Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 15, 2023

HNR ACQUISITION CORP

(Exact name of registrant as specified in its charter)

Delaware		001-41278		85-4359124
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

3730 Kirby Drive, Suite 1200

Houston, Texas 77098

(Address of principal executive offices, including zip code)

(713) 834-1145

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:	Trading symbol	Name of each exchange on which registered
Class A Common stock, par value $0.0001 per share	HNRA	NYSE American
Redeemable warrants, exercisable for three quarters of one share of Class A Common Stock at an exercise price of $11.50 per share	HNRAW	NYSE American

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR§230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

INTRODUCTORY NOTE

As previously announced, HNR Acquisition Corp, a Delaware corporation (“HNRA” or the “Company”), entered into that certain Amended and Restated Membership Interest Purchase Agreement, dated as of August 28, 2023 (as amended, the “MIPA”), by and among HNRA, HNRA Upstream, LLC, a newly formed Delaware limited liability company which is managed by, and is a subsidiary of, HNRA (“OpCo”), and HNRA Partner, Inc., a newly formed Delaware corporation and wholly owned subsidiary of OpCo (“SPAC Subsidiary”, and together with the Company and OpCo, “Buyer” and each a “Buyer”), CIC Pogo LP, a Delaware limited partnership (“CIC”), DenCo Resources, LLC, a Texas limited liability company (“DenCo”), Pogo Resources Management, LLC, a Texas limited liability company (“Pogo Management”), 4400 Holdings, LLC, a Texas limited liability company (“4400” and, together with CIC, DenCo and Pogo Management, collectively, “Seller” and each a “Seller”), and, solely with respect to Section 6.20 of the MIPA, HNRAC Sponsors LLC, a Delaware limited liability company (“Sponsor”). HNRA’s stockholders approved the transactions contemplated by the MIPA at a special meeting of stockholders that was originally convened October 30, 2023, adjourned, and then reconvened on November 13, 2023 (the “Special Meeting”).

On November 15, 2023 (the “Closing Date”), as contemplated by the MIPA:

●

HNRA filed a Second Amended and Restated Certificate of Incorporation (the “Second A&R Charter”) with the Secretary of State of the State of Delaware, pursuant to which the number of authorized shares of HNRA’s capital stock, par value $0.0001 per share, was increased to 121,000,000 shares, consisting of (i) 100,000,000 shares of Class A common stock, par value $0.0001 per share (the “Class A Common Stock”), (ii) 20,000,000 shares of Class B common stock, par value $0.0001 per share (the “Class B Common Stock”), and (iii) 1,000,000 shares of preferred stock, par value $0.0001 per share;

●

The current shares of common stock of HNRA were reclassified as Class A Common Stock; the Class B Common Stock has no economic rights but entitles its holder to one vote on all matters to be voted on by stockholders generally; holders of shares of Class A Common Stock and shares of Class B Common Stock will vote together as a single class on all matters presented to HNRA’s stockholders for their vote or approval, except as otherwise required by applicable law or by the Second A&R Charter;

●

(A) HNRA contributed to OpCo (i) all of its assets (excluding its interests in OpCo and the aggregate amount of cash required to satisfy any exercise by HNRA stockholders of their Redemption Rights (as defined below)) and (ii) 2,000,000 newly issued shares of Class B Common Stock (such shares, the “Seller Class B Shares”) and (B) in exchange therefor, OpCo issued to HNRA a number of Class A common units of OpCo (the “OpCo Class A Units”) equal to the number of total shares of Class A Common Stock issued and outstanding immediately after the closing (the “Closing”) of the transactions (the “Transactions”) contemplated by the HNRA (following the exercise by HNRA stockholders of their Redemption Rights) (such transactions, the “SPAC Contribution”); and

●

Immediately following the SPAC Contribution, OpCo contributed $900,000 to SPAC Subsidiary in exchange for 100% of the outstanding common stock of SPAC Subsidiary (the “SPAC Subsidiary Contribution”);

●

Immediately following the SPAC Subsidiary Contribution, Seller sold, contributed, assigned, and conveyed to (A) OpCo, and OpCo acquired and accepted from Seller, ninety-nine percent (99.0%) of the outstanding membership interests of Pogo Resources, LLC, a Texas limited liability company (“Pogo” or the “Target”), and (B) SPAC Subsidiary, and SPAC Subsidiary purchased and accepted from Seller, one percent (1.0%) of the outstanding membership interest of Target (together with the ninety-nine percent (99.0%) interest, the “Target Interests”), in each case, in exchange for (x) $900,000 of the Cash Consideration (as defined below) in the case of SPAC Subsidiary and (y) the remainder of the Aggregate Consideration (as defined below) in the case of OpCo (such transactions, together with the SPAC Contribution and SPAC Subsidiary Contribution, the “Business Combination”).

The “Aggregate Consideration” for the Target Interests was: (a) cash in the amount of $31,074,127 in immediately available funds (the “Cash Consideration”), (b) 2,000,000 Class B common units of OpCo (“OpCo Class B Units”) valued at $10.00 per unit (the “Common Unit Consideration”), which will be equal to and exchangeable into 2,000,000 shares of Class A Common Stock issuable upon exercise of the OpCo Exchange Right (as defined below), as reflected in the amended and restated limited liability company agreement of OpCo that became effective at Closing (the “A&R OpCo LLC Agreement”), (c) the Seller Class B Shares, (d) $15,000,000 payable through a promissory note to Seller (the “Seller Promissory Note”), (e) 1,500,000 preferred units (the “OpCo Preferred Units” and together with the Opco Class A Units and the OpCo Class B Units, the “OpCo Units”) of OpCo (the “Preferred Unit Consideration”, and, together with the Common Unit Consideration, the “Unit Consideration”), and (f) an agreement for Buyer, on or before November 21, 2023, to settle and pay to Seller $1,925,873 from sales proceeds received from oil and gas production attributable to Pogo, including pursuant to its third party contract with affiliates of Chevron. At Closing, 500,000 Seller Class B Shares (the “Escrowed Share Consideration”) were placed in escrow for the benefit of Buyer pursuant to an escrow agreement and the indemnity provisions in the MIPA. The Aggregate Consideration is subject to adjustment in accordance with the MIPA.

In connection with the Business Combination, holders of 3,323,707 shares of common stock sold in HNRA’s initial public offering (the “public shares”) properly exercised their right to have their public shares redeemed (the “Redemption Rights”) for a pro rata portion of the trust account (the “Trust Account”) which held the proceeds from HNRA’s initial public offering, funds from HNRA’s payments to extend the time to consummate a business combination and interest earned, calculated as of two business days prior to the Closing, which was approximately $10.95 per share, or $49,362,479 in the aggregate. The remaining balance in the Trust Account (after giving effect to the Redemption Rights) was $12,979,300.

Immediately upon the Closing, Pogo Royalty exercised the OpCo Exchange Right as it relates to 200,000 OpCo Class B units (and 200,000 shares of Class B Common Stock). After giving effect to the Business Combination, the redemption of public shares as described above and the exchange mentioned in the preceding sentence, there are currently (i) 5,097,009 shares of Class A Common Stock issued and outstanding, (ii) 1,800,000 shares of Class B Common Stock issued and outstanding and (iii) no shares of preferred stock issued and outstanding.

The Class A Common Stock and HNRA warrants continued to trade, but now as an operating company, on the NYSE American LLC (“NYSE American”) under the symbols “HNRA” and “HNRAW,” respectively, on November 16, 2023.

A more detailed description of the Business Combination can be found in the section titled “Proposal No. 1—The Purchase Proposal” beginning on page 112 of HNRA’s definitive proxy statement dated October 13, 2023 (the “Proxy Statement”) filed with the Securities and Exchange Commission (the “SEC”), and such description is incorporated herein by reference. Further, the foregoing description of the MIPA is a summary only and is qualified in its entirety by reference to the MIPA, that certain First Amendment to Membership Interest Purchase Agreement, dated November 15, 2023 (the “MIPA Amendment”), and that certain Letter Agreement between Buyer and Seller Re: Settle Up between Buyer and Seller, dated November 15, 2023 (the “Settle Up Letter Agreement”), copies of which are included as Exhibit 2.1, Exhibit 2.2, and Exhibit 2.3, respectively, to this Current Report on Form 8-K (this “Report”), and are incorporated herein by reference.

All references herein to the “Board” refer to the board of directors of HNRA. Terms used in this Report but not defined herein, or for which definitions are not otherwise incorporated by reference herein, shall have the meaning given to such terms in the Proxy Statement, and such definitions are incorporated herein by reference.

This Report incorporates by reference certain information from reports and other documents that were previously filed with the SEC, including certain information from the Proxy Statement. To the extent there is a conflict between the information contained in this Report and the information contained in such prior reports and documents incorporated by reference herein, the information in this Report controls.

Item 1.01. Entry into a Material Definitive Agreement.

The Purchase

First Amendment to Amended and Restated Membership Interest Purchase Agreement

On November 15, 2023, Buyer, Seller, and Sponsor entered into the MIPA Amendment, whereby the Parties agreed to extend the outside date for the transaction to November 30, 2023, and to place 500,000 shares of Seller Class B Shares into escrow instead of 500,000 OpCo Class B Units.

The above description of the MIPA Amendment is a summary only and is qualified in its entirety by the text of the MIPA Amendment, which is included as Exhibit 2.2 to this Report and is incorporated herein by reference.

Settle Up Letter Agreement

On November 15, 2023, Buyer and Seller entered into the Settle Up Letter Agreement, whereby Seller agreed to accept a minimum amount of cash at Closing less than $33,000,000, provided that, on or before November 21, 2023, Buyer must settle and pay to Seller $1,925,873 from sales proceeds received from oil and gas production attributable to Pogo, including pursuant to its third party contract with affiliates of Chevron.

The above description of the Settle Up Letter Agreement is a summary only and is qualified in its entirety by the text of the Settle Up Letter Agreement, which is included as Exhibit 2.3 to this Report and is incorporated herein by reference.

OpCo A&R LLC Agreement

In connection with the Closing, HNRA and Pogo Royalty, LLC, a Texas limited liability company, an affiliate of Seller and Seller’s designated recipient of the Aggregate Consideration (“Pogo Royalty”), entered into an amended and restated limited liability company agreement of OpCo (the “OpCo A&R LLC Agreement”). Pursuant to the A&R OpCo LLC Agreement, each OpCo unitholder (excluding HNRA) will, subject to certain timing procedures and other conditions set forth therein, have the right (the “OpCo Exchange Right”) to exchange all or a portion of its OpCo Class B Units for, at OpCo’s election, (i) shares of Class A Common Stock at an exchange ratio of one share of Class A Common Stock for each OpCo Class B Unit exchanged, subject to conversion rate adjustments for stock splits, stock dividends and reclassifications and other similar transactions, or (ii) an equivalent amount of cash. Additionally, the holders of OpCo Class B Units will be required to exchange all of their OpCo Class B Units (a “Mandatory Exchange”) upon the occurrence of the following: (i) upon the direction of HNRA with the consent of at least fifty percent (50%) of the holders of OpCo Class B Units; or (ii) upon the one-year anniversary of the Mandatory Conversion Trigger Date. In connection with any exchange of OpCo Class B Units pursuant to the OpCo Exchange Right or acquisition of OpCo Class B Units pursuant to a Mandatory Exchange, a corresponding number of shares of Class B Common Stock held by the relevant OpCo unitholder will be cancelled.

The OpCo Preferred Units will be automatically converted into OpCo Class B Units on the two-year anniversary of the issuance date of such OpCo Preferred Units (the “Mandatory Conversion Trigger Date”) at a rate determined by dividing (i) $20.00 per unit (the “Stated Conversion Value”), by (ii) the Market Price of the Class A Common Stock (the “Conversion Price”). The “Market Price” means the simple average of the daily VWAP of the Class A Common Stock during the five (5) trading days prior to the date of conversion. On the Mandatory Conversion Trigger Date, HNRA will issue a number of shares of Class B Common Stock to Pogo Royalty equivalent to the number of OpCo Class B Units issued to Pogo Royalty. If not exchanged sooner, such newly issued OpCo Class B Units shall automatically exchange into Class A Common Stock on the one-year anniversary of the Mandatory Conversion Trigger Date at a ratio of one OpCo Class B Unit for one share of Class Common Stock. An equivalent number of shares of Class B Common Stock must be surrendered with the OpCo Class B Units to the Company in exchange for the Class A Common Stock. As noted above, the OpCo Class B Units must be exchanged upon the one-year anniversary of the Mandatory Conversion Trigger Date.

The material terms of the OpCo A&R LLC Agreement are described in the section of the Proxy Statement beginning on page 32 titled “Summary of the Proxy Statement — Related Agreements — OpCo A&R LLC Agreement.” Such description is incorporated by reference in this Report and is qualified in its entirety by the text of the OpCo A&R LLC Agreement, which is included as Exhibit 10.1 to this Report and is incorporated herein by reference.

Promissory Note

In connection with the Closing, OpCo issued the Seller Promissory Note to Pogo Royalty in the principal amount of $15,000,000. The Seller Promissory Note provides for a maturity date that is six (6) months from the Closing Date, bears an interest rate equal 12% per annum, and contains no penalty for prepayment. If the Seller Promissory Note is not repaid in full on or prior to its stated maturity date, OpCo will owe interest from and after default equal to the lesser of 18% per annum and the highest amount permissible under law, compounded monthly. The Seller Promissory Note is subordinated to the Term Loan (as defined below).

The material terms of the Seller Promissory Note are described in the section of the Proxy Statement beginning on page 30 titled “Summary of the Proxy Statement — Related Agreements — Promissory Note.” Such description is incorporated by reference in this Report and is qualified in its entirety by the text of the Seller Promissory Note, which is included as Exhibit 10.2 to this Report and is incorporated herein by reference.

Registration Rights Agreement

In connection with the Closing, HNRA and Pogo Royalty entered into a Registration Rights Agreement (the “Registration Rights Agreement”), pursuant to which HNRA has agreed to provide Pogo Royalty with certain registration rights with respect to the shares of Class A Common Stock issuable upon exercise of the OpCo Exchange Right, including filing with the SEC an initial registration statement on Form S-1 covering the resale by the Pogo Royalty of the shares of Class A Common Stock issuable upon exercise of the OpCo Exchange Right so as to permit their resale under Rule 415 under the Securities Act, no later than thirty (30) days following the Closing, use its commercially reasonable efforts to have the initial registration statement declared effective by the SEC as soon as reasonably practicable following the filing thereof with the SEC, and use commercially reasonable efforts to convert the Form S-1 (and any subsequent registration statement) to a shelf registration statement on Form S-3 as promptly as practicable after HNRA is eligible to use a Form S-3 Shelf.

In certain circumstances, Pogo Royalty can demand the Company’s assistance with underwritten offerings, and Pogo Royalty will be entitled to certain piggyback registration rights.

The material terms of the Registration Rights Agreement are described in the section of the Proxy Statement beginning on page 30 titled “Summary of the Proxy Statement — Related Agreements — Registration Rights Agreement.” Such description is incorporated by reference in this Report and is qualified in its entirety by the text of the Registration Rights Agreement, which is included as Exhibit 10.3 to this Report and is incorporated herein by reference.

Option Agreement

In connection with the Closing, HNRA Royalties, LLC, a newly formed Delaware limited liability company and wholly-owned subsidiary of HNRA (“HNRA Royalties”) and Pogo Royalty entered into an Option Agreement (the “Option Agreement”). Pogo Royalty owns certain overriding royalty interests in certain oil and gas assets owned by Pogo(the “ORR Interest”). Pursuant to the Option Agreement, Pogo Royalty granted irrevocable and exclusive option to HNRA Royalty to purchase the ORR Interest for the Option Price (as defined below) at any time prior to November 15, 2024. The option is not exercisable while the Seller Promissory Note is outstanding.

The purchase price for the ORR Interest upon exercise of the option is: (i) (1) $30,000,000 the (“Base Option Price”), plus (2) an additional amount equal to interest on the Base Option Price of twelve percent (12%), compounded monthly, from the Closing Date through the date of acquisition of the ORR Interest, minus (ii) any amounts received by Pogo Royalty in respect of the ORR Interest from the month of production in which the effective date of the Option Agreement occurs through the date of the exercise of the option (such aggregate purchase price, the “Option Price”).

The material terms of the Option Agreement are described in the section of the Proxy Statement beginning on page 31 titled “Summary of the Proxy Statement — Related Agreements — Option Agreement.” Such description is incorporated by reference in this Report and is qualified in its entirety by the text of the Option Agreement, which is included as Exhibit 10.4 to this Report and is incorporated herein by reference.

Director Nomination and Board Observer Agreement

In connection with the Closing, the Company entered into Director Nomination and Board Observer Agreement (the “Board Designation Agreement”) with CIC. Pursuant to the Board Designation Agreement, CIC has the right, at any time CIC beneficially owns capital stock of the Company, to appoint two board observers to attend all meetings of the board of directors of the Company. In addition, after the time of the conversion of the OpCo Preferred Units owned by Pogo Royalty, CIC will have the right to nominate a certain number of members of the board of directors depending on Pogo Royalty’s ownership percentage of Class A Common Stock as further provided in the Board Designation Agreement.

The material terms of the Board Designation Agreement are described in the section of the Proxy Statement beginning on page 32 titled “Summary of the Proxy Statement — Related Agreements — Director Nomination and Board Observer Agreement.” Such description is incorporated by reference in this Report and is qualified in its entirety by the text of the Board Designation Agreement, which is included as Exhibit 10.5 to this Report and is incorporated herein by reference.

Backstop Agreement

In connection with the Closing, HNRA entered a Backstop Agreement (the “Backstop Agreement”) with Pogo Royalty and certain of HNRA’s founders listed therein (the “Founders”) whereby Pogo Royalty will have the right (“Put Right”) to cause the Founders to purchase Pogo Royalty’s OpCo Preferred Units at a purchase price per unit equal to $10.00 per unit plus the product of (i) the number of days elapsed since the effective date of the Backstop Agreement and (ii) $10.00 divided by 730. Seller’s right to exercise the Put Right will survive for six (6) months following the date the Trust Shares (as defined below) are not restricted from transfer under the Letter Agreement (as defined in the MIPA) (the “Lockup Expiration Date”).

As security that the Founders will be able to purchase the OpCo Preferred Units upon exercise of the Put Right, the Founders agreed to place at least 1,300,000 shares of Class A Common Stock into escrow (the “Trust Shares”), which the Founders can sell or borrow against to meet their obligations upon exercise of the Put Right, with the prior consent of Seller. HNRA is not obligated to purchase the OpCo Preferred Units from Pogo Royalty under the Backstop Agreement. Until the Backstop Agreement is terminated, Pogo Royalty and its affiliates are not permitted to engage in any transaction which is designed to sell short the Class A Common Stock or any other publicly traded securities of HNRA.

The material terms of the Backstop Agreement are described in the section of the Proxy Statement beginning on page 32 titled “Summary of the Proxy Statement — Related Agreements — Backstop Agreement.” Such description is incorporated by reference in this Report and is qualified in its entirety by the text of the Backstop Agreement, which is included as Exhibit 10.6 to this Report and is incorporated herein by reference.

Founder Pledge Agreement

In connection with the Closing, HNRA entered a Founder Pledge Agreement (the “Founder Pledge Agreement”) with the Founders whereby, in consideration of placing the Trust Shares into escrow and entering into the Backstop Agreement, HNRA agreed: (a) by January 15, 2024, to issue to the Founders an aggregate number of newly issued shares of Class A Common Stock equal to 10% of the number of Trust Shares; (b) by January 15, 2024, to issue to the Founders number of warrants to purchase an aggregate number of shares of Class A Common Stock equal to 10% of the number of Trust Shares, which such warrants shall be exercisable for five years from issuance at an exercise price of $11.50 per shares; (c) if the Backstop Agreement is not terminated prior to the Lockup Expiration Date, to issue an aggregate number of newly issued shares of Class A Common Stock equal to (i) (A) the number of Trust Shares, divided by (B) the simple average of the daily VWAP of the Class A Common Stock during the five (5) Trading Days prior to the date of the termination of the Backstop Agreement, subject to a minimum of $6.50 per share, multiplied by (C) a price between $10.00-$13.00 per share (as further described in the Founder Pledge Agreement), minus (ii) the number of Trust Shares; and (d) following the purchase of OpCo Preferred Units by a Founder pursuant to the Put Right, to issue a number of newly issued shares of Class A Common Stock equal to the number of Trust Shares sold by such Founder. Until the Founder Pledge Agreement is terminated, the Founders are not permitted to engage in any transaction which is designed to sell short the Class A Common Stock or any other publicly traded securities of HNRA.

The above description of the Founder Pledge Agreement is a summary only and is qualified in its entirety by the text of the Founder Pledge Agreement, which is included as Exhibit 10.7 to this Report and is incorporated herein by reference.

Debt Financing

Senior Secured Term Loan Agreement

Consistent with the previously disclosed commitment letter (the “Debt Commitment Letter”) between HNRA and First International Bank & Trust (“FIBT” or “Lender”), in connection with the Closing, HNRA (for purposes of the Loan Agreement, the “Borrower”), OpCo, SPAC Subsidiary, Pogo, and LH Operating, LLC (for purposes of the Loan Agreement, collectively, the “Guarantors” and together with the Borrower, the “Loan Parties”), and FIBT entered into a Senior Secured Term Loan Agreement on November 15, 2023 (the “Loan Agreement”), setting forth the terms of a senior secured term loan facility in an aggregate principal amount of $28 million (the “Term Loan”).

Pursuant to the terms of the Term Loan Agreement, the Term Loan was advanced in one tranche on the Closing Date. The proceeds of the Term Loan were used to (a) fund a portion of the purchase price, (b) partially fund a debt service reserve account funded with $2,600,000 at the Closing Date, (c) pay fees and expenses in connection with the purchase and the closing of the Term Loan and (e) other general corporate purposes. The Term Loan accrues interest at a per annum rate equal to the FIBT prime rate plus 6.5% and fully matures on the third anniversary of the Closing Date (“Maturity Date”). Payments of principal and interest will be due on the 15^th day of each calendar month, beginning December 15, 2023, each in an amount equal to the Monthly Payment Amount (as defined in the Term Loan Agreement), except that the principal and interest payment due on the Maturity Date will be in the amount of the entire remaining principal amount of the Term Loan and all accrued but unpaid interest then outstanding. An additional one-time payment of principal is due on the date the quarterly financial report for the year ending December 31, 2024, is due to be delivered by Borrower to Lender in an amount that Excess Cash Flow (as defined in the Term Loan Agreement) exceeds the Debt Service Coverage Ratio (as defined in the Term Loan Agreement) of 1.35x as of the end of such quarter; provided that in no event shall the amount of the payment exceed $5,000,000.

The Borrower may elect to prepay all or a portion greater than $1,000,000 of the amounts owed prior to the Maturity Date. In addition to the foregoing, the Borrower is required to prepay the Term Loan with the net cash proceeds of certain dispositions and upon the decrease in value of collateral.

On the Closing Date, Borrower deposited $2,600,000 into a Debt Service Reserve Account (the “Debt Service Reserve Account”) and, within 60 days following the Closing Date, Borrower must deposit such additional amounts such that the balance of the Debt Service Reserve Account is equal to $5,000,000 at all times. The Debt Service Reserve Account may be used by Lender at any time and from time to time, in Lender’s sole discretion, to pay (or to supplement Borrower’s payments of) the obligations due under the Term Loan Agreement.

The Term Loan Agreement contains affirmative and restrictive covenants and representations and warranties. The Loan Parties are bound by certain affirmative covenants setting forth actions that are required during the term of the Term Loan Agreement, including, without limitation, certain information delivery requirements, obligations to maintain certain insurance, and certain notice requirements. Additionally, the Loan Parties from time to time will be bound by certain restrictive covenants setting forth actions that are not permitted to be taken during the term of the Term Loan Agreement without prior written consent, including, without limitation, incurring certain additional indebtedness, entering into certain hedging contracts, consummating certain mergers, acquisitions or other business combination transactions, consummating certain dispositions of assets, making certain payments on subordinated debt, making certain investments, entering into certain transactions with affiliates, and incurring any non-permitted lien or other encumbrance on assets. The Term Loan Agreement also contains other customary provisions, such as confidentiality obligations and indemnification rights for the benefit of the Lender.

The above description of the Term Loan Agreement is a summary only and is qualified in its entirety by the text of the Term Loan Agreement, which is included as Exhibit 10.8 to this Report and is incorporated herein by reference.

Pledge and Security Agreement

In connection with the Term Loan, FIBT and the Loan Parties entered into a Pledge and Security Agreement on November 15, 2023 (the “Security Agreement”), whereby the Loan Parties granted a senior security interest to FIBT on all assets of the Loan Parties, except certain excluded assets described therein, including, among other things, any interests in the ORR Interest.

The above description of the Security Agreement is a summary only and is qualified in its entirety by the text of the Security Agreement, which is included as Exhibit 10.9 to this Report and is incorporated herein by reference.

Guaranty Agreement

In connection with the Term Loan, FIBT and the Loan Parties entered into a Guaranty Agreement on November 15, 2023 (the “Guaranty Agreement”), whereby the Guarantors guaranteed payment and performance of all Loan Parties under the Term Loan Agreement.

The above description of the Guaranty Agreement is a summary only and is qualified in its entirety by the text of the Guaranty Agreement, which is included as Exhibit 10.10 to this Report and is incorporated herein by reference.

Item 2.01. Completion of Acquisition or Disposition of Assets.

The disclosure set forth in the “Introductory Note” above is incorporated into this Item 2.01 by reference. At the Special Meeting, the HNRA stockholders considered and adopted, among other matters, a proposal to approve the Business Combination. The Business Combination was completed on November 15, 2023.

FORM 10 INFORMATION

In accordance with Item 2.01(f) of Form 8-K, the Company is providing below the information that would be required if the Company were filing a general form for registration of securities on Form 10. Please note that the information provided below relates to the combined company after the consummation of the Business Combination, unless otherwise specifically indicated or the context otherwise requires.

The Company acknowledges that certain of the information referenced below is required to be updated for the year ended December 31, 2023, including the annual audit of HNRA, and HNRA will update such information through an amendment to this Current Report on Form 8-K once the annual audit of HNRA is completed and related annual financial information for the year ended December 31, 2023 is available which HNRA expects by April 1, 2024.

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this Report (including in the information that is incorporated by reference in this Report) may constitute “forward-looking statements” for purposes of the federal securities laws. The Company’s forward-looking statements include, but are not limited to, statements regarding the Company’s or the Company’s management team’s expectations, hopes, beliefs, intentions or strategies regarding the future, including those relating to the Business Combination. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the control of the Company, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Important factors, among others, that may affect actual results or outcomes include:

	●	the financial and business performance of HNRA;

	●	the ability to maintain the listing of the Class A Common Stock and the public warrants on NYSE American, and the potential liquidity and trading of such securities;

	●	the diversion of management in connection with the Business Combination and HNRA’s ability to successfully integrate Pogo’s operations and achieve or realize fully or at all the anticipated benefits, savings or growth of the Transactions;

	●	the impact of the announcement of the Business Combination on relationships with third parties, including commercial counterparties, employees and competitors, and risks associated with the loss and ongoing replacement of key personnel;

	●	HNRA’s abilities to execute its business strategies;

	●	changes in general economic conditions, including the material and adverse negative consequences of the COVID-19 pandemic and its unfolding impact on the global and national economy and/or as a result of the armed conflict in Ukraine and associated economic sanctions on Russia;

	●	the actions of the Organization of Petroleum Exporting Countries (“OPEC”) and other significant producers and governments, including the armed conflict in Ukraine and the potential destabilizing effect such conflict may pose for the global oil and natural gas markets, and the ability of such producers to agree to and maintain oil price and production controls;

	●	the effect of change in commodity prices, including the volatility of realized oil and natural gas prices, as a result of the Russian invasion of Ukraine that has led to significant armed hostilities and a number of severe economic sanctions on Russia or otherwise;

	●	the level of production on our properties;

	●	overall and regional supply and demand factors, delays, or interruptions of production;

	●	our ability to replace our oil and natural gas reserves;

	●	ability to identify, complete and integrate acquisitions of properties or businesses;

	●	general economic, business or industry conditions, including the cost of inflation;

	●	competition in the oil and natural gas industry;

	●	conditions in the capital markets and our ability, and the ability of our operators, to obtain capital or financing on favorable terms or at all;

●

title defects in the properties in which HNRA invests;

	●	risks associated with the drilling and operation of crude oil and natural gas wells, including uncertainties with respect to identified drilling locations and estimates of reserves;

	●	the availability or cost of rigs, equipment, raw materials, supplies, oilfield services or personnel;

	●	restrictions on the use of water;

	●	the availability of pipeline capacity and transportation facilities;

	●	the ability of our operators to comply with applicable governmental laws and regulations, including environmental laws and regulations and to obtain permits and governmental approvals;

	●	the effect of existing and future laws and regulatory actions, including federal and state legislative and regulatory initiatives relating to hydraulic fracturing and environmental matters, including climate change;

	●	future operating results;

	●	risk related to our hedging activities;

	●	exploration and development drilling prospects, inventories, projects, and programs;

	●	the impact of reduced drilling activity in our focus areas and uncertainty in whether development projects will be pursued;

	●	operating hazards faced by our operators;

	●	technological advancements;

	●	weather conditions, natural disasters and other matters beyond our control; and

●

other factors detailed under the section titled “Risk Factors” beginning on page 52 of the Proxy Statement and incorporated herein by reference.

The forward-looking statements contained in this Report are based on the Company’s current expectations and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that future developments affecting the Company will be those that the Company has anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the Company’s control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described or incorporated by reference under the heading “Risk Factors” below. Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. There may be additional risks that the Company considers immaterial or which are unknown. It is not possible to predict or identify all such risks. The Company will not and does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Business

The business of the Company is described in the Proxy Statement in the section titled “Information About Pogo” beginning on page 145 thereof and that information is incorporated herein by reference.

Risk Factors

The risks associated with the Company’s business are described in the Proxy Statement in the section titled “Risk Factors” beginning on page 52 thereof and are incorporated herein by reference. A summary of the risks associated with the Company’s business are also described on page 43 of the Proxy Statement under the heading “Summary of Risk Factors” and are incorporated herein by reference.

Financial Information

The consolidated financial statements of Pogo as of September 30, 2023 (unaudited) and December 31, 2022 and for the nine months ended September 30, 2023 and 2022 (unaudited) and the related notes is filed as Exhibit 99.1 to this Report and is incorporated herein by reference.

The audited consolidated financial statements of Pogo as of December 31, 2022 and 2021, and for the year ended December 31, 2022 and 2021 and the related notes are included in the Proxy Statement beginning on page F-45.

The unaudited pro forma condensed combined financial information of HNRA as of September 30, 2023 and for the year ended December 31, 2022 and the nine months ended September 30, 2023 is filed as Exhibit 99.2 to this Report and is incorporated herein by reference.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of the Financial Condition and Results of Operations of Pogo for the nine months ended September 30, 2023 and 2022 is set forth in Exhibit 99.3 hereto and is incorporated herein by reference.

Properties

The properties of the Company are described in the Proxy Statement in the section titled “Information About Pogo” beginning on page 145 thereof and that information is incorporated herein by reference.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information known to the Company regarding the beneficial ownership of Class A Common Stock immediately following consummation of the Business Combination by:

●

each person who is the beneficial owner of more than 5% of the outstanding shares of Class A Common Stock;

●

each of the Company’s named executive officers and directors; and

●

all of the Company’s executive officers and directors as a group.

Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security. Under those rules, beneficial ownership includes securities that the individual or entity has the right to acquire, such as through the exercise of warrants or stock options or the vesting of restricted stock units, within 60 days of the Closing Date. Shares subject to warrants or options that are currently exercisable or exercisable within 60 days of the Closing Date or subject to restricted stock units that vest within 60 days of the Closing Date are considered outstanding and beneficially owned by the person holding such warrants, options or restricted stock units for the purpose of computing the percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Shares issuable pursuant to the exchange of OpCo Class B Units listed in the table below are represented in shares of Class A Common Stock.

Except as described in the footnotes below and subject to applicable community property laws and similar laws, the Company believes that each person listed above has sole voting and investment power with respect to such shares.

The beneficial ownership of HNRA securities is based on (i) 5,097,009 shares of Class A Common Stock issued and outstanding immediately following consummation of the Business Combination, after giving effect to the Redemption Rights, and (ii) 1,800,000 shares of Class B Common Stock issued and outstanding immediately following the consummation of the Business Combination.

Name and Address of Beneficial Owners⁽¹⁾	Number of Shares		%
Directors of officers:
Byron Blount		63,700		*
Diego Rojas		—		—
Joseph V. Salvucci, Sr.		—		—
Joseph V. Salvucci, Jr.⁽²⁾		—		—
Mitchell B. Trotter		22,125		*
David M. Smith		142,500		2.1	%

All directors and officers after as a group (6 persons)		228,325		3.3	%

Five Percent Holders:
JVS Alpha Property, LLC⁽³⁾		1,232,621		17.9	%
HNRAC Sponsor LLC⁽⁴⁾		490,625		7.1	%
Pogo Royalty, LLC⁽⁵⁾		2,000,000		29.0	%
Dante Caravaggio⁽⁶⁾		539,040		7.8	%
Donald H. Goree⁽⁷⁾		367,969		5.3	%

*	Less than one percent (1%)

(1)	Unless otherwise noted, the business address of each of the following entities or individuals is 3730 Kirby Drive, Suite 1200, Houston, Texas 77098.

(2)	Mr. Salvucci Jr. has sole voting and dispositive control over the securities held by JVS Alpha Property, LLC, however he disclaims any beneficial ownership of such shares.

(3)	JVS Alpha Property, LLC’s Manager is Joseph V. Salvucci, Jr., who has voting and dispositive control over the shares held by such entity.

(4)

Don Orr, as Manager of HNRAC Sponsors LLC, has voting and dispositive control over the securities held by such entity, however he disclaims any beneficial ownership of such shares. Includes the assumption that 378,750 shares of common stock underlying 505,000 private placement warrants have been issued.

(5)

Consists of (1) 1,800,000 shares of Class B Common Stock (and corresponding OpCo Class B Units) and (2) 200,000 shares of Class A Common Stock received following exercise of the OpCo Exchange Right. Includes all Class B Common Stock held by Pogo Royalty following Closing of the Business Combination. Fouad Bashour, Amir Yoffe, Michael Rawlings and Marshall Payne have voting and dispositive control over the securities held by such entity. Does not include any Class B Common Stock upon conversion of OpCo Preferred Units, due to conversion only occurring on the date that is two (2) years after Closing. The address of Messrs. Bashour, Yoffe, Rawlings and Payne is 3879 Maple Avenue, Suite 400, Dallas, Texas 75219 and the telephone number at that address is 214-871-6812.

(6)

Consists of (1) 450,040 shares of Class A Common Stock held by Dante Caravaggio, LLC, of which Mr. Caravaggio has voting and dispositive control over the shares held by such entity and (2) 89,000 shares of Class A Common Stock held by Alexandria VMA Capital, LLC, of which Mr. Caravaggio has voting and dispositive control over the shares held by such entity. The business address of Mr. Caravaggio is 22415 Keystone Trail, Katy, TX 77450.

(7)

Mr. Goree has sole voting and dispositive control over the securities held by Rhone Merchant House Ltd, which indirectly holds 367,969 private placement shares by virtue of its 75% ownership in HNRAC Sponsors LLC, which owns 490,625 private placement shares. Includes the assumption that 378,750 shares of common stock underlying 505,000 private placement warrants have been issued to Sponsor. The business address of Rhone Merchant House Ltd. is 81 Rue de France, 5TH Floor, Nice, France 06000.

Directors and Executive Officers

The Company’s directors and executive officers upon the Closing are described in the Proxy Statement in the section titled “Management After the Purchase” beginning on page 204 thereof and that information is incorporated herein by reference.

Directors

Upon the Closing, the Company’s Board has five directors. The Company’s Board is divided into two classes with only one class of directors being elected in each year and each class (except for those directors appointed prior to HNRA’s first annual meeting of stockholders) serving a two-year term. The class I directors consist of Diego Rojas and Joseph V. Salvucci, Jr., and their term will expire at HNRA’s first annual meeting of stockholders. The class II directors consist of Mitchell Trotter, Byron Blount, and Joseph V. Salvucci, Sr. and their term will expire at the second annual meeting of stockholders. Biographical information for these individuals is set forth in the Proxy Statement in the section titled “Management After the Purchase” beginning on page 204 thereof and that information is incorporated herein by reference.

Committees of the Board of Directors

The standing committees of the Company’s Board consist of an audit committee (the “Audit Committee”), a compensation committee (the “Compensation Committee”), and a Nominating, Corporate Governance, and ESG Committee (the “Nominating Committee”). The Audit Committee, Compensation Committee, and the Nominating Committee report to the Board.

