements for plans in endangered or critical status under Section 432 of the Code
or Section 305 of ERISA.

 

“Event
of Default” has the meaning set forth in Section 10.1.

 

“Excluded
Subsidiaries” means each of the entities listed in Schedule 6.13(b), including without limitation, Brushy Gap.

 

“Excluded
Swap Obligation” means, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion
of the Guarantee of such Guarantor of, or the grant by such Guarantor of a Lien to secure, such Swap Obligation (or any Guarantee
thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading
Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any
reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act (determined after
giving effect to any “keepwell, support or other agreement” for the benefit of such Guarantor and any and all Guarantees
of such Guarantor’s Swap Obligations by Borrower or any other Guarantor) at the time the Guarantee of such Guarantor, or
a grant by such Guarantor of a Lien, becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under
a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is
attributable to swaps for which such Guarantee or Lien is or becomes excluded in accordance with the first sentence of this definition.

 

“Excluded
Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted
from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and
branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the Laws of, or having
its principal office or, in the case of any Lender, its applicable Lending Office located in, the jurisdiction imposing such Tax
(or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal
withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a
Loan or Commitment pursuant to a Law in effect on the date on which (i) such Lender acquires such interest in such Loan or
Commitment (other than pursuant to an assignment request by Borrower under Section 3.6(b)) or (ii) such Lender
changes its Lending Office, except in each case to the extent that, pursuant to Section 3.4, amounts with respect
to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such
Lender immediately before it changed its Lending Office, (c) Taxes attributable to such Recipient’s failure to comply
with Section 3.4(g) and (d) any U.S. federal withholding Taxes imposed under FATCA.

 

    	CREDIT AGREEMENT - Page 11	 

     

    

 

“Existing
Credit Agreement” means the Credit Agreement dated May 31, 2010, between Nytis, as borrower, and Bank of Oklahoma, N.A.,
as lender, as amended from time to time.

 

“Facility”
means, at any time, the Aggregate Commitments at such time.

 

“Farmout”
means an arrangement pursuant to any agreement whereby the owner(s) of one or more oil, gas and/or mineral leases or other oil
and natural gas working interests with respect to any property from which production of Hydrocarbons is sought agrees to transfer
or assign an interest in such property to one or more Persons in exchange for (a) drilling or participating in (or agreeing to
drill or participate in) the cost of the drilling of one or more wells, or undertaking other exploration or development activities
or participating in the cost of such activities (or agreeing to do so), in an attempt to obtain production of Hydrocarbons from
such property, or (b) obtaining production of Hydrocarbons from such property or participating in the costs of obtaining such
production.

 

“FATCA”
means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that
is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations
thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.

 

“Federal
Funds Rate” means, for any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal
to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers on such day, as published by the Federal Reserve Bank of New York, on the Business Day next succeeding
such day, provided that (a) if the day for which such rate is to be determined is not a Business Day, the Federal
Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (b) if such rate is not so published for any day, the Federal Funds Rate for such day shall
be the average rate charged to Administrative Agent on such day on such transactions as determined by Administrative Agent.

 

“Flood
Insurance Regulations” means (a) the National Flood Insurance Act of 1968, (b) the Flood Disaster Protection Act of
1973, (c) the National Flood Insurance Reform Act of 1994 (amending 42 USC 4001 et seq.), and (d) the Flood Insurance Reform Act
of 2004, in each case as now or hereafter in effect or any successor statute thereto and including any regulations promulgated
thereunder.

 

“Foreign
Lender” means a Lender that is not a U.S. Person.

 

“Fronting
Exposure” means, at any time there is a Defaulting Lender, with respect to L/C Issuer, such Defaulting Lender’s
Applicable Percentage of the Outstanding Amount of the L/C Obligations other than L/C Obligations as to which such Defaulting
Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms
hereof.

 

“Fund”
means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing
in commercial loans and similar extensions of credit in the ordinary course of its activities.

 

“GAAP”
means generally accepted accounting principles, applied on a consistent basis, as set forth in opinions of the Accounting Principles
Board of the American Institute of Certified Public Accountants and/or in statements of the Financial Accounting Standards Board
and/or their respective successors and which are applicable in the circumstances as of the date in question. Accounting principles
are applied on a “consistent basis” when the accounting principles applied in a current period are comparable in all
material respects to those accounting principles applied in a preceding period.

 

    	CREDIT AGREEMENT - Page 12	 

     

    

 

“Gas
Balancing Agreement” means any agreement or arrangement whereby Borrower or any of its Subsidiaries, or any other party
owning an interest in any Hydrocarbons to be produced from Oil and Gas Properties in which Borrower or any of its Subsidiaries
owns an interest, has a right to take more than its proportionate share of production therefrom.

 

“Governmental
Authority” means the government of the United States of America or any other nation, or of any political subdivision
thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank, tribal body
or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining
to government (including any supra-national bodies such as the European Union or the European Central Bank), and any group or
body charged with setting financial accounting or regulatory capital rules or standards (including, without limitation, the Financial
Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or any successor
or similar authority to any of the foregoing).

 

“Guarantee”
by any Person means any obligation or liability, contingent or otherwise, of such Person directly or indirectly guaranteeing any
Debt or other obligation of any other Person as well as any obligation or liability, direct or indirect, contingent or otherwise,
of such Person (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation
or liability (whether arising by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities
or services, to operate Property, to take-or-pay, or to maintain net worth or working capital or other financial statement conditions
or otherwise) or (b) entered into for the purpose of indemnifying or assuring in any other manner the obligee of such Debt
or other obligation or liability of the payment thereof or to protect the obligee against loss in respect thereof (in whole or
in part); provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course
of business. The term “Guarantee” used as a verb has a corresponding meaning.

 

“Guaranteed
Parties” means the collective reference to Administrative Agent, each Lender, L/C Issuer, each Bank Product Provider,
and any other Person the Obligations owing to which are, or are purported to be, Guaranteed under the terms of a Guaranty.

 

“Guarantors”
means each Person who from time to time Guarantees all or any part of the Obligations under the Loan Documents, and “Guarantor”
means any one of the Guarantors.

 

“Guaranty”
means each written guaranty of a Guarantor in favor of Administrative Agent, for the benefit of the Guaranteed Parties, in form
and substance satisfactory to Administrative Agent.

 

“Hazardous
Material” means any substance, product, waste, pollutant, material, chemical, contaminant, constituent, or other material
which is or becomes listed, regulated, or addressed under any Environmental Law, including, without limitation, asbestos, petroleum,
and polychlorinated biphenyls.

 

“Hedge
Obligations” means, at any time with respect to any Person, all indebtedness, liabilities, and obligations of such Person
under or in connection with any Hedging Agreement or Hedging Transaction, whether actual or contingent, due or to become due and
existing or arising from time to time.

 

“Hedge
Termination Value” means, in respect of any one or more Hedging Transactions, after taking into account the effect of
any legally enforceable netting agreement relating to such Hedging Transactions, (a) for any date on or after the date such
Hedging Transactions have been closed out and settlement amounts, early termination amounts or termination value(s) determined
in accordance therewith, such settlement amounts, early termination amounts or termination value(s), and (b) for any date
prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Hedging
Transactions, as determined based upon one or more commercially reasonable mid-market or other readily available quotations provided
by any dealer which is a party to such Hedging Transactions or any other recognized dealer in such Hedging Transactions (which
may include a Lender or any Affiliate of a Lender).

 

    	CREDIT AGREEMENT - Page 13	 

     

    

 

“Hedging
Agreement” means any International Swap Dealers Association, Inc. Master Agreement, International Swaps and Derivatives
Association, Inc. Master Agreement or other agreement and all schedules and exhibits attached thereto and incorporated therein
that set forth the general terms upon which a Person may enter into one or more Hedging Transactions.

 

“Hedging
Transaction” means a Commodity Hedging Transaction, a Rate Management Transaction or any other transaction with respect
to any swap, forward, future or derivative transaction or option or similar transaction, whether exchange traded, “over-the-counter”
or otherwise, involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or
securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions.

 

“Honor
Date” has the meaning set forth in Section 2.2(c)(i).

 

“Hydrocarbons”
means oil, gas, coal seam gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate and all other liquid or
gaseous hydrocarbons produced or to be produced in conjunction therewith from a well bore and all products, by-products and other
substances derived therefrom or the processing thereof, including natural gas liquids, and all other minerals and substances produced
in conjunction with such substances, including, sulfur, geothermal steam, water, carbon dioxide, helium and any and all minerals,
ores or substances of value and the products and proceeds therefrom.

 

“Immaterial
Title Deficiencies” means, with respect to Oil and Gas Properties, defects or clouds on title, discrepancies in reported
net revenue or working interest ownership interests and other defects, discrepancies, Liens and similar matters which do not,
individually or in the aggregate, affect Oil and Gas Properties with a Recognized Value greater than five percent (5.00%) of the
Recognized Value of all such properties included in the Borrowing Base.

 

“Indemnified
Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account
of any obligation of Borrower under any Loan Document and (b) to the extent not otherwise described in clause (a),
Other Taxes.

 

“Independent
Engineer” means Cawley, Gillespie & Associates, Inc. or any other third-party engineering firm acceptable to Administrative
Agent in its sole discretion.

 

“Information”
has the meaning set forth in Section 12.25.

 

“Initial
Reserve Report” means the Reserve Report prepared by an Independent Engineer and updated by Borrower’s own engineer,
dated as of June 30, 2016, covering all of the Oil and Gas Properties of Borrower and its Subsidiaries or to be acquired pursuant
to the Acquisition Agreement as of March 1, 2017.

 

“Intellectual
Property” means all copyrights, copyright licenses, patents, patent licenses, trademarks, trademark licenses and other
types of intellectual property, in whatever form, now owned or hereafter acquired.

 

    	CREDIT AGREEMENT - Page 14	 

     

    

 

“Intercreditor
Agreement” means and certain intercreditor agreement among Borrower, one or more Approved Commodity Swap Counterparties
that are not Bank Product Providers, and Administrative Agent, as contractual collateral representative for itself, the Lenders,
the Bank Product Providers and such Approved Commodity Swap Counterparties, as amended and in effect from time to time.

 

“Interest
Period” means, with respect to any LIBOR Portion, the period commencing on the date such Portion becomes a LIBOR Portion
(whether by the making of a Loan or its continuation or conversion) and ending on the numerically corresponding day in the calendar
month that is one, two, or three months thereafter, as Borrower may elect; provided, that (a) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless
such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next
preceding Business Day, and (b) any Interest Period pertaining to a LIBOR Portion that commences on the last Business Day
of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest
Period) shall end on the last Business Day of the last calendar month of such Interest Period.

 

“Interest
Rate” means the rate equal to the lesser of (a) the Maximum Rate and (b) the Applicable Rate.

 

“IRS”
means the Internal Revenue Service or any entity succeeding to all or any of its functions.

 

“ISP”
means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute
of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance).

 

“Issuer
Documents” means, with respect to any Letter of Credit, the Letter of Credit Application and any other document, agreement
and instrument entered into by L/C Issuer and Borrower (or any Subsidiary) or in favor of L/C Issuer and relating to such Letter
of Credit.

 

“Jaguar
Triangle Partnership” means Jaguar Triangle Partners, a Kentucky general partnership.

 

“L/C
Advance” means, with respect to each Lender, such Lender’s funding of its participation in any L/C Borrowing in
accordance with its Applicable Percentage.

 

“L/C
Borrowing” means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed
by Borrower on the date when made or refinanced as a Borrowing.

 

“L/C
Credit Extension” means, with respect to any Letter of Credit, the issuance thereof, the extension of the expiry date
thereof, or the increase of the amount thereof.

 

“L/C
Issuer” means LegacyTexas Bank in its capacity as issuer of Letters of Credit hereunder, or any successor issuer of
Letters of Credit hereunder.

 

“L/C
Obligations” means, as at any date of determination thereof, an amount equal to the aggregate amount available to be
drawn under all outstanding Letters of Credit, plus the aggregate amount of all Unreimbursed Amounts, including all L/C
Borrowings. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of
Credit shall be determined in accordance with Section 1.4. For all purposes of this Agreement, if on any date of determination
a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14
of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.

 

    	CREDIT AGREEMENT - Page 15	 

     

    

 

“Laws”
means, collectively, all international, foreign, federal, state, provincial and local statutes, treaties, rules, guidelines, regulations,
ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof
by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative
orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in
each case whether or not having the force of law.

 

“Lease
Operating Statement” means a report, in form and substance reasonably satisfactory to
Administrative Agent, prepared by Borrower covering each of the Proved Oil and Gas Properties of Borrower and its Subsidiaries
included in the most recent redetermination of the Borrowing Base and detailing on a monthly basis the Hydrocarbon production
volumes, revenues, associated lease operating expenses, taxes and other expenses for such Proved Oil and Gas Properties.

 

“LegacyTexas
Bank” means LegacyTexas Bank, a Texas state bank, and its successors and assigns.

 

“Lender”
and “Lenders” have the meanings set forth in the introductory paragraph hereto and shall include L/C Issuer,
as the context may require.

 

“Lending
Office” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative
Questionnaire, or such other office or offices as a Lender may from time to time notify Borrower and Administrative Agent.

 

“Letter
of Credit” means any standby letter of credit issued hereunder providing for the payment of cash upon the honoring of
a presentation thereunder.

 

“Letter
of Credit Application” means an application and agreement for the issuance or amendment of a Letter of Credit in the
form from time to time in use by L/C Issuer.

 

“Letter
of Credit Expiration Date” means the date that is seven days prior to the Maturity Date (or, if such day is not a Business
Day, the next preceding Business Day).

 

“Letter
of Credit Fee” has the meaning set forth in Section 2.3(a).

 

“Letter
of Credit Sublimit” means an amount equal to $500,000. The Letter of Credit Sublimit is part of, and not in addition
to, the Aggregate Commitments.

 

“Leverage
Ratio” means, as of any date of determination thereof, the ratio of (a) all Debt of Borrower and its Subsidiaries, on
a consolidated basis in accordance with GAAP, as of such date to (b) EBITDA of Borrower and its Subsidiaries, on a consolidated
basis, for the Test Period most recently ended.

 

“Liberty
Energy Advances” means the funds advanced to Nytis by Liberty Energy LLC in connection with the participation agreements
by and between Nytis and Liberty Energy LLC covering Oil and Gas Properties located in portions of Boyd, Carter, Greenup and Lawrence
Counties, Kentucky. As of June 30, 2016, the outstanding balance of the Liberty Advances was approximately $1,633,000 and is being
repaid by Nytis by means of crediting to Liberty Energy LLC its portion of monthly joint interest billings.

 

    	CREDIT AGREEMENT - Page 16	 

     

    

 

“LIBOR”
means:

 

(a)       for
any interest calculation with respect to a LIBOR Portion, for any Interest Period:

 

(i)       the
rate per annum for deposits for the same term in Dollars that appears on Thomson Reuters ICE Benchmark Administration LIBOR Rates
Page (or the successor thereto if the ICE Benchmark Administration is no longer making a LIBOR rate available) at approximately
11:00 a.m., London, England time, on the related LIBOR Determination Date; provided, however, if such rate
appearing on such page is less than zero, such rate shall be deemed to be zero for purposes of this Agreement; or

 

(ii)       if
such rate does not appear on such screen or service, or such screen or service shall cease to be available, then LIBOR shall be
determined by Administrative Agent to be the offered rate on such other screen or service that displays an average interest settlement
rate for deposits in Dollars (for delivery on the first day of such Interest Period) for a term equivalent to such Interest Period
as of 11:00 a.m. on the relevant LIBOR Determination Date; provided, however, if such rate appearing on such
screen or service is less than zero, such rate shall be deemed to be zero for purposes of this Agreement; or

 

(ii)       if
the rates referenced in the foregoing clauses (a)(i) and (a)(ii) are not available, then LIBOR for the relevant
Interest Period will be determined by such alternate method as is reasonably selected by Administrative Agent; and

 

(b)       for
any interest calculation with respect to a Base Rate Portion:

 

(i)       the
rate per annum for deposits in Dollars that appears on Thomson Reuters ICE Benchmark Administration LIBOR Rates Page (or the successor
thereto if the ICE Benchmark Administration is no longer making a LIBOR rate available) at approximately 11:00 a.m., London, England
time, on the related LIBOR Determination Date for a term of one month commencing on the date of calculation;
provided, however, if such rate appearing on such page is less than zero, such rate shall be deemed to be zero for
purposes of this Agreement; or

 

(ii)       if
such rate does not appear on such screen or service, or such screen or service shall cease to be available, then LIBOR shall be
determined by Administrative Agent to be the offered rate on such other screen or service that displays an average interest
settlement rate for deposits in Dollars (for delivery on such date of calculation)
for a term of one month as of 11:00 a.m. on the relevant LIBOR Determination Date;
provided, however, if such rate appearing on such screen or service is less than zero, such rate shall be deemed
to be zero for purposes of this Agreement; or

 

(iii)       if
the rates referenced in the foregoing clauses (b)(i) and (b)(ii)
are not available, then LIBOR for a term of one month will be determined by such alternate method as is
reasonably selected by Administrative Agent.

 

“LIBOR
Determination Date” means a day that is two Business Days prior to the beginning of the relevant Interest Period
or prior to the applicable date of determination, as applicable.

 

“LIBOR
Portion” means each Portion bearing interest based on Adjusted LIBOR (other than any Portion bearing interest at the
Base Rate which is determined by reference to Adjusted LIBOR).

 

    	CREDIT AGREEMENT - Page 17	 

     

    

 

“Lien”
means, as to any Property of any Person, (a) any lien, mortgage, security interest, tax lien, pledge, charge, hypothecation, collateral
assignment, or other encumbrance of any kind or nature whatsoever (including, without limitation, any conditional sale or title
retention agreement), whether arising by contract, operation of law, or otherwise, affecting such Property, (b) production payments
and the like payable out of such Property, and (c) the signing or filing of a financing statement which names the Person as debtor
or the signing of any security agreement, or the signing of any document authorizing a secured party to file any financing statement
which names such Person as debtor.

 

“Loan”
has the meaning set forth in Section 2.1(a).

 

“Loan
Documents” means this Agreement, each Guaranty, the Security Documents, the Notes, the Issuer Documents, and all other
promissory notes, security agreements, deeds of trust, assignments, letters of credit, guaranties, and other instruments, documents,
or agreements executed and delivered pursuant to or in connection with this Agreement or the Security Documents; provided
that the term “Loan Documents” shall not include any Bank Product Agreement or the Intercreditor Agreement.

 

“Loss”
has the meaning set forth in Section 7.5(c).

 

“Material
Adverse Event” means any act, event, condition, or circumstance which could materially and adversely affect (a) the
operations, business, properties, liabilities (actual or contingent), condition (financial or otherwise) or prospects of Borrower
and its Subsidiaries, taken as a whole; (b) the ability of any Obligated Party to perform its obligations under any Loan
Document to which it is a party or the Intercreditor Agreement to the extent party thereto; or (c) the legality, validity,
binding effect or enforceability against any Obligated Party of any Loan Document to which it is a party or the Intercreditor
Agreement to the extent party thereto.

 

“Material
Gas Imbalance” means, with respect to all Gas Balancing Agreements to which Borrower or any of its Subsidiaries is a
party or by which any Oil and Gas Property of Borrower or any of its Subsidiaries is bound, net gas imbalance liabilities of Borrower
or any of its Subsidiaries, considered individually or in the aggregate, in excess of $250,000. Gas imbalances will be determined
based on Gas Balancing Agreements, with respect to wellhead imbalances, or gas purchase or transportation agreements, with respect
to downstream imbalances, if any, specifying the method of calculation thereof, or, alternatively, if no such Gas Balancing Agreements
or gas purchase or transportation agreements, as the case may be, are in existence, gas imbalances will be calculated by multiplying
(x) the volume of gas imbalance as of the date of calculation (expressed in thousand cubic feet) by (y) the heating
value in BTUs per thousand cubic feet, times the Henry Hub average daily spot price for the month immediately preceding
the date of calculation adjusted for location differential and transportation costs based upon the location where the Oil and
Gas Property giving rise to the imbalances are located.

 

“Maturity
Date” means October 3, 2020, or such earlier date on which the Commitment of each Lender terminates as provided in this
Agreement; provided, however, that if such date is not a Business Day, the Maturity Date shall be the next succeeding
Business Day.

 

“Maximum
Rate” means, at all times, the maximum rate of interest which may be charged, contracted for, taken, received or reserved
by Lenders in accordance with applicable Texas Law (or applicable United States federal Law to the extent that such Law permits
Lenders to charge, contract for, receive or reserve a greater amount of interest than under Texas Law). The Maximum Rate shall
be calculated in a manner that takes into account any and all fees, payments, and other charges in respect of the Loan Documents
that constitute interest under applicable Law. Each change in any interest rate provided for herein based upon the Maximum Rate
resulting from a change in the Maximum Rate shall take effect without notice to Borrower at the time of such change in the Maximum
Rate.

 

    	CREDIT AGREEMENT - Page 18	 

     

    

 

“Minimum
Collateral Amount” means, at any time, (a) with respect to Cash Collateral consisting of cash or deposit account
balances provided to reduce or eliminate Fronting Exposure during the time that a Defaulting Lender exists, an amount equal to
105% of the Fronting Exposure of L/C Issuer with respect to Letters of Credit issued and outstanding at such time, (b) with
respect to Cash Collateral consisting of cash or deposit account balances provided in accordance with the provisions of Section 2.6(a)(i),
(a)(ii) or (a)(iii), an amount equal to 105% of the Outstanding Amount of all L/C Obligations, and (c) otherwise,
an amount determined by Administrative Agent and L/C Issuer in their sole discretion.

 

“Mortgaged
Properties” means all present and future Oil and Gas Properties of one or more of Borrower and its Subsidiaries in which
one or more of Borrower and its Subsidiaries has granted or does hereafter grant a mortgage or Lien to or for the benefit of Administrative
Agent for the benefit of the Secured Parties.

 

“Mortgages”
means, collectively, the mortgages or deeds of trust now or hereafter encumbering Borrower’s or any of its Subsidiaries’
fee or leasehold estates in the property described therein in favor of Administrative Agent, in form and substance satisfactory
to Administrative Agent.

 

“Multiemployer
Plan” means a multiemployer plan defined as such in Section 3(37) of ERISA to which contributions are being made
or have been made by, or for which there is an obligation to make by or there is any liability, contingent or otherwise, with
respect to an Obligated Party or any ERISA Affiliate and which is covered by Title IV of ERISA.

 

“Net
Income” means, for any Person for any Test Period, the net income (or loss) of such Person and its Subsidiaries on a
consolidated basis as determined in accordance with GAAP; provided that Net Income shall exclude (a) the net income
of any Subsidiary of such Person during such Test Period to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary of such income is not permitted by operation of the terms of its Constituent Documents or any
agreement, instrument or Law applicable to such Subsidiary during such Test Period except that such Person’s equity in any
net loss of any such Subsidiary for such Test Period shall be included in determining Net Income, and (b) any income (or
loss) for such Test Period of any other Person if such other Person is not a Subsidiary, except that Borrower’s equity in
the net income of any such Person for such Test Period shall be included in Net Income up to the aggregate amount of cash actually
distributed by such Person during such Test Period to Borrower or a Subsidiary as a dividend or other distribution (and in the
case of a dividend or other distribution to a Subsidiary, such Subsidiary is not precluded from further distributing such amount
to Borrower as described in clause (a) of this proviso).

 

“Non-Consenting
Lender” means any Lender that does not approve any consent, waiver or amendment that (a) requires the approval
of all or all affected Lenders in accordance with the terms of Section 12.10 and (b) has been approved by the
Required Lenders.

 

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

 

“Note”
means a promissory note made by Borrower in favor of a Lender evidencing Loans made by such Lender, substantially in the form
of Exhibit D.

 

“Nytis”
means Nytis Exploration Company LLC, a Delaware limited liability company.

 

    	CREDIT AGREEMENT - Page 19	 

     

    

 

“Obligated
Party” means each of the Borrower, the Guarantors and each other Person who is or becomes party to any agreement that
obligates such Person to pay or perform, or that Guarantees or secures payment or performance of, the Obligations under the Loan
Documents or any part thereof.

 

“Obligations”
means all obligations, indebtedness, and liabilities of Borrower, each Guarantor and each other Obligated Party to Administrative
Agent, each Lender, any Affiliates of Administrative Agent or any Lender and any Bank Product Provider now existing or hereafter
arising, whether direct, indirect, related, unrelated, fixed, contingent, liquidated, unliquidated, joint, several, or joint and
several, arising under or pursuant to this Agreement, any Bank Product Agreements (but in the case of Bank Product Agreements
that are Hedging Agreements, limited to obligations and liabilities of Borrower and its Subsidiaries to Bank Product Providers
in respect of Hedging Transactions that are permitted by Section 8.17 and the Hedging Agreements under which they arise,
to the extent related thereto, including any related early termination or settlement amounts) or the other Loan Documents, and
all interest accruing thereon (whether a claim for post-filing or post-petition interest is allowed in any bankruptcy, insolvency,
reorganization or similar proceeding) and all attorneys’ fees and other expenses incurred in the enforcement or collection
thereof; provided that, as to any Guarantor, the “Obligations” shall exclude any Excluded Swap Obligations
of such Guarantor.

 

“Oil
and Gas Properties” means (a) all present and future interests and estates existing under any oil, gas and/or mineral
leases including, without limitation, working interests, royalty interests, overriding royalty interests, production payments,
net profits interests and carried interests, (b) all present and future rights in mineral fee interests, including without
limitation, any reversionary interests relating thereto, (c) all rights, titles and interests created by or arising under
the terms of all present and future unitization, communitization or pooling arrangements (and all properties covered and units
created thereby) whether arising by contract or operation of law which now or hereafter include all or any part of the foregoing,
(d) all rights, titles and interest created by or arising under the terms of all present and future Farmouts including, without
limitation, any back-in interests related thereto, (e) all unsevered and unextracted Hydrocarbons in, under or attributable with
respect to any of the foregoing, and (f) all rights, remedies, powers and privileges with respect to any of the foregoing,
in each case, including, without limitation, all of the foregoing which are classified as proved developed producing, proved developed
non-producing, proved developed behind pipe, proved developed shut-in, proved undeveloped, probable and possible reserves and
any other reserve category recognized by the Society of Petroleum Evaluation Engineers or any successor thereto.

 

“Other
Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection
between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed,
delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest
under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan
or Loan Document).

 

“Other
Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that
arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt
or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other
Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 3.6).

 

“Outstanding
Amount” means (a) with respect to the Loans on any date, the aggregate outstanding principal amount thereof after
giving effect to any borrowings and prepayments or repayments of Loans occurring on such date, and (b) with respect to any
L/C Obligations on any date, the amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring
on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any
reimbursements by Borrower of Unreimbursed Amounts.

 

    	CREDIT AGREEMENT - Page 20	 

     

    

 

“Participant”
means any Person (other than a natural Person, or a holding company, investment vehicle or trust for, or owned and operated for
the primary benefit of, a natural Person, a Defaulting Lender, or Borrower or any of Borrower’s Affiliates or Subsidiaries
or any other Obligated Party) to which a participation is sold by any Lender in all or a portion of such Lender’s rights
and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it).

 

“Participant
Register” means a register in the United States on which each Lender that sells a participation enters the name and
address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans
or other obligations under the Loan Documents.

 

“Patriot
Act” means the Uniting and Strengthening America by Providing Appropriate Tools to Intercept and Obstruct Terrorism
Act of 2001 (Title III of Pub. L. 107-56, signed into law October 26, 2001).

 

“Payment
Date” means (a) in respect of each Base Rate Portion, the first day of each and every calendar quarter during the
term of this Agreement and the Maturity Date, and (b) in respect of each LIBOR Portion, the last day of each Interest Period
applicable to such LIBOR Portion (or the day that is three months after the first day of such Interest Period if such Interest
Period has a length of more than three months) and the Maturity Date.

 

“PBGC”
means the Pension Benefit Guaranty Corporation or any entity succeeding to all or any of its functions under ERISA.

 

“Permitted
Liens” means those Liens permitted by Section 8.2.

 

“Permitted
Refinancing” means Debt constituting a refinancing or extension of Debt permitted under Sections 8.1(b) and 8.1(d)
that (a) has an aggregate outstanding principal amount not greater than the aggregate principal amount of the Debt being
refinanced or extended plus an amount equal to the fees and expenses reasonably incurred in connection with such refinancing or
extension, (b) is not entered into as part of a sale leaseback transaction, (c) is not secured by a Lien on any assets
other than the collateral securing the Debt being refinanced or extended, (d) the obligors of which are the same as the obligors
of the Debt being refinanced or extended and (e) is otherwise on terms no less favorable to the Obligated Parties, taken
as a whole, than those of the Debt being refinanced or extended.

 

“Permitted
Tax Distributions” means, with respect to any Person, any dividend or distribution to any holder of such Person’s
Equity Interests to permit such holders to pay federal income taxes and all relevant state and local income taxes at a rate equal
to the highest marginal applicable tax rate for the applicable tax year, however denominated (together with any interest, penalties,
additions to tax, or additional amounts with respect thereto) imposed as a result of taxable income attributed to such holder
as a partner, member or stockholder of such Person under federal, state, and local income tax Laws, determined on a basis that
combines those liabilities arising out of the net effect of the income, gains, deductions, losses, and credits of such Person
and attributable to it in proportion and to the extent in which such holders hold Equity Interests of such Person, provided,
however, the computation of tax distributions under this definition shall take into account the carryovers of items of
loss, deduction and expense previously allocated by Borrower to holders of its Equity Interests, such that the excess, if any,
of the aggregate items of losses from the prior taxable year over aggregate items of income from the prior taxable year will be
deducted from the current taxable year’s income before applying the appropriate tax rate.

 

    	CREDIT AGREEMENT - Page 21	 

     

    

 

“Person”
means any individual, corporation, limited liability company, business trust, association, company, partnership, joint venture,
Governmental Authority, or other entity, and shall include such Person’s heirs, administrators, personal representatives,
executors, successors and assigns.

 

“Plan”
means any employee benefit or other plan, other than a Multiemployer Plan, established or maintained by, or for which there is
an obligation to make contributions by or there is any liability, contingent or otherwise with respect to Borrower or any ERISA
Affiliate and which is covered by Title IV of ERISA or subject to Section 412 of the Code.

 

“Platform”
means Debt Domain, Intralinks, Syndtrak or a substantially similar electronic transmission system.

 

“Portion”
means any principal amount of any Loan bearing interest based upon the Base Rate or Adjusted LIBOR.

 

“Prime
Rate” means the rate of interest per annum publicly announced from time to time by LegacyTexas Bank as its prime rate
in effect at its Principal Office; each change in the Prime Rate shall be effective from and including the date such change is
publicly announced as being effective. Such rate is set by LegacyTexas Bank as a general reference rate of interest, taking into
account such factors as LegacyTexas Bank may deem appropriate; it being understood that many of LegacyTexas Bank’s commercial
or other loans are priced in relation to such rate, that it is not necessarily the lowest or best rate actually charged to any
customer and that LegacyTexas Bank may make various commercial or other loans at rates of interest having no relationship to such
rate.

 

“Principal
Office” means the principal office of Administrative Agent, presently located at the address set forth on Schedule 12.11.

 

“Production
Report” means a report, in form and substance reasonably satisfactory to Administrative Agent, prepared by Borrower
covering each of the Proved Oil and Gas Properties of Borrower and its Subsidiaries included in the most recent redetermination
of the Borrowing Base and detailing Hydrocarbon production volumes on a well-by-well basis for the most recently-completed month,
which report shall provide whether such Hydrocarbons were produced during such month or, as a result of accounting practices,
were produced in a previous month, in which case the report shall specify the month during which such Hydrocarbons were produced.

 

“Prohibited
Transaction” means any transaction set forth in Section 406 of ERISA or Section 4975 of the Code.

 

“Projected
Production” as of any time means the projected production of oil, natural gas, condensate or natural gas liquids including
gas processing plant products (measured by volume unit or BTU equivalent, not sales price), as applicable, for the term of the
contracts or a particular month, as applicable, from properties and interests owned by Borrower or any of its Subsidiaries which
are located in or offshore of the United States and which have attributable to them proved developed producing oil and gas reserves,
as such production has been most recently projected by Administrative Agent in its sole discretion based upon Administrative Agent’s
reasonable internal reserve analysis, after deducting projected production from any properties or interests sold or under contract
for sale that had been included in such analysis.

 

“Property”
of a Person means any and all property, whether real, personal, tangible, intangible or mixed, of such Person, or any other assets
owned, operated or leased by such Person, and, with respect to Borrower and its Subsidiaries, shall include the Mortgaged Properties.

 

    	CREDIT AGREEMENT - Page 22	 

     

    

 

“Proved
Oil and Gas Properties” means, collectively, (a) all Oil and Gas Properties which constitute proved developed producing
reserves as determined by Administrative Agent, (b) all Oil and Gas Properties which constitute proved developed non-producing
reserves, proved developed behind pipe reserves or proved developed shut-in reserves as determined by Administrative Agent, (c) all
Oil and Gas Properties which constitute proved undeveloped reserves as determined by Administrative Agent and (d) all Oil
and Gas Properties which constitute other categories of proved reserves recognized by the Society of Petroleum Evaluation Engineers
or any successor thereto as determined by Administrative Agent.

 

“Rate
Management Transaction” means any transaction (including an agreement with respect thereto) now existing or hereafter
entered into by any Obligated Party which is a rate swap, basis swap, forward rate transaction, equity or equity index swap, equity
or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar
transaction, forward transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other
similar transaction (including any option with respect to any of these transactions) or any combination thereof, whether linked
to one or more interest rates, foreign currencies, commodity prices, equity prices or other financial measures, but excluding
Commodity Hedging Transactions.

 

“Recipient”
means Administrative Agent, L/C Issuer, or any Lender, as applicable.

 

“Recognized
Value” means the value, as determined by the Lenders, attributed to the Oil and Gas Properties of Borrower and its Subsidiaries
from the most recent determination of the Borrowing Base, based upon the discounted present value of the estimated net cash flow
to be realized from the production of Hydrocarbons from such Oil and Gas Properties and the other standards specified in Section 2.9(a).

 

“Register”
means a register for the recordation of the names and addresses of Lenders, and the Commitments of, and principal amounts of the
Loans owing to, each Lender pursuant to the terms hereof from time to time.

 

“Related
Indebtedness” means any and all Debt paid or payable by Borrower to Administrative Agent or any Lender pursuant to any
Loan Document other than any Note.

 

“Related
Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees,
agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.

 

“Release”
means, as to any Person, any release, spill, emission, leaking, pumping, injection, deposit, disposal, disbursement, leaching,
or migration of Hazardous Materials into the indoor or outdoor environment or into or out of property owned by such Person, including,
without limitation, the movement of Hazardous Materials through or in the air, soil, surface water, ground water, or Property.

 

“Remedial
Action” means all actions required to (a) clean up, remove, treat, or otherwise address Hazardous Materials in
the indoor or outdoor environment, (b) prevent the Release or threat of Release or minimize the further Release of Hazardous
Materials so that they do not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment,
or (c) perform pre-remedial studies and investigations and post-remedial monitoring and care.

 

“Removal
Effective Date” has the meaning set forth in Section 11.6(b).

 

“Reportable
Event” means any of the events set forth in Section 4043 of ERISA.

 

    	CREDIT AGREEMENT - Page 23	 

     

    

 

“Required
Lenders” means, as of any date of determination, Lenders holding more than 66-2/3% of the Total
Credit Exposure at such time (with the aggregate amount of each Lender’s risk participation and funded participation in
L/C Obligations being deemed “held” by such Lender for purposes of this definition); provided that, if one
Lender holds more than 66-2/3% but less than 100% of the Total Credit Exposure at such time, subject to
the last sentence of Section 12.10, Required Lenders shall be at least two Lenders. The unused Commitment of, and
the Revolving Credit Exposure held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination
of Required Lenders.

 

“Required
Reserve Value” means Proved Oil and Gas Properties that have a Recognized Value of not less than 90% of the Recognized
Value of all Proved Oil and Gas Properties evaluated in the most recent Reserve Report.

 

“Reserve
Report” means a report, in form and substance satisfactory to Administrative Agent, evaluating the oil and gas reserves
attributable to all of the Oil and Gas Properties of Borrower and its Subsidiaries which shall, among other things, (a) identify
the wells covered thereby, (b) specify the applicable engineer’s opinions with respect to the total volume of reserves
(the “available reserves”) of Hydrocarbons (using, as applicable, the terms or categories “proved developed
producing reserves”, “proved developed non-producing reserves”, “proved developed behind pipe reserves”,
“proved developed shut-in reserves”, “proved undeveloped reserves”, “probable reserves” and
“possible reserves” and any other reserve category recognized by the Society of Petroleum Evaluation Engineers or
any successor thereto) which Borrower has advised such engineer that Borrower and its Subsidiaries have the right to produce for
their own account, (c) set forth such engineer’s opinions with respect to the projected future cash proceeds from the
available reserves, discounted for present value at a rate acceptable to Administrative Agent, for each calendar year or portion
thereof after the date of such findings and data, (d) set forth such engineer’s opinions with respect to the projected
future rate of production of the available reserves, (e) contain such other information as requested by Administrative Agent
with respect to the projected rate of production, gross revenues, operating expenses, taxes, capital costs, net revenues and present
value of future net revenues attributable to such reserves and production therefrom, (f) contain a statement of the price
and escalation parameters, procedures and assumptions upon which such determinations were based, (g) contain a statement
of price differentials between the wellhead market price for the commodity sold and the quoted market price used in such report
during the previous 12-month period, and (h) contain summary lease operating statements for such Oil and Gas Properties for
the previous 12-month period.

 

“Resignation
Effective Date” has the meaning set forth in Section 11.6(a).

 

“Responsible
Officer” means the chief executive officer, president, chief financial officer, or treasurer of an Obligated Party or
any Person designated by a Responsible Officer to act on behalf of a Responsible Officer; provided that such designated
Person may not designate any other Person to be a Responsible Officer. Any document delivered hereunder that is signed by a Responsible
Officer of an Obligated Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or
other action on the part of such Person and such Responsible Officer shall be conclusively presumed to have acted on behalf of
Obligated Party.

 

“Revolving
Credit Availability” means, as of any date of determination thereof, the difference between (a) the Aggregate Commitments
on such date minus (b) the Aggregate Revolving Credit Exposure on such date.

 

“Revolving
Credit Exposure” means, as to any Lender at any time, the aggregate principal amount of its outstanding Loans at such
time and such Lender’s participation in L/C Obligations at such time.

 

    	CREDIT AGREEMENT - Page 24	 

     

    

 

“RICO”
means the Racketeer Influenced and Corrupt Organization Act of 1970.

 

“Sanctions”
means all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by the U.S. government,
including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department
of State.

 

“Sanctioned
Country” means, at any time, a country, region or territory which is itself the subject or target of any Sanctions (at
the time of this Agreement, Crimea, Cuba, Iran, North Korea, Sudan, and Syria).

 

“Sanctioned
Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by
the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, (b) any Person operating,
organized, or resident in a Sanctioned Country, or (c) any Person controlled by any such Person.

 

“Secured
Parties” means, collectively, Administrative Agent, each Lender, L/C Issuer, each Bank Product Provider, each other
Approved Commodity Swap Counterparty (with respect to the Mortgages) and any other Person the Obligations owing to which are,
or are purported to be, secured by the Collateral under the terms of the Security Documents.

 

“Security
Agreement” means that certain security agreement dated as of even date herewith, among the Obligated Parties and Administrative
Agent, in favor of the Secured Parties.

 

“Security
Documents” means each and every Mortgage, security agreement, pledge agreement, mortgage, deed of trust, control agreement
or other collateral security agreement required by or delivered to Administrative Agent from time to time that purport to create
a Lien in favor of any of the Secured Parties to secure payment or performance of the Obligations or any portion thereof.

 

“Sellers”
means, collectively, EXCO Production Company (WV), LLC, a Delaware limited liability company, BG Production Company (WV), LLC,
a Delaware limited liability company, and EXCO Resources (PA) LLC, a Delaware limited liability company.

 

“Solvent”
means, with respect to any Person as of any date of determination thereof, that the fair value of the assets of such Person (at
fair valuation) is, on the date of determination, greater than the total amount of liabilities (including contingent and unliquidated
liabilities) of such Person as of such date; that the present fair saleable value of the assets of such Person will, as of such
date, be greater than the amount that will be required to pay the probable liability of such Person on its debts as such debts
become absolute and matured; and that, as of such date, such Person will be able to pay all liabilities of such Person as such
liabilities mature, and such Person does not have unreasonably small capital with which to carry on its business. In computing
the amount of contingent or unliquidated liabilities at any time, such liabilities will be computed at the amount which, in light
of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual
or matured liability discounted to present value at rates believed to be reasonable by such Person acting in good faith.

 

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

 

    	CREDIT AGREEMENT - Page 25	 

     

    

 

“Subordinated
Debt” means any unsecured Debt of Borrower (other than the Obligations) that has been subordinated to the Obligations
under the Loan Documents by written agreement, in form and content, including without limitation, amount, interest rates, payments,
covenants, and other terms and conditions, satisfactory to Administrative Agent, and which has been approved in writing by Administrative
Agent as constituting Subordinated Debt for purposes of this Agreement.

 

“Subsidiary”
means (a) any corporation of which at least a majority of the outstanding shares of stock having by the terms thereof ordinary
voting power to elect a majority of the board of directors of such corporation (irrespective of whether or not at the time stock
of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency)
is at the time directly or indirectly owned or Controlled by Borrower, one or more of Borrower’s other Subsidiaries or by
Borrower and one or more of such Subsidiaries, and (b) any other entity (i) of which at least a majority of the ownership,
equity or voting interest is at the time directly or indirectly owned or Controlled by one or more of Borrower and other Subsidiaries
and (ii) which is treated as a subsidiary in accordance with GAAP. Unless otherwise specified herein, any reference to a
“Subsidiary” or “Subsidiaries” shall be deemed to be references to a Subsidiary or Subsidiaries of Borrower.
Notwithstanding anything to the contrary contained herein, each of the Excluded Subsidiaries shall not be a Subsidiary for purposes
of this Agreement or any other Loan Document.

 

“Swap
Obligations” means, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract or
transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.

 

“Taxes”
means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments,
fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable
thereto.

 

“Test
Period” means, as of any date of determination thereof, the four consecutive fiscal quarters of Borrower most recently
ended (in each case taken as one accounting period) for which financial statements have been or are required to be delivered pursuant
to this Agreement; provided, however, for purposes of the calculation of EBITDAX (including Net Income and each
other amount included in the determination of EBITDAX) for Test Period ending March 31, 2017, such amounts shall be annualized
by taking the results of the fiscal quarter ending March 31, 2017, and multiplying them by 4; for the Test Period ending June
30, 2017, such amounts shall be annualized by taking the results of the two fiscal quarters ending June 30, 2017, and multiplying
them by 2; for the Test Period ending September 30, 2017, such amounts shall be annualized by taking the results of the three
fiscal quarters ending September 30, 2017, and multiplying them by 4/3; and for the Test Period ending December 31, 2017 and for
each Test Period thereafter, such amount shall be the sum of the results of the four consecutive fiscal quarters of Borrower most
recently ended.

 

“Total
Credit Exposure” means, as of any date of determination thereof, the sum of the unused Aggregate Commitments at such
time plus the Aggregate Revolving Credit Exposure at such time.

 

“Type”
means, with respect to a Portion, its character as a LIBOR Portion or a Base Rate Portion.

 

“UCC”
means Chapters 1 through 11 of the Texas Business and Commerce Code.

 

    	CREDIT AGREEMENT - Page 26	 

     

    

 

“Unfunded
Pension Liability” means the excess, if any, of (a) the funding target as defined under Section 430(d) of
the Code without regard to the special at-risk rules of Section 430(i) of the Code, over (b) the value of plan assets
as defined under Section 430(g)(3)(A) of the Code determined as of the last day of each calendar year, without regard to
the averaging which may be allowed under Section 430(g)(3)(B) of the Code and reduced for any prefunding balance or funding
standard carryover balance as defined and provided for in Section 430(f) of the Code.

 

“Unreimbursed
Amount” has the meaning set forth in Section 2.2(c)(i).

 

“U.S.
Person” means any Person that is a “United States person” as defined in Section 7701(a)(30) of the
Code.

 

“U.S.
Tax Compliance Certificate” has the meaning specified in Section 3.4(g)(ii)(B)(3).

 

“Utilization”
means, as of any date of determination thereof, the percentage obtained by dividing the Aggregate Revolving Credit Exposure as
of such date by the Aggregate Commitments as of such date.

 

“WI/NRI
Schedule” means a schedule comparing the working and net revenue interests of each well, lease or unit mortgaged to
Administrative Agent as reflected on each applicable Mortgage, to the working and net revenue interests for such properties reflected
in the Reserve Report, along with an explanation as to any material discrepancies between the two disclosures.

 

“Withholding
Agent” means each of Borrower and Administrative Agent.

 

Section
1.2Accounting Matters.

 

(a)       Generally.
All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data
(including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared
in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that
used in preparing the audited financial statements described in Section 6.2, except as otherwise specifically prescribed
herein. Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the computation of
any financial covenant) contained herein, Debt of Borrower and its Subsidiaries shall be deemed to be carried at 100% of the outstanding
principal amount thereof, and the effects of ASC 825 on financial liabilities shall be disregarded.

 

(b)       Changes
in GAAP. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth herein,
and either Borrower or the Required Lenders shall so request, Administrative Agent, Lenders and Borrower shall negotiate in good
faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the
approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to
be computed in accordance with GAAP prior to such change therein and (ii) Borrower shall provide to Administrative Agent
and Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting
forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in
GAAP.

 

    	CREDIT AGREEMENT - Page 27	 

     

    

 

Section
1.3ERISA Matters. If, after the date hereof, there shall occur, with respect to ERISA, the adoption of any applicable
Law, rule, or regulation, or any change therein, or any change in the interpretation, implementation or administration thereof
by the PBGC or any other Governmental Authority, then either Borrower or Required Lenders may request a modification to this Agreement
solely to preserve the original intent of this Agreement with respect to the provisions hereof applicable to ERISA, and the parties
to this Agreement shall negotiate in good faith to complete such modification.

 

Section
1.4Letter of Credit Amounts. Unless otherwise specified herein, the amount of a Letter of Credit at any time shall
be deemed to be the stated amount of such Letter of Credit in effect at such time; provided, however, that with
respect to any Letter of Credit that, by its terms or the terms of any Issuer Document related thereto, provides for one or more
automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated
amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect
at such time.

 

Section
1.5Other Definitional Provisions. All definitions contained in this Agreement are equally applicable to the singular
and plural forms of the terms defined. The words “hereof”, “herein”, and “hereunder”
and words of similar import referring to this Agreement refer to this Agreement as a whole and not to any particular provision
of this Agreement. Unless otherwise specified, all references in a Loan Document to Articles, Sections, Exhibits and Schedules
shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references
appear. Terms used herein that are defined in the UCC, unless otherwise defined herein, shall have the meanings specified in the
UCC. Any definition of or reference to any agreement, instrument or other document 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 or in any other Loan Document). Any reference to any Law shall
include all statutory and regulatory provisions consolidating, amending or replacing such Law and any reference to any Law or
regulation shall, unless otherwise specified, refer to such Law or regulation as amended, modified or supplemented from time to
time. Words denoting gender shall be construed to include the masculine, feminine and neuter, when such construction is appropriate;
and specific enumeration shall not exclude the general but shall be construed as cumulative; the word “or” is not
exclusive; the word “including” (in its various forms) means “including, without limitation”; in the computation
of periods of time, the word “from” means “from and including” and the words “to” and “until”
mean “to but excluding”; and all references to money refer to the legal currency of the United States of America.

 

Section
1.6Interpretative Provision. For purposes of Section 10.1, a breach of a financial covenant contained in
Article 9 shall be deemed to have occurred as of any date of determination thereof by Borrower, the Required Lenders
or as of the last date of any specified measurement period, regardless of when the financial statements or the Compliance Certificate
reflecting such breach are delivered to Administrative Agent.

 

Section
1.7Times of Day. Unless otherwise specified, all references herein to times of day shall be references to central time
(daylight or standard, as applicable).

 

Section
1.8Other Loan Documents. The other Loan Documents, including the Security Documents, and the Intercreditor Agreement
contain representations, warranties, covenants, defaults and other provisions that are in addition to and not limited by, or a
limitation of, similar provisions of this Agreement. Such provisions in such other Loan Documents and the Intercreditor Agreement
may be different or more expansive than similar provisions of this Agreement and neither such differences nor such more expansive
provisions shall be construed as a conflict.

 

    	CREDIT AGREEMENT - Page 28	 

     

    

 

ARTICLE
2

THE COMMITMENTS AND CREDIT EXTENSIONS

 

Section
2.1The Loans.

 

(a)       Borrowings.
Subject to the terms and conditions of this Agreement, each Lender severally agrees to make one or more revolving credit loans
(each such loan, a “Loan”) to Borrower from time to time from the Closing Date until the Maturity Date in an
aggregate principal amount for such Lender at any time outstanding up to but not exceeding the amount of such Lender’s Commitment,
provided that the Aggregate Revolving Credit Exposure shall not exceed the Aggregate Commitments. Subject to the foregoing
limitations, and the other terms and provisions of this Agreement, Borrower may borrow, repay, and reborrow Loans hereunder.

 

(b)       Borrowing
Procedure. Each Borrowing, each conversion of a Portion from one Type to the other, and each continuation of a LIBOR Portion
shall be made upon Borrower’s irrevocable notice to Administrative Agent, which may be given by telephone. Each such notice
must be received by Administrative Agent not later than 11:00 a.m. (i) three Business Days prior to the requested
date of any Borrowing of, conversion to, or continuation of a LIBOR Portion or of any conversion of a LIBOR Portion to a Base
Rate Portion, and (ii) on the requested date of any Borrowing of a Base Rate Portion. Each telephonic notice by Borrower
pursuant to this Section 2.1(b) must be confirmed promptly by delivery to Administrative Agent of a written Borrowing
Request, appropriately completed and signed by a Responsible Officer of Borrower. Each Borrowing of, conversion to, or continuation
of a LIBOR Portion shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof. Except as provided
in Section 2.2(c), each Borrowing of or conversion to a Base Rate Portion shall be in a principal amount of $250,000
or a whole multiple of $50,000 in excess thereof; provided that a Base Rate Portion may be in an amount equal to the Revolving
Credit Availability. Each Borrowing Request (whether telephonic or written) shall specify (A) whether Borrower is requesting
a Borrowing, a conversion of Portions from one Type to the other, or a continuation of LIBOR Portions, (B) the requested
date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (C) the principal
amount of Portions to be borrowed, converted or continued, (D) the Type of Portions to be borrowed or to which existing Portions
are to be converted, and (E) if applicable, the duration of the Interest Period with respect thereto. If Borrower fails to
specify a Type of Portion in a Borrowing Request or if Borrower fails to give a timely notice requesting a conversion or continuation,
then the applicable Portions shall be made as, or converted to, Base Rate Portions. Any such automatic conversion to Base Rate
Portions shall be effective as of the last day of the Interest Period then in effect with respect to the applicable LIBOR Portions.
If Borrower requests a Borrowing of, conversion to, or continuation of a LIBOR Portion in any such Borrowing Request but fails
to specify an Interest Period, it will be deemed to have specified an Interest Period of one month.

 

(c)       Funding.
Following receipt of a Borrowing Request, Administrative Agent shall promptly notify each Lender of the amount of its Applicable
Percentage of the applicable Portions, and if no timely notice of a conversion or continuation is provided by Borrower, Administrative
Agent shall notify each Lender of the details of any automatic conversion to Base Rate Portions as described in Section 2.1(b).
In the case of a Borrowing, each Lender shall make the amount of its Loan available to Administrative Agent in immediately available
funds at Administrative Agent’s Principal Office not later than 1:00 p.m. on the Business Day specified in the applicable
Borrowing Request. Upon satisfaction of the applicable conditions set forth in Section 5.2 (and, if such Borrowing
is the initial Credit Extension, Section 5.1), Administrative Agent shall make all funds so received available to
Borrower in like funds as received by Administrative Agent either by (i) crediting the account of Borrower on the books of
LegacyTexas Bank with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions
provided to (and reasonably acceptable to) Administrative Agent by Borrower; provided, however, if, on the date
the Borrowing Request with respect to such Borrowing is given by Borrower, there are L/C Borrowings outstanding, then the proceeds
of such Borrowing, first, shall be applied to the payment in full of any such L/C Borrowings, and second, shall
be made available to Borrower as provided above.

 

    	CREDIT AGREEMENT - Page 29	 

     

    

 

(d)       Continuations
and Conversions. Except as otherwise provided herein, a LIBOR Portion may be continued or converted only on the last day of
the Interest Period for such LIBOR Portion. During the existence of a Default, (i) no Loans may be requested as, converted
to, or continued as LIBOR Portions without the consent of the Required Lenders and (ii) unless repaid, each LIBOR Portion
shall be converted to a Base Rate Portion at the end of the Interest Period applicable thereto.

 

(e)       Notifications.
Administrative Agent shall promptly notify Borrower and Lenders of the interest rate applicable to any Interest Period for LIBOR
Portions upon determination of such interest rate.

 

(f)       Interest
Periods. After giving effect to all Borrowings, all conversions of Portions from one Type to the other, and all continuations
of Portions as the same Type, there shall not be more than five Interest Periods in effect with respect to LIBOR Portions.

 

Section
2.2Letters of Credit.

 

(a)       The
Letter of Credit Commitment.

 

(i)       Subject
to the terms and conditions set forth herein, (A) L/C Issuer agrees, in reliance upon the agreements of Lenders set forth
in this Section 2.2, (1) from time to time on any Business Day during the period from the Closing Date until
the Letter of Credit Expiration Date, to issue Letters of Credit for the account of Borrower or its Subsidiaries, and to amend
or extend Letters of Credit previously issued by it, in accordance with subsection (b) below, and (2) to honor
drawings under the Letters of Credit; and (B) Lenders severally agree to participate in Letters of Credit issued for the
account of Borrower or its Subsidiaries and any drawings thereunder; provided that after giving effect to any L/C Credit
Extension with respect to any Letter of Credit, (x) the Aggregate Revolving Credit Exposure shall not exceed the Aggregate
Commitments, (y) the Revolving Credit Exposure of any Lender shall not exceed such Lender’s Commitment, and (z) the
Outstanding Amount of the L/C Obligations shall not exceed the Letter of Credit Sublimit. Each request by Borrower for the issuance
or amendment of a Letter of Credit shall be deemed to be a representation by Borrower that the L/C Credit Extension so requested
complies with the conditions set forth in the proviso to the preceding sentence. Within the foregoing limits, and subject to the
terms and conditions hereof, Borrower’s ability to obtain Letters of Credit shall be fully revolving, and accordingly Borrower
may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn
upon and reimbursed.

 

    	CREDIT AGREEMENT - Page 30	 

     

    

 

(ii)       L/C
Issuer shall not issue any Letter of Credit, if:

 

(A)       the
expiry date of the requested Letter of Credit would occur more than 12 months after the date of issuance, unless Required Lenders
have approved such expiry date; or

 

(B)       the
expiry date of the requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless all Lenders have
approved such expiry date.

 

(iii)       L/C
Issuer shall not be under any obligation to issue any Letter of Credit if:

 

(A)       any
order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain L/C Issuer
from issuing the Letter of Credit, or any Law applicable to L/C Issuer or any request or directive (whether or not having the
force of law) from any Governmental Authority with jurisdiction over L/C Issuer shall prohibit, or request that L/C Issuer refrain
from, the issuance of letters of credit generally or the Letter of Credit in particular or shall impose upon L/C Issuer with respect
to the Letter of Credit any restriction, reserve or capital requirement (for which L/C Issuer is not otherwise compensated hereunder)
not in effect on the Closing Date, or shall impose upon L/C Issuer any unreimbursed loss, cost or expense which was not applicable
on the Closing Date and which L/C Issuer in good faith deems material to it;

 

(B)       the
issuance of the Letter of Credit would violate one or more policies of L/C Issuer applicable to letters of credit generally;

 

(C)       except
as otherwise agreed by Administrative Agent and L/C Issuer, the Letter of Credit is in an initial stated amount less than $25,000;

 

(D)       the
Letter of Credit is to be denominated in a currency other than Dollars;

 

(E)       any
Lender is at that time a Defaulting Lender, unless L/C Issuer has entered into arrangements, including the delivery of Cash Collateral,
satisfactory to L/C Issuer (in its sole discretion) with Borrower or such Lender to eliminate L/C Issuer’s actual or potential
Fronting Exposure (after giving effect to Section 12.22(a)(iv)) with respect to such Defaulting Lender arising from
either the Letter of Credit then proposed to be issued or that Letter of Credit and all other L/C Obligations as to which L/C
Issuer has actual or potential Fronting Exposure, as it may elect in its sole discretion; or

 

(F)       the
Letter of Credit contains any provisions for automatic reinstatement of the stated amount after any drawing thereunder.

 

(iv)       L/C
Issuer shall not amend any Letter of Credit if L/C Issuer would not be permitted at such time to issue the Letter of Credit in
its amended form under the terms hereof.

 

    	CREDIT AGREEMENT - Page 31	 

     

    

 

(v)       L/C
Issuer shall be under no obligation to amend any Letter of Credit if (A) L/C Issuer would have no obligation at such time
to issue the Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of the Letter of Credit
does not accept the proposed amendment to the Letter of Credit.

 

(vi)       L/C
Issuer shall act on behalf of Lenders with respect to any Letters of Credit issued by it and the documents associated therewith,
and L/C Issuer shall have all of the benefits and immunities (A) provided to Administrative Agent in Article 11
with respect to any acts taken or omissions suffered by L/C Issuer in connection with Letters of Credit issued by it or proposed
to be issued by it and Issuer Documents pertaining to such Letters of Credit as fully as if the term “Administrative Agent”
as used in Article 11 included L/C Issuer with respect to such acts or omissions, and (B) as additionally provided
herein with respect to L/C Issuer.

 

(b)       Procedures
for Issuance and Amendment of Letters of Credit.

 

(i)       Each
Letter of Credit shall be issued or amended, as the case may be, upon the request of Borrower delivered to L/C Issuer (with a
copy to Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by a Responsible
Officer of Borrower. Such Letter of Credit Application may be sent by facsimile, by United States mail, by overnight courier,
by electronic transmission using the system provided by L/C Issuer, by personal delivery, or by any other means acceptable to
L/C Issuer. Such Letter of Credit Application must be received by L/C Issuer and Administrative Agent not later than 11:00 a.m.
at least two Business Days (or such later date and time as Administrative Agent and L/C Issuer may agree in a particular instance
in their sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request
for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory
to L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the
amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents
to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented
by such beneficiary in case of any drawing thereunder; (G) the purpose and nature of the requested Letter of Credit; and
(H) such other matters as L/C Issuer may require. In the case of a request for an amendment of any outstanding Letter of
Credit, such Letter of Credit Application shall specify in form and detail satisfactory to L/C Issuer (1) the Letter of Credit
to be amended; (2) the proposed date of amendment thereof (which shall be a Business Day); (3) the nature of the proposed
amendment; and (4) such other matters as L/C Issuer may require. Additionally, Borrower shall furnish to L/C Issuer and Administrative
Agent such other documents and information pertaining to such requested Letter of Credit issuance or amendment, including any
Issuer Documents, as L/C Issuer or Administrative Agent may require.

 

(ii)       Promptly
after receipt of any Letter of Credit Application, L/C Issuer will confirm with Administrative Agent (by telephone or in writing)
that Administrative Agent has received a copy of such Letter of Credit Application from Borrower and, if not, L/C Issuer will
provide Administrative Agent with a copy thereof. Unless L/C Issuer has received written notice from any Lender, Administrative
Agent or any Obligated Party, at least one Business Day prior to the requested date of issuance or amendment of the applicable
Letter of Credit that one or more applicable conditions contained in Article 5 shall not then be satisfied, then,
subject to the terms and conditions hereof, L/C Issuer shall, on the requested date, issue a Letter of Credit for the account
of Borrower (or the applicable Subsidiary) or enter into the applicable amendment, as the case may be, in each case in accordance
with L/C Issuer’s usual and customary business practices. Immediately upon the issuance of each Letter of Credit, each Lender
shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from L/C Issuer a risk participation in such
Letter of Credit in an amount equal to the product of such Lender’s Applicable Percentage times the amount of such Letter
of Credit.

 

    	CREDIT AGREEMENT - Page 32	 

     

    

 

(iii)       Promptly
after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or
to the beneficiary thereof, L/C Issuer will also deliver to Borrower and Administrative Agent a true and complete copy of such
Letter of Credit or amendment.

 

(c)       Drawings
and Reimbursements; Funding of Participations.

 

(i)       Upon
receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, L/C Issuer shall
notify Borrower and Administrative Agent thereof. Not later than 11:00 a.m. on the date of any payment by L/C Issuer under
a Letter of Credit (each such date, an “Honor Date”), Borrower shall reimburse L/C Issuer through Administrative
Agent in an amount equal to the amount of such drawing. If Borrower fails to so reimburse L/C Issuer by such time, Administrative
Agent shall promptly notify each Lender of the Honor Date, the amount of the unreimbursed drawing (the “Unreimbursed
Amount”), and the amount of such Lender’s Applicable Percentage thereof. In such event, Borrower shall be deemed
to have requested a Borrowing to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, subject to the
amount of the unutilized portion of Revolving Credit Availability and the conditions set forth in Section 5.2 (other
than the delivery of a Borrowing Request). Any notice given by L/C Issuer or Administrative Agent pursuant to this Section 2.2(c)(i)
may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation
shall not affect the conclusiveness or binding effect of such notice.

 

(ii)       Each
Lender shall upon any notice pursuant to Section 2.2(c)(i) make funds available (and Administrative Agent may apply
Cash Collateral provided for this purpose) for the account of L/C Issuer at Administrative Agent’s Principal Office in an
amount equal to its Applicable Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified
in such notice by Administrative Agent, whereupon, subject to the provisions of Section 2.2(c)(iii), each Lender that
so makes funds available shall be deemed to have made a Loan (or, if the conditions set forth in Section 5.2 are not satisfied,
an L/C Borrowing as further described in clause (iii) below) to Borrower in such amount. Administrative Agent shall remit
the funds so received to L/C Issuer.

 

(iii)       With
respect to any Unreimbursed Amount that is not fully refinanced by a Borrowing because the conditions set forth in Section 5.2
cannot be satisfied or for any other reason, Borrower shall be deemed to have incurred from L/C Issuer an L/C Borrowing in
the amount of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due and payable on demand (together
with interest) and shall bear interest at the Default Interest Rate. In such event, each Lender’s payment to Administrative
Agent for the account of L/C Issuer pursuant to Section 2.2(c)(ii) shall be deemed payment in respect of its participation
in such L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation under
this Section 2.2.

 

    	CREDIT AGREEMENT - Page 33	 

     

    

 

(iv)       Until
each Lender funds its Loan or L/C Advance pursuant to this Section 2.2(c) to reimburse L/C Issuer for any amount drawn
under any Letter of Credit, interest in respect of such Lender’s Applicable Percentage of such amount shall be solely for
the account of L/C Issuer.

 

(v)       Each
Lender’s obligation to make Loans or L/C Advances to reimburse L/C Issuer for amounts drawn under Letters of Credit, as
contemplated by this Section 2.2(c), shall be absolute and unconditional and shall not be affected by any circumstance,
including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against L/C Issuer,
Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any other
occurrence, event or condition, whether or not similar to any of the foregoing; provided, however, that each Lender’s
obligation to make Loans (but not its obligation to fund its pro rata share of L/C Advances) pursuant to this Section 2.2(c)
is subject to the conditions set forth in Section 5.2 (other than delivery by Borrower of a Borrowing Request).
No such making of an L/C Advance shall relieve or otherwise impair the obligation of Borrower to reimburse L/C Issuer for the
amount of any payment made by L/C Issuer under any Letter of Credit, together with interest as provided herein.

 

(vi)       If
any Lender fails to make available to Administrative Agent for the account of L/C Issuer any amount required to be paid by such
Lender pursuant to the foregoing provisions of this Section 2.2(c) by the time specified in Section 2.2(c)(ii),
then, without limiting the other provisions of this Agreement, L/C Issuer shall be entitled to recover from such Lender (acting
through Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required
to the date on which such payment is immediately available to L/C Issuer at a rate per annum equal to the greater of the Federal
Funds Rate and a rate determined by L/C Issuer in accordance with banking industry rules on interbank compensation, plus any administrative,
processing or similar fees customarily charged by L/C Issuer in connection with the foregoing. If such Lender pays such amount
(with interest and fees as aforesaid), the amount so paid shall constitute such Lender’s Loan included in the relevant Borrowing
or L/C Advance in respect of the relevant L/C Borrowing, as the case may be. A certificate of L/C Issuer submitted to any Lender
(through Administrative Agent) with respect to any amounts owing under this clause (vi) shall be conclusive absent
manifest error.

 

(d)       Repayment
of Participations.

 

(i)       At
any time after L/C Issuer has made a payment under any Letter of Credit and has received from any Lender such Lender’s L/C
Advance in respect of such payment in accordance with Section 2.2(c), if Administrative Agent receives for the account
of L/C Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from Borrower or
otherwise, including proceeds of Cash Collateral applied thereto by Administrative Agent), Administrative Agent will distribute
to such Lender its Applicable Percentage thereof in the same funds as those received by Administrative Agent.

 

    	CREDIT AGREEMENT - Page 34	 

     

    

 

(ii)       If
any payment received by Administrative Agent for the account of L/C Issuer pursuant to Section 2.2(c)(i) is required
to be returned under any of the circumstances described in Section 12.24 (including pursuant to any settlement entered
into by L/C Issuer in its discretion), each Lender shall pay to Administrative Agent for the account of L/C Issuer its Applicable
Percentage thereof on demand of Administrative Agent, plus interest thereon from the date of such demand to the date such amount
is returned by such Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of
Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.

 

(e)       Obligations
Absolute. The obligation of Borrower to reimburse L/C Issuer for each drawing under each Letter of Credit and to repay each
L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, including the following:

 

(i)       any
lack of validity or enforceability of such Letter of Credit, this Agreement, or any other Loan Document;

 

(ii)       the
existence of any claim, counterclaim, setoff, defense or other right that Borrower or any Subsidiary may have at any time against
any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee
may be acting), L/C Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby
or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;

 

(iii)       any
draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission
or otherwise of any document required in order to make a drawing under such Letter of Credit;

 

(iv)       waiver
by L/C Issuer of any requirement that exists for L/C Issuer’s protection and not the protection of Borrower or any waiver
by L/C Issuer which does not in fact materially prejudice Borrower;

 

(v)       honor
of a demand for payment presented electronically even if such Letter of Credit requires that demand be in the form of a draft;

 

(vi)       any
payment made by L/C Issuer in respect of an otherwise complying item presented after the date specified as the expiration date
of, or the date by which documents must be received under such Letter of Credit if presentation after such date is authorized
by the UCC or the ISP, as applicable;

 

(vii)       any
payment by L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply
with the terms of such Letter of Credit; or any payment made by L/C Issuer under such Letter of Credit to any Person purporting
to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative
of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding
under any Debtor Relief Law; or

 

    	CREDIT AGREEMENT - Page 35	 

     

    

 

(viii)       any
other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that
might otherwise constitute a defense available to, or a discharge of, Borrower or any Subsidiary.

 

Borrower
shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of
any claim of noncompliance with Borrower’s instructions or other irregularity, Borrower will promptly notify L/C Issuer.
Borrower shall be conclusively deemed to have waived any such claim against L/C Issuer and its correspondents unless such notice
is given as aforesaid.

 

(f)       Role
of L/C Issuer. Each Lender and Borrower agree that, in paying any drawing under a Letter of Credit, L/C Issuer shall not have
any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter
of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing
or delivering any such document. None of L/C Issuer, Administrative Agent, any of their respective Related Parties nor any correspondent,
participant or assignee of L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith
at the request or with the approval of Required Lenders; (ii) any action taken or omitted in the absence of gross negligence
or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument
related to any Letter of Credit or Issuer Document. Borrower hereby assumes all risks of the acts or omissions of any beneficiary
or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption is not intended
to, and shall not, preclude Borrower’s pursuing such rights and remedies as it may have against the beneficiary or transferee
at law or under any other agreement. None of L/C Issuer, Administrative Agent, any of their respective Related Parties nor any
correspondent, participant or assignee of L/C Issuer shall be liable or responsible for any of the matters described in clauses (i)
through (viii) of Section 2.2(e); provided, however, that anything in such clauses to the
contrary notwithstanding, Borrower may have a claim against L/C Issuer, and L/C Issuer may be liable to Borrower, to the extent,
but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by Borrower which Borrower proves
were caused by L/C Issuer’s willful misconduct or gross negligence or L/C Issuer’s willful failure to pay under any
Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the
terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, L/C Issuer may accept documents
that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information
to the contrary, and L/C Issuer shall not be responsible for the validity or sufficiency of any instrument transferring or assigning
or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason. L/C Issuer may send a Letter of Credit or conduct any communication
to or from the beneficiary via the Society for Worldwide Interbank Financial Telecommunication message or overnight courier, or
any other commercially reasonable means of communicating with a beneficiary.

 

(g)       Applicability
of ISP; Limitation of Liability. Unless otherwise expressly agreed by L/C Issuer and Borrower when a Letter of Credit is issued,
the rules of the ISP shall apply to such Letter of Credit. Notwithstanding the foregoing, L/C Issuer shall not be responsible
to Borrower for, and L/C Issuer’s rights and remedies against Borrower shall not be impaired by, any action or inaction
of L/C Issuer required or permitted under any Law, order, or practice that is required or permitted to be applied to any Letter
of Credit or this Agreement, including the Law or any order of a jurisdiction where L/C Issuer or the beneficiary is located,
the practice stated in the ISP or in the decisions, opinions, practice statements, or official commentary of the ICC Banking Commission,
the Bankers Association for Finance and Trade – International Financial Services Association (BAFT-IFSA), or the Institute
of International Banking Law & Practice, whether or not any Letter of Credit or other Issuer Document chooses such Law
or practice.

 

    	CREDIT AGREEMENT - Page 36	 

     

    

 

(h)       Fronting
Fee and Documentary and Processing Charges Payable to L/C Issuer. At any time there is more than one Lender, Borrower shall
pay directly to L/C Issuer for its own account a fronting fee with respect to each Letter of Credit, at the rate per annum separately
agreed between Borrower and L/C Issuer, computed on the daily amount available to be drawn under such Letter of Credit and payable
on a quarterly basis in advance. Such fronting fee shall be due and payable upon the issuance or renewal of such Letter of Credit
for the period from the date of issuance or renewal through the end of the first calendar quarter ending after such date and on
the first Business Day of each April, July, October and January thereafter. For purposes of computing the daily amount available
to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.4.
In addition, Borrower shall pay directly to L/C Issuer for its own account the customary issuance, presentation, amendment and
other processing fees, and other standard costs and charges, of L/C Issuer relating to letters of credit as from time to time
in effect. Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable.

 

(i)       Conflict
with Issuer Documents. In the event of any conflict between the terms hereof and the terms of any Issuer Document, the terms
hereof shall control.

 

(j)       Letters
of Credit Issued for Subsidiaries. Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of
any obligations of, or is for the account of, a Subsidiary, Borrower shall be obligated to reimburse L/C Issuer hereunder for
any and all drawings under such Letter of Credit. Borrower hereby acknowledges that the issuance of Letters of Credit for the
account of Subsidiaries inures to the benefit of Borrower, and that Borrower’s business derives substantial benefits from
the businesses of such Subsidiaries.

 

Section
2.3Fees.

 

(a)       Letter
of Credit Fees. Borrower shall pay to Administrative Agent for the account of each Lender in accordance, subject to Section 12.22,
with its Applicable Percentage a Letter of Credit fee (the “Letter of Credit Fee”) for each Letter of Credit
equal to the Applicable Margin for LIBOR Portions times the daily amount available to be drawn under such Letter of Credit; provided,
however, each such Letter of Credit Fee shall be no less than $1,000. For purposes of computing the daily amount available
to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.4.
Letter of Credit Fees for each Letter of Credit shall be (i) due and payable in advance on the date of issuance of such Letter
of Credit and on the first Business Day of each April, July, October and January thereafter so long as such Letter of Credit remains
outstanding and (ii) computed on a quarterly basis in advance. If there is any change in the Applicable Margin for LIBOR
Portions during any quarter, the daily amount available to be drawn under each Letter of Credit shall be computed and multiplied
by the Applicable Margin for LIBOR Portions separately for each period during such quarter that such Applicable Margin for LIBOR
Portions was in effect. Notwithstanding anything to the contrary contained herein while any Event of Default exists, all Letter
of Credit Fees shall accrue at the Default Interest Rate.

 

    	CREDIT AGREEMENT - Page 37	 

     

    

 

(b)       Commitment
Fees. Borrower agrees to pay to Administrative Agent for the account of each Lender in accordance, subject to Section 12.22,
with its Applicable Percentage a commitment fee on the daily average unused amount of the Commitment of such Lender for the period
from and including the date of this Agreement to and including the Maturity Date (including at any time during which one or more
of the conditions in Article 5 is not met), at a rate equal to the Applicable Margin. For the purpose of calculating
the commitment fee hereunder, the Commitment of each Revolving Credit Lender shall be deemed utilized by the amount of all outstanding
Revolving Credit Loans and L/C Obligations, owing to such Revolving Credit Lender whether directly or by participation. Accrued
commitment fees shall be payable quarterly in arrears on the first day of each April, July, October, and January during the term
of this Agreement and on the Maturity Date.

 

Section
2.4Payments Generally; Administrative Agent’s Clawback.

 

(a)       Generally.
All payments of principal, interest, and other amounts to be made by Borrower under this Agreement and the other Loan Documents
shall be made to Administrative Agent for the account of Administrative Agent or L/C Issuer or the pro rata accounts of the applicable
Lenders, as applicable, at the Principal Office in Dollars and immediately available funds, without setoff, deduction, or counterclaim,
and free and clear of all Taxes at the time and in the manner provided herein. Payments by check or draft shall not constitute
payment in immediately available funds until the required amount is actually received by Administrative Agent in full. Payments
in immediately available funds received by Administrative Agent in the place designated for payment on a Business Day prior to
11:00 a.m. at such place of payment shall be credited prior to the close of business on the Business Day received, while
payments received by Administrative Agent on a day other than a Business Day or after 11:00 a.m. on a Business Day shall
not be credited until the next succeeding Business Day. If any payment of principal or interest on the Notes shall become due
and payable on a day other than a Business Day, then such payment shall be made on the next succeeding Business Day. Any such
extension of time for payment shall be included in computing interest which has accrued and shall be payable in connection with
such payment. Administrative Agent is hereby authorized upon notice to Borrower to charge the account of Borrower maintained with
Administrative Agent for each payment of principal, interest and fees as it becomes due hereunder.

 

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

 

    	CREDIT AGREEMENT - Page 38	 

     

    

 

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

 

Section
2.5Evidence of Debt.

 

(a)       The
Loans made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by Administrative
Agent in the ordinary course of business; provided that such Lender or Administrative Agent may, in addition, request that
such Loans be evidenced by the Notes. The Credit Extensions made by L/C Issuer shall be evidenced by one or more accounts or records
maintained by L/C Issuer and by Administrative Agent in the ordinary course of business. The accounts or records maintained by
Administrative Agent, L/C Issuer, and each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions
made to Borrower and, with respect to Letters of Credit issued for the account of a Subsidiary, such Subsidiary and the interest
and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation
of Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts
and records maintained by L/C Issuer or any Lender and the accounts and records of Administrative Agent in respect of such matters,
the accounts and records of Administrative Agent shall control in the absence of manifest error.

 

(b)       In
addition to the accounts and records referred to in Section 2.5(a) above, each Lender and Administrative Agent shall maintain
in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations
in Letters of Credit. In the event of any conflict between the accounts and records maintained by Administrative Agent and the
accounts and records of any Lender in respect of such matters, the accounts and records of Administrative Agent shall control
in the absence of manifest error.

 

Section
2.6Cash Collateral.

 

(a)       Certain
Credit Support Events. If (i) L/C Issuer has honored any full or partial drawing request under any Letter of Credit and
such drawing has resulted in an L/C Borrowing, (ii) as of the Letter of Credit Expiration Date, any L/C Obligation for any
reason remains outstanding, (iii) Borrower shall be required to provide Cash Collateral pursuant to Section 10.2,
or (iv) there shall exist a Defaulting Lender, Borrower shall immediately (in the case of clause (iii) above)
or within one Business Day (in all other cases) following any request by Administrative Agent or L/C Issuer, provide Cash
Collateral in an amount not less than the applicable Minimum Collateral Amount (determined, in the case of Cash Collateral provided
pursuant to clause (iv) above, after giving effect to Section 12.22(a)(iv) and any Cash Collateral provided
by the Defaulting Lender).

 

    	CREDIT AGREEMENT - Page 39	 

     

    

 

(b)       Grant
of Security Interest. Borrower, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grants
to (and subjects to the control of) Administrative Agent, for the benefit of Administrative Agent, L/C Issuer and Lenders, and
agrees to maintain, a first priority security interest in all such Cash Collateral and all other Property so provided as Collateral
pursuant hereto, and in all proceeds of the foregoing, all as security for the obligations to which such Cash Collateral may be
applied pursuant to Section 2.6(c). If at any time Administrative Agent determines that Cash Collateral is subject
to any right or claim of any Person other than Administrative Agent or L/C Issuer as herein provided, or that the total amount
of such Cash Collateral is less than the Minimum Collateral Amount, Borrower will, promptly upon demand by Administrative Agent,
pay or provide to Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency. All Cash
Collateral (other than credit support not constituting funds subject to deposit) shall be maintained in one or more blocked, non-interest
bearing deposit accounts at LegacyTexas Bank. Borrower shall pay on demand therefor from time to time all customary account opening,
activity and other administrative fees and charges in connection with the maintenance and disbursement of Cash Collateral.

 

(c)       Application.
Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under any of this Section 2.6
or Sections 2.2, 10.2 or 12.22 in respect of Letters of Credit shall be held and applied to the
satisfaction of the specific L/C Obligations, obligations to fund participations therein (including, as to Cash Collateral provided
by a Defaulting Lender, any interest accrued on such obligation) and other obligations for which the Cash Collateral was so provided,
prior to any other application of such Property as may otherwise be provided for herein.

 

(d)       Release.
Cash Collateral (or the appropriate portion thereof) provided to reduce Fronting Exposure or to secure other obligations shall
be released promptly following (i) the elimination of the applicable Fronting Exposure or other obligations giving rise thereto,
including by the termination of Defaulting Lender status of the applicable Lender (or, as appropriate, its assignee following
compliance with Section 12.8(b)(vii)) or (ii) the determination by Administrative Agent and L/C Issuer that there
exists excess Cash Collateral; provided, however, (x) any such release shall be without prejudice to, and any
disbursement or other transfer of Cash Collateral shall be and remain subject to, any other Lien conferred under the Loan Documents
and the other applicable provisions of the Loan Documents, and (y) the Person providing Cash Collateral and L/C Issuer
may agree that Cash Collateral shall not be released but instead held to support future anticipated Fronting Exposure or other
obligations.

 

Section
2.7Interest; Payment Terms.

 

(a)       Loans
– Payment of Principal and Interest; Revolving Nature. The unpaid principal amount of each Portion of the Loans shall,
subject to the following sentence and Section 2.7(f), bear interest at the applicable Interest Rate. If at any time
such rate of interest would exceed the Maximum Rate but for the provisions thereof limiting interest to the Maximum Rate, then
any subsequent reduction shall not reduce the rate of interest on the Loans below the Maximum Rate until the aggregate amount
of interest accrued on the Loans equals the aggregate amount of interest which would have accrued on the Loans if the interest
rate had not been limited by the Maximum Rate. All accrued but unpaid interest on the principal balance of the Loans shall be
payable on each Payment Date and on the Maturity Date, provided that interest accruing at the Default Interest Rate pursuant
to Section 2.7(f) shall be payable on demand. The then Outstanding Amount of the Loans and all accrued but unpaid
interest thereon shall be due and payable on the Maturity Date. The unpaid principal balance of the Loans at any time shall be
the total amount advanced hereunder by Lenders less the amount of principal payments made thereon by or for Borrower, which balance
may be endorsed on the Notes from time to time by Lenders or otherwise noted in Lenders’ and/or Administrative Agent’s
records, which notations shall be, absent manifest error, conclusive evidence of the amounts owing hereunder from time to time.

 

    	CREDIT AGREEMENT - Page 40	 

     

    

 

(b)       Application.
Except as expressly provided herein or in the Intercreditor Agreement to the contrary, all payments on the Obligations under the
Loan Documents shall be applied in the following order of priority: (i) the payment or reimbursement of any expenses, costs
or obligations (other than the outstanding principal amount thereof and interest thereon) for which Borrower shall be obligated
or Administrative Agent, L/C Issuer, or any Lender shall be entitled pursuant to the provisions of this Agreement, the Notes or
the other Loan Documents; (ii) the payment of accrued but unpaid interest thereon; and (iii) the payment of all or any
portion of the principal balance thereof then outstanding hereunder as directed by Borrower. If an Event of Default exists under
this Agreement, the Notes or under any of the other Loan Documents, any such payment shall be applied as provided in Section 10.3
below.

 

(c)       Computation
Period. Interest on the Loans and all other amounts payable by Borrower hereunder on a per annum basis shall be computed on
the basis of a 360-day year and the actual number of days elapsed (including the first day but excluding the last day) unless
such calculation would result in a usurious rate, in which case interest shall be calculated on the basis of a 365-day year or
366-day year, as the case may be. In computing the number of days during which interest accrues, the day on which funds are initially
advanced shall be included regardless of the time of day such advance is made, and the day on which funds are repaid shall be
included unless repayment is credited prior to the close of business on the Business Day received. Each determination by Administrative
Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.

 

(d)       Unconditional
Payment. Borrower is and shall be obligated to pay all principal, interest and any and all other amounts which become payable
under any of the Loan Documents absolutely and unconditionally and without any abatement, postponement, diminution or deduction
whatsoever and without any reduction for counterclaim or setoff whatsoever. If at any time any payment received by Administrative
Agent hereunder shall be deemed by a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance
under any Debtor Relief Law, then the obligation to make such payment shall survive any cancellation or satisfaction of the Obligations
under the Loan Documents and shall not be discharged or satisfied with any prior payment thereof or cancellation of such Obligations,
but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions hereof, and such payment
shall be immediately due and payable upon demand.

 

(e)       Partial
or Incomplete Payments. Remittances in payment of any part of the Obligations under the Loan Documents other than in the required
amount in immediately available funds at the place where such Obligations are payable shall not, regardless of any receipt or
credit issued therefor, constitute payment until the required amount is actually received by Administrative Agent in full in accordance
herewith and shall be made and accepted subject to the condition that any check or draft may be handled for collection in accordance
with the practice of the collecting bank or banks. Acceptance by Administrative Agent of any payment in an amount less than the
full amount then due shall be deemed an acceptance on account only, and the failure to pay the entire amount then due shall be
and continue to be an Event of Default.

 

    	CREDIT AGREEMENT - Page 41	 

     

    

 

(f)       Default
Interest Rate. For so long as any Event of Default exists, regardless of whether or not there has been an acceleration of
the Loans, and at all times after the maturity of the Loans (whether by acceleration or otherwise), and in addition to all other
rights and remedies of Administrative Agent or Lenders hereunder, (i) interest shall accrue on the Outstanding Amount of
the Loans at the Default Interest Rate, (ii) interest shall accrue on any past due amount (other than the Outstanding Amount
of the Loans) at the Default Interest Rate and (iii) upon the request of the Required Lenders, interest shall accrue on the principal
amount of all other outstanding Obligations at the Default Interest Rate, and such accrued interest shall be immediately due and
payable. Borrower acknowledges that it would be extremely difficult or impracticable to determine Administrative Agent’s
or Lenders’ actual damages resulting from any late payment or Event of Default, and such accrued interest are reasonable
estimates of those damages and do not constitute a penalty.

 

Section
2.8Voluntary Termination or Reduction of Commitments; Prepayments.

 

(a)       Voluntary
Termination or Reduction of Commitments. Borrower may, upon written notice to Administrative Agent, terminate the Aggregate
Commitments, or from time to time permanently reduce the Aggregate Commitments; provided that (i) any such notice
shall be received by Administrative Agent not later than 11:00 a.m. three Business Days prior to the date of termination
or reduction, (ii) any such partial reduction shall be in an aggregate amount of $1,000,000 or any whole multiple of $500,000
in excess thereof, and (iii) Borrower shall not terminate or reduce the Aggregate Commitments if, after giving effect thereto
and to any concurrent prepayments hereunder, the Aggregate Revolving Credit Exposure would exceed the Aggregate Commitments. Administrative
Agent will promptly notify Lenders of any such notice of termination or reduction of the Aggregate Commitments. Any reduction
of the Aggregate Commitments shall be applied to the Commitment of each Lender according to its Applicable Percentage. All fees
accrued until the effective date of any termination or reduction of the Aggregate Commitments shall be paid on the effective date
of such termination or reduction and all Commitment Fees shall thereafter be computed on the basis of the Commitments, as so reduced.