Audit Committee

The Board appointed Messrs. Blount and Salvucci Sr. to serve on the Audit Committee, with Mr. Blount serving as the chair. Mr. Blount also serves as the Audit Committee’s “audit committee financial expert” under SEC rules. As described below under “Directors Independence,” the Board has determined that Messrs. Blount and Salvucci Sr. are “independent” as that term is defined under the applicable rules and regulations of the SEC and the listing requirements and rules of NYSE American.

Compensation Committee

The Board appointed Messrs. Salvucci Sr., Salvucci, Jr., and Blount to serve on the Compensation Committee, with Mr. Salvucci, Jr. serving as the chair. As described below under “Directors Independence,” the Board has determined that Messrs. Salvucci Sr., Salvucci, Jr., and Blount are “independent” as that term is used under the applicable rules and regulations of the SEC and the listing requirements and rules of NYSE American.

Nominating Committee

The Board appointed Messrs. Salvucci Sr., Salvucci, Jr., and Blount to serve on the Nominating Committee, with Mr. Salvucci, Jr. serving as the chair.

Executive Officers

Effective as of the Closing, the executive officers are:

Name	Position	Age
Diego Rojas	Chief Executive Officer	69
Mitchell B. Trotter	Chief Financial Officer	64
David M. Smith	General Counsel and Secretary	68

Biographical information for these individuals is set forth in the Proxy Statement in the section titled “Management After the Purchase” beginning on page 204 thereof and that information is incorporated herein by reference.

Executive Compensation

A description of the compensation of the executive officers and directors of HNRA after the consummation of the Business Combination is set forth in the section of the Proxy Statement titled “Compensation of Executive Officers and Directors After the Purchase,” beginning on page 211 thereof which is incorporated herein by reference.

At the Special Meeting, HNRA stockholders approved the HNR Acquisition Corp 2023 Omnibus Incentive Plan (the “2023 Plan”), which is included as Exhibit 10.11 to this Report and is incorporated herein by reference. A summary of the 2023 Plan is set forth in the section of the Proxy Statement titled “Proposal No. 2—The Incentive Plan Proposal” beginning on page 132 thereof, which is incorporated herein by reference.

Certain Relationships and Related Person Transactions, and Director Independence

Certain Relationships and Related Person Transactions

Certain relationships and related person transactions are described in the Registration Statement on Form S-1 filed with the SEC on November 7, 2023 in the section titled “Certain Relationships and Related Person Transactions” beginning on page 151 thereof and are incorporated herein by reference.

Directors Independence

The NYSE American listing standards require that a majority of the Board be independent. An “independent director” is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship which in the opinion of the company’s board of directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. Of the current members of the Board, Messrs. Salvucci Sr., Salvucci Jr., and Byron Blount are each considered an “independent director” under the NYSE American listing standards and applicable SEC rules. HNRA’s independent directors will have regularly scheduled meetings at which only independent directors are present.

Legal Proceedings

Reference is made to the disclosure regarding legal proceedings in the sections of the Proxy Statement titled “Information About Pogo—Legal Proceedings” and “Business of HNRA and Certain Information About HNRA—Legal Proceedings” beginning on pages 164 and 186, respectively, which are incorporated herein by reference.

Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters

Market Information and Dividends

On November 16, 2023, the HNRA Class A Common Stock and HNRA public warrants began trading on NYSE American as an operating company under the trading symbols of “HNRA” and “HNRAW.” The Company has never declared or paid any cash dividends and does not presently plan to pay cash dividends in the foreseeable future.

Holders of Record

Following the completion of the Business Combination, including the redemption of public shares as described above, the Company had 5,097,009 shares of Class A Common Stock outstanding that were held of record by approximately 450 holders, 1,800,000 shares of Class B Common Stock outstanding that were held of record by one holder, and no shares of preferred stock outstanding.

Securities Authorized for Issuance Under HNR Acquisition Corp Omnibus Equity Incentive Plan

Reference is made to the disclosure described in the Proxy Statement in the section titled “Proposal No. 2—The Incentive Plan Proposal” beginning on page 132 thereof, which is incorporated herein by reference. The 2023 Plan and the material terms thereunder, including the authorization of the initial share reserve thereunder, were approved by HNRA’s stockholders at the Special Meeting.

Recent Sales of Unregistered Securities

Reference is made to the disclosure set forth under “Introductory Note” above, Item 1.01 of this Report, and Item 3.02 below of this Report, which is incorporated herein by reference.

Set forth below is information regarding securities sold and issued by us in the past three years that were not registered under the Securities Act of 1933, as amended (the “Securities Act”), as well as the consideration received by us for such securities and information relating to the section of the Securities Act, or rule of the SEC, under which exemption from registration was claimed.

The Sponsor, together with such other members, if any, of the Company’s executive management, directors, advisors or third party investors as determined by the Sponsors in its sole discretion, purchased, in the aggregate, 505,000 units (“Private Placement Units”) at a price of $10.00 per Private Placement Unit in a private placement which included a share of common stock and warrant to purchase three quarters of one share of common stock at an exercise price of $11.50 per share, subject to certain adjustments (“Private Placement Warrants” and together, the “Private Placement”) that occurred immediately prior to the Initial Public Offering in such amounts as is required to maintain the amount in the Trust Account at $10.30 per Unit sold. The Sponsor agreed that if the over-allotment option was exercised by the underwriter in full or in part, the Sponsor and/or its designees shall purchase from us additional private placement units on a pro rata basis in an amount that is necessary to maintain in the trust account $10.30. Since the over-allotment was exercised in full, the Sponsor purchased 505,000 Private Placement Units. The purchase price of the Private Placement Units was added to the proceeds from the Public Offering to be held in the Trust Account pending completion of the Company’s initial Business Combination.

On December 24, 2020, the Sponsor purchased 2,875,000 founder shares for an aggregate purchase price of $25,000, up to 375,000 founder shares of which were subject to forfeiture. On February 4, 2022, the Sponsor forfeited 373,750 founder shares and as a result, there are currently 2,501,250 founder shares issued and outstanding.

In January 2023, HNRA issued 50,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $50,000 in cash and the issuance of a promissory note.

In January 2023, HNRA issued 10,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $10,000 in cash and the issuance of a promissory note.

In January 2023, HNRA issued 75,000 warrants to a stockholder having terms substantially similar to the Private Placement Warrants in connection with the receipt of $75,000 in cash and the issuance of a promissory note.

In January 2023, HNRA issued 100,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $100,000 in cash and the issuance of a promissory note.

In January 2023, HNRA issued 100,000 warrants to a stockholder having terms substantially similar to the Private Placement Warrants in connection with the receipt of $100,000 in cash and the issuance of a promissory note.

In January 2023, HNRA issued 50,000 warrants to a director nominee having terms substantially similar to the Private Placement Warrants in connection with the receipt of $50,000 in cash and the issuance of a promissory note.

In February 2023, HNRA issued 700,000 warrants to a stockholder controlled by a director having terms substantially similar to the Private Placement Warrants in connection with the receipt of $700,000 in cash and the issuance of a promissory note.

In February 2023, HNRA issued 179,000 warrants to a stockholder having terms substantially similar to the Private Placement Warrants in connection with the receipt of $179,000 in cash and the issuance of a promissory note.

In March 2023, HNRA issued 33,000 warrants to a stockholder controlled by a director having terms substantially similar to the Private Placement Warrants in connection with the receipt of $33,000 in cash and the issuance of a promissory note.

In April 2023, HNRA issued 67,000 warrants to a stockholder controlled by a director having terms substantially similar to the Private Placement Warrants in connection with the receipt of $67,000 in cash and the issuance of a promissory note.

In April 2023, HNRA issued 50,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $50,000 in cash and the issuance of a promissory note.

In May 2023, HNRA issued 50,000 warrants to a stockholder controlled by a director having terms substantially similar to the Private Placement Warrants in connection with the receipt of $50,000 in cash and the issuance of a promissory note.

In May 2023, HNRA issued 15,000 warrants to a stockholder having terms substantially similar to the Private Placement Warrants in connection with the receipt of $15,000 in cash and the issuance of a promissory note.

In May 2023, HNRA issued 100,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $100,000 in cash and the issuance of a promissory note.

In May 2023, HNRA issued 250,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $250,000 in cash and the issuance of a promissory note.

In June 2023, HNRA issued 150,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $150,000 in cash and the issuance of a promissory note.

In July 2023, HNRA issued 150,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $150,000 in cash and the issuance of a promissory note.

In July 2023, HNRA issued 50,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $50,000 in cash and the issuance of a promissory note.

In July 2023, HNRA issued 25,000 warrants to a stockholder having terms substantially similar to the Private Placement Warrants in connection with the receipt of $25,000 in cash and the issuance of a promissory note.

In July 2023, HNRA issued 10,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $10,000 in cash and the issuance of a promissory note.

In August 2023, HNRA issued 50,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $50,000 in cash and the issuance of a promissory note.

In August 2023, HNRA issued 150,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $150,000 in cash and the issuance of a promissory note.

In August 2023, HNRA issued 100,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $100,000 in cash and the issuance of a promissory note.

In September 2023, HNRA issued 125,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $125,000 in cash and the issuance of a promissory note.

In September 2023, HNRA issued 20,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $20,000 in cash and the issuance of a promissory note.

In October 2023, HNRA issued 875,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $875,000 in cash and the issuance of a promissory note.

In October 2023, HNRA issued 100,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $100,000 in cash and the issuance of a promissory note.

In October 2023, HNRA issued 500,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $500,000 in cash and the issuance of a promissory note.

In October 2023, HNRA issued 50,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $50,000 in cash and the issuance of a promissory note.

In October 2023, HNRA issued 125,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $125,000 in cash and the issuance of a promissory note.

In November 2023, HNRA issued 600,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $600,000 in cash and the issuance of a promissory note.

In November 2023, HNRA issued 500,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $500,000 in cash and the issuance of a promissory note.

In November 2023, HNRA issued 250,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $250,000 in cash and the issuance of a promissory note.

In November 2023, HNRA issued 50,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $50,000 in cash and the issuance of a promissory note.

In November 2023, HNRA issued 200,000 warrants to a third-party having terms substantially similar to the Private Placement Warrants in connection with the receipt of $200,000 in cash and the issuance of a promissory note.

On November 2, 2023, HNRA entered into a subscription agreement (the “FPA Funding Amount PIPE Subscription Agreement”) with (i) Meteora Capital Partners, LP (“MCP”), (ii) Meteora Select Trading Opportunities Master, LP (“MSTO”), and (iii) Meteora Strategic Capital, LLC (“MSC” and, collectively with MCP and MSTO, “Meteora”). Pursuant to the FPA Funding PIPE Subscription Agreement, Meteora agreed to subscribe for and purchase, and HNRA agreed to issue and sell to Meteroa, on the Closing Date, an aggregate of up to 3,000,000 shares of Class A Common Stock, less the number of shares of Class A Common Stock purchased by Meteora separately from third parties through a broker in the open market.

On November 13, 2023, HNRA entered into an agreement with Meteora (the “Non-Redemption Agreement”) pursuant to which Meteora agreed to reverse the redemption of up to the lesser of (i) 600,000 shares of Class A Common Stock, and (ii) such number of shares of Class A Common Stock such that the number of shares beneficially owned by Meteora and its affiliates and any other persons whose beneficial ownership of Class A Common Stock would be aggregated with those of Meteora for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), does not exceed 9.99% of the total number of issued and outstanding shares of Class A Common Stock.

All issuances of warrants described above were not registered under the Securities Act in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.

Description of Registrant’s Securities

Pursuant to the Second A&R Charter, HNRA’s authorized capital stock consists of 121,000,000 shares, consisting of (i) 100,000,000 shares of Class A Common Stock, (ii) 20,000,000 shares of Class B Common Stock, par value $0.0001 per share, and (iii) 1,000,000 shares of preferred stock, par value $0.0001 per share; consist of 100,000,000 shares of common stock, $0.0001 par value, and 1,000,000 shares of undesignated preferred stock, $0.0001 par value. The following description summarizes the material terms of HNRA’s capital stock. Because it is only a summary, it may not contain all the information that is important to investors.

Units

Public Units

Pursuant to the Company’s initial Public Offering (the “IPO”), the Company sold 7,500,000 units at a price of $10.00 per unit (the “Units”). Each Unit consisted of one (1) share of the Company’s common stock, $0.0001 par value and one (1) warrant to purchase three quarters of one share of common stock (the “Warrants”). On April 4, 2022, the Units separated into common stock and warrants, and ceased trading.

Private Placement Units

The Sponsor purchased 505,000 Private Placement Units at a price of $10.00 per Private Placement Unit in a private placement which included a share of common stock and Private Placement Warrants that occurred immediately prior to the IPO in such amounts as was required to maintain the amount in the Trust Account at $10.30 per Unit sold. The Sponsor agreed that if the over-allotment option was exercised by the underwriter in full or in part, the Sponsor and/or its designees would purchase from the Company additional Private Placement Units on a pro rata basis in an amount that was necessary to maintain in the trust account $10.30. Since the over-allotment was exercised in full, the Sponsor purchased 505,000 Private Placement Units. The purchase price of the Private Placement Units was added to the proceeds from the IPO to be held in the Trust Account pending completion of the Company’s initial Business Combination. The Private Placement Units (including the warrants and common stock issuable upon exercise of the Private Placement Units) are not be transferable, assignable, or salable until 30 days after the completion of the initial Business Combination and they are non-redeemable so long as they are held by the original holders or their permitted transferees. If the Private Placement Units are held by someone other than the original holders or their permitted transferees, the Private Placement Units will be redeemable by the Company and exercisable by such holders on the same basis as the Warrants included in the Units sold in the IPO. Otherwise, the Private Placement Units have terms and provisions that are substantially identical to those of the Warrants sold as part of the Units in the IPO.

Common Stock

Class A Common Stock

Holders of record of Class A Common Stock are entitled to one vote for each share held on all matters to be voted on by stockholders. Unless specified in the Second A&R Charter or the HNRA bylaws, or as required by applicable provisions of the Delaware General Corporation Law (“DGCL”) or applicable stock exchange rules, the affirmative vote of a majority of HNRA’s common stock (with Class A Common Stock and Class B Common Stock voting together in one class) that are voted is required to approve any such matter voted on by HNRA’s stockholders. HNRA’s board of directors is divided into two classes, each of which will generally serve for a term of one year with only one class of directors being elected in each year. There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares voted for the election of directors can elect all of the directors. The holders of Class A Common Stock are entitled to receive ratable dividends when, as and if declared by the board of directors out of funds legally available therefor.

Under Section 211(b) of the DGCL, HNRA is required to hold an annual meeting of stockholders for the purposes of electing directors in accordance with the bylaws unless such election is made by written consent in lieu of such a meeting. HNRA did not hold an annual meeting of stockholders to elect new directors prior to the consummation of the Business Combination, and thus HNRA may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting.

In the event of a liquidation, dissolution or winding up of the Company, the Company’s holders of Class A Common Stock are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of stock, if any, having preference over the Class A Common Stock. HNRA’s stockholders have no preemptive or other subscription rights. There are no sinking fund provisions applicable to the Class A Common Stock.

Class B Common Stock

Each share of Class B Common Stock has no economic rights but entitles its holder to one vote on all matters to be voted on by stockholders generally. Holders of shares of Class A Common Stock and shares of Class B Common Stock will vote together as a single class on all matters presented to the stockholders for their vote or approval, except as otherwise required by applicable law or by the Second A&R Charter. HNRA does not intend to list any shares of Class B Common Stock on any exchange.

Preferred Stock

The Second A&R Charter provides that shares of preferred stock may be issued from time to time in one or more series. The Board is authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. The Board is able to, without stockholder approval, issue preferred stock with voting and other rights that could adversely affect the voting power and other rights of the holders of the common stock and could have anti-takeover effects. The ability of the Board to issue preferred stock without stockholder approval could have the effect of delaying, deferring or preventing a change of control of the Company or the removal of existing management. HNRA has no preferred stock outstanding at the date hereof. Although the Company does not currently intend to issue any shares of preferred stock, the Company cannot assure investors that it will not do so in the future.

Warrants

Public Warrants

There are currently 8,625,000 warrants outstanding held by public shareholders (“Public Warrants”).

Each Public Warrant entitles the registered holder to purchase three quarters of one share of Class A Common Stock at a price of $11.50 per share, subject to adjustment as discussed below, at any time commencing 30 days after the completion of the Business Combination. However, no Public Warrants will be exercisable for cash unless the Company has an effective and current registration statement covering the shares of Class A Common Stock issuable upon exercise of the Public Warrants and a current prospectus relating to such shares of Class A Common Stock. Notwithstanding the foregoing, if a registration statement covering the shares of Class A Common Stock issuable upon exercise of the Public Warrants is not effective within a specified period following the consummation of the Business Combination, Public Warrant holders may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise Public Warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their Public Warrants on a cashless basis. In the event of such cashless exercise, each holder would pay the exercise price by surrendering the Public Warrants for that number of shares of Class A Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A Common Stock underlying the Public Warrants, multiplied by the difference between the exercise price of the Public Warrants and the “fair market value” (defined below) by (y) the fair market value. The “fair market value” for this purpose will mean the average reported last sale price of the shares of Class A Common Stock for the 5 trading days ending on the trading day prior to the date of exercise. The Public Warrants will expire on the fifth anniversary of the completion of the Business Combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.

HNRA may call the Public Warrant for redemption, in whole and not in part, at a price of $0.01 per Public Warrant,

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at any time after the Public Warrants become exercisable,

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upon not less than 30 days’ prior written notice of redemption to each warrant holder,

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if, and only if, the reported last sale price of the shares of Class A Common Stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations), for any 20 trading days within a 30 trading day period commencing at any time after the Public Warrants become exercisable and ending on the third business day prior to the notice of redemption to warrant holders; and

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if, and only if, there is a current registration statement in effect with respect to the shares of Class A Common Stock underlying such Public Warrants.

The right to exercise will be forfeited unless the Public Warrants are exercised prior to the date specified in the notice of redemption. On and after the redemption date, a record holder of a Public Warrants will have no further rights except to receive the redemption price for such holder’s Public Warrants upon surrender of such Public Warrant.

The redemption criteria for the Public Warrants have been established at a price which is intended to provide Public Warrants holders a reasonable premium to the initial exercise price and provide a sufficient differential between the then- prevailing share price and the Public Warrant exercise price so that if the share price declines as a result of a redemption call, the redemption will not cause the share price to drop below the exercise price of the Public Warrants.

If HNRA calls the Public Warrants for redemption as described above, management will have the option to require all holders that wish to exercise Public Warrants to do so on a “cashless basis.” In such event, each holder would pay the exercise price by surrendering the Public Warrants for that number of shares of Class A Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A Common Stock underlying the Public Warrants, multiplied by the difference between the exercise price of the Public Warrants and the “fair market value” (defined below) by (y) the fair market value. The “fair market value” for this purpose shall mean the average reported last sale price of the shares of co Class A Common Stock for the 5 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of Public Warrants.

Continental Stock Transfer & Trust Company, acts as warrant agent for the Public Warrants pursuant to a warrant agreement between Continental Stock Transfer & Trust and us. The warrant agreement provides that the terms of the Public Warrants may be amended without the consent of any holder (i) to cure any ambiguity or correct any mistake, including to conform the provisions of the Public Warrant agreement to the description of the terms of the Public Warrants and the warrant agreement set forth in this prospectus, or to cure, correct or supplement any defective provision, or (ii) to add or change any other provisions with respect to matters or questions arising under the warrant agreement as the parties to the warrant agreement may deem necessary or desirable and that the parties deem to not adversely affect the interests of the registered holders of the Public Warrants. The warrant agreement requires the approval, by written consent or vote, of the holders of at least 50% of the then outstanding Public Warrants in order to make any change that adversely affects the interests of the registered holders.

The exercise price and number of shares of Class A Common Stock on exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary dividend or a recapitalization, reorganization, merger or consolidation. However, except as described below, the Public Warrants will not be adjusted for issuances of shares of Class A Common Stock at a price below their respective exercise prices.

The Public Warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price, by certified or official bank check payable to us, for the number of Public Warrants being exercised. The warrant holders do not have the rights or privileges of holders of shares of Class A Common Stock and any voting rights until they exercise their Public Warrants and receive shares of Class A Common Stock. After the issuance of shares of Class A Common Stock upon exercise of the Public Warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by stockholders.

Warrant holders may elect to be subject to a restriction on the exercise of their Public Warrants such that an electing warrant holder would not be able to exercise their Public Warrants to the extent that, after giving effect to such exercise, such holder would beneficially own in excess of 9.8% of the shares of common stock outstanding.

No fractional shares of Class A Common Stock will be issued upon exercise of the Public Warrants. If, upon exercise of the Public Warrants, a holder would be entitled to receive a fractional interest in a share, HNRA will, upon exercise, round up to the nearest whole number the number of shares of Class A Common Stock to be issued to the warrant holder.

HNRA has agreed that, subject to applicable law, any action, proceeding or claim against HNRA arising out of or relating in any way to the warrant agreement, including under the Securities Act, will be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and HNRA irrevocably submit to such jurisdiction, which jurisdiction will be the exclusive forum for any such action, proceeding or claim. This exclusive forum provision shall not apply to suits brought to enforce a duty or liability created by the Exchange Act, any other claim for which the federal district courts of the United States of America are the sole and exclusive forum.

Private Warrants

The Company has issued warrants in various private placements since the IPO (the “Private Warrants”). The Private Warrants are identical to the Public Warrants in all material respects, except that the Private Warrants are not transferable, assignable or salable until 30 days after the Closing and they are be redeemable by HNRA so long as they are held by Sponsor or its permitted transferees. Sponsor, or its permitted transferees, has the option to exercise the Private Warrants on a cashless basis. If the Private Warrants are held by holders other than the Sponsor or its permitted transferees, the Private Warrants will be redeemable by HNRA in all redemption scenarios and exercisable by the holders on the same basis as the Public Warrants.

Dividends

HNRA has not paid any cash dividends on its common stock to date. The payment of cash dividends in the future will be dependent upon HNRA’s revenues and earnings, if any, capital requirements and general financial condition. The payment of any cash dividends will be within the discretion of the Board at such time. In addition, the Board is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future. Further, if HNRA incurs any indebtedness, its ability to declare dividends may be limited by restrictive covenants it may agree to in connection therewith.

Transfer Agent and Warrant Agent

The transfer agent for Class A Common Stock and Class B Common Stock and the warrant agent for the warrants is Continental Stock Transfer & Trust Company. HNRA has agreed to indemnify Continental Stock Transfer & Trust Company in its roles as transfer agent and warrant agent, its agents and each of its stockholders, directors, officers and employees against all liabilities, including judgments, costs and reasonable counsel fees that may arise out of acts performed or omitted for its activities in that capacity, except for any liability due to any gross negligence, willful misconduct or bad faith of the indemnified person or entity.

Listing of Securities

The Class A Common Stock and Public Warrants are listed on the NYSE American under the symbols “HNRA” and “HNRAW,” respectively.

Second A&R Charter and Bylaws

Certain Anti-Takeover Provisions of Delaware Law and the Second Amended and Restated Certificate of Incorporation and Bylaws

HNRA is subject to the provisions of Section 203 of the DGCL regulating corporate takeovers. This statute prevents certain Delaware corporations, under certain circumstances, from engaging in a “business combination” with:

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a stockholder who owns 15% or more of HNRA’s outstanding voting stock, otherwise known as an “interested stockholder”;

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an affiliate of an interested stockholder; or

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an associate of an interested stockholder, for three years following the date that the stockholder became an interested stockholder.

A “business combination” includes a merger or sale of more than 10% of HNRA’s assets. However, the above provisions of Section 203 do not apply if:

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the Board approves the transaction that made the stockholder an “interested stockholder,” prior to the date of the transaction;

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after the completion of the transaction that resulted in the stockholder becoming an interested stockholder, that stockholder owned at least 85% of HNRA’s voting stock outstanding at the time the transaction commenced, other than statutorily excluded shares of common stock; or

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on or subsequent to the date of the transaction, the business combination is approved by the Board and authorized at a meeting of HNRA’s stockholders, and not by written consent, by an affirmative vote of at least two-thirds of the outstanding voting stock not owned by the interested stockholder.

HNRA’s authorized but unissued common stock and preferred stock are available for future issuances without stockholder approval and could be utilized for a variety of corporate purposes, including future offerings to raise additional capital, acquisitions and employee benefit plans. The existence of authorized but unissued and unreserved common stock and preferred stock could render more difficult or discourage an attempt to obtain control of HNRA by means of a proxy contest, tender offer, merger or otherwise.

Exclusive Forum for Certain Lawsuits

The Second A&R Charter requires, to the fullest extent permitted by law, that derivative actions brought in HNRA’s name, actions against HNRA’s directors, officers, other employees or stockholders for breach of fiduciary duty and certain other actions may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel except any action (A) as to which the Court of Chancery in the State of Delaware determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery or (C) for which the Court of Chancery does not have subject matter jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in shares of HNRA’s capital stock shall be deemed to have notice of and consented to the forum provisions in the Second A&R Charter. This choice of forum provision may limit or make more costly a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of HNRA’s directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims. Alternatively, if a court were to find the choice of forum provision contained in the Second A&R Charter to be inapplicable or unenforceable in an action, HNRA may incur additional costs associated with resolving such action in other jurisdictions, which could harm HNRA’s business, operating results and financial condition.

The Second A&R Charter provides that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law, subject to certain exceptions. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. In addition, the Second A&R Charter provides that, unless HNRA consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall, to the fullest extent permitted by law, be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act, or the rules and regulations promulgated thereunder. However, there is uncertainty as to whether a court would enforce this provision and that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Section 22 of the Securities Act creates concurrent jurisdiction for state and federal courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.

Special Meeting of Stockholders

HNRA’s bylaws provide that special meetings of HNRA’s stockholders may be called only by a majority vote of the Board, by HNRA’s Chief Executive Officer or by HNRA’s Chairman.

Advance Notice Requirements for Stockholder Proposals and Director Nominations

HNRA’s bylaws provide that stockholders seeking to bring business before an annual meeting of stockholders, or to nominate candidates for election as directors at an annual meeting of stockholders must provide timely notice of their intent in writing. To be timely, a stockholder’s notice will need to be received by the company secretary at the principal executive offices not later than the close of business on the 90^th day nor earlier than the opening of business on the 120^th day prior to the anniversary of the immediately preceding annual meeting of stockholders. Pursuant to Rule 14a-8 of the Exchange Act, proposals seeking inclusion in HNRA’s annual proxy statement must comply with the notice periods contained therein. HNRA’s bylaws also specify certain requirements as to the form and content of a stockholders’ meeting. These provisions may preclude stockholders from bringing matters before an annual meeting of stockholders or from making nominations for directors at an annual meeting of stockholders.

Action by Written Consent

Any action required or permitted to be taken by common stockholders must be effected by a duly called annual or special meeting of such stockholders and may not be effected by written consent of the stockholders other than with respect to common stock.

Classified Board of Directors

The Board is divided into two classes, Class I and Class II, with members of each class serving staggered one-year terms. The Second A&R Charter provides that the authorized number of directors may be changed only by resolution of the board of directors. Subject to the terms of any preferred stock, any or all of the directors may be removed from office at any time, but only for cause and only by the affirmative vote of holders of a majority of the voting power of all then outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class. Any vacancy on the Board, including a vacancy resulting from an enlargement of the Board, may be filled only by vote of a majority of the directors then in office.

Indemnification of Directors and Officers

The indemnification of the Company’s directors and officers is described in the Proxy Statement in the section titled “Business of HNRA and Certain Information About HNRA—Limitation on Liability and Indemnification of Officers and Directors” beginning on page 193 thereof and that information is incorporated herein by reference.

Financial Statements and Exhibits

The information set forth under Item 9.01 of this Report is incorporated herein by reference.

Item 3.02. Unregistered Sales of Equity Securities.

The disclosure set forth in the “Introductory Note” above is incorporated herein by reference.

On November 13, 2023, HNRA entered into exchange agreements (“Exchange Agreements”) with certain holders (the “Noteholders”) of promissory notes issued by HNRA for working capital purposes which accrued interest at a rate of 15% per annum (the “Notes”). Pursuant to the Exchange Agreements, HNRA agreed to exchange, in consideration of the surrender and termination of the Notes in an aggregate principal amount (including interest accrued thereon) of $2,257,771, for 451,563 shares of Common Stock at a price per share equal to $5.00 per share.

In connection with a Referral Fee and Consulting Agreement (the “Consulting Agreement”) by and between HNRA and Alexandria VMA Capital, LLC (“Consultant”), HNRA issued 89,000 shares of Class A Common Stock to Consultant in connection with the closing of the Business Combination.

Item 3.03. Material Modification to Rights of Security Holders

In connection with the Closing, the Company filed its Second A&R Charter with the Secretary of State of the State of Delaware.

A copy of the Second A&R Charter is included as Exhibit 3.1 to this Report and is incorporated herein by reference.

The material terms of the Second A&R Charter and the general effect upon the rights of the Company’s stockholders are included in the Proxy Statement under the sections titled “Proposal No. 4—The Charter Proposal,” beginning on page 142 of the Proxy Statement, which is incorporated herein by reference.

Item 5.01. Changes in Control of the Registrant.

The information set forth above under “Introductory Note” and Item 2.01 of this Report is incorporated herein by reference.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

The information set forth above in the sections titled “Directors and Executive Officers,” “Executive Compensation,” “Certain Relationships and Related Person Transactions and Director Independence” and “Indemnification of Directors and Officers” is incorporated herein by reference.

Further, in connection with the Business Combination, effective as of the Closing, Donald H. Goree resigned from his position as HNRA’s Chief Executive Officer, Chief Financial Officer, Chairman, and Director and Donald W. Orr resigned from his positions as HNRA President and Director.

In addition, the 2023 Plan became effective upon the Closing. The material terms of the plan are described in the Proxy Statement in the section titled “Proposal No.2—The Incentive Plan Proposal” beginning on page 132 thereof, which are incorporated herein by reference.

Item 5.03. Amendments to Articles of Incorporation or Bylaws.

The disclosure set forth in Item 3.03 of this Report is incorporated herein by reference.

Item 5.06 Change in Shell Company Status

As a result of the Business Combination, the Company ceased to be a shell company. Reference is made to the disclosure in the Proxy Statement in the section titled “Proposal No. 1—The Purchase Proposal” beginning on page 112 thereof, which is incorporated herein by reference.

Item 8.01 Other Events.

On November 15, 2023, the Company issued a press release announcing the consummation of the Business Combination. A copy of the press release is filed as Exhibit 99.4 to this Report and is incorporated herein by reference.

The disclosure set forth in Item 2.01 of this Report is incorporated herein by reference.

Item 9.01. Financial Statement and Exhibits.

The Company acknowledges that the information required by Item 9.01(a) and (b) referenced below is required to be updated for the year ended December 31, 2023, and the Company will update such information through an amendment to this Current Report on Form 8-K once the annual audits of HNRA and Pogo are completed and related unaudited pro forma condensed combined financial information for the year ended December 31, 2023 is available which the Company expects by April 1, 2024.

(a)	Financial statements of businesses acquired.

The consolidated financial statements of Pogo as of September 30, 2023 (unaudited) and December 31, 2022 and for the nine months ended September 30, 2023 and 2022 (unaudited) and the related notes are included are filed as Exhibit 99.1 to this Report and is incorporated herein by reference.

The unaudited condensed financial statements of HNRA as of September 30, 2023 and December 31, 2022 and for the three and nine months ended September 30, 2023 and 2022 and the related notes are included in Quarterly Report on Form 10-Q filed by HNRA on November 13, 2023.

The audited financial statements of HNRA as of December 31, 2022 and 2021, and for the year ended December 31, 2022 and December 31, 2021 and the related notes are included in the Proxy Statement beginning on page F-2.

(b)	Pro forma financial information.

(d)

Exhibits.

Exhibit Number		Description

2.1†		Amended and Restated Membership Interest Purchase Agreement, dated August 28, 2023, by and among Buyer, Seller, and Sponsor (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K, filed with the SEC on August 30, 2023).

2.2*		Amendment No. 1 to the Amended and Restated Membership Interest Purchase Agreement, dated November 15, 2023, by and among Buyer, Seller, and Sponsor.

2.3*		Letter Agreement between Buyer and Seller Re: Settle Up between Parties, dated November 15, 2023.

3.1*		Second Amended and Restated Certificate of Incorporation of HNR Acquisition Corp, filed with the Secretary of State of the State of Delaware.

4.1		Warrant Agreement between Continental Stock Transfer & Trust Company and the Company (filed as Exhibit 4.1 to the Company’s Annual Report on Form 10-K filed on April 15, 2022 and incorporated herein by reference).

10.1*		Amended and Restated Limited Liability Company Agreement of HNRA Upstream, LLC by and among HNRA Upstream, LLC, Pogo Royalty, LLC, and HNR Acquisition Corp, dated November 15, 2023.

10.2*		Promissory Note issued to Pogo Royalty, LLC by HNR Acquisition Corp, dated November 15, 2023.

10.3*		Registration Rights Agreement, dated November 15, 2023, by and between HNR Acquisition Corp and Pogo Royalty, LLC.

10.4*		Option Agreement, dated November 15, 2023, by and between HNRA Royalties, LLC, Pogo Royalty, LLC, and HNR Acquisition Corp.

10.5*		Director Nomination and Board Observer Agreement, dated November 15, 2023, by and between HNR Acquisition Corp and CIC Pogo, LP.

10.6*		Backstop Agreement, dated November 15, 2023, by and among HNR Acquisition Corp, HNRA Upstream, LLC, Pogo Royalty, and the Founders that are signatory thereto.

10.7*		Founder Pledge Agreement, dated November 15, 2023, by and among HNR Acquisition Corp and the Founders that are signatory thereto.

10.8†*		Senior Secured Term Loan Agreement, dated November 15, 2023, by and among First International Bank & Trust, HNR Acquisition Corp, HNRA Upstream, LLC, HNRA Partner, Inc., Pogo Resources, LLC, and LH Operating, LLC.

10.9†*		Security Agreement, dated November 15, 2023, by and among First International Bank & Trust, HNR Acquisition Corp, HNRA Upstream, LLC, HNRA Partner, Inc., Pogo Resources, LLC, and LH Operating, LLC.

10.10*		Guaranty, dated November 15, 2023, by and among First International Bank & Trust, HNR Acquisition Corp, HNRA Upstream, LLC, HNRA Partner, Inc., Pogo Resources, LLC, and LH Operating, LLC.

10.11*		2023 HNR Acquisition Corp Omnibus Incentive Plan

10.12		Insider Letter between the Company and each of its executive officers, directors, HNRAC Sponsors LLC and its permitted transferees (incorporated by reference to Exhibit 10.1 to the Annual Report on Form 10-K filed by the Company on April 15, 2022).

10.13		Investment Management Trust Agreement between Continental Stock Transfer & Trust Company and the Company (incorporated by reference to Exhibit 10.2 to the Annual Report on Form 10-K filed by the Company on April 15, 2022).

10.14		Registration Rights Agreement between the Company and certain security holders (incorporated by reference to Exhibit 10.3 to the Annual Report on Form 10-K filed by the Company on April 15, 2022).

10.15		Securities Subscription Agreement (founder shares), dated December 24, 2020, between the Company and HNRAC Sponsors LLC (incorporated by reference to Exhibit 10.4 to the Annual Report on Form 10-K filed by the Company on April 15, 2022).

10.16		Unit Subscription Agreement between the Company and HNRAC Sponsors LLC (private placement units) (incorporated by reference to Exhibit 10.5 to the Annual Report on Form 10-K filed by the Company on April 15, 2022).

10.17		Administrative Services Agreement by and between the Company and HNRAC Sponsors LLC (incorporated by reference to Exhibit 10.7 to the Annual Report on Form 10-K filed by the Company on April 15, 2022).

10.18		Services Agreement, dated April 11, 2022, by and between Company and Houston Natural Resources, Inc. (incorporated by reference to Exhibit 10.8 to the Annual Report on Form 10-K filed by the Company on April 15, 2022).

10.19		Form of SPAC Stockholder Support Agreement, dated as of December 27, 2022, by and between the Company and SPAC Stockholder (incorporated by reference to Exhibit 10.1 on the Company’s Current Report on Form 8-K as filed with the SEC on January 3, 2023)

10.20		Common Stock Purchase Agreement, dated as of October 17, 2022, by and between HNR Acquisition Corp and White Lion Capital LLC (incorporated by reference to Exhibit 10.1 on the Company’s Current Report on Form 8-K as filed with the SEC on October 21, 2022)

10.21		Registration Rights Agreement, dated as of October 17, 2022, by and between HNR Acquisition Corp and White Lion Capital LLC (incorporated by reference to Exhibit 10.2 on the Company’s Current Report on Form 8-K as filed with the SEC on October 21, 2022).