 

(b)       Voluntary
Prepayments. Subject to the conditions set forth below, Borrower shall have the right, at any time and from time to time upon
at least three Business Days’ prior written notice to Administrative Agent, to prepay the principal of the Loans in full
or in part. If there is a prepayment of all or any portion of the principal of the Loans on or before the Maturity Date for such
Loans, whether voluntary or because of acceleration or otherwise, such prepayment shall also include any and all accrued but unpaid
interest on the amount of principal being so prepaid through and including the date of prepayment, plus any other sums which have
become due to Lenders under the other Loan Documents on or before the date of prepayment, but which have not been fully paid.

 

(c)       Mandatory
Prepayments. Except as provided in Section 2.9(e) hereof, if at any time the Aggregate Revolving Credit Exposure
exceeds the Borrowing Base then in effect, then Borrower shall immediately prepay the entire amount of such excess to Administrative
Agent, for the ratable account of the Lenders, and/or Cash Collateralize the L/C Obligations in an aggregate amount equal to such
excess; provided, however, that Borrower shall not be required to Cash Collateralize the L/C Obligations pursuant
to this Section 2.8(c) unless after the prepayment in full of the Loans the Aggregate Revolving Credit Exposure exceeds
the Borrowing Base then in effect. Each prepayment required by this Section 2.8(c) shall be applied, first, to any
Base Rate Portions then outstanding, and, second, to any LIBOR Portions then outstanding, and if more than one LIBOR Portion is
then outstanding, to such LIBOR Portions in such order as Borrower may direct or, if Borrower fails to so direct, as Administrative
Agent shall elect.

 

    	CREDIT AGREEMENT - Page 42	 

     

    

 

Section
2.9Borrowing Base.

 

(a)       Borrowing
Base Standards. The Borrowing Base shall represent the approval in their sole discretion of the Required Lenders or all Lenders,
as applicable, of Administrative Agent’s determination of the loan amount that may be supported by the Required Lenders’
or all Lenders’, as applicable, evaluation of the Proved Oil and Gas Properties of Borrower and its Subsidiaries. The determination
of the Borrowing Base will be made in accordance with then-current practices, economic and pricing parameters, methodology, assumptions,
and customary procedures and standards established by each Lender from time to time for its petroleum industry customers including
without limitation (i) an analysis of such reserve and production data with respect to all of the Proved Oil and Gas Properties
of Borrower and its Subsidiaries, including the Mortgaged Properties, as is provided to the Lenders in accordance herewith, (ii) an
analysis of the assets, liabilities, cash flow, business, properties, prospects, management and ownership of Borrower and its
Subsidiaries, (iii) Borrower’s and its Subsidiaries’ Hedging Transactions and the status (or lack thereof) of any
provider of Hedging Transactions as an “Approved Commodity Swap Counterparty,” and (iv) such other credit factors
consistently applied as each Lender customarily considers in evaluating similar oil and gas credit facilities. Borrower and the
Lenders acknowledge that due to the uncertainties of the oil and gas extraction process, the Oil and Gas Properties of Borrower
and its Subsidiaries are not subject to evaluation with a high degree of accuracy and are subject to potential rapid deterioration
in value, the determination of the loan amount will be less than the total present value of the Proved Oil and Gas Properties
of Borrower and its Subsidiaries, which Borrower acknowledges to be essential for the adequate protection of the Lenders. Without
limiting the foregoing, the Lenders may exclude from the Borrowing Base any oil and gas reserves or portion of production therefrom
or any income from any other property, at any time, because title information is not satisfactory, such oil and gas reserves are
not Mortgaged Properties in violation of this Agreement or such oil and gas reserves are not in “pay” status. The
Borrowing Base shall initially be $17,000,000 on the Closing Date.

 

(b)       Periodic
Determinations of Borrowing Base.

 

(i)       The
Borrowing Base shall be redetermined as of March 1 and September 1 of each year, commencing March 1, 2017. On or before February
1 of each year, Borrower shall furnish Administrative Agent a Reserve Report as of the preceding January 1 prepared by an Independent
Engineer covering all of the Proved Oil and Gas Properties of Borrower and its Subsidiaries, including the Mortgaged Properties.
On or before August 1 of each year, Borrower shall furnish Administrative Agent a Reserve Report as of the preceding July 1 prepared
by Borrower’s own engineer and certified by a Responsible Officer of Borrower covering all of the Proved Oil and Gas Properties
of Borrower and its Subsidiaries, including the Mortgaged Properties. Upon receipt of each such Reserve Report, Administrative
Agent shall make a determination of the Borrowing Base which shall become effective upon approval by the Required Lenders or all
Lenders in accordance with the procedures set forth in Section 2.9(d) and subsequent written notification from Administrative
Agent to Borrower, and which, subject to the other provisions of this Agreement, shall be the Borrowing Base until the effective
date of the next redetermination as provided in this Section 2.9.

 

    	CREDIT AGREEMENT - Page 43	 

     

    

 

(ii)       In
the event that Borrower does not furnish to Administrative Agent a Reserve Report by the dates specified in Section 2.9(b)(i),
then Administrative Agent and the Required Lenders or all Lenders, as applicable, may nonetheless redetermine the Borrowing Base
and redesignate the Borrowing Base from time to time thereafter in their sole discretion until Administrative Agent receives the
relevant Reserve Report, whereupon Administrative Agent and the Required Lenders or all Lenders, as applicable, shall redetermine
the Borrowing Base as otherwise specified in this Section 2.9.

 

(c)       Special
Determinations of Borrowing Base.

 

(i)       Special
determinations of the Borrowing Base may be requested (A) by Borrower not more than two times per calendar year, or (B) by Administrative
Agent at any time during the term hereof. If any special determination is requested by Borrower, Borrower shall provide, if requested
by Administrative Agent, an updated Reserve Report prepared by Borrower’s own engineer brought forward from the most recent
Reserve Report furnished by Borrower to Administrative Agent. If any special determination is requested by Administrative Agent,
Borrower will provide Administrative Agent with engineering data for the oil and gas reserves updated from the most recent Reserve
Report furnished to Administrative Agent, as soon as is reasonably possible following the request. The determination whether to
increase or decrease the Borrowing Base shall be made in accordance with the standards set forth in Section 2.9(a)
and the procedures set forth in Section 2.9(d). In the event of any special determination of the Borrowing Base pursuant
to this Section 2.9(c), Administrative Agent in the exercise of its discretion may suspend the next regularly scheduled
determination of the Borrowing Base.

 

(ii)       In
addition to the special determinations described in Section 2.9(c)(i), Administrative Agent may, by notifying Borrower
thereof, elect to cause an interim redetermination of the Borrowing Base any time (i) Borrower or any of its Subsidiaries
Disposes of, whether in one Disposition or a series of Dispositions, Oil and Gas Properties the Borrowing Base value of which
exceeds 5% of the Borrowing Base then in effect, (ii) any Commodity Hedging Transaction which has been taken into account
in connection with the then current Borrowing Base is terminated and the Hedge Termination Value thereof determined in accordance
therewith exceeds 5% of such Borrowing Base or (iii) a Person loses its status as an Approved Commodity Swap Counterparty if the
then current Borrowing Base includes credit for Hedging Transactions with such Person. Any redetermination of the Borrowing Base
pursuant to this Section 2.9(c)(ii) shall be made in accordance with the standards set forth in Section 2.9(a)
and the procedures set forth in Section 2.9(d) and shall not be considered a special determination requested by Administrative
Agent within the meaning of Section 2.9(c)(i). Borrower shall, if requested by Administrative Agent, deliver an updated
Reserve Report prepared by Borrower’s own engineer brought forward from the most recent Reserve Report furnished by Borrower
to Administrative Agent. If a Borrowing Base Deficiency exists solely because of the reduction of the Borrowing Base pursuant
to this Section 2.9(c)(ii), Borrower shall, on the date of such occurrence, make a single lump sum payment in an amount
sufficient to reduce the Aggregate Revolving Credit Exposure to or below the Borrowing Base.

 

    	CREDIT AGREEMENT - Page 44	 

     

    

 

(d)       General
Procedures With Respect to Determination of Borrowing Base. Administrative Agent shall propose a redetermined Borrowing Base
within 30 days following receipt by Administrative Agent and the Lenders of a Reserve Report and other applicable information.
After having received notice of such proposal from Administrative Agent, the Required Lenders (or all Lenders in the event of
a proposed increase of the Borrowing Base) shall have 15 days to agree or disagree with such proposal. If at the end of such 15-day
period, the Required Lenders (or all Lenders, in the event of a proposed increase of the Borrowing Base) shall not have communicated
their approval or disapproval, such silence shall be deemed an approval, and Administrative Agent’s proposal shall be the
new Borrowing Base. If the Required Lenders (or all Lenders, in the event of a proposed increase of the Borrowing Base) cannot
agree on the amount of the Borrowing Base within 7 days after Administrative Agent has been notified of their disapproval, then
Administrative Agent shall propose a new redetermined Borrowing Base within 15 days after the end of such 7-day period and the
foregoing process shall be repeated. This process shall be repeated until the Required Lenders (or all Lenders, in the event of
a proposed increase of the Borrowing Base) agree on a new Borrowing Base. Upon the final redetermination of the Borrowing Base,
Administrative Agent, the Lenders approving same and Borrower shall execute a Borrowing Base Adjustment Letter.

 

(e)       Borrowing
Base Deficiency.

 

(i)       If
a Borrowing Base Deficiency exists because of a periodic or special determination made pursuant to Section 2.9(b)
or Section 2.9(c)(i), then Administrative Agent shall send a Borrowing Base Deficiency Notice to Borrower, and Borrower
shall within 30 days following receipt of such Borrowing Base Deficiency Notice elect whether to (A) prepay an amount which
would, if prepaid immediately, reduce the Aggregate Revolving Credit Exposure to the amount of the Borrowing Base, (B) execute
one or more Mortgages (or cause a Subsidiary to execute one or more Mortgages) covering such other Oil and Gas Properties not
previously taken into account in the determination of the Borrowing Base as are acceptable to Administrative Agent and the Required
Lenders having present values which, in the opinion of Administrative Agent and the Required Lenders, based upon Administrative
Agent’s and the Required Lenders’ evaluation of the engineering data provided them, taken in the aggregate are sufficient
to increase the Borrowing Base to an amount at least equal to the Aggregate Revolving Credit Exposure, or (C) do any combination
of the foregoing as is acceptable to Administrative Agent. If Borrower fails to make an election within 30 days after Borrower’s
receipt of the Borrowing Base Deficiency Notice, then Borrower shall be deemed to have selected the prepayment option specified
in clause (A) above.

 

(ii)       Borrower
shall deliver or shall cause to be delivered such prepayments or Mortgages of additional Oil and Gas Properties in accordance
with its election (or deemed election) pursuant to Section 2.9(e)(i) as follows:

 

(A)       Prepayment
Elections. If Borrower elects (or is deemed to have elected) to prepay an amount in accordance with Section 2.9(e)(i)(A)
above, then Borrower may make such prepayment in one installment within 90 days after Borrower’s receipt of the Borrowing
Base Deficiency Notice or, provided no Default has occurred and is continuing, in 6 equal consecutive monthly installments beginning
within 30 days after Borrower’s receipt of the Borrowing Base Deficiency Notice and continuing on the same day of each month
thereafter.

 

    	CREDIT AGREEMENT - Page 45	 

     

    

 

(B)       Elections
to Mortgage Additional Oil and Gas Properties. If Borrower elects to mortgage additional Oil and Gas Properties in accordance
with Section 2.9(e)(i)(B) above, then (1) such properties shall be acceptable to Administrative Agent and the
Required Lenders with values determined by Administrative Agent and the Required Lenders in accordance with this Section 2.9
and (2) Borrower or such Subsidiary shall execute, acknowledge and deliver to Administrative Agent one or more Mortgages
within 30 days after Borrower’s receipt of the Borrowing Base Deficiency Notice (or such longer time as Administrative Agent
may agree in its sole discretion); provided, however (x) if none of the additional Oil and Gas Properties offered
by Borrower are acceptable to Administrative Agent and the Required Lenders, Borrower shall be deemed to have elected the prepayment
option specified in Section 2.9(e)(i)(A) (and Borrower shall make such prepayment in accordance with Section 2.9(e)(ii)(A));
and (y) if the aggregate present values of additional Oil and Gas Properties which are acceptable to Administrative Agent
and the Required Lenders are insufficient to eliminate the Borrowing Base Deficiency, then Borrower shall be deemed to have selected
the option specified in Section 2.9(e)(i)(C) (and Borrower shall make prepayment and deliver one or more Mortgages
as provided in Section 2.9(e)(ii)(C)). Together with such Mortgages, Borrower shall deliver or cause to be delivered
to Administrative Agent title opinions and/or other title information and data acceptable to Administrative Agent such that Administrative
Agent shall have received, together with the title information previously delivered to Administrative Agent, acceptable title
information regarding the Oil and Gas Properties of Borrower and its Subsidiaries that in the aggregate represent not less than
85% (or such lesser percentage as acceptable to Administrative Agent in its sole discretion) of the Recognized Value of Oil and
Gas Properties evaluated in the most recent Reserve Report.

 

(C)       Combination
Elections. If Borrower elects (or is deemed to have elected) to eliminate the Borrowing Base Deficiency by a combination of
prepayment and mortgaging of additional Oil and Gas Properties in accordance with Section 2.9(e)(i)(C), then (1) within
30 days after Borrower’s receipt of the Borrowing Base Deficiency Notice (or such longer time as Administrative Agent may
agree in its sole discretion), Borrower shall (or shall cause a Subsidiary to) execute, acknowledge and deliver to Administrative
Agent one or more Mortgages covering such additional Oil and Gas Properties and (2) Borrower shall pay Administrative Agent the
amount by which the Borrowing Base deficiency exceeds the present values of such additional Oil and Gas Properties in one installment
within 30 days after Borrower’s receipt of the Borrowing Base Deficiency Notice or, provided no Default has occurred and
is continuing, in six (6) equal consecutive monthly installments beginning within thirty (30) days after Borrower's receipt of
the Borrowing Base Deficiency Notice and continuing on the same day of each month thereafter until paid.

 

(iii)       Applicable
Margin Increase. During any time in which a Borrowing Base Deficiency exists, each of the Applicable Margins will be automatically
increased by a rate equal to 2.00% per annum.

 

(f)       Borrowing
Base Increase Fee. A fee shall be paid to Administrative Agent for the account of the Lenders for each incremental increase
in the new Borrowing Base over the previously existing Borrowing Base; provided that, such fee shall not be subject to "double-counting"
should a future Borrowing Base be reduced, then subsequently increased to an amount at or below the highest previously determined
or redetermined Borrowing Base. The amount of each such fee shall be a percentage of such increase as determined by Administrative
Agent in accordance with then current market conditions. There shall be no obligation imposed upon Borrower to accept an increase
of the Borrowing Base proposed by the Lenders. However, if Borrower accepts the increase in the Borrowing Base, the fee determined
by Administrative Agent shall be due and payable immediately and without regard as to whether Borrower ever borrows the increased
amount available under such new Borrowing Base.

 

    	CREDIT AGREEMENT - Page 46	 

     

    

 

(g)       Mortgage
of Additional Properties. Borrower may from time to time upon written notice to Administrative Agent propose to add Oil and
Gas Properties of Borrower or any Subsidiary as Mortgaged Properties to be included in the Borrowing Base. Any such proposal shall
be accompanied by a Reserve Report, which may be prepared by Borrower’s own engineer, applicable to such properties that
conforms with the requirements of this Agreement and evidence sufficient to establish that Borrower or such Subsidiary, as applicable,
has title to such Oil and Gas Properties. Any such addition shall become effective at such time as (i) Administrative Agent,
with the approval of all of the Lenders, has made a determination of the amount by which the Borrowing Base would be increased
as the result of such addition, (ii) the conditions set out in this Section 2.9, to the extent they are applicable
to such additional Oil and Gas Properties, have been satisfied, (iii) Mortgages duly executed and acknowledged by Borrower
or such Subsidiary, as applicable, have been delivered to Administrative Agent, and (iv) arrangements satisfactory to Administrative
Agent have been made with respect to payment of recording fees and taxes, as applicable. In determining the increase in the Borrowing
Base pursuant to this Section, Administrative Agent and the Lenders shall apply the parameters and other credit factors set forth
in this Section 2.9. A proposal by Borrower pursuant to this Section 2.9(g) shall constitute a request for
a special determination of the Borrowing Base for purposes of Section 2.9(c).

 

ARTICLE
3

TAXES, YIELD PROTECTION AND INDEMNITY

 

Section
3.1Increased Costs.

 

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

 

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

 

(ii)       subject
any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through
(d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its Loans, Loan principal, Letters of
Credit, Commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or

 

(iii)       impose
on any Lender or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement
or Loans made by such Lender;

 

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

 

    	CREDIT AGREEMENT - Page 47	 

     

    

 

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

 

(c)       Certificates
for Reimbursement. A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its
holding company, as the case may be, as specified in Sections 3.1(a) or 3.1(b) and delivered to Borrower, shall
be conclusive absent manifest error. Borrower shall pay such Lender the amount shown as due on any such certificate within 30
days after receipt thereof.

 

(d)       Delay
in Requests. Failure or delay on the part of any Lender to demand compensation pursuant to this Section 3.1 shall
not constitute a waiver of such Lender’s right to demand such compensation; provided that Borrower shall not be required
to compensate a Lender pursuant to this Section 3.1 for any increased costs incurred or reductions suffered more than
9 months prior to the date that such Lender notifies Borrower of the Change in Law giving rise to such increased costs or reductions,
and of such Lender’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased
costs or reductions is retroactive, then the 9-month period referred to above shall be extended to include the period of retroactive
effect thereof).

 

Section
3.2Illegality. If any Lender determines that any Law or regulation has made it unlawful, or that any Governmental Authority
has asserted that it is unlawful, for any Lender or its Lending Office to make, maintain or fund Loans whose interest is determined
by reference to LIBOR, or to determine or charge interest rates based upon LIBOR, or any Governmental Authority has imposed material
restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market,
then, on notice thereof by such Lender to Borrower through Administrative Agent, (a) any obligation of such Lender to make
or continue LIBOR Portions or to convert Base Rate Portions to LIBOR Portions shall be suspended, and (b) if such notice
asserts the illegality of such Lender making or maintaining Base Rate Portions the interest rate on which is determined by reference
to the LIBOR component of the Base Rate, the interest rate on which Base Rate Portions of such Lender shall, if necessary to avoid
such illegality, be determined by Administrative Agent without reference to the LIBOR component of the Base Rate, in each case
until such Lender notifies Administrative Agent and Borrower that the circumstances giving rise to such determination no longer
exist. Upon receipt of such notice, (i) Borrower shall, upon demand from such Lender (with a copy to Administrative Agent),
prepay or, if applicable, convert all LIBOR Portions of such Lender to Base Rate Portions (the interest rate on which Base Rate
Loans of such Lender shall, if necessary to avoid such illegality, be determined by Administrative Agent without reference to
the LIBOR component of the Base Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue
to maintain such LIBOR Portions to such day, or immediately, if such Lender may not lawfully continue to maintain such LIBOR Portions
and (ii) if such notice asserts the illegality of such Lender determining or charging interest rates based upon LIBOR, Administrative
Agent shall during the period of such suspension compute the Base Rate applicable to such Lender without reference to the LIBOR
component thereof until Administrative Agent is advised in writing by such Lender that it is no longer illegal for such Lender
to determine or charge interest rates based upon the LIBOR. Upon any such prepayment or conversion, Borrower shall also pay accrued
interest on the amount so prepaid or converted.

 

    	CREDIT AGREEMENT - Page 48	 

     

    

 

Section
3.3Inability to Determine Rates. If (a) Administrative Agent or the Required Lenders determine that for any reason
in connection with any request for a LIBOR Portion or a conversion to or continuation thereof that (i) Dollar deposits are
not being offered to banks in the London interbank eurodollar market for the applicable amount and Interest Period of such LIBOR
Portion, (ii) adequate and reasonable means do not exist for determining LIBOR for any requested Interest Period with respect
to a proposed LIBOR Portion or in connection with an existing or proposed Base Rate Portion, or (iii) LIBOR for any requested
Interest Period with respect to a proposed LIBOR Portion does not adequately and fairly reflect the cost to such Lenders of funding
such LIBOR Portion, or (b) by reason of any Change in Law any Lender would become subject to restrictions on the amount of
a category of liabilities or assets which it may hold and notifies Administrative Agent of same, Administrative Agent will promptly
so notify Borrower and each Lender. Thereafter, (x) the obligation of Lenders to make or maintain LIBOR Portions shall be
suspended, and (y) in the event of a determination described in the preceding sentence with respect to the LIBOR component
of the Base Rate, the utilization of the LIBOR component in determining the Base Rate shall be suspended, in each case until Administrative
Agent (upon the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, Borrower may revoke any
pending request for a Borrowing of, conversion to or continuation of LIBOR Portions or, failing that, will be deemed to have converted
such request into a request for a Borrowing of Base Rate Portions in the amount specified therein.

 

Section
3.4Taxes.

 

(a)       Defined
Terms. For purposes of this Section, the term “applicable Law” includes FATCA.

 

(b)       Payment
Free of Taxes. Any and all payments by or on account of any obligation of Borrower under any Loan Document shall be made without
deduction or withholding for any Taxes, except as required by applicable Law. If any applicable Law (as determined in the good
faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by
a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely
pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable Law and, if such
Tax is an Indemnified Tax, then the sum payable by Borrower shall be increased as necessary so that after such deduction or withholding
has been made (including such deductions and withholdings applicable to additional sums payable under this Section 3.4)
the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been
made.

 

(c)       Payment
of Other Taxes by Borrower. Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable
Law, or at the option of Administrative Agent timely reimburse it for the payment of, any Other Taxes.

 

    	CREDIT AGREEMENT - Page 49	 

     

    

 

(d)       Indemnification
by Borrower. Borrower shall indemnify each Recipient, within 30 days after demand therefor, for the full amount of any Indemnified
Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 3.4)
payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses
arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. A certificate setting forth in reasonable detail the amount and derivation of such payment
or liability delivered to Borrower by a Lender (with a copy to Administrative Agent), or by Administrative Agent on its own behalf
or on behalf of a Lender, shall be conclusive absent manifest error.

 

(e)       Indemnification
by Lenders. Each Lender shall severally indemnify Administrative Agent, within 10 days after demand therefor, for (i) any
Indemnified Taxes attributable to such Lender (but only to the extent that Borrower has not already indemnified Administrative
Agent for such Indemnified Taxes and without limiting the obligation of Borrower to do so), (ii) any Taxes attributable to
such Lender’s failure to comply with the provisions of Section 12.8 relating to the maintenance of a Participant
Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by Administrative
Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or
not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to any Lender by Administrative Agent shall be conclusive absent manifest error. Each Lender
hereby authorizes Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan
Document or otherwise payable by Administrative Agent to such Lender from any other source against any amount due to Administrative
Agent under this Section 3.4(e).

 

(f)       Evidence
of Payments. As soon as practicable after any payment of Taxes by Borrower to a Governmental Authority pursuant to this Section 3.4,
Borrower shall deliver to Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory
to Administrative Agent.

 

(g)       Status
of Lenders.

 

(i)       Any
Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document
shall deliver to Borrower and Administrative Agent, at the time or times reasonably requested by Borrower or Administrative Agent,
such properly completed and executed documentation reasonably requested by Borrower or Administrative Agent as will permit such
payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested
by Borrower or Administrative Agent, shall deliver such other documentation prescribed by applicable Law or reasonably requested
by Borrower or Administrative Agent as will enable Borrower or Administrative Agent to determine whether or not such Lender is
subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding
two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in
Section 3.4(g)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in such Lender’s reasonable
judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would
materially prejudice the legal or commercial position of such Lender.

 

    	CREDIT AGREEMENT - Page 50	 

     

    

 

(ii)       Without
limiting the generality of the foregoing, in the event that Borrower is a U.S. Person,

 

(A)       any
Lender that is a U.S. Person shall deliver to Borrower and Administrative Agent on or prior to the date on which such Lender becomes
a Lender under this Agreement (and from time to time thereafter upon the reasonable request of Borrower or Administrative Agent),
executed copies of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;

 

(B)       any
Foreign Lender shall, to the extent it is legally entitled to do so, deliver to Borrower and Administrative Agent (in such number
of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under
this Agreement (and from time to time thereafter upon the reasonable request of Borrower or Administrative Agent), whichever of
the following is applicable:

 

(1)       in
the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with
respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN-E (or IRS Form W-8BEN, as applicable)
establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of
such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN-E (or IRS
Form W-8BEN, as applicable) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business
profits” or “other income” article of such tax treaty;

 

(2)       executed
copies of IRS Form W-8ECI;

 

(3)       in
the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code,
(x) a certificate substantially in the form of Exhibit E-1 to the effect that such Foreign Lender is not a “bank”
within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of Borrower within the meaning
of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C)
of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN-E (or IRS
Form W-8BEN, as applicable); or

 

(4)       to
the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS
Form W-8BEN, a U.S. Tax Compliance Certificate substantially in the form of Exhibit E-2 or Exhibit E-3,
IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign
Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest
exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit E-4
on behalf of each such direct and indirect partner;

 

    	CREDIT AGREEMENT - Page 51	 

     

    

 

(C)       any
Foreign Lender shall, to the extent it is legally entitled to do so, deliver to Borrower and Administrative Agent (in such number
of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under
this Agreement (and from time to time thereafter upon the reasonable request of Borrower or Administrative Agent), executed copies
of any other form prescribed by applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding
Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable Law to permit Borrower
or Administrative Agent to determine the withholding or deduction required to be made; and

 

(D)       if
a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender
were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b)
or 1472(b) of the Code, as applicable), such Lender shall deliver to Borrower and Administrative Agent at the time or times prescribed
by Law and at such time or times reasonably requested by Borrower or Administrative Agent such documentation prescribed by applicable
Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested
by Borrower or Administrative Agent as may be necessary for Borrower and Administrative Agent to comply with their obligations
under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the
amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall
include any amendments made to FATCA after the date of this Agreement.

 

Each
Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect,
it shall update such form or certification or promptly notify Borrower and Administrative Agent in writing of its legal inability
to do so.

 

(h)       Treatment
of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund
of any Taxes as to which it has been indemnified pursuant to this Section 3.4 (including by the payment of additional
amounts pursuant to this Section 3.4), it shall pay to the indemnifying party an amount equal to such refund (but
only to the extent of indemnity payments made under this Section 3.4 with respect to the Taxes giving rise to such
refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest
paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified
party, shall repay to such indemnified party the amount paid over pursuant to this Section 3.4(h) (plus any penalties,
interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required
to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this Section 3.4(h),
in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this Section 3.4(h)
the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party
would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise
imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This Section 3.4(h)
shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating
to its Taxes that it deems confidential) to the indemnifying party or any other Person.

 

    	CREDIT AGREEMENT - Page 52	 

     

    

 

(i)       Survival.
Each party’s obligations under this Section 3.4 shall survive the resignation or replacement of Administrative
Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction
or discharge of all obligations under any Loan Document.

 

Section
3.5Compensation for Losses. Upon demand of any Lender (with a copy to Administrative Agent) from time to time, Borrower
shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result
of:

 

(a)       any
continuation, conversion, payment or prepayment of any LIBOR Portion on a day other than the last day of the Interest Period for
such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);

 

(b)       any
failure by Borrower (for a reason other than the failure of such Lender to lend a LIBOR Portion) to prepay, borrow, continue or
convert any LIBOR Portion on the date or in the amount notified by Borrower; or

 

(c)       any
assignment of a LIBOR Portion on a day other than the last day of the Interest Period therefor as a result of a request by Borrower
pursuant to Section 3.6(b);

 

including
any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to
maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained as a result of any of the
actions described in Section 3.5 hereunder. Borrower shall also pay any customary administrative fees charged by such Lender
in connection with the foregoing.

 

For
purposes of calculating amounts payable by Borrower to the Lenders under this Section 3.5, each Lender shall be deemed
to have funded each LIBOR Portion made by it at Adjusted LIBOR for such Loan by a matching deposit or other borrowing in the London
interbank eurodollar market for a comparable amount and for a comparable period, whether or not such LIBOR Portion was in fact
so funded.

 

Section
3.6Mitigation of Obligations; Replacement of Lenders.

 

(a)       Designation
of a Different Lending Office. If any Lender requests compensation under Section 3.1, or requires Borrower to
pay any Indemnified Taxes or additional amounts to such Lender or any Governmental Authority for the account of such Lender pursuant
to Section 3.4, then such Lender shall (at the request of Borrower) use reasonable efforts to designate a different
Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or Affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or
reduce amounts payable pursuant to Section 3.1 or Section 3.4, as the case may be, in the future, and
(ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender. Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation
or assignment.

 

    	CREDIT AGREEMENT - Page 53	 

     

    

 

(b)       Replacement
of Lenders. If any Lender requests compensation under Section 3.1, or if Borrower is required to pay any Indemnified
Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.4
and, in each case, such Lender has declined or is unable to designate a different Lending Office in accordance with Section 3.6(a),
or if any Lender is a Defaulting Lender or a Non-Consenting Lender, then Borrower may, at its sole expense and effort, upon notice
to such Lender and Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and
subject to the restrictions contained in, and consents required by, Section 12.8), all of its interests, rights (other
than its existing rights to payments pursuant to Section 3.1 or Section 3.4) and obligations under this
Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that:

 

(i)       Borrower
shall have paid to Administrative Agent the assignment fee (if any) specified in Section 12.8;

 

(ii)       such
Lender shall have received payment of an amount equal to the Outstanding Amount of its Loans, and L/C Advances, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts
under Section 3.5) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or
Borrower (in the case of all other amounts);

 

(iii)       in
the case of any such assignment resulting from a claim for compensation under Section 3.1 or payments required to
be made pursuant to Section 3.4, such assignment will result in a reduction in such compensation or payments thereafter;

 

(iv)       such
assignment does not conflict with applicable Law; and

 

(v)       in
the case of any assignment resulting from a Lender becoming a Non-Consenting Lender, the applicable assignee shall have consented
to the applicable amendment, waiver or consent.

 

A
Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender
or otherwise, the circumstances entitling Borrower to require such assignment and delegation cease to apply.

 

Section
3.7Survival. All of Borrower’s obligations under this Article 3 shall survive termination of the
Aggregate Commitments, repayment of all other Obligations hereunder, and resignation of Administrative Agent.

 

ARTICLE
4

SECURITY

 

Section
4.1Mortgaged Properties. To secure full and complete payment and performance of the Obligations, Borrower shall, and
shall cause each of its Subsidiaries to, grant a first priority Lien (subject to Permitted Liens) against the Oil and Gas Properties
of Borrower and its Subsidiaries to the extent set forth below pursuant to terms of one or more Mortgages. Borrower covenants
that the Recognized Value of all Oil and Gas Properties subject to Mortgages shall at all times be not less than the Required
Reserve Value. Within 30 days (or such longer time as Administrative Agent may agree in its sole discretion) after Administrative
Agent advises Borrower of the failure to so achieve the Required Reserve Value and the percentage shortfall thereof, Borrower
shall cause the Recognized Value of all Mortgaged Properties to be not less than the Required Reserve Value by executing, or causing
its Subsidiaries to execute, Mortgages covering additional Proved Oil and Gas Properties sufficient to cover such shortfall.

 

    	CREDIT AGREEMENT - Page 54	 

     

    

 

Section
4.2Collateral. To secure full and complete payment and performance of the Obligations, Borrower shall, and shall cause
its Subsidiaries to, execute and deliver or cause to be executed and delivered all of the Security Documents required by Administrative
Agent covering the Collateral, subject, with respect to Oil and Gas Properties, to the limitations set forth in Section 4.1.
Borrower shall execute and cause to be executed such further documents and instruments, including without limitation, UCC financing
statements, as Administrative Agent, in its reasonable discretion, deems necessary or desirable to create, evidence, preserve,
and perfect its Liens in the Collateral and maintain the priority thereof as required by the Loan Documents.

 

Section
4.3Setoff. If an Event of Default exists and subject to the Intercreditor Agreement, Administrative Agent and each
Lender shall have the right to set off against the Obligations under the Loan Documents, at any time, any and all deposits (general
or special, time or demand, provisional or final) or other sums at any time credited by or owing from Administrative Agent or
such Lender to Borrower whether or not the Obligations under the Loan Documents are then due; provided that in the event
that any Defaulting Lender shall exercise any such right of setoff: (a) all amounts so set off shall be paid over immediately
to Administrative Agent for further application in accordance with the provisions of Section 12.22 and, pending such
payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of Administrative
Agent and Lenders; and (b) such Defaulting Lender shall provide promptly to Administrative Agent a statement describing in
reasonable detail the Obligations under the Loan Documents owing to such Defaulting Lender as to which it exercised such right
of setoff. To the extent that Borrower has accounts, which in the style thereof as reflected in Administrative Agent’s records
are designated as royalty, joint interest owner or operator accounts, the foregoing right of setoff shall only extend to funds
in such accounts which do not belong to, or otherwise arise from payments to Borrower for the account of, third-party royalty,
joint interest owners, or operators, and any funds in such accounts improperly setoff shall be returned to Borrower upon presentation
by Borrower of reasonable proof that such funds were being held for the account of such other Persons. Each Lender or Administrative
Agent making such an offset and application shall give Borrower and other Lenders written notice of such offset and application
promptly after effecting it. Subject to the Intercreditor Agreement, each amount set off shall be paid to Administrative Agent
for application to the Obligations under the Loan Documents in the order set forth in Section 10.3. Subject to the
limitations set forth in this Section 4.3, as further security for the Obligations, Borrower hereby grants to Administrative
Agent and each Lender a security interest in all money, instruments, and other Property of Borrower now or hereafter held by Administrative
Agent or such Lender, including, without limitation, Property held in safekeeping. In addition to Administrative Agent’s
and each Lender’s right of setoff and as further security for the Obligations, subject to the limitations set forth in this
Section 4.3, Borrower hereby grants to Administrative Agent and each Lender a security interest in all deposits (general
or special, time or demand, provisional or final) and other accounts of Borrower now or hereafter on deposit with or held by Administrative
Agent or such Lender and all other sums at any time credited by or owing from Administrative Agent or such Lender to Borrower.
The rights and remedies of Administrative Agent and each Lender hereunder are in addition to other rights and remedies (including,
without limitation, other rights of setoff) which Administrative Agent or such Lender may have. Each Lender agrees to notify Borrower
and the Administrative Agent within ten (10) days after such setoff and application, provided that the failure to give
such notice shall not affect the validity of such set-off and application or any other rights and remedies of Administrative Agent
and each Lender hereunder.

 

Section
4.4Authorization to File Financing Statements. Borrower and each other Obligated Party that has granted a security
interest in connection herewith authorizes Administrative Agent to complete and file, from time to time, financing statements
naming Borrower or such other Obligated Party, as applicable, as debtor.

 

    	CREDIT AGREEMENT - Page 55	 

     

    

 

ARTICLE
5

CONDITIONS PRECEDENT

 

Section
5.1Initial Extension of Credit. The obligation of Lenders to make the initial Credit Extension hereunder is subject
to the condition precedent that Administrative Agent shall have received all of the following, each dated (unless otherwise indicated
or otherwise specified by Administrative Agent) the Closing Date, in form and substance satisfactory to Administrative Agent:

 

(a)       Credit
Agreement. Executed counterparts of this Agreement, sufficient in number for distribution to Administrative Agent, each Lender
and Borrower;

 

(b)       Resolutions.
Resolutions of the governing body of Borrower and each other Obligated Party certified by the secretary or an assistant secretary
(or a Responsible Officer or other custodian of records) of such Person which authorize the execution, delivery, and performance
by such Person of this Agreement, the other Loan Documents to which such Person is or is to be a party and the Intercreditor Agreement
to the extent party thereto;

 

(c)       Incumbency
Certificate. A certificate of incumbency certified by a Responsible Officer of each Obligated Party certifying the names of
the individuals or other Persons authorized on behalf of such Person to sign this Agreement, each of the other Loan Documents
to which such Person is or is to be a party (including the certificates contemplated herein), and the Intercreditor Agreement
to the extent party thereto, together with specimen signatures of such individual Persons;

 

(d)       Certificate
Regarding Consents and Approvals. A certificate of a Responsible Officer of each Obligated Party either (i) attaching copies
of all consents, licenses and approvals required in connection with the execution, delivery and performance by such Obligated
Party and the validity against such Obligated Party of the Loan Documents to which it is a party and the Intercreditor Agreement
to the extent party thereto, and such consents, licenses and approvals shall be in full force and effect, or (ii) stating that
no such consents, licenses or approvals are so required;

 

(e)       Closing
Certificate. A certificate signed by a Responsible Officer of Borrower certifying that the conditions specified in Sections
5.2(b), 5.2(c) and 5.2(d) have been satisfied;

 

(f)       Constituent
Documents. The Constituent Documents and all amendments thereto for Borrower and each other Obligated Party that is not a
natural Person, with the formation documents included in the Constituent Documents being certified as of a date acceptable to
Administrative Agent by the appropriate government officials of the state of incorporation or organization of Borrower and each
other Obligated Party, and all such Constituent Documents being accompanied by certificates that such copies are complete and
correct, given by an authorized representative acceptable to Administrative Agent;

 

(g)       Governmental
Certificates. Certificates of the appropriate government officials of the state of incorporation or organization of Borrower
and each other Obligated Party as to the existence and good standing of Borrower and each other Obligated Party. Any such certificate(s)
due from the Texas Comptroller of Public Accounts may be satisfied with a printout of an electronic search of such office’s
records which shows that the applicable Person’s status with respect to its right to transact business in Texas is “active”.
Each certificate or other evidence required by this clause (g) shall be dated within 30 days prior to the date of
the initial Credit Extension;

 

    	CREDIT AGREEMENT - Page 56	 

     

    

 

(h)       Notes.
The Notes executed by Borrower in favor of each Lender requesting Notes;

 

(i)       Security
Documents. The Security Documents executed by Borrower and the other Obligated Parties;

 

(j)       Financing
Statements. UCC financing statements reflecting Borrower and the other Obligated Parties, as debtors, and Administrative Agent,
as secured party, which are required to grant a Lien which secures the Obligations and covering such Collateral as Administrative
Agent may request;

 

(k)       Stock
Certificates and Stock Powers. With respect to each Subsidiary or Excluded Subsidiary that is a corporation, all certificates
evidencing the Equity Interests of such Subsidiary or Excluded Subsidiary, as applicable, accompanied by undated and duly executed
stock powers or instruments of transfer or assignment in blank, all in form and substance reasonably satisfactory to Administrative
Agent;

 

(l)       Guaranty.
A Guaranty executed by each Guarantor;

 

(m)       Insurance
Matters. Copies of insurance certificates describing all insurance policies required by Section 7.5, together
with loss payable and lender endorsements in favor of Administrative Agent with respect to all insurance policies covering Collateral;

 

(n)       
Acquisition. (i) A true and correct copy of each Acquisition Document, (ii) evidence that all conditions precedent to the
closing of the transactions described in the Acquisition Agreement, except the funding of the initial Credit Extension to enable
Borrower to fund in part its obligations under the Acquisition Agreement, shall have been completed in a manner satisfactory to
Administrative Agent for a total purchase price not to exceed $9,000,000, and (iii) evidence that any indebtedness owed by Sellers
which is secured by a Lien on any property described in the Acquisition Agreement has been or concurrently with the Closing Date
is being paid in full and such Liens have been or concurrently with the Closing Date are being released pursuant to lien releases
satisfactory to Administrative Agent;

 

(o)       Lien
Searches. The results of UCC, tax Lien and judgment Lien searches showing all financing statements and other documents or
instruments on file against Borrower and each other Obligated Party in the appropriate filing offices, such search to be as of
a date no more than 30 days prior to the date of the initial Credit Extension, and reflecting no Liens against any of the intended
Collateral other than Liens being released or assigned to Administrative Agent concurrently with the initial Credit Extension;

 

(p)       Opinions
of Counsel. A favorable opinion of Welborn Sullivan Meck & Tooley, P.C., legal counsel to Borrower and Guarantors, and
a favorable opinion of local counsel to Borrower and Guarantors in each jurisdiction where the Mortgaged Properties are located
on the Closing Date, in each case as to such matters as Administrative Agent may reasonably request;

 

(q)       Attorneys’
Fees and Expenses. Evidence that the costs and expenses (including reasonable attorneys’ fees) referred to in Section 12.1,
to the extent invoiced, shall have been paid in full by Borrower;

 

    	CREDIT AGREEMENT - Page 57	 

     

    

 

(r)       Title
Assurances. Title opinions and/or other title information and data acceptable to Administrative Agent covering Oil and Gas
Properties that in the aggregate represent not less than 85% (or such lesser percentage as acceptable to Administrative Agent
in its sole discretion) of the Recognized Value evaluated in the Initial Reserve Report, reflecting title to the Oil and Gas Properties
of Borrower and its Subsidiaries in such Mortgaged Properties which is acceptable to Administrative Agent;

 

(s)       Environmental
Reports. Such environmental reports, if any, regarding the Oil and Gas Properties of Borrower and its Subsidiaries as Administrative
Agent may reasonably request;

 

(t)       Initial
Reserve Report. A true and correct copy of the Initial Reserve Report;

 

(u)       Material
Agreements. True and correct copies of all material agreements described on Schedule 6.28;

 

(v)       Payoff
of Existing Indebtedness; Release of Liens. Evidence that all commitments under the Existing Credit Agreement have been or
concurrently with the Closing Date are being terminated, and all outstanding amounts thereunder paid in full and all Liens securing
obligations under the Existing Credit Agreement have been or concurrently with the Closing Date are being released pursuant to
lien releases satisfactory to Administrative Agent; and

 

(w)       Closing
Fees. Evidence that (i) the upfront fee of $127,500 payable to LegacyTexas Bank and (ii) any other fees due on or before the
Closing Date have, in each case, been paid.

 

For
purposes of determining compliance with the conditions set forth in this Section 5.1, each Lender that has signed
this Agreement shall be deemed to have consented to, approved or accepted or be satisfied with, each document or other matter
required thereunder to be consented to or approved by or be acceptable or satisfactory to a Lender unless Administrative Agent
shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.

 

Section
5.2All Extensions of Credit. The obligation of Lenders to make any Credit Extension hereunder (including the initial
Credit Extension) is subject to the following additional conditions precedent:

 

(a)       Request
for Credit Extension. Administrative Agent shall have received in accordance with this Agreement, as the case may be, a Borrowing
Request or Letter of Credit Application, as applicable, pursuant to Administrative Agent’s requirements and executed by
a Responsible Officer of Borrower;

 

(b)       No
Default. No Default shall have occurred and be continuing, or would result from or after giving effect to such Credit Extension;

 

(c)       No
Material Adverse Event. No Material Adverse Event shall have occurred and no circumstance shall exist that could reasonably
be expected to result in a Material Adverse Event;

 

    	CREDIT AGREEMENT - Page 58	 

     

    

 

(d)       Representations
and Warranties. All of the representations and warranties contained in Article 6 and in the other Loan Documents
shall be true and correct in all material respects on and as of the date of such Borrowing with the same force and effect as if
such representations and warranties had been made on and as of such date, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they shall be true and correct in all material respects as of such earlier
date, and except that for purposes of this Section 5.2, the representations and warranties contained in Section 6.2
shall be deemed to refer to the most recent statements furnished pursuant to Sections 7.1(a) and 7.1(b), respectively;

 

(e)       Additional
Documentation. Administrative Agent shall have received such additional approvals, opinions, or documents as Administrative
Agent or its legal counsel may reasonably request; and

 

(f)       Revolving
Credit Availability. After giving effect to the Credit Extension so requested, the Aggregate Revolving Credit Exposure shall
not exceed the Aggregate Commitments in effect as of the date of such Credit Extension.

 

Each
Credit Extension hereunder shall be deemed to be a representation and warranty by Borrower that the conditions specified in this
Section 5.2 have been satisfied on and as of the date of the applicable Credit Extension.

 

ARTICLE
6

REPRESENTATIONS AND WARRANTIES

 

To
induce Administrative Agent and Lenders to enter into this Agreement, and to make Credit Extensions hereunder, Borrower represents
and warrants to Administrative Agent and Lenders that:

 

Section
6.1Entity Existence. Each of Borrower and its Subsidiaries (a) is duly incorporated or organized, as the case
may be, validly existing, and in good standing under the Laws of the jurisdiction of its incorporation or organization; (b) has
all requisite power and authority to own its assets and carry on its business as now being or as proposed to be conducted; and
(c) is qualified to do business in all jurisdictions in which the nature of its business makes such qualification necessary
and where failure to so qualify could reasonably be expected to result in a Material Adverse Event. Each of Borrower and the other
Obligated Parties has the power and authority to execute, deliver, and perform its obligations under this Agreement, the other
Loan Documents to which it is or may become a party and the Intercreditor Agreement to the extent party thereto.

 

Section
6.2Financial Statements; Etc. Borrower has delivered to Administrative Agent audited financial statements of Borrower
and its Subsidiaries as at and for the fiscal year ended December 31, 2015 and unaudited financial statements of Borrower and
its Subsidiaries as at and for the 6-month period ended June 30, 2016. Such financial statements are accurate and complete in
all material respects, have been prepared in accordance with GAAP, and fairly and accurately present in all material respects,
on a consolidated basis, the financial condition of Borrower and its Subsidiaries as of the respective dates indicated therein
and the results of operations for the respective periods indicated therein. Neither Borrower nor any of its Subsidiaries has any
material contingent liabilities, liabilities for taxes, unusual forward or long-term commitments, unrealized or anticipated losses
from any unfavorable commitments except as referred to or reflected in such financial statements. No Material Adverse Event has
occurred since the effective date of the financial statements referred to in this Section 6.2. All projections delivered
by Borrower to Administrative Agent and Lenders have been prepared in good faith, with care and diligence and using assumptions
that are reasonable under the circumstances at the time such projections were prepared and delivered to Administrative Agent and
Lenders and all cost, volume and pricing assumptions are disclosed in the projections. Other than the Debt listed on Schedule 8.1
and Debt otherwise permitted by Section 8.1, Borrower and each Subsidiary have no Debt.

 

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Section
6.3Action; No Breach. The execution, delivery, and performance by each of Borrower and each other Obligated Party of
this Agreement, the other Loan Documents to which such Person is or may become a party and the Intercreditor Agreement to the
extent party thereto and compliance with the terms and provisions hereof and thereof have been duly authorized by all requisite
action on the part of such Person and do not and will not (a) violate or conflict with, or result in a breach of, or require
any consent under (i) the Constituent Documents of such Person, (ii) any applicable Law, rule, or regulation or any
order, writ, injunction, or decree of any Governmental Authority or arbitrator, or (iii) any agreement or instrument to which
such Person is a party or by which it or any of its Properties is bound or subject which could result in a Material Adverse Event,
or (b) constitute a default under any such agreement or instrument which could result in a Material Adverse Event, or result
in the creation or imposition of any Lien upon any of the revenues or assets of such Person.

 

Section
6.4Operation of Business. Each of Borrower and its Subsidiaries possesses all licenses, permits, consents, authorizations,
franchises, patents, copyrights, trademarks, and trade names, or rights thereto, necessary to conduct its respective businesses
substantially as now conducted and as presently proposed to be conducted, and neither Borrower nor any of its Subsidiaries is
in violation of any valid rights of others with respect to any of the foregoing which could reasonably be expected to result in
a Material Adverse Event.

 

Section
6.5Litigation and Judgments. Except as specifically disclosed in Schedule 6.5 as of the date hereof, there
is no action, suit, investigation, or proceeding before or by any Governmental Authority or arbitrator pending, or to the knowledge
of Borrower, threatened against or affecting Borrower, any of its Subsidiaries, or any other Obligated Party that could, if adversely
determined, result in a Material Adverse Event. There are no outstanding judgments against Borrower, any of its Subsidiaries,
or any other Obligated Party that could result in an Event of Default.

 

Section
6.6Rights in Properties; Liens.

 

(a)       Each
of Borrower and its Subsidiaries has good and indefeasible title to or valid leasehold interests in its respective Properties,
including the Properties reflected in the financial statements described in Section 6.2 but excluding the Oil and
Gas Properties owned by Borrower and its Subsidiaries, and none of such Properties is subject to any Lien, except Permitted Liens.

 

(b)       Schedule
6.6(b) sets forth a complete and accurate list of all Oil and Gas Properties owned by Borrower and each of its Subsidiaries
on the Closing Date and as of the date of each update thereof required hereunder, showing as of the date thereof the lessor, lessee,
lease date, recording information and legal description for each oil, gas and/or mineral lease in which Borrower or any of its
Subsidiaries has an interest, which leases shall be grouped by the applicable well or unit. Each of Borrower and its Subsidiaries
has good and defensible title in and to such Oil and Gas Properties. Such Oil and Gas Properties are free and clear of all Liens,
other than Liens created or permitted by the Loan Documents, Liens set forth on Schedule 8.2, other permitted exceptions
as reasonably approved by Administrative Agent and Liens otherwise permitted by Section 8.2. Except in the ordinary course
of business and consistent with historical practice, no Person other than such Person has any ownership interests, whether legal
or beneficial, in such Person’s purported interests in such Oil and Gas Properties.

 

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(c)       The
Mortgaged Properties are described in and covered by the Reserve Reports which have previously been delivered to and relied upon
by Administrative Agent and the Lenders in connection with this Agreement. Borrower has provided Administrative Agent with title
information and title data acceptable to Administrative Agent reflecting title to the Oil and Gas Properties of Borrower and its
Subsidiaries in those Oil and Gas Properties that in the aggregate represent not less than 85% (or such lesser percentage as acceptable
to Administrative Agent in its sole discretion) of the Recognized Value of Oil and Gas Properties evaluated in the most recent
Reserve Report. Borrower and each of its Subsidiaries owns (or, contemporaneously with the closing of any Acquisitions being financed
through and closed substantially contemporaneously with the initial Credit Extension, will own) at least the net interest and
production attributable to the wells and units evaluated in each Reserve Report delivered to Administrative Agent, except such
as may result, after the delivery of such Reserve Report, from customary provisions of operating agreements requiring or allowing
for the acquisition of the interests of any non-consenting parties so long as Borrower promptly notifies Administrative Agent
thereof. The ownership of such Properties shall not in the aggregate obligate Borrower or any of its Subsidiaries to bear costs
and expenses relating to the maintenance, development and operations of such Properties in an amount in excess of the working
interests of such Properties as shown in each such Reserve Report, except such as may result, after the delivery of such Reserve
Report, from customary provisions of operating agreements requiring or allowing the parties thereto to pay the share of costs
of a non-consenting party so long as Borrower promptly notifies Administrative Agent of such changes. Neither Borrower nor any
of its Subsidiaries has conveyed or transferred to any other Person a beneficial interest in the Oil and Gas Properties owned
by it of record, whether pursuant to unrecorded assignments or transfers or accounting mechanisms, except to the extent disclosed
or taken into account in the most recent Reserve Report. Borrower and each of its Subsidiaries has paid all royalties payable
under the oil and gas leases concerning which it is an operator, except to those contested in accordance with the terms of the
applicable joint operating agreement, held in suspense or otherwise contested in good faith and by appropriate proceedings and
reserves for the payment of which are being maintained in accordance with GAAP.

 

Section
6.7Enforceability. This Agreement constitutes, and the other Loan Documents to which Borrower or any other Obligated
Party is a party and the Intercreditor Agreement to the extent Borrower or any other Obligated Party is party thereto, when delivered,
shall constitute legal, valid, and binding obligations of such Person, enforceable against such Person in accordance with their
respective terms, except as limited by Debtor Relief Laws and by general principles of equity, whether applied by a court of law
or equity.

 

Section
6.8Approvals. Except for the applicable authorization, approval, or consent contemplated by and obtained for this Agreement,
the other Loan Documents or the Acquisition Agreement, no authorization, approval, or consent of, and no filing or registration
with, any Governmental Authority or third party is or will be necessary for the execution, delivery, or performance by Borrower
or any other Obligated Party of this Agreement, the other Loan Documents to which such Person is or may become a party or the
Intercreditor Agreement to the extent such Person is party thereto or the validity or enforceability thereof.

 

Section
6.9Taxes. Except to the extent that a failure to do so could not be reasonably expected to result in a Material Adverse
Event, each of Borrower and its Subsidiaries has filed all tax returns (federal, state, and local) required to be filed, including
all income, franchise, employment, Property, and sales tax returns, and has paid all of their respective liabilities for taxes,
assessments, governmental charges, and other levies that are due and payable, other than taxes the payment of which is being contested
in good faith and by appropriate proceedings and reserves for the payment of which are being maintained in accordance with GAAP.
Borrower knows of no pending investigation of Borrower or any of its Subsidiaries by any taxing authority or of any pending but
unassessed tax liability of Borrower or any of its Subsidiaries. Neither Borrower nor any Subsidiary thereof is party to any tax
sharing agreement.

 

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Section
6.10Use of Proceeds; Margin Securities. The proceeds of the Borrowings shall be used by Borrower for working capital
in the ordinary course of business, for the acquisition, drilling and development of the Oil and Gas Properties of Borrower and
its Subsidiaries, for the refinancing of the Existing Credit Agreement, and for other general company or corporate purposes, as
applicable. Neither Borrower nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulations T, U, or
X of the Board of Governors), and no part of the proceeds of any Loan will be used to purchase or carry any margin stock or to
extend credit to others for the purpose of purchasing or carrying margin stock.

 

Section
6.11ERISA. Each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination
letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the
knowledge of Borrower, nothing has occurred which would prevent, or cause the loss of, such qualification. No application for
a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect
to any Plan. There are no pending or, to the knowledge of Borrower, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan. There has been no Prohibited Transaction or violation of the fiduciary responsibility rules
with respect to any Plan. No ERISA Event has occurred or is reasonably expected to occur. No Plan has any Unfunded Pension Liability.
No Obligated Party or ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with
respect to any Plan (other than premiums due and not delinquent under Section 4007 of ERISA). No Obligated Party or ERISA
Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice
under Section 4219 of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer
Plan. No Obligated Party or ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or 4212(c)
of ERISA.

 

Section
6.12Disclosure. No statement, information, report, representation, or warranty made by Borrower or any other Obligated
Party in this Agreement, in any other Loan Document or the Intercreditor Agreement or furnished to Administrative Agent or any
Lender in connection with this Agreement or any of the transactions contemplated hereby contains any untrue statement of a material
fact or omits to state any material fact necessary to make the statements herein or therein not misleading. There is no fact known
to Borrower which is a Material Adverse Event, or which might in the future be reasonably expected to result in a Material Adverse
Event that has not been disclosed in writing to Administrative Agent and each Lender.

 

Section
6.13Subsidiaries. Borrower has no Subsidiaries other than those listed on Schedule 6.13 (and, if subsequent
to the Closing Date, such additional Subsidiaries as have been formed or acquired in compliance with Section 7.13),
and Schedule 6.13 sets forth the jurisdiction of incorporation or organization of each such Subsidiary and the percentage
of Borrower’s ownership interest in such Subsidiary. All of the outstanding Equity Interests in each Subsidiary described
on Schedule 6.13 have been validly issued, are fully paid, and are nonassessable. Other than (i) in connection
with its equity incentive plans or (ii) as disclosed in its financial statements, there are no outstanding subscriptions, options,
warrants, calls, rights or other agreements or commitments of any nature relating to any Equity Interests of Borrower or any Subsidiary.
All Excluded Subsidiaries are listed on Schedule 6.13(b), and sets forth the jurisdiction of incorporation or organization
of each such Excluded Subsidiary and the percentage of Borrower’s ownership interest in such Excluded Subsidiary.

 

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Section
6.14Agreements. Neither Borrower nor any of its Subsidiaries is a party to any indenture, loan, or credit agreement,
or to any lease or other agreement or instrument, or subject to any charter or corporate or other organizational restriction,
in each case which could reasonably be expected to result in a Material Adverse Event. Neither Borrower nor any of its Subsidiaries
is in default in any respect in the performance, observance, or fulfillment of any of the obligations, covenants, or conditions
contained in any agreement or instrument material to its business to which it is a party which could reasonably be expected to
result in a Material Adverse Event.

 

Section
6.15Compliance with Laws. Neither Borrower nor any of its Subsidiaries is in violation in any material respect of any
Law, rule, regulation, order, or decree of any Governmental Authority or arbitrator.

 

Section
6.16Inventory. All inventory (including Hydrocarbons) of Borrower and its Subsidiaries has been and will hereafter
be produced in material compliance with all applicable Laws, rules, regulations, and governmental standards, including, without
limitation, the minimum wage and overtime provisions of the Fair Labor Standards Act (29 U.S.C. §§ 201-219).

 

Section
6.17Regulated Entities. Neither Borrower nor any of its Subsidiaries is (a) an “investment company”
or a company “controlled” by an “investment company” within the meaning of the Investment Company Act
of 1940, (b) a “utility” under the Laws of the State of Texas or any other jurisdiction wherein such Person is required
to qualify to do business or (c) subject to regulation under any other federal or state statute, rule or regulation limiting
its ability to incur Debt, pledge its assets or perform its obligations under the Loan Documents or the Intercreditor Agreement.

 

Section
6.18Environmental Matters. Except (i) as could not reasonably be expected to result in a Material Adverse Event
or (ii) as set forth on Schedule 6.18:

 

(a)       Each
of Borrower and its Subsidiaries, and all of its respective Properties, assets, and operations are in compliance with all Environmental
Laws. Borrower is not aware of, nor has Borrower received notice of, any past, present, or future conditions, events, activities,
practices, or incidents which may interfere with or prevent the compliance or continued compliance of Borrower and its Subsidiaries
with all Environmental Laws;

 

(b)       Each
of Borrower and its Subsidiaries has obtained all permits, licenses, and authorizations that are required under applicable Environmental
Laws, and all such permits are in good standing and Borrower and its Subsidiaries are in compliance with all of the terms and
conditions of such permits;

 

(c)       No
Hazardous Materials exist on, about, or within or have been used, generated, stored, transported, disposed of on, or Released
from any of the Properties or assets of Borrower or any of its Subsidiaries. The use which Borrower and its Subsidiaries make
and intend to make of their respective Properties and assets will not result in the use, generation, storage, transportation,
accumulation, disposal, or Release of any Hazardous Material on, in, or from any of their Properties or assets;

 

(d)       Neither
Borrower nor any of its Subsidiaries nor any of their respective currently or previously owned or leased Properties or operations
is subject to any outstanding or threatened order from or agreement with any Governmental Authority or other Person or subject
to any judicial or docketed administrative proceeding with respect to (i) failure to comply with Environmental Laws, (ii) Remedial
Action, or (iii) any Environmental Liabilities arising from a Release or threatened Release;

 

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(e)       There
are no conditions or circumstances associated with the currently or previously owned or leased Properties or operations of Borrower
or any of its Subsidiaries that could reasonably be expected to give rise to any Environmental Liabilities;

 

(f)       Neither
Borrower nor any of its Subsidiaries is a treatment, storage, or disposal facility requiring a permit under the Resource Conservation
and Recovery Act, 42 U.S.C. § 6901 et seq., regulations thereunder or any comparable provision of state Law. Borrower
and its Subsidiaries are in compliance with all applicable financial responsibility requirements of all Environmental Laws;

 

(g)       Neither
Borrower nor any of its Subsidiaries has filed or failed to file any notice required under applicable Environmental Law reporting
a Release; and

 

(h)       No
Lien arising under any Environmental Law has attached to any Property or revenues of Borrower or any of its Subsidiaries.

 

Section
6.19Intellectual Property. All material Intellectual Property owned or used by Borrower and its Subsidiaries as of
the Closing Date is listed, together with application or registration numbers, where applicable, in Schedule 6.19.
Each Person identified on Schedule 6.19 owns, or is licensed to use, all Intellectual Property necessary to conduct
its business as currently conducted except for such Intellectual Property the failure of which to own or license could not result
in a Material Adverse Event. Each Person identified on Schedule 6.19 will maintain the patenting and registration
of all Intellectual Property with the United States Patent and Trademark Office, the United States Copyright Office, or other
appropriate Governmental Authority, and each Person identified on Schedule 6.19 will promptly, but in any event within
10 Business Days following its acquisition thereof, patent or register, as the case may be, all new Intellectual Property and
notify Administrative Agent in writing 5 Business Days prior to filing any such new patent or registration.

 

Section
6.20Anti-Corruption Laws and Sanctions. Borrower has implemented and maintains in effect policies and procedures designed
to ensure compliance by Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption
Laws and applicable Sanctions, and Borrower, its Subsidiaries and their respective officers and employees, and to the knowledge
of Borrower its directors and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects.
None of (a) Borrower or any Subsidiary or (b) to the knowledge of Borrower, any of their respective directors, officers, employees,
or agents, is a Sanctioned Person. No Credit Extension or use of proceeds of any Credit Extension will violate Anti-Corruption
Laws or applicable Sanctions.

 

Section
6.21Patriot Act. The Obligated Parties, each of their Subsidiaries, and each of their Affiliates are in compliance
with (a) the Trading with the Enemy Act, and each of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B Chapter V, as amended), and all other enabling legislation or executive order relating thereto,
(b) the Patriot Act, and (c) all other federal or state Laws relating to “know your customer” and anti-money
laundering rules and regulations. No part of the proceeds of any Loan will be used directly or indirectly for any payments to
any government official or employee, political party, official of a political party, candidate for political office, or anyone
else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977.

 

Section
6.22Insurance. The Properties of Borrower and its Subsidiaries are insured with financially sound and reputable insurance
companies not Affiliates of Borrower, in such amounts, with such deductibles and covering such risks as are customarily carried
in conformity with prudent industry practice by companies in the oil and gas industry owning similar Properties in localities
where Borrower or the applicable Subsidiary operates.

 

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Section
6.23Solvency. Each of Borrower and the other Obligated Parties is Solvent and has not entered into any transaction
with the intent to hinder, delay or defraud a creditor.

 

Section
6.24Security Documents. The provisions of the Security Documents are effective to create in favor of Administrative
Agent for the benefit of the Secured Parties a legal, valid and enforceable Lien (subject to Permitted Liens) on all right, title
and interest of the respective Obligated Parties party thereto in the Collateral. Except for filings completed in connection with
the Closing Date and as otherwise contemplated hereby and by the Security Documents, no filing or other action will be necessary
to perfect such Liens in Collateral.

 

Section
6.25Businesses. Borrower is presently engaged directly or through its Subsidiaries in the business of oil and gas acquisition,
exploration, development, and production.

 

Section
6.26Labor Matters. There are no labor controversies pending, or to the best knowledge of Borrower, threatened against
Borrower or any of its Subsidiaries which could reasonably be expected to result in a Material Adverse Event.

 

Section
6.27Gas Balancing Agreements and Advance Payment Contracts. As of the Closing Date, (a) there is no Material Gas
Imbalance, and (b) the aggregate amount of all Advance Payments received by Borrower and its Subsidiaries under Advance Payment
Contracts which have not been satisfied by delivery of production does not exceed $250,000.

 

Section
6.28Material Agreements. Schedule 6.28 sets forth a complete and correct list of all agreements in effect or
to be in effect on the Closing Date and on the date of each update thereof required hereunder, to the extent that a default, breach,
termination or other impairment thereof could reasonably be expected to cause a Material Adverse Event.

 

Section
6.29Hedging Agreements and Transactions. Schedule 6.29 sets forth a complete and correct list of all Hedging
Agreements and Hedging Transactions entered into by Borrower or any of its Subsidiaries in effect or to be in effect on the Closing
Date and on the date of each update thereof required hereunder, the material terms thereof (including the type, term, effective
date, termination date and notional amounts or volumes), the Hedge Termination Value thereof, and the counterparty thereto.

 

Section
6.30Flood Matters. No “Building” (as defined in the applicable Flood Insurance Regulation) or “Manufactured
(Mobile) Home” (as defined in the applicable Flood Insurance Regulation) is located on any Mortgaged Property within an
area having special flood hazards and in which flood insurance is available under the Flood Insurance Regulations, and no “Building”
or “Manufactured (Mobile) Home” is encumbered by the Mortgages.

 

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ARTICLE
7

AFFIRMATIVE COVENANTS

 

Borrower
covenants and agrees that, as long as the Obligations or any part thereof are outstanding (other than contingent indemnification
obligations) or any Letter of Credit shall remain outstanding (unless arrangements satisfactory to the L/C Issuer have been made)
or any Lender has any Commitment hereunder:

 

Section
7.1Reporting Requirements. Borrower will furnish to Administrative Agent (with copies for each Lender):

 

(a)       Borrower
Annual Financial Statements. As soon as available, and in any event within 90 days after the last day of each fiscal year
of Borrower, beginning with the fiscal year ending December 31, 2016, a copy of the annual audited report of Borrower and its
Subsidiaries for such fiscal year containing, on a consolidated basis, balance sheets and statements of income, retained earnings,
and cash flow as of the end of such fiscal year and for the 12-month period then ended, in each case setting forth in comparative
form the figures for the preceding fiscal year, all in reasonable detail and audited by and accompanied by a report of an independent
certified public accountants of recognized standing reasonably acceptable to Administrative Agent, to the effect that such report
has been prepared in accordance with GAAP and containing no material qualifications or limitations on scope;

 

(b)       Borrower
Quarterly Financial Statements. As soon as available, and in any event within 60 days after the last day of each fiscal quarter
of each fiscal year of Borrower, commencing with the fiscal quarter ending September 30, 2016, a copy of an unaudited financial
report of Borrower and its Subsidiaries as of the end of such fiscal quarter and for the portion of the fiscal year then ended,
containing, on a consolidated basis, balance sheets and statements of income, retained earnings, and cash flow, in each case setting
forth in comparative form the figures for the corresponding period of the preceding fiscal year, all in reasonable detail certified
by a Responsible Officer of Borrower to have been prepared in accordance with GAAP and to fairly and accurately present in all
material respects (subject to year-end audit adjustments) the financial condition and results of operations of Borrower and its
Subsidiaries, on a consolidated basis, as of the dates and for the periods indicated therein;

 

(c)       Compliance
Certificate. Concurrently with the delivery of each of the financial statements referred to in Sections 7.1(a)
and 7.1(b), a Compliance Certificate executed by a Responsible Officer of Borrower (i) stating that to the best of
the knowledge of such Responsible Officer executing the same, no Default has occurred and is continuing, or if a Default has occurred
and is continuing, a statement as to the nature thereof and the action which is proposed to be taken with respect thereto, (ii) showing
in reasonable detail the calculations demonstrating compliance with the covenants set forth in Article 9, (iii) containing
an update to Schedule 6.29 and (iv) containing such other certifications set forth therein. For any financial statements
delivered electronically by a Responsible Officer in satisfaction of the reporting requirements set forth in Sections 7.1(a)
or 7.1(b) that are not accompanied by the required Compliance Certificate, that Responsible Officer shall nevertheless
be deemed to have certified the factual matters described in this clause (c) with respect to such financial statements;
provided, however, such deemed certification shall not excuse or be construed as a waiver of Borrower’s obligation
to deliver the required Compliance Certificate;

 

(d)       Management
Letters. Promptly upon receipt thereof, a copy of any management letter or written report (except standard or customary correspondence)
submitted to Borrower or any of its Subsidiaries by independent certified public accountants with respect to the business, financial
condition, operations or Properties of Borrower or any of its Subsidiaries;

 

(e)       Notice
of Litigation. Promptly after the commencement thereof, notice of all actions, suits, and proceedings before any Governmental
Authority or arbitrator not previously disclosed in writing to the Administrative Agent affecting Borrower or any of its Subsidiaries
which, if determined adversely to Borrower or such Subsidiary, could be a Material Adverse Event;

 

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(f)       Notice
of Default. As soon as possible and in any event within 5 Business Days after the occurrence of any Default, a written notice
setting forth the details of such Default and the action that Borrower has taken and proposes to take with respect thereto;

 

(g)       ERISA
Reports. Promptly after the filing or receipt thereof, copies of all reports, including annual reports, and notices which
any Borrower or ERISA Affiliate files with or receives from the PBGC, the IRS, or the U.S. Department of Labor under ERISA; as
soon as possible and in any event within 5 Business Days after Borrower or any ERISA Affiliate knows or has reason to know that
any ERISA Event or Prohibited Transaction has occurred with respect to any Plan, a certificate of the chief financial officer
of Borrower setting forth the details as to such ERISA Event or Prohibited Transaction and the action that Borrower proposes to
take with respect thereto; annually, copies of the notice described in Section 101(f) of ERISA that Borrower or ERISA Affiliate
receives with respect to a Plan or Multiemployer Plan;

 

(h)       Reports
to Other Creditors. Promptly after the furnishing thereof, copies of any material statement or report furnished to any other
party pursuant to the terms of any indenture, loan, or credit or similar agreement and not otherwise required to be furnished
to Administrative Agent pursuant to any other clause of this Section 7.1;

 

(i)       Acquisitions
and Dispositions of Oil and Gas Properties. Concurrently with each Reserve Report delivered under Section 7.1(k) below,
a list and description showing the lessor, lessee, lease date, recording information and legal description for each oil, gas and/or
mineral lease (which leases shall be grouped by the applicable well or unit) and a sufficient description of any other Oil and
Gas Property in which Borrower or any of its Subsidiaries acquired an interest or Disposed of since the delivery to Administrative
Agent of the immediately previous Reserve Report;

 

(j)       Notice
of Material Adverse Event. As soon as possible and in any event within 5 Business Days after the occurrence thereof, written
notice of any event or circumstance that could reasonably be expected to result in a Material Adverse Event;

 

(k)       Reserve
Reports. (i) On or before February 1 of each year, a Reserve Report prepared by an Independent Engineer, an update to
Schedule 6.29, and a WI/NRI Schedule, and (ii) on or before August 1 of each year, a Reserve Report prepared by Borrower’s
own engineers and certified by a Responsible Officer of Borrower, an update to Schedule 6.29, and a WI/NRI Schedule;

 

(l)       Lease
Operating Statements. Together with each Reserve Report delivered under Section 7.1(k) above, a Lease Operating Statement;

 

(m)       Updated
Schedules. Within 30 days after each request from Administrative Agent, updates to Schedules 6.6(b), 6.28 and
6.29 of this Agreement and updates to the schedules to such other Loan Documents as may be requested by Administrative
Agent, upon which delivery Borrower shall be deemed to have made all applicable representations and warranties with respect thereto
contained in the applicable Loan Documents;

 

(n)       Material
Gas Imbalance; Advance Payments. Promptly upon the occurrence thereof, notice to Administrative Agent of any Material Gas
Imbalance or Advance Payments in violation of Section 8.18 hereof;

 

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(o)       Tax
Returns. Within 30 days after each filing thereof by each Obligated Party with any Governmental Authority, if requested by
Administrative Agent, complete copies of the federal and state income tax returns so filed;

 

(p)       Accounts
Receivable. Within 15 days following each request by Administrative Agent, a report setting forth all accounts receivable
and accounts payable of Borrower as of the date specified in such request, such report to show the age of such accounts and such
other information as Administrative Agent shall reasonably request;

 

(q)       Change
in Insurance. Within 10 Business Days after any material change in insurance coverage by Borrower or any Subsidiary from that
previously disclosed to Administrative Agent, a report describing such change, and, within 30 days after each request by Administrative
Agent, certificates of insurance from the insurance companies insuring Borrower and its Subsidiaries, describing such insurance
coverage;

 

(r)       Purchasers
of Production. Within 10 Business Days after receipt of each request from Administrative Agent, a report setting forth the
identities and addresses of all Persons remitting proceeds from the sale of Hydrocarbon production from or attributable to Collateral
to any Person who has executed a Mortgage;

 

(s)       Operating
Budget. As soon as available, but in any event within 90 days after the last day of each fiscal year of Borrower, an annual
Borrower-prepared operating budget for the fiscal year in which such budget is due, including at a minimum an income statement,
balance sheet, cash flow statement and capital expenditure plan of Borrower;

 

(t)       Production
Reports. Within 15 days after request by Administrative Agent, a Production Report; and

 

(u)       General
Information. Promptly, such other information concerning Borrower, any of its Subsidiaries, or any other Obligated Party as
Administrative Agent, or any Lender through Administrative Agent, may from time to time request.

 

No
reporting requirement in this Section 7.1 shall be construed as waiving or eliminating any covenants or restrictions set
forth elsewhere in this Agreement or in the other Loan Documents. All representations and warranties set forth in the Loan Documents
with respect to any financial information concerning Borrower or any Guarantor shall apply to all financial information delivered
to Administrative Agent by Borrower, such Guarantor, or any Person purporting to be a Responsible Officer of Borrower or such
Guarantor or other representative of Borrower or such Guarantor regardless of the method of such transmission to Administrative
Agent or whether or not signed by Borrower, such Guarantor, or such Responsible Officer or other representative, as applicable.

 

Section
7.2Maintenance of Existence; Conduct of Business. Borrower shall, and shall cause each of its Subsidiaries to, preserve
and maintain its existence and all of its leases, privileges, licenses, permits, franchises, qualifications, and rights that,
in its reasonable business judgment, are necessary or desirable in the ordinary conduct of its business, except to the extent
a failure to so preserve and maintain could not reasonably be expected to result in a Material Adverse Event. Borrower shall,
and shall cause each of its Subsidiaries to, conduct its business in an orderly manner in accordance with prudent industry practice
by companies in the oil and gas industry owning similar properties in localities where Borrower or the applicable Subsidiary operates.

 

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Section
7.3Maintenance and Operation of Properties.

 

(a)       Each
Obligated Party shall at all times maintain, develop and operate its Oil and Gas Properties in a good and workmanlike manner in
accordance with prudent industry practice by companies in the oil and gas industry owning similar properties in localities where
Borrower or the applicable Subsidiary operates and will observe and comply in all material respects with all of the terms and
provisions of all oil and gas leases relating to such Oil and Gas Properties so long as such oil and gas leases are capable of
producing Hydrocarbons in commercial quantities, to the extent that the failure to so observe and comply could reasonably be expected
to result in a Material Adverse Event.

 

(b)       Each
Obligated Party shall use commercially reasonable efforts to remain as the named operator for each oil or gas well in which it
now or hereafter owns an interest if (i) any such party is the operator thereof on the date hereof or becomes the operator
thereof subsequent hereto and (ii) such well is now or hereafter becomes Collateral.

 

(c)       Each
Obligated Party shall at all times maintain, preserve and keep all operating equipment used or useful with respect to its Oil
and Gas Properties in proper repair, working order and condition, and make all necessary or appropriate repairs, renewals, replacements,
additions and improvements thereto as would a reasonably prudent operator of similar properties in localities where Borrower or
the applicable Subsidiary operates.

 

(d)       Each
Obligated Party shall comply in all material respects with all Laws and agreements applicable to or relating to its Oil and Gas
Properties or the production and sale of Hydrocarbons therefrom and all applicable proration and conservation Laws of the jurisdictions
in which such Properties are located, to the extent that the failure to so comply with such Laws or agreements could reasonably
be expected to result in a Material Adverse Event.

 

(e)       With
respect to the Oil and Gas Properties referred to in this Section 7.3 that
are operated by operators other than an Obligated Party or any Affiliate of an Obligated Party, no Obligated Party shall be obligated
itself to perform any undertakings contemplated by the covenants and agreements contained in this Section 7.3
which are performable only by such operators and are beyond its control, but the Obligated Parties shall use commercially
reasonable efforts to cause such operators to perform such undertakings.

 

(f)       No
Obligated Party will amend, alter or change in any respect which could reasonably be expected to be materially adverse to its
interests or that of Lenders any agreements relating to the operations or business arrangements of such Obligated Party or the
compression, gathering, sale or transportation of oil and gas from the Oil and Gas Properties included in the most recent determination
of the Borrowing Base without the prior written consent of Administrative Agent, which consent shall not be unreasonably withheld.

 

Section
7.4Taxes and Claims. Borrower shall, and shall cause each of its Subsidiaries to, pay or discharge at or before maturity
or before becoming delinquent (a) all Taxes, levies, assessments, and governmental charges imposed on it or its income or
profits or any of its Property, and (b) all lawful claims for labor, material, and supplies, which, if unpaid, could become
a Lien upon any of its Property; provided, however, that neither Borrower nor any of its Subsidiaries shall be required
to pay or discharge any Tax, levy, assessment, or governmental charge which is being contested in good faith by appropriate proceedings
diligently pursued, and for which adequate reserves in accordance with GAAP have been established.

 

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Section
7.5Insurance.

 

(a)       Borrower
shall, and shall cause each of its Subsidiaries and shall use its commercially reasonable efforts to cause each of the other operators
of the Oil and Gas Properties of Borrower and its Subsidiaries to, maintain insurance with financially sound and reputable insurance
companies in such amounts and covering such risks as is customarily carried in conformity with prudent industry practice by companies
in the oil and gas industry owning similar Properties in the same general areas in which Borrower and its Subsidiaries operate,
provided that in any event Borrower will maintain and cause each of its Subsidiaries to maintain workmen’s compensation
insurance, property insurance, and comprehensive general liability insurance reasonably satisfactory to Administrative Agent.
Each insurance policy of Borrower or its Subsidiaries covering Collateral shall name Administrative Agent as loss payee and each
insurance policy covering liabilities shall name Administrative Agent as additional insured, and each such insurance policy shall
provide that such policy will not be cancelled or reduced without 30 days prior written notice to Administrative Agent.

 

(b)       Subject
to the Intercreditor Agreement and subject to clause (c) below, all proceeds of insurance shall be paid over to Administrative
Agent for application to the Obligations under the Loan Documents, unless Required Lenders otherwise agree in writing in their
sole discretion.

 

(c)       So
long as no Default or Borrowing Base Deficiency is continuing, Borrower or a Subsidiary may apply the net proceeds of a casualty
or condemnation (each a “Loss”) to the repair, restoration, or replacement of the assets suffering such Loss,
so long as (i) such repair, restoration, or replacement is completed within 180 days after the date of such Loss (or such
longer period of time agreed to in writing by Required Lenders), (ii) while such repair, restoration, or replacement is underway,
all of such net proceeds are on deposit with Administrative Agent in a separate deposit account over which Administrative Agent
has exclusive control, and (iii) such Loss did not cause an Event of Default. If (x) an Event of Default occurs pursuant
to which the Obligations under the Loan Documents are accelerated in accordance with Section 10.2 or (y) such repair,
restoration, or replacement is not completed within 180 days of the date of such Loss (or such longer period of time agreed to
in writing by Required Lenders), then in each case Administrative Agent may immediately and without notice to any Person apply
all of such net proceeds to such Obligations, regardless of any other prior agreement regarding the disposition of such net proceeds.

 

(d)       If
at any time the representations made in Section 6.30 are untrue and any Building or Manufactured (Mobile) Home (as defined
in applicable Flood Insurance Regulations) is included in the Collateral and is or has become located in an area designated as
a “flood hazard area” under applicable Flood Insurance Regulations, Borrower shall, and shall cause each of its Subsidiaries
to, (i) provide Administrative Agent with a description of such Building or Manufactured (Mobile) Home, including the address
and legal description thereof and such other information as may be requested by Administrative Agent to obtain a flood determination
or otherwise satisfy its obligations under applicable Flood Insurance Regulations, (ii) obtain flood insurance in such amounts
as required by applicable Flood Insurance Regulations and (iii) provide evidence in form and substance satisfactory to Administrative
Agent of such flood insurance to Administrative Agent.

 

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Section
7.6Inspection Rights. At any reasonable time and from time to time during normal business hours, Borrower shall, and
shall, upon at least 1 Business Day’s advance written request from Administrative Agent or any Lender, cause each of its
Subsidiaries to, permit representatives of Administrative Agent or any Lender (a) to examine, inspect, review, evaluate and
make physical verifications and appraisals of the Mortgaged Properties and other Collateral in any manner and through any medium
that Administrative Agent or such Lender considers advisable, (b) to examine, copy, and make extracts from its books and
records, (c) to visit and inspect its Properties, and (d) to discuss its business, operations, and financial condition
with its officers, employees, and independent certified public accountants, in each instance, at Borrower’s expense.

 

Section
7.7Keeping Books and Records. Borrower shall, and shall cause each of its Subsidiaries to, maintain proper books of
record and account in which full, true, and correct entries in conformity with GAAP shall be made of all dealings and transactions
in relation to its business and activities.

 

Section
7.8Compliance with Laws. Borrower shall, and shall cause each of its Subsidiaries to, (a) comply in all material respects
with all applicable Laws and decrees of any Governmental Authority or arbitrator, (b) maintain at all times all consents or approvals
required from the United States or any state of the United States (or other applicable Governmental Authorities) necessary to
grant to Administrative Agent a Lien on the Oil and Gas Properties of Borrower and its Subsidiaries, and (c) maintain
in effect and enforce policies and procedures designed to ensure compliance by Borrower, its Subsidiaries and their respective
directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions.

 

Section
7.9Compliance with Agreements. Borrower shall, and shall cause each of its Subsidiaries to, comply in all material
respects with all agreements, contracts, and instruments binding on it or affecting its Properties or business, except to the
extent a failure to so comply could not reasonably be expected to result in a Material Adverse Event.

 

Section
7.10Further Assurances. Borrower shall, and shall cause each of its Subsidiaries and each other Obligated Party to,
execute and deliver such further agreements and instruments and take such further action as may be reasonably requested by Administrative
Agent or any Lender to carry out the provisions and purposes of this Agreement, the other Loan Documents and the Intercreditor
Agreement and to create, preserve, and perfect the Liens of Administrative Agent in the Collateral.

 

Section
7.11ERISA. Borrower shall, and shall cause each of its Subsidiaries to, comply with all minimum funding requirements,
and all other material requirements, of ERISA, if applicable, so as not to give rise to any liability thereunder.

 

Section
7.12Depository Relationship. Within 30 days after the Closing Date (or such other longer period as acceptable to the
Administrative Agent in its sole discretion), Borrower shall, and shall cause each of its Subsidiaries to, use LegacyTexas Bank
as its principal depository bank, and Borrower shall, and shall cause each of its Subsidiaries to, maintain LegacyTexas Bank as
its principal depository bank, including for the maintenance of business, cash management, operating and administrative deposit
accounts.

 

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Section
7.13Additional Guarantors. Borrower shall notify Administrative Agent at the time that any Person becomes a Subsidiary,
and promptly thereafter (and in any event within 30 days) Borrower shall (a) execute and deliver, or cause to be executed and
delivered, to Administrative Agent all Security Documents, stock certificates, stock powers and other agreements and instruments
as may be reasonably requested by Administrative Agent to ensure that Administrative Agent has a perfected security interest in
all Equity Interests held by any Obligated Party in such Subsidiary, and (b) cause such Person to (i) become a Guarantor
by executing and delivering to Administrative Agent a Guaranty (or a joinder to any existing Guaranty), (ii) execute and
deliver all Security Documents requested by Administrative Agent pledging to Administrative Agent for the benefit of the Secured
Parties all of its Property (subject to (A) Permitted Liens and (B) such exceptions as are provided in the Security
Documents then in effect and (C) as Administrative Agent may permit), and subject, with respect to Oil and Gas Properties,
to the limitations set forth in clause (iii) below and take all actions required by Administrative Agent to grant to the
Administrative Agent for the benefit of Secured Parties a perfected first priority Lien on such property, including the filing
of UCC financing statements in such jurisdictions as may be requested by Administrative Agent, (iii) with respect to each Oil
and Gas Property owned by such Subsidiary, execute, acknowledge and deliver a Mortgage or Mortgages and evidence of the proper
recordation of each such Mortgage in the appropriate filing office, in each case, sufficient to cause the Recognized Value of
the Mortgaged Properties to be not less than the Required Reserve Value, (iv) deliver to Administrative Agent title opinions and/or
other title information and data acceptable to Administrative Agent such that Administrative Agent shall have received, together
with the title information previously delivered to Administrative Agent, acceptable title information regarding those Oil and
Gas Properties that in the aggregate represent not less than 85% (or such lesser percentage as acceptable to Administrative Agent
in its sole discretion) of the Recognized Value of Oil and Gas Properties evaluated in the most recent Reserve Report; and (v) deliver
to Administrative Agent such other documents and instruments as Administrative Agent may require, including appropriate favorable
opinions of counsel to such Person in form, content and scope reasonably satisfactory to Administrative Agent.