10.22		Form of Forward Purchase Agreement (filed as Exhibit 10.1 to the Company’s Current Report on form 8-K filed on November 3, 2023 and incorporated herein by reference).

10.23		Form of FPA Funding Amount PIPE Subscription Agreement (filed as Exhibit 10.2 to the Company’s Current Report on form 8-K filed on November 3, 2023 and incorporated herein by reference).

10.24		Form of Indemnification Agreement (filed as Exhibit 10.6 to the Company’s Registration Statement on Form S-1 filed on December 28, 2021).

10.25		Form of Non-Redemption Agreement (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K on November 13, 2023 and incorporated herein by reference).

10.26		Form of Exchange Agreement (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K on November 13, 2023 and incorporated herein by reference).

21.1*		List of subsidiaries.

99.1*		Consolidated financial statements of Pogo as of September 30, 2023 (unaudited) and December 31, 2022 and for the nine months ended September 30, 2023 and 2022 (unaudited) and the related notes.

99.2*		Unaudited pro forma condensed combined financial information of HNRA as of September 30, 2023 and for the year ended December 31, 2022 and the nine months ended September 30, 2023.

99.3*		Management’s Discussion and Analysis of the Financial Condition and Results of Operations of Pogo for the nine months ended September 30, 2023 and 2022.

99.4*		Press Release of HNR Acquisition Corp dated November 15, 2023.

104*		Cover Page Interactive Data File (embedded within the Inline XBRL document).

*	Filed herewith.

†	Schedules and exhibits to this Exhibit omitted pursuant to Regulation S-K Item 601(b)(2). The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

November 21, 2023	HNR Acquisition Corp

	By:	/s/ Mitchell B. Trotter
	Name:	Mitchell B. Trotter
	Title:	Chief Financial Officer

Exhibit 2.2

Execution Version

Amendment No. 1

to AMENDED AND RESTATED

Membership interest purchase AGREEMENT

This Amendment No. 1 (this “Amendment”) dated November 14, 2023 (the “Amendment Effective Date” to Amended and Restated Membership Interest Purchase Agreement, dated as of August 28, 2023, is made by and among CIC Pogo LP, a Delaware limited partnership (“CIC”), DenCo Resources, LLC, a Texas limited liability company (“DenCo”), Pogo Resources Management, LLC, a Texas limited liability company (“Pogo Management”), 4400 Holdings, LLC, a Texas limited liability company (“4400” and, together with CIC, DenCo and Pogo Management, collectively, “Seller” and each a “Seller”), HNR Acquisition Corp, a Delaware corporation (“HNRA” or the “SPAC”), HNRA PARTNER, INC., a Delaware corporation, (“SPAC Subsidiary”), HNRA UPSTREAM, LLC, a Delaware limited liability company (“OpCo”, and together with HNRA, SPAC Subsidiary and “Buyer” and each a “Buyer”) and, solely with respect to ‎Section 6.20, HNRAC Sponsors LLC, a Delaware limited liability company (“Sponsor”). Seller and Buyer may hereafter be referred to each as a “Party” and together as the “Parties.” Capitalized terms used herein but not otherwise defined have the respectively meanings attributed to them in the MIPA (defined below).

Recitals

Whereas, Seller, Buyer, and, solely with respect to Section 6.20 therein, Sponsor, are parties to that certain Amended and Restated Membership Interest Purchase Agreement, dated as of August 28, 2023 (the “MIPA”); and

WHEREAS, pursuant to Section 11.6 of the MIPA, the MIPA may be amended by a written agreement duly executed by each of the Parties thereto; and

WHEREAS, Buyer and Seller desire to enter into this Amendment in order to amend the MIPA in the manner set forth herein.

Now, Therefore, in consideration of the representations, warranties, covenants and agreements herein made and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Agreement

1. Amendment to MIPA. The MIPA is hereby amended as follows:

(a)

The definition of “Option Agreement” in Section 1.1 of the MIPA is hereby amended and restated in its entirety as follow:

““Option Agreement” means that option agreement by and between Pogo Royalty, LLC (an Affiliate of Seller) and HNRA Royalties LLC (an Affiliate of Buyer) in the form attached hereto as Exhibit C.”

(b)

Section 2.2 of the MIPA is hereby amended and restated in its entirety as follows:

“Section 2.2 Aggregate Consideration. The aggregate consideration for the Target Interests shall be (a), cash in the amount of $63,000,000 in immediately available funds (the “Cash Consideration”), (b) 2,000,000 units of OpCo Class B Units valued at $10.00 per unit (the “Common Unit Consideration”), which shall be equal to 2,000,000 shares of SPAC Class A Common Stock issuable upon exercise of the OpCo Holder Redemption Right, as reflected in the A&R OpCo LLC Agreement and (c) and the Seller Class B Shares; provided, that (i) a portion of the Cash Consideration not to exceed $15,000,000 may be payable through the Promissory Note to Seller to the extent the Minimum Cash Amount is less than $63,000,000 and (ii) a portion of the Cash Consideration not to exceed $20,000,000 may be payable through the issuance of up to 2,000,000 units of OpCo Preferred Units (the “Preferred Unit Consideration”, and, together with the Common Unit Consideration, the “Unit Consideration”), to the extent the Minimum Cash Amount is less than $48,000,000. At Closing, 500,000 shares of the Seller Class B Shares (the “Escrowed Share Consideration”) shall be placed in escrow with the Escrow Agent for the benefit of Buyer pursuant to the Escrow Agreement and the indemnity provisions herein. The Unit Consideration and Escrowed Share Consideration shall be proportionately adjusted to reflect any stock split, combination of shares, stock dividend, reorganization, recapitalization or other similar event affecting the SPAC Common Stock, the OpCo Class B Units, the Seller Class B Shares or the OpCo Preferred Units occurring after the date of this Agreement and prior to the Closing so as to provide Seller the same economic effect as contemplated by this Agreement prior to such change.”

(c)

All instances of the defined term “Escrowed Unit Consideration” are hereby replaced with “Escrowed Share Consideration”.

(d)

Section 9.1(b) of the MIPA is hereby amended and restated in its entirety as follows:

“(b) by Seller or Buyer if Closing has not occurred on or before November 30, 2023 (the “Outside Date”);”

(e)

Section 10.4(b)(3) of the MIPA is hereby amended and restated in its entirety as follows:

“(3) In no event shall any Sellers aggregate liability to Buyer and Buyer Indemnitees under Section 10.2(a)(1) exceed the value of the Escrowed Share Consideration, except in the case of breaches of the Seller Fundamental Representations or in the case of actual Fraud; and”

2. Effect on the MIPA. Except as specifically amended by this Amendment, the MIPA shall remain in full force and effect, and the MIPA, as amended by this Amendment, is hereby ratified and confirmed in all respects. From and after the Amendment Effective Date, each reference in the MIPA to “this Agreement,” “herein,” “hereof,” “hereunder” or words of similar import, or to any provision of the MIPA, as the case may be, shall be deemed to refer to the MIPA or such provision as amended by this Amendment, unless the context otherwise requires.

3. Miscellaneous. The provisions of Sections 11.1 (Counterparts), 11.2 (Notices), 11.4 (Law; Venue), 11.5 (Jurisdiction; Waiver of Jury Trial), 11.6 (Amendment; Waivers), 11.7 (Assignment), 11.8 (Entire Agreement), 11.9 (No Third Party Beneficiaries), 11.10 (Invalid Provisions), 11.11 (Construction), 11.12 (Limitation on Damages), and 11.13 (No Recourse), of the MIPA are incorporated by reference into this Amendment mutatis mutandis.

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

IN WITNESS WHEREOF, the Parties have executed this Agreement on the dates indicated below, effective as of the Execution Date.

SELLER:

CIC:

CIC Pogo LP

By CIC IV GP LLC, its general partner

By:	/s/ Fouad Bashour	Date:	November 15, 2023
	Fouad Bashour, Manager

Amendment Number 1 to Amended and Restated Membership Interest Purchase Agreement

Execution Page - Page 1

SELLER (Continued):

DenCo:

DenCo Resources, LLC

By:	/s/ John L. Denman, Jr.	Date:	November 15, 2023
	John L. Denman, Jr., President

Amendment Number 1 to Amended and Restated Membership Interest Purchase Agreement

Execution Page - Page 2

SELLER (Continued):

4400:

4400 Holdings, LLC

By:	/s/ Kirk Pogoloff	Date:	November 15, 2023
	Kirk Pogoloff, Manager

Amendment Number 1 to Amended and Restated Membership Interest Purchase Agreement

Execution Page - Page 3

SELLER (Continued):

Pogo Management:

Pogo Resources Management, LLC

By:	/s/ Kirk Pogoloff	Date:	November 15, 2023
	Kirk Pogoloff, Manager

Amendment Number 1 to Amended and Restated Membership Interest Purchase Agreement

Execution Page - Page 4

BUYER:

HNR Acquisition Corp

By:	/s/ Donald W. Orr	Date:	November 15, 2023
	Donald W. Orr, President

HNRA PARTNER, INC.

By:	/s/ Mitchell B. Trotter	Date:	November 15, 2023
	Mitchell B. Trotter, President

HNRA UPSTREAM, LLC

By:	/s/ Mitchell B. Trotter	Date:	November 15, 2023
	Mitchell B. Trotter, President

Amendment Number 1 to Amended and Restated Membership Interest Purchase Agreement

Execution Page - Page 5

SPONSOR:

HNRAC SPONSORS LLC

By:	/s/ Donald Goree	Date:	November 15, 2023
	Donald Goree

Amendment Number 1 to Amended and Restated Membership Interest Purchase Agreement

Execution Page - Page 6

Exhibit 2.3

November 15, 2023

VIA E-MAIL

HNR Acquisition Corp

3730 Kirby Drive, Suite 1200

Houston, Texas 77098

Attention: Mitchell B. Trotter, CFO

Email: mbtrotter@comcast.net

Re: Settle Up between Parties

Dear Mr. Trotter

Reference is made to that certain Amended and Restated Membership Interest Purchase Agreement (the “MIPA”), dated as of August 28, 2023 (the “Execution Date”), made by and among CIC Pogo LP, a Delaware limited partnership (“CIC”), DenCo Resources, LLC, a Texas limited liability company (“DenCo”), Pogo Resources Management, LLC, a Texas limited liability company (“Pogo Management”), 4400 Holdings, LLC, a Texas limited liability company (“4400” and, together with CIC, DenCo and Pogo Management, collectively, “Seller” and each a “Seller”), HNR Acquisition Corp, a Delaware corporation (“HNRA” or the “SPAC”), HNRA Partner, Inc., a Delaware corporation, (“SPAC Subsidiary”), HNRA Upstream, LLC, a Delaware limited liability company (“OpCo”, and together with HNRA, SPAC Subsidiary and “Buyer” and each a “Buyer”) and, solely with respect to ‎Section 6.20 thereof, HNRAC Sponsors LLC, a Delaware limited liability company (“Sponsor”). Capitalized terms used herein and not otherwise defined herein shall have the respective meanings ascribed thereto in the MIPA.

The Parties acknowledge and agree that the MIPA provides for a Minimum Cash Amount equal to at least $33,000,000, which requires that Seller receive cash at Closing in at least an amount equal to the Minimum Cash Amount. The Parties further acknowledge that less than the Minimum Cash Amount was delivered at Closing. On or before November 21, 2023, Buyer shall settle and pay to Seller any deficiency in the amount of cash consideration received by Seller at Closing and the Minimum Cash Amount of $33,000,000.00 required to be paid to Seller at Closing under MIPA. Any such deficiency shall be paid out of sales proceeds received from oil and gas production attributable to the Company, including pursuant to its third party contract with affiliates of Chevron; provided, that any such payment and settlement from Buyer shall not exceed $2,000,000.00.

First International Bank & Trust (“FIBT”) and Buyer hereby acknowledge and agree that (i) FIBT consents to the terms of this letter agreement pursuant to the Senior Secured Term Loan Agreement between First International Bank & Trust, HNRA, and the other parties thereto dated November 14, 2023 (the “Term Loan Agreement”) and (ii) the payment to Seller contemplated herein shall be a permitted payment by the Buyer (or their subsidiaries) under the Term Loan Agreement and the other terms hereof shall not violate any provision of the Term Loan Agreement or any other Loan Document (as defined in the Term Loan Agreement) or other agreement between HNRA and its affiliates and FIBT. The foregoing accounting between the parties shall occur as to the categories described and shall not limit or preclude other or further obligations or rights between the parties in any manner.

***

	Very truly yours,

	CIC Pogo LP

	By: CIC IV GP LLC,
	Its General Partner

	By:	/s/ Fouad Bashour
		Fouad Bashour, Manager

	DenCo Resources, LLC

	By:	/s/ John L. Denman, Jr.
		John L. Denman, Jr., President

	4400 Holdings, LLC

	By:	/s/ Kirk Pogoloff
		Kirk Pogoloff, Manager

	Pogo Resources Management, LLC

	By:	/s/ Kirk Pogoloff
		Kirk Pogoloff, Manager

AGREED AND ACCEPTED:

HNR Acquisition Corp

By:	/s/ Mitchell B. Trotter	Date:	November 15, 2023
	Mitchell B. Trotter, CFO

HNRA Partner, Inc.

By:	/s/ Mitchell B. Trotter	Date:	November 15, 2023
	Mitchell B. Trotter, President

HNRA Upstream, LLC

By:	/s/ Mitchell B. Trotter	Date:	November 15, 2023
	Mitchell B. Trotter, President

ACKNOWLEDGED:

FIRST INTERNATIONAL BANK & TRUST

By:	/s/ Mitchell Cook	Date:	November 15, 2023
Name:	Mitchell Cook
Title:	Market President, Twin Cities

Exhibit 3.1

SECOND AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

hnr ACQUISITION CORP

(a Delaware Corporation)

HNR Acquisition Corp, a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), DOES HEREBY CERTIFY AS FOLLOWS:

1. That the name of this corporation is HNR Acquisition Corp and that this corporation was originally incorporated pursuant to the General Corporation Law of the State of Delaware, as amended from time to time (the “General Corporation Law”), on December 9, 2020 under the name HNR Acquisition Corp, the first amended and restated certificate of incorporation was filed on February 10, 2022, and an amendment to the first amended and restated certificate of incorporation was filed on May 11, 2023 (as amended, the “Previous Certificate”).

2. This Second Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”), which both restates and amends the provisions of the Previous Certificate, was duly adopted in accordance with Sections 242 and 245 of the General Corporation Law.

3. This Certificate of Incorporation shall become effective on the date of filing with the Secretary of State of Delaware (the “Effective Date”).

4. The text of the Previous Certificate is hereby restated and amended in its entirety to read as follows:

Article I
NAME

The name of the Corporation is HNR Acquisition Corp

Article II
REGISTERED AGENT

The address of the Corporation’s registered office in the State of Delaware is 8 The Green, Suite A, Dover, County of Kent, State of Delaware, 19901, and the name of the Corporation’s registered agent at such address is A Registered Agent, Inc.

Article III
PURPOSE

The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law.

Article IV
STOCK

Section 4.1 Authorized Stock. The total number of shares of all classes of stock that the Corporation shall have authority to issue is 121,000,000 shares, consisting of: (i) 120,000,000 shares of common stock, divided into (a) 100,000,000 shares of Class A common stock, with the par value of $0.0001 per share (the “Class A Common Stock”), and (b) 20,000,000 shares of Class B common stock, with the par value of $0.0001 per share (the “Class B Common Stock” and, together with Class A Common Stock, the “Common Stock”); and (ii) 1,000,000 shares of preferred stock, with the par value of $0.0001 per share (the “Preferred Stock”).

Section 4.2 No Class Vote on Changes in Authorized Number of Shares of Stock. Subject to the rights of the holders of any one or more series of Preferred Stock then outstanding, the number of authorized shares of any class of the Common Stock or the Preferred Stock may be increased or decreased, in each case by the affirmative vote of the holders of a majority of the total voting power of the outstanding shares of capital stock of the Corporation entitled to vote thereon, voting together as a single class, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law, and no vote of the holders of any class of the Common Stock or the Preferred Stock voting separately as a class will be required therefor. Notwithstanding the immediately preceding sentence, the number of authorized shares of any particular class may not be decreased below the number of shares of such class then outstanding, plus, in the case of Class A Common Stock, the number of shares of Class A Common Stock issuable in connection with (x) the exchange of all outstanding Class B LLC Units (together with the surrender for cancellation of all outstanding shares of Class B Common Stock), pursuant to the OpCo LLC Agreement and (y) the exercise of outstanding options, warrants, exchange rights, conversion rights or similar rights for Class A Common Stock.

Section 4.3 Common Stock.

(a)

Voting Rights.

(i)

Each holder of Common Stock will be entitled to one vote for each share of Common Stock held of record by such holder on all matters on which stockholders generally are entitled to vote, except that, to the fullest extent permitted by law and subject to Section 4.3(a)(ii), holders of shares of each class of Common Stock, as such, will have no voting power with respect to, and will not be entitled to vote on, any amendment to this Certificate of Incorporation (including any certificate of designations relating to any series of Preferred Stock) that relates solely to the terms of any outstanding Preferred Stock if the holders of such Preferred Stock are entitled to vote as a separate class thereon under this Certificate of Incorporation (including any certificate of designations relating to any series of Preferred Stock) or under the General Corporation Law.

(ii)

(1) The holders of the outstanding shares of Class A Common Stock shall be entitled to vote separately upon any amendment to this Certificate of Incorporation (including by merger, consolidation, reorganization or similar event) that would alter or change the powers, preferences or special rights of the Class A Common Stock in a manner that is disproportionately adverse as compared to the Class B Common Stock and (2) the holders of the outstanding shares of Class B Common Stock shall be entitled to vote separately upon any amendment to this Certificate of Incorporation (including by merger, consolidation, reorganization or similar event) that would alter or change the powers, preferences or special rights of the Class B Common Stock in a manner that is disproportionately adverse as compared to the Class A Common Stock.

(iii)

Except as otherwise required in this Certificate of Incorporation or by applicable law, the holders of Common Stock will vote together as a single class on all matters (or, if any holders of Preferred Stock are entitled to vote together with the holders of Common Stock, as a single class with the holders of Preferred Stock).

(b)

Dividends; Stock Splits or Combinations.

(i)

Subject to applicable law and the rights, if any, of the holders of any outstanding series of Preferred Stock or any class or series of stock having a preference senior to or the right to participate with the Class A Common Stock with respect to the payment of dividends, such dividends and other distributions of cash, stock or property may be declared and paid on the Class A Common Stock out of the assets of the Corporation that are by law available therefor, at the times and in the amounts as the Board of Directors of the Corporation (the “Board”) in its discretion may determine.

(ii)

Except as provided in Section 4.3(b)(iii) with respect to a Stock Adjustment (as defined below), dividends of cash or property may not be declared or paid on shares of Class B Common Stock.

(iii)

In no event will any stock dividend, stock split, reverse stock split, combination of stock, reclassification or recapitalization be declared or made on any class of Common Stock (each, a “Stock Adjustment”) unless (a) a corresponding Stock Adjustment for all other classes of Common Stock not so adjusted at the time outstanding is made in the same proportion and the same manner and (b) the Stock Adjustment has been reflected in the same economically equivalent manner with respect to all Class B LLC Units and OpCo Preferred Units. Stock dividends with respect to each class of Common Stock may only be paid with shares of stock of the same class of Common Stock.

(c)

Liquidation. In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the affairs of the Corporation, after payment or provision for payment of the debts and other liabilities of the Corporation and of the preferential and other amounts, if any, to which the holders of Preferred Stock are entitled, if any, the holders of all outstanding shares of Class A Common Stock will be entitled to receive, pari passu, an amount per share equal to the par value thereof, and thereafter the holders of all outstanding shares of Class A Common Stock will be entitled to receive the remaining assets of the Corporation available for distribution ratably in proportion to the number of shares of Class A Common Stock. Without limiting the rights of the holders of Class B Common Stock to exchange their shares of Class B LLC Units (together with the surrender for cancellation of a corresponding number of shares of Class B Common Stock) for shares of Class A Common Stock in accordance with the OpCo LLC Agreement, the holders of shares of Class B Common Stock, as such, will not be entitled to receive, with respect to such shares, any assets of the Corporation in excess of the par value thereof, in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation.

Section 4.4 Preferred Stock. Shares of Preferred Stock may be issued from time to time in one or more series of any number of shares, provided that the aggregate number of shares issued and not retired of any and all such series shall not exceed the total number of shares of Preferred Stock hereinabove authorized, and with such powers, including voting powers, if any, and the designations, preferences and relative, participating, optional or other special rights, if any, and any qualifications, limitations or restrictions thereof, all as shall hereafter be stated and expressed in the resolution or resolutions providing for the designation and issue of such shares of Preferred Stock from time to time adopted by the Board pursuant to authority so to do which is hereby expressly vested in the Board. The powers, including voting powers, if any, preferences and relative, participating, optional and other special rights of each series of Preferred Stock, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding.

Section 4.5 Class B Common Stock.

(a)

Retirement of Class B Common Stock. No holder of Class B Common Stock may transfer shares of Class B Common Stock to any Person unless such holder transfers a corresponding number of Class B LLC Units to the same Person in accordance with the provisions governing transfers of Class B LLC Units in the OpCo LLC Agreement. If any outstanding share of Class B Common Stock ceases to be held by a holder of a corresponding Class B LLC Unit, such share shall automatically and without further action on the part of the Corporation or any holder of Class B Common Stock be transferred to the Corporation for no consideration and retired.

(b)

Reservation of Shares of Class A Common Stock. The Corporation will at all times reserve and keep available out of its authorized and unissued shares of Class A Common Stock, solely for the purpose of the issuance in connection with the exchange of Class B LLC Units pursuant to the OpCo LLC Agreement, the number of shares of Class A Common Stock that are issuable upon exchange of all outstanding Class B LLC Units, pursuant to the OpCo LLC Agreement. The Corporation covenants that all the shares of Class A Common Stock that are issued upon the exchange of such Class B LLC Units will, upon issuance, be validly issued, fully paid and non-assessable.

(c)

Taxes. The issuance of shares of Class A Common Stock upon the exercise by holders of Class B LLC Units of their right under the OpCo LLC Agreement to exchange Class B LLC Units for shares of Class A Common Stock will be made without charge to such holders for any transfer taxes, stamp taxes or duties or other similar tax in respect of the issuance; provided, however, that if any such shares of Class A Common Stock are to be issued in a name other than that of the then record holder of the Class B LLC Units being exchanged (or The Depository Trust Company or its nominee for the account of a participant of The Depository Trust Company that will hold the shares for the account of such holder), then such holder and/or the Person in whose name such shares are to be delivered shall pay to the Corporation the amount of any tax that may be payable in respect of any transfer involved in the issuance or shall establish to the reasonable satisfaction of the Corporation that the tax has been paid or is not payable.

(d)

Preemptive Rights. To the extent Class B LLC Units are issued pursuant to the OpCo LLC Agreement to anyone other than the Corporation or a wholly owned subsidiary of the Corporation, an equivalent number of shares of Class B Common Stock (subject to adjustment as set forth herein) shall be issued at par to the same Person to whom such Class B LLC Units are issued.

Article V
BOARD OF DIRECTORS

Section 5.1 Number of Directors.

(a)

The business and affairs of the Corporation shall be managed by, or under the direction of, the Board. Unless and except to the extent that the Amended and Restated Bylaws of the Corporation (as such Bylaws may be amended from time to time, the “Bylaws”) shall so require, the election of the directors of the Corporation (the “Directors”) need not be by written ballot. Except as otherwise provided for or fixed pursuant to the provisions of Section 4.4 of this Certificate of Incorporation relating to the rights of the holders of any series of Preferred Stock to elect additional Directors, the total number of Directors constituting the entire Board shall, (a) as of the date of this Certificate of Incorporation, be five (5) and (b) thereafter, shall be fixed exclusively by one or more resolutions adopted from time to time by the Board.

(b)

Subject to Section 5.1(d), the Directors shall be divided into two classes designated Class I and Class II. Class I shall initially consist of two (2) Directors and Class II shall initially consist of three (3) Directors. The initial Class I Directors shall serve for a term expiring at the first annual meeting of stockholders following the Effective Date and the initial Class II Directors shall serve for a term expiring at the second annual meeting of stockholders following the Effective Date. At each succeeding annual meeting of the stockholders of the Corporation, beginning with the first annual meeting of the stockholders of the Corporation following the Effective Date, each of the successors elected to replace the class of Directors whose term expires at that annual meeting shall be elected for a two-year term or until the election and qualification of their respective successors in office, subject to their earlier death, resignation or removal. Subject to Section 5.1(d), if the number of Directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of Directors in each class as nearly equal as possible, but in no case will a decrease in the number of Directors shorten the term of any incumbent Director.

	(c)	A Director shall hold office until his or her successor shall be elected and shall qualify, subject, however, to prior death, resignation, retirement, disqualification or removal from office. Directors need not be stockholders.

	(d)	During any period when the holders of any series of Preferred Stock have the right to elect additional Directors as provided for or fixed pursuant to the provisions of Section 4.4 (“Preferred Stock Directors”), upon the commencement, and for the duration, of the period during which such right continues: (i) the then-total authorized number of Directors shall automatically be increased by such specified number of Preferred Stock Directors, and the holders of the related Preferred Stock shall be entitled to elect the Preferred Stock Directors pursuant to the provisions of the Board’s designation for the series of Preferred Stock and (ii) each such Preferred Stock Director shall serve until such Preferred Stock Director’s successor shall have been duly elected and qualified, or until such Preferred Stock Director’s right to hold such office terminates pursuant to such provisions, whichever occurs earlier, subject to his or her earlier death, disqualification, resignation or removal. Except as otherwise provided by the Board in the resolution or resolutions establishing such series, whenever the holders of any series of Preferred Stock having such right to elect Preferred Stock Directors are divested of such right pursuant to the provisions of such stock, the terms of office of all such Preferred Stock Directors elected by the holders of such Preferred Stock, or elected to fill any vacancies resulting from the death, resignation, disqualification or removal of such Preferred Stock Directors, shall forthwith terminate and the total and authorized number of Directors shall be reduced accordingly.

Section 5.2 Vacancies and Newly Created Directorships. Subject to any limitations imposed by applicable law and the rights of the holders of any one or more series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the authorized number of Directors or any vacancies on the Board resulting from death, resignation, retirement, disqualification, removal from office or other cause shall be filled only by the affirmative vote of a majority of the remaining Directors then in office, even if less than a quorum of the Board, and not by the stockholders. Any Director so chosen shall hold office until his or her successor shall be duly elected and qualified or until such Director’s earlier death, disqualification, resignation or removal. No decrease in the number of Directors shall shorten the term of any Director then in office.

Section 5.3 Resignations and Removal of Directors.

(a)

Any Director may resign at any time upon notice given in writing or by electronic transmission to the Board, the Chairman of the Board or the Secretary of the Corporation. Such resignation shall take effect upon delivery, unless the resignation specifies a later effective date or time or an effective date or time determined upon the happening of an event or events. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

(b)

Subject to the special rights of the holders of one or more outstanding series of Preferred Stock to elect Directors, the Board or any individual Director may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least a majority of the voting power of all of the then outstanding shares of voting stock of the Corporation entitled to vote at an election of Directors; provided, however, that in each case, whenever the holders of any class or series are entitled to elect one or more Directors pursuant to this Certificate of Incorporation (including any Preferred Stock Directors), with respect to the removal without cause of a Director or Directors so elected, the vote of the holders of the outstanding shares of that class or series and not the vote of the outstanding shares as a whole shall apply.

Article VI
STOCKHOLDER ACTION

Section 6.1 Action by Written Consent. Except as may be otherwise provided for or fixed pursuant to this Amended and Restated Certificate (including any Preferred Stock designation) relating to the rights of the holders of any outstanding series of Preferred Stock, any action required or permitted to be taken by the stockholders of the Corporation must be effected by (i) a duly called annual or special meeting of such stockholders or (ii) by the written consent of the stockholders.

Section 6.2 Meetings of Stockholders.

(a)

An annual meeting of stockholders for the election of Directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting shall be held at such place, on such date, and at such time as the Board shall determine.

(b)

Subject to any special rights of the holders of any series of Preferred Stock, and to the requirements of applicable law, special meetings of stockholders of the Corporation may be called only by the chairperson of the Board, the chief executive officer of the Corporation, or at the direction of the Board pursuant to a written resolution adopted by a majority of the total number of Directors that the Corporation would have if there were no vacancies. Any business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of meeting.

(c)

Advance notice of stockholder nominations for the election of Directors and of business to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in the Bylaws of the Corporation.

Section 6.3 No Cumulative Voting. There shall be no cumulative voting in the election of Directors.

Article VII
LIABILITY OF DIRECTORS AND OFFICERS

Section 7.1 No Personal Liability. No Director or officer of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a Director or officer, as applicable, except to the extent such an exemption from liability or limitation thereof is not permitted under the General Corporation Law as presently in effect or as the same may hereafter be amended. No amendment to or repeal of this provision shall apply to or have any effect on the liability or alleged liability of any Director or officer of the Corporation for or with respect to any acts or omissions of such Director or officer occurring prior to such amendment or repeal.

Section 7.2 Right to Indemnification.

(a)

To the fullest extent permitted by applicable law, the Corporation shall have the power to provide indemnification of (and advancement of expenses to) Directors, officers, employees and agents of the Corporation (and any other persons to which applicable law permits the Corporation to provide indemnification) through Bylaw provisions, agreements with such Directors, officers, employees, agents or other persons, vote of stockholders or disinterested directors or otherwise in excess of the indemnification and advancement otherwise permitted by such applicable law. Any amendment, repeal or modification of this Section 9.2 shall only be prospective and shall not affect the rights or protections or increase the liability of any Director under this Section 7.2(a) in effect at the time of the alleged occurrence of any act or omission to act giving rise to liability or indemnification.

(b)

This Section 7.2 shall not limit the right of the Corporation, to the extent and in the manner authorized or permitted by law, to indemnify and to advance expenses to persons other than indemnitees.

(c)

The Corporation shall maintain Directors’ and officers’ liability insurance coverage, on terms reasonably satisfactory to the Board, to the fullest extent permitted by law covering, among other things, violations of federal or state securities laws. The Corporation will pay all premiums due thereon and will not make any material alteration to the terms thereof, or the coverage provided by, such insurance policy without the prior written consent of the Board.

Section 7.3 Amendment or Repeal. Any amendment, repeal or elimination of this Article VII, or the adoption of any provision of the Corporation’s certificate of incorporation inconsistent with this Article VII, shall not affect its application with respect to an act or omission by a Director or officer occurring before such amendment, adoption, repeal or elimination.

Article VIII
AMENDMENT

Section 8.1 Amendment of Certificate of Incorporation. Subject to Sections 4.3 and 4.4, the Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by the General Corporation Law, and all rights, preferences and privileges of whatsoever nature conferred upon stockholders, Directors or any other Persons whomsoever by and pursuant to this Certificate of Incorporation in its present form or as hereafter amended, are granted and held subject to this reservation. Notwithstanding anything to the contrary contained in this Certificate of Incorporation, and notwithstanding that a lesser percentage may be permitted from time to time by applicable law, no provision of Section 5.2, Section 5.3, Section 6.1, Section 6.2, Article VII, Section 8.2, Article IX or Article XI may be altered, amended or repealed in any respect, nor may any provision or by-law inconsistent therewith be adopted, unless in addition to any other vote required by this Certificate of Incorporation or otherwise required by law, such alteration, amendment, repeal or adoption is approved by, in addition to any other vote otherwise required by law, the affirmative vote of at least a majority of the total voting power of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of Directors, voting together as a single class, at a meeting of the stockholders called for that purpose.

Section 8.2 Amendment of Bylaws. In furtherance and not in limitation of the powers conferred by law, the Board is expressly authorized to make, alter, amend or repeal the Bylaws. Any adoption, amendment or repeal of the Bylaws of the Corporation by the Board shall require the approval of a majority of the authorized number of Directors. The stockholders shall also have power to adopt, amend or repeal the Bylaws of the Corporation; provided, however, that, in addition to any vote of the holders of any class or series of stock of the Corporation required by law or by this Certificate of Incorporation, such action by stockholders shall require the affirmative vote of the holders of a majority of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of Directors, voting together as a single class.

Article IX
FORUM FOR ADJUDICATION OF DISPUTES

Section 9.1 Forum. Unless the Corporation consents in writing to the selection of an alternative forum, (a) the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by, or other wrongdoing by, any current or former Director, officer, employee or agent of the Corporation to the Corporation or the Corporation’s stockholders, or a claim of aiding and abetting any such breach of fiduciary duty, (iii) any action asserting a claim against the Corporation or any Director, officer, employee or agent of the Corporation arising pursuant to any provision of the General Corporation Law, this Certificate of Incorporation or the Bylaws (as either may be amended, restated, modified, supplemented or waived from time to time), (iv) any action to interpret, apply, enforce or determine the validity of this Certificate of Incorporation or the Bylaws of the Corporation (as either may be amended, restated, modified, supplemented or waived from time to time), (v) any action asserting a claim against the Corporation or any Director, officer, employee or agent of the Corporation that is governed by the internal affairs doctrine or (vi) any action asserting an “internal corporate claim” as that term is defined in Section 115 of the General Corporation Law and (b) the federal district courts of the United States of America shall, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. Notwithstanding the foregoing, this Article IX shall not apply to claims seeking to enforce any liability or duty created by the Securities Exchange Act of 1934 or any other claim for which the U.S. federal courts have exclusive jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in any security of the Corporation shall be deemed to have notice of and consented to the provisions of this Article IX.

Section 9.2 Enforceability. If any provision of this Article IX shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provision in any other circumstance and of the remaining provisions of this Article IX (including, without limitation, each portion of any sentence of this Article IX containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable), and the application of such provision to other persons or entities or circumstances shall not in any way be affected or impaired thereby.

Article X
SEVERABILITY

If any provision or provisions of this Certificate of Incorporation shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (i) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Certificate of Incorporation (including, without limitation, each portion of any paragraph of this Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (ii) to the fullest extent possible, the provisions of this Certificate of Incorporation (including, without limitation, each such portion of any paragraph of this Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its Directors, officers, employees and agents from personal liability in respect of their good faith service to or for the benefit of the Corporation to the fullest extent permitted by law.

Article XI
CORPORATE OPPORTUNITY

Section 11.1 Corporate Opportunities.

(a)

In recognition and anticipation that (i) certain Directors, principals, officers, employees and/or other representatives of CIC Pogo LP (“CIC”) and its Affiliates may serve as Directors, officers, employees or agents of the Corporation, (ii) CIC and its Affiliates may now engage and may continue to engage in the same or similar activities or related lines of business as those in which the Corporation, directly or indirectly, may engage and/or other business activities that overlap with or compete with those in which the Corporation, directly or indirectly, may engage, and (iii) members of the Board who are not employees of the Corporation (the “Non-Employee Directors”) and their respective Affiliates may now engage and may continue to engage in the same or similar activities or related lines of business as those in which the Corporation, directly or indirectly, may engage and/or other business activities that overlap with or compete with those in which the Corporation, directly or indirectly, may engage, the provisions of this Article XI are set forth to regulate and define the conduct of certain affairs of the Corporation with respect to certain classes or categories of business opportunities as they may involve any of CIC, the Non-Employee Directors or their respective Affiliates and the powers, rights, duties and liabilities of the Corporation and its Directors, officers and stockholders in connection therewith.

	(b)	None of (i) CIC or any of its Affiliates or (ii) any Non-Employee Director or his or her Affiliates (the Persons identified in (i) and (ii) above being referred to, collectively, as “Identified Persons” and, individually, as an “Identified Person”) shall, to the fullest extent permitted by law, have any duty to refrain from directly or indirectly (1) engaging in the same or similar business activities or lines of business in which the Corporation or any of its Affiliates now engages or proposes to engage or (2) otherwise competing with the Corporation or any of its Affiliates, and, to the fullest extent permitted by law, no Identified Person shall be liable to the Corporation or its stockholders or to any Affiliate of the Corporation for breach of any fiduciary duty solely by reason of the fact that such Identified Person engages in any such activities. To the fullest extent permitted by law, the Corporation hereby renounces any interest or expectancy in, or right to be offered an opportunity to participate in, any business opportunity that may be a corporate opportunity for an Identified Person and the Corporation or any of its Affiliates, except as provided in Section 11.1(c) of this Article XI. Subject to Section 11.1(c) of this Article XI, in the event that any Identified Person acquires knowledge of a potential transaction or other business opportunity that may be a corporate opportunity for itself, herself or himself and the Corporation or any of its Affiliates, such Identified Person shall, to the fullest extent permitted by law, have no duty to communicate or offer such transaction or other business opportunity to the Corporation or any of its Affiliates and, to the fullest extent permitted by law, shall not be liable to the Corporation or its stockholders or to any Affiliate of the Corporation for breach of any fiduciary duty as a stockholder, Director or officer of the Corporation solely by reason of the fact that such Identified Person pursues or acquires such corporate opportunity for itself, herself or himself, or offers or directs such corporate opportunity to another Person.

	(c)	Notwithstanding the foregoing provisions of this Article XI, the Corporation does not renounce its interest in any corporate opportunity offered to any Non-Employee Director if such opportunity is expressly offered to such Non-Employee Director solely in his or her capacity as a Director or officer of the Corporation, and the provisions of Section 11.1(b) of this Article XI shall not apply to any such corporate opportunity.

(d)

In addition to and notwithstanding the foregoing provisions of this Article XI, a corporate opportunity shall not be deemed to be a potential corporate opportunity for the Corporation if it is a business opportunity that (i) the Corporation is neither financially or legally able, nor contractually permitted to undertake, (ii) from its nature, is not in the line of the Corporation’s business or is of no practical advantage to the Corporation or (iii) is one in which the Corporation has no interest or reasonable expectancy.

Section 11.2 Amendments. Neither the alteration, amendment, addition to or repeal of this Article XI, nor the adoption of any provision of this Certificate of Incorporation (including any certificate of designation) inconsistent with this Article XI, shall eliminate or reduce the effect of this Article XI in respect of any business opportunity first identified or any other matter occurring, or any cause of action, suit or claim that, but for this Article XI, would accrue or arise, prior to such alteration, amendment, addition, repeal or adoption. This Article XI shall not limit any protections or defenses available to, or indemnification or advancement rights of, any Director or officer of the Corporation under this Certificate, the Bylaws or applicable law.

Article XII
DEFINITIONS

As used in this Certificate of Incorporation, unless the context otherwise requires or as set forth in another Article or Section of this Certificate of Incorporation, the term:

(a)

“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person, provided that (i) neither the Corporation nor any of its subsidiaries will be deemed an Affiliate of any stockholder of the Corporation or any of such stockholders’ Affiliates unless and during such time that such stockholder holds a majority of the total voting power of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of Directors, voting together as a single class, and (ii) no stockholder of the Corporation will be deemed an Affiliate of any other stockholder of the Corporation, in each case, solely by reason of any investment in the Corporation (including any representatives of such stockholder serving on the Board).

(b)

“Class B LLC Unit” means a unit of HNRA Upstream, LLC designated as a Class B Unit pursuant to the OpCo LLC Agreement.

	(c)	“OpCo Preferred Unit” means a Class A Convertible Preferred Unit of HNRA Upstream, LLC pursuant to the OpCo LLC Agreement.

	(c)	“control” (including the terms “controlling” and “controlled”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of such subject Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise.

(d)

“OpCo” means HNRA Upstream, LLC, a Delaware limited liability company, or any successor thereto.

(e)

“OpCo LLC Agreement” means the Amended and Restated Limited Liability Company Agreement of HNRA Upstream, LLC dated as of November 15, 2023, as the same may be amended, restated, supplemented and/or otherwise modified, from time to time.

(f)

“Person” means any individual, partnership, firm, corporation, limited liability company, association, trust, unincorporated organization or other entity.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, this Second Amended and Restated Certificate of Incorporation has been duly executed by a duly authorized officer of the Corporation on this 15^TH day of November, 2023.

	By:	/s/ Mitchell Trotter
	Name:	Mitchell Trotter
	Title:	Chief Financial Officer

Exhibit 10.1

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

HNRA UPSTREAM, LLC

A Delaware limited liability company

dated as of November 15, 2023

THE LIMITED LIABILITY COMPANY INTERESTS IN HNRA UPSTREAM, LLC HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, THE SECURITIES LAWS OF ANY STATE, OR ANY OTHER APPLICABLE SECURITIES LAWS, AND HAVE BEEN OR ARE BEING ISSUED IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. SUCH INTERESTS MUST BE ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE WITH (I) THE SECURITIES ACT, ANY APPLICABLE SECURITIES LAWS OF ANY STATE AND ANY OTHER APPLICABLE SECURITIES LAWS; (II) THE TERMS AND CONDITIONS OF THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT; AND (III) ANY OTHER TERMS AND CONDITIONS AGREED TO IN WRITING BETWEEN THE COMPANY AND THE APPLICABLE MEMBER. THE LIMITED LIABILITY COMPANY INTERESTS MAY NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS, THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT, AND ANY OTHER TERMS AND CONDITIONS AGREED TO IN WRITING BY THE COMPANY AND THE APPLICABLE MEMBER. THEREFORE, PURCHASERS AND OTHER TRANSFEREES OF SUCH LIMITED LIABILITY COMPANY INTERESTS WILL BE REQUIRED TO BEAR THE RISK OF THEIR INVESTMENT OR ACQUISITION FOR AN INDEFINITE PERIOD OF TIME.

TABLE OF CONTENTS

			Page

Article I GENERAL PROVISIONS			1

	Section 1.1	Formation	1
	Section 1.2	Name	1
	Section 1.3	Principal Place of Business; Other Places of Business	1
	Section 1.4	Designated Agent for Service of Process	1
	Section 1.5	Term	1
	Section 1.6	No State Law Partnership	2
	Section 1.7	Business Purpose	2
	Section 1.8	Powers	2
	Section 1.9	Certificates; Filings	2
	Section 1.10	Representations and Warranties by the Members	2

Article II UNITS; CAPITAL CONTRIBUTIONS			3

	Section 2.1	Units	3
	Section 2.2	Capital Contributions of the Members; No Deficit Restoration Obligation	4
	Section 2.3	No Interest; No Return	4
	Section 2.4	Issuances of Additional Units	4
	Section 2.5	Additional Funds and Additional Capital Contributions	5

Article III DISTRIBUTIONS			6

	Section 3.1	Distributions Generally	6
	Section 3.2	Tax Distributions	6
	Section 3.3	Distributions in Kind	7
	Section 3.4	Distributions to Reflect Additional Units	7
	Section 3.5	Other Distribution Rules	7

Article IV Management and Operations			8

	Section 4.1	Management.	8
	Section 4.2	Tax Actions	10
	Section 4.3	Compensation and Reimbursement of Manager	10
	Section 4.4	Outside Activities	11
	Section 4.5	Transactions with Affiliates	11
	Section 4.6	Limitation on Liability	12
	Section 4.7	Indemnification	12

Article V BOOKS AND RECORDS			13

	Section 5.1	Books and Records	13
	Section 5.2	Financial Accounts	13
	Section 5.3	Inspection; Confidentiality	13
	Section 5.4	Information to Be Provided by Manager to Members	13

Article VI TAX MATTERS, ACCOUNTING, AND REPORTING			13

	Section 6.1	Tax Matters	13
	Section 6.2	Accounting and Fiscal Year	13

Article VII UNIT TRANSFERS AND MEMBER WITHDRAWALS			14

	Section 7.1	Transfer Generally Prohibited	14
	Section 7.2	Conditions Generally Applicable to All Transfers	14
	Section 7.3	Substituted Members	15
	Section 7.4	Withdrawal	16
	Section 7.5	Restrictions on Termination Transactions	16
	Section 7.6	Incapacity	17
	Section 7.7	Legend	17

Article VIII ADMISSION OF ADDITIONAL MEMBERS			17

	Section 8.1	Admission of Additional Members	17
	Section 8.2	Limit on Number of Members	17

Article IX DISSOLUTION, LIQUIDATION AND TERMINATION			18

	Section 9.1	Dissolution Generally	18
	Section 9.2	Events Causing Dissolution	18
	Section 9.3	Distribution upon Dissolution	18
	Section 9.4	Rights of Members	19
	Section 9.5	Termination	19

Article X PROCEDURES FOR ACTIONS AND CONSENTS OF MEMBERS; MEETINGS			19

	Section 10.1	Actions and Consents of Members	19
	Section 10.2	Procedures for Meetings and Actions of the Members	19

Article XI EXCHANGE RIGHTS			20

	Section 11.1	Elective and Mandatory Exchanges	20
	Section 11.2	Additional Terms Applying to Exchanges	21
	Section 11.3	Exchange Consideration; Settlement	22
	Section 11.4	Adjustment	22
	Section 11.5	Class A Common Stock to Be Issued in Connection with an Exchange	23
	Section 11.6	Tax Treatment	23
	Section 11.7	Contribution by Manager	23
	Section 11.8	Apportionment of Distributions	23
	Section 11.9	Right of Manager to Acquire Exchangeable Units	23

Article XII			24

	Section 12.1	Distributions	24
	Section 12.2	Mandatory Conversion	24
	Section 12.3	Mandatory Conversion Notice	24
	Section 12.4	Fractional Shares	24
	Section 12.5	Registration	24
	Section 12.6	Adjustment	24
	Section 12.7	Voting	25

Article XIII MISCELLANEOUS			26

	Section 13.1	Conclusive Nature of Determinations	26
	Section 13.2	Company Counsel	26
	Section 13.3	Appointment of Manager as Attorney-in-Fact	26
	Section 13.4	Entire Agreement	27
	Section 13.5	Further Assurances	27
	Section 13.6	Notices	27
	Section 13.7	Governing Law	27
	Section 13.8	Jurisdiction and Venue	28

	Section 13.9	Equitable Remedies	28
	Section 13.10	Construction	28
	Section 13.11	Counterparts	28
	Section 13.12	Third-Party Beneficiaries	28
	Section 13.13	Binding Effect	28
	Section 13.14	Severability	28
	Section 13.15	Survival	28
	Section 13.16	Effect on Other Obligations of Members or the Company	29
	Section 13.17	Confidentiality	29

Article XIV DEFINED TERMS			29

	Section 14.1	Definitions	29
	Section 14.2	Interpretation	36

iii

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF HNRA UPSTREAM, LLC

THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) of HNRA Upstream, LLC, a Delaware limited liability company (the “Company”), dated as of November 15, 2023, is entered into by and among the Members that are party hereto, HNR Acquisition Corp., a Delaware corporation (the “Manager”), and each other Person as may become a Member from time to time, pursuant to the provisions of this Agreement.

WHEREAS, the Company was formed as a limited liability company pursuant to the Delaware Limited Liability Company Act, 6 Del. C. §§ 18-101, et seq. (as it may be amended from time to time, and any successor to such statute, the “Act”), under the name “HNRA UPSTREAM, LLC” by the filing of a Certificate of Formation (together with any amendments, the “Certificate of Formation”) of the Company in the office of the Secretary of State of the State of Delaware on August 9, 2023;

WHEREAS, immediately prior to the adoption of this Agreement, the Company was governed by the Limited Liability Company Agreement, dated August 9, 2023 (the “Initial Operating Agreement”); and

WHEREAS, in connection with the Amended and Restated MIPA, by and among CIC Pogo LP, a Delaware limited partnership (“CIC”), DenCo Resources, LLC, a Texas limited liability company (“DenCo”), Pogo Resources Management, LLC, a Texas limited liability company (“Pogo Management”), 4400 Holdings, LLC, a Texas limited liability company (“4400” and, together with CIC, DenCo and Pogo Management, collectively, “Seller” and each a “Seller”), the Manager, HNRA Partner, Inc., a Delaware corporation, (“SPAC Subsidiary”) and the Company (and together with the Manager and SPAC Subsidiary, “Buyer”) and, solely with respect to Section 6.20 thereof, HNRAC Sponsors LLC, a Delaware limited liability company (“Sponsor”) (as further amended or modified in whole or in part from time to time in accordance with such agreement, the “Purchase Agreement”), the Initial Operating Agreement is amended and restated in its entirety by this Agreement, with this Agreement superseding and replacing the Initial Operating Agreement in its entirety.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement, intending to be legally bound, agree as follows:

Article I
GENERAL PROVISIONS

Section 1.1 Formation. The Company has been formed as a Delaware limited liability company by the filing of the Certificate of Formation, pursuant to the Act on August 9, 2023.

Section 1.2 Name. The name of the Company is “HNRA Upstream, LLC.” The Company may also conduct business at the same time under one or more fictitious names if the Manager determines that such is in the best interests of the Company. The Company may change its name, from time to time, in accordance with Law.

Section 1.3 Principal Place of Business; Other Places of Business. The principal business office of the Company shall be in Houston, Texas or such other location as may be designated by the Manager from time to time. The Company may maintain offices and places of business at such other place or places within or outside the State of Delaware as the Manager deems advisable.

Section 1.4 Designated Agent for Service of Process. So long as required by the Act, the Company shall continuously maintain a registered office and a designated and duly qualified agent for service of process on the Company in the State of Delaware. The address of the registered office of the Company in the State of Delaware shall be as set forth in the Certificate of Formation. The Company’s registered agent for service of process at such address shall also be as set forth in the Certificate of Formation.

Section 1.5 Term. The term of the Company shall be perpetual unless and until the Company is dissolved in accordance with the Act or this Agreement. Notwithstanding the dissolution of the Company, the existence of the Company shall continue until its termination pursuant to this Agreement or as otherwise provided in the Act.

Section 1.6 No State Law Partnership. The Members intend that the Company shall not be a partnership (including a limited partnership) or joint venture, and that no Member shall be an agent, partner or joint venturer of any other Member, for any purposes other than for U.S. federal, and applicable state and local, income tax purposes, and this Agreement shall not be construed to suggest otherwise. Neither the Company nor any Member shall take action inconsistent with the express intent of the parties hereto as set forth in this Section 1.6. Other than in respect of the Company, nothing contained in this Agreement shall be construed as creating a corporation, association, joint stock company, business trust, or organized group of Persons, whether incorporated or not, among or involving any Member or its Affiliates, and nothing in this Agreement shall be construed as creating or requiring any continuing relationship or commitment as between such parties other than as specifically set forth in this Agreement.

Section 1.7 Business Purpose. The purpose of the Company is to carry on any and all lawful businesses and activities permitted from time to time under the Act. On the terms and subject to the conditions of this Agreement, the Company is authorized to enter into, make and perform all contracts and other undertakings, and engage in all other activities and transactions as the Manager may deem necessary, advisable or convenient for carrying out the purposes of the Company.

Section 1.8 Powers. Subject to the limitations set forth in this Agreement, the Company will possess and may exercise all of the powers and privileges granted to it by the Act, any other Law, or this Agreement, together with all powers incidental thereto, so far as such powers are necessary or convenient to the conduct, promotion or attainment of the purposes of the Company set forth in ‎Section 1.7.

Section 1.9 Certificates; Filings. The Certificate of Formation was previously filed on behalf of the Company in the office of the Secretary of State of the State of Delaware as required by the Act. The Manager shall take any and all other actions reasonably necessary to maintain the status of the Company under the Laws of the State of Delaware or any other state in which the Company shall do business. If requested by the Manager, the Members shall promptly execute all certificates and other documents consistent with the terms of this Agreement necessary for the Manager to accomplish all filing, recording, publishing, and other acts as may be appropriate to comply with all requirements for (a) the formation and operation of a limited liability company under the Laws of the State of Delaware, (b) if the Manager deems it advisable, the operation of the Company as a limited liability company, in all jurisdictions in which the Company proposes to operate, and (c) all other filings required (or determined by the Manager to be necessary or appropriate) to be made by the Company.

Section 1.10 Representations and Warranties by the Members.

(a) Individual-Member-Specific Representations. Each Member (including each Additional Member or Substituted Member as a condition to becoming an Additional Member or a Substituted Member) that is an individual represents and warrants to, and covenants with, each other Member that (i) the execution of this Agreement and the consummation of the transactions contemplated by this Agreement to be performed by such Member will not result in a breach or violation of, or a default under, any material agreement by which such Member or any of such Member’s property is bound, or any statute, regulation, order or other Law to which such Member is subject and (ii) this Agreement is binding upon, and enforceable against, such Member in accordance with its terms, except (A) to the extent that enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other Laws affecting the enforcement of creditors’ rights generally and (B) that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding thereof may be brought.

(b) Non-Individual-Member-Specific Representations. Each Member (including each Additional Member or Substituted Member as a condition to becoming an Additional Member or a Substituted Member) that is not an individual represents and warrants to, and covenants with, each other Member that (i) the execution of this Agreement and all transactions contemplated by this Agreement to be performed by it have been duly authorized by all necessary action, including that of its general partner(s), managing member(s), committee(s), trustee(s), beneficiaries, directors and/or stockholder(s) (as the case may be) as required, (ii) the execution of this Agreement and consummation of such transactions will not result in a breach or violation of, or a default under, its partnership or operating agreement, trust agreement, charter or bylaws (as the case may be), any material agreement by which such Member or any of such Member’s properties or any of its partners, members, beneficiaries, trustees or stockholders (as the case may be) is or are bound, or any statute, regulation, order or other Law to which such Member or any of its partners, members, trustees, beneficiaries or stockholders (as the case may be) is or are subject, and (iii) this Agreement is binding upon, and enforceable against, such Member in accordance with its terms, except (A) to the extent that enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other Laws affecting the enforcement of creditors’ rights generally and (B) that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding thereof may be brought.

(c) Securities Laws. Each Member (including each Additional Member or Substituted Member as a condition to becoming an Additional Member or Substituted Member) represents and warrants that it has acquired and continues to hold its interest in the Company for its own account for investment purposes only and not for the purpose of, or with a view toward, the resale or distribution of all or any part thereof, and not with a view toward selling or otherwise distributing such interest or any part thereof at any particular time or under any predetermined circumstances. Each Member further represents and warrants that it is a sophisticated investor, able and accustomed to handling sophisticated financial matters for itself, and that it has a sufficiently high net worth that it does not anticipate a need for the funds that it has invested in the Company in what it understands to be a speculative and illiquid investment.

(d) Survival of Representations and Warranties. The representations and warranties contained in Sections ‎1.10(a), ‎1.10(b), and ‎1.10(c) shall survive the execution and delivery of this Agreement by each Member (and, in the case of an Additional Member or a Substituted Member, the admission of such Additional Member or Substituted Member as a Member in the Company), and the dissolution, liquidation, and termination of the Company.

(e) No Representations as to Performance. Each Member (including each Additional Member or Substituted Member as a condition to becoming an Additional Member or Substituted Member) hereby acknowledges that no representations as to potential profit, cash flows, funds from operations or yield, if any, in respect of the Company or the Manager have been made by the Company or any Member or any employee or representative or Affiliate of the Company or any Member, and that projections and any other information, including financial and descriptive information and documentation, that may have been in any manner submitted to such Member shall not constitute any representation or warranty of any kind or nature, express or implied.

(f) Modification of Representations and Warranties. The Manager may permit the modification of any of the representations and warranties contained in Sections 1.10(a), 1.10(b), and ‎1.10(c), as applicable, to any Member (including any Additional Member or Substituted Member or any transferee of either); provided, that such representations and warranties, as modified, shall be set forth in either (i) a Unit Designation applicable to the Units held by such Member or (ii) a separate writing addressed to the Company.

Article II
UNITS; CAPITAL CONTRIBUTIONS

Section 2.1 Units.

(a) Generally. The interests of the Members in the Company are divided into, and represented by, the Units, each having the rights and obligations specified in this Agreement.

(b) Classes. The Units are initially divided into:

(i) “Class A Units,” which are issuable solely to the Manager and such other persons as the Manager shall determine;

(ii) “Class B Units,” which are issuable to the Members as set forth on the Register and as otherwise provided in this Agreement;

(iii) “Class A Convertible Preferred Units,” which are issuable to the Members as set forth on the Register and as otherwise provided in this Agreement; and

(iv) Other Classes of Units. The Company may issue additional Units or create additional classes, series, subclasses, or sub-series of Units in accordance with this Agreement.

Section 2.2 Capital Contributions of the Members; No Deficit Restoration Obligation.

(a) Capital Contributions. The Members made, shall be treated as having made, or have agreed to make, Capital Contributions to the Company and were issued the Units indicated on the Register. Except as provided by Law or in this Agreement, the Members shall have no obligation or, except as otherwise provided in this Agreement or with the prior written consent of the Manager, right to make any other Capital Contributions or any loans to the Company.

(b) No Deficit Restoration Obligation. No Member shall have an obligation to make any contribution to the capital of the Company as the result of a deficit balance in its Capital Account, and any such deficit shall not be considered a Debt owed to the Company or to any other Person for any purpose whatsoever.

Section 2.3 No Interest; No Return. No Member shall be entitled to interest on its Capital Contribution or on such Member’s Capital Account balance. Except as provided by this Agreement, any Unit Designation, or by Law, no Member shall have any right to demand or receive a withdrawal or the return of its Capital Contribution from the Company. Except to the extent provided in this Agreement or in any Unit Designation, no Member shall have priority over any other Member as to distributions or the return of Capital Contributions.

Section 2.4 Issuances of Additional Units. Subject to Section 2.5 and the rights of any Member set forth in a Unit Designation:

(a) General. The Company may issue additional Units for any Company purpose at any time or from time to time to the Members (including, subject to ‎Section 2.4(b), the Manager) or any other Person and may admit any such Person as an Additional Member for such consideration and on such terms and conditions as shall be established by the Company. Any additional Units may be issued in one or more classes or one or more series of any of such classes with such designations, preferences, conversion or other rights, voting powers, restrictions, rights to distributions, qualifications and terms and conditions of redemption (including rights that may be senior or otherwise entitled to preference over existing Units) as shall be determined by the Company and set forth in a written document attached to and made an exhibit to this Agreement, which exhibit shall be an amendment to this Agreement and shall be incorporated into this Agreement by reference (each, a “Unit Designation”). Upon the issuance of any additional Unit, the Manager shall amend the Register and the books and records of the Company as appropriate to reflect such issuance. Except to the extent specifically set forth in any Unit Designation, a Unit of any class or series other than a Common Unit shall not entitle the holder thereof to vote on, or consent to, any matter.

(b) Issuances to the Manager. No additional Units shall be issued to the Manager unless at least one of the following conditions is satisfied:

(i) The additional Units are issued to all Members holding Common Units in proportion to their respective Percentage Interests in the Common Units;

(ii) There is a recapitalization of the Capital Stock of the Manager, including any stock split, stock dividend, reclassification or similar transaction;

(iii) The additional Units are issued upon the conversion, redemption or exchange of Debt, Units or other securities issued by the Company and held by the Manager; or

(iv) The additional Units are issued in accordance with the express terms of Section 2.5(g) or any of the other provisions of this Article II (other than Section 2.4(a)).

(c) Issuances of Class B Units. No additional Class B Units shall be issued except in the event of a recapitalization of the Capital Stock of the Manager, including any stock split, stock dividend, reclassification or similar transaction.

(d) Issuances of Class A Convertible Preferred Units. No additional Class A Convertible Preferred Units (the “Class A Preferred Units”) shall be issued.

(e) No Preemptive Rights. Except as expressly provided in this Agreement or in any Unit Designation, no Person shall have any preemptive, preferential, participation or similar right or rights to subscribe for or acquire any Unit.

Section 2.5 Additional Funds and Additional Capital Contributions.

(a) General. The Company may, at any time and from time to time, determine that it requires additional funds (“Additional Funds”) for the acquisition or development of additional Assets, for the redemption of Units, or for such other purposes as the Company may determine. Additional Funds may be obtained by the Company in any manner provided in, and in accordance with, the terms of this ‎Section 2.5 without the approval of any Member or any other Person.

(b) Additional Capital Contributions. The Company may obtain any Additional Funds by accepting Capital Contributions from any Members or other Persons. In connection with any such Capital Contribution, the Company is hereby authorized from time to time to issue additional Units (as set forth in ‎Section 2.4(a) but subject to Section 2.4(b), (c) and (d)) in consideration for such Capital Contribution.

(c) Loans by Third Parties. The Company may obtain any Additional Funds by incurring Debt payable to any Person upon such terms as the Company determines appropriate, including making such Debt convertible, redeemable, or exchangeable for Units; provided, however, that the Company shall not incur any such Debt if any Member would be personally liable for the repayment of all or any portion of such Debt unless that Member otherwise agrees in writing.

(d) Issuance of Securities by the Manager.

(i) Unless otherwise agreed to by the Members, after the completion of the SPAC Transaction, except in the case of a Liquidity Offering for purposes of a Cash Settlement and subject to Section 2.5(d)(ii) and Article XI, the Manager shall not issue any additional Capital Stock or New Securities unless the Manager contributes the net proceeds received from the issuance of such additional Capital Stock or New Securities (as the case may be), and from the exercise of the rights contained in any such additional Capital Stock or New Securities to the Company in exchange for (i) in the case of an issuance of Class A Common Stock, Class A Units, or (ii) in the case of an issuance of Preferred Stock or New Securities, Equivalent Units. If at any time any Preferred Stock or New Securities are issued that are convertible into or exercisable for Class A Common Stock or another security of the Manager, then upon any such conversion or exercise, the corresponding Equivalent Unit shall be similarly converted or exercised, as applicable, and an equal number of Class A Units or other Equivalent Units shall be issued to the Manager. It is the intent of the parties that the Manager will always own Units equivalent in number and rights to its outstanding Capital Stock, except as provided pursuant to Section 11.4, and the parties hereby acknowledge that the Manager may make reasonable adjustments to its own capitalization, subject to applicable Law and the terms of any such outstanding Capital Stock, in order to effect such parity.

(ii) New Securities that are derivative securities issued under any Incentive Compensation Plan of the Manager shall not require issuance of Equivalent Units by the Company until such time as such derivative securities are exercised for Capital Stock of the Manager.

(e) Reimbursement of Issuance Expenses. If the Manager issues additional Capital Stock or New Securities and contributes the net proceeds (after deduction of any underwriters’ discounts and commissions) received from such issuance to the Company pursuant to ‎Section 2.5(d), the Company shall reimburse or assume (on an after-tax basis) the Manager’s expenses associated with such issuance.

(f) Repurchase or Redemption of Capital Stock. If any shares of Capital Stock, or New Securities are repurchased, redeemed or otherwise retired (whether by exercise of a put or call, automatically or by means of another arrangement) by the Manager, then the Manager shall cause the Company, immediately before such repurchase, redemption or retirement of such Capital Stock or New Securities, to redeem, repurchase or otherwise retire a corresponding number of Class A Units, Class B Units, or Equivalent Units held by the Manager, upon the same terms and for the same consideration as the Capital Stock or New Securities to be repurchased, redeemed, or retired.

(g) Reinvestment of Excess Cash. Notwithstanding anything to the contrary in this Agreement, if the Manager (i) receives Tax Distributions in an amount in excess of the amount necessary to enable the Manager to meet or pay its U.S. federal, state and local Tax obligations and any other operating expenses or (ii) holds any other excess cash amount, the Manager may, in its sole discretion, (A) distribute such excess cash amount to its shareholders or (B) contribute such excess cash amount to the Company in exchange for a number of Class A Units, and in the case of clause (B), the Manager may distribute to the holders of Class A Common Stock an amount of shares of Class A Common Stock corresponding to the Class A Units issued by the Company and with substantially the same rights to dividends and distributions (including distributions upon liquidation) and other economic rights as those of such Class A Units of the Company that were issued to the Manager.

Article III
DISTRIBUTIONS

Section 3.1 Distributions Generally.

(a) Except as otherwise provided in this Article III and Article XII and subject to the terms of any Unit Designation, the Company shall distribute an amount of Available Cash if, when, and as determined by the Manager to the Members pro rata in proportion to the number of Class A Units owned by each of them.

Section 3.2 Tax Distributions.

(a) Generally. If the amount distributed to a Member pursuant to Section 3.1, in respect of a Fiscal Year is less than that Member’s Assumed Tax Liability in respect of such Fiscal Year, the Company shall distribute an amount of Available Cash to the Members, pro rata in accordance with the number of Common Units owned (subject to any Unit Designation), such that each Member receives distributions of Available Cash in respect of each Fiscal Year in an amount at least equal to the Member’s Assumed Tax Liability for such Fiscal Year (each such distribution, a “Tax Distribution”); provided that notwithstanding any distributions pursuant to Section 3.1 or any other provision of this Agreement, the amounts required to be distributed as Tax Distributions under this Section 3.2(a) shall be an amount such that the Manager receives at least an amount equal to the Manager Tax-Related Liabilities with respect to such Fiscal Year. Except as provided in Section 3.2(d) and subject to any Unit Designation, all Tax Distributions shall be made pro rata in accordance with Units.

(b) Calculation of Assumed Tax Liability. For purposes of calculating the amount of each Member’s Tax Distributions under ‎Section 3.2(a), a Member’s “Assumed Tax Liability” means an amount equal to the product of:

(i) the sum of (A) the net taxable income and gain allocated to that Member in respect of its Common Units from the Company for U.S. federal income tax purposes in the Fiscal Year and (B) to the extent (x) determined by the Company in its sole discretion and (y) attributable to the Company, the amount the Member is required to include in income by reason of Code Sections 707(c) (but not including guaranteed payments for services within the meaning of Code Sections 707(c)), 951(a), and 951A(a); multiplied by

(ii) unless otherwise determined by the Company, the combined effective U.S. federal, state, and local rate of tax applicable to the Manager for the Fiscal Year (such tax rate, the “Assumed Tax Rate”).

The calculation required by this Section 3.2(b) shall be made by taking into account (w) the character of the income or gain, (x) any allocations under Code Section 704(c), (y) any special basis adjustments resulting from any election under Section 754 of the Code, including adjustments under Code Sections 732, 734(b) or 743(b), and (z) any limitations on the use of deductions or credits allocable with respect to the Fiscal Year. In addition, the Company shall adjust a Member’s Assumed Tax Liability to the extent the Company reasonably determines is necessary or appropriate as a result of any differences between U.S. federal income tax law and the tax laws of other jurisdictions in which the Company has a taxable presence. The Company shall calculate the amount of any increase described in the preceding sentence by applying the principles of Section 3.2(b)(i) and (ii) replacing the words “U.S. federal” with a reference to the applicable jurisdiction.

(c) Timing of Tax Distributions. If reasonably practicable, the Company shall make distributions of the estimated Tax Distributions in respect of a Fiscal Year on a quarterly basis to facilitate the payment of quarterly estimated income taxes, taking into account amounts previously distributed by reason of this ‎Section 3.2; provided that, if necessary for the Manager to timely satisfy any Manager Tax-Related Liabilities, the Company shall make Tax Distributions on a more frequent basis. Not later than sixty (60) Business Days after the end of the Fiscal Year, the Company shall make a final Tax Distribution in an amount sufficient to fulfill the Company’s obligations under ‎Section 3.2(a).

(d) Impact of Insufficient Available Cash. If the amount of estimated or final Tax Distributions to be made exceeds the amount of the Available Cash, the Tax Distribution to which each Member is entitled pursuant to Section 3.2(a) shall be reduced in accordance with the provisions of this ‎Section 3.2(d) (the amount of such reduction with respect to each Member, such Member’s “Tax Distribution Shortfall Amount”), and Available Cash shall be distributed in the following order of priority:

(i) First, to the Manager in an amount equal to the full amount of its Tax Distribution; and

(ii) Second, to the Members other than the Manager pro rata in accordance with their Units (subject to any Unit Designation) in an aggregate amount such that each such Member has received distributions pursuant to this Section 3.2(d)(ii) that is not less than its Assumed Tax Liability.

Any Tax Distribution Shortfall Amounts will be carried forward to subsequent Fiscal Years, and distributions will be made to resolve such amounts, in accordance with the foregoing order of priority when and to the extent that the Company has sufficient Available Cash (for the avoidance of doubt, taking into account any cash required to make Tax Distributions in respect of subsequent Fiscal Years). Any outstanding Tax Distribution Shortfall Amounts must be resolved prior to making (or must be taken into account in making) any distribution under ‎Section 3.1 or ‎Section 9.3(a).

(e) No Tax Distributions on Liquidation. No Tax Distributions shall be made in connection with a Liquidating Event or the liquidation of a Member’s Units in the Company.

Section 3.3 Distributions in Kind. No Member may demand to receive property other than cash as provided in this Agreement. The Company may make a distribution in kind of Assets to the Members, and if a distribution is made both in cash and in kind, such distribution shall be made so that, to the fullest extent practical, the percentage of the cash and any other Assets distributed to each Member entitled to such distribution is identical.

Section 3.4 Distributions to Reflect Additional Units. If the Company issues additional Units pursuant to the provisions of ‎Article II, subject to the provisions of any Unit Designation, the Manager is authorized to make such revisions to this ‎Article III and to ‎Annex C as it determines are reasonably necessary or desirable to reflect the issuance of such additional Units, including making preferential distributions to certain classes of Units.

Section 3.5 Other Distribution Rules.

(a) Transfers. From and after the Transfer of a Unit, for purposes of determining the rights to distributions (including Tax Distributions) under this Agreement, distributions (including Tax Distributions) made to the transferor Member, along with any withholding or deduction in respect of any such distribution, shall be treated as having been made to the transferee unless otherwise determined by the Company.

(b) Record Date for Distributions. The Company may designate a Record Date for purposes of calculating and giving effect to distributions. All distributions shall be made to the holders of record as of the applicable Record Date.

(c) Over-Distributions. If the amount of any distribution to a Member under the Agreement exceeds the amount to which the Member in entitled (e.g., by reason of an accounting error), the Member shall, upon written notice of the over-distribution delivered to the Member within one year of the over-distribution, promptly return the amount of such over-distribution to the Company.

(d) Reimbursements of Preformation Capital Expenditures. To the extent a distribution (or deemed distribution resulting from a reduction in a Member’s share of Company liabilities for federal tax purposes) otherwise would be treated as proceeds in a sale under Code Section 707(a)(2)(B), the Members intend such actual or deemed distribution to reimburse preformation capital expenditures under Treas. Reg. § 1.707-4(d) to the maximum extent permitted by Law.

(e) Limitation on Distributions. Notwithstanding any provision of this Agreement to the contrary, the Company shall not make a distribution to any Member to the extent such distribution would violate the Act or other Law or would result in the Company or any of its Subsidiaries being in default under any material agreement.

Article IV
Management and Operations

Section 4.1 Management.

(a) Authority of Manager.

(i) Except as otherwise provided in this Agreement, the Manager shall have full, exclusive, and complete discretion to manage and control the business and affairs of the Company, to make all decisions affecting the business and affairs of the Company and to do or cause to be done any and all acts, at the expense of the Company, as the Manager deems necessary or appropriate to accomplish the purposes and direct the affairs of the Company. Without limiting the generality of the preceding sentence and subject to Section 4.1, the Manager may cause the Company, without the consent or approval of any other Member, to enter into any of the following in one or a series of related transactions: (i) any merger, (ii) any acquisition, (iii) any consolidation, (iv) any sale, lease or other transfer or conveyance of Assets, (v) any recapitalization or reorganization of outstanding securities, (vi) any merger, sale, lease, spin-off, exchange, transfer or other disposition of a Subsidiary, division or other business, (vii) any issuance of Debt or equity securities (subject to any limitations expressly provided for in this Agreement), or (viii) any incurrence of Debt.

(ii) The Manager shall have the exclusive power and authority to bind the Company and shall be an agent of the Company’s business. The actions of the Manager taken in such capacity and in accordance with this Agreement shall bind the Company. Except to the extent expressly delegated in writing by the Manager, no Member or Person other than the Manager shall be an agent for the Company or have any right, power or authority to transact any business in the name of the Company or act for or on behalf of or to bind the Company.

(iii) Subject to the rights of any Member set forth in Section 4.1(f), any determinations to be made by the Company pursuant to this Agreement shall be made by the Manager, and such determinations shall be final, conclusive and binding upon the Company and every Member.

(iv) The Manager shall constitute a “manager” (as that term is defined in the Act) of the Company.

(v) The Manager may not be removed by the Members, with or without cause, except with the consent of the Manager.

(b) Appointment of Officers. The Manager may, from time to time, appoint such officers and establish such management and/or advisory boards or committees of the Company as the Manager deems necessary or advisable, each of which shall have such powers, authority, and responsibilities as are delegated in writing by the Manager from time to time. Each such officer and/or board or committee member shall serve at the pleasure of the Manager. The initial Officers of the Company are set forth on ‎Annex D attached to this Agreement.

(c) No Participation by Members. Except as otherwise expressly provided in this Agreement or required by any non-waivable provision of the Act or other Law and subject to ‎Section 4.1, no Member (acting in such capacity) shall (x) have any right to vote on or consent to any other matter, act, decision or document involving the Company or its business or any other matter, or (y) take part in the day-to-day management, or the operation or control, of the business and affairs of the Company. No Member, as such, shall have the power to bind the Company.

(d) Bankruptcy. Only the Manager may commence a voluntary case on behalf of, or an involuntary case against, the Company under a chapter of Title 11 U.S.C. by the filing of a “petition” (as defined in 11 U.S.C. 101(42)) with the United States Bankruptcy Court. Any such petition filed by any other Member, to the fullest extent permitted by Law, shall be deemed an unauthorized and bad faith filing, and all parties to this Agreement shall use their best efforts to cause such petition to be dismissed.