 

Section
7.14Title Assurances. Without limitation of any other requirements contained in this Agreement and the other Loan Documents,
Borrower shall, (a) upon request by Administrative Agent, deliver to Administrative Agent title opinions and/or other title
information and data acceptable to Administrative Agent regarding the Oil and Gas Properties of Borrower and its Subsidiaries
that in the aggregate represent not less than 85% (or such lesser percentage as acceptable to Administrative Agent in its sole
discretion) of the Recognized Value of Oil and Gas Properties evaluated in the most recent Reserve Report; and (b) promptly,
but in any event within 30 days after notice by Administrative Agent of any defect, material in the opinion of Administrative
Agent, in the title of the mortgagor under any Mortgage to any Oil and Gas Property covered thereby, clear such title defect,
and in the event any such title defects are not cured in a timely manner, pay all related costs and fees incurred by Administrative
Agent and Lenders in attempting to do so. A failure of Borrower to clear any such title defect shall not be an Event of Default,
but instead Administrative Agent and the Required Lenders may elect to redetermine the Borrowing Base, and if such election is
made, Borrower may not make any special determinations of the Borrowing Base under Section 2.9(c)(i) until after the
next scheduled redetermination.

 

Section
7.15Commodity Hedging Transactions.

 

(a)       Borrower
shall, within 30 days following the Closing Date, enter into Acceptable Commodity Hedging Transactions for quantities of gaseous
and liquid Hydrocarbons equal to (i) for the period through December 31, 2018, at least 75%, and (ii) for the 2019 calendar year,
at least 60%, in each case, of the monthly Projected Production from the proved, developed producing Oil and Gas Properties of
Borrower and its Subsidiaries used in determining the Borrowing Base using the most recently delivered Reserve Report (or, with
Administrative Agent’s written approval, Acceptable Commodity Hedging Transactions having substantially equal value).

 

(b)       Borrower
and its Subsidiaries shall maintain a commodity price risk management policy, which policy shall be reasonably acceptable to Administrative
Agent.

 

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Section
7.16 Concerning Operator’s Liens. Upon request of Administrative Agent, Borrower shall cause each Affiliated
operator of its Oil and Gas Properties to fully subordinate to the Liens securing the Obligations any and all Liens granted to
or held by such operator under any present or future joint operating agreement covering any of the Oil and Gas Properties of Borrower
or any of its Subsidiaries, in a manner satisfactory to Administrative Agent and pursuant to documentation in form and substance
satisfactory to Administrative Agent.

 

Section
7.17Post-Closing Obligation.

 

(a)       On
or before the date Borrower enters into Acceptable Commodity Hedging Transactions in accordance with Section 7.15, Administrative
Agent shall have received the Intercreditor Agreement, duly executed by the parties thereto.

 

(b)       Within
30 days following the Closing Date, Brushy Gap shall (i) transfer the entirety of its ownership interests in its Oil and Gas Properties
and its Equity Interests in the Jaguar Triangle Partnership to Nytis, and (ii) promptly dissolve its corporate existence.

 

(c)       Within
30 days after the Closing Date (or such other longer period as acceptable to the Administrative Agent in its sole discretion),
Borrower shall, and shall cause each of its Subsidiaries to, (i) use LegacyTexas Bank as its principal depository bank pursuant
to Section 7.12 hereof, and (ii) transfer funds from each of the deposit accounts set forth on Schedule 5 of the
Security Agreement so that, collectively, the balance in all such accounts does not exceed $100,000 at any time.

 

ARTICLE
8

NEGATIVE COVENANTS

 

Borrower
covenants and agrees that, as long as the Obligations or any part thereof are outstanding (other than contingent indemnification
obligations) or any Letter of Credit outstanding (unless arrangements satisfactory to the L/C Issuer have been made) or any Lender
has any Commitment hereunder:

 

Section
8.1Debt. Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, incur, create,
assume, or permit to exist any Debt, except:

 

(a)       the
Obligations under the Loan Documents and Obligations existing or arising under Bank Product Agreements other than Hedging Agreements
and Hedging Transactions;

 

(b)       existing
Debt described on Schedule 8.1 and Permitted Refinancings thereof;

 

(c)       Subordinated
Debt;

 

(d)       purchase
money Debt and Capitalized Lease Obligations not to exceed $250,000 in the aggregate at any time outstanding and Permitted Refinancings
thereof;

 

(e)       Hedge
Obligations existing or arising under Hedging Agreements and Hedging Transactions permitted by Section 8.17;

 

(f)       Debt
associated with bonds or other surety obligations required by Governmental Authorities in connection with the operation of the
businesses of Borrower and its Subsidiaries;

 

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(g)       Debt
arising in the ordinary course of business with respect to customary indemnification and reimbursement obligations under asset
purchase and sale agreements, division and transfer orders, joint operating agreements (including funds held in suspense), pooling,
unitization or communitization agreements, gathering agreements, processing agreements, Farmout agreements and other agreements
customary in the industry pertaining to the exploration for, development, disposition or operation of, or the production or sale
of Hydrocarbons produced from, Oil and Gas Properties;

 

(h)       Endorsements
for collection or deposit in the ordinary course of business;

 

(i)       Debt
related to the financing of insurance policy premiums not to exceed $150,000 in the aggregate at any time outstanding;

 

(j)       Debt
related to the Liberty Energy Advances; and

 

(k)       other
Debt not to exceed $250,000 in the aggregate at any time outstanding.

 

Section
8.2Limitation on Liens. Borrower shall not, and shall not permit any of its Subsidiaries to, incur, create, assume,
or permit to exist any Lien upon any of its Property, assets, or revenues, whether now owned or hereafter acquired, except:

 

(a)       existing
Liens disclosed on Schedule 8.2 and Permitted Refinancings thereof;

 

(b)       Liens
in favor of Administrative Agent for the benefit of the Secured Parties, so long as, with respect to Liens for the benefit of
Approved Commodity Swap Counterparties other than Bank Product Providers, such Liens are permitted by and subject to the Intercreditor
Agreement;

 

(c)       encumbrances
consisting of minor easements, zoning restrictions, or other restrictions on the use of real property that are customary in the
oil and gas industry and do not (individually or in the aggregate) materially affect the value of the assets encumbered thereby
or materially impair the ability of Borrower or its Subsidiaries to use or operate such assets in their respective businesses,
and none of which is violated in any material respect by existing or proposed structures or land use or operation;

 

(d)       Immaterial
Title Deficiencies;

 

(e)       Liens
for Taxes, assessments, or other governmental charges which are not delinquent or which are being contested in good faith and
for which adequate reserves in accordance with GAAP have been established;

 

(f)       Any
interest or title of, or Liens created by, a lessor under any leases or subleases or occupancy agreement, other than oil and gas
leases or other such instruments pertaining to Oil and Gas Properties, entered into in each case by Borrower or any Subsidiary,
as tenant, in the ordinary course of business;

 

(g)       Liens
of mechanics, materialmen, warehousemen, carriers, or other similar statutory Liens securing obligations that are not yet due
or are being contested in good faith and for which adequate reserves in accordance with GAAP have been established and are incurred
in the ordinary course of business;

 

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(h)       Liens
resulting from good faith deposits to secure payments of workmen’s compensation or other social security programs (other
than Liens imposed by ERISA) or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, contracts
(other than for payment of Debt), or leases made in the ordinary course of business;

 

(i)       purchase
money Liens on specific Property to secure Debt used to acquire such Property and Liens securing Capitalized Lease Obligations
with respect to specific leased Property, in each case to the extent permitted in Section 8.1(d);

 

(j)       so
long as no default has occurred by any Obligated Party in the payment or performance of such agreements, contracts, agreements,
lease provisions, defects and irregularities which (i) were in effect when such Property, assets or revenues were acquired,
(ii) were not created in contemplation of such acquisition, (iii) were not such as to materially interfere with the operation,
value or use of the Properties covered by such Lien, (iv) are ordinary and customary to the oil, gas and other mineral exploration,
development, processing or extraction business, (v) do not otherwise cause any other express representation or warranty of
any Obligated Party in any of the Loan Documents to be untrue in any material respect, and (vi) do not operate to reduce
any Obligated Party’s net revenue interest in production for the affected Oil and Gas Properties (if any) below such interests
reflected in the most recent Reserve Report, or increase the working interest for the affected Oil and Gas Properties (if any)
as reflected or warranted in the most recent Reserve Report without a corresponding increase in the corresponding net revenue
interest;

 

(k)       contractual
Liens for the benefit of operators of the Oil and Gas Properties of Borrower and its Subsidiaries, but only to the extent that
such operators are not Obligated Parties or Affiliates of Obligated Parties, and are not asserting a claim or right to exercise
their rights under such contractual Liens, except for such claims and rights of operators which Borrower or the applicable Subsidiary
is contesting in good faith and for which adequate reserves are maintained in accordance with GAAP;

 

(l)       to
the extent applicable, the statutory Lien to secure payment of proceeds of production established by § 9.343 of the UCC and
similar Laws of other jurisdictions;

 

(m)       royalties,
overriding royalties, reversionary interests, production payments, net profits interests, calls on production, preferential purchase
rights and similar lease burdens which (i) are customarily granted in the ordinary course of business in the oil and gas industry,
(ii) are deducted in the calculation of discounted present value in the most recent Reserve Reports delivered to Administrative
Agent hereunder, (iii) with respect to each Oil and Gas Property, do not operate to reduce any Obligated Party's net revenue interest
in production for such Oil and Gas Property (if any) below such interests reflected in the most recent Reserve Report or increase
the working interest for such Oil and Gas Property (if any) as reflected or warranted in the most recent Reserve Report without
a corresponding increase in the corresponding net revenue interest, and (iv) do not materially impair the use or value of such
Oil and Gas Property subject to such Lien;

 

(n)       contractual
Liens under sale contracts, farm-in agreements, Farmout agreements, area of mutual interest, joint operating agreements, or other
arrangements for the exploration, development, production, transportation, gathering, processing or sale of Hydrocarbons, and
other agreements which are usual and customary in the oil and gas business which (i) would not (when considered cumulatively with
the matters discussed in Section 8.2(m)) materially impair the use or value of such Oil and Gas Property subject to such
Lien, (ii) are ordinary and customary to the oil, gas and other mineral exploration, development, processing or extraction business,
(iii) do not otherwise cause any other express representation or warranty of any Obligated Party in any of the Loan Documents
to be untrue in any material respect, and (iv) do not operate to reduce any Obligated Party's net revenue interest in production
for the affected Oil and Gas Properties (if any) below such interests reflected in the most recent Reserve Report, or increase
the working interest for the affected Oil and Gas Properties (if any) as reflected or warranted in the most recent Reserve Report
without a corresponding increase in the corresponding net revenue interest;

 

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(o)       Gas
Balancing Agreements; provided that the amount of all gas imbalances and the amount of all production which has been paid
for but not delivered shall have been disclosed or otherwise taken into account in the Reserve Reports delivered to Administrative
Agent hereunder; and

 

(p)       Liens
to secure plugging and abandonment obligations;

 

(q)       Liens
granted by any Obligated Party on its rights under any insurance policy, but only to the extent that such Lien is granted to the
insurers under such insurance policies or any insurance premium finance company to secure payment of the premiums and other amounts
owed to the insurers or such premium finance company with respect to such insurance policy; and

 

(r)       Other
Liens securing Debt not to exceed $150,000 in the aggregate at any time outstanding;

 

provided,
however, that Liens described in clauses (a), (e), (g), (h), (j) and (o) above
shall continue to be permitted only for so long as (A) the appropriate Obligated Party shall cause any proceeding instituted contesting
such Lien to stay the sale or forfeiture of any portion of Property on account of such Lien and (B) a proper reserve, if applicable,
continues to be maintained in accordance with GAAP; and provided further, that no intention to subordinate the first
priority Liens granted in favor of Administrative Agent to secure the Obligations is hereby implied or expressed or is to be inferred
by the permitted existence of such Liens.

 

Section
8.3Mergers, Etc. Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, become
a party to a merger or consolidation, or purchase or otherwise acquire all or substantially all of the assets of any Person or
any Equity Interests or other evidence of beneficial ownership of any Person, or wind-up, dissolve, or liquidate, except that
(a) any Subsidiary may merge or consolidate with Borrower so long as Borrower is the surviving entity; (b) any Subsidiary may
merge or consolidate with another Subsidiary so long as the Subsidiary surviving the merger or consolidation (i) is a Guarantor,
or (ii) within 10 Business Days of such merger or consolidation, becomes a Guarantor pursuant to Section 7.13; and (c) as
otherwise permitted under Section 8.5.

 

Section
8.4Restricted Payments. Borrower shall not, directly or indirectly, declare or pay any dividends or make any other
payment or distribution (in cash, Property, or obligations) on account of its Equity Interests, or redeem, purchase, retire, call,
or otherwise acquire any of its Equity Interests, or permit any of its Subsidiaries to purchase or otherwise acquire any Equity
Interest of Borrower or another Subsidiary of Borrower, or set apart any money for a sinking or other analogous fund for any dividend
or other distribution on its Equity Interests or for any redemption, purchase, retirement, or other acquisition of any of its
Equity Interests, or incur any obligation (contingent or otherwise) to do any of the foregoing, except that (a) Subsidiaries shall
be permitted to make payments and distributions to Borrower or any Guarantor, and (b) annually, but only so long as Nytis is treated
as a pass-through entity for federal income tax purposes, Nytis may make Permitted Tax Distributions, provided that no
Default or Borrowing Base Deficiency exists or will exist after giving effect to such distribution.

 

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Section
8.5Loans and Investments. Borrower shall not make, and shall not permit any of its Subsidiaries, directly or indirectly,
to make, hold or maintain, any advance, loan, extension of credit, or capital contribution to or investment in, or purchase any
stock, bonds, notes, debentures, or other securities of, any Person, except:

 

(a)       existing
investments described on Schedule 8.5;

 

(b)       readily
marketable direct obligations of the United States of America or any agency thereof with maturities of one year or less from
the date of acquisition;

 

(c)       fully
insured certificates of deposit with maturities of one year or less from the date of acquisition issued by either (i) any
commercial bank operating in the United States of America having capital and surplus in excess of $50,000,000.00 or (ii) any
Lender;

 

(d)       commercial
paper of a domestic issuer if at the time of purchase such paper is rated in one of the two highest rating categories of
Standard and Poor’s Corporation or Moody’s Investors Service;

 

(e)       investments
resulting in an Acquisition where:

 

(i)       the
business, division or assets acquired are for use, or the Person acquired is engaged in, one of the businesses described in Section 6.25;

 

(ii)       immediately
before and after giving effect to such Acquisition, no Default shall exist;

 

(iii)       the
business, division or Person acquired shall not have a negative EBITDA after giving effect to reasonable pro forma adjustments
which are approved by Administrative Agent;

 

(iv)       no
less than 10 Business Days prior to such Acquisition, Administrative Agent shall have received (A) drafts of each material
document, instrument and agreement to be executed in connection with such Acquisition, (B) an acquisition summary with respect
to the Person and/or business or division to be acquired, such summary to include a reasonably detailed description thereof (including
financial information) and operating results (including financial statements for the most recent 12-month period for which they
are available and as otherwise applicable), the terms and conditions, including economic terms, of the proposed Acquisition and
Borrower’s calculation of pro forma EBITDA relating thereto, (C) a certificate of Borrower executed on its behalf by
a Responsible Officer of Borrower, certifying that both before and after giving effect to such Acquisition, Borrower is in pro
forma compliance with all financial covenants set forth in Article 9; and (D) Administrative Agent shall have
approved Borrower’s computation of pro forma EBITDA;

 

(v)       to
the extent applicable, the provisions of Section 7.13 have been satisfied, thereby causing Administrative Agent to
have a perfected first priority Lien (subject to Permitted Liens) on all assets, including Equity Interests, that are acquired
in the Acquisition; and

 

(vi)       after
giving effect to such Acquisition, there shall be at least $250,000 in unrestricted cash of Borrower plus Revolving Credit Availability;

 

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(f)       investments
in Subsidiaries that are Guarantors;

 

(g)       investments
consisting of direct ownership interests in Oil and Gas Properties or wells, gas gathering systems or other field facilities,
seismic data and surveys, in each case related to such Oil and Gas Properties, or related to Farmouts or farm-ins, participation
agreements, joint operating agreements, joint venture or area of mutual interest agreements or other similar arrangements which
are usual and customary in the oil and gas industry located within the geographic boundaries of the United States of America;
provided that (i) no such investment includes an investment in any Equity Interest in a Person, (ii) any Debt incurred or assumed
or Lien granted or permitted to exist pursuant to such investments is otherwise permitted under Section 8.1 and Section
8.2, respectively, and (iii) such investments are taken into account in computing the working interests and net revenue interests
set forth in the most recent WI/NRI Schedule;

 

(h)       investments
consisting of Hedging Transactions permitted under Section 8.17;

 

(i)       advances
or extensions of credit in the form of accounts receivable incurred in the ordinary course of business and upon terms common in
the industry for such accounts receivable which are not more than 90 days past due;

 

(j)       advances
to employees for the payment of expenses in the ordinary course of business

 

(k)       Investments
received in satisfaction or partial satisfaction of Investments described in clause (i) above from financially troubled account
debtors to the extent reasonably necessary in order to prevent or limit loss, provided that all such Investments under this clause
(k) shall not exceed $100,000 in the aggregate outstanding at any one time; and

 

(l)       other
Investments not otherwise permitted by the foregoing clauses in an amount not to exceed $100,000 in the aggregate outstanding
at any one time.

 

Section
8.6Limitation on Issuance of Equity. Subsidiaries of the Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, issue or Dispose of any of its Equity Interests other than to Borrower or another Subsidiary and only
if such Equity Interests are pledged to the Administrative Agent consistent with the Security Documents.

 

Section
8.7Transactions With Affiliates. Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly,
enter into any transaction, including, without limitation, the purchase, sale, or exchange of Property, the rendering of any service
or the payment of any management, advisory or similar fees, with any Affiliate of Borrower or such Subsidiary, except in the ordinary
course of and pursuant to the reasonable requirements of Borrower’s or such Subsidiary’s business, pursuant to a transaction
which is otherwise expressly permitted under this Agreement, and upon fair and reasonable terms no less favorable to Borrower
or such Subsidiary than would be obtained in a comparable arm’s-length transaction with a Person not an Affiliate of Borrower
or such Subsidiary.

 

Section
8.8Disposition of Assets. Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly,
make any Disposition, except:

 

(a)       Dispositions
of inventory (including Hydrocarbons) in the ordinary course of business;

 

    	CREDIT AGREEMENT - Page 78	 

     

    

 

(b)       Dispositions,
for fair value, of worn-out and obsolete equipment not necessary or useful to the conduct of business;

 

(c)       Dispositions
consisting of any compulsory pooling or unitization ordered by a Governmental Authority with jurisdiction over Borrower’s
or any of its Subsidiaries’ Oil and Gas Properties;

 

(d)       subject
to Section 2.9(c)(ii) and provided that no Default has occurred and is continuing or would result therefrom, Dispositions
of Oil and Gas Properties; provided that the aggregate fair market value of all such Oil and Gas Properties Disposed of
between periodic redeterminations of the Borrowing Base under Section 2.9(b) shall not exceed $1,000,000 (when aggregated
with Dispositions permitted under Section 8.8(e) during the same period);

 

(e)       subject
to Section 2.9(c)(ii) and provided no Default has occurred and is continuing or would result therefrom, Dispositions of
proved developed Oil and Gas Properties; provided that (i) all of the consideration received in respect of any such
Disposition shall be cash, (ii) the consideration received shall be equal to or greater than the fair market value thereof
(as reasonably determined by a Responsible Officer of Borrower, and if requested by Administrative Agent, Borrower shall deliver
a certificate of a Responsible Officer of Borrower certifying to that effect), and (iii) the aggregate Borrowing Base value
of all such proved developed Oil and Gas Properties Disposed of between periodic redeterminations of the Borrowing Base under
Section 2.9(b) shall not exceed 5% of the Borrowing Base in effect as of the then most recent periodic redetermination
of the Borrowing Base under Section 2.9(b); and

 

(f)       other
Dispositions not to exceed $500,000 in the aggregate in any fiscal year.

 

Section
8.9Sale and Leaseback. Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly,
enter into any arrangement with any Person pursuant to which it leases from such Person real or personal Property that has been
or is to be sold or transferred, directly or indirectly, by it to such Person.

 

Section
8.10Prepayment of Debt. Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly,
make any optional or voluntary payment, prepayment, repurchase or redemption of any Debt, except (a) the Obligations under
the Loan Documents, (b) Debt secured by a Permitted Lien if the asset securing such Debt has been sold or otherwise disposed
of in a transaction permitted hereunder, (c) a Permitted Refinancing of Debt permitted under Sections 8.1(b), and 8.1(d),
(d) prepayments of other Debt so long as the amounts prepaid do not exceed $250,000 in the aggregate during any period between
determinations of the Borrowing Base, and (e) prepayment of intercompany Debt to Obligated Parties.

 

Section
8.11Nature of Business. Borrower shall not, and shall not permit any of its Subsidiaries to, engage in any business
other than their businesses as oil and gas exploration and production companies. Borrower shall not, and shall not permit any
of its Subsidiaries to, make any material change in its credit collection policies if such change would materially impair the
collectability of any Account, nor will it rescind, cancel or modify any Account except in the ordinary course of business.

 

Section
8.12Environmental Protection. Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly
(a) use (or permit any tenant to use) any of their respective Properties or assets for the handling, processing, storage,
transportation, or disposal of any Hazardous Material in material violation of Environmental Laws, (b) generate any Hazardous
Material in material violation of Environmental Laws, (c) conduct any activity that is likely to cause a Release or threatened
Release of any Hazardous Material, or (d) otherwise conduct any activity or use any of their respective Properties or assets
in any manner that is likely to violate in any material respect any Environmental Law or create any material Environmental Liabilities
for which Borrower or any of its Subsidiaries would be responsible.

 

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Section
8.13Accounting. Borrower shall not, and shall not permit any of its Subsidiaries to, change its fiscal year or make
any change (a) in accounting treatment or reporting practices, except as required by GAAP and disclosed to Administrative
Agent and Lenders, or (b) in tax reporting treatment, except as required by Law and disclosed to Administrative Agent and
Lenders.

 

Section
8.14Burdensome Agreements. Borrower shall not, and shall not permit any of its Subsidiaries or any other Obligated
Party to, enter into or permit to exist any arrangement or agreement, other than pursuant to this Agreement or any Loan Document,
which (a) directly or indirectly prohibits Borrower, any of its Subsidiaries, or any other Obligated Party from creating
or incurring a Lien on any of its Property, revenues, or assets, whether now owned or hereafter acquired, (b) directly or
indirectly prohibits any of its Subsidiaries, or any other Obligated Party to make any payments, directly or indirectly, to Borrower
by way of dividends, distributions, advances, repayments of loans, repayments of expenses, accruals, or otherwise or (c) in
any way would be contravened by such Person’s performance of its obligations hereunder or under the other Loan Documents;
provided, that the foregoing shall not prohibit any (i) provisions restricting subletting or assignment of any lease, (ii) provisions
in any assignment, lease, easement, permit, license, deed or other agreement or instrument restricting or prohibiting assignment
of such agreement or instrument or rights created, or property conveyed or assigned, thereunder, including, without limitation,
preferential purchase rights and consent requirements, and (iii) customary restrictions and conditions contained in any agreement
relating to the sale of any property permitted under this Agreement pending the consummation of such sale.

 

Section
8.15Subsidiaries. Borrower shall not, directly or indirectly, form or acquire any Subsidiary unless Borrower complies
with the requirements of Section 7.13.

 

Section
8.16Amendments of Constituent Documents. Borrower
shall not, and shall not permit any of its Subsidiaries to, amend or restate any of their respective Constituent Documents without
prior consent of the Administrative Agent, except as would not be reasonably expected to be materially adverse to the Lenders.

 

Section
8.17Hedging Agreements and Transactions.

 

(a)Borrower
shall not, and shall not permit any of its Subsidiaries to, enter into, or permit to exist, any Hedging Transaction unless (i) such
Hedging Transaction is an Acceptable Commodity Hedging Transaction or a Rate Management Transaction that is with a counterparty
reasonably satisfactory to Administrative Agent and that has terms and conditions reasonably satisfactory to Administrative Agent,
and (ii) the Hedging Agreement governing such Hedging Transaction does not contain any anti-assignment provisions restricting
such Person or, if such agreement contains anti-assignment provisions which cannot be removed, such provisions shall be modified
to read substantially as follows: “The interest and obligations arising from this agreement are non-transferable and non-assignable,
except that [insert Obligated Party’s name] may assign and grant a security
interest in its rights and interests hereunder to LegacyTexas Bank, as a lender or as contractual representative of itself and
other creditors, and its assigns (the “Lender”) as security for [insert
Obligated Party’s name]’s present and future obligations to such parties. Until [hedge
provider] is notified in writing by the Lender to pay to the Lender amounts due [insert
Obligated Party’s name] hereunder, [hedge provider] may continue
to make such payments to [insert Obligated Party’s name].”

 

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(b)No
Obligated Party shall cause or permit any Hedging Transaction now existing or hereafter entered into by such Person to be amended,
modified, terminated, negated through such Person’s entry into one or more new Hedging Transactions with the opposing effect,
or liquidated without the prior written consent of Administrative Agent. Any consent by Administrative Agent granted pursuant
to this Section might include a requirement (to be treated for the purposes of Section 2.9
as a Borrower requested determination) that a new Borrowing Base be determined.

 

(c)No
Obligated Party shall enter into any new Hedging Agreement, or cause or permit any Hedging Agreement now existing or hereafter
entered into by such Person to be amended, modified or terminated, without the prior written consent of Administrative Agent except
as specifically permitted herein or as permitted in any then-effective Intercreditor Agreement and except for entering into usual
and customary confirmations under such Hedging Agreements setting forth volume, pricing, duration and other such standard terms.

 

Section
8.18Gas Balancing Agreements and Advance Payment Contracts. Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, incur, become or remain liable for, or permit any of its Subsidiaries to incur, become or remain liable
for, at any time (a) any Material Gas Imbalance, or (b) Advance Payments under Advance Payment Contracts which are to
be satisfied by delivery of production in excess of $250,000 in the aggregate.

 

Section
8.19Certain Accounts Payable. For each well whose reserves or projected cash flow are from time to time included in
any Reserve Report, there shall be no accounts payable outstanding more than 90 days after the due date under or in connection
with an authorization for expenditure that are associated with such well, other than those that are being contested in good faith
by appropriate proceedings and for which adequate reserves in accordance with GAAP have been established.

 

Section
8.20Use of Proceeds. Borrower will not request any Credit Extension, and Borrower shall not use, and shall ensure that
its Subsidiaries and its or their respective directors, officers, employees and agents shall not use, the proceeds of any Credit
Extension, (a) directly or indirectly, to purchase or carry margin stock (within the meaning of Regulations T, U, or X of
the Board of Governors), (b) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving
of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (c) for the purpose of funding,
financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country,
or (d) in any manner that would result in the violation of any Sanctions applicable to any party hereto.

 

Section
8.21Joint Operating Agreements. Borrower shall not, and shall not permit any of its Subsidiaries to, amend, restate,
supplement or otherwise modify, or elect a new operator under, any joint operating agreement covering any of the Oil and Gas Properties
of Borrower or any of its Subsidiaries in a manner materially adverse to Borrower or such Subsidiary without the prior written
consent of Administrative Agent.

 

Section
8.22Excluded Subsidiaries. Borrower shall not permit any of its Excluded Subsidiaries (other than Crawford Company)
to directly or indirectly, incur, create, assume, or permit to exist (i) any Debt, or (ii) any Lien upon any of its Property,
assets, or revenues, whether now owned or hereafter acquired, except for those permitted by the Administrative Agent in its sole
discretion.

 

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ARTICLE
9

FINANCIAL COVENANTS

 

Borrower
covenants and agrees that, as long as the Obligations or any part thereof are outstanding or any Letter of Credit shall remain
outstanding or any Lender has any Commitment hereunder:

 

Section
9.1Leverage Ratio. Borrower shall not permit, as of the last day of any Test Period, commencing with the Test Period
ending March 31, 2017, the Leverage Ratio for Borrower and its Subsidiaries, on a consolidated basis, to be greater than 3.50
to 1.00.

 

Section
9.2Current Ratio. Borrower shall not permit, as of the last day of any fiscal quarter of Borrower, commencing with
the fiscal quarter ending March 31, 2017, the Current Ratio for Borrower and its Subsidiaries, on a consolidated basis, to be
less than 1.00 to 1.00.

 

ARTICLE
10

DEFAULT

 

Section
10.1Events of Default. Each of the following shall be deemed an “Event of Default”:

 

(a)       Borrower
shall fail to pay the Obligations under the Loan Documents or any part thereof shall not be paid when due or declared due and,
other than with respect to payments of principal, such failure shall continue unremedied for three (3) Business Days after
such payment became due;

 

(b)       Borrower
shall breach any provision of Sections 7.1, 7.2, 7.5, 7.6, 7.13, or 7.15 or Article 8
or Article 9 of this Agreement and in the case of a breach of Section 7.1(i), (k), or (l),
such breach shall continue unremedied for three (3) Business Days;

 

(c)       any
representation or warranty made or deemed made by Borrower or any other Obligated Party (or any of their respective officers)
in any Loan Document or the Intercreditor Agreement or in any certificate, report, notice, or financial statement furnished at
any time in connection with this Agreement shall be false, misleading, or erroneous in any material respect (without duplication
of any materiality qualifier contained therein) when made or deemed to have been made;

 

(d)       Borrower,
any of its Subsidiaries, or any other Obligated Party shall fail to perform, observe, or comply with any covenant, agreement,
or term contained in this Agreement or any other Loan Document (other than as covered by Sections 10.1(a) and 10.1(b))
or the Intercreditor Agreement, and such failure continues for more than 30 consecutive days following the earlier of (i) the
date of Borrower's receipt of written notice thereof or (ii) the date Borrower knew or should have known of such failure;

 

(e)       Borrower,
any of its Subsidiaries, or any other Obligated Party shall commence a voluntary proceeding seeking liquidation, reorganization,
or other relief with respect to itself or its debts under any bankruptcy, insolvency, or other similar Law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator, custodian, or other similar official of it or a substantial
part of its Property or shall consent to any such relief or to the appointment of or taking possession by any such official in
an involuntary case or other proceeding commenced against it or shall make a general assignment for the benefit of creditors or
shall generally fail to pay its debts as they become due or shall take any corporate action to authorize any of the foregoing;

 

    	CREDIT AGREEMENT - Page 82	 

     

    

 

(f)       an
involuntary proceeding shall be commenced against Borrower, any of its Subsidiaries, or any other Obligated Party seeking liquidation,
reorganization, or other relief with respect to it or its debts under any bankruptcy, insolvency, or other similar Law now or
hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian, or other similar official for it
or a substantial part of its Property, and such involuntary proceeding shall remain undismissed and unstayed for a period of 60
days;

 

(g)       Borrower,
any of its Subsidiaries, or any other Obligated Party shall fail to pay when due any principal of or interest on any Debt (other
than the Obligations under the Loan Documents and Hedging Agreements with Bank Product Providers) in the amount of $250,000 or
more beyond any applicable grace or cure period, or the maturity of any such Debt shall have been accelerated, or any such Debt
shall have been required to be prepaid, repurchased, defeased or redeemed prior to the stated maturity thereof or any cash collateral
in respect thereof to be demanded, or any event shall have occurred that permits (or, with the giving of notice or lapse of time
or both, would permit) any holder or holders of such Debt or any Person acting on behalf of such holder or holders to accelerate
the maturity thereof or require any such prepayment, repurchase, defeasance or redemption or any cash collateral in respect thereof
to be demanded;

 

(h)       there
shall occur an Early Termination Date (as defined in a Hedging Agreement) under any Hedging Agreement to which any Obligated Party
is a party, and the Hedge Termination Value, if any, owed by Borrower or another Obligated Party as a result thereof exceeds $250,000;

 

(i)       this
Agreement, any other Loan Document or the Intercreditor Agreement shall cease to be in full force and effect or shall be declared
null and void or the validity or enforceability thereof shall be contested or challenged by Borrower, any of its Subsidiaries,
any other Obligated Party or any of their respective equity holders, or Borrower or any other Obligated Party shall deny that
it has any further liability or obligation under any of the Loan Documents or the Intercreditor Agreement, or any Lien created
by the Loan Documents shall for any reason cease to be a valid, first priority perfected Lien (subject to Permitted Liens) upon
any of the Collateral purported to be covered thereby;

 

(j)       any
of the following events shall occur or exist with respect to Borrower or any ERISA Affiliate: (i) any ERISA Event occurs
with respect to a Plan or Multiemployer Plan, or (ii) any Prohibited Transaction involving any Plan; and in each case above,
such event or condition, together with all other events or conditions, if any, have subjected or could in the reasonable opinion
of Administrative Agent subject Borrower or any ERISA Affiliate to any tax, penalty, or other liability to a Plan, a Multiemployer
Plan, the PBGC, the IRS, the U. S. Department of Labor, or otherwise (or any combination thereof) which in the aggregate exceed
or could reasonably be expected to result in a Material Adverse Event;

 

(k)       a
Change of Control shall occur;

 

(l)       Borrower,
any of its Subsidiaries, or any other Obligated Party, or any of their Properties, revenues, or assets, shall become subject to
an order of forfeiture, seizure, or divestiture (whether under RICO or otherwise) and the same shall not have been discharged
within 30 days from the date of entry thereof;

 

    	CREDIT AGREEMENT - Page 83	 

     

    

 

(m)       Borrower,
any of its Subsidiaries, or any other Obligated Party shall fail to discharge within a period of 60 days after the commencement
thereof any attachment, sequestration, or similar proceeding or proceedings involving an aggregate amount in excess of $250,000
against any of its assets or Properties;

 

(n)       a
final judgment or judgments for the payment of money in excess of $250,000 in the aggregate shall be rendered by a court or courts
against Borrower, any of its Subsidiaries, or any other Obligated Party and the same shall not be discharged (or provision shall
not be made for such discharge), or a stay of execution thereof shall not be procured, within 60 days from the date of entry thereof
and Borrower, such Subsidiary, or such Obligated Party shall not, within such period of 60 days, or such longer period during
which execution of the same shall have been stayed, appeal therefrom and cause the execution thereof to be stayed during such
appeal;

 

(o)       the
subordination provisions related to any Subordinated Debt or any other agreement, document or instrument governing any Subordinated
Debt shall for any reason be revoked or invalidated, or otherwise cease to be in full force and effect, or any Person shall contest
in any manner the validity or enforceability thereof or deny that it has any further liability or obligation thereunder, or the
Obligations under the Loan Documents, for any reason shall not have the priority contemplated by this Agreement or any such subordination
provisions;

 

(p)       any
failure to cure a Borrowing Base Deficiency in accordance with Section 2.9(e) shall have occurred; or

 

(q)       any
Security Document shall cease to create valid perfected first priority Liens (subject to Permitted Liens) on the Collateral purported
to be covered thereby.

 

Section
10.2Remedies Upon Default. If any Event of Default shall occur and be continuing, then Administrative Agent may, with
the consent of Required Lenders, or shall, at the direction of Required Lenders, without notice do any or all of the following:
(a) terminate the Aggregate Commitments (except with respect to funding obligations for outstanding Letters of Credit), (b) terminate
the obligations of L/C Issuer to make L/C Credit Extensions, (c) require that Borrower Cash Collateralize the L/C Obligations
(in an amount equal to the Minimum Collateral Amount with respect thereto), or (d) declare the Obligations under the Loan
Documents or any part thereof to be immediately due and payable, and the same shall thereupon become immediately due and payable,
without notice, demand, presentment, notice of dishonor, notice of acceleration, notice of intent to accelerate, notice of intent
to demand, protest, or other formalities of any kind, all of which are hereby expressly waived by Borrower; provided, however,
that upon the occurrence of an Event of Default under Section 10.1(e) or (f), the Aggregate Commitments shall
automatically terminate (except for funding obligations with respect to outstanding Letters of Credit), the obligations of L/C
Issuer to make L/C Credit Extensions shall automatically terminate, the obligation of Borrower to Cash Collateralize the L/C Obligations
as aforesaid shall automatically become effective, and the Obligations under the Loan Documents shall become immediately due and
payable, in each case without notice, demand, presentment, notice of dishonor, notice of acceleration, notice of intent to accelerate,
notice of intent to demand, protest, or other formalities of any kind, all of which are hereby expressly waived by Borrower. In
addition to the foregoing, if any Event of Default shall occur and be continuing, Administrative Agent may, with the consent of
Required Lenders, or shall, at the direction of Required Lenders, exercise all rights and remedies available to it, Lenders and
L/C Issuer in law or in equity, under the Loan Documents, or otherwise.

 

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Section
10.3Application of Funds. After the exercise of remedies provided for in Section 10.2 (or after the Loans
have automatically become immediately due and payable), any amounts received on account of the Obligations shall be applied by
Administrative Agent in the following order, subject to the Intercreditor Agreement:

 

First,
to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges
and disbursements of counsel to Administrative Agent) payable to Administrative Agent in its capacity as such;

 

Second,
to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal, interest,
and Letter of Credit Fees) payable to Lenders and L/C Issuer (including fees, charges and disbursements of counsel to the respective
Lenders and L/C Issuer) arising under the Loan Documents, ratably among them in proportion to the respective amounts described
in this clause Second payable to them;

 

Third,
to payment of that portion of the Obligations constituting accrued and unpaid Letter of Credit Fees and interest on the Loans,
L/C Borrowings and other Obligations arising under the Loan Documents, ratably among Lenders and L/C Issuer in proportion to the
respective amounts described in this clause Third payable to them;

 

Fourth,
to payment of that portion of the Obligations constituting unpaid principal of the Loans and L/C Borrowings and constituting unpaid
Bank Product Obligations, ratably among Lenders and Bank Product Providers in proportion to the respective amounts described in
this clause Fourth held by them;

 

Fifth,
to Administrative Agent for the account of the L/C Issuer, to Cash Collateralize that portion of L/C Obligations comprised of
the aggregate undrawn amount of Letters of Credit to the extent not otherwise Cash Collateralized by Borrower pursuant to Sections
2.2 and 2.6;

 

Sixth,
to payment of that remaining portion of the Obligations, ratably among the Lenders and Bank Product Providers in proportion to
the respective amounts described in this clause Sixth held by them; and

 

Last,
the balance, if any, after all of the Obligations have been indefeasibly paid in full, to Borrower or as otherwise required by
Law.

 

Notwithstanding
the foregoing, Bank Product Obligations shall be excluded from the application described above if Administrative Agent has not
received written notice thereof, together with supporting documentation as Administrative Agent may request from the applicable
Bank Product Provider, provided that no such notice shall be required for any Bank Product Agreement for which Administrative
Agent or any Affiliate of Administrative Agent is the applicable Bank Product Provider. Each Bank Product Provider that is not
a party to this Agreement that has given notice contemplated by the preceding sentence shall, by such notice, be deemed to have
acknowledged and accepted the appointment of Administrative Agent pursuant to the terms of Article 11 hereof for itself
and its Affiliates as if a “Lender” party hereto.

 

Section
10.4Performance by Administrative Agent. If Borrower shall fail to perform any covenant or agreement contained in any
of the Loan Documents or the Intercreditor Agreement, then Administrative Agent may perform or attempt to perform such covenant
or agreement on behalf of Borrower. In such event, Borrower shall, at the request of Administrative Agent, promptly pay to Administrative
Agent any amount expended by Administrative Agent in connection with such performance or attempted performance, together with
interest thereon at the Default Interest Rate from and including the date of such expenditure to but excluding the date such expenditure
is paid in full. Notwithstanding the foregoing, it is expressly agreed that Administrative Agent shall not have any liability
or responsibility for the performance of any covenant, agreement, or other obligation of Borrower under this Agreement, any other
Loan Document or the Intercreditor Agreement.

 

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ARTICLE
11

AGENCY

 

Section
11.1Appointment and Authority.

 

(a)       Each
of the Lenders and L/C Issuer hereby irrevocably appoints LegacyTexas Bank to act on its behalf as Administrative Agent hereunder
and under the other Loan Documents and the Intercreditor Agreement and authorizes Administrative Agent to take such actions on
its behalf and to exercise such powers as are delegated to Administrative Agent by the terms hereof or thereof, together with
such actions and powers as are reasonably incidental thereto, and each of the Lenders and L/C Issuer hereby approves the terms
and conditions of the Intercreditor Agreement and authorizes Administrative Agent to enter into the Intercreditor Agreement and
amendments thereto from time to time. The provisions of this Article 11 are solely for the benefit of Administrative
Agent, Lenders, and L/C Issuer, and neither Borrower nor any other Obligated Party shall have rights as a third-party beneficiary
of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Loan
Documents or in the Intercreditor Agreement (or any other similar term) with reference to Administrative Agent is not intended
to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law. Instead
such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between
contracting parties.

 

(b)       Administrative
Agent shall also act as the “collateral agent” under the Loan Documents and the Intercreditor Agreement, and each
of the Lenders (including, for itself and its Affiliates, in their capacities as potential Bank Product Providers) and L/C Issuer
hereby irrevocably appoints and authorizes Administrative Agent to act as the agent of such Lender and L/C Issuer for purposes
of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Obligated Parties to secure any of the
Obligations, together with such powers and discretion as are reasonably incidental thereto. In this connection, Administrative
Agent, as “collateral agent” and any co-agents, sub-agents and attorneys-in-fact appointed by Administrative Agent
pursuant to Section 11.5 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof)
granted under the Security Documents, or for exercising any rights and remedies thereunder at the direction of Administrative
Agent, shall be entitled to the benefits of all provisions of this Article 11 and Article 12 (including Section 12.1(b)),
as though such co-agents, sub-agents and attorneys-in-fact were the “collateral agent” under the Loan Documents and
the Intercreditor Agreement as if set forth in full herein with respect thereto.

 

Section
11.2Rights as a Lender. The Person serving as Administrative Agent hereunder shall have the same rights and powers
in its capacity as a Lender as any other Lender and may exercise the same as though it were not Administrative Agent, and the
term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise
requires, include the Person serving as Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates
may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for,
and generally engage in any kind of business with, Borrower or any Subsidiary or other Affiliate thereof as if such Person were
not Administrative Agent hereunder and without any duty to account therefor to Lenders.

 

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Section
11.3Exculpatory Provisions.