(e) Amendment of Agreement. All amendments to this Agreement must be approved by the Manager. Subject to the rights of any Member set forth in a Unit Designation and ‎‎Section 4.1(f) and ‎‎Section 4.1(g), the Manager shall have the power, without the consent or approval of any Member, to amend this Agreement as may be required to facilitate or implement any of the following purposes:

(i) to add to the obligations of the Manager or surrender any right or power granted to the Manager or any Affiliate of the Manager for the benefit of the Members;

(ii) to reflect a change that is of an inconsequential nature or does not adversely affect the Members in any material respect, or to cure any ambiguity, correct or supplement any provision in this Agreement not inconsistent with Law or with other provisions, or make other changes with respect to matters arising under this Agreement that will not be inconsistent with Law or with the provisions of this Agreement;

(iii) to satisfy any requirements, conditions, or guidelines contained in any order, directive, opinion, ruling or regulation of a federal or state agency, or in federal or state Law;

(iv) to reflect the admission, substitution, or withdrawal of Members, the Transfer of any Units, the issuance of additional Units, or the termination of the Company in accordance with this Agreement, and to amend the Register in connection with such admission, substitution, withdrawal, or Transfer;

(v) to set forth or amend the designations, preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications or terms or conditions of redemption of any additional Units issued pursuant to Article II;

(vi) if the Company is the Surviving Company in any Termination Transaction, to modify Section 10.1 or any related definitions to provide the holders of interests in the Surviving Company rights that are consistent with Section 7.5(b)(iii); and

(vii) to reflect any other modification to this Agreement as is reasonably necessary or appropriate for the business or operations of the Company or the Manager and that does not violate a Unit Designation, ‎‎Section 4.1(f), or Section 4.1(g).

(f) Certain Amendments and Actions Requiring Member Consent.

(i) Notwithstanding anything in Section 4.1(e) or Article X to the contrary, this Agreement shall not be amended, and no action may be taken by the Manager or the Company without the consent of any Member holding Common Units or Class A Preferred Units that would be adversely affected by such amendment or action. Without limiting the generality of the preceding sentence, for purposes of this Section 4.1(f)(i), the Members holding Common Units or Class A Preferred Units will be deemed to be adversely affected by an amendment or action that would (A) adversely alter the rights of any Member to receive the distributions to which such Member is entitled pursuant to Article III or Section 9.3(a)(iv), (B) convert the Company into a corporation or cause the Company to be classified as a corporation for U.S. federal income tax purposes (other than in connection with a Termination Transaction), or (C) amend this Section 4.1(f)(i). Notwithstanding the provisions of the preceding two sentences of this Section 4.1(f)(i), but subject to Section 4.1(f)(ii), the consent of any Member holding Common Units or Class A Preferred Units that would be adversely affected by an amendment or action shall not be required for any such amendment or action that affects all Members holding the same class or series of Units on a uniform or pro rata basis if such amendment or action is approved by a Majority-in-Interest of the Members of such class or series. If some, but not all, of the Members consent to such an amendment or action, the Company may, in its discretion, make such amendment or action effective only as to the Members that consented to it, to the extent it is practicable to do so.

(ii) This Agreement shall not be amended, and no action may be taken by the Manager without the consent of any Member holding Common Units or Class A Preferred Units that would be adversely affected by such amendment or action if such amendment or action would (A) modify the limited liability of a Member or increase the obligation of a Member to make a Capital Contribution to the Company or (B) amend this Section 4.1(f)(ii).

(g) Implementation of Amendments. Upon obtaining any Consent required under this Section 4.1 or otherwise required by this Agreement, and without further action or execution by any other Person, including any Member, (i) any amendment to this Agreement may be implemented and reflected in a writing executed solely by the Manager, and (ii) the Members shall be deemed a party to and bound by that amendment of this Agreement.

Section 4.2 Tax Actions. All tax-related actions, decisions, or determinations (or failure to take any available tax-related action, decision, or determination) by or with respect to the Company or any Subsidiary of the Company not expressly reserved for the Members shall be made, taken, or determined by the Manager; provided, however, any action, decision, or determination that could reasonably be expected to have a material consequence to Seller Member that is disproportionately adverse to it as compared to the Manager shall not be taken without the prior written consent of the Seller Member (such consent not to be unreasonably withheld, conditioned or delayed).

Section 4.3 Compensation and Reimbursement of Manager.

(a) General. The Manager shall not receive any fees from the Company for its services in administering the Company, except as otherwise provided in this Agreement.

(b) Reimbursement of Manager. The Company shall be liable for, and shall reimburse the Manager on an after-tax basis at such intervals as the Manager may determine, all:

(i) overhead, administrative expenses, insurance and reasonable legal, accounting and other professional fees and expenses of the Manager;

(ii) expenses of the Manager incidental to being a public reporting company;

(iii) reasonable fees and expenses related to the SPAC Transactions or any subsequent public offering of equity securities of the Manager (without duplicating any provisions of Section 2.5(e)) or private placement of equity securities of the Manager (including any reasonable fees and expenses related to the registration for resale of any such securities), whether or not consummated;

(iv) franchise and similar taxes of the Manager and other fees and expenses in connection with the maintenance of the existence of the Manager;

(v) customary compensation and benefits payable by the Manager, and indemnities provided by the Manager on behalf of, the officers, directors, and employees of the Manager; and

(vi) reasonable expenses paid by the Manager on behalf of the Company; provided, however, that the amount of any reimbursement shall be reduced by any interest earned by the Manager with respect to bank accounts or other instruments or accounts held by it on behalf of the Company as permitted pursuant to Section 4.4. Such reimbursements shall be in addition to any reimbursement of the Manager as a result of indemnification pursuant to Section 4.7.

Section 4.4 Outside Activities.

(a) Limitation on Outside Activities of Manager. The Manager shall not directly or indirectly enter into or conduct any business, other than in connection with (i) the ownership, acquisition, and disposition of Units, (ii) maintaining its legal existence (including the ability to incur and pay, as applicable, fees, costs, expenses and taxes relating to that maintenance), (iii) the management of the business of the Company and its Subsidiaries, (iv) its operation as a reporting company with a class (or classes) of securities registered under the Exchange Act, (v) the offering, sale, syndication, private placement, or public offering of stock, bonds, securities, or other interests of the Manager, (vi) the financing or refinancing of any type related to the Company or its Assets or activities, (vii) receiving and paying dividends and distributions or making contributions to the capital of its Subsidiaries, (viii) filing tax reports and tax returns and paying taxes and other customary obligations in the ordinary course (and contesting any taxes), (ix) participating in tax, accounting, and other administrative matters with respect to its Subsidiaries and providing administrative and advisory services (including treasury and insurance services, including maintaining directors’ and officers’ insurance on its behalf and on behalf of its Subsidiaries) to its Subsidiaries, (x) holding any cash or property (but not operating any property), (xi) indemnifying officers, directors, members of management, managers, employees, consultants, or independent contractors of the Manager, the Company or their respective Subsidiaries, (xii) entering into any Termination Transaction or similar transaction in accordance with this Agreement, (xiii) preparing reports to governmental authorities and to its shareholders, (xiv) holding director and shareholder meetings, preparing organizational records, and other organizational activities required to maintain its separate organizational structure, (xv) complying with applicable Law, (xvi) engaging in activities relating to any management equity plan, stock option plan or any other management or employee benefit plan of the Manager, the Company or their respective Subsidiaries, and (xvii) engaging in activities that are incidental to clauses (i) through (xvi). The provisions of this ‎Section 4.4 shall restrict only the Manager and its Subsidiaries (other than the Company and its Subsidiaries) and shall not restrict the other Members or any Affiliate of the other Members (other than the Manager).

(b) Outside Activities of Members.

(i) Subject to (x) Article XI of the Third Amended and Restated Certificate of Incorporation of the Manager, (y) any agreements entered into pursuant to Section 4.5, and (z) any other agreements (including any employment agreement) entered into by a Member or any of its Affiliates with the Manager, the Company or a Subsidiary, any Member (but, with respect to the Manager, subject to Section 4.4(a)), or any officer, director, employee, agent, trustee, Affiliate, member or stockholder of any Member shall be entitled to and may have business interests and engage in business activities in addition to those relating to the Company, including business interests and activities that are in direct or indirect competition with the Company or that are enhanced by the activities of the Company, and, in any such case, need not (A) first offer the Company or any of its Subsidiaries an opportunity to participate in such business interests or activities or (B) account to the Company or any of its Subsidiaries with respect to such business interests or activities.

(ii) None of the Members, the Company or any other Person shall have any rights by virtue of this Agreement or the relationship established hereby in any business ventures of any other Member or Person. Subject to any other agreements entered into by a Member or its Affiliates with the Manager, the Company or a Subsidiary, no Member (other than the Manager) or any such other Person shall have any obligation pursuant to this Agreement to offer any interest in any such business ventures to the Company, any Member, or any such other Person.

Section 4.5 Transactions with Affiliates. Subject to the provisions of ‎Section 4.1(f) and ‎Section 4.4, the Company may enter into any transaction or arrangement with the Manager or Subsidiaries of the Company or other Persons in which the Company has an equity investment on terms and conditions determined by the Manager. Without limiting the foregoing, but subject to ‎Section 4.4, (a) the Company may (i) lend funds to, or borrow funds from, the Manager or to Subsidiaries of the Company or other Persons in which the Company has an equity investment and (ii) transfer Assets to joint ventures, limited liability companies, partnerships, corporations, business trusts or other business entities in which the Company or any of its Subsidiaries is or thereby becomes a participant, and (b) the Manager may (i) propose and adopt on behalf of the employee benefit plans funded by the Company for the benefit of employees of the Manager, the Company, Subsidiaries of the Company or any Affiliate of any of them in respect of services performed, directly or indirectly, to or for the benefit of the Manager, the Company or any of the Company’s Subsidiaries and (ii) sell, transfer or convey any property to the Company, directly or indirectly.

Section 4.6 Limitation on Liability.

(a) General. To the fullest extent permitted by Law, no Indemnitee, in such capacity, shall be liable to the Company, any Member or any of their respective Affiliates, for any losses sustained or liabilities incurred as a result of any act or omission of such Person if (i) either (A) the Indemnitee, at the time of such act or omission, determined in good faith that its, his or her course of conduct was in, or not opposed to, the best interests of the Company or (B) in the case of omission by the Indemnitee, the Indemnitee did not intend its, his or her inaction to be harmful or opposed to the best interests of the Company and (ii) the act or omission did not constitute fraud or intentional misconduct by the Indemnitee.

(b) Action in Good Faith. An Indemnitee acting under this Agreement shall not be liable to the Company for its, his, or her good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that they expand, restrict, or eliminate the duties and liabilities of such Persons otherwise existing at Law or in equity, are agreed by the Members to replace fully and completely such other duties and liabilities of such Persons. Whenever the Manager or the Company is permitted or required to make a decision or take an action under this Agreement (i) in making such decisions, such Person shall be entitled to take into account its own interests as well as the interests of the Members as a whole or (ii) in its “good faith” or under another expressed standard, such Person shall act under such express standard and shall not be subject to any other or different standards.

(c) Outside Counsel. The Manager may consult with legal counsel, accountants and financial or other advisors, and any act or omission suffered or taken by the Manager on behalf of the Company or in furtherance of the interests of the Company in good faith in reliance upon and in accordance with the advice of such counsel, accountants or financial or other advisors will be full justification for any such act or omission, and the Manager will be fully protected in so acting or omitting to act so long as such counsel or accountants or financial or other advisors were selected with reasonable care.

(d) Duties of Members. Other than obligations of Members explicitly set forth in this Agreement, no Member (other than the Manager in its capacity as a manager), including any Member who may be deemed to be a controlling Member under applicable Law (other than the Manager in its capacity as a manager), shall owe any duty (of loyalty, care or otherwise) to the Company or to any other Member solely by reason of being a Member. With respect to each matter requiring approval of a Majority-in-Interest of the Members, each Member having voting rights may grant or withhold such Member’s vote under this Agreement, in such Member’s sole judgment, as directed or otherwise determined by such Member, without regard to the interests of any other Member or of the Company, and no Member shall have any duty to represent or act in the best interests of the Company or any other Member.

Section 4.7 Indemnification.

(a) General. The Company shall indemnify and hold harmless each Indemnitee (and such Person’s heirs, successors, assigns, executors or administrators) to the full extent permitted by Law and to the same extent and in the same manner provided by the provisions of Article VIII of the Amended and Restated Bylaws of the Manager applicable to officers and directors as if such provisions were set forth herein, mutatis mutandis, and applied to each such Indemnitee.

(b) Non-Exclusivity of Rights. The rights to indemnification and to the advancement of expenses conferred in this Section 4.7 shall not be exclusive of any other right that any Person may have or hereafter acquire under any law, agreement, vote of stockholders or disinterested directors, provisions of a certificate of incorporation or bylaws, or otherwise.

(c) Nature of Rights. The rights conferred upon Indemnitees in this ‎Section 4.7 shall be contract rights and shall continue as to an Indemnitee who has ceased to be the Manager, an Affiliate of the Manager, the Tax Representative, the Designated Individual, or an officer or director of the Manager, the Company, or their respective Affiliates. Any amendment, alteration or repeal of this ‎Section 4.7 or of Article VI of the Amended and Restated Bylaws of the Manager that would adversely affect any right of an Indemnitee or its successors shall apply prospectively only and shall not limit or eliminate any such right with respect to any proceeding involving any occurrence or alleged occurrence of any action or omission to act that took place before such amendment, alteration or repeal.

Article V

BOOKS AND RECORDS

Section 5.1 Books and Records.

(a) General. The Company shall maintain in its principal business office, or any other place as may be determined by the Company, the books and records of the Company.

(b) Specific Records. In particular, the Company shall maintain:

(i) A register containing the name, address, and number and class of Units (including Equivalent Units) of each Member, and such other information as the Manager may deem necessary or desirable and attached to this Agreement as Annex (A) (as may be amended or updated from time to time, the “Register”). The Manager shall from time to time update the Register as necessary to ensure the Register is accurate, including as a result of any sales, exchanges, or other Transfers, or any redemptions, issuances, or similar events involving Units. Except as required by Law, no Member shall be entitled to receive a copy of the Register or of the information set forth in the Register relating to any Member other than itself.

(ii) A copy of the Certificate of Formation and this Agreement and all amendments thereto.

Section 5.2 Financial Accounts. At all times during the continuance of the Company, the Company shall prepare and maintain separate books of account for the Company for financial reporting purposes, on an accrual basis, in accordance with United States generally accepted accounting principles, consistently applied.

Section 5.3 Inspection; Confidentiality. The Manager may keep confidential from the Members (or any of them) for such period of time as the Manager determines to be reasonable, any information (a) that the Manager believes to be in the nature of trade secrets, (b) the disclosure of which the Manager in good faith believes is not in the best interests of the Company or the Manager, or (c) that the Company or the Manager is required by Law, agreement, or customary commercial practice to keep confidential. Subject to the provisions of the previous sentence, the Members (personally or through an authorized representative) may, for purposes reasonably related to their respective interests in the Company, examine and copy (at their own cost and expense) the books and records of the Company at all reasonable business hours upon reasonable prior notice.

Section 5.4 Information to Be Provided by Manager to Members. The Company shall deliver (or otherwise make accessible) to each Member a copy of any information mailed or delivered electronically to all of the common stockholders of the Manager as soon as practicable after such mailing or electronic delivery.

Article VI
TAX MATTERS, ACCOUNTING, AND REPORTING

Section 6.1 Tax Matters.

(a) Tax Returns. The Company shall cause to be prepared and timely filed (taking into account available extensions) all federal, state, and local, and non-U.S. tax returns of the Company for each year for which such returns are required to be filed and shall determine the appropriate treatment of each tax item of the Company and make all other determinations with respect to such tax returns.

(b) Other Tax-Related Matters. Each of the provisions of ‎Annex C, which address various tax-related matters, is incorporated into and shall constitute a part of this Agreement.

Section 6.2 Accounting and Fiscal Year. Unless otherwise determined by the Company or required by Code Section 706, the fiscal year of the Company (the “Fiscal Year”) shall be the calendar year ending December 31st, or, in the case of the last Fiscal Year of the Company, the fraction thereof ending on the date on which the winding up of the Company is completed.

Article VII

UNIT TRANSFERS AND MEMBER WITHDRAWALS

Section 7.1 Transfer Generally Prohibited. No Units shall be Transferred, in whole or in part, except in accordance with the terms and conditions set forth in this ‎Article VII and ‎Article X. Any Transfer or purported Transfer of a Unit not made in accordance with this ‎Article VII or ‎Article X shall be null and void ab initio. Units shall not be subject to the claims of any creditor, spouse for alimony or support, or legal process and may not be voluntarily or involuntarily alienated or encumbered except as may be specifically provided for in this Agreement.

Section 7.2 Conditions Generally Applicable to All Transfers. All Transfers are subject to the satisfaction of the following conditions:

(a) Transfers by Members Other than the Manager of Class A Units, Class B Units or Other Classes of Units.

(i) Consent of Manager. No Member other than the Manager shall Transfer any portion of its Class A Units, Class B Units or other Classes of Units to any transferee without the prior written consent of the Manager unless the Transfer is a Related-Party Transfer.

(ii) Assumption of Obligations; No Relief from Obligations. Any transferee of all or a portion of a Unit (whether or not admitted as a Substituted Member) shall take subject to and assume, by operation of Law or express agreement, all of the obligations of the transferor Member under this Agreement with respect to such Transferred Unit. No Transfer (other than pursuant to a statutory merger or consolidation pursuant to which all obligations and liabilities of the transferor Member are assumed by a successor corporation by operation of Law) shall relieve the transferor Member of its obligations under this Agreement without the approval of the Manager.

(iii) No Rights as Member. No transferee, whether by a voluntary Transfer, by operation of Law or otherwise, shall have any rights under this Agreement unless admitted as a Substituted Member.

(b) Transfer by Members other than the Manager of Class A Preferred Units.

(i) Transfer of the Class A Preferred Units. No Member shall Transfer any portion of its Class A Preferred Units to any transferee within ninety (90) days from the date hereof; thereafter, a Member may Transfer all or any portion of its Class A Preferred Units; provided, that the aggregate number of holders of Class A Preferred Units shall at no time exceed ten (10) Persons.

(iii) No Rights as Member. No transferee, whether by a voluntary Transfer, by operation of Law or otherwise, shall have any rights under this Agreement unless admitted as a Substituted Member.

(i) Consent of Members. The Manager may not Transfer any of its Units without the consent of a Majority-in-Interest of the Members, except in connection with a Termination Transaction or to a wholly owned subsidiary in accordance with ‎Section 7.2(b)(ii).

(ii) Transfer to Subsidiary. Subject to compliance with the other provisions of this ‎Article VII, the Manager may Transfer all of its Units at any time to any Person that is, at the time of such Transfer, a direct or indirect wholly owned Subsidiary of the Manager without the consent of any Member and may designate the transferee to become the new Manager for all purposes of this Agreement.

(d) Withholding with Respect to a Transfer of Units. A Member making a Transfer permitted by this Agreement shall comply with Section 4.10(b) of ‎Annex C.

(e) Other Restrictions on Transfer. In addition to any other restrictions on Transfer in this Agreement, no Member may Transfer a Unit (including by way of acquisition of Units by the Manager or any other acquisition of Units by the Company) if the Manager determines:

(i) such Transfer (A) would result in the Company having more than 100 partners, within the meaning of Treasury Regulations Section 1.7704-1(h)(1)(ii) (determined taking into account the rules of Treasury Regulations Section 1.7704-1(h)(3)), or (B) would create an undue risk that the Company be treated as a “publicly traded partnership” within the meaning of Section 7704 of the Code or a successor provision or otherwise classified as an association taxable as a corporation for U.S. federal, state, or local income tax purposes; provided, that a Transfer by a Member shall not be prohibited under Section 7.2(d)(i)(B) if the Member obtains a tax opinion on which the Manager and the Company can rely from nationally recognized tax counsel that the Transfer will not result in the Company being treated as a “publicly traded partnership” within the meaning of Section 7704 of the Code or a successor provision or otherwise classified as an association taxable as a corporation for U.S. federal, state, or local income tax purposes;

(ii) that the Transfer would be to any Person or entity that lacks the legal right, power or capacity to own a Unit;

(iii) that the Transfer would be in violation of Law;

(iv) that the Transfer would be of any fractional or component portion of a Unit or rights to distributions, separate and apart from all other components of a Unit;

(v) that the Transfer would create a material risk that the Company would become, with respect to any employee benefit plan subject to Title I of ERISA, a “party-in-interest” (as defined in ERISA Section 3(14)) or a “disqualified Person” (as defined in Code section 4975(c));

(vi) that the Transfer would create a material risk that any portion of the Assets would constitute assets of any employee benefit plan pursuant to Department of Labor Reg. § 2510.2-101;

(vii) that the Transfer would require the registration of such Unit pursuant to any applicable federal or state securities Laws;

(viii) that such Transfer would create a material risk that the Company would become a reporting company under the Exchange Act; or

(ix) that the Transfer would subject the Company to regulation under the Investment Company Act of 1940, the Investment Advisors Act of 1940 or ERISA, each as amended.

Section 7.3 Substituted Members.

(a) Admission as Member. A transferee of Units of a Member, other than a Related-Party Transferee or a transferee of Class A Preferred Units transferred as permitted by Section 7.2(b), may be admitted as a Substituted Member only with the consent of the Company. A Related-Party Transferee and any transferee of Class A Preferred Units shall be admitted as a Substituted Member without the consent of the Company, subject to compliance with ‎Section 7.3(b). A transferee who has been admitted as a Substituted Member in accordance with this ‎Article VII shall have all the rights and powers and be subject to all the restrictions and liabilities of a Member under this Agreement.

(b) Documents to Be Provided by Transferee. No transferee shall be admitted as a Substituted Member until and unless it furnishes to the Manager (i) evidence of acceptance, in form and substance satisfactory to the Manager, of all the terms, conditions and applicable obligations of this Agreement, (ii) a counterpart signature page to this Agreement executed by such transferee and (iii) such other documents and instruments as the Manager may require to effect such transferee’s admission as a Substituted Member, including a certification from the transferee or an opinion of counsel reasonably acceptable to the Company in respect of any of the restrictions on transfer set forth in Section 7.2(d) (which certification or opinion may be waived, in whole or in part, in the sole discretion of the Company).

(c) Amendment of Books and Records. In connection with, and as evidence of, the admission of a Substituted Member, the Manager or Company shall amend the Register and the books and records of the Company to reflect the name, address and number of Units of such Substituted Member and to eliminate or adjust, if necessary, the name, address and number of Units of the predecessor of such Substituted Member.

Section 7.4 Withdrawal.

(a) Permissible Withdrawals. Subject to any Unit Designation, no Member may withdraw from the Company other than:

(i) as a result of a Transfer of all of such Member’s Units in accordance with this Article VII or Article X with respect to which the transferee becomes a Substituted Member;

(ii) pursuant to an acquisition by the Manager or Subsidiary of the Manager of all of its Units; or

(iii) with the prior written consent of the Company.

(b) Consequences of Withdrawal. Any Member who Transfers all of its Units in a Transfer (i) permitted pursuant to this ‎Article VII where such transferee was admitted as a Substituted Member or (ii) to the Manager, whether or not pursuant to ‎Section 10.1, shall cease to be a Member but shall continue to have the obligations of a former Member that are expressly set forth in this Agreement.

Section 7.5 Restrictions on Termination Transactions.

(a) General. Except as provided in ‎Section 7.5(b), neither the Company nor the Manager shall engage in, or cause or permit, a Termination Transaction.

(b) Consent. The Company or Manager may engage in, cause, or permit a Termination Transaction only if at least one of the following conditions is satisfied:

(i) A Majority-in-Interest of the Members give Consent;

(ii) In connection with any such Termination Transaction, each holder of Common Units (other than the Manager and its wholly owned Subsidiaries) will receive, or will have the right to elect to receive, for each Common Unit an amount of cash, securities or other property equal to the greatest amount of cash, securities or other property that the holder of Common Units would have received had it exercised its right to Exchange pursuant to Article X and received Class A Common Stock in exchange for its Common Units immediately before such Termination Transaction; or

(iii) All of the following conditions are met: (1) substantially all of the Assets directly or indirectly owned by the Company before the announcement of the Termination Transaction are, immediately after the Termination Transaction, owned directly or indirectly by the Company or another limited partnership or limited liability company that is the survivor of a merger, consolidation or combination of assets with the Company (in each case, the “Surviving Company”); (2) the Surviving Company is classified as a partnership for U.S. federal income tax purposes and each of its Subsidiaries has the same classification for U.S. federal, state, and local tax purposes immediately after the Termination Transaction that each Subsidiary had immediately before the Termination Transaction; (3) the rights of such Members with respect to the Surviving Company are at least as favorable as those of Members holding Units immediately before the consummation of such Termination Transaction (except to the extent that any such rights are consistent with clause (4) of this Section 7.5(b)(iii)) and as those applicable to any other limited partners or non-managing members of the Surviving Company; and (4) such rights include the right to cause their interests in the Surviving Company to be redeemed at any time or times for cash in an amount equal to the Fair Market Value of such interest at the time of redemption, as determined at least once every calendar quarter by an independent appraisal firm of recognized national standing retained by the Surviving Company.

Section 7.6 Incapacity. If a Member is subject to Incapacity, the executor, administrator, trustee, committee, guardian, conservator, or receiver of such Member’s estate (a “Member Representative”) shall have the same rights as the Incapacitated Member possessed to Transfer its Units. The Incapacity of a Member, in and of itself, shall not dissolve or terminate the Company. Unless a Member or Member Representative informs the Company in writing of the Member’s Incapacity, the Company shall have the right to assume each Member is not Incapacitated. The Company shall have no obligation to determine whether or not a Member is Incapacitated.

Section 7.7 Legend. Each certificate representing a Unit, if any, will be stamped or otherwise imprinted with a legend in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.

THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT.

THE TRANSFER AND VOTING OF THESE SECURITIES IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF HNRA UPSTREAM, LLC DATED AS OF NOVEMBER 15, 2023, AMONG THE MEMBERS LISTED THEREIN, AS IT MAY BE AMENDED, SUPPLEMENTED AND/OR RESTATED FROM TIME TO TIME, AND NO TRANSFER OF THESE SECURITIES WILL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE ISSUER OF SUCH SECURITIES.”

Article VIII
ADMISSION OF ADDITIONAL MEMBERS

Section 8.1 Admission of Additional Members.

(a) Requirements for Admission. A Person (other than a then-existing Member) who makes a Capital Contribution to the Company in exchange for Units and in accordance with this Agreement shall be admitted to the Company as an Additional Member only upon furnishing to the Manager (i) evidence of acceptance, in form and substance satisfactory to the Manager, of all of the terms and conditions of this Agreement, including the power of attorney granted in ‎Section 11.1, (ii) a counterpart signature page to this Agreement executed by such Person, and (iii) such other documents or instruments as may be required by the Manager in order to effect such Person’s admission as an Additional Member. In connection with, and as evidence of, the admission of an Additional Member, the Manager shall amend the Register and the books and records of the Company to reflect the name, address, number and type of Units of such Additional Member.

(b) Consent of Company Required. Notwithstanding anything to the contrary in this ‎Section 8.1, no Person shall be admitted as an Additional Member without the consent of the Company. The admission of any Person as an Additional Member shall become effective on the date determined by the Company (but in no case earlier than the satisfaction of all the conditions set forth in ‎Section 8.1(a)).

Section 8.2 Limit on Number of Members. Unless otherwise permitted by the Manager, no Person shall be admitted to the Company after the date of this Agreement as an Additional Member if the effect of such admission would be to cause the Company to have a number of Members (including as Members for this purpose those Persons indirectly owning an interest in the Company through another partnership, a limited liability company, a subchapter S corporation or a grantor trust) that would cause the Company to become a reporting company under the Exchange Act.

Article IX

DISSOLUTION, LIQUIDATION AND TERMINATION

Section 9.1 Dissolution Generally.

(a) Dissolution Only in Accordance with This Agreement. The Company shall not be dissolved by the substitution of Members or the admission of Additional Members in accordance with the terms of this Agreement. The Company may be dissolved, liquidated and terminated only pursuant to the provisions of this ‎Article IX, and the Members hereby irrevocably waive any and all other rights they may have to cause a dissolution of the Company or a sale or partition of any or all of the Company’s Assets.

(b) Termination of Members. The death, retirement, resignation, expulsion, Bankruptcy, insolvency or dissolution of a Member or the occurrence of any other event that terminates the continued membership of a Member in the Company shall not in and of itself cause dissolution of the Company.

Section 9.2 Events Causing Dissolution.

(a) Actions by Members. No Member shall take any action to dissolve, terminate or liquidate the Company, or require apportionment, appraisal or partition of the Company or any of its Assets, or file a bill for an accounting, except as specifically provided in this Agreement, and each Member, to the fullest extent permitted by Law, waives any rights to take any such actions under Law, including any right to petition a court for judicial dissolution under Section 18-802 of the Act.

(b) Liquidating Events. The Company shall dissolve and commence winding up and liquidating its affairs upon the occurrence of any of the following events (each, a “Liquidating Event”):

(i) an election to dissolve the Company made by the Manager, with the Consent of a Majority-in-Interest of the Members;

(ii) the sale or other disposition of all or substantially all Assets; or

(iii) any other event that results in a mandatory dissolution under the Act.

Section 9.3 Distribution upon Dissolution.

(a) Order of Distributions. Upon the dissolution of the Company pursuant to ‎Section 9.2, the Manager (or, in the event that the Manager has dissolved, become Bankrupt or ceased to operate, any Person elected by a Majority-in-Interest of the Members (the Manager or such other Person, the “Liquidator”)) shall be responsible for overseeing the winding up and dissolution of the Company and shall take full account of the Company’s Assets and liabilities, and the Company’s Assets shall be liquidated as promptly as is consistent with obtaining the fair value thereof, and the proceeds therefrom (which may, to the extent determined by the Manager, include shares of stock in the Manager) shall be applied and distributed in the following order:

(i) first, to the satisfaction of all of the Company’s Debts and liabilities to creditors, including Members who are creditors (other than with respect to liabilities owed to Members in satisfaction of liabilities for previously declared distributions), whether by payment or the making of reasonable provision for payment thereof;

(ii) second, to the satisfaction of all of the Company’s liabilities to the Members in satisfaction of liabilities for previously declared distributions, whether by payment or the making of reasonable provision for payment thereof;

(iii) third, to the holders of Class A Preferred Units then outstanding in an amount equal to the greater of (A) the Liquidation Preference per unit and (B) the amount such holder of Class A Preferred Units would have been entitled to receive had such holder’s Class A Preferred Units converted to Class A Common Stock pursuant to ‎Section 12.2; and

(iv) the balance, if any, to the Members, in accordance with Section 3.1.

(b) Discretion of Liquidator and Manager.

(i) Notwithstanding the provisions of Section 9.3(a) that require liquidation of the Assets, but subject to the order of priorities set forth therein, if before or upon dissolution of the Company, the Liquidator determines that an immediate sale of part or all of the Company’s Assets would be impractical or would cause undue loss to the Members, the Liquidator may, in its sole discretion, defer for a reasonable time the liquidation of any Assets except those necessary to satisfy liabilities of the Company (including to those Members as creditors) and/or distribute to the Members, in lieu of cash, as tenants-in-common and in accordance with the provisions of Section 9.3(a), undivided interests in such Company Assets as the Liquidator deems not suitable for liquidation. Any such distributions in kind shall be subject to such conditions relating to the disposition and management of such properties as the Liquidator deems reasonable and equitable and any agreements governing the operation of such properties at such time. The Liquidator shall determine the Fair Market Value of any property distributed in kind using such reasonable method of valuation as it may adopt.

(ii) In the sole discretion of the Manager, a pro rata portion of the distributions that would otherwise be made to the Members pursuant to this Article IX may be:

(A) Distributed to a trust established for the benefit of the Manager and the Members for the purpose of liquidating Company Assets, collecting amounts owed to the Company, and paying any contingent or unforeseen liabilities or obligations of the Company or of the Manager arising out of or in connection with the Company and/or Company activities. The assets of any such trust shall be distributed to the Members, from time to time, in the reasonable discretion of the Manager, in the same proportions and amounts as would otherwise have been distributed to the Members pursuant to this Agreement; or

(B) Withheld or escrowed to provide a reasonable reserve for Company liabilities (contingent or otherwise) and to reflect the unrealized portion of any installment obligations owed to the Company, provided, that such withheld or escrowed amounts shall be distributed to the Members in the manner and order of priority set forth in Section 9.3(a) as soon as practicable.

Section 9.4 Rights of Members. Except as otherwise provided in this Agreement and subject to the rights of any Member set forth in a Unit Designation, (a) each Member shall look solely to the Assets for the return of its Capital Contribution, (b) no Member shall have the right or power to demand or receive property other than cash from the Company, and (c) no Member shall have priority over any other Member as to the return of its Capital Contributions or distributions.

Section 9.5 Termination. The Company shall terminate when all of the Assets, after payment of or due provision for all Debts, liabilities, and obligations of the Company, have been distributed to the Members in the manner provided for in this ‎Article IX and the Certificate of Formation shall have been cancelled in the manner required by the Act.

Article X
PROCEDURES FOR ACTIONS AND CONSENTS OF MEMBERS; MEETINGS

Section 10.1 Actions and Consents of Members. The actions requiring Consent of any Member pursuant to this Agreement or otherwise pursuant to Law are subject to the procedures set forth in this ‎Article X.

Section 10.2 Procedures for Meetings and Actions of the Members.

(a) Time; Quorum; Consent. Meetings of the Members may be called only by the Manager and shall state the nature of the business to be transacted. Notice of any such meeting shall be given to all Members entitled to act at the meeting not less than two (2) days nor more than ninety (90) days before the date of such meeting. Members may vote in Person or by proxy at such meeting. Unless approval by a different number or proportion of the Members is required by this Agreement or any Unit Designation, the affirmative vote of a Majority-in-Interest of the Members shall be sufficient to approve such proposal at a meeting of the Members. Whenever the Consent of any Members is permitted or required under this Agreement, such Consent may be given at a meeting of Members or in accordance with the procedure prescribed in ‎Section 10.2(b).

(b) Written Consents. Any action requiring the Consent of any Member or a group of Members pursuant to this Agreement or that is required or permitted to be taken at a meeting of the Members may be taken without a meeting if a Consent in writing or by electronic transmission and filed with the Manager setting forth the action so taken or consented to is given by Members whose affirmative vote would be sufficient to approve such action or provide such Consent at a meeting of the Members. Such Consent may be in one or several instruments and shall have the same force and effect as the affirmative vote of such Members at a meeting of the Members. An action so taken shall be deemed to have been taken at a meeting held on the effective date so certified. For purposes of obtaining a Consent in writing or by electronic transmission, the Manager may require a response within a reasonable specified time, and failure to respond in such time period shall constitute a Consent that is consistent with the Manager’s recommendation with respect to the proposal.

(c) Proxy. Each Member entitled to act at a meeting of Members may authorize any Person or Persons to act for it by proxy on all matters in which a Member is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. Each proxy must be signed by the Member or its attorney-in-fact. No proxy shall be valid after the expiration of eleven (11) months from the date thereof unless otherwise provided in the proxy (or there is receipt of a proxy authorizing a later date). Every proxy shall be revocable at the pleasure of the Member executing it, such revocation to be effective upon the Company’s receipt of written notice of such revocation from the Member executing such proxy, unless such proxy states that it is irrevocable and is coupled with an interest.

(d) Record Date for Meetings and Other Purposes.

(i) The Manager may set, in advance, a Record Date (x) for the purpose of determining the identities of the Members entitled to Consent to any action or entitled to receive notice of or vote at any meeting of the Members or (y) to make a determination of Members for any other proper purpose. Any such date shall not be before the close of business on the day the Record Date is fixed and shall be not more than ninety (90) days and, in the case of a meeting of the Members, not less than two (2) days, before the date on which the meeting is to be held.

(ii) If no Record Date is set, the Record Date for the determination of Members entitled to notice of or vote at a meeting of the Members shall be at the close of business on the day on which the notice of the meeting is sent, and the Record Date for any other determination of Members shall be the effective date of such Member action, distribution or other event. When a determination of the Members entitled to vote at any meeting of the Members has been made as provided in this Section 10.2(d)(ii), such determination shall apply to any adjournment thereof.

(e) Conduct of Meetings. Each meeting of Members shall be conducted by the Manager or such other Person as the Manager may appoint pursuant to such rules for the conduct of the meeting as the Manager or such other Person deems appropriate.