 

(a)       Administrative
Agent shall not have any duties or obligations except those expressly set forth herein, in the other Loan Documents and in the
Intercreditor Agreement, and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing,
Administrative Agent:

 

(i)       shall
not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

 

(ii)       shall
not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers
expressly contemplated hereby or by the other Loan Documents or the Intercreditor Agreement that Administrative Agent is required
to exercise as directed in writing by Required Lenders (or such other number or percentage of Lenders as shall be expressly provided
for herein or in the other Loan Documents) or is required to exercise as directed in writing by any other party to the Intercreditor
Agreement, as applicable; provided that Administrative Agent shall not be required to take any action that, in its opinion
or upon the advice of its counsel, may expose Administrative Agent to liability or that is contrary to any Loan Document, the
Intercreditor Agreement or applicable Law, including for the avoidance of doubt any action that may be in violation of the automatic
stay under any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender
in violation of any Debtor Relief Law;

 

(iii)       shall
not, except as expressly set forth herein and in the other Loan Documents and the Intercreditor Agreement, have any duty to disclose,
and shall not be liable for the failure to disclose, any information relating to Borrower or any of its Affiliates that is communicated
to or obtained by the Person serving as Administrative Agent or any of its Affiliates in any capacity; and

 

(iv)       shall
be fully justified in failing or refusing to take any action hereunder or under any other Loan Document or the Intercreditor Agreement
unless it shall first be indemnified to its satisfaction by Lenders pro rata against any and all liability, cost and expense that
it may incur by reason of taking or continuing to take any such action.

 

(b)       Administrative
Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of Required Lenders
(or such other number or percentage of Lenders as shall be necessary, or as Administrative Agent shall believe in good faith shall
be necessary, under the circumstances as provided in Sections 10.2 and 11.9), or (ii) in the absence of
its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment.
SUCH LIMITATION OF LIABILITY SHALL APPLY REGARDLESS OF WHETHER THE LIABILITY ARISES FROM THE SOLE, CONCURRENT, CONTRIBUTORY
OR COMPARATIVE NEGLIGENCE OF ADMINISTRATIVE AGENT. Administrative Agent shall be deemed not to have knowledge of any Default
unless and until notice describing such Default is given to Administrative Agent in writing by Borrower, a Lender or L/C Issuer.

 

(c)       Neither
Administrative Agent nor any Related Party thereof shall be responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with this Agreement, any other Loan Document or the Intercreditor
Agreement, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection
herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions
set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness
of this Agreement, any other Loan Document, the Intercreditor Agreement or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article 5 or elsewhere herein, other than to confirm receipt of items expressly
required to be delivered to Administrative Agent.

 

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Section
11.4Reliance by Administrative Agent. Administrative Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including
any electronic message, internet or intranet website posting or other distribution) believed by it to be genuine and to have been
signed, sent or otherwise authenticated by the proper Person. Administrative Agent also may rely upon any statement made to it
orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying
thereon. In determining compliance with any condition hereunder to the making of a Credit Extension that by its terms must be
fulfilled to the satisfaction of a Lender or L/C Issuer, Administrative Agent may presume that such condition is satisfactory
to such Lender or L/C Issuer unless Administrative Agent shall have received notice to the contrary from such Lender prior to
the making of such Loan. Administrative Agent may consult with legal counsel (who may be counsel for Borrower), independent accountants
and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice
of any such counsel, accountants or experts.

 

Section
11.5Delegation of Duties. Administrative Agent may perform any and all of its duties and exercise its rights and powers
hereunder or under any other Loan Document or the Intercreditor Agreement by or through any one or more sub agents appointed by
Administrative Agent. Administrative Agent and any such sub agent may perform any and all of its duties and exercise its rights
and powers by or through their respective Related Parties. The exculpatory provisions of this Article 11 shall apply
to any such sub agent and to the Related Parties of Administrative Agent and any such sub agent, and shall apply to their respective
activities in connection with the syndication of this facility as well as activities as Administrative Agent. Administrative Agent
shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction
determines in a final and non-appealable judgment that Administrative Agent acted with gross negligence or willful misconduct
in the selection of such sub agents.

 

Section
11.6Resignation of Administrative Agent.

 

(a)       Administrative
Agent may at any time give notice of its resignation to Lenders, L/C Issuer, and Borrower. Upon receipt of any such notice of
resignation, Required Lenders shall have the right, in consultation with Borrower (so long as no Event of Default has occurred
and is continuing), to appoint a successor, which shall be a bank with an office in Dallas, Texas, or an Affiliate of any such
bank with an office in Dallas, Texas. If no such successor shall have been so appointed by Required Lenders and shall have accepted
such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as
shall be agreed by Required Lenders) (such date, the “Resignation Effective Date”), then the retiring Administrative
Agent may (but shall not be obligated to), on behalf of Lenders and L/C Issuer, appoint a successor Administrative Agent meeting
the qualifications set forth above. Whether or not a successor has been appointed, such resignation shall become effective in
accordance with such notice on the Resignation Effective Date. After the Resignation Effective Date, the provisions of this Article 11
relating to or indemnifying or releasing Administrative Agent shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Administrative Agent under this Agreement, the other Loan Documents and the Intercreditor Agreement.

 

    	CREDIT AGREEMENT - Page 88	 

     

    

 

(b)       If
the Person serving as Administrative Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof,
Required Lenders may, to the extent permitted by applicable Law, by notice in writing to Borrower and such Person remove such
Person as Administrative Agent and, in consultation with Borrower, appoint a successor. If no such successor shall have been so
appointed by Required Lenders and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed
by Required Lenders) (such date, the “Removal Effective Date”), then such removal shall nonetheless become
effective in accordance with such notice on the Removal Effective Date.

 

(c)       With
effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (i) the retiring or removed Administrative
Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents and the Intercreditor Agreement
(except that in the case of any Collateral held by Administrative Agent on behalf of Secured Parties under any of the Loan Documents
or the Intercreditor Agreement, the retiring or removed Administrative Agent shall continue to hold such Collateral until such
time as a successor Administrative Agent is appointed or a different Person is appointed to serve as collateral agent pursuant
to the terms of the Intercreditor Agreement) and (ii) except for any indemnity, fee or expense payments owed to the retiring
or removed Administrative Agent, all payments, communications and determinations provided to be made by, to or through Administrative
Agent shall instead be made by or to each Lender or L/C Issuer, as applicable, directly, until such time, if any, as Required
Lenders appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successor’s appointment
as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges
and duties of the retiring or removed Administrative Agent (other than any rights to indemnity payments owed to the retiring or
removed Administrative Agent), and the retiring or removed Administrative Agent shall be discharged from all of its duties and
obligations hereunder or under the other Loan Documents or the Intercreditor Agreement. The fees payable by Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between Borrower and such successor.
After the retiring or removed Administrative Agent’s resignation or removal hereunder and under the other Loan Documents
and the Intercreditor Agreement, the provisions of this Article 11, Section 12.1, and Section 12.2
shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub agents and their respective
Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Administrative
Agent was acting as Administrative Agent.

 

(d)       Any
resignation by LegacyTexas Bank as Administrative Agent pursuant to this Section shall also constitute its resignation as L/C
Issuer. If LegacyTexas Bank resigns as an L/C Issuer, it shall retain all the rights, powers, privileges and duties of L/C Issuer
hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all
L/C Obligations with respect thereto, including the right to require Lenders to make Loans or fund risk participations in Unreimbursed
Amounts pursuant to Section 2.2(c). Upon the appointment by Borrower of a successor L/C Issuer hereunder (which successor
shall in all cases be a Lender other than a Defaulting Lender), (i) such successor shall succeed to and become vested with
all of the rights, powers, privileges and duties of the retiring L/C Issuer, (ii) the retiring L/C Issuer shall be discharged
from all of its duties and obligations hereunder or under the other Loan Documents, and (iii) the successor L/C Issuer shall
issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make
other arrangements satisfactory to LegacyTexas Bank to effectively assume the obligations of LegacyTexas Bank with respect to
such Letters of Credit.

 

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Section
11.7Non-Reliance on Administrative Agent and Other Lenders. Each of the Lenders and L/C Issuer expressly acknowledges
that neither Administrative Agent nor any other Lender nor any Related Party thereto has made any representation or warranty to
such Person and that no act by Administrative Agent or any other Lender hereafter taken, including any review of the affairs of
Borrower, shall be deemed to constitute any representation or warranty by Administrative Agent or any Lender to any other Lender.
Each of the Lenders and L/C Issuer acknowledges that it has, independently and without reliance upon Administrative Agent or any
other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each of the Lenders and L/C Issuer also acknowledges that it will,
independently and without reliance upon Administrative Agent or any other Lender or any of their Related Parties and based on
such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or
not taking action under or based upon this Agreement, any other Loan Document, the Intercreditor Agreement or any related agreement
or any document furnished hereunder or thereunder. Except for notices, reports and other documents expressly required to be furnished
to the Lenders by Administrative Agent hereunder, Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise),
or creditworthiness of Borrower or the value of the Collateral or other Properties of Borrower or any other Person which may come
into the possession of Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates.

 

Section
11.8Administrative Agent May File Proofs of Claim. In case of the pendency of any proceeding under any Debtor Relief
Law or any other judicial proceeding relating to any Obligated Party, Administrative Agent (irrespective of whether the principal
of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether Administrative
Agent shall have made any demand on Borrower) shall be entitled and empowered (but not obligated) by intervention in such proceeding
or otherwise:

 

(a)       to
file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C Obligations
and all other Obligations under the Loan Documents that are owing and unpaid and to file such other documents as may be necessary
or advisable in order to have the claims of Lenders, L/C Issuer, and Administrative Agent (including any claim for the reasonable
compensation, expenses, disbursements and advances of Lenders, L/C Issuer, and Administrative Agent and their respective agents
and counsel and all other amounts due Lenders, L/C Issuer, and Administrative Agent under Section 12.1 or Section 12.2)
allowed in such judicial proceeding; and

 

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

 

and
any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding
is hereby authorized by each Lender and L/C Issuer to make such payments to Administrative Agent and, in the event that Administrative
Agent shall consent to the making of such payments directly to Lenders and L/C Issuer, as applicable, to pay to Administrative
Agent any amount due for the reasonable compensation, expenses, disbursements and advances of Administrative Agent and its agents
and counsel, and any other amounts due Administrative Agent under Section 12.1 or Section 12.2.

 

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Section
11.9Collateral and Guaranty Matters.

 

(a)       The
Secured Parties irrevocably authorize Administrative Agent, at its option and in its discretion:

 

(i)       to
release any Lien on any Property granted to or held by Administrative Agent under any Loan Document (x) upon termination
of the Aggregate Commitments and payment in full of all Obligations (other than (A) contingent indemnification obligations
and (B) obligations and liabilities under Bank Product Agreements as to which arrangements satisfactory to the applicable
Bank Product Provider shall have been made) and the expiration or termination of all Letters of Credit (other than Letters of
Credit as to which other arrangements satisfactory to Administrative Agent and L/C Issuer shall have been made), (y) that
is Disposed of or to Disposed of as part of or in connection with any Disposition permitted under the Loan Documents, or (z) if
approved, authorized or ratified in writing by Required Lenders or all Lenders, as applicable, under Section 12.10;

 

(ii)       to
subordinate any Lien on any Property granted to or held by Administrative Agent under any Loan Document to the holder of any Lien
on such Property that is permitted by Section 8.2;

 

(iii)       to
release any Guarantor from its obligations under the applicable Guaranty if such Person ceases to be a Subsidiary as a result
of a transaction permitted under the Loan Documents; and

 

(iv)       to
take any other action with respect to the Collateral that is permitted or required under the Intercreditor Agreement.

 

Upon
request by Administrative Agent at any time, Required Lenders will confirm in writing Administrative Agent’s authority to
release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations
under the Guaranty pursuant to this Section 11.9.

 

(b)       Administrative
Agent shall not be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence,
value or collectability of the Collateral, the existence, priority or perfection of Administrative Agent’s Lien thereon,
or any certificate prepared by any Obligated Party in connection therewith, nor shall Administrative Agent be responsible or liable
to Lenders for any failure to monitor or maintain any portion of the Collateral.

 

Section
11.10Bank Product Agreements. No Bank Product Provider who obtains the benefits of Section 10.3, any Guaranties
or any Collateral by virtue of the provisions hereof or of any Guaranty or any Security Document shall have any right to notice
of any action or to consent to, direct or object to any action hereunder, under any other Loan Document or the Intercreditor Agreement
or otherwise in respect of the Collateral (including the release or impairment of any Collateral) (or to notice of or to consent
to any amendment, wavier or modification of the provisions hereof or of the Guaranty or any Security Document) other than in its
capacity as a Lender and, in such case, only to the extent expressly provided in the Loan Documents and the Intercreditor Agreement.
Notwithstanding any other provision of this Article 11 to the contrary, Administrative Agent shall not be required
to verify the payment of, or that other satisfactory arrangements have been made with respect to, Bank Product Obligations unless
Administrative Agent has received written notice of such Bank Product Obligations, together with such supporting documentation
as Administrative Agent may request, from the applicable Bank Product Provider. Administrative Agent shall not be required to
verify the payment of, or that other satisfactory arrangements have been made with respect to, Bank Product Obligations arising
under Bank Product Agreements upon termination of the Aggregate Commitments and payment in full of all Obligations under the Loan
Documents (other than contingent indemnification obligations) and the expiration or termination of all Letters of Credit (other
than Letters of Credit as to which other arrangements satisfactory to Administrative Agent and L/C Issuer shall have been made).

 

    	CREDIT AGREEMENT - Page 91	 

     

    

 

ARTICLE
12

MISCELLANEOUS

 

Section
12.1Expenses.

 

(a)       Borrower
hereby agrees to pay on demand: (i) all reasonable out-of-pocket and documented costs and expenses of Administrative Agent,
L/C Issuer, and their Related Parties in connection with the preparation, negotiation, execution, and delivery of this Agreement,
the other Loan Documents, the Intercreditor Agreement and any and all amendments, modifications, renewals, extensions, supplements,
waivers, consents and ratifications thereof and thereto, including, without limitation, the reasonable fees and expenses of legal
counsel, advisors, consultants, and auditors for Administrative Agent, L/C Issuer, and their Related Parties, and all title due
diligence and review expenses, Oil and Gas Properties evaluation and engineering expenses, expenses associated with the investigation
of any matters relating to the transactions contemplated hereby and the satisfaction of the conditions set forth herein, the giving
of oral or written opinions or advice incident to this transaction, and the consummation of the transactions contemplated hereby;
(ii) all documented out-of-pocket costs and expenses of Administrative Agent, L/C Issuer, and each Lender in connection with
any Default and the enforcement of this Agreement, any other Loan Document or the Intercreditor Agreement, including, without
limitation, court costs and the fees and expenses of legal counsel, advisors, consultants, engineers, experts and auditors for
Administrative Agent, L/C Issuer, and each Lender; (iii) all costs and expenses incurred by L/C Issuer in connection with
the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder; (iv) all transfer,
stamp, documentary, or other similar taxes, assessments, or charges levied by any Governmental Authority in respect of this Agreement,
any of the other Loan Documents or the Intercreditor Agreement; (v) all costs, expenses, assessments, and other charges incurred
in connection with any filing, registration, recording, or perfection of any Lien contemplated by this Agreement, any other Loan
Document or the Intercreditor Agreement; and (vi) all other documented out-of-pocket costs and expenses incurred by Administrative
Agent, L/C Issuer, and any Lender in connection with this Agreement, any other Loan Document or the Intercreditor Agreement, any
litigation, dispute, suit, proceeding or action, the enforcement of its rights and remedies, and the protection of its interests
in bankruptcy, insolvency or other legal proceedings, including, without limitation, all documented out-of-pocket costs, expenses,
and other charges incurred in connection with evaluating, observing, collecting, examining, auditing, appraising, selling, liquidating,
or otherwise disposing of the Collateral or other assets of Borrower. Borrower shall be responsible for all expenses described
in this clause (a) whether or not any Credit Extension is ever made. Any amount to be paid under this Section 12.1
shall be a demand obligation owing by Borrower and if not paid within 30 days of demand shall bear interest, to the extent
not prohibited by and not in violation of applicable Law, from the date of expenditure until paid at a rate per annum equal to
the Default Interest Rate. The obligations of Borrower under this Section 12.1 shall survive payment of the Notes
and other Obligations hereunder and the assignment of any right hereunder.

 

    	CREDIT AGREEMENT - Page 92	 

     

    

 

(b)       To
the extent that Borrower for any reason fails to indefeasibly pay any amount required under Section 12.1(a) or Section 12.2
to be paid by it to Administrative Agent or L/C Issuer (or any sub-agent thereof) or any Related Party of Administrative Agent
or L/C Issuer (or any sub-agent thereof), each Lender severally agrees to pay to Administrative Agent or L/C Issuer (or any such
sub-agent) or such Related Party, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought based each Lender’s share of the Total Credit Exposure at such time)
of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such Lender); provided that the
unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or
asserted against Administrative Agent or L/C Issuer (or any such sub-agent) or against any Related Party of Administrative Agent
or L/C Issuer (or any sub-agent thereof) acting for Administrative Agent or L/C Issuer (or any such sub-agent) in connection with
such capacity. EACH LENDER ACKNOWLEDGES THAT SUCH PAYMENTS MAY BE IN RESPECT OF LOSSES, CLAIMS, DAMAGES, LIABILITIES OR RELATED
EXPENSES ARISING OUT OF OR RESULTING FROM THE SOLE, CONTRIBUTORY, COMPARATIVE, CONCURRENT OR ORDINARY NEGLIGENCE OF THE PERSON
(OR THE REPRESENTATIVES OF THE PERSON) TO WHOM SUCH PAYMENTS ARE TO BE MADE.

 

Section
12.2INDEMNIFICATION. BORROWER SHALL INDEMNIFY ADMINISTRATIVE AGENT, L/C ISSUER, EACH LENDER AND EACH RELATED PARTY
THEREOF (EACH, AN “INDEMNIFIED PARTY”) FROM, AND HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES,
CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING THE DOCUMENTED OUT-OF-POCKET FEES, CHARGES
AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNIFIED PARTY) TO WHICH ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR INDIRECTLY
ARISE FROM OR RELATE TO (A) THE NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION, OR ENFORCEMENT OF ANY OF THE
LOAN DOCUMENTS OR THE INTERCREDITOR AGREEMENT, (B) ANY OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS OR THE INTERCREDITOR
AGREEMENT, (C) ANY BREACH BY BORROWER OF ANY REPRESENTATION, WARRANTY, COVENANT, OR OTHER AGREEMENT CONTAINED IN ANY OF THE
LOAN DOCUMENTS OR THE INTERCREDITOR AGREEMENT, (D) THE PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL, REMOVAL, OR CLEANUP
OF ANY HAZARDOUS MATERIAL LOCATED ON, ABOUT, WITHIN, OR AFFECTING ANY OF THE PROPERTIES OR ASSETS OF BORROWER OR ANY OF ITS SUBSIDIARIES
OR ANY OTHER OBLIGATED PARTY, (E) ANY LOAN OR LETTER OF CREDIT UNDER THIS AGREEMENT OR USE OR PROPOSED USE OF THE PROCEEDS THEREFROM
(INCLUDING ANY REFUSAL BY L/C ISSUER TO HONOR A DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT IF THE DOCUMENTS PRESENTED IN CONNECTION
WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER OF CREDIT) OR (F) ANY INVESTIGATION, LITIGATION, OR
OTHER PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY THREATENED INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, RELATING TO ANY
OF THE FOREGOING. WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR OF ANY OTHER LOAN DOCUMENT, IT IS THE EXPRESS INTENTION
OF THE PARTIES HERETO THAT EACH INDEMNIFIED PARTY SHALL BE INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES,
CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING THE DOCUMENTED OUT-OF-POCKET FEES, CHARGES
AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNIFIED PARTY) ARISING OUT OF OR RESULTING FROM THE SOLE, CONTRIBUTORY, COMPARATIVE,
CONCURRENT OR ORDINARY NEGLIGENCE OF SUCH PERSON (OR THE REPRESENTATIVES OF SUCH PERSON), provided that such indemnity
shall not, as to any Indemnified Party, be available to the extent that such losses, liabilities, claims, damages, penalties,
judgments, disbursements, costs and expenses are determined by a court of competent jurisdiction by final and non-appealable judgment
to have resulted from the gross negligence or willful misconduct of such Indemnified Party. Any amount to be paid under this Section 12.2
shall be a demand obligation owing by Borrower and if not paid within 10 days of demand shall bear interest, to the extent
not prohibited by and not in violation of applicable Law, from the date of expenditure until paid at a rate per annum equal to
the Default Interest Rate. The obligations of Borrower under this Section 12.2 shall survive payment of the Notes
and other Obligations hereunder and the assignment of any right hereunder.

 

    	CREDIT AGREEMENT - Page 93	 

     

    

 

Section
12.3Limitation of Liability. No party hereto or any Related Party of any party hereto, shall assert, and each such
Person hereby waives, any claim against any other party hereto and their Related Parties for any special, indirect, consequential
or punitive damages in connection with, arising out of, or in any way related to, this Agreement, any of the other Loan Documents
or the Intercreditor Agreement, or any of the transactions contemplated by this Agreement, any of the other Loan Documents or
the Intercreditor Agreement.

 

Section
12.4No Duty. All attorneys, accountants, appraisers, and other professional Persons and consultants retained by Administrative
Agent, any Lender or L/C Issuer shall have the right to act exclusively in the interest of Administrative Agent or such Lender
or L/C Issuer and shall have no duty of disclosure, duty of loyalty, duty of care, or other duty or obligation of any type or
nature whatsoever to Borrower or any of Borrower’s equity holders, Affiliates, officers, employees, attorneys, agents, or
any other Person.

 

Section
12.5Lenders Not Fiduciary. The relationship between Borrower and Administrative Agent, Arranger, each Lender, and L/C
Issuer is solely that of debtor and creditor, and none of Administrative Agent, Arranger, any Lender, or L/C Issuer has any fiduciary
or other special relationship with Borrower, and no term or condition of any of the Loan Documents or the Intercreditor Agreement
shall be construed so as to deem the relationship between Borrower and Administrative Agent, Arranger each Lender, and L/C Issuer
to be other than that of debtor and creditor.

 

Section
12.6Equitable Relief. Borrower recognizes that in the event Borrower fails to pay, perform, observe, or discharge any
or all of the Obligations, any remedy at law may prove to be inadequate relief to Administrative Agent or Lenders or L/C Issuer.
Borrower therefore agrees that Administrative Agent, any Lender, or L/C Issuer, if Administrative Agent or such Lender, or L/C
Issuer, so requests, shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of
proving actual damages.

 

Section
12.7No Waiver; Cumulative Remedies. No failure on the part of an Obligated Party, Administrative Agent, any Lender,
or L/C Issuer to exercise, and no delay in exercising, and no course of dealing with respect to, any right, remedy, power, or
privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy,
power, or privilege under this Agreement preclude any other or further exercise thereof or the exercise of any other right, remedy,
power, or privilege. The rights and remedies provided for in this Agreement, the other Loan Documents and the Intercreditor Agreement
are cumulative and not exclusive of any rights and remedies provided by Law.

 

    	CREDIT AGREEMENT - Page 94	 

     

    

 

Notwithstanding
anything to the contrary contained herein, in any other Loan Document or the Intercreditor Agreement, the authority to enforce
rights and remedies hereunder and under the other Loan Documents and the Intercreditor Agreement against the Obligated Parties
or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall
be instituted and maintained exclusively by, Administrative Agent in accordance with Section 10.2 for the benefit
of all the Lenders; provided, however, that the foregoing shall not prohibit (a) Administrative Agent from
exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent)
hereunder and under the other Loan Documents and the Intercreditor Agreement, (b) any Lender from exercising setoff rights in
accordance with Section 4.3 (subject to the terms of Section 12.23), or (c) any Lender from filing
proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Obligated
Party under any Debtor Relief Law; and provided, further, that if at any time there is no Person acting as
Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise
ascribed to Administrative Agent pursuant to Section 10.2 and (ii) in addition to the matters set forth in clauses (b)
and (c) of the preceding proviso and subject to Section 12.23, any Lender may, with the consent of the
Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.

 

Section
12.8Successors and Assigns.

 

(a)       Successors
and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby, except that Borrower may not assign or transfer any of its rights,
duties, or obligations under this Agreement, the other Loan Documents or the Intercreditor Agreement without the prior written
consent of Administrative Agent and each Lender, and no Lender may assign or otherwise transfer any of its rights or obligations
hereunder except (i) to an assignee in accordance with the provisions of Section 12.8(b), (ii) by way of
participation in accordance with the provisions of Section 12.8(d), or (iii) by way of pledge or assignment of
a security interest subject to the restrictions of Section 12.8(e) (and any other attempted assignment or transfer
by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon
any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent
provided in Section 12.8(d) and, to the extent expressly contemplated hereby, the Related Parties of each of Administrative
Agent and Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

 

(b)       Assignments
by Lenders. Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under
this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that any
such assignment shall be subject to the following conditions:

 

(i)       Minimum
Amounts. (A) In the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and/or
the Loans at the time owing to it or contemporaneous assignments to related Approved Funds (determined after giving effect to
such assignments) that equal at least the amount specified in Section 12.8(b)(i)(B) in the aggregate or in the case
of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and (B) in
any case not described in Section 12.8(b)(i)(A), the aggregate amount of the Commitment (which for this purpose includes
Loans outstanding hereunder) or, if the Commitment is not then in effect, the Outstanding Amount of the Loans of the assigning
Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment
is delivered to Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the
Trade Date) shall not be less than $5,000,000, unless each of Administrative Agent and, so long as no Event of Default has occurred
and is continuing, Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed).

 

    	CREDIT AGREEMENT - Page 95	 

     

    

 

(ii)       Proportionate
Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s
rights and obligations under this Agreement with respect to the Loans or the Commitment assigned.

 

(iii)       Required
Consents. No consent shall be required for any assignment except to the extent required by Section 12.8(b)(i)(B)
and, in addition: (A) the consent of Borrower (such consent not to be unreasonably withheld or delayed) shall be required
unless (x) an Event of Default has occurred and is continuing at the time of such assignment, or (y) such assignment
is to a Lender, an Affiliate of a Lender or an Approved Fund; provided that Borrower shall be deemed to have consented
to any such assignment unless it shall object thereto by written notice to Administrative Agent within 5 Business Days after having
received notice thereof; (B) the consent of Administrative Agent (such consent not to be unreasonably withheld or delayed)
shall be required for assignments in respect of any Commitment or Loans if such assignment is to a Person that is not a Lender
with a Commitment, an Affiliate of such Lender or an Approved Fund with respect to such Lender, and (C) the consent of L/C
Issuer (such consent not to be unreasonably withheld or delayed) shall be required for assignments in respect of any Commitment
or Loans if such assignment is to a Person that is not a Lender with a Commitment, an Affiliate of such Lender or an Approved
Fund with respect to such Lender.

 

(iv)       Assignment
and Assumption. The parties to each assignment shall execute and deliver to Administrative Agent an Assignment and Assumption,
together with a processing and recordation fee of $3,500; provided that Administrative Agent may, in its sole discretion,
elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver
to Administrative Agent an Administrative Questionnaire.

 

(v)       No
Assignment to Certain Persons. No such assignment shall be made to (A) Borrower, any of Borrower’s Affiliates or
Subsidiaries or any other Obligated Party or (B) any Defaulting Lender or any of its Affiliates, or any Person who, upon
becoming a Lender hereunder, would constitute any of the foregoing persons described in this clause (B).

 

(vi)       No
Assignment to Natural Persons. No such assignment shall be made to a natural Person (or a holding company, investment vehicle
or trust for, or owned and operated for the primary benefit of, a natural Person).

 

(vii)       Certain
Additional Payments. In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such
assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to such
assignment shall make such additional payments to Administrative Agent in an aggregate amount sufficient, upon distribution thereof
as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating
actions, including funding, with the consent of Borrower and Administrative Agent, the applicable pro rata share of Loans previously
requested but not funded by such Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent),
to: (A) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to Administrative Agent or any
Lender hereunder (and interest accrued thereon) and (B) acquire (and fund as appropriate) its full pro rata share of all
Loans in accordance with its Applicable Percentage. Notwithstanding the foregoing, in the event that any assignment of rights
and obligations of any Defaulting Lender hereunder shall become effective under applicable Law without compliance with the provisions
of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement
until such compliance occurs.

 

    	CREDIT AGREEMENT - Page 96	 

     

    

 

Subject
to acceptance and recording thereof by Administrative Agent pursuant to Section 12.8(c), from and after the effective
date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent
of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released
from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to
the benefits of Section 12.1 and Section 12.2 with respect to facts and circumstances occurring prior
to the effective date of such assignment; provided that, except to the extent otherwise expressly agreed by the affected
parties, no assignment by a Defaulting Lender will constitute a waiver or release of any party hereunder arising from that Lenders’
having been a Defaulting Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does
not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in
such rights and obligations in accordance with Section 12.8(d). Upon the consummation of any assignment pursuant to
this Section 12.8(b), if requested by the transferor or transferee Lender, the transferor Lender, Administrative Agent
and Borrower shall make appropriate arrangements so that replacement Notes are issued to such transferor Lender (if applicable)
and new Notes or, as appropriate, replacement Notes, are issued to the assignee.

 

(c)       Register.
Administrative Agent, acting solely for this purpose as an agent of Borrower, shall maintain at one of its offices in Dallas,
Texas a copy of each Assignment and Assumption delivered to it and a Register. The entries in the Register shall be conclusive
absent manifest error, and Borrower, Administrative Agent and Lenders shall treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection
by Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

 

(d)       Participations.
Any Lender may at any time, without the consent of, or notice to, Borrower, but subject to the prior written consent of Administrative
Agent, sell participations to a Participant in all or a portion of such Lender’s rights and/or obligations under this Agreement
(including all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Lender’s
obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, and (iii) Borrower, Administrative Agent, and Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. For the
avoidance of doubt, each Lender shall be responsible for the indemnity under Section 12.1(b) without regard to the
existence of any participation.

 

    	CREDIT AGREEMENT - Page 97	 

     

    

 

Any
agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the
sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement;
provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant,
agree to any amendment, modification or waiver described in Section 12.10 which requires the consent of all Lenders
and affects such Participant. Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.1,
3.4 and 3.5 (subject to the requirements and limitations therein, including the requirements under Section 3.4(g)
(it being understood that the documentation required under Section 3.4(g) shall be delivered to the participating
Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b)
of this Section; provided that such Participant (A) agrees to be subject to the provisions of Section 3.6
as if it were an assignee under paragraph (b) of this Section; and (B) shall not be entitled to receive any
greater payment under Sections 3.1 or 3.4, with respect to any participation, than its participating Lender
would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change
in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation agrees,
at Borrower’s request and expense, to use reasonable efforts to cooperate with Borrower to effectuate the provisions of
Section 3.6 with respect to any Participant. To the extent permitted by Law, each Participant also shall be entitled
to the benefits of Section 4.3 as though it were a Lender; provided that such Participant agrees to pay to
Administrative Agent any amount set-off for application to the Obligations under the Loan Documents as required pursuant to Section 4.3;
provided further that such Participant agrees to be subject to Section 12.23 as though it were a Lender. Each
Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of Borrower, maintain a Participant
Register; provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register
to any Person (including the identity of any Participant or any information relating to a Participant’s interest in any
commitments, loans, letters of credit or its other obligations under any Loan Document) except to the extent that such disclosure
is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c)
of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error,
and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation
for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, Administrative Agent
(in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

 

(e)       Certain
Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement
to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided
that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee
or assignee for such Lender as a party hereto.

 

(f)       Dissemination
of Information. Borrower and each other Obligated Party authorizes Administrative Agent and each Lender to disclose to any
actual or prospective purchaser, assignee or other recipient of a Lender’s Commitment, any and all information in Administrative
Agent’s or such Lender’s possession concerning Borrower, the other Obligated Parties and their respective Affiliates.

 

Section
12.9Survival. All representations and warranties made in this Agreement, any other Loan Document or the Intercreditor
Agreement or in any document, statement, or certificate furnished in connection with this Agreement shall survive the execution
and delivery of this Agreement, the other Loan Documents and the Intercreditor Agreement, and no investigation by Administrative
Agent or any Lender or any closing shall affect the representations and warranties or the right of Administrative Agent or any
Lender to rely upon them. Without prejudice to the survival of any other obligation of Borrower hereunder, the obligations of
Borrower under Sections 12.1 and 12.2 shall survive repayment of the Obligations and termination of the Aggregate
Commitments.

 

    	CREDIT AGREEMENT - Page 98	 

     

    

 

Section
12.10Amendment. The provisions of this Agreement and the other Loan Documents to which Borrower is a party (other than
the Issuer Documents) may be amended or waived only by an instrument in writing signed by Required Lenders (or by Administrative
Agent with the consent of Required Lenders) and Borrower and acknowledged by Administrative Agent; provided, however,
that no such amendment or waiver shall:

 

(a)       waive
any condition set forth in Section 5.1 (other than Sections 5.1(q) and 5.1(w)), without the written
consent of each Lender;

 

(b)       extend
or increase any Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 10.2) without
the written consent of such Lender;

 

(c)       postpone
any date fixed by this Agreement or any other Loan Document for any payment (excluding mandatory prepayment) of principal, interest,
fees or other amounts due to Lenders (or any of them) hereunder or under any other Loan Document without the written consent of
each Lender directly affected thereby;

 

(d)       reduce
the principal of, or the rate of interest specified herein on, any Loan, or any fees or other amounts payable hereunder or under
any other Loan Document without the written consent of each Lender directly affected thereby; provided, however,
that only the consent of Required Lenders shall be necessary to adjust the Default Interest Rate or to waive any obligation of
Borrower to pay interest at such rate;

 

(e)       change
any provision of this Section 12.10 or the definition of “Required Lenders” or any other provision hereof
specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination
or grant any consent hereunder, without the written consent of each Lender;

 

(f)       change
Section 10.3 in a manner that would alter the pro rata sharing of payments required thereby without the written consent
of each Lender;

 

(g)       release
any material Guaranty or all or substantially all of the Collateral (in each case, except as provided herein) without the written
consent of each Lender; or

 

(h)       increase
the Borrowing Base or modify the provisions of Section 2.9(d) without the written consent of each Lender;

 

and,
provided further, that (i) no amendment, waiver or consent shall, unless in writing and signed by L/C Issuer in addition
to the Lenders required above, affect the rights or duties of the L/C Issuer under this Agreement or any Issuer Document relating
to any Letter of Credit issued or to be issued by it; and (ii) no amendment, waiver or consent shall, unless in writing and signed
by Administrative Agent in addition to Lenders required above, affect the rights or duties of Administrative Agent under this
Agreement or any other Loan Document.

 

Notwithstanding
anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent
hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender
may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment
of any Defaulting Lender may not be increased or extended without the consent of such Lender; and (y) any waiver, amendment
or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender disproportionately
adversely relative to other affected Lenders shall require the consent of such Defaulting Lender. For the avoidance of doubt,
a Defaulting Lender shall not have the right to approve or disapprove any decrease or reaffirmation of the Borrowing Base.

 

    	CREDIT AGREEMENT - Page 99	 

     

    

 

Section
12.11Notices.

 

(a)       Notices
Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and except
as provided in Section 12.11(b)), all notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile as set forth
on Schedule 12.11. Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall
be deemed to have been given when received. Notices sent by facsimile shall be deemed to have been given when sent (except that,
if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on
the next Business Day for the recipient). Notices delivered through electronic communications, to the extent provided in Section 12.11(b)
shall be effective as provided in Section 12.11(b).

 

(b)       Electronic
Communications. Notices and other communications to Lenders hereunder may be delivered or furnished by electronic communication
(including e-mail and internet or intranet websites) pursuant to procedures approved by Administrative Agent, provided
that the foregoing shall not apply to notices to any Lender pursuant to Article 2 if such Lender has notified Administrative
Agent that it is incapable of receiving notices under Article 2 by electronic communication. Administrative Agent
or Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications
pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or
communications.

 

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

 

(c)       Change
of Address, etc. Any party hereto may change its address or facsimile number for notices and other communications hereunder
by notice to the other parties hereto, Schedule 12.11 shall be deemed to be amended by each such change, and Administrative
Agent is authorized, in its discretion, from time to time to reflect each such change in an amended Schedule 12.11
provided by Administrative Agent to each party hereto.

 

    	CREDIT AGREEMENT - Page 100	 

     

    

 

(d)       Platform.

 

(i)       Borrower
agrees that Administrative Agent may, but shall not be obligated to, make the Communications available to the Lenders or L/C Issuer
by posting the Communications on the Platform.

 

(ii)       The
Platform is provided “as is” and “as available.” The Agent Parties (as defined below) do not warrant the
adequacy of the Platform and expressly disclaim liability for errors or omissions in the Communications. No warranty of any kind,
express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose,
non-infringement of third-party rights or freedom from viruses or other code defects, is made by any Agent Party in connection
with the Communications or the Platform. In no event shall the Agent Parties have any liability to Borrower, any Lender or any
other Person for damages of any kind, including, without limitation, direct or indirect, special, incidental or consequential
damages, losses or expenses (whether in tort, contract or otherwise) arising out of Borrower’s or Administrative Agent’s
transmission of communications through the Platform.

 

(iii)       Borrower
and each other Obligated Party (by its, his or her execution of a Loan Document) hereby authorizes Administrative Agent, each
Lender, and their respective counsel and agents to communicate and transfer documents and other information (including confidential
information) concerning this transaction or Borrower or any other Obligated Party and the business affairs of Borrower and such
other Obligated Parties via the internet or other electronic communication without regard to the lack of security of such communications.

 

Section
12.12Governing Law; Venue; Service of Process.

 

(a)       Governing
Law. This Agreement and the other Loan Documents and any claims, controversy, dispute or cause of action (whether in contract
or tort or otherwise) based upon, arising out of or relating to this Agreement or any other Loan Document (except, as to any other
Loan Document, as expressly set forth therein) and the transactions contemplated hereby and thereby shall be governed by, and
construed in accordance with, the Law of the State of Texas (without reference to applicable rules of conflicts of Laws), except
to the extent the Laws of any jurisdiction where Collateral is located require application of such Laws with respect to such Collateral.

 

(b)       Jurisdiction.
Borrower irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or
description, whether in law or equity, whether in contract or in tort or otherwise, against Administrative Agent, any Lender,
L/C Issuer, or any Related Party of the foregoing in any way relating to this Agreement or any other Loan Document or the transactions
relating hereto or thereto in any forum other than the courts of the State of Texas sitting in Dallas County, and of the United
States District Court of the Northern District of Texas, and any appellate court from any thereof, and each of the parties hereto
irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that all claims in respect of any such action,
litigation or proceeding may be heard and determined in such Texas State court or, to the fullest extent permitted by applicable
Law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action, litigation or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law.
Nothing in this Agreement or in any other Loan Document shall affect any right that Administrative Agent, any Lender or L/C Issuer
may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against Borrower or
its Properties in the courts of any jurisdiction.

 

    	CREDIT AGREEMENT - Page 101	 

     

    

 

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

 

(d)       Service
of Process. Each party hereto irrevocably consents to service of process in the manner provided for notices in Section 12.11.
Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by applicable
Law.

 

Section
12.13Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. Except as provided in Section 5.1, this Agreement
shall become effective when it shall have been executed by Administrative Agent and when Administrative Agent shall have received
counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed
counterpart of a signature page of this Agreement by facsimile or other electronic imaging means (e.g. “pdf” or “tif”)
shall be effective as delivery of a manually executed counterpart of this Agreement.

 

Section
12.14Severability. Any provision of this Agreement or any other Loan Document held by a court of competent jurisdiction
to be invalid or unenforceable shall not impair or invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision held to be invalid or illegal. Furthermore, in lieu of such invalid or unenforceable provision, such
court shall substitute as a part of this Agreement or the other Loan Documents a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

 

Section
12.15Headings. The headings, captions, and arrangements used in this Agreement are for convenience only and shall not
affect the interpretation of this Agreement.

 

Section
12.16Construction. Borrower, Administrative Agent and each Lender acknowledge that each of them has had the benefit
of legal counsel of its own choice and has been afforded an opportunity to review this Agreement, the other Loan Documents and
the Intercreditor Agreement with its legal counsel and that this Agreement, the other Loan Documents and the Intercreditor Agreement
shall be construed as if jointly drafted by Borrower, Administrative Agent, each Lender and each other Person party thereto.

 

Section
12.17Independence of Covenants. All covenants hereunder shall be given independent effect so that if a particular action
or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or be otherwise
within the limitations of, another covenant shall not avoid the occurrence of a Default if such action is taken or such condition
exists.

 

Section
12.18WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY
OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 12.18.

 

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Section
12.19Additional Interest Provision. It is expressly stipulated and agreed to be the intent of Borrower, Administrative
Agent and each Lender at all times to comply strictly with the applicable Law governing the maximum rate or amount of interest
payable on the indebtedness evidenced by any Note, any Loan Document, and the Related Indebtedness (or applicable United States
federal Law to the extent that it permits any Lender to contract for, charge, take, reserve or receive a greater amount of interest
than under applicable Law). If the applicable Law is ever judicially interpreted so as to render usurious any amount (a) contracted
for, charged, taken, reserved or received pursuant to any Note, any of the other Loan Documents or any other communication or
writing by or between Borrower and any Lender related to the transaction or transactions that are the subject matter of the Loan
Documents, (b) contracted for, charged, taken, reserved or received by reason of Administrative Agent’s or any Lender’s
exercise of the option to accelerate the maturity of any Note and/or the Related Indebtedness, or (c) Borrower will have
paid or Administrative Agent or any Lender will have received by reason of any voluntary prepayment by Borrower of any Note and/or
the Related Indebtedness, then it is Borrower’s, Administrative Agent’s and Lenders’ express intent that all
amounts charged in excess of the Maximum Rate shall be automatically canceled, ab initio, and all amounts in excess of the Maximum
Rate theretofore collected by Administrative Agent or any Lender shall be credited on the principal balance of any Note and/or
the Related Indebtedness (or, if any Note and all Related Indebtedness have been or would thereby be paid in full, refunded to
Borrower), and the provisions of any Note and the other Loan Documents shall immediately be deemed reformed and the amounts thereafter
collectible hereunder and thereunder reduced, without the necessity of the execution of any new document, so as to comply with
the applicable Law, but so as to permit the recovery of the fullest amount otherwise called for hereunder and thereunder; provided,
however, if any Note or Related Indebtedness has been paid in full before the end of the stated term thereof, then Borrower,
Administrative Agent and each Lender agree that Administrative Agent or any Lender, as applicable, shall, with reasonable promptness
after Administrative Agent or such Lender discovers or is advised by Borrower that interest was received in an amount in excess
of the Maximum Rate, either refund such excess interest to Borrower and/or credit such excess interest against such Note and/or
any Related Indebtedness then owing by Borrower to Administrative Agent or such Lender. Borrower hereby agrees that as a condition
precedent to any claim seeking usury penalties against Administrative Agent or any Lender, Borrower will provide written notice
to Administrative Agent or such Lender, advising Administrative Agent or such Lender in reasonable detail of the nature and amount
of the violation, and Administrative Agent or such Lender shall have 60 days after receipt of such notice in which to correct
such usury violation, if any, by either refunding such excess interest to Borrower or crediting such excess interest against the
Note to which the alleged violation relates and/or the Related Indebtedness then owing by Borrower to Administrative Agent or
such Lender. All sums contracted for, charged, taken, reserved or received by Administrative Agent or any Lender for the use,
forbearance or detention of any debt evidenced by any Note and/or the Related Indebtedness shall, to the extent permitted by applicable
Law, be amortized or spread, using the actuarial method, throughout the stated term of such Note and/or the Related Indebtedness
(including any and all renewal and extension periods) until payment in full so that the rate or amount of interest on account
of any Note and/or the Related Indebtedness does not exceed the Maximum Rate from time to time in effect and applicable to such
Note and/or the Related Indebtedness for so long as debt is outstanding. In no event shall the provisions of Chapter 346
of the Texas Finance Code (which regulates certain revolving credit loan accounts and revolving triparty accounts) apply to the
Notes and/or any of the Related Indebtedness. Notwithstanding anything to the contrary contained herein or in any of the other
Loan Documents, it is not the intention of Administrative Agent or any Lender to accelerate the maturity of any interest that
has not accrued at the time of such acceleration or to collect unearned interest at the time of such acceleration.

 

    	CREDIT AGREEMENT - Page 103	 

     

    

 

Section
12.20Ceiling Election. To the extent that any Lender is relying on Chapter 303 of the Texas Finance Code to determine
the Maximum Rate payable on any Note and/or any other portion of the Obligations under the Loan Documents, such Lender will utilize
the weekly ceiling from time to time in effect as provided in such Chapter 303. To the extent United States federal Law permits
any Lender to contract for, charge, take, receive or reserve a greater amount of interest than under Texas Law, such Lender will
rely on United States federal Law instead of such Chapter 303 for the purpose of determining the Maximum Rate. Additionally,
to the extent permitted by applicable Law now or hereafter in effect, any Lender may, at its option and from time to time, utilize
any other method of establishing the Maximum Rate under such Chapter 303 or under other applicable Law by giving notice, if required,
to Borrower as provided by applicable Law now or hereafter in effect.

 

Section
12.21USA Patriot Act Notice. Administrative Agent and each Lender hereby notify Borrower that pursuant to the requirements
of the Patriot Act, it is required to obtain, verify and record information that identifies Borrower and each other Obligated
Party, which information includes the name and address of Borrower and each other Obligated Party and other information that will
allow Administrative Agent and such Lender to identify Borrower and each other Obligated Party in accordance with the Patriot
Act.

 

Section
12.22Defaulting Lenders.

 

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

 

(i)       Waivers
and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect
to this Agreement shall be restricted as set forth in the definitions of “Required Lenders” and in Section 12.10.

 

(ii)       Defaulting
Lender Waterfall. Any payment of principal, interest, fees or other amounts received by Administrative Agent for the account
of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article 10 or otherwise) or received
by Administrative Agent from a Defaulting Lender shall be applied at such time or times as may be determined by Administrative
Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to Administrative Agent hereunder;
second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to L/C Issuer hereunder; third,
to Cash Collateralize L/C Issuer’s Fronting Exposure, if any, with respect to such Defaulting Lender in accordance with
Section 2.6; fourth, as Borrower may request (so long as no Default or Event of Default exists), to the funding
of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as
determined by Administrative Agent; fifth, if so determined by Administrative Agent and Borrower, to be held in a deposit
account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations
with respect to Loans under this Agreement and (y) Cash Collateralize L/C Issuer’s future Fronting Exposure, if any,
with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in accordance with
Section 2.6; sixth, to the payment of any amounts owing to Lenders or L/C Issuer as a result of any judgment
of a court of competent jurisdiction obtained by any Lender or L/C Issuer against such Defaulting Lender as a result of such Defaulting
Lender’s breach of its obligations under this Agreement; seventh, so long as no Default or Event of Default exists,
to the payment of any amounts owing to Borrower as a result of any judgment of a court of competent jurisdiction obtained by Borrower
against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and
eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that,
if (A) such payment is a payment of the principal amount of any Loans or L/C Borrowings in respect of which such Defaulting
Lender has not fully funded its appropriate share, and (B) such Loans were made or the related Letters of Credit were issued
at a time when the conditions set forth in Section 5.2 were satisfied or waived, such payment shall be applied solely
to pay the Loans of, and L/C Obligations owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the
payment of any Loans of, or L/C Obligations owed to, such Defaulting Lender until such time as all Loans and funded and unfunded
participations in L/C Obligations are held by Lenders pro rata in accordance with the Aggregate Commitments under the Facility
without giving effect to Section 12.22(a)(iv). Any payments, prepayments or other amounts paid or payable to a Defaulting
Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 12.22(a)(ii)
shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

 

    	CREDIT AGREEMENT - Page 104	 

     

    

 

(iii)       Certain
Fees.

 

(A)       No
Defaulting Lender shall be entitled to receive any fee payable under Section 2.3(b) for any period during which that
Lender is a Defaulting Lender (and Borrower shall not be required to pay any such fee that otherwise would have been required
to have been paid to that Defaulting Lender).

 

(B)       Each
Defaulting Lender shall be entitled to receive Letter of Credit Fees for any period during which that Lender is a Defaulting Lender
only to the extent allocable to its Applicable Percentage of the stated amount of Letters of Credit for which it has provided
Cash Collateral pursuant to Section 2.6.

 

(C)       With
respect to any fee payable under Section 2.3(b) or Letter of Credit Fee not required to be paid to any Defaulting Lender
pursuant to clause (A) or (B) above, Borrower shall (x) pay to each Non-Defaulting Lender that portion
of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in L/C
Obligations that has been reallocated to such Non-Defaulting Lender pursuant to clause (a)(iv) below, (y) pay
to L/C Issuer the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to such L/C Issuer’s
Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such fee.

 

(iv)       Reallocation
of Applicable Percentages to Reduce Fronting Exposure. All or any part of such Defaulting Lender’s participation in
L/C Obligations shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Applicable Percentages
(calculated without regard to such Defaulting Lender’s Commitment) but only to the extent that such reallocation does not
cause the Revolving Credit Exposure of any Non-Defaulting Lender to exceed such Non-Defaulting Lender’s Commitment. No reallocation
hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that
Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s
increased exposure following such reallocation.

 

    	CREDIT AGREEMENT - Page 105	 

     

    

 

(v)       Cash
Collateral. If the reallocation described in clause (a)(iv) above cannot, or can only partially, be effected,
Borrower shall, without prejudice to any right or remedy available to it hereunder or under applicable Law, Cash Collateralize
L/C Issuer’s Fronting Exposure in accordance with the procedures set forth in Section 2.6.

 

(b)       Defaulting
Lender Cure. If Borrower, Administrative Agent, and L/C Issuer agree in writing that a Lender is no longer a Defaulting Lender,
Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject
to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to
the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as Administrative
Agent may determine to be necessary to cause the Loans and funded and unfunded participations in Letters of Credit to be held
on a pro rata basis by Lenders in accordance with their Applicable Percentages (without giving effect to Section 12.22(a)(iv)),
whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with
respect to fees accrued or payments made by or on behalf of Borrower while that Lender was a Defaulting Lender; and provided,
further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting
Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having
been a Defaulting Lender.

 

Section
12.23Sharing of Payments by Lenders. If any Lender shall, by exercising any right of setoff or counterclaim or otherwise,
obtain payment in respect of any principal of or interest on any of the Loans made by it or other obligations hereunder, resulting
in such Lender’s receiving payment of a proportion of the aggregate amount of such Loans and accrued interest thereon greater
than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall:

 

(a)       notify
Administrative Agent of such fact; and

 

(b)       purchase
(for cash at face value) participations in the Loans and such other obligations of the other Lenders, or make such other adjustments
as shall be equitable, so that the benefit of all such payments shall be shared by Lenders ratably in accordance with the aggregate
amount of principal of and accrued interest on their respective Loans and other amounts owing them, provided that:

 

(i)       if
any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations
shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and

 

(ii)       the
provisions of this Section 12.23 shall not be construed to apply to: (A) any payment made by or on behalf of
Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from
the existence of a Defaulting Lender); or (B) any payment obtained by a Lender as consideration for the assignment of or
sale of a participation in any of its Loans or subparticipations in L/C Obligations to any assignee or participant, other than
an assignment to Borrower or any Affiliate thereof (as to which the provisions of this Section 12.23 shall apply).

 

    	CREDIT AGREEMENT - Page 106	 

     

    

 

Borrower
consents to the foregoing and agrees, to the extent it may effectively do so under applicable Law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against Borrower rights of setoff and counterclaim with respect
to such participation as fully as if such Lender were a direct creditor of Borrower in the amount of such participation.

 

Section
12.24Payments Set Aside. To the extent that any payment by or on behalf of Borrower is made to Administrative Agent,
L/C Issuer or any Lender, or Administrative Agent, L/C Issuer or any Lender exercises its right of setoff, and such payment or
the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside
or required (including pursuant to any settlement entered into by Administrative Agent, L/C Issuer or such Lender in its discretion)
to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise,
then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each
Lender and L/C Issuer severally agrees to pay to Administrative Agent upon demand its applicable share (without duplication) of
any amount so recovered from or repaid by Administrative Agent, plus interest thereon from the date of such demand to the date
such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of Lenders
and L/C Issuer under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and
the termination of this Agreement.

 

Section
12.25Confidentiality. Each of Administrative Agent, L/C Issuer, and the Lenders agrees to maintain the confidentiality
of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its Related
Parties (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the extent required or requested by any regulatory
authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of
Insurance Commissioners) or any Governmental Authority, quasi-Governmental Authority or legislative committee, (c) to the
extent required by applicable Laws or regulations or by any subpoena or similar legal process, (d) to any other party to
this Agreement, any other Loan Document or the Intercreditor Agreement, (e) in connection with the exercise of any remedies
hereunder, under any other Loan Document or the Intercreditor Agreement or any suit, action or proceeding relating to this Agreement,
any other Loan Document or the Intercreditor Agreement or the enforcement of rights hereunder or thereunder, (f) subject
to its being under a duty of confidentiality no less restrictive than this Section 12.25, to (i) any assignee
of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement,
(ii) any actual or prospective counterparty (or its Related Parties) to any Hedging Agreement relating to Borrower and its
obligations, (iii) any actual or prospective purchaser of a Lender or its holding company, (iv) any rating agency or
any similar organization in connection with the rating of Borrower or the Facility or (v) the CUSIP Service Bureau or any
similar organization in connection with the issuance and monitoring of CUSIP numbers with respect to the Facility, (g) with
the consent of Borrower, or (h) to the extent such Information (i) becomes publicly available other than as a result
of a breach of this Section 12.25 or (ii) becomes available to Administrative Agent, L/C Issuer, any Lender or
any of their respective Affiliates on a nonconfidential basis from a source other than Borrower or a Subsidiary which is not actually
known by Administrative Agent, L/C Issuer, any Lender or any of their respective Affiliates to be bound by a contractual, legal
or fiduciary obligation of confidentiality to the Borrower or its Subsidiaries with respect to such information. In addition,
Administrative Agent and the Lenders may disclose the existence of this Agreement and information about this Agreement to market
data collectors, similar service providers to the lending industry and service providers to Administrative Agent and the Lenders
in connection with the administration of this Agreement, the other Loan Documents, and the Aggregate Commitments. For purposes
of this Section 12.25, “Information” means all information received from Borrower or any Subsidiary
relating to Borrower or any Subsidiary or any of their respective businesses, other than any such information that is available
to Administrative Agent, L/C Issuer, or any Lender on a nonconfidential basis prior to disclosure by Borrower or a Subsidiary.
Any Person required to maintain the confidentiality of Information as provided in this Section 12.25 shall be considered
to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality
of such Information as such Person would accord to its own confidential information.

 

    	CREDIT AGREEMENT - Page 107	 

     

    

 

Section
12.26Electronic Execution of Assignments and Certain Other Documents. The words “execute,” “execution,”
“signed,” “signature,” and words of like import in any Assignment and Assumption or in any amendment or
other modification hereof (including waivers and consents) shall be deemed to include electronic signatures, the electronic matching
of assignment terms and contract formations on electronic platforms approved by Administrative Agent, or the keeping of records
in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature
or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable Law,
including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and
Records Act, or any other similar state Laws based on the Uniform Electronic Transactions Act.

 

Section
12.27Intercreditor Agreement. In the event of a conflict between the provisions of any of the Loan Documents and the
provisions of the Intercreditor Agreement, the provisions of the Intercreditor Agreement shall control.

 

Section
12.28NOTICE OF FINAL AGREEMENT. THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE INTERCREDITOR AGREEMENT REPRESENT
THE FINAL AGREEMENT AMONG THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

 

[Remainder
of Page Intentionally Left Blank; Signature Pages Follow]

 

    	CREDIT AGREEMENT - Page 108	 

     

    

 

EXECUTED
to be effective as of the date first written above.

 

	 	BORROWER:
	 	 
	 	CARBON
    NATURAL GAS COMPANY
	 	 	 	 
	 	By:	
	 	 	Name:	 
	 	 	Title:	 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CREDIT AGREEMENT - Signature Page [Borrower]

 

    

     

    

 

	 	ADMINISTRATIVE
    AGENT:
	 	 
	 	LEGACYTEXAS
    BANK
	 	 
	 	By:	   
	 	 	Alison White
	 	 	Senior Vice
    President
	 	 	 
	 	LENDERS:
	 	 	 
	 	LEGACYTEXAS BANK
	 	 	 
	 	By:	             
	 	 	Alison White
	 	 	Senior Vice
    President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CREDIT AGREEMENT - Signature Page [Administrative Agent and Lenders]

    	 

    	 

    

 

 

SCHEDULE
2.1

 

Commitments
and Applicable Percentages

 

	Lender	 	Commitment	 	 	Applicable
 Percentage
	 
	LegacyTexas Bank	 	$	100,000,000	 	 	 	100.000000000	%
	 	 	 	 	 	 	 	 	 
	Total:	 	$	100,000,000	 	 	 	100.000000000	%

 

 

SCHEDULE 2.1 – Page 1

 

     

     

    

 

SCHEDULE
6.5

 

Litigation
and Judgments

 

 None.

 

 

SCHEDULE 6.5 – Page 1 

 

     

     

    

 

SCHEDULE
6.6(b)

 

Oil
and Gas Properties

 

Subject
to Confidential Treatment Status

 

 

SCHEDULE 6.6(b) – Page 1 

 

     

     

    

 

SCHEDULE
6.13

 

Subsidiaries

 

	Subsidiary	 	Jurisdiction of Incorporation or 

Organization	 	Borrower’s Ownership 

Interest	 
	Nytis Exploration (USA) Inc.	 	Delaware	 	 	100	%
	Nytis Exploration Company, LLC	 	Delaware	 	 	97.5	%

 

 

SCHEDULE 6.13 – Page 1

 

     

     

    

 

SCHEDULE
6.13(b)

 

Excluded
Subsidiaries

 

Subject
to Confidential Treatment Status

 

2.
Other Excluded Subsidiaries:

 

	 	 	Jurisdiction of Incorporation or Organization	 	Nytis LLC’s Ownership Interest	 	 	 
	Brushy Gap Coal & Gas, Inc.	 	Kentucky	 	 	100	%	 	 
	Crawford County Gas Gathering Company, LLC	 	Indiana	 	 	50	%	 	Carbon Natural Gas Company has a 50% interest in Crawford County Gas Gathering Company, LLC (“CCGGC”), an Indiana limited liability company, which owns and operates pipelines and related gathering and treating facilities.

 

 

SCHEDULE 6.13(b) – Page 1

 

     

     

    

 

SCHEDULE
6.18

 

Environmental
Matters

 

None.

 

 

SCHEDULE 6.18 – Page 1 

 

     

     

    

 

SCHEDULE
6.19

 

Intellectual
Property

 

None.

 

 

SCHEDULE 6.19 – Page 1

 

     

     

    

 

SCHEDULE
6.28

 

Material
Agreements

 

	1.	Participation
                                         Agreement dated September 17, 2012, by and among Nytis Exploration Company LLC, Carbon
                                         Natural Gas Company and Liberty Energy, LLC.
	 	 
	2.	Participation
                                         Agreement dated February 25, 2014, by and among Nytis Exploration Company LLC, Carbon
                                         Natural Gas Company and Liberty Energy, LLC.
	 	 
	3.	Addendum
                                         to Participation Agreement dated February 26, 2014, by and among Nytis Exploration Company
                                         LLC, Carbon Natural Gas Company and Liberty Energy, LLC.
	 	 
	4.	Amended
                                         and Restated Credit Agreement dated May 31, 2010, by and between Nytis Exploration Company
                                         LLC and BOKF, NA, as amended. This and associated agreements will be terminated at Closing.
	 	 
	5.	FTS
                                                                                                                                                                  Services Agreement by and between                                                            and
                                                                                                                                                                  Nytis Exploration Company LLC dated July 7, 2010.
	 	 
	6.	FTS
                                         Services Agreement by and between                                                           
                                         and Nytis Exploration Company LLC dated December 9, 2014 (Service Agreement 30091).
	 	 
	7.	FTS
                                         Services Agreement by and between                                                            and
                                         Nytis Exploration Company LLC dated December 9, 2014 (Service Agreement 30092).
	 	 
	8.	Transportation
                                         Service Agreement by and between                                      and
                                         Nytis Exploration Company LLC dated August 31, 2011.
	 	 
	9.	Agreements
                                         associated with the acquisition of the EXCO assets:

 

		a.	Purchase
                                         and Sale Agreement [dated October 3, 2016] by and among EXCO Production Company (WV),
                                         LLC, BG Production Company (WV), LLC, EXCO Resources (PA) LLC and Nytis Exploration Company
                                         LLC
	 	 	 
		b.	Mineral
                                         Farmout Agreement [dated October 3, 2016] by and among EXCO Production Company (WV),
                                         LLC, BG Production Company (WV), LLC, EXCO Resources (PA) LLC and Nytis Exploration Company
                                         LLC

 

	10.	Post-EXCO
                                         Acquisition:

 

		a.	FTS
                                                                                                                                                                                                                                                      Services Agreement by and between                                                            and                                          
                                                                                                                                                                                                                                                      dated
                                                                                                                                                                                                                                                      August 1, 2009.
	 	 	 
		b.	FTS
                                                                                                                                                                                                                            Services Agreement by and between                                                             and                                           .
                                                                                                                                                                                                                            dated April 1, 2010.

 

	11.	Denver
                                         Office Lease.
	 	 
	12.	Lexington
                                         Office Lease.

 

 

SCHEDULE 6.28 – Page 1

 

     

     

    

 

SCHEDULE
6.29

 

Hedging
Agreements and Hedging Transactions

 

None.

 

 

SCHEDULE 6.29 – Page 1

 

     

     

    

 

SCHEDULE
8.1

 

Existing
Debt

 

Subject
to Confidential Treatment Status

 

 

SCHEDULE 8.1 – Page 1 

 

     

     

    

 

SCHEDULE
8.2

 

Existing
Liens

 

Subject
to Confidential Treatment Status

 

 

SCHEDULE
8.2 – Page 1

 

     

     

    

 

SCHEDULE
8.5

 

Existing
Investments

 

	1.	Crawford County Gas Gathering Co., LLC

400
Main St., PO Box 237

Vincennes,
IN 47591

FEIN:
27-3505894

Membership
interest:50.0%

Held
by Nytis Exploration Company LLC

 

	2.	                                                     

                                                               

 

 

SCHEDULE 8.5 – Page 1

 

     

     

    

 

SCHEDULE
12.11

 

Notices

 

Notices
under this Agreement shall be given:

 

(a)       if
to Borrower, to it at 1700 Broadway, Suite 1170, Denver, Colorado 80290, Attention of                                                                                                                       ;

 

(b)       if
to Administrative Agent, to it at LegacyTexas Bank at its Principal Office at 8411 Preston Road, Suite 600, Dallas,
Texas 75225, Attention                                                                                                                      ;

 

(c)       if
to L/C Issuer, to it at LegacyTexas Bank at its Principal Office at 8411 Preston Road, Suite 600, Dallas, Texas 75225, Attention
                                                                                                                      ;
and

 

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

 

 

SCHEDULE 12.11 – Page 1

 

     

     

    

 

EXHIBIT
A

 

Assignment
and Assumption

 

This
Assignment and Assumption (the “Assignment and Assumption”) is dated as of the Effective Date set forth below
and is entered into by and between [the][each]1 Assignor identified in item 1 below ([the][each, an]
“Assignor”) and [the][each]2 Assignee identified in item 2 below ([the][each,
an] “Assignee”). [It is understood and agreed that the rights and obligations of [the Assignors][the
Assignees]3 hereunder are several and not joint.]4 Capitalized terms used but not defined herein
shall have the meanings given to them in the Credit Agreement identified below (as amended, the “Credit Agreement”),
receipt of a copy of which is hereby acknowledged by [the][each] Assignee. The Standard Terms and Conditions set forth
in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption
as if set forth herein in full.

 

For
an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to [the Assignee][the respective
Assignees], and [the][each] Assignee hereby irrevocably purchases and assumes from [the Assignor][the respective
Assignors], subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective
Date inserted by Administrative Agent as contemplated below (i) all of [the Assignor’s][the respective Assignors’]
rights and obligations in [its capacity as a Lender][their respective capacities as Lenders] under the Credit Agreement
and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest
identified below of all of such outstanding rights and obligations of [the Assignor][the respective Assignors] under the
respective facilities identified below (including without limitation any letters of credit and guarantees included in such facilities),
and (ii) to the extent permitted to be assigned under applicable Law, all claims, suits, causes of action and any other right
of [the Assignor (in its capacity as a Lender)][the respective Assignors (in their respective capacities as Lenders)] against
any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments
delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing,
including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law
or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and
obligations sold and assigned by [the][any] Assignor to [the][any] Assignee pursuant to clauses (i)
and (ii) above being referred to herein collectively as [the][an] “Assigned Interest”); provided,
however, that for the avoidance of doubt, the Assigned Interest excludes any Hedging Agreements and Hedging Transactions that
may exist between the Assignor(s) and Borrower or any other Obligated Party. Each such sale and assignment is without recourse
to [the][any] Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty
by [the][any] Assignor.

 

	1.	Assignor[s]:	 	 
	 	 	 	 
	 	 	 	 

 

 

	1	For
                                         bracketed language here and elsewhere in this form relating to the Assignor(s), if the
                                         assignment is from a single Assignor, choose the first bracketed language. If the assignment
                                         is from multiple Assignors, choose the second bracketed language.
	2	For
                                         bracketed language here and elsewhere in this form relating to the Assignee(s), if the
                                         assignment is to a single Assignee, choose the first bracketed language. If the assignment
                                         is to multiple Assignees, choose the second bracketed language.
	3	Select
                                         as appropriate.
	4	Include
                                         bracketed language if there are either multiple Assignors or multiple Assignees.

 

 

EXHIBIT A – Assignment and Assumption – Page 1

 

     

     

    

 

[Assignor
[is] [is not] a Defaulting Lender]

 

	2.	Assignee[s]:		 
	 	 	 	 
	 	 	 	 

 

[Assignee
is an [Affiliate][Approved Fund] of [identify Lender]]

 

	3.	Borrower:	Carbon
    Natural Gas Company
	 	 	 
	4.	Administrative
    Agent:	LegacyTexas
    Bank, as the administrative agent under the Credit Agreement
	 	 	 
	5.	Credit
    Agreement:	$100,000,000
    Credit Agreement dated as of October 3, 2016 among Borrower, the Lenders parties thereto, LegacyTexas Bank, as Administrative
    Agent, and the other agents parties thereto
	 	 	 
	6.	Assigned
    Interest[s]:	 

 

	Assignor[s]5	 	Assignee[s]6	 	Aggregate Amount
 of Commitment/Loans for all Lenders20
	 	 	Amount of Commitment/Loans Assigned7	 	 	Percentage Assigned of Commitment/Loans8	 	 	CUSIP Number
	 	 		 	$		 	 	$		 	 	%		 	 	
	 	 	 	 	$		 	 	$		 	 	%		 	 	 
	 	 	 	 	$		 	 	$		 	 	%		 	 	 

 

	[7.	Trade
    Date:	______________]9	 

 

 

		5	List
                                         each Assignor, as appropriate.
		6	List
                                         each Assignor, as appropriate.
		7	Amount
                                         to be adjusted by the counterparties to take into account any payments or prepayments
                                         made between the Trade Date and the Effective Date.
		8	To
                                         be completed if the Assignor(s) and the Assignee(s) intend that the minimum assignment
                                         amount is to be determined as of the Trade Date.
		9	To
                                         be added only if the consent of Administrative Agent is required by the terms of the
                                         Credit Agreement.

 

 

EXHIBIT A – Assignment and Assumption – Page 2 

 

     

     

    

 

Effective
Date: _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION
OF TRANSFER IN THE REGISTER THEREFOR.]

 

The
terms set forth in this Assignment and Assumption are hereby agreed to:

 

	 	ASSIGNOR[S]10
	 	 	 
	 	[NAME OF ASSIGNOR]
	 	 	 	 
	 	By:	 	 
	 	 	Name:	 
	 	 	Title:	 
	 	 	 	 
	 	[NAME OF ASSIGNOR]
	 	 	 	 
	 	By:	 	 
	 	 	Name:	 
	 	 	Title:	 
	 	 	 	 
	 	ASSIGNEE[S]11
	 	 	 	 
	 	[NAME OF ASSIGNEE]
	 	 	 	 
	 	By:	 	 
	 	 	Name:	 
	 	 	Title:	 
	 	 	 	 
	 	[NAME OF ASSIGNEE]
	 	 	 	 
	 	By:	 	 
	 	 	Name:	 
	 	 	Title:	 

 

 

 

	10	To
                                         be added only if the consent of Borrower and/or other parties (e.g. L/C Issuer) is required
                                         by the terms of the Credit Agreement.
	11	Add additional signature blocks as needed. Include both Fund/Pension Plan and manager making the trade (if applicable).

 

 

EXHIBIT
A – Assignment and Assumption – Page 3

 

     

     

    

 

[Consented
to and]12 Accepted:

 

LEGACYTEXAS
BANK,

as
Administrative Agent

 

	By:	 	 	 
	 	Name:	 	 
	 	Title:	 	 

 

[Consented
to]:13

 

[NAME
OF RELEVANT PARTY]

 

	By:	 	 	 
	 	Name:	 	 
	 	Title:	 	 

 

 

	12	To be added only if the consent of Administrative Agent
is required by the terms of the Credit Agreement.
	13	To be added only if the consent of Borrower and/or other
parties (e.g. L/C Issuer) is required by the terms of the Credit Agreement. 

 

 

EXHIBIT A – Assignment and Assumption – Page 4 

 

     

     

    

 

ANNEX
1

 

Standard
Terms and Conditions for Assignment and Assumption

 

	1.	Representations and Warranties.

 

1.1       Assignor[s].
[The][Each] Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of [the][the
relevant] Assigned Interest, (ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or
other adverse claim, (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this
Assignment and Assumption and to consummate the transactions contemplated hereby and (iv) it is [not] a Defaulting
Lender; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in
or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of Borrower,
any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document, or (iv) the performance
or observance by Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under
any Loan Document.

 

1.2.       Assignee[s].
[The][Each] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all
action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby
and to become a Lender under the Credit Agreement, (ii) it meets all the requirements to be an assignee under Section 12.8(b)(iii),
(v) and (vi) of the Credit Agreement (subject to such consents, if any, as may be required under Section 12.8(b)(iii)
of the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit
Agreement as a Lender thereunder and, to the extent of [the][the relevant] Assigned Interest, shall have the obligations
of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the
Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire the Assigned Interest,
is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or
has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 7.1
thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and
decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, (vi) it has,
independently and without reliance upon Administrative Agent or any other Lender and based on such documents and information as
it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase
[the][such] Assigned Interest, and (vii) if it is a Foreign Lender, attached to the Assignment and Assumption is any
documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by [the][such]
Assignee; and (b) agrees that (i) it will, independently and without reliance on Administrative Agent, [the][any]
Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue
to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance
with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

 

2.          Payments.
From and after the Effective Date, Administrative Agent shall make all payments in respect of [the][each] Assigned Interest
(including payments of principal, interest, fees and other amounts) to [the][the relevant] Assignor for amounts which have
accrued to but excluding the Effective Date and to [the][the relevant] Assignee for amounts which have accrued from and
after the Effective Date. Notwithstanding the foregoing, Administrative Agent shall make all payments of interest, fees or other
amounts paid or payable in kind from and after the Effective Date to [the][the relevant] Assignee.

 

3.          General
Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together
shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by
telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment
and Assumption shall be governed by, and construed in accordance with, the Law of the State of Texas.

 

 

ANNEX 1 – Standard Terms and Conditions for Assignment and Assumption – Page 1

 

     

     

    

 

EXHIBIT
B

 

Compliance
Certificate

 

	FOR
    QUARTER/YEAR ENDED	_______________________
    (the “Subject Period”)
	 	 
	ADMINISTRATIVE
    AGENT:	LegacyTexas
    Bank
	 	 
	BORROWER:	Carbon
    Natural Gas Company

 

This
Compliance Certificate (this “Certificate”) is delivered under the Credit Agreement (the “Credit Agreement”)
dated as of October 3, 2016, by and among Borrower, the Lenders from time to time party thereto and Administrative Agent. Capitalized
terms used in this Certificate shall, unless otherwise indicated, have the meanings set forth in the Credit Agreement. The undersigned
hereby certifies to Administrative Agent and Lenders as of the date hereof that: (a) he/she is the ___________________ of
Borrower, and that, as such, he/she is authorized to execute and deliver this Certificate to Administrative Agent on behalf of
Borrower; (b) he/she has reviewed and is familiar with the terms of the Credit Agreement and has made, or has caused to be
made under his/her supervision, a detailed review of the transactions and condition (financial or otherwise) of Borrower during
the Subject Period; (c) during the Subject Period, Borrower performed and observed each covenant and condition of the Loan
Documents applicable to it and no Default or Event of Default currently exists or has occurred which has not been cured or waived
by Required Lenders or all Lenders, as required by the Loan Documents; (d) the representations and warranties of Borrower
contained in Article 6 of the Credit Agreement, and any representations and warranties of Borrower that are contained
in any document furnished at any time under or in connection with the Loan Documents, are true and correct on and as of the date
hereof, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they
are true and correct as of such earlier date, and except that for purposes of this Certificate, the representations and warranties
contained in Section 6.2 of the Credit Agreement shall be deemed to refer to the most recent statements furnished
pursuant to Section 7.1 of the Credit Agreement, including the statements in connection with which this Certificate
is delivered; (e) the financial statements of Borrower attached to this Certificate were prepared in accordance with GAAP,
and present, on a consolidated basis, fairly and accurately the financial condition and results of operations of Borrower and
its Subsidiaries as of the end of and for the Subject Period; (f) the update to Schedule 6.29 attached hereto sets
forth a complete and correct list of all Hedging Agreements and Hedging Transactions in effect or to be in effect as of the date
hereof, the material terms thereof (including the type, term, effective date, termination date and notional amounts or values),
the Hedge Termination Value thereof, and the counterparty thereto; (g) the financial covenant analyses and information set
forth below are true and accurate on and as of the date of this Certificate; and (h) the status of compliance by Borrower
with certain covenants of the Credit Agreement at the end of the Subject Period is as set forth below:

 

	 	 	In
    Compliance as of 

    End of Subject Period 

    (Please Indicate)
	 	 	 	 	 
	1.	Financial
    Statements and Reports	 	 
	 	 	 	 
	 	(a)	
        Provide
annual audited FYE financial statements within 90 days after the last day of each fiscal year.
	Yes	No

 

 

EXHIBIT B – Compliance Certificate – Page 1

 

     

     

    

 

	 	In Compliance as of
 End of Subject Period
 (Please Indicate)
	 	 	 	 	 
	 	(b)	
        Provide
quarterly financial statements within 60 days after the last day of each fiscal quarter.
	Yes	No
	 	 	 	 	 
	 	(c)	Provide other required reporting timely.	Yes	No
	 	 	 	 	 
	2.	Subsidiaries

    None, except as listed on Schedule 6.13.	Yes	No
	 	 	 	 
	3.	Debt
    

    None, except Debt permitted by Section 8.1
    of the Credit Agreement.	Yes	No
	 	 	 	 
	4.	Liens

    None, except Liens permitted by Section 8.2
    of the Credit Agreement.	Yes	No
	 	 	 	 
	5.	Acquisitions
    and Mergers 

    None, except those permitted by Section 8.3
    of the Credit Agreement.	Yes	No
	 	 	 	 
	6.	Dividends
    and Stock Repurchase 

    None, except as permitted by Section 8.4
    of the Credit Agreement. (if applicable, Dollar amount during Subject Period: $_____)	Yes	No
	 	 	 	 
	7.	Loans
    and Investments

    None, except those permitted by Section 8.5
    of the Credit Agreement.	Yes	No
	 	 	 	 
	8.	Issuance
    of Equity 

    None, except issuances permitted by Section 8.6
    of the Credit Agreement.	Yes	No
	 	 	 	 
	9.	Affiliate
    Transactions 

    None, except transactions permitted by Section 8.7
    of the Credit Agreement.	Yes	No
	 	 	 	 
	10.	Dispositions
    of Assets 

    None, except Dispositions permitted by Section 8.8
    of the Credit Agreement.	Yes	No
	 	 	 	 
	11.	Sale
    and Leaseback Transactions 

    None, except transactions permitted by Section 8.9
    of the Credit Agreement.	Yes	No
	 	 	 	 
	12.	Prepayment
    of Debt 

    None, except prepayments permitted by Section 8.10
    of the Credit Agreement.	Yes	No
	 	 	 	 
	13.	Changes
    in Nature of Business

    None, except changes permitted by Section 8.11
    of the Credit Agreement.	Yes	No
	 	 	 	 
	14.	Environmental
    Protection 

    No activity likely to cause violations of Environmental
    Laws or create any Environmental Liabilities.	Yes	No
	 	 	 	 
	15.	Changes
    in Fiscal Year; Accounting Practices 

    None, except transactions permitted by Section 8.13
    of the Credit Agreement.	Yes	No

 

 

EXHIBIT B – Compliance Certificate
– Page 2

 

     

     

    

 

	 	In Compliance as of

End of Subject Period

(Please Indicate)

	 	 	 	 
	16.	No Negative Pledge

    None, except those permitted by Section 8.14 of the Credit Agreement.	Yes	No
	 	 	 	 
	17.	Hedging Agreements, Transactions and Terminations

None, except those permitted by Section 8.17 of the Credit Agreement.	Yes	No
	 	 	 	 
	18.	Gas Balancing Agreements and Advance Payment Contracts

None, except those permitted by Section 8.18 of the Credit Agreement.	Yes	No
	 	 	 	 
	19.	Amendments to JOAs

None, except those permitted by Section 8.21 of the Credit Agreement.	Yes	No
	 	 	 	 
	20.	Leverage Ratio 

Maximum of 3.50 to 1.00 at end of Subject Period (defined as Debt divided by EBITDA; calculated for the Test Period then ended). 	 	 

 

	 	 	÷	 	=	 	 	 	 
	 	Debt	 	EBITDAX	 	 	 	Yes	No

  

	21.	Current Ratio
    

    Minimum of 1.00 to 1.00 at end of Subject Period
    (defined as current assets divided by current liabilities). 	Yes	No

 

	 	 	÷	 	=	 	 	 	 
	 	Current
    Assets 	 	Current
    Liabilities	 	 	 	 	 

 

 

EXHIBIT B – Compliance Certificate – Page 3

 

     

     

    

 

IN
WITNESS WHEREOF, the undersigned has executed this Certificate as of _____________________, _____.

 

	 	BORROWER:
	 	 	 
	 	CARBON NATURAL GAS COMPANY
	 	 	 	 
	 	By:	 	 
	 	 	Name:	 
	 	 	Title:	 

 

 

EXHIBIT
B – Compliance Certificate – Page 4

 

     

     

    

 

EXHIBIT
C

 

Borrowing
Request

 

Date:
___________, _____

 

	To:	LegacyTexas
                                         Bank, as Administrative Agent

 

Ladies
and Gentlemen:

 

Reference
is made to that certain Credit Agreement, dated as of October 3, 2016 (as amended, restated, extended, supplemented or otherwise
modified in writing from time to time, the “Credit Agreement;” the terms defined therein being used herein
as therein defined), among Carbon Natural Gas Company, a Texas corporation (“Borrower”), the Lenders from time
to time party thereto, and LegacyTexas Bank, as Administrative Agent and L/C Issuer.

 

The
undersigned hereby requests (select one):

 

	 	☐	A
    Borrowing of Loans
	 	 	 
	 	☐	A
    conversion or continuation of Loans
	 	 	 
	 	 	1.	On
    ________________________________________ (a Business Day).
	 	 	 	 
	 	 	2.	In
    the amount of $______________________
	 	 	 	 
	 	 	3.	Comprised
    of _______________________________________
	 	 	 	(Type
    of Portion requested)
	 	 	 	 
	 	 	4.	For
    LIBOR Portion: with an Interest Period of ____ months.

 

Borrower
hereby represents and warrants that the conditions specified in Section 5.2 of the Credit Agreement shall be satisfied
on and as of the date of the requested Borrowing.

 

	 	BORROWER:
	 	 	 
	 	CARBON NATURAL GAS COMPANY
	 	 	 	 
	 	By:	 	 
	 	 	Name:	 
	 	 	Title:	 

 

 

EXHIBIT C – Borrowing Request – Page Solo

 

     

     

    

 

EXHIBIT
D

 

Note

 

	 	____________,
    20___

 

FOR
VALUE RECEIVED, Carbon Natural Gas Company, a Texas corporation (“Borrower”), hereby promises to pay to the
order of _______________________________ (“Lender”), in accordance with the provisions of the Credit
Agreement (as hereinafter defined), the principal amount of each Loan or so much thereof as may be advanced by Lender (in its
capacity as Lender) from time to time to or for the benefit or account of Borrower under that certain Credit Agreement, dated
as of October 3, 2016 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Credit
Agreement;” the terms defined therein being used herein as therein defined), among Borrower, the lenders from time to
time party thereto, and LegacyTexas Bank, as Administrative Agent (in such capacity, “Administrative Agent”)
and L/C Issuer.

 

Borrower
promises to pay interest on the unpaid principal amount of this Note from the date hereof until the Loans made by Lender are paid
in full, at such interest rates and at such times as provided in the Credit Agreement. All payments of principal and interest
shall be made to Administrative Agent for the account of Lender in Dollars in immediately available funds at Administrative Agent’s
Principal Office. If any amount is not paid in full when due hereunder, then such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the
per annum rate set forth in the Credit Agreement.

 

This
Note is one of the Notes referred to in the Credit Agreement, is entitled to the benefits thereof and may be prepaid in whole
or in part subject to the terms and conditions provided therein. This Note is also entitled to the benefits of the Guaranties.
Upon the occurrence and continuation of one or more of the Events of Default specified in the Credit Agreement, all amounts then
remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable all as provided in the Credit
Agreement. The Loans made by Lender shall be evidenced by an account maintained by Lender in the ordinary course of business.
Lender may also attach schedules to this Note and endorse thereon the date, amount and maturity of its Loans and payments with
respect thereto.

 

Borrower,
for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Note.

 

THIS
NOTE, AND ANY CLAIM, CONTROVERSY, OR DISPUTE ARISING OUT OF OR IN CONNECTION WITH THIS NOTE, SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.

 

[Remainder
of Page Intentionally Left Blank

Signature
Page Follows]

 

EXHIBIT D – Note – Page 1

 

     

     

    

 

IN
WITNESS WHEREOF, Borrower, intending to be legally bound hereby, has duly executed this Note as of the day and year first written
above.

 

	 	BORROWER:
	 	 	 	 
	 	CARBON NATURAL GAS COMPANY
	 	 	 	 
	 	By:	 	 
	 	 	Name:	 
	 	 	Title:	 

 

 

EXHIBIT D – Note – Page 2

 

     

     

    

 

EXHIBIT
E-1

 

U.S.
Tax Compliance Certificate

(For
Foreign Lenders That Are Not Partnerships for U.S. Federal Income Tax Purposes)

 

Reference
is hereby made to the Credit Agreement dated as of October 3, 2016 (as amended, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among Carbon Natural Gas Company, a Texas corporation (“Borrower”),
LegacyTexas Bank, as Administrative Agent and L/C Issuer, and each Lender from time to time party thereto.

 

Pursuant
to the provisions of Section 3.4 of the Credit Agreement, the undersigned hereby certifies that (i) it is the
sole record and beneficial owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing
this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not
a ten percent shareholder of Borrower within the meaning of Section 871(h)(3)(B) of the Code and (iv) it is not a controlled
foreign corporation related to Borrower as described in Section 881(c)(3)(C) of the Code.

 

The
undersigned has furnished Administrative Agent and Borrower with a certificate of its non-U.S. Person status on IRS Form W-8BEN.
By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the
undersigned shall promptly so inform Borrower and Administrative Agent, and (2) the undersigned shall have at all times furnished
Borrower and Administrative Agent with a properly completed and currently effective certificate in either the calendar year in
which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

 

Unless
otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit
Agreement.

 

[NAME
OF LENDER]

 

	By:	 	 	 
	 	Name:	                   	 
	 	Title:	 	 
	 	 	 	 
	Date:	______________
    ____, 20__	 

 

 

EXHIBIT E – U.S. Tax Compliance Certificate – Page 1

 

     

     

    

 

EXHIBIT
E-2

 

U.S.
Tax Compliance Certificate

(For
Foreign Participants That Are Not Partnerships for U.S. Federal Income Tax Purposes)

 

Reference
is hereby made to the Credit Agreement dated as of October 3, 2016 (as amended, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among Carbon Natural Gas Company, a Texas corporation (“Borrower”),
LegacyTexas Bank, as Administrative Agent and L/C Issuer, and each Lender from time to time party thereto.

 

Pursuant
to the provisions of Section 3.4 of the Credit Agreement, the undersigned hereby certifies that (i) it is the
sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not
a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of Borrower
within the meaning of Section 871(h)(3)(B) of the Code and (iv) it is not a controlled foreign corporation related to
Borrower as described in Section 881(c)(3)(C) of the Code.