(f) Waivers. Any time period for notice with respect to meetings or consents of the Members may be waived by a Member as to such Member.

Article XI
EXCHANGE RIGHTS

Section 11.1 Elective and Mandatory Exchanges.

(a) Elective Exchanges. Subject to the Policy Regarding Exchanges set forth in Annex E, as amended from time to time by the Company (the “Policy Regarding Exchanges”), an Exchangeable Unit Member shall have the right, from time to time, to surrender Exchangeable Units, along with an equal number of shares of Class B Common Stock (in each case, free and clear of all liens, encumbrances, rights of first refusal and similar restrictions, except for those arising under this Agreement), to the Company and to thereby cause the Company to deliver to such Exchangeable Unit Member (or its designee) the Exchange Consideration as set forth in ‎Section 11.3 (an “Elective Exchange”).

(b) Mandatory Exchange Events. Class B Units are subject to Mandatory Exchange, in the following circumstances: (i) at the discretion of the Manager with the consent of Members whose Class B Units represent fifty percent (50%) of the Class B Units of all Members in the aggregate; or (ii) automatically, without the consent of any Members of the Company, upon the one-year anniversary of the Mandatory Conversion Trigger Date. Upon a Mandatory Exchange, all Members will be required to exchange all Exchangeable Units then held by the Members.

(c) Mandatory Exchange Notices and Dates. Upon the occurrence of the circumstances set out in ‎Section 11.1(b), a mandatory exchange of a Member’s Exchangeable Units and an equal number of shares of Class B Common Stock (a “Mandatory Exchange”) shall be initiated by the Manager by delivering to each Member holding Exchangeable Units a written notice pursuant to the notice provisions in ‎Section 13.6 (a “Mandatory Exchange Notice”). A Mandatory Exchange Notice will specify the basis for the Mandatory Exchange, the Exchangeable Units of the Company to which the Mandatory Exchange applies, the Exchange Consideration and the effective date of such Mandatory Exchange (the “Mandatory Exchange Date”), which shall be no earlier than ten (10) Business Days after delivery of the Mandatory Exchange Notice. The Member receiving the Mandatory Exchange Notice shall use its reasonable best efforts to deliver the Certificates, as applicable, representing the applicable Exchangeable Units and corresponding shares of Class B Common Stock (free and clear of all liens, encumbrances, rights of first refusal and similar restrictions, except for those arising under this Agreement) no later than one (1) Business Day before the Mandatory Exchange Date. Upon the Mandatory Exchange Date, the Manager will effect the Mandatory Exchange.

Section 11.2 Additional Terms Applying to Exchanges.

(a) Rights of Exchangeable Unit Member. On an Exchange Date, all rights of the Exchangeable Unit Member as a holder of the Exchangeable Units and, if the applicable Exchangeable Units are Class B Units, shares of Class B Common Stock held by the holder of the Class B Units that are subject to the Exchange, shall cease, and, unless the Company or Manager, as applicable, has elected Cash Settlement as to all Exchangeable Units tendered, the Manager shall use commercially reasonable efforts to cause the transfer agent or registrar of the Manager to update the stock register of the Manager such that such Exchangeable Unit Member (or its designee) becomes the record holder of the shares of Class A Common Stock to be received by the Exchangeable Unit Member in respect of such Exchange.

(b) Expenses. Except as otherwise agreed by the Company, the Manager and an Exchangeable Unit Member, the Company, the Manager, and each Exchangeable Unit Member shall bear their own expenses in connection with the consummation of any Exchange, whether or not any such Exchange is ultimately consummated. Notwithstanding the foregoing sentence, the Manager (or the Company, at the Manager’s direction) shall bear any transfer taxes, stamp taxes or duties, or other similar taxes in connection with, or arising by reason of, any Exchange; provided, however, that if any shares of Class A Common Stock are to be delivered pursuant to an Elective Exchange in a name other than that of the Exchangeable Unit Member that requested the Exchange (or The Depository Trust Company or its nominee for the account of a participant of The Depository Trust Company that will hold the shares for the account of such Exchangeable Unit Member) or the Cash Settlement is to be paid to a Person other than the Exchangeable Unit Member that requested the Exchange, then such Exchangeable Unit Member or the Person in whose name such shares are to be delivered or to whom the Cash Settlement is to be paid shall pay to the Manager (or the Company, at the Manager’s direction) the amount of any transfer taxes, stamp taxes or duties, or other similar taxes in connection with, or arising by reason of, such Exchange or shall establish to the reasonable satisfaction of the Manager that such tax has been paid or is not payable.

(c) Concurrent Delivery of Class B Common Stock. No Exchange of Class B Units may be made without a concurrent delivery of an equal number of shares of Class B Common Stock. Any shares of Class B Common Stock surrendered in an Exchange shall automatically be deemed retired without any action on the part of any Person, including the Manager. Any such retired shares of Class B Common Stock shall no longer be outstanding, all rights with respect to such shares shall automatically cease and terminate, and such shares shall return to the status of authorized but unissued shares of the Manager.

Section 11.3 Exchange Consideration; Settlement.

(a) Generally. The Manager (in the case of a Mandatory Exchange) or the Company (in the case of an Elective Exchange) shall have the right, in its sole discretion, to elect the form of Exchange Consideration with respect to any Exchange. On an Exchange Date, provided the Exchangeable Unit Member has satisfied its obligations under the Policy Regarding Exchanges and not validly retracted such proposed Exchange, the Manager or the Company, as applicable, shall deliver or cause to be delivered the Exchange Consideration to such Exchangeable Unit Member (or its designee), at the address set forth on the applicable Exchange Notice. If the Manager or the Company, as applicable, elects a Cash Settlement, the Manager shall only be obligated to contribute to the Company (or, if the Manager elects to settle directly pursuant to ‎Section 11.9, settle directly for an amount equal to) an amount in respect of such Cash Settlement equal to the net proceeds (after deduction of any underwriters’ discounts and commissions, if applicable) from the sale by the Manager of a number of shares of Class A Common Stock equal to the number of Exchangeable Units being Exchanged for such Cash Settlement. Except as otherwise required by Law, the Manager shall, for U.S. federal income tax purposes, be treated as paying an appropriate portion of the selling expenses described in the previous sentence as agent for and on behalf of the Exchangeable Unit Member. Except as otherwise determined by the Manager or the Company, as applicable, if (i) the Company or the Manager determines that some or all of the Exchange Consideration with respect to an Exchange will be Class A Common Stock and (ii) such Exchange would, but for this ‎Section 11.3(a), result in the Exchangeable Unit Member’s receipt of a fractional share of Class A Common Stock, then the number of shares of Class A Common Stock to be received by the Exchangeable Unit Member shall be rounded down to the nearest whole number of shares and the amount of the reduction shall be paid as a Cash Settlement.

(b) Restriction on Cash Settlement of Class B Units. Except in connection with a payment in respect of a fractional share (as described in the final sentence of Section 11.3(a)), the Manager or the Company, as applicable, may elect Cash Settlement with respect to an Exchange of Exchangeable Units that are Class B Units only to the extent the Cash Settlement is funded by the proceeds (net of underwriting discounts and commissions) of a Liquidity Offering with respect to that Exchange.

(c) Notice of Intended Exchange Consideration. At least two (2) Business Days before the Exchange Date, the Manager or the Company, as applicable, shall give written notice to the other (with a copy to the Exchangeable Unit Member) of its intended Exchange Consideration. If the Manager or the Company does not timely deliver such written notice, the Manager or the Company shall be deemed to have elected to settle the Exchange with shares of Class A Common Stock.

(d) Settlement through Depository Trust Company. To the extent the Class A Common Stock is settled through the facilities of The Depository Trust Company, the Manager or the Company will, upon the written instruction of an Exchangeable Unit Member, deliver the shares of Class A Common Stock deliverable to such Exchangeable Unit Member through the facilities of The Depository Trust Company to the account of the participant of The Depository Trust Company designated by such Exchangeable Unit Member in the Exchange Notice.

(e) Obligations of Manager and Company. Upon any Exchange, the Manager or the Company, as applicable, shall take such actions as (A) may be required to ensure that such Exchangeable Unit Member receives the shares of Class A Common Stock and/or the Cash Settlement that such Exchangeable Unit Member is entitled to receive in connection with such Exchange pursuant to ‎Section 11.3(a), and (B) may be reasonably within its control that would cause such Exchange to be treated as a direct exchange between the Manager and the Member for U.S. federal and applicable state and local income tax purposes.

Section 11.4 Adjustment. To the extent not reflected in an adjustment to the Exchange Rate, if there is any reclassification, reorganization, recapitalization or other similar transaction in which the Class A Common Stock is converted or changed or exchanged into or for another security, securities or other property, then, upon any subsequent Exchange, an Exchangeable Unit Member shall be entitled to receive the amount of such security, securities or other property that such Exchangeable Unit Member would have received if such Exchange had occurred immediately before the effective date of such reclassification, reorganization, recapitalization or other similar transaction, taking into account any adjustment as a result of any subdivision (by any split, distribution or dividend, reclassification, reorganization, recapitalization or otherwise) or combination (by reverse split, reclassification, recapitalization or otherwise) of such security, securities or other property that occurs after the effective time of such reclassification, reorganization, recapitalization or other similar transaction. For the avoidance of doubt, if there is any reclassification, reorganization, recapitalization or other similar transaction in which the Class A Common Stock is converted or changed or exchanged into or for another security, securities or other property, this ‎Section 11.4 shall continue to be applicable, mutatis mutandis, with respect to such security or other property.

Section 11.5 Class A Common Stock to Be Issued in Connection with an Exchange.

(a) Class A Common Stock Reserve. The Manager shall at all times reserve and keep available out of its authorized but unissued Class A Common Stock, solely for the purpose of issuance upon an Exchange, such number of shares of Class A Common Stock as shall be deliverable under this Agreement upon all such Exchanges; provided, however, that the Manager may satisfy its obligations in respect of any such Exchange or conversion by delivery of unencumbered purchased shares of Class A Common Stock (which may or may not be held in the treasury of the Manager or any subsidiary thereof). The preceding sentence shall not affect the Manager’s right, where applicable, to elect a Cash Settlement (for the avoidance of doubt the Manager cannot force a Cash Settlement to the extent there are not enough authorized or legally available Class A Common Stock).

(b) Rule 16(b) Exemption. The Manager has taken and will take all such steps as may be required to cause to qualify for exemption under Rule 16b-3(d) or (e), as applicable, under the Exchange Act, and be exempt for purposes of Section 16(b) under the Exchange Act, any acquisitions or dispositions of equity securities of the Manager (including derivative securities with respect thereto) and any securities that may be deemed to be equity securities or derivative securities of the Manager for such purposes that result from the transactions contemplated by this Agreement, by each director or officer of the Manager (including directors-by-deputization) who may reasonably be expected to be subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to the Manager upon the registration of any class of equity security of the Manager pursuant to Section 12 of the Exchange Act.

(c) Validity of Class A Common Stock. The Manager covenants that all shares of Class A Common Stock issued upon an Exchange will, upon issuance, be validly issued, fully paid and non-assessable and not subject to any preemptive right of stockholders of the Manager or any right of first refusal or other right in favor of any Person.

Section 11.6 Tax Treatment. Unless otherwise agreed to in writing by the Exchangeable Unit Member and the Manager, it is intended that, for U.S. federal and applicable state and local income tax purposes, each Exchange be treated as direct exchange between the Manager and the Exchangeable Unit Member that is a taxable transaction to the Exchangeable Unit Member. All applicable parties shall treat each Exchange consistently with the intended treatment for all U.S. federal and applicable state and local tax purposes unless otherwise required by a “determination” within the meaning of Code Section 1313(a) or a change in Law.

Section 11.7 Contribution by Manager. Except as otherwise provided in Section 11.9, on the Exchange Date (i) the Manager shall contribute to the Company the shares of Class A Common Stock and/or Cash Settlement that the Manager has elected to deliver and that the Exchangeable Unit Member is entitled to receive in the applicable Exchange and (ii) the Company shall issue to the Manager a number of Class A Units equal to the number of Exchangeable Units (and corresponding number of shares of Class B Common Stock) surrendered by the Exchangeable Unit Member.

Section 11.8 Apportionment of Distributions. Distributions with a Record Date on or before the Exchange Date shall be made to the Exchangeable Unit Member.

Section 11.9 Right of Manager to Acquire Exchangeable Units. With respect to Class B Units surrendered in an Elective Exchange or subject to a Mandatory Exchange, the Manager shall have the right but not the obligation to have the Manager (in lieu of the Company) acquire Exchangeable Units and, if the applicable Exchangeable Units are Class B Units, an equal number of shares of Class B Common Stock held by the holder of those Class B Units, directly from an Exchangeable Unit Member for the elected Exchange Consideration. If the Manager acquires Exchangeable Units as described in the preceding sentence, those Exchangeable Units shall be automatically recapitalized into the same number of Class A Units as the Exchangeable Units. The applicable provisions of this Article XI shall apply to any such direct exchange, mutatis mutandis.

Article XII

CLASS A PREFERRED UNITS

Section 12.1 Distributions. Notwithstanding anything herein to the contrary, the Company shall not effect any distributions on Units of any class or series of Units if any such distribution shall be used to pay dividends to the Manager’s stockholders without the prior written consent of the Series A Preferred Units, voting as a class, which written consent shall not be unreasonably withheld, conditioned, or delayed.

Section 12.2 Mandatory Conversion. Each Class A Preferred Unit that is outstanding on (i) the date that is the second year anniversary of the date of Original Issue Date or (ii) the date that is immediately prior to the consummation of a Change of Control will be converted into Class B Common Units at the Conversion Ratio (the “Mandatory Conversion Trigger Date”). The “Conversion Ratio” means, for each Class A Preferred Unit, the quotient of (i) the Stated Conversion Value and (ii) the Market Price, plus declared and unpaid distributions per Class A Preferred Unit through the date the conversion occurs pursuant to Section 12.1, if any (the “Conversion Price”). The “Stated Conversion Value” of the Class A Preferred Units shall be $20.00 per unit. The “Market Price” shall mean the average of the daily VWAP of the Class A Common Stock during the five (5) Trading Days prior to the Mandatory Conversion Trigger Date. The “VWAP” means, for any Trading Day, the per share daily volume weighted average price of the Class A Common Stock for such Trading Day on the New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, the OTCQB, the OTCBB or the NYSE Euronext, whichever is at the time the principal trading exchange or market for the Common Stock (the “Principal Market”) from 9:30 a.m. Eastern Time through 4:00 p.m. Eastern Time (the “Measurement Period”) or, if such price is not available, “VWAP” shall mean the market value per share of Class A Common Stock on such Trading Day as determined, using a volume-weighted average method, by a nationally recognized independent investment banking firm reasonably acceptable to the holders of a majority of the Class A Preferred Units. A “Trading Day” means any days during the course of which the Principal Market on which the Class A Common Stock is listed or admitted to trading is open for the exchange of securities.

Section 12.3 Mandatory Conversion Notice. The Company will provide notice to holders of Class A Preferred Units within five days of the occurrence of the Mandatory Conversion Trigger Date (provided, however that failure of the Company to timely give such notice does not void the mandatory conversion). The holders of Class A Preferred Units will be deemed a Class B Common Unit holder of record as of Mandatory Conversion Trigger Date.

Section 12.4 Fractional Shares. No fractional Class B Common Unit or scrip shall be issued upon conversion of the Class A Preferred Units. If more than one Class A Preferred Unit shall be surrendered for conversion at any one time by the same holder, the number of full Class B Common Units issuable upon conversion thereof shall be computed on the basis of the aggregate number of Class A Preferred Units so surrendered. Instead of any fractional Class B Common Unit which would otherwise be issuable upon conversion of any Class A Preferred Units, the Manager shall make an adjustment in respect of such fractional interest by rounding the fractional unit up to the next whole Class B Common Unit.

Section 12.5 Registration. If any Class B Common Units to be reserved for the purpose of conversion of Class A Preferred Units require registration or listing with, or approval of, any governmental authority, stock exchange or other regulatory body under any federal or state law or regulation or otherwise, including registration under the Securities Act, and appropriate state securities laws, before such shares may be validly issued or delivered upon conversion, the Manager shall, at its sole cost and expense, in good faith and as expeditiously as possible endeavor to secure such registration, listing or approval, as the case may be.

Section 12.6 Adjustment. If, after the Original Issuance Date, the Manager (i) makes a distribution on its Class B Common Units in securities (including Class B Common Units), (ii) subdivides or splits its outstanding Class B Common Units into a greater number of Class B Common Units, (iii) combines or reclassifies its Class B Common Units into a smaller number of Class B Common Units or (iv) issues by reclassification of its Class B Common Units any securities (including any reclassification in connection with a merger, consolidation or business combination in which the Manager is the surviving person), then the Conversion Price in effect at the time of the record date for such distribution or of the effective date of such subdivision, split, combination, or reclassification shall be proportionately adjusted so that the conversion of the Class A Preferred Units after such time shall entitle the holder to receive the aggregate number of Class B Common Units that such holder would have been entitled to receive if the Class A Preferred Units had been converted into Class B Common Units immediately prior to such record date or effective date, as the case may be, and in the case of a merger, consolidation or business combination in which the Manager is the surviving person, the Manager and the Company shall provide effective provisions to ensure that the provisions in this Agreement relating to the Class A Preferred Units shall not be abridged or amended and that the Class A Preferred Units shall thereafter retain the same powers, preferences and relative participating, optional and other special rights, and the qualifications, limitations and restrictions thereon, that the Class A Preferred Units had immediately prior to such transaction or event. An adjustment made pursuant to this Section 12.7 shall become effective immediately after the record date in the case of a distribution and shall become effective immediately after the effective date in the case of a subdivision, combination, reclassification (including any reclassification in connection with a merger, consolidation or business combination in which the Manager or the Company is the surviving person) or split. Such adjustment shall be made successively whenever any event described above shall occur. The Manager and the Company, as the case may be, agrees that it will act in good faith to make any adjustment(s) required by this Section 12.7 equitably and in such a manner as to afford the holders of Class A Preferred Units the benefits of the provisions hereof, and will not intentionally take any action to deprive such holders of the express benefit hereof. Upon any adjustment to the Conversion Price pursuant to this Section 12.7, the Company promptly shall deliver to each holder of Class A Preferred Units a certificate signed by an appropriate officer of the Company, setting forth in reasonable detail the event requiring the adjustment and the method by which such adjustment was calculated and specifying the increased or decreased Conversion Price then in effect following such adjustment.

Section 12.7 Voting. In addition to any vote required by the Act, other applicable law or this Agreement, for so long as any of the Class A Preferred Units shall remain outstanding, neither the Manager nor the Company shall, either directly or indirectly by amendment, merger, consolidation or otherwise, take any of the following actions, including whether by merger, consolidation or otherwise, without (in addition to any other vote required the Act, other applicable law or this Agreement) the written consent or affirmative vote of the holders of at least a majority of the then outstanding shares of Class A Preferred Units, consenting or voting as a single class, by relative liquidation value, to:

(a) authorize or create, or increase the authorized amount of, or issue any class or series of Senior Units or Parity Units or reclassify or amend the provisions of any existing class of securities of the Company into Senior Units or Parity Units;

(b) authorize, create or issue any stock or debt instrument or other obligation that is convertible or exchangeable into Senior Units or Parity Units (or that is accompanied by options or warrants to purchase such Senior Units or Parity Units);

(c) amend, alter or repeal any provision of this Agreement in a manner that adversely affects the rights, preferences, privileges or powers of the Class A Preferred Units;

(d) declare or pay any distributions in cash or property with respect to its Common Units (other than distributions of cash or property paid on the Class A Preferred Units); or

(e) redeem, repurchase, recapitalize or acquire the Common Units or other Junior Units.

If the Company or the Manager shall propose to take any action enumerated above in clauses (a) through (e) of this Section 12.8 then, and in each such case, the Company or the Manager shall give notice of such proposed action to each holder of record of Class A Preferred Units as of the date of such notice at the address of said holder shown in the books and records of the Company. Such notice shall specify, inter alia (x) the proposed effective date of such action; (y) the date on which a record is to be taken for the purposes of such action, if applicable; and (z) the other material terms of such action. Such notice shall be given at least ten calendar days prior to the applicable date or effective date specified above. If at any time the Company or the Manager shall cancel any of the proposed actions for which notice has been given under this Section 12.8 prior to the consummation thereof, the Company or the Manager shall give prompt notice of such cancellation to each holder of record of the Class A Preferred Units as of the date of such notice at the address of said holder shown in the books and records of the Company. For the avoidance of doubt, if a holder of record of Class A Preferred Units does not respond to the aforementioned notice, such non-response shall in no way be deemed to constitute the written consent or affirmative vote of such holder regarding any of the aforementioned actions in this Section 12.8 or described within such notice.

Article XIII
MISCELLANEOUS

Section 13.1 Conclusive Nature of Determinations. All determinations, interpretations, calculations, adjustments and other actions of the Manager, the Company, the Board of Directors (or a committee to which the Board of Directors has delegated such authority), or a designee of any of the foregoing that are within such Person’s authority under this Agreement shall be binding and conclusive on a Member absent manifest error. In connection with any such determination, interpretation, calculation, adjustment, or other action, the Manager, the Company, the Board of Directors (or a committee to which the Board of Directors has delegated such authority), or the designee of any of the foregoing shall be entitled to resolve any ambiguity with respect to the manner in which such determination, interpretation, calculation, adjustment or other action is to be made or taken, and shall be entitled to interpret the provisions of this Agreement in such a manner as such Person determines to be fair and equitable, and such resolution or interpretation shall be binding and conclusive on a Member absent manifest error.

Section 13.2 Company Counsel. THE COMPANY, THE MANAGER AND AFFILIATED ENTITIES MAY BE REPRESENTED BY THE SAME COUNSEL. THE ATTORNEYS, ACCOUNTANTS AND OTHER EXPERTS WHO PERFORM SERVICES FOR THE COMPANY MAY ALSO PERFORM SERVICES FOR THE MANAGER AND AFFILIATES THEREOF. THE MANAGER MAY, WITHOUT THE CONSENT OF THE MEMBERS, EXECUTE ON BEHALF OF THE COMPANY ANY CONSENT TO THE REPRESENTATION OF THE COMPANY THAT COUNSEL MAY REQUEST PURSUANT TO THE NEW YORK RULES OF PROFESSIONAL CONDUCT OR SIMILAR RULES IN ANY OTHER JURISDICTION. THE COMPANY HAS INITIALLY SELECTED PRYOR CASHMAN LLP (“COMPANY COUNSEL”) AS LEGAL COUNSEL TO THE COMPANY. EACH MEMBER ACKNOWLEDGES THAT COMPANY COUNSEL DOES NOT REPRESENT ANY MEMBER IN ITS CAPACITY AS SUCH IN THE ABSENCE OF A CLEAR AND EXPLICIT WRITTEN AGREEMENT TO SUCH EFFECT BETWEEN SUCH MEMBER AND COMPANY COUNSEL (AND THEN ONLY TO THE EXTENT SPECIALLY SET FORTH IN SUCH AGREEMENT), AND THAT IN THE ABSENCE OF ANY SUCH AGREEMENT COMPANY COUNSEL SHALL OWE NO DUTIES TO ANY MEMBER. EACH MEMBER FURTHER ACKNOWLEDGES THAT, WHETHER OR NOT COMPANY COUNSEL HAS IN THE PAST REPRESENTED OR IS CURRENTLY REPRESENTING SUCH MEMBER WITH RESPECT TO OTHER MATTERS, UNLESS OTHERWISE EXPRESSLY AGREED BY COMPANY COUNSEL, COMPANY COUNSEL HAS NOT REPRESENTED THE INTERESTS OF ANY MEMBER IN THE PREPARATION AND/OR NEGOTIATION OF THIS AGREEMENT.

Section 13.3 Appointment of Manager as Attorney-in-Fact.

(a) Execution of Documents. Each Member, including each Additional Member and Substituted Member that is a Member, irrevocably makes, constitutes and appoints the Manager, any Liquidator, and authorized officers and attorneys-in-fact of each, and each of those acting singly, in each case with full power of substitution, as its true and lawful attorney-in-fact with full power and authority in its name, place and stead to execute, acknowledge, deliver, swear to, file and record at the appropriate public offices such documents as may be necessary or appropriate to carry out the provisions of this Agreement, including:

(i) All certificates and other instruments (including counterparts of this Agreement), and all amendments thereto, that the Manager deems appropriate to form, qualify, continue or otherwise operate the Company as a limited liability company (or other entity in which the Members will have limited liability comparable to that provided in the Act) in the jurisdictions in which the Company may conduct business or in which such formation, qualification or continuation is, in the opinion of the Manager, necessary or desirable to protect the limited liability of the Members.

(ii) All amendments to this Agreement adopted in accordance with the terms of this Agreement, and all instruments that the Manager deems appropriate in accordance with the terms of this Agreement.

(iii) All conveyances of Company Assets and other instruments that the Manager reasonably deems necessary in order to complete a dissolution and termination of the Company pursuant to this Agreement.

(b) Power and Interest. The appointment by all Members of the Manager as attorney-in-fact shall be deemed to be a power coupled with an interest in recognition of the fact that each of the Members under this Agreement will be relying upon the power of the Manager to act as contemplated by this Agreement in any filing and other action by it on behalf of the Company, shall survive the Incapacity of any Person hereby giving such power and the Transfer of all or any portion of such Person’s Units, and shall not be affected by the subsequent Incapacity of the Person.

Section 13.4 Entire Agreement. This Agreement, together with the Registration Rights Agreement, and the certificate of incorporation of the Manager, in each case, as amended, supplemented or restated in accordance with its terms, and the other documents contemplated hereby and thereby, constitute the entire agreement between the parties hereto pertaining to the subject matter hereof and fully supersede any and all prior or contemporaneous agreements or understandings between the parties to this Agreement pertaining to the subject matter hereof, including the Initial Operating Agreement.

Section 13.5 Further Assurances. Each of the parties to this Agreement does hereby covenant and agree on behalf of itself, its successors, and its assigns, without further consideration, to prepare, execute, acknowledge, file, record, publish, and deliver such other instruments, documents and statements, and to take such other action as may be required by Law or reasonably necessary to effectively carry out the intent and purposes of this Agreement.

Section 13.6 Notices. Any notice, consent, payment, demand, or communication required or permitted to be given by any provision of this Agreement shall be in writing and shall be (a) delivered personally to the Person or an officer of the Person to whom the same is directed, (b) sent by facsimile, overnight mail or registered or certified mail, return receipt requested, postage prepaid, or (c) (except with respect to notice to the Company or the Manager) sent by email, with electronic, written or oral confirmation of receipt, in each case addressed as follows:

(i)

if to the Company or the Manager:

c/o

HNR Acquisition Corp.

3730 Kirby Drive, Suite 1200

Houston, Texas 77098

Attention:

Donald W. Orr, President

Email:

donald.orr@hnra-nyse.com

with copies (which shall not constitute notice) to:

Pryor Cashman LLP

7 Times Square

New York, New York 10036

Attention

Matthew Ogurick

Email:

mogurick@pryorcashman.com

or to such other address as the Company may from time to time specify by notice to the Members

(ii)

if to any Member, to:

the address, email, or facsimile number of such Member set forth in the records of the Company.

Any such notice shall be deemed to be delivered, given and received for all purposes as of: (A) the date so delivered, if delivered personally, (B) upon receipt, if sent by facsimile or email, or (C) on the date of receipt or refusal indicated on the return receipt, if sent by registered or certified mail, return receipt requested, postage and charges prepaid and properly addressed.

Section 13.7 Governing Law. This Agreement, including its existence, validity, construction, and operating effect, and the rights of each of the parties to this Agreement, shall be governed by and construed in accordance with the Laws of the State of Delaware without regard to otherwise governing principles of conflicts of Law.

Section 13.8 Jurisdiction and Venue. The parties to this Agreement agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby (whether brought by any party or any of its Affiliates or against any party or any of its Affiliates) shall be brought in the Delaware Chancery Court, or, if such court shall not have jurisdiction, any federal court located in the State of Delaware or other Delaware state court (the “Selected Courts”), and each of the parties hereby irrevocably consents to the jurisdiction of the Selected Courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by Law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any Selected Court. Without limiting the foregoing, each party agrees that service of process on such party in the manner provided for notice in ‎Section 13.6 shall be deemed effective service of process on such party.

Section 13.9 Equitable Remedies. The parties to this Agreement agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with its specific terms or was otherwise breached. It is accordingly agreed that the parties to this Agreement shall be entitled to an injunction or injunctions and other equitable remedies to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any of the Selected Courts, this being in addition to any other remedy to which they are entitled at Law or in equity. Any requirements for the securing or posting of any bond with respect to such remedy are hereby waived by each of the parties to this Agreement. Each party further agrees that, in the event of any action for an injunction or other equitable remedy in respect of such breach or enforcement of specific performance, it will not assert the defense that a remedy at Law would be adequate.

Section 13.10 Construction. This Agreement shall be construed as if all parties to this Agreement prepared this Agreement.

Section 13.11 Counterparts. This Agreement may be executed in any number of counterparts, and each such counterpart shall for all purposes be deemed an original, and all such counterparts shall together constitute but one and the same agreement.

Section 13.12 Third-Party Beneficiaries. Except as provided in ‎Section 4.7, nothing in this Agreement, express or implied, is intended or shall be construed to give any Person other than the parties to this Agreement (or their respective legal representatives, successors, heirs and distributees) any legal or equitable right, remedy or claim under or in respect of any agreement or provision contained herein, it being the intention of the parties to this Agreement that this Agreement is for the sole and exclusive benefit of such parties (or such legal representatives, successors, heirs and distributees) and for the benefit of no other Person.

Section 13.13 Binding Effect. Except as otherwise expressly provided herein, all of the terms and provisions of this Agreement shall be binding on, shall inure to the benefit of and shall be enforceable by the Members, their heirs, executors, administrators, successors and all other Persons hereafter holding, having or receiving an interest in the Company, whether as Substituted Members or otherwise.

Section 13.14 Severability. If any provision of this Agreement as applied to any party or any circumstance shall be adjudged by a court to be void, unenforceable or inoperative as a matter of Law, then the same shall in no way affect any other provision in this Agreement, the application of such provision in any other circumstance or with respect to any other party, or the validity or enforceability of the Agreement as a whole.

Section 13.15 Survival. The provisions of Section 4.6 (Limitation on Liability), ‎Section 4.7 (Indemnification), ‎Section 13.1 (Conclusive Nature of Determinations), ‎Section 13.3 (Appointment of Manager as Attorney-in-Fact), ‎Section 13.4 (Entire Agreement), ‎Section 13.5 (Further Assurances), ‎Section 13.6 (Notices), ‎Section 13.7 (Governing Law), ‎Section 13.8 (Jurisdiction and Venue), ‎Section 4.8 (Survival of Obligations) of ‎Annex C, and this ‎Section 13.15 (Survival) (and any other provisions of this Agreement necessary for the effectiveness of the enumerated sections) shall survive the termination of the Company and/or the termination of this Agreement.

Section 13.16 Effect on Other Obligations of Members or the Company. Nothing in this Agreement shall modify, amend, terminate or supersede any obligations or rights of any Member or the Company under any agreement between or among Member(s) and/or the Company (other than the Initial Operating Agreement) that is in effect as of the date hereof.

Section 13.17 Confidentiality. Each Member recognizes and acknowledges that it has and may in the future receive certain confidential and proprietary information and trade secrets of the Company (including its predecessors), including confidential information of the Company (and its predecessors) regarding identifiable, specific and discrete business opportunities being pursued by the Company (the “Confidential Information”). Except as otherwise consented to by the Manager in writing, each Member (other than the Manager), on behalf of itself (and, to the extent that such Member would be responsible for the acts of the following Persons under principles of agency Law, its managers, directors, officers, shareholders, partners, members, employees, representatives and agents) agrees that, during the term of this Agreement, whether directly or indirectly through an Affiliate or otherwise, it (a) will use the same degree of care as it uses to protect its own confidential information to keep confidential any Confidential Information furnished to such Member; (b) will not intentionally use any of the Confidential Information for any purpose other than monitoring its investment in the Company; and (c) will not disclose such Confidential Information to any third party for any reason or purpose whatsoever, except that each Member may disclose such information (i) to authorized directors, officers, employees, representatives and agents of the Company or the Manager and as otherwise may be proper in the course of performing such Member’s obligations or enforcing its rights under this Agreement and the agreements expressly contemplated hereby; (ii) to such Member’s (or any of its Affiliates’) Affiliates, auditors, accountants, attorneys or other agents who are informed of the Member’s obligations hereunder; (iii) to any bona fide prospective purchaser of the equity or assets of such Member or its Affiliates or the Units held by such Member, or prospective merger partner of such Member or its Affiliates, provided that such purchaser or merger partner agrees to be bound by the provisions of this Section 13.17 or other confidentiality agreement approved by the Manager; or (iv) as is required to be disclosed by any Law, by any governmental authority or stock exchange or by any listing or trading agreement concerning a Member or its Affiliates; provided that the Member required to make such disclosure pursuant to clause (iv) above shall provide to the Company prompt notice of such disclosure to enable the Company to seek an appropriate protective order or confidential treatment. It is acknowledged and agreed that a Member’s review of Confidential Information will inevitably enhance its knowledge and understanding of the Company’s industry in a way that cannot be separated from its other knowledge, and it shall not be a violation of Section 13.17(b) if such Member’s overall knowledge and understanding are used for purposes other than monitoring its investment in the Company. For purposes of this Section 13.17, the term “Confidential Information” shall not include any information which (x) such Person learns from a source other than the Company or the Manager, or any of their respective representatives, employees, agents or other service providers, and in each case who is not bound by a confidentiality obligation, (y) is disclosed in a prospectus, in other documents or in any other manner for dissemination to the public (in each case, not in violation of this Section 13.17), or (z) is independently developed by the disclosing Member without violating any requirement hereunder. Nothing in this Section 13.17 shall in any way limit or otherwise modify any confidentiality covenants entered into by any Member pursuant to any other agreement entered into with the Company or the Manager.

Article XIV
DEFINED TERMS

Section 14.1 Definitions. Unless otherwise indicated to the contrary, the following definitions shall be applied to the terms used in this Agreement:

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

“Additional Funds” is defined in ‎Section 2.5(a).

“Additional Member” means a Person who is admitted to the Company as a Member pursuant to the Act and ‎Section 8.1, who is shown as such on the books and records of the Company, and who has not ceased to be a Member pursuant to the Act and this Agreement.

“Affiliate” means, with respect to a specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person; provided, however, that (i) none of the Members or their parent companies or Affiliates shall be deemed to be an Affiliate of any other Member or its parent company or Affiliates and (ii) none of the Members or their parent companies or Affiliates shall be deemed to be an Affiliate of the Company or any of its Affiliates. With respect to any Person who is an individual, “Affiliate” shall also include, without limitation, any Family Member of such Person.

“Asset Value” is defined in Annex C.

“Assets” means any assets and property of the Company.

“Assumed Tax Liability” is defined in ‎Section 3.2(b).

“Assumed Tax Rate” is defined in ‎Section 3.2(b)(ii).

“Available Cash” means, after taking into account amounts determined by the Manager to be reasonably necessary or advisable to be retained by the Company to meet actual or anticipated, direct or indirect, expenses, capital investments, working capital needs or liabilities (actual, contingent or otherwise) of the Company, including the payment of any Imputed Underpayment or for the operation of the business of the Company, or to create reasonable reserves for any of the foregoing, cash (in United States dollars) of the Company that the Manager determines is available for distribution to the Members.

“Bankruptcy” means, with respect to any Person, the occurrence of any event specified in Section 18-304 of the Act with respect to such Person, and the term “Bankrupt” has a correlative meaning.

“Board of Directors” means the Board of Directors of the Manager.

“Purchase Agreement” is defined in the recitals of this Agreement.

“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by Law to close.

“Capital Account” is defined in ‎Annex C.

“Capital Contribution” means, with respect to any Member, the aggregate amount of money and the initial Asset Value of property (other than money) in such form as may be permitted by the Act that the Member contributes (or is treated as contributing) to the Company.

“Capital Stock” means a share of any class or series of stock of the Manager now or hereafter authorized.

“Cash Settlement” means immediately available funds in U.S. dollars in an amount equal to the product of (x) the number of shares of Class A Common Stock that would otherwise be delivered to a Member in an Exchange, multiplied by (y) the price per share of Class A Common Stock. For purposes of the preceding sentence, in an Exchange of Class B Units, the price per share of Class A Common Stock shall only be determined by a private sale or underwritten offering (including a “bought” deal or “overnight” public offering) undertaken by the Manager in connection with or anticipation of the Exchange (a “Liquidity Offering”). For purposes of this definition, the price per share of Class A Common Stock shall be determined net of any underwriting discounts and commissions and shall be subject to appropriate and equitable adjustment for any stock splits, reverse splits, stock dividends or similar events affecting the Class A Common Stock. For purposes of determining Cash Settlement to be paid in settlement of a fractional share of Class A Common Stock, the price per share of Class A Common Stock shall be determined as the VWAP, in each case subject to appropriate and equitable adjustment for any stock splits, reverse splits, stock dividends or similar events affecting the Class A Common Stock. If, at the time of determination, the Class A Common Stock no longer trades on a Principal Market, then the price per share of Class A Common Stock shall be determined in good faith by a committee of the Board of Directors composed of a majority of the directors of the Manager that do not have an interest in the Exchangeable Units.

“Certificate of Formation” is defined in the recitals of this Agreement.

“Certificates” means (A) if certificated, any certificates representing Exchangeable Units, (B) if certificated, any stock certificates representing the shares of Class B Common Stock required to be surrendered in connection with an Exchange of Class B Units, and (C) such other information, documents or instruments as either the Manager (or the Manager’s transfer agent) or the Company may reasonably require in connection with an Exchange. If any certificate or other document referenced in the immediately preceding sentence is alleged to be lost, stolen or destroyed, the Exchangeable Unit Member shall cooperate with and respond to the reasonable requests of the Manager (or the Manager’s transfer agent) and the Company and, if required by the Manager or the Company, furnish an affidavit of loss and/or an indemnity against any claim that may be made against the Manager or the Company on account of the alleged loss, theft or destruction of such certificate or other document.

“Change of Control” means, as of any date of determination, in one transaction or a series of related transactions, the Transfer of Units (or any beneficial interest therein) of the Company representing more than fifty (50) percent of the outstanding Common Units as of such date of determination.

“Class A Common Stock” means the Class A common stock of the Manager, $0.0001 par value per share.

“Class A Convertible Preferred Units” is defined in Section 2.1(b)(iii).

“Class A Preferred Units” is defined in Section 2.4(d).

“Class A Unit” is defined in ‎Section 2.1(b)(i).

“Class B Common Stock” means a non-economic voting share in the Manager, with each share having non-economic rights equivalent to one share of Class A Common Stock.

“Class B Unit” is defined in ‎Section 2.1(b)(ii).

“Code” means the Internal Revenue Code of 1986, as amended. All references in this Agreement to sections of the Code shall include any corresponding provision or provisions of succeeding Law.

“Common Stock” means the Class A Common Stock or the Class B Common Stock (and shall not include any additional series or class of the Manager’s common stock created after the date of this Agreement).

“Common Unit” means a Class A Unit, a Class B Unit, and any other Unit designated as a Common Unit by the Company.

“Company” is defined in the preamble to this Agreement.

“Company Counsel” is defined in ‎Section 11.2.

“Consent” means the consent to, approval of, or vote in favor of a proposed action by a Member given in accordance with ‎Article X.

“control,” including the terms “controlled by” and “under common control with,” means with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, as trustee or executor, as general partner or managing member, by contract or otherwise, including the ownership, directly or indirectly, of securities having the power to elect a majority of the Board of Directors or similar body governing the affairs of such Person.

“Conversion Price” is defined in Section 12.2.

“Conversion Ratio” is defined in Section 12.2.

“de minimis” shall mean an amount small enough as to make not accounting for it commercially reasonable or accounting for it administratively impractical, in each case as determined by the Manager.

“Debt” means, as to any Person, as of any date of determination, (i) all indebtedness of such Person for borrowed money or the deferred purchase price of property or services; (ii) all amounts owed by such Person to banks or other Persons in respect of reimbursement obligations under letters of credit, surety bonds and other similar instruments guaranteeing payment or other performance of obligations by such Person; and (iii) obligations of such Person as lessee under capital leases.

“Designated Individual” is defined in Annex C.

“Elective Exchange” is defined in ‎Section 11.1(a).

“Elective Exchange Date” means the effective date of an Elective Exchange.

“Elective Exchange Notice” is defined in Annex (B).

“Equivalent Units” means Units with preferences, conversion and other rights (other than voting rights), restrictions, limitations as to dividends and other distributions, qualifications, terms and conditions of redemption (the “Terms”) that are (a) relative to the Common Units and the other classes and series of Units that correspond to classes and series of Capital Stock, and (b) substantially the same as (or corresponding to) the Terms that any new Capital Stock or New Securities have relative to the Common Stock and other classes and series of Capital Stock or New Securities. The foregoing shall not apply to matters such as voting for members of the Board of Directors that are not applicable to the Company. In comparing the economic rights of any Preferred Stock with the economic rights of any Units, the effect of taxes may be taken into account.

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

“Exchange” means any Elective Exchange or Mandatory Exchange.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor statute thereto, and the rules and regulations of the SEC promulgated thereunder.

“Exchange Consideration” shall mean, in the case of any Exchange, (x) the number of shares of Class A Common Stock that is equal to the product of the number of Exchangeable Units surrendered in the Exchange multiplied by the Exchange Rate (the “Stock Consideration”), (y) the Cash Settlement, plus, in the case of an Exchange of Class B Units under either subclause (x) or (y), an amount that is equal to $0.0001 multiplied by the number of shares of Class B Common Stock included in the Exchange, or (z) a combination of the Stock Consideration and the Cash Settlement.

“Exchange Date” means an Elective Exchange Date or Mandatory Exchange Date.

“Exchange Rate” means, in respect of any Exchange, subject to ‎Section 11.4, a ratio, expressed as a fraction, the numerator of which shall be the number of shares of Class A Common Stock outstanding immediately before the Exchange and the denominator of which shall be the number of Class A Units owned by the Manager immediately before the Exchange. On the date of this Agreement, the Exchange Rate shall be 1.

“Exchangeable Unit” means each Class B Unit and any other Unit designated as an Exchangeable Unit by the Company.

“Exchangeable Unit Member” means (i) each Member, other than the Manager and any of its wholly owned Subsidiaries, that holds an Exchangeable Unit or (ii) each holder of an interest in a Member that holds an Exchangeable Unit pursuant to ‎Article X.

“Fair Market Value” of Units or other property, means the cash price that a third party would pay to acquire all of such Units (computed on a fully diluted basis after giving effect to the exercise of any and all outstanding conversion rights, exchange rights, warrants and options) or other property, as the case may be, in an arm’s-length transaction. Unless otherwise determined by the Company, the following assumptions will be made when determining the Fair Market Value of Units:

(a) that the Company was being sold in a manner reasonably designed to solicit all possible participants and permit all interested Persons an opportunity to participate and achieve the best value reasonably available to the Members at the time; and

(b) that all existing circumstances are taken into account, including the terms and conditions of all agreements (including this Agreement) to which the Company is then a party or by which it is otherwise benefited or affected, determined.

“Family Members” means, as to a Person that is an individual, such Person’s spouse, ancestors (whether by blood or by adoption), descendants (whether by blood or by adoption), brothers and sisters (whether by blood or by adoption) and inter vivos or testamentary trusts of which only such Person and his spouse, ancestors (whether by blood or by adoption), descendants (whether by blood or by adoption), brothers and sisters (whether by blood or adoption) are beneficiaries.

“Fiscal Year” is defined in ‎Section 6.2.

“Incapacity” or “Incapacitated” means, (i) as to any Member who is an individual, death, total physical disability or entry by a court of competent jurisdiction adjudicating such Member incompetent to manage his or her Person or his or her estate; (ii) as to any Member that is a corporation or limited liability company, the filing of a certificate of dissolution, or its equivalent, for the corporation or the revocation of its charter; (iii) as to any Member that is a partnership, the dissolution and commencement of the winding up of the partnership; (iv) as to any Member that is an estate, the distribution by the fiduciary of the estate’s entire interest in the Company; (v) as to any trustee of a trust that is a Member, the termination of the trust (but not the substitution of a new trustee); or (vi) as to any Member, the Bankruptcy of such Member.

“Incentive Compensation Plan” means any plan, agreement or other arrangement that provides for the grant or issuance of equity or equity-based awards and that is now in effect or is hereafter adopted by the Company or the Manager for the benefit of any of their respective employees or other service providers (including directors, advisers and consultants), or the employees or other services providers (including directors, advisers and consultants) of any of their respective Affiliates or Subsidiaries.

“Indemnitee” means the Manager, each Affiliate of the Manager, the Tax Representative, the Designated Individual and each officer or director of the Manager, the Company or their respective Affiliates, in all cases in such capacity.

“Initial Operating Agreement” is defined in the recitals of this Agreement.

“IRS” means the United States Internal Revenue Service, or, if applicable, a state or local taxing agency.

“Law” means any applicable statute, law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree or order of any governmental authority. The term “Lawful” has a correlative meaning.

“Liquidating Event” is defined in ‎Section 9.2(b).

“Liquidation Preference” shall mean, with respect to the Class A Preferred Unit, (i) during the period from the original issue date of the Class A Preferred Units (the “Original Issuance Date”) to the first anniversary of the Original Issue Date, $10.00 per unit, (ii) during the period from the first anniversary of the Original Issue Date to the second anniversary of the Original Issuance Date, $15.00 per unit and (iii) thereafter, $20.00 per unit, in each case subject to appropriate adjustment in the event of any equity distribution, unit split, combination or other similar recapitalization with respect to the applicable Class A Preferred Units..

“Liquidator” is defined in ‎Section 9.3(a).

“Liquidity Offering” is defined in the definition of Cash Settlement.

“Majority-in-Interest of the Members” means Members (excluding the Manager in its capacity as a Member) entitled to vote on or consent to any matter holding more than fifty percent (50%) of all outstanding Common Units held by all Members (excluding the Manager in its capacity as a Member) entitled to vote on or consent to such matter.

“Manager” is defined in the preamble to this Agreement.

“Manager Tax-Related Liabilities” means any U.S. federal, state and local and non-U.S. tax obligations (including any Imputed Underpayment Share for which the Manager is liable hereunder) owed by the Manager (other than any obligations to remit any withholdings withheld from payments to third parties).

“Mandatory Conversion Trigger Date” is defined in Section 12.2.

“Mandatory Exchange” is defined in ‎Section 11.1(c).

“Mandatory Exchange Date” is defined in ‎Section 11.1(c).

“Mandatory Exchange Notice” is defined in ‎Section 11.1(c).

“Market Price” is defined in Section 12.2.

“Measurement Period” is defined in Section 12.2.

“Member” means any Person named as a member of the Company on the Register of this Agreement (as amended from time to time) and any Person admitted as an Additional Member of the Company or a Substituted Member of the Company, in each case, in such Person’s capacity as a member of the Company, until such time as such Person has ceased to be a Member.

“Member Representative” is defined in ‎Section 7.6.

“New Securities” means any equity security as defined in Rule 3a11-1 under the Securities Exchange Act of 1934, as amended, excluding grants under the Incentive Compensation Plans, including (i) rights, options, warrants, or convertible or exchangeable securities that entitle the holder thereof to subscribe for or purchase, convert such securities into, or exchange such securities for, Common Stock or Preferred Stock and (ii) any Debt issued by the Manager that provides any of the rights described in clause (i).

“Original Issuance Date” is defined in the definition of Liquidation Preference.

“Percentage Interest” means, with respect to each Member, as to any class or series of relevant Units, the fraction, expressed as a percentage, the numerator of which is the aggregate number of Units of such class or series held by such Member and the denominator of which is the total number of Units of such class or series held by all Members, in each case determined as of the date of determination. If not otherwise specified, “Percentage Interest” shall be deemed to refer to Common Units.

“Person” means an individual, corporation, partnership, limited liability company, limited liability partnership, joint venture, syndicate, person, trust, association, organization or other entity, including any governmental authority, and including any successor, by merger or otherwise, of any of the foregoing.

“Policy Regarding Exchanges” is defined in ‎Section 11.1(a).

“Principal Market” is defined in Section 12.2.

“Preferred Stock” means shares of preferred stock of the Manager now or hereafter authorized or reclassified that has dividend rights, or rights upon liquidation, winding up and dissolution, that are superior or prior to the Common Stock.

“Record Date” means the record date established by the Company for the purpose of determining the Members entitled to notice of or vote at any meeting of Members or to consent to any matter, or to receive any distribution or the allotment of any other rights, or in order to make a determination of Members for any other proper purpose, which, in the case of a record date fixed for the determination of Members entitled to receive any distribution, shall (unless otherwise determined by the Company) generally be the same as the record date established by the Manager for a distribution to the Members of its Capital Stock of some or all of its portion of such distribution.

“Register” is defined in ‎Section 5.1(b)(i).

“Registration Rights Agreement” means the Registration Rights Agreement, effective on or about the date hereof, among the Manager and the other Persons party thereto, as the same may be amended, modified, supplemented or restated from time to time.

“Regulations” means the income tax regulations, including temporary regulations and, to the extent taxpayers are permitted to rely on them, proposed regulations, promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations). References to “Treas. Reg. §” are to the sections of the Regulations.

“Related-Party Transfer” means a Transfer by a Member of all or part of its Units to any Related-Party Transferee.

“Related-Party Transferee” means, with respect to a Member, (i) any Family Member of that Member, (ii) any direct or indirect member or equityholder of that Member or any Affiliate of that Member, (iii) any Family Member of any direct or indirect member or equityholder described in (ii), or (iv) the Manager or any Subsidiary of the Manager.

“SEC” means the Securities and Exchange Commission.

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

“Selected Courts” is defined in ‎Section 11.7.

“SPAC Transactions” means the series of transactions effectuated pursuant to the Purchase Agreement.

“Stated Conversion Value” is defined in Section 12.2.

“Subsidiary” means, with respect to any Person, any corporation or other entity if a majority of (i) the voting power of the voting equity securities or (ii) the outstanding equity interests is owned, directly or indirectly, by such Person.

“Substituted Member” means a Person who is admitted as a Member to the Company pursuant to ‎Section 7.3.

“Surviving Company” is defined in Section 7.5(b)(iii).

“Tax Distribution” is defined in ‎Section 3.2(a).

“Tax Distribution Shortfall Amount” is defined in Section 3.2(d).

“Termination Transaction” means any direct or indirect Transfer of all or any portion of the Manager’s Units in connection with, or the other occurrence of, (a) a merger, consolidation or other combination involving the Manager, on the one hand, and any other Person, on the other, (b) a sale, lease, exchange or other transfer of all or substantially all of the assets of the Manager not in the ordinary course of its business, whether in a single transaction or a series of related transactions, (c) a reclassification, recapitalization or change of the outstanding Class A Common Stock (other than a change in par value, or from par value to no par value, or as a result of a stock split or reverse stock split, stock dividend or similar subdivision), (d) the adoption of any plan of liquidation or dissolution of the Manager, or (e) a Transfer of all or any portion of the Manager’s Units (other than to a wholly owned Affiliate).

“Terms” is defined in the definition of “Equivalent Units.”

“Trading Day” is defined in Section 12.2.

“Transfer” means, in respect of any Units, property or other assets, any sale, assignment, hypothecation, lien, encumbrance, transfer, distribution or other disposition thereof or of a participation therein, or other conveyance of legal or beneficial interest therein, including rights to vote and receive dividends or other income with respect thereto, or any short position in a security or any other action or position otherwise reducing risk related to ownership through hedging or other derivative instruments, whether voluntarily or by operation of Law, or any agreement or commitment to do any of the foregoing. An Exchange shall not constitute a Transfer under this Agreement.

“Unit” means a fractional share of the limited liability company interest in the Company, which may be a Class A Unit, Class B Unit or Class A Preferred Unit and shall be deemed to include any equity security received in connection with any recapitalization, merger, consolidation, or other reorganization, or by way of any distribution in respect of Units, in any such case, after the date of this Agreement.

“Unit Designation” is defined in Section 2.4(a).

“VWAP” is defined in Section 12.2.

Section 14.2 Interpretation. In this Agreement and in the exhibits to this Agreement, except to the extent that the context otherwise requires:

(a) the headings are for convenience of reference only and shall not affect the interpretation of this Agreement;

(b) defined terms include the plural as well as the singular and vice versa;

(d) a reference to any statute or statutory provision shall be construed as a reference to the same as it may have been or may from time to time be amended, extended, re-enacted or consolidated and all statutory instruments or orders made under it;

(e) any reference to a “day” or “Business Day” means the whole of such day, being the period of 24 hours running from midnight to midnight;

(f) references to Articles, Sections, subsections, clauses and Exhibits are references to Articles, Sections, subsections, clauses and Exhibits to this Agreement;

(g) the words “including” and “include” and other words of similar import shall be deemed to be followed by the phrase “without limitation”; and

(h) unless otherwise specified, references to any party to this Agreement or any other document or agreement shall include its successors and permitted assigns.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, this Agreement has been executed as of the date first written above.

MANAGER:	HNR ACQUISITION CORP

	By:	/s/ Mitchell B. Trotter
	Name:	Mitchell B. Trotter
	Title:	Authorized Signer

MEMBERS:

POGO ROYALTY, LLC		HNR ACQUISITION CORP

By:	/s/ Kirk Pogoloff	By:	/s/ Mitchell B. Trotter
Name:	Kirk Pogoloff	Name:	Mitchell B. Trotter
Title:	Manager	Title:	Authorized Signer

[Signature Page to Amended and Restated Limited Liability Company Agreement of HNRA Upstream, LLC]

Annex A: INITIAL UNITS

Member		Class A Units
HNR Acquisition Corp..			4,201,946

Member		Class B Units
Pogo Royalty, LLC			2,000,000

Member

Class A
Preferred
Units

Pogo Royalty, LLC

1,500,000

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Annex B: FORM OF ELECTIVE EXCHANGE NOTICE

ELECTIVE EXCHANGE NOTICE

[SPAC ADDRESS]

[SELLER MEMBER ADDRESS]

This elective exchange notice (“Elective Exchange Notice”) is delivered by the undersigned Exchangeable Unit Member pursuant to Section 11.1 of the Amended and Restated Limited Liability Company Agreement of HNRA Upstream, LLC, dated as of November 15, 2023 (the “LLC Agreement”), by and among HNR Acquisition Corp., a Delaware corporation (the “Manager”) and the members that are party thereto. Capitalized terms used but not defined herein shall have the meanings given to them in the LLC Agreement.

The undersigned hereby transfers the number of Class B Units plus shares of Class B Common Stock set forth below (together, the “Paired Interests”) in exchange for the Stock Consideration to be issued in its name as set forth below, or the Cash Settlement, as applicable, as set forth in the LLC Agreement.

Legal Name of Holder:

Address:

Number of Class B Units:

Number of Class B Common Stock:

Brokerage Account Details: __

The undersigned hereby represents and warrants that (i) the undersigned has full legal capacity to execute and deliver this Elective Exchange Notice and to perform the undersigned’s obligations hereunder; (ii) this Elective Exchange Notice has been duly executed and delivered by the undersigned and is the legal, valid and binding obligation of the undersigned enforceable against it in accordance with the terms thereof or hereof, as the case may be, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and the availability of equitable remedies; (iii) the Paired Interests subject to this Elective Exchange Notice are being transferred to the Manager or the Company, as applicable, free and clear of any pledge, lien, security interest, encumbrance, equities or claim; and (iv) no consent, approval, authorization, order, registration or qualification of any third party or with any court or governmental agency or body having jurisdiction over the undersigned or the Paired Interests subject to this Elective Exchange Notice is required to be obtained by the undersigned for the transfer of such Paired Interests to the Manager or the Company, as applicable.

The undersigned hereby irrevocably constitutes and appoints any officer of the Manager or of the Company as the attorney of the undersigned, with full power of substitution and resubstitution in the premises, to do any and all things and to take any and all actions that may be necessary to transfer to the Manager or the Company, as applicable, the Paired Interests subject to this Elective Exchange Notice and to deliver to the undersigned the Stock Consideration or Cash Settlement, as applicable, to be delivered in exchange therefor.

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IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this Elective Exchange Notice to be executed and delivered by the undersigned or by its duly authorized attorney.

Name:

Dated: ___________________

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Annex C: TAX MATTERS

Article I
Definitions

“Asset Value” means, with respect to any Asset, the adjusted basis of such Asset for U.S. federal income tax purposes; provided, however, that:

(i) the initial Asset Value of any Asset (other than cash) contributed or deemed contributed by a Member to the Company shall be the gross Fair Market Value of such Asset as determined by the Company;

(ii) the Asset Values of all Assets shall be adjusted to equal their respective gross Fair Market Values as determined by the Company as of the following times: (A) the acquisition of an additional interest in the Company by any new or existing Member, in exchange for more than a de minimis Capital Contribution; (B) the distribution by the Company to a Member of more than a de minimis amount of property as consideration for an interest in the Company; (C) the liquidation of the Company within the meaning of Treas. Reg. § 1.704-1(b)(2)(ii)(g); (D) the grant of an interest in the Company (other than a de minimis interest) as consideration for the provision of services to the benefit of the Company by an existing Member acting in a Member capacity or by a new Member acting in a Member capacity or in anticipation of becoming a Member; (E) the Conversion of any Class A Preferred Units into Class B Common Units in accordance with principles similar to those set forth under Treas. Reg. § 1.704 1(b)(2)(iv)(s); or (F) any other instance in which such adjustment is permitted under Treas. Reg. § 1.704-1(b)(2)(iv); provided, however, that any adjustment pursuant to clause (A), (B), (D), or (E) above shall be made only if the Company determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Members in the Company;

(iii) the Asset Value of any Asset distributed to any Member shall be the gross Fair Market Value of such Asset on the date of distribution, as determined by the Company;

(iv) the Asset Values of all Assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such Assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Treas. Reg. § 1.704-1(b)(2)(iv)(m); provided, however, that Asset Values shall not be adjusted pursuant to this paragraph (iv) to the extent that the Company determines that an adjustment pursuant to paragraph (ii) of this definition of Asset Value is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this paragraph (iv); and

(v) if the Asset Value of an Asset has been determined or adjusted to paragraph (i), (ii), (iv), or (v) of this definition of Asset Value, then such Asset Value shall thereafter be adjusted by the Depreciation or Simulated Depletion taken into account with respect to such Asset for purposes of computing Net Profits and Net Losses.

“Audit” is defined in Section 4.4(a) of this Annex C.

“Company Minimum Gain” has the meaning set forth as “partnership minimum gain” in Treas. Reg. § 1.704-2(b)(2) and is computed in accordance with Treas. Reg. § 1.704-2(d).

“Depreciation” means, for each Fiscal Year or other period, an amount equal to the depreciation, amortization or other cost recovery deduction (other than depletion or Simulated Depletion) allowable for U.S. federal income tax purposes with respect to an Asset for such Fiscal Year or other period; provided, however, that if the Asset Value of an Asset differs from its adjusted basis for U.S. federal income tax purposes at the beginning of such Fiscal Year or other period, Depreciation shall be determined in accordance with Treas. Reg. § 1.704-1(b)(2)(iv)(g)(3), or Treas. Reg. § 1.704-3(d)(2), as appropriate.

“Designated Individual” is defined in Section 4.3(a)(ii) of this Annex C.

“Imputed Underpayment” is defined in Section 4.4(d) of this Annex C.

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“Imputed Underpayment Share” is defined in Section 4.4(e)(i) of this Annex C.

“Member Nonrecourse Debt” has the meaning given to the term “partner nonrecourse debt” in Treas. Reg. § 1.704-2(b)(4).

“Member Nonrecourse Debt Minimum Gain” means, with respect to each Member Nonrecourse Debt, an amount equal to the Company Minimum Gain that would result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Treas. Reg. § 1.704-2(i)(3).

“Member Nonrecourse Deductions” has the meaning given to the term “partner nonrecourse deduction” in Treas. Reg. §§ 1.704-2(i)(l) and 1.704-2(i)(2).

“Net Profits” and “Net Losses” mean, for each Fiscal Year or other period, an amount equal to the Company’s taxable income or loss for such Fiscal Year or other period, determined in accordance with Code Section 703(a) and, where appropriate (but including in taxable income or loss, for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1)), with the following adjustments:

(i) any income of the Company exempt from U.S. federal income tax and not otherwise taken into account in computing Net Profits or Net Losses pursuant to this definition shall be added to such taxable income or loss;

(ii) any expenditures of the Company described in Code Section 705(a)(2)(B) (or treated as expenditures described in Code Section 705(a)(2)(B) pursuant to Treas. Reg. § 1.704-1(b)(2)(iv)(i)) and not otherwise taken into account in computing Net Profits or Net Losses pursuant to this definition shall be subtracted from such taxable income or loss;

(iii) in the event the Asset Value of any Asset of the Company is adjusted in accordance with paragraph (ii), paragraph (iii), or paragraph (v) of the definition of “Asset Value,” the amount of such adjustment shall be taken into account as gain or loss from the disposition of such Asset for purposes of computing Net Profits or Net Losses;

(iv) gain or loss resulting from any disposition of any Asset with respect to which gain or loss is recognized for U.S. federal income tax purposes shall be computed by reference to the Asset Value of the Asset disposed of, notwithstanding that the adjusted tax basis of such Asset differs from its Asset Value;

(v) in lieu of the depreciation, amortization and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Fiscal Year;

(vi) to the extent an adjustment to the adjusted tax basis of any Asset pursuant to Code Section 734(b) is required pursuant to Treas. Reg. § 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Member’s interest in the Company, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the Asset) or loss (if the adjustment decreases the basis of the Asset) from the disposition of the Asset and shall be taken into account for purposes of computing Net Profits and Net Losses;

(vii) notwithstanding any other provision of this definition of Net Profits and Net Losses, any items that are specially allocated pursuant to Section 3.2 and Section 3.3 of this Annex C shall not be taken into account in computing Net Profits or Net Losses, but shall be determined by applying rules analogous to those set forth in paragraphs (i) through (vi) above; and

(viii) where appropriate, references to Net Profits and Net Losses shall refer to specific items of income, gain, loss, deduction, and credit comprising or otherwise comprising Net Profits or Net Losses.

“Nonrecourse Deductions” has the meaning set forth in Treas. Reg. § 1.704-2(b)(1).

“Nonrecourse Liability” has the meaning set forth in Treas. Reg. § 1.752-1(a)(2).

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“Push Out Election” means the election under Code Section 6226 (or any similar provision of state or local law) to “push out” an adjustment to the Members or former Members, including filing IRS Form 8988 (Election for Alternative to Payment of the Imputed Underpayment), or any successor or similar form, and taking any other action necessary to give effect to such election.

“Revised Partnership Audit Provisions” means Code Sections 6221 through 6241, as in effect for taxable years of the Company beginning after December 31, 2017, together with any subsequent amendments thereto, Treasury Regulations promulgated thereunder, and published administrative interpretations thereof, and any comparable provisions of state or local tax law.

“Seller” has the meaning set forth in the recitals.

“Seller Member” means Pogo Royalty, LLC, a Texas limited liability company.

“Specified Audit” is defined in ‎Section 4.4(b) of this Annex C.

“Tax Representative” means, as applicable, and including the Designated Individual as the context requires, (a) the Member or other Person (including the Company) designated as the “partnership representative” of the Company under Code Section 6223, and/or (b) the Member or other Person serving in a similar capacity under any similar provisions of state, local or non-U.S. Laws, in each case, acting solely at the direction of the Company to the maximum extent permitted under Law.

Article II
Member’s Capital Accounts.

The Company or the Manager shall establish and maintain a capital account for each Member in accordance with Treas. Reg. § 1.704-1(b)(2)(iv) (each, a “Capital Account”). The Company shall maintain Capital Account subaccounts for Class A Preferred Units that are separate from those maintained for Common Units, and may maintain Capital Account subaccounts for other different classes of Units, and any provisions of this Agreement pertaining to Capital Account maintenance shall apply, mutatis mutandis, to those subaccounts.

Article III
Allocations

Section 3.1 Allocations to Capital Accounts Generally. Each Fiscal Year or other relevant period, after adjusting each Member’s Capital Account for all contributions and distributions with respect to such Fiscal Year and after giving effect to the allocations under Section 3.2 of this Annex C for the Fiscal Year or period, Net Profits and Net Losses shall be allocated among the Members in a manner such that, after such allocations have been made, each Member’s Capital Account balance with respect to its Common Units (which may be a positive, negative, or zero balance) will equal (proportionately) (a) the amount that would be distributed to each such Member in respect of its Common Units, determined as if the Company were to (i) sell all of its Assets for their Asset Values, (ii) satisfy all of its liabilities in accordance with their terms with the proceeds from such sale (limited, with respect to Nonrecourse Liabilities, to the Asset Values of the Assets securing such liabilities), and (iii) distribute the remaining proceeds pursuant Section 3.1 of this Agreement, minus (b) the sum of (x) such Member’s share of the Company Minimum Gain and Member Nonrecourse Debt Minimum Gain and (y) the amount, if any (without duplication of any amount included under clause (x)), that such Member is obligated (or is deemed for U.S. tax purposes to be obligated) to contribute, in its capacity as a Member, to the capital of the Company as of the last day of such Fiscal Year.

Section 3.2 Priority Allocations to Capital Accounts.

(a) Minimum Gain Chargeback, Qualified Income Offset, and Stop Loss Provisions. Each of (i) the “minimum gain chargeback” provision of Treas. Reg. § 1.704-2(f), (ii) the “chargeback of partner nonrecourse debt minimum gain” provision of Treas. Reg. § 1.704-2(i)(4), (iii) the “qualified income offset” provision of Treas. Reg. § 1.704-1(b)(2)(ii)(d)(3), and (iv) the requirement in the flush language immediately following Treas. Reg. § 1.704-1(b)(2)(ii)(d)(3) that an allocation “not cause or increase a deficit balance” in a Member’s Capital Account is hereby incorporated by reference as a part of this Agreement. The Company shall make such allocations as are necessary to comply with those provisions and shall make any determinations with respect to such allocations (to the extent consistent with clauses (i) – (iv) of the preceding sentence).

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(b) Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal Year or other relevant period shall be allocated to the Members in proportion to the number of Common Units owned by each of them, unless otherwise determined by the Company.

(c) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions for any Fiscal Year or other relevant period shall be specially allocated to the Member who bears the economic risk of loss (within the meaning of Treas. Reg. § 1.752-2) with respect to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable in accordance with Treas. Reg. § 1.704-2(i)(l).

(d) Special Basis Adjustments. To the extent an adjustment to the adjusted tax basis of any Asset under Code Section 734(b) or Code Section 743(b) is required, pursuant to Treas. Reg. §§ 1.704-1(b)(2)(iv)(m)(2) or 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts as the result of a distribution to a Member in complete liquidation of such Member’s interest in the Company, the amount of such adjustment to Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the Asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members in accordance with their interests in the Company in the event Treas. Reg. § 1.704-1(b)(2)(iv)(m)(2) applies, or to the Member to whom such distribution was made in the event Treas. Reg. § 1.704-1(b)(2)(iv)(m)(4) applies.

(e) Ameliorative Allocations. Any allocations made (as well as anticipated reversing or offsetting regulatory allocations to be made) pursuant to Section 3.2(a) – (d) of this Annex C shall be taken into account in computing subsequent allocations pursuant to this Agreement, so that the net amount for any item so allocated and all other items allocated to each Member pursuant to this Agreement shall be equal, to the extent possible, to the net amount that would have been allocated to each Member pursuant to the provisions of this Agreement if those allocations had not occurred.

(f) Depletion, Gain and Loss on Depletable Properties. The Simulated Basis in each oil and gas property owned by the Company shall be allocated among the Members in proportion to the number of Common Units owned by each such Member. Simulated Depletion with respect to each separate oil and gas property shall be allocated to the Members in proportion to their respective shares of the Simulated Basis in the related property. Any Simulated Gain shall be allocated to the Members and shall increase their respective Capital Accounts in the same manner as an equal amount of gain would have been allocated pursuant to Section 3.1 and Section 3.2(g)(ii). Any Simulated Loss shall be allocated to the Members in the same percentages as the Simulated Basis of the property sold was allocated up to an amount equal to each Member’s share of the Company’s Simulated Basis in such property at the time of such sale.

(g) Notwithstanding anything to the contrary contained in this Agreement, (i) no allocation of Net Profit, Net Losses or otherwise shall be made in respect of any Class A Preferred Units, except as follows:

(i) Any gains resulting from adjustments to Asset Value, and items of income or gain realized on and after a Liquidating Event occurs shall be specially allocated to holders of Class A Preferred Units (in proportion to the number of Class A Preferred Units owned by each of them) until the Capital Account balances attributable to the Class A Preferred Units equals the Liquidation Preference of the Class A Preferred Units.

(ii) Once the Capital Account balances of all Common Units have been reduced to zero, (A) any further Net Losses shall be allocated to the holders of Preferred Units (in proportion to the number of Class A Preferred Units owned by each of them) and (B) and Net Profits subsequently realized shall be allocated to holders of Class A Preferred Units (in proportion to the number of Class A Preferred Units owned by each of them) until the cumulative amount so allocated equals the cumulative amount of Net Losses allocated to the holders of Class A Preferred Units pursuant to clause (A).

(iii) In the event the Asset Value of any Asset is adjusted pursuant to paragraph (ii), clause (E), of the definition of Asset Value, any Net Profit or Net Losses resulting from such adjustment shall, in accordance with principles similar to those set forth in Treas. Reg. § 1.704 1(b)(2)(iv)(s) or in any other manner reasonably determined by the Company, be allocated among the Members (including the Members who hold the Class A Preferred Units giving rise to such adjustment) such that the Capital Account balance relating to each Class B Common Unit (including any Class A Preferred Units that have been converted into Class B Common Units) is equal in amount (or as close to equal in amount as possible) immediately after making such allocation; provided that, if the foregoing allocations are insufficient to cause the Capital Account balance relating to each Class B Common Unit to be so equal in amount, then the Company shall cause a “capital account reallocation” in accordance with principles similar to those set forth in Treas. Reg. § 1.704 1(b)(2)(iv)(s)(3) to cause the Capital Account balance relating to each Class B Common Unit to be so equal in amount.

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Section 3.3 Tax Allocation Rules.

(a) In General. Except as otherwise provided in this Section 3.3 of this Annex C, for income tax purposes under the Code and the Regulations, each Company item of income, gain, loss, deduction, and credit as determined for tax purposes shall be allocated among the Members in the same manner as its correlative item of income, gain, loss, deduction, and credit (as calculated in accordance with the definitions of “Net Profits” and “Net Loss”) is allocated pursuant to Section 3.1 and Section 3.2 of this Annex C.

(b) The deduction for depletion with respect to each separate oil and gas property (as defined in Section 614 of the Internal Revenue Code) shall, in accordance with Section 613A(c)(7)(D) of the Internal Revenue Code, be computed for federal income tax purposes separately by the Members rather than the Company. Except as provided in Section 3.3(d), for purposes of such computation, the adjusted tax basis of each oil and gas property shall be allocated among the Members in proportion to the number of Common Units owned by each Member. Each Member, with the assistance of the Tax Representative, shall separately keep records of its share of the adjusted tax basis in each separate oil and gas property, adjust such share of the adjusted tax basis for any cost or percentage depletion allowable with respect to such property and use such adjusted tax basis in the computation of its cost depletion or in the computation of its gain or loss on the disposition of such property by the Company. Upon the request of the Tax Representative, each Member shall advise the Tax Representative of its adjusted tax basis in each separate oil and gas property and any depletion computed with respect thereto, both as computed in accordance with the provisions of this subsection. The Tax Representative may rely on such information and, if it is not provided by the Member, may make such reasonable assumptions as it shall determine with respect thereto

(c) Except as provided in Section 3.3(d), for the purposes of the separate computation of gain or loss by each Member on a disposition of each separate oil and gas property (as defined in Section 614 of the Internal Revenue Code), the Company’s allocable share of the “amount realized” (as such term is defined in Section 1001(b) of the Internal Revenue Code) from such disposition shall be allocated for federal income tax purposes among the Members as follows:

(i) first, to the extent such amount realized constitutes a recovery of the Simulated Basis of the property, to the Members in the same proportion as the depletable basis of such property was allocated to the Members pursuant to Section 3.3(b) (without regard to any special allocation of basis under Section 3.3(d)); and

(ii) second, the remainder of such amount realized, if any, to the Members so that, to the maximum extent possible, the amount realized that is allocated to each Member under this Section 3.3(c)(ii) will equal such Member’s share of the Simulated Gain recognized by the Company from such Transfer.