 

The
undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN. By executing
this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned
shall promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such Lender with
a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the
undersigned, or in either of the two calendar years preceding such payments.

 

Unless
otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit
Agreement.

 

[NAME OF PARTICIPANT] 

 

	By:	 	 	 
	 	Name:	                   	 
	 	Title:	 	 
	 	 	 	 
	Date:	______________
    ____, 20__	 

 

 

EXHIBIT
E – U.S. Tax Compliance Certificate – Page 2 

 

     

     

    

 

EXHIBIT
E-3

 

U.S.
Tax Compliance Certificate

(For
Foreign Participants That Are Partnerships for U.S. Federal Income Tax Purposes)

 

Reference
is hereby made to the Credit Agreement dated as of October 3, 2016 (as amended, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among Carbon Natural Gas Company, a Texas corporation (“Borrower”),
LegacyTexas Bank, as Administrative Agent and L/C Issuer, and each Lender from time to time party thereto.

 

Pursuant
to the provisions of Section 3.4 of the Credit Agreement, the undersigned hereby certifies that (i) it is the
sole record owner of the participation in respect of which it is providing this certificate, (ii) its direct or indirect
partners/members are the sole beneficial owners of such participation, (iii) with respect such participation, neither the
undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered
into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none
of its direct or indirect partners/members is a ten percent shareholder of Borrower within the meaning of Section 871(h)(3)(B)
of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to Borrower
as described in Section 881(c)(3)(C) of the Code.

 

The
undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from each of
its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or (ii) an IRS Form W-8IMY
accompanied by an interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided
on this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all
times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which
each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

 

Unless
otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit
Agreement.

 

[NAME
OF PARTICIPANT]

 

	By:	 	 	 
	 	Name:	                   	 
	 	Title:	 	 
	 	 	 	 
	Date:	______________
    ____, 20__	 

 

 

EXHIBIT
E – U.S. Tax Compliance Certificate – Page 3 

 

     

     

    

 

EXHIBIT
E-4

 

U.S.
Tax Compliance Certificate

(For
Foreign Lenders That Are Partnerships for U.S. Federal Income Tax Purposes)

 

Reference
is hereby made to the Credit Agreement dated as of October 3, 2016 (as amended, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among Carbon Natural Gas Company, a Texas corporation (“Borrower”),
LegacyTexas Bank, as Administrative Agent and L/C Issuer, and each Lender from time to time party thereto.

 

Pursuant
to the provisions of Section 3.4 of the Credit Agreement, the undersigned hereby certifies that (i) it is the
sole record owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate,
(ii) its direct or indirect partners/members are the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing
such Loan(s)), (iii) with respect to the extension of credit pursuant to this Credit Agreement or any other Loan Document,
neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement
entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none
of its direct or indirect partners/members is a ten percent shareholder of Borrower within the meaning of Section 871(h)(3)(B)
of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to Borrower
as described in Section 881(c)(3)(C) of the Code.

 

The
undersigned has furnished Administrative Agent and Borrower with IRS Form W-8IMY accompanied by one of the following forms from
each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or (ii) an IRS
Form W-8IMY accompanied by an interest exemption. By executing this certificate, the undersigned agrees that (1) if the information
provided on this certificate changes, the undersigned shall promptly so inform Borrower and Administrative Agent, and (2) the
undersigned shall have at all times furnished Borrower and Administrative Agent with a properly completed and currently effective
certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar
years preceding such payments.

 

Unless
otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit
Agreement.

 

[NAME
OF LENDER]

 

	By:	 	 	 
	 	Name:	                   	 
	 	Title:	 	 
	 	 	 	 
	Date:	______________
    ____, 20__	 

 

 

EXHIBIT
E – U.S. Tax Compliance Certificate – Page 4 

 

     

     

    

 

EXHIBIT
F

 

Form
of Borrowing Base Adjustment Letter

 

As
of __________, 201__

 

Carbon
Natural Gas Company

____________________

____________________

 

	Re:	Adjustment of Borrowing Base

 

Ladies
and Gentlemen:

 

We
refer to that certain Credit Agreement, dated as of October 3, 2016 (as amended from time to time, the “Credit Agreement”)
among Carbon Natural Gas Company, a Texas corporation (“Borrower”), the financial institutions from time to
time party thereto (the “Lenders”), and LegacyTexas Bank, as administrative agent for the Lenders (“Administrative
Agent”). The defined terms used in this letter have the same meanings as are provided therefor in the Credit Agreement.

 

This
letter will confirm our agreements with respect to the Borrowing Base:

 

		(a)	[Increase][Decrease][Reaffirmation]
                                         of Borrowing Base. Effective as of the date hereof [and subject to the payment
                                         of the fee described below], the Borrowing Base is hereby [[increased][decreased]
                                         from [$__________] to [$__________]][reaffirmed at $__________]. The foregoing adjustment
                                         of the Borrowing Base is a periodic redetermination of the Borrowing Base under Section
                                         2.9(b) of the Credit Agreement.
	 	 	 
		(b)	[Borrowing
                                         Base Increase Fee. The incremental increase in the Borrowing Base is $__________.
                                         As a condition to the increase in the Borrowing Base set forth above, Borrower will pay
                                         the Lenders a fee of $__________ for such incremental increase (_____% of $__________),
                                         to be shared among the Lenders in accordance with their Applicable Percentages.]
	 	 	 
		(c)	Determination
                                         Date. The Borrowing Base as adjusted will remain in effect until __________,
                                         201__, which is the date of the next periodic redetermination of the Borrowing Base,
                                         unless otherwise adjusted pursuant to the provisions of Section 2.9 of the Credit Agreement.

 

The
agreements set forth herein are limited precisely as written and shall not be deemed (a) to be a waiver of or a consent to
the modification of or deviation from any other term or condition of the Loan Documents, or (b) to prejudice any right or
rights which Administrative Agent or the Lenders may now have or may have in the future under or in connection with the Loan Documents.
This letter constitutes a Loan Document under the Credit Agreement.

 

The
failure by Administrative Agent and the Lenders to exercise available rights and remedies is not intended (a) to operate as a
waiver of rights and remedies except as expressly herein provided, and (b) to indicate any agreement on the part of Administrative
Agent and the Lenders to waive their rights and remedies in the future. Administrative Agent and the Lenders are not obligated
in any way with respect to future dealings between them and Borrower, except as set forth in the presently existing Loan Documents.

 

[Remainder
of page intentionally left blank. Signature pages follow.]

 

 

EXHIBIT F – Borrowing Base Adjustment Letter – Page 1 

 

     

     

    

 

Kindly
sign and return the enclosed counterpart of this letter.

 

	 	Very
    truly yours,
	 	 
	 	LEGACYTEXAS
    BANK
	 	as
    Administrative Agent and as a Lender
	 	 	 
	 	By:	             
	 	Name:	 
	 	Title:	 

 

 

EXHIBIT F – Form of Borrowing Base Adjustment Letter – Signature Page

 

     

     

    

 

AGREED
AND ACCEPTED:

as
of __________, 201__

 

CARBON
NATURAL GAS COMPANY,

as
Borrower

 

	By:	 	 
	Name:	 	 
	Title:	 	 

 

 

EXHIBIT F – Form of Borrowing Base Adjustment Letter – Signature PageExhibit
10.1(a)

 

UNCONDITIONAL
GUARANTY

 

THIS
UNCONDITIONAL GUARANTY (this "Guaranty") dated as of October 3, 2016, is made by NYTIS EXPLORATION COMPANY LLC,
a Delaware limited liability company, NYTIS EXPLORATION (USA) INC., a Delaware corporation, each a Subsidiary of CARBON NATURAL
GAS COMPANY, a Delaware corporation ("Borrower"), whether as an original signatory hereto or as an Additional
Guarantor (together with each such Person's permitted successors and permitted assigns, collectively, "Guarantors"
and each individually, a "Guarantor"), in favor of LEGACYTEXAS BANK, as administrative agent for the benefit
of the Guaranteed Parties, as defined herein (in such capacity, "Administrative Agent"), and is executed and
delivered pursuant to that certain Credit Agreement dated as of the date hereof (as the same may be amended, restated or modified
from time to time, the "Credit Agreement") among Administrative Agent, the financial institutions party thereto
(the "Lenders") and Borrower.

 

WHEREAS,
Borrower has executed and delivered the Credit Agreement, and to induce the Guaranteed Parties to make the loans and other financial
accommodations provided for in the Credit Agreement and any Bank Product Agreements, Guarantors have agreed to guarantee the payment
and satisfaction of the Obligations and to execute and deliver this Guaranty; and

 

WHEREAS,
each Guarantor is a Subsidiary of Borrower, and each Guarantor desires that the Guaranteed Parties extend credit and make financial
accommodations to Borrower as contemplated by the Credit Agreement, and each Guarantor will directly or indirectly benefit from
the extensions of credit and financial accommodations for the purposes for which the credit and financial accommodations are being
extended pursuant to the Credit Agreement and the Bank Product Agreements; and

 

WHEREAS,
each Guarantor, by and through the action of its governing body, has determined that it may reasonably be expected to benefit,
directly or indirectly, from guarantying the Obligations, all as hereinafter provided;

 

NOW,
THEREFORE, in consideration of the foregoing, and intending to be legally bound hereby, Guarantors guarantee to the Guaranteed
Parties the prompt and full payment and performance of the Obligations upon the following terms and conditions:

 

1.       Definitions.
Capitalized terms used herein which are defined in the Credit Agreement have the meanings provided
therefor in the Credit Agreement unless the context hereof otherwise requires or provides. As used herein:

 

"Guaranteed
Parties" means the collective reference
to Administrative Agent, each Lender, the L/C Issuer, each Bank Product Provider and any other Person the Obligations owing to
which are, or are purported to be, guaranteed under the terms hereof.

 

"Release
Date" means the last to occur of the dates on which Liens securing the Obligations may be released pursuant to Section 11.9(a)(i)
of the Credit Agreement.

 

    UNCONDITIONAL GUARANTY – Page 1 

     

    

 

2.       Guaranty.

 

(a)       In
consideration of loans, advances or other credit heretofore or hereafter granted by the Guaranteed Parties to Borrower pursuant
to the Credit Agreement and in further consideration of any Bank Product Agreements, Guarantors hereby, jointly and severally,
unconditionally, absolutely and irrevocably, guarantee to the Guaranteed Parties the due and
punctual payment at maturity, whether by acceleration or otherwise, and the due fulfillment and performance of the Obligations.
 Each Guarantor is jointly and severally liable for the full payment and performance of the Obligations as a primary obligor.

 

(b)       In
order to provide for just and equitable contribution among the Guarantors, subject to Section 6 hereof, the Guarantors
agree that in the event a payment shall be made on any date under this Guaranty by any Guarantor (the "Funding Guarantor"),
each other Guarantor (each a "Contributing Guarantor") shall indemnify the Funding Guarantor in an amount
equal to the amount of such payment, in each case multiplied by a fraction the numerator of which shall be the net worth of the
Contributing Guarantor as of such date and the denominator of which shall be the aggregate net worth of all the Contributing Guarantors
together with the net worth of the Funding Guarantor as of such date. Any Contributing Guarantor making any payment to a Funding
Guarantor pursuant to this Section 2(b) shall be subrogated to the rights of such Funding Guarantor to the extent of such
payment.

 

3.       Payment.
If any of the Obligations is not punctually paid when the same becomes due and payable, either by its terms or as a result of
the exercise of any power to accelerate, Guarantors shall, immediately on demand and without presentment, protest, notice of protest,
notice of nonpayment, notice of intent to accelerate, notice of acceleration or any other notice whatsoever (all of which are
expressly waived in accordance with Section 4 hereof), pay to Administrative Agent the amount due and payable thereon at
its office specified in the Credit Agreement. It is not necessary for Administrative Agent, in order to enforce such payment by
Guarantors, first to institute suit or exhaust its remedies against Borrower or others liable on the Obligations, or to enforce
its rights against any security given to secure the Obligations. Administrative Agent is not required to mitigate damages or take
any other action to reduce, collect or enforce the Obligations. No setoff, counterclaim, reduction or diminution of any obligation,
or any defense of any kind which any Guarantor has or may have against Borrower or any Guaranteed Party shall be available hereunder
to Guarantors. No payment by any Guarantor shall discharge the liability of Guarantors hereunder until the Obligations have been
fully satisfied and the Release Date shall have occurred. If Administrative Agent must rescind or restore any payment, or any
part thereof, received by Administrative Agent on any part of the Obligations, any prior release or discharge from the terms of
this Guaranty given Guarantors by Administrative Agent or any reduction of any Guarantor's liability hereunder shall be without
effect, and this Guaranty shall remain in full force and effect. Each Guarantor shall make all payments hereunder without setoff
or counterclaim and free and clear of and without deduction for any taxes, levies, imposts, duties, charges, fees, deductions,
withholdings, compulsory loans, restrictions or conditions of any nature now or hereafter imposed or levied by any jurisdiction
or any political subdivision thereof or taxing or other authority therein unless such Guarantor is compelled by law to make such
deduction or withholding. If any such obligation (other than one arising with respect to taxes based on or measured by the income
or profits of the Guaranteed Parties) is imposed upon any Guarantor with respect to any amount payable by it hereunder, such Guarantor
will pay to the Administrative Agent, on behalf of the Guaranteed Parties, on the date on which such amount is due and payable
hereunder, such additional amount in Dollars as shall be necessary to enable the Guaranteed Parties to receive the same net amount
which the Guaranteed Parties would have received on such due date had no such obligation been imposed upon such Guarantor. Each
Guarantor will deliver promptly to the Administrative Agent, on behalf of the Guaranteed Parties, certificates or other valid
vouchers for all taxes or other charges deducted from or paid with respect to payments made by such Guarantor hereunder. The obligations
of each Guarantor under this Section 3 shall survive the payment in full of the Obligations and termination of this Guaranty.

 

    UNCONDITIONAL GUARANTY – Page 2 

     

    

 

4.       Agreements
and Waivers. To the extent not prohibited by applicable Law, each Guarantor:

 

(a)       agrees
to all terms and agreements heretofore or hereafter made by Borrower with Administrative Agent and/or any other Guaranteed Party;

 

(b)       agrees
that Administrative Agent may without impairing its rights or the obligations of such Guarantor hereunder (i) waive or delay the
exercise of any of its rights or remedies against or release Borrower or any other Person, including, without limitation, any
other Person who is or whose Property is liable with respect to the Obligations or any part thereof (Guarantors and any such other
Person or Persons are hereafter collectively called the "Sureties" and
each individually called a "Surety"); (ii) take or accept any other
security, collateral or guaranty, or other assurance of the payment of all or any part of the Obligations; (iii) release, surrender,
exchange, or subordinate any collateral, property or security, at any time existing in connection with, or assuring or securing
payment of, all or any part of the Obligations or the liability of such Guarantor or any other Surety; (iv) increase, renew, extend,
or modify the terms of any of the Obligations or any instrument or agreement evidencing the same; (v) apply payments by Borrower,
any Surety, or any other Person to any of the Obligations; (vi) bring suit against any one or more Sureties without joining any
other Surety or Borrower in such proceeding; (vii) compromise or settle with any one or more Sureties in whole or in part for
such consideration or no consideration as Administrative Agent may deem appropriate; or (viii) partially or fully release any
Guarantor or any other Surety from liability hereunder;

 

(c)       agrees
that the obligations of such Guarantor under this Guaranty shall not be released, diminished, or adversely affected by any of
the following: (i) the insolvency, bankruptcy, rearrangement, adjustment, composition, liquidation, disability, dissolution or
lack of power of Borrower or any Surety; (ii) the invalidity, illegality or unenforceability of all or any part of the Obligations
or any document or agreement executed in connection with the Obligations, for any reason, or the fact that any debt included in
the Obligations exceeds the amount permitted by law; (iii) the fact that any collateral, security, security interest or Lien contemplated
or intended to be given, created or granted as security for the repayment of the Obligations is not properly perfected or created,
or proves to be unenforceable or subordinate to any other security interest or Lien; (iv) the fact that Borrower has any defense
to the payment of all or any part of the Obligations; (v) any payment by Borrower or any Surety to Administrative Agent and/or
any other Guaranteed Party is a preference under applicable Debtor Relief Laws, or for any reason Administrative Agent and/or
any other Guaranteed Party is required to refund such payment or pay such amounts to Borrower, any such Surety, or someone else;
(vi) any defenses which Borrower could assert on the Obligations, including but not limited to failure of consideration, breach
of warranty, fraud, accord and satisfaction, strict foreclosure, statute of frauds, bankruptcy, statute of limitations, lender
liability and usury; or (vii) any other action taken or omitted to be taken with respect to the Credit
Agreement, the Loan Documents, the Obligations, the security and the collateral therefor whether or not such action or
omission prejudices such Guarantor or any Surety or increases the likelihood that such Guarantor will be required to pay the Obligations
pursuant to the terms hereof;

 

(d)       agrees
that such Guarantor is obligated to pay the Obligations when due, notwithstanding any occurrence, circumstance, event, action
or omission whatsoever whether or not particularly described herein, except for the full and final payment and satisfaction of
the Obligations;

 

(e)       waives
all rights and remedies now or hereafter accorded by applicable Law to guarantors or sureties, including without limitation any
defense, right of offset or other claim which such Guarantor may have against Borrower or which Borrower may have against Administrative
Agent and/or the Guaranteed Parties;

 

(f)       waives
all notices whatsoever with respect to this Guaranty or with respect to the Obligations, including, but without limitation, notice
of (i) Administrative Agent's and/or the Guaranteed Parties' acceptance hereof or its or their intention to act, or its or their
action, in reliance hereon; (ii) the present existence, future incurring, or any amendment of the provisions of any of the Obligations
or any terms or amounts thereof or any change therein in the rate of interest thereon; (iii) any default by Borrower or any Surety;
or (iv) the obtaining, enforcing, or releasing of any guaranty or surety agreement (in addition hereto), pledge, assignment, or
other security for any of the Obligations;

 

    UNCONDITIONAL GUARANTY – Page 3 

     

    

 

(g)       waives
notice of presentment for payment, notice of protest, protest, demand, notice of intent to accelerate, notice of acceleration
and notice of nonpayment, protest in relation to any instrument evidencing any of the Obligations, and any demands and notices
required by Law, except as such waiver may be expressly prohibited by Law, and diligence in bringing suits against any Surety;
and

 

(h)       waives
each right to which it may be entitled by virtue of the laws of the State of Texas governing or relating to suretyship and guaranties,
including, without limitation, any rights under Rule 31, Texas Rules of Civil Procedure, Chapter 51 of the Texas Property Code,
Section 17.001 of the Texas Civil Practice and Remedies Code, Section 3.605 of the UCC, and Chapter 43 of the Texas Civil Practice
and Remedies Code, as any or all of the same may be amended or construed from time to time, or the common law of the State of
Texas at all relevant times.

 

5.       Liability.
The liability of each Guarantor under this Guaranty is irrevocable, absolute and unconditional, without regard to the liability
of any other Person, and shall not in any manner be affected by reason of any action taken or not taken by Administrative Agent
and/or any other Guaranteed Party, which action or inaction is herein consented and agreed to, nor by the partial or complete
unenforceability or invalidity of any other guaranty or surety agreement, pledge, assignment or other security for any of the
Obligations. No delay in making demand on Sureties or any of them for satisfaction of the liability hereunder shall prejudice
Administrative Agent's right to enforce such satisfaction. All of Administrative Agent's rights and remedies shall be cumulative
and any failure of Administrative Agent to exercise any right hereunder shall not be construed as a waiver of the right to exercise
the same or any other right at any time, and from time to time, thereafter. This is a continuing guaranty of payment, not a guaranty
of collection, and this Guaranty shall be binding upon Guarantors regardless of how long before or after the date hereof any of
the Obligations were or are incurred.

 

6.       Subordination.
If Borrower or any other Obligated Party is now or hereafter becomes indebted to one or more Guarantors (such indebtedness and
all interest thereon is referred to as the "Affiliated Debt"), such Affiliated Debt shall be subordinate in all
respects to the full payment and performance of the Obligations, and no Guarantor shall be entitled to enforce or, during the
existence of an Event of Default, receive payment with respect to any Affiliated Debt until the Release Date. Each
Guarantor agrees that any Liens, mortgages, deeds of trust, security interests, judgment liens, charges or other encumbrances
upon Borrower's or any other Obligated Party's assets securing the payment of the Affiliated
Debt shall be and remain subordinate and inferior to any Liens, security interests, judgment liens, charges or other encumbrances
upon Borrower's or any other Obligated Party's assets securing the payment of the Obligations,
and without the prior written consent of Administrative Agent, no Guarantor shall exercise or enforce any creditor's rights of
any nature against Borrower or any other Obligated Party to collect the Affiliated Debt
(other than demand payment therefor). In the event of the receivership, bankruptcy, reorganization, arrangement, debtor's relief
or other insolvency proceedings involving Borrower or any applicable Obligated Party as
a debtor, Administrative Agent has the right and authority, either in its own name or as attorney-in-fact for any applicable Guarantor,
to file such proof of debt, claim, petition or other documents and to take such other steps as are necessary to prove its rights
hereunder and receive directly from the receiver, trustee or other court custodian, payments, distributions or other dividends
which would otherwise be payable upon the Affiliated Debt. Each Guarantor hereby assigns such payments, distributions and dividends
to Administrative Agent, and irrevocably appoints Administrative Agent as its true and lawful attorney-in-fact with authority
to make and file in the name of such Guarantor any proof of debt, amendment of proof of debt, claim, petition or other document
in such proceedings and to receive payment of any sums becoming distributable on account of the Affiliated Debt, and to execute
such other documents and to give acquittances therefor and to do and perform all such other acts and things for and on behalf
of such Guarantor as may be necessary in the opinion of Administrative Agent in order to have the Affiliated Debt allowed in any
such proceeding and to receive payments, distributions or dividends of or on account of the Affiliated Debt.

 

    UNCONDITIONAL GUARANTY – Page 4 

     

    

 

7.       Subrogation.
No Guarantor waives or releases any rights of subrogation, reimbursement or contribution which such Guarantor may have, after
full and final payment of the Obligations, against others liable on the Obligations. Each Guarantor's rights of subrogation and
reimbursement are subordinate in all respects to the rights and claims of Administrative Agent and the other Guaranteed Parties,
and no Guarantor may exercise any rights it may acquire by way of subrogation under this Guaranty, by payment made hereunder or
otherwise, until the Release Date. If any amount is paid to any Guarantor on account of such subrogation rights prior to the Release
Date, such amount shall be held in trust for the benefit of Administrative Agent and/or the other Guaranteed Parties to be credited
and applied on the Obligations, whether matured or unmatured. If all Obligations have been paid in full and on the Release Date,
there is no proceeding pending to recover any payments made on or transfers of property with respect to the Obligations from Lenders,
such trust shall be released. If on the Release Date, any proceeding to recover payments made on or transfers of property with
respect to the Obligations from Lenders is pending, such funds shall be held in trust until the final resolution of such proceeding.

 

8.       Other
Indebtedness or Obligations of Guarantors. If any Guarantor is or becomes liable for any indebtedness owed by Borrower
or any other Obligated Party to the Guaranteed Parties by endorsement or otherwise than under this Guaranty, such liability shall
not be affected by this Guaranty, and the rights of Administrative Agent and the Guaranteed Parties hereunder shall be cumulative
of all other rights that Administrative Agent and the Guaranteed Parties may have against such Guarantor. The exercise by Administrative
Agent of any right or remedy hereunder or under any other instrument or at law or in equity shall not preclude the concurrent
or subsequent exercise of any other instrument or remedy at law or in equity and shall not preclude the concurrent or subsequent
exercise of any other right or remedy. Further, without limiting the generality of the foregoing, this Guaranty is given by Guarantors
as an additional guaranty to all guaranties heretofore or hereafter executed and delivered to Administrative Agent and/or the
Guaranteed Parties by Guarantors in favor of Administrative Agent and/or the Guaranteed Parties relating to the indebtedness of
Borrower and the other Obligated Parties to the Guaranteed Parties, and nothing herein shall be deemed to replace or be in lieu
of any other of such previous or subsequent guarantees.

 

9.       Representations.
Each Guarantor represents as follows:

 

(a)       such
Guarantor has received, or will receive, direct or indirect benefit from the Obligations and from the making of this Guaranty;

 

(b)       such
Guarantor is familiar with, and has independently reviewed the books and records regarding, the financial condition of Borrower
and is familiar with the value of any and all Collateral intended to be created as security for the payment of the Obligations,
but such Guarantor is not relying on such financial condition, the collateral, or the agreement of any other party to become a
Surety as an inducement to enter into this Guaranty;

 

(c)       neither
Administrative Agent, any Guaranteed Party, any Surety, nor any other Person has made any representation, warranty or statement
to such Guarantor in order to induce such Guarantor to execute this Guaranty;

 

    UNCONDITIONAL GUARANTY – Page 5 

     

    

 

(d)       as
of the date hereof, and after giving effect to this Guaranty and the contingent obligation evidenced hereby, such Guarantor is,
and will be, Solvent and has not entered into any transaction with the intent to hinder, delay or defraud a creditor;

 

(e)       the
execution, delivery, and performance by such Guarantor of this Guaranty and the other Loan Documents to which such Guarantor is
or may become a party and compliance with the terms and provisions hereof and thereof have been duly authorized by all requisite
action on the part of such Guarantor and do not and will not (i) violate or conflict with, or result in a breach of, or require
any consent under (x) the Constituent Documents of such Person, (y) any applicable Law, rule, or regulation or any order,
writ, injunction, or decree of any Governmental Authority or arbitrator, or (z) any agreement or instrument to which such
Guarantor is a party or by which it or any of its Properties is bound or subject which could result in a Material Adverse Event,
or (ii) constitute a default under any such agreement or instrument which could result in a Material Adverse Event, or result
in the creation or imposition of any Lien upon any of the revenues or assets of such Guarantor;

 

(f)       the
governing body of such Guarantor, acting pursuant to a duly called and constituted meeting, after proper notice, or pursuant to
a valid unanimous consent, has determined that (i) such Guarantor has received, or will receive, direct or indirect benefit from
the Obligations and
the making of this Guaranty, and (ii) this Guaranty is in the best interests of such Guarantor; and

 

(g)       such
Guarantor (i) is duly incorporated or organized, as the case may be, validly existing, and in good standing under the Laws of
the jurisdiction of its incorporation or organization, (ii) has all requisite
power and authority to own its assets and carry on its business as now being or as proposed to be conducted, and (iii) is
qualified to do business in all jurisdictions in which the nature of its business makes such qualification necessary and where
failure to so qualify could result in a Material Adverse Event, and (iv) has the power and authority to execute, deliver and perform
its obligations under this Guaranty and the other Loan Documents to which it is or may become a party.

 

10.       Covenants
of Guarantors. So
long as the Credit Agreement is in effect and until the Release Date, unless compliance has been waived in writing by Administrative
Agent, each Guarantor will

 

(a)       promptly
give written notice to Administrative Agent of (i) any action, proceeding or claim of which such Guarantor may have notice, which
may be commenced or asserted against such Guarantor or relate to this Guaranty and (ii) any dispute which may exist between such
Guarantor and any Governmental Authority, which in either case may substantially affect the properties and assets of such Guarantor;

 

(b)       pay
or discharge at or before maturity or before becoming delinquent (i) all taxes, levies, assessments, and governmental charges
imposed on it or its income or profits or any of its Property, and (ii) all lawful claims for labor, material, and supplies,
which, if unpaid, might become a Lien upon any of its Property; provided, however, such Guarantor shall not be required
to pay or discharge any tax, levy, assessment, or governmental charge which is being contested in good faith by appropriate proceedings
diligently pursued, and for which adequate reserves in accordance with GAAP have been established;

 

(c)       allow
any representative of Administrative Agent or any Lender to visit and inspect any of its Properties and to examine its books and
records in accordance with Section 7.6 of the Credit Agreement;

 

    UNCONDITIONAL GUARANTY – Page 6 

     

    

 

(d)       not
wind up, liquidate or dissolve its affairs or enter into any transaction of merger or consolidation unless permitted by Section
8.3 of the Credit Agreement; and

 

(e)       not
Dispose of any of its assets, except in accordance with Section 8.8 of the Credit Agreement.

 

11.       Setoff.
If an Event of Default exists, Administrative Agent and each Guaranteed Party shall have the right to set off against the Obligations,
at any time and without prior notice to any Guarantor (but in any event in accordance with Section 4.3 of the Credit Agreement),
any and all deposits (general or special, time or demand, provisional or final) or other sums at any time credited by or owing
from Administrative Agent or such Guaranteed Party to such Guarantor whether or not the Obligations under the Loan Documents are
then due and irrespective of whether or not such Guaranteed Party shall have made demand under this Guaranty or any other Loan
Document and although such Obligations may be contingent or unmatured or denominated in a currency different from that of the
applicable deposit or indebtedness. Each Guaranteed Party agrees promptly to notify the affected Guarantor and Administrative
Agent after any such set-off and application made by such Guaranteed Party; provided, however, that the failure
to give such notice shall not affect the validity of such set-off and application.

 

12.       Costs
and Expenses. Guarantors jointly and severally agree to pay to Administrative Agent and the Guaranteed Parties, upon
demand, all documented out-of-pocket costs and expenses, including attorneys' fees, that may be incurred by Administrative Agent
and the Guaranteed Parties in attempting to cause the Obligations to be satisfied or in attempting to cause satisfaction of Guarantors'
liability under this Guaranty.

 

13.       Exercising
Rights, Etc. No notice to or demand upon any Guarantor in any case shall, of itself, entitle such Guarantor or any
other Guarantor to any other or further notice or demand in similar or other circumstances. No delay or omission by Administrative
Agent in exercising any power or right hereunder shall impair such right or power or be construed as a waiver thereof or any acquiescence
therein, nor shall any single or partial exercise of any such power preclude other or further exercise thereof, or the exercise
of any other right or power hereunder.

 

14.       Reference
to Credit Agreement; Incorporation of Certain Provisions by Reference. Reference
is hereby made to the representations, warranties and covenants of the Borrower set forth in Articles 6, 7, and 8 of the Credit
Agreement which are incorporated herein by reference for all purposes. Each Guarantor (a) reaffirms that each such representation
and warranty is true and correct in every material respect with respect to such Guarantor to the extent that such representation
and warranty refers to such Guarantor, and (b) agrees, with respect to the covenants, to take, or refrain from taking, as the
case may be, each action that is necessary to be taken or not taken, as the case may be, so that no Default or Event of Default
is caused by the failure to take such action or to refrain from taking such action by such Guarantor or any of its Subsidiaries.
Further, the provisions of Section 12.12 of the Credit Agreement captioned "Governing Law; Venue; Service of Process"
and Section 12.18 of the Credit Agreement captioned "WAIVER OF JURY TRIAL" are incorporated herein by reference for
all purposes. If the Credit Agreement shall cease to remain in effect for any reason whatsoever during any period and any part
of the Obligations remain unpaid, then the terms, covenants, and agreements set forth therein applicable to the Guarantors shall
nevertheless continue in full force and effect as obligations of each Guarantor under this Guaranty.

 

15.       Notices.
All notices and other communications provided for herein shall be in writing and shall be delivered in accordance with Section
12.11 of the Credit Agreement as follows:

 

(a)       if
to Guarantors, at their addresses set forth on the signature pages hereof; and

 

(b)       if
to Administrative Agent, as provided in Schedule 12.11 of the Credit Agreement.

 

    UNCONDITIONAL GUARANTY – Page 7 

     

    

 

16.       Benefit;
Binding Effect. This Guaranty shall inure to the benefit of Administrative Agent and each other Guaranteed Party and
their respective successors and assigns, and to any interest in any of the Obligations. All of the obligations of Guarantors arising
hereunder shall be jointly and severally binding on each of the Persons signing this Guaranty, and their respective successors
and assigns (provided, however, that no Guarantor may, without the prior written consent of Administrative Agent, in each
instance, assign or delegate any of its rights, powers, duties or obligations hereunder, and any attempted assignment or delegation
made without Administrative Agent's prior written consent shall be void ab initio and of no force or effect).

 

17.       Entirety
and Amendments. This Guaranty embodies the entire agreement between the parties and supersedes all prior agreements,
conditions, and understandings, if any, relating to the subject matter hereof and thereof, and this Guaranty may be amended only
by an instrument in writing executed by Guarantors, Administrative Agent (with the requisite consent, if any, of the Required
Lenders or all Lenders in accordance with the Credit Agreement).

 

18.       Counterparts.
This Guaranty may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Guaranty
and all of which, when taken together, will be deemed to constitute one and the same Guaranty. Delivery of an executed counterpart
of a signature page of this Guaranty by facsimile or other electronic imaging means (e.g. "pdf" or "tif")
shall be effective as delivery of a manually executed counterpart of this Guaranty.

 

19.       Multiple
Guarantors. It is specifically agreed
that Administrative Agent may enforce the provisions hereof with respect to one or more Guarantors without seeking to enforce
the same as to all or any Guarantors. If one or more additional guaranty agreements ("Other Guaranties")
are executed by one or more additional guarantors ("Other Guarantors"), which guarantee, in whole or in part,
any of the Obligations, it is specifically agreed that Administrative Agent may enforce the provisions of this Guaranty or of
the Other Guaranties with respect to one or more of the Guarantors or any one or more of the Other Guarantors under the Other
Guaranties without seeking to enforce the provisions of this Guaranty or the Other Guaranties as to all or any of the Guarantors
or the Other Guarantors. Each Guarantor hereby waives any requirement of joinder of all or any other Guarantor or all or any of
the Other Guarantors in any suit or proceeding to enforce the provisions of this Guaranty or of the Other Guaranties. The liability
hereunder of all Guarantors hereunder shall be joint and several.

 

20.       Additional
Guarantors. From time to time subsequent to the date hereof, additional Persons may become parties hereto as additional Guarantors
(each, an "Additional Guarantor"), by executing a joinder agreement in the form of Exhibit A hereto (each,
a "Joinder Agreement"). Upon delivery of any such Joinder Agreement to Administrative Agent, notice of which
is hereby waived by Guarantors, each Additional Guarantor shall be a Guarantor and shall be as fully a party hereto as if Additional
Guarantor were an original signatory hereto. Each Guarantor expressly agrees that its obligations arising hereunder shall not
be affected or diminished by the addition or release of any other Guarantor hereunder, nor by any election of Administrative Agent
not to cause any Subsidiary of Borrower to become an Additional Guarantor hereunder. This Guaranty shall be fully effective as
to any Guarantor that is or becomes a party hereto regardless of whether any other Person becomes or fails to become or ceases
to be a Guarantor hereunder.

 

    UNCONDITIONAL GUARANTY – Page 8 

     

    

 

21.       Maximum
Liability. Anything in this Guaranty to the contrary notwithstanding, the obligations of each
Guarantor hereunder shall be limited to a maximum aggregate amount equal to the largest amount that would not render its obligations
hereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the United States Code
or any applicable provisions of comparable Law (collectively, the "Fraudulent Transfer Laws"), in each case after
giving effect to all other liabilities of such Guarantor, contingent or otherwise, that are relevant under the Fraudulent Transfer
Laws (specifically excluding, however, any liabilities of such Guarantor in respect of intercompany indebtedness to other Obligated
Parties or Affiliates of other Obligated Parties to the extent that such indebtedness would be discharged in an amount equal to
the amount paid or property conveyed by such Guarantor under the Loan Documents) and after giving effect as assets, subject to
Section 7, to the value (as determined under the applicable provisions of the Fraudulent Transfer Laws) of any rights to subrogation
or contribution of such Guarantor pursuant to (a) applicable Law or (b) any agreement providing for an equitable allocation among
such Guarantor and other Obligated Parties of obligations arising under the Loan Documents and Bank Product Agreements.

 

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

 

[Remainder
of Page Intentionally Left Blank; Signature Pages Follow]

 

    UNCONDITIONAL GUARANTY – Page 9 

     

    

 

IN
WITNESS WHEREOF, Guarantors, intending to be jointly and severally legally bound hereby, have executed this Guaranty as of the
date and year first above written.

 

	 	NYTIS
    EXPLORATION COMPANY LLC
	 	 
	 	By:	Nytis
    Exploration (USA) Inc.,
	 	 	its
    sole Manager

 

	 	By:	 
	 	 	Patrick
    R. McDonald
	 	 	Chief
    Executive Officer

 

	 	Address:
	 	 
	 	2480
    Fortune Drive, Suite 300
	 	Lexington,
    Kentucky  40509

 

	 	NYTIS
    EXPLORATION (USA) INC.
	 	 	 
	 	By:	 
	 	 	Patrick
    R. McDonald
	 	 	Chief
    Executive Officer

 

	 	Address:
	 	 
	 	1700
    Broadway, Suite 1170
	 	Denver,
    Colorado  80290

 

 

 UNCONDITIONAL
GUARANTY – Signature Page

 

    	 

    	 

    

 

EXHIBIT A

 

Form of Guaranty Joinder Agreement

 

JOINDER AGREEMENT

 

THIS
JOINDER AGREEMENT (this "Joinder Agreement") is entered into as of ______________, 20___, by the undersigned ("Additional
Guarantor"), in favor of LEGACYTEXAS BANK, for the benefit of the Guaranteed Parties (in such capacity, "Administrative
Agent").

 

WHEREAS,
CARBON NATURAL GAS COMPANY, a Delaware corporation ("Borrower"), Administrative Agent and the Lenders party thereto
have entered into that certain Credit Agreement dated as of October 3, 2016 (as the same has been or may be amended, restated or
modified from time to time, the "Credit Agreement"); and

 

WHEREAS,
pursuant to the Credit Agreement, certain Subsidiaries of Borrower entered into that certain Unconditional Guaranty dated as of
October 3, 2016 (as the same has been or may be amended, restated or modified from time to time, the "Guaranty")
in favor of Administrative Agent for the benefit of the Guaranteed Parties, in order to, among other things, induce the Guaranteed
Parties to make the loans and other financial accommodations provided for in the Credit Agreement and Bank Product Agreements;
and

 

WHEREAS,
Additional Guarantor is a Subsidiary of Borrower, and Additional Guarantor desires that the Lenders extend credit to Borrower as
contemplated by the Credit Agreement, and Additional Guarantor will directly or indirectly benefit from the use of the loan proceeds
by Borrower for the purposes for which the credit is being extended pursuant to the Credit Agreement; and

 

WHEREAS,
Additional Guarantor, by and through the action of its governing body, has determined that it may reasonably be expected to benefit,
directly or indirectly, from guarantying the Obligations (as defined in the Credit Agreement), all as provided therein;

 

ACCORDINGLY,
Additional Guarantor hereby agrees with Administrative Agent as follows:

 

1.          Definitions. All capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms
in the Guaranty.

 

2.          Party to Guaranty. Additional Guarantor hereby acknowledges, agrees and confirms that, by its execution of this Joinder
Agreement, Additional Guarantor will be deemed to be a party to the Guaranty and a "Guarantor" for all purposes of the
Guaranty, and shall have all of the obligations of a Guarantor thereunder as if it had executed the Guaranty. Additional Guarantor
hereby ratifies, as of the date hereof, and agrees to be bound by, all of the terms, provisions and conditions applicable to Guarantors
contained in the Guaranty. Without limiting the generality of the foregoing terms of this Section 2, Additional Guarantor
hereby, jointly and severally with the other Guarantors, unconditionally, absolutely and irrevocably guarantees to the Guaranteed
Parties, as provided in the Guaranty, the due and punctual payment at maturity, whether by acceleration or otherwise, and the due
fulfillment and performance of the Obligations. Additional Guarantor is jointly and severally liable for the full payment and performance
of the Obligations as a primary obligor.

 

3.          Address for Notice Purposes. The address of Additional Guarantor for purposes of all notices and other communications is
set forth on the signature page hereof.

 

 

EXHIBIT A – Form of Guaranty Joinder Agreement – Page
1

 

     

     

    

 

4.          Waiver of Acceptance. Additional Guarantor hereby waives acceptance by Administrative
Agent and the Guaranteed Parties of the guaranty by Additional Guarantor under the Guaranty upon the execution of this Joinder
Agreement by Additional Guarantor.

 

5.          Representations and Warranties. Additional Guarantor hereby represents and confirms that the representations and warranties
set forth in the Guaranty and in the Credit Agreement which are applicable to Guarantors are true and correct with respect to Additional
Guarantor on and as of the date hereof (and after giving effect hereto), as if set forth herein in their entirety.

 

6.          Severability. Any provision of this Joinder Agreement held by a court of competent jurisdiction to be invalid or unenforceable
shall not impair or invalidate the remainder of this Joinder Agreement and the effect thereof shall be confined to the provision
held to be invalid or illegal.

 

7.          Counterparts. This Joinder Agreement may be executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. This Joinder Agreement shall become effective when it shall
have been executed by Administrative Agent and when Administrative Agent shall have received counterparts hereof that, when taken
together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this
Joinder Agreement by facsimile or other electronic imaging means (e.g. "pdf" or "tif") shall be effective as
delivery of a manually executed counterpart of this Joinder Agreement.

 

8.          Governing Law. This Joinder Agreement and any claims, controversy, dispute or cause of action (whether in contract or tort
or otherwise) based upon, arising out of or relating to this Joinder Agreement and the transactions contemplated hereby and thereby
shall be governed by, and construed in accordance with, the law of the State of Texas (without reference to applicable rules of
conflicts of laws).

 

9.          Loan Document. This Joinder Agreement is a Loan Document for all purposes
and each reference in any Loan Document to the Guaranty shall mean the Guaranty as supplemented by this Joinder Agreement.

 

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

 

 

[Remainder of Page Intentionally Left
Blank; Signature Pages Follow]

 

 

EXHIBIT A – Form of Guaranty Joinder Agreement – Page
2

 

     

     

    

  

IN
WITNESS WHEREOF, the undersigned Additional Guarantor and Administrative Agent have executed this Joinder Agreement as of the date
first above written.

 

	 	ADDITIONAL GUARANTOR:
	 	 	 
	 	By:	           
	 	Name:	 
	 	Title:	 

 

	 	Address:	 
	 	 	 
	 	 	 
	 	 	 
	 	Facsimile:	 

 

 

EXHIBIT A – Form of Guaranty Joinder Agreement – Signature
Page 

 

     

     

    

 

	 	ACCEPTED BY:

LEGACYTEXAS BANK, as Administrative Agent

	 	 	 
	 	By:	             
	 	Name:	 
	 	Title:	 

 

 

EXHIBIT A – Form of Guaranty Joinder Agreement – Signature
Page

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