(d) Section 704(c) Allocations. Notwithstanding the provisions of Section 3.3(a) of this Annex C to the contrary, in accordance with Code Section 704(c)(1)(A) (and the principles of those provisions) and Treas. Reg. § 1.704-3, Company items of income, gain, loss, deduction, and credit with respect to any property contributed to the capital of the Company, or after Company property has been revalued under Treas. Reg. § 1.704-1(b)(2)(iv)(f) or (s), shall, solely for U.S. federal, state and local tax purposes, be allocated among the Members so as to take into account any variation between the adjusted basis of such Company property to the Company for U.S. federal income tax purposes and its value as so determined at the time of the contribution or revaluation of Company property. The Company shall use the “traditional method” with respect to any property contributed to the Company in connection with the SPAC Transactions. With respect to property contributed or Section 704(c) amounts arising from revaluations made after the SPAC Transactions, the Company may use any method permitted under Treas. Reg. § 1.704-3. Allocations pursuant to ‎Section 3.3(a) and this Section 3.3(b) of this Annex C are solely for U.S. federal, state, and local tax purposes and shall not affect, or in any way be taken into account in computing, any Member’s Capital Account or share of profit, loss, or other items, pursuant to any provision of this Agreement.

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(e) Corrective Allocations. If, pursuant to Section 3.2(g), the Company causes a “capital account reallocation” in accordance with principles similar to those set forth in Treas. Reg. § 1.704-1(b)(2)(iv)(s)(3), the Company shall make corrective allocations in accordance with principles similar to those set forth in Treas. Reg. § 1.704-1(b)(4)(x).

(f) Allocations in Respect of Varying Interests. If any Member’s interest in the Company varies (within the meaning of Code Section 706(d)) within a Fiscal Year, whether by reason of a Transfer of a Unit, redemption of a Unit by the Company, or otherwise, Net Profits and Net Losses for that Fiscal Year will be allocated so as to take into account such varying interests in accordance with Code Section 706(d) using the daily proration method and/or such other permissible method, methods, or conventions selected by the Company.

(g) Timing and Amount of Allocations of Net Profits and Net Loss. Net Profits and Net Losses of the Company shall be determined and allocated with respect to each Fiscal Year as of the end of each such year, or at such other time or times determined by the Company.

(h) Modification of Allocations. The allocations set forth in Section 3.1 and ‎Section 3.2 of this Annex C are intended to comply with certain requirements of the Regulations. The Company shall be authorized to make, in its reasonable discretion, appropriate modifications to the allocations of Net Profits and Net Losses pursuant to this Agreement in order to comply with Code Section 704 or applicable Regulations. Notwithstanding any provision of this Agreement to the contrary, if the Company reasonably determines an allocation other than the allocations that would otherwise be made pursuant to this Agreement would more appropriately reflect the Members’ interests in the Company, the Company may in its discretion make appropriate adjustments to such allocations.

(i) Allocation of Liabilities under Code Section 752. Notwithstanding anything in this Agreement to the contrary, no Member will take, or permit any Affiliate to take, any action that would change the allocation of liabilities for purposes of Code Section 752 without the consent of the Company.

(j) Adjustment for Non-Compensatory Options. If the Company issues Units or other securities that are treated as “non-compensatory options”, as defined in Treasury Regulations Section 1.721-2, the Manager shall make such adjustments to the Asset Value of the Company’s Assets, allocation of Net Profits and Net Losses, Capital Accounts and allocations of items for income tax purposes as it reasonably determines may be necessary to comply with the provisions of Treasury Regulations Section 1.721-2 and Treasury Regulations Section 1.704-1(b)(2)(iv)(s) or any successor provisions relating thereto and to properly reflect the economic sharing arrangement associated with the non-compensatory options.

Article IV
Certain Tax Matters

Section 4.1 Provision of Information.

(a) Information to Be Provided by Company to Members. No later than thirty (30) days after the filing by the Company of the Company’s federal tax return (IRS Form 1065), the Company shall provide to each Member a copy of Schedule K-1 of IRS Form 1065 reporting that Member’s allocable share of items of income, gain, loss, deduction, or credit for such Fiscal Year, and such additional information as is required to be provided on Schedule K-1 or as such Member may reasonably request for tax purposes, each as determined by the Company. The Member hereby consents to receive each Schedule K-1 in respect of the Member’s ownership interest in the Company through electronic delivery.

(b) Information to Be Provided by Members to Company.

(i) Notice of Audit or Tax Examination. Each Member shall notify the Company within five (5) Business Days after receipt of any notice regarding an audit or tax examination of the Company and upon any request for material information related to the Company by U.S. federal, state, local, or other tax authorities.

(ii) Other Relevant Tax Information. Each Member shall provide to the Company upon reasonable request tax basis information about Assets contributed by it to the Company and such other tax information as reasonably requested by the Company and necessary for it to prepare its financial reports or any tax returns and such other information and/or tax forms as the Company reasonably requests.

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(c) No Right to Member Tax Returns. Notwithstanding anything to the contrary in this Agreement or any right to information under the Act, with respect to the financial statements or tax returns of a Member or its Affiliates (excluding, for this purpose, Manager and the Company), none of the Company, the other Members, such other Member’s Affiliates or any of their respective representatives, will be entitled to review such financial statements or tax returns for any purpose, including in connection with any proceeding or other dispute (whether involving the Company, between the Members, or involving any other Persons).

Section 4.2 Tax Elections. The Company shall have in effect (and shall cause each Subsidiary that is classified as a partnership for U.S. federal income tax purposes to have in effect) an election pursuant to Code Section 754 (and any similar provisions of applicable U.S. state or local law) for the Company for the Fiscal Year that includes the date of the SPAC Transactions and each Fiscal Year in which a sale or exchange (whether partial or complete) occurs. The Company shall determine whether to make any other available election pursuant to the Code or Regulations that is not otherwise expressly provided for or prohibited in this Agreement, and, unless otherwise provided for by this Agreement, the Members hereby consent to all such elections.

Section 4.3 Tax Representative.

(a) Appointment and Replacement of Tax Representative.

(i) Tax Representative. The Manager shall act as the Tax Representative, but the Manager may designate another Person to act as the Tax Representative and may remove, replace, or revoke the designation of that Person, or require that Person to resign. For any jurisdiction with respect to which the Manager cannot serve as the Tax Representative, however, the Manager may designate another Person to act as the Tax Representative.

(ii) Designated Individual. If the Tax Representative is not an individual, the Manager shall appoint a “designated individual” for each taxable year (as described in Treas. Reg. § 301.6223-1(b)(3)(ii)) (a “Designated Individual”).

(iii) Approval by Members. Each Member agrees to execute, certify, acknowledge, deliver, swear to, file, and record at the appropriate public offices such documents as may be deemed necessary or appropriate to evidence the appointments described in Section 4.3(a)(i) and Section 4.3(a)(ii) of this Annex C, including statements required to be filed with the tax returns of the Company in order to effect the designation of the Tax Representative or Designated Individual (and any successor).

(b) Authority of the Tax Representative; Delegation of Authority. The Tax Representative shall have all of the rights, duties, powers, and obligations provided for under the Code, Regulations, or other applicable guidance; provided that, if a Person other than the Manager is the Tax Representative, such Person shall in all cases act solely at the direction of the Manager; provided further that, if the Tax Representative appoints a Designated Individual, such Designated Individual shall in all cases act solely at the direction of the Tax Representative.

(c) Costs and Indemnification of Tax Representative and Designated Individual. Without duplication of the provisions of Section 4.3(b) of this Annex C, the Company shall pay, or to the extent the Tax Representative or Designated Individual pays, indemnify and reimburse, to the fullest extent permitted by Law, the Tax Representative or Designated Individual for all costs and expenses, including legal and accounting fees (as such fees are incurred) and any claims incurred in connection with any tax audit or judicial review proceeding with respect to the tax liability of the Company.

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Section 4.4 Tax Audits.

(a) Subject to this Section 4.4, the Tax Representative shall have the sole authority to act on behalf of the Company in connection with, make all relevant decisions regarding application of, and to exercise the rights and powers provided for in the Revised Partnership Audit Provisions, including making any elections under the Revised Partnership Audit Provisions or any decisions to settle, compromise, challenge, litigate or otherwise alter the defense of any action, audit or examination before the IRS or any other tax authority (each, an “Audit”), and to expend Company funds for professional services and other expenses reasonably incurred in connection therewith.

(b) Without limiting the foregoing, the Tax Representative shall give prompt written notice to the Seller Member of the commencement of any Audit of the Company or any of its Subsidiaries the resolution of which would reasonably be expected to have a disproportionate (compared to the Manager) and adverse effect on the Seller Member (a “Specified Audit”). The Tax Representative shall (i) keep the Seller Member reasonably informed of the material developments and status of any such Specified Audit, (ii) permit the Seller Member (or its designee) to participate (including using separate counsel), in each case at the Seller Member’s sole cost and expense, in any such Specified Audit, and (iii) promptly notify the Seller Member of receipt of a notice of a final partnership adjustment (or equivalent under applicable Laws) or a final decision of a court or IRS Independent Office of Appeals panel (or equivalent body under applicable Laws) with respect to such Specified Audit. The Tax Representative shall promptly provide the Seller Member with copies of all material correspondence between the Tax Representative or the Company (as applicable) and any governmental entity in connection with such Specified Audit and shall give the Seller Member a reasonable opportunity to review and comment on any material correspondence, submission (including settlement or compromise offers) or filing in connection with any such Specified Audit. Additionally, the Tax Representative shall not settle, compromise or abandon any Specified Audit in a manner that would reasonably be expected to have a disproportionate (compared to the Manager) and material adverse effect on the Seller Member without the Seller Member’s prior written consent (which consent shall not be unreasonably withheld, delayed or conditioned). The Tax Representative shall obtain the prior written consent of the Seller Member (which consent shall not be unreasonably withheld, delayed or conditioned) before (i) making a Push Out Election or (ii) taking any other material action under the Revised Partnership Audit Provisions that, in each case, would reasonably be expected to have a material effect on the Seller Member that is disproportionately adverse to them as compared to the Manager; provided, however, the Tax Representative may cause the Company to make a Push Out Election in its sole discretion (without the prior written consent of the Seller Member) to the extent not making such Push Out Election would reasonably be expected to have a material effect on the Manager that is disproportionately adverse to it as compared to the Seller Member.

(c) The Company, the Tax Representative, the Seller Member and the Members expressly agree to be bound by the terms of Section 6.13(g) of the Purchase Agreement. Notwithstanding anything to the contrary contained in this Agreement, in the event of any conflict between Section 6.13(g) of the Purchase Agreement and this Agreement, Section 6.13(g) of the Purchase Agreement shall control.

(d) Determinations with Respect to Elections. Subject to the provisions of this Annex C (including Section 4.4(b) thereof), the Tax Representative shall have the sole authority to determine whether to cause the Company to make a Push Out Election with respect to any adjustment that could result in an imputed underpayment (within the meaning of Code Section 6225) (an “Imputed Underpayment”).

(e) Responsibility for Payment of Tax; Former Members.

(i) Imputed Underpayment Share. To the extent the Company is liable for any Imputed Underpayment, the Company shall determine the liability of the Members for a share of such Imputed Underpayment, taking into account the Members’ Units and the status and actions of the Members (including those described in Code Section 6225(c)) (such share, an “Imputed Underpayment Share”).

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(ii) Payment of Imputed Underpayment Share. The Company may (A) require a Member who is liable for an Imputed Underpayment Share to pay the amount of its Imputed Underpayment Share to the Company within ten (10) Business Days after the date on which the Company notifies the Member (and in the manner required by the notice) and/or (B) reduce future distributions to the Member, such that the amount determined under clauses (A) and (B) equals the Member’s Imputed Underpayment Share; provided, however, that no Member shall have an obligation to make any contribution to the capital of the Company with respect to any Imputed Underpayment. If a Member fails to pay any amount that it is required to pay the Company in respect of an Imputed Underpayment Share within such ten (10) Business Day period, that amount shall be treated as a loan to the Member, bearing interest at ten (10) percent annually (which interest shall increase the Member’s Imputed Underpayment Share). Such loan shall be repayable upon demand by the Company. If the Member fails to repay the loan upon demand, the full balance of the loan shall be immediately due (including accrued but unpaid interest) and the Company shall have the right to collect the balance in any manner it determines, including by reducing future distributions to that Member; provided, however, that no Member may have any Imputed Underpayment Share treated as a loan to the extent it would violate Section 402 of the Sarbanes-Oxley Act of 2002. Any Member not permitted to treat its Imputed Underpayment Share as a loan due to the provisions of the previous sentence shall pay any Imputed Underpayment Share within ten (10) Business Days after the date of the notice referred to in the first sentence of this Section 4.4(e)(ii) of this Annex C.

Section 4.5 No Independent Actions or Inconsistent Positions. Except as required by Law or previously authorized in writing by the Company (which authorization may be withheld in the sole discretion of the Company), no Member shall (i) independently act with respect to tax matters (including, but not limited to, audits, litigation and controversies) affecting or arising from the Company, or (ii) treat any Company item inconsistently on such Member’s income tax return with the treatment of the item on the Company’s tax return and/or the Schedule K-1 (or other written information statement) provided to such Member. Solely to the extent required by Law, this Section 4.5 of this Annex C shall not apply with respect to any “special enforcement matter” described in Code Section 6241(11).

Section 4.6 United States Person. Except as permitted by the Company, each Member represents and covenants that, for U.S. federal income tax purposes, it is and will at all times remain a “United States Person,” within the meaning of Code Section 7701, or is a disregarded entity the assets of which are treated as owned by a United States Person under Treas. Reg. §§ 301.7701-1, 301.7701-2, and 301.7701-3.

Section 4.7 State, Local, and Non-U.S. Tax Law. The provisions of this Agreement with respect to U.S. federal income tax shall apply, mutatis mutandis, with respect to any similar provisions of state, local, or non-U.S. tax law as determined by the Company.

Section 4.8 Survival of Obligations. For purposes of this Article IV of this Annex C, the term “Member” shall include a former Member unless otherwise determined by the Company. The rights and obligations of each Member and former Member under this Article IV of this Annex C shall survive the Transfer by such Member of its Units (or withdrawal by a Member or redemption of a Member’s Units) and the dissolution of the Company until ninety (90) days after the applicable statute of limitations. Section 4.3 (Tax Representative), Section 4.4 (Tax Audits), and this Section 4.8 (Survival of Obligations) of this Annex C shall not be amended without the prior written consent of any Member or former Member that would be disproportionately and adversely impacted by such amendment.

Section 4.9 Tax Classification. The parties intend that the Company shall be classified as a partnership for United States federal, state, and local tax purposes. The parties intend that the Subsidiaries of the Company currently classified either as disregarded entities or as partnerships for United States federal, state, and local tax purposes as of the date of this Agreement shall remain classified either as disregarded entities or as partnerships for United States federal, state, and local tax purposes. No Person shall take any action inconsistent with such classifications.

Section 4.10 Withholding.

(a) Withholding Generally. Each Member acknowledges and agrees that the Company may be required by Law to deduct and withhold taxes or to fulfill other similar obligations of such Member on any amount paid, distributed, disbursed, or allocated by the Company to that Member, including upon liquidation, and any transferee of a Member’s interest or a Substituted Member shall, by reason of such Transfer or substitution, acknowledge, and agree to any such withholding by the Company, including withholding to discharge obligations of the Company with respect to prior distributions, allocations, or an Imputed Underpayment Share (to the extent not otherwise borne by the transferor Member pursuant to Section 4.4 of this Annex C). Taxes withheld by third parties from payments to the Company in respect of the Company shall be treated as an expense of the Company, unless such withholding is attributable to a specific Member, in which case, amounts so withheld shall be allocated to such Member and the Company may deduct and withhold such amounts from the Member. All amounts withheld pursuant to this Section 4.10 of this Annex C and timely paid over to the appropriate governmental authority shall, except as otherwise determined by the Company pursuant to Section 4.4(e)(ii) of this Annex C, be treated as amounts distributed to such Person pursuant to the provision of this Agreement that would have applied if such amount had actually been distributed.

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(b) Additional Provisions with Respect to a Transfer of Units. A Member transferring Units permitted by this Agreement shall, unless otherwise determined by the Company, (i) deliver to the Company, between ten (10) days and thirty (30) days before the Transfer, an affidavit of non-foreign status with respect to such transferor Member that satisfies the requirements of Code Section 1446(f)(2) or other documentation establishing a valid exemption from withholding pursuant to Code Section 1446(f) (including IRS Form W-9) or (ii) ensure that, contemporaneously with the Transfer, the transferee of such interest properly withholds and remits to the IRS the amount of tax required to be withheld upon the Transfer by Code Section 1446(f) (and promptly provide evidence to the Company of such withholding and remittance). Upon reasonable request of a transferor Member, the Company shall provide such Member a certificate described Treasury Regulations Section 1.1446(f)-2(b)(3)(ii) or (4)(i), if the Company reasonably determines that it can make such certifications.

(i) Withholding of Cash or Class A Common Stock Permitted. If the Company or the Manager shall be required to withhold any amounts by reason of any federal, state, local, or non-U.S. tax Laws in respect of any Exchange, the Company, or the Manager, as the case may be, shall be entitled to take such action as it deems appropriate in order to ensure compliance with such withholding requirements, including, at its option, withholding cash from the Cash Settlement or shares of Class A Common Stock with a Fair Market Value equal to the amount of any taxes that the Company or the Manager, as the case may be, may be required to withhold with respect to such Exchange. To the extent that amounts are (or property is) so withheld and paid over to the appropriate taxing authority, such withheld amounts (or property) shall be treated for all purposes of this Agreement as having been paid (or delivered) to the applicable Member.

(ii) Notice of Withholding. If the Company or the Manager determines that any amounts by reason of any federal, state, local, or non-U.S. tax laws or regulations are required to be withheld in respect of any Exchange, the Company or the Manager, as the case may be, shall use commercially reasonable efforts to promptly notify the Exchangeable Unit Member and shall consider in good faith any positions or alternative arrangements that such Member raises (reasonably in advance of the date on which the Company or the Manager believes withholding is required) as to why withholding is not required or that may avoid the need for such withholding, provided, that neither the Company nor the Manager is required to incur additional costs as a result of such obligation, and this Section 4.10(c)(ii) of this Annex C shall not in any manner limit the authority of the Company or the Manager to withhold taxes with respect to an Exchangeable Unit Member pursuant to Section 4.10(c)(i) of this Annex C.

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Annex D: SCHEDULE OF OFFICERS

Name		Title
Mitchell B. Trotter		President, Chief Financial Officer and Treasurer
David M. Smith		Secretary

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Annex E: POLICY REGARDING EXCHANGES

Effective as of November 15, 2023

This Policy Regarding Exchanges (the “Policy”) of HNRA Upstream, LLC (the “Company”) sets forth certain rules applicable to the exchange of Exchangeable Units for shares of Class A Common Stock of HNR Acquisition Corp. (the “Common Stock”) and/or cash, at the option of the Manager (each, an “Exchange”), pursuant to the Company’s Amended and Restated Limited Liability Company Agreement (the “Agreement”). Capitalized terms that are not defined in this Policy have the meanings given to them in the Agreement. This Policy is made pursuant to, and supplements the provisions of, Article XI of the Agreement.

Article I
EXCHANGE DATES; PROVISIONS REGARDING EXCHANGEABLE AMOUNT

Section 1.1 Quarterly Exchange Date. There shall be one (1) date per quarter of each Fiscal Year on which an Elective Exchange may occur (each, a “Quarterly Exchange Date”) for a holder of Exchangeable Units (each holder, an “Exchanging Holder”). The Quarterly Exchange Date for Exchanging Holders that are required to file reports pursuant to Section 16(a) of the Exchange Act may be different than the Quarterly Exchange Date for Exchanging Holders that are not required to file reports pursuant to Section 16(a) of the Exchange Act. The Company shall use commercially reasonable efforts to notify the applicable Exchanging Holders at least forty-five (45) days before a relevant Quarterly Exchange Date (such notice, a “Quarterly Exchange Date Notice”).

Section 1.2 Minimum Exchangeable Amount. The Company may set a minimum number or dollar value of Exchangeable Units that may be exchanged by Exchanging Holders on a Quarterly Exchange Date, which minimum amount shall be the same for all holders of Exchangeable Units (the “Minimum Exchangeable Amount”) and shall include the applicable Minimum Exchangeable Amount in the applicable Quarterly Exchange Date Notice. If an Exchanging Holder delivers an Elective Exchange Notice pursuant to Section 3.1 requesting to exchange all of its Exchangeable Units, the number or dollar value, as applicable, of the Exchanging Holder’s Exchangeable Units shall be deemed to satisfy the Minimum Exchangeable Amount requirement.

Section 1.3 Maximum Exchangeable Amount. The Company may set a maximum aggregate number or dollar value of Exchangeable Units that may be exchanged by the Exchanging Holders on a Quarterly Exchange Date (the “Maximum Exchangeable Amount”) and shall include the applicable Maximum Exchangeable Amount in the applicable Quarterly Exchange Date Notice. If the aggregate number or dollar value of Exchangeable Units that the Exchanging Holders propose to exchange on the Quarterly Exchange Date (as set forth on the Elective Exchange Notices) exceeds the Maximum Exchangeable Amount, then the number or dollar value of Exchangeable Units that each Exchanging Holder specified in its Elective Exchange Notice shall be reduced by the same percentage by which the aggregate number or dollar value of Exchangeable Units of all Exchanging Holders is reduced so that the aggregate number or dollar value of Exchangeable Units does not exceed the Maximum Exchangeable Amount.

Article II
ADDITIONAL RIGHTS TO EXCHANGE

Section 2.1 Rights to Exchange.

(a) Right to Exchange Before Certain Transactions. If the Company or the Manager consolidates, merges, combines or consummates any other transaction in which shares of Class A Common Stock are exchanged for or converted into other stock or securities, or the right to receive cash and/or any other property, no other provisions of this Policy shall limit the right of any Exchangeable Unit Member to effect an Elective Exchange in order to receive Class A Common Stock in advance of consummation of any such consolidation, merger, combination or other such transaction unless in connection with any such consolidation, merger, combination or other transaction each Class B Unit shall be entitled to be exchanged for or converted into the stock, cash, securities or other property that such holder of a Class B Unit would have received had it exercised its right to Exchange pursuant to this Policy and received Class A Common Stock in exchange for its Class B Units immediately before such consolidation, merger, combination or other transaction (subject to any differences in the kind and amount of stock or securities, cash and/or any other property as are intended (as determined by the Company in good faith) to maintain the relative voting power of each share of Class B Common Stock relative to each share of Class A Common Stock in effect before such transaction). This Article II shall not apply to any action or transaction (including any consolidation, merger, or combination) approved by a Majority-in-Interest of the Members.

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(b) Right to Exchange Before a Termination Transaction. Upon the occurrence of a Termination Transaction, no other provisions of this Policy shall limit the right of any Exchangeable Unit Member to effect an Elective Exchange in order to receive Class A Common Stock in advance of consummation of any such Termination Transaction.

Article III
ELECTIVE EXCHANGE NOTICE

Section 3.1 Timing of Elective Exchange Notice.

(a) Elective Exchange Notice. Each holder that elects to Exchange some or all of its Exchangeable Units must deliver notice of an election in respect of the Exchangeable Units to be exchanged (an “Elective Exchange Notice”) to the Company, in a method determined by the Company at least thirty (30) days before the relevant Quarterly Exchange Date. The Company shall provide to each Exchangeable Unit Holder the form of Elective Exchange Notice and the means for delivery of that Elective Exchange Notice.

(b) Acceptance of Elective Exchange Notice. After the Elective Exchange Notice has been delivered to the Company, and unless the Company or Manager, as applicable, has refused to honor the request in full pursuant to Section 1.2 (Minimum Exchangeable Amount), Section 1.3 (Maximum Exchangeable Amount), Section 3.1(c) (Cancellation of Quarterly Exchange Window), Section 3.2(c) (Post-Retraction Limitation on Exchange), or Article IV (Other Restrictions), the Company or Manager, as applicable, will effect the Elective Exchange on the applicable Quarterly Exchange Date in accordance with this Policy.

(c) Cancellation of Quarterly Exchange Date. The Company may at any time, in its sole discretion, cancel a Quarterly Exchange Date for any or no reason. If the Company cancels a Quarterly Exchange Date, then no holder of Exchangeable Units shall be permitted to Exchange those Exchangeable Units on the cancelled Quarterly Exchange Date.

Section 3.2 Retraction of Elective Exchange Notice.

(a) Ability to Retract; Retraction Deadline. If, at any time between the close of business on the date of delivery of an Elective Exchange Notice and the close of trading on the date that is two (2) Business Days before the applicable effective date of such Elective Exchange (the “Elective Exchange Date”), the reported closing trading price of a share of the Common Stock on the principal United States securities exchange or automated or electronic quotation system on which the Common Stock trades decreases by five (5) percent or more, so long as the Manager or the Company, as applicable, has not elected a Cash Settlement, an Exchanging Holder may retract or amend its Elective Exchange Notice by delivering a notice to the Company in a manner determined by the Company not later than the Retraction Deadline (a “Retraction Notice” and the Exchangeable Units that were the subject of the Retraction Notice, the “Retracted Units”) not later than the close of trading on the date that is two (2) Business Days before the applicable Elective Exchange Date (the “Retraction Deadline”) pursuant to Section 3.2(b). The Company shall have no obligation to notify the Exchanging Holders of any decrease in the Common Stock trading price.

(b) Retraction Notice. An Exchanging Holder wishing to retract must retract at least fifty percent (50%) of its Exchangeable Units that were the subject of the retracted Elective Exchange Notice. If the revised Elective Exchange Notice does not satisfy the Minimum Exchangeable Amount, the Exchanging Holder will be deemed to retract the full amount of Exchangeable Units that were the subject of the retracted Elective Exchange Notice. An Exchanging Holder’s delivery of a Retraction Notice shall be irrevocable and shall terminate all of the Exchanging Holder’s, Company’s, and Manager’s rights and obligations with respect to the Retracted Units, and all actions taken to effect the Elective Exchange contemplated by that retracted Elective Exchange Notice shall be deemed rescinded and void with respect to the Retracted Units. Subject to the applicable Minimum Exchangeable Amount and Maximum Exchangeable Amount, if any, if a Retraction Notice does not retract all of the Exchangeable Units that were the subject of an Elective Exchange Notice, the Exchangeable Units that are not Retracted Units will be exchanged on the relevant Quarterly Exchange Date.

E-2

(c) Post-Retraction Limitation on Exchange. If an Exchanging Holder delivers a Retraction Notice for a Quarterly Exchange Date pursuant to Section 3.2(b), the retracting Exchanging Holder shall not be entitled to participate in the Exchange on the Quarterly Exchange Date for which the Retraction Notice was delivered with respect to the Retracted Units.

Article IV
OTHER RESTRICTIONS

Notwithstanding any provision of this Policy to the contrary (including the provisions of Article II), the Company may prohibit an Exchange by one or more holders of Exchangeable Units under any of the following conditions and determinations made by the Company based on the advice of counsel (which may be external or internal counsel):

(a) If an Exchange is (or is reasonably likely to be) prohibited under applicable law, regulation, or agreement to which the Company or an affiliate is a party or could reasonably be expected to result in a bona fide lawsuit against the Company or its affiliates; or

(b) If there is a material risk that the Company would be a “publicly traded partnership” under section 7704 of the Code as a result of an Exchange.

Article V
EXEMPTIONS FROM AND MODIFICATIONS TO POLICY

The Company may, in its discretion and based on the advice of counsel (which may be external or internal counsel), consider and grant requests from holders of Exchangeable Units, including for (i) additional Exchange Dates, (ii) Exchanges of less than the Minimum Exchangeable Amount, (iii) Exchanges in excess of the Maximum Exchangeable Amount, (iv) an Exchange to be subject to one or more contingencies relating to the Company or the Manager, or (v) any other matter with respect to Exchanges (to the extent permitted by the Agreement and applicable Law). A holder of Exchangeable Units may request an exemption from this Policy by submitting a written request to the Company and following the delivery requirements set forth in Article III as if the written request were an Elective Exchange Notice.

Article VI
MISCELLANEOUS

Section 6.1 Continuing Application of Company’s Policies and Securities Laws. Nothing in this Policy shall affect, and each holder of Exchangeable Units shall remain subject to, the Company’s Policies, including those addressing insider trading and any other Company policies regarding trading or the holding of investments. All holders of Exchangeable Units shall comply with all applicable securities laws and rules.

Section 6.2 Independent Nature of Rights and Obligations. Nothing in this Policy or in any other agreement or document or any action taken by any holder of Exchangeable Units shall be deemed to cause the holders of Exchangeable Units to have formed a partnership, association, joint venture, or any other kind of entity or create a presumption that the holders of Exchangeable Units are in any way acting in concert as a group.

Section 6.3 Mandatory Exchanges. This Policy shall not apply to any Exchange of Exchangeable Units pursuant to a Mandatory Exchange, as described in, and pursuant to, the Agreement.

Section 6.4 Notice Delivery Deadlines on Non-Business Days. If the date on or before which the Company or an Exchanging Holder is required to deliver a notice pursuant to this Policy is not a Business Day, then that notice will be deemed to be timely delivered on that date if that notice is received on the Business Day immediately following that date.

Section 6.5 Notifications Under This Policy. The Company will be deemed to have satisfied any notification requirement in this Policy by making available such notification on any system accessible by Exchanging Holders.

E-3

Section 6.6 Modification of Policy. The Company may modify this Policy at any time without notice. The Company will deliver or make available a copy of the revised Policy to the holders of Exchangeable Units at least forty-five (45) days before the next Quarterly Exchange Date.

* * *

Exhibit 10.2

EXECUTION VERSION

PROMISSORY NOTE

HNRA Upstream, LLC

12.00%

Promissory Note

THIS PROMISSORY NOTE AND ANY SECURITIES ISSUABLE RELATED TO THIS PROMISSORY NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THEY HAVE BEEN REGISTERED UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT.

This unsecured, subordinated note (the “Note”) is being delivered pursuant to that certain Amended and Restated Membership Interest Purchase Agreement dated as of August 28, 2023 (the “Purchase Agreement”), by and among CIC Pogo LP, a Delaware limited partnership (“CIC”), DenCo Resources, LLC, a Texas limited liability company (“DenCo”), 4400 Holdings, LLC, a Texas limited liability company (“4400”), Pogo Resources Management, LLC, a Texas limited liability company (“Pogo Management”, and together with CIC, DenCo and 4400, collectively, “Sellers”), HNR Acquisition Corp., a Delaware corporation (the “Company”), HNRA Partner, Inc., a Delaware corporation (“Partner”), and HNRA Upstream, LLC, a Delaware limited liability company (“Obligor”), and, solely for purposes of Section 6.20 thereof, HNRAC Sponsors LLC, a Delaware limited liability company, pursuant to which the Obligor and Partner have agreed to acquire 100% of the outstanding equity interests of Pogo Resources, LLC, a Texas limited liability company (“Pogo”). All capitalized terms used but not otherwise defined herein shall have the meaning ascribed to such terms in the Purchase Agreement.

FOR VALUE RECEIVED, Obligor hereby promises to pay to Pogo Royalty, LLC, a Texas limited liability company and an affiliate of Sellers (the “Holder”), an amount equal to $15,000,000.00 (the “Principal”) on or before May 15, 2024 (the “Maturity Date”), together with accrued interest thereon at an interest rate equal to 12.00% per annum (“Interest”).

1. Payment Terms.

(a) Payment. Payment of the Principal and any accrued Interest (including Default Interest, as such term is defined herein (if any)) shall be made on the Maturity Date by certified or bank cashier’s check payable to the Holder, or by bank wire transfer, in immediately available funds, to the account so specified, in lawful money of the United States of America. If the Maturity Date occurs on a date that is not a Business Day then the Principal or Interest (including Default Interest, if applicable) then due shall be paid on the next succeeding Business Day. “Business Day” shall mean any day other than Saturday, Sunday or any day upon which banks in Dallas, Texas are authorized or required to be closed.

(b) Prepayment. Obligor may prepay this Note at any time, without premium or penalty, in whole or in part, with accrued Interest to the date of such payment on the amount prepaid.

(c) Interest. Interest shall be paid to the Holder in cash, on or prior to the Maturity Date. Any Default Interest shall be paid to the Holder in cash promptly.

2. Default and Remedies.

(a) If any of the following events or conditions (each an “Event of Default”) shall occur and be continuing:

(i) Obligor shall fail to pay the Principal and any Interest due (or any lesser amount due) on the Maturity Date;

(ii) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (A) relief in respect of Obligor, or of a substantial part of the property or assets of Obligor, under Title 11 of the United States Code, as now constituted or hereafter amended, or any successor to or replacement of such statute, or any other federal or state bankruptcy, insolvency, receivership or similar law, (B) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for Obligor or for a substantial part of the properties or assets of Obligor or (C) the winding-up, liquidation or dissolution of Obligor; and such proceeding or petition shall continue undismissed for 90 days or an order or decree approving or ordering any of the foregoing shall be entered;

(iii) Obligor (A) voluntarily commences any proceeding or files any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any successor to or replacement of such statute, or any other federal or state bankruptcy, insolvency, receivership or similar law, (B) consents to, or fails to contest in a timely and appropriate manner, the commencement against of any proceeding or the filing of any petition described in clause (A) above, (C) applies for or consents to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for Obligor or for a substantial part of the properties or assets of Obligor, (D) files an answer admitting the material allegations of a petition filed against it in any such proceeding, (E) makes a general assignment for the benefit of creditors, (F) becomes unable, admits in writing its inability or fails generally to pay its debts as they become due or (G) takes any action for the purpose of effecting any of the foregoing;

(iv) Obligor shall fail to materially comply with any material covenant or obligation set forth in this Note, including the covenants set forth in Section 4 hereof; or

(v) Any Event of Default under and as defined in the Term Loan Agreement, dated on or about the date hereof (the “Senior Loan Agreement”), among First International Bank & Trust, as Lender, the Company, as Borrower, and the other parties thereto;

; then, (x) in the case of an Event of Default specified in clause (a)(i), (a)(iv) or (a)(v) above, the Holder may, at any time during the continuance of such Event of Default, by written notice to Obligor, declare the entire outstanding Principal, together with all accrued and unpaid Interest, to be due and payable and (y) in the case of an Event of Default specified in clauses (a)(ii) or (a)(iii) above, the entire outstanding Principal, together with all accrued and unpaid Interest, shall automatically forthwith become due and payable without presentment, protest or notice of any kind, all of which are hereby expressly waived by Obligor.

(b) Subject to the other terms of this Note, if an Event of Default occurs and is continuing, the Holder may pursue any available remedy to collect the payment of the Principal or Interest or to enforce the performance of any provision of this Note. If an Event of Default occurs and is continuing, the Holder may proceed to protect and enforce its rights by any action at law, suit in equity or other appropriate proceeding. In the case of a default in the payment of the Principal or Interest, and in addition to any Default Interest that shall accrue and become payable, Obligor will pay to the Holder such further amount as shall be sufficient to cover the costs and expenses of collection, including, without limitation, reasonable attorneys’ fees, expenses and disbursements.

(c) Default Interest. If an Event of Default occurs, at the option of the Holder, all outstanding amounts of the Principal and Interest shall thereafter bear interest at the lesser of (i) 18% per annum and (ii) the highest amount permissible under applicable Law (“Default Interest”) per annum and compounded monthly; provided, that such Default Interest shall apply retroactive to the date of this Note for all amounts outstanding.

3. Representations and Warranties.

Each of the Company and Obligor hereby represents and warrants to the Holder that on and as of the date hereof:

(a) Each of the Company and Obligor is duly organized, validly existing and in good standing under the laws of the State of Delaware;

(b) Each of the Company and Obligor is duly authorized to execute and deliver this Note and to perform their respective obligations under this Note. The execution and delivery of this Note, and the performance by each of the Company and Obligor of their respective obligations hereunder, (i) have been duly authorized by all necessary corporate or limited liability company action on the part of each of the Company and Obligor, (ii) do not conflict with or violate any provisions of either the Company’s Organizational Documents or Obligor’s Organizational Documents, (iii) do not violate or cause a default under any applicable Law; and (iv) do not result in a violation of, or a default under, or give rise to a right for any third-party to terminate any Material Contract to which either the Company or Obligor is party or by which either the Company’s or Obligor’s assets are bound, including the Senior Loan Agreement, except in the case of clauses (iii) and (iv) as would not reasonably be expected to have a material adverse effect on the business, property, operations or financial condition of either the Company or Obligor, or of either the Company’s or Obligor’s Subsidiaries, taken as a whole, or the validity or enforceability of this Note or the rights and remedies of the Holder hereunder (including the right of timely repayment of all Principal and Interest) (a “Material Adverse Effect”);

(c) this Note is a legal, valid and binding obligation of the Company and Obligor, enforceable against the Company and Obligor in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization or similar laws relating to or affecting creditors’ rights generally and general principles of equity (whether considered in a proceeding in equity or law);

(d) except for such filings or other actions that have been made or taken on or prior to the date hereof and such filings or other actions the failure of which to be obtained or made would not reasonably be expected to have a Material Adverse Effect, no consent, approval, authorization or other action by, or filing with or notification to, any Person or any Governmental Body on the part of the Company or Obligor is required in connection with the execution, delivery and performance by the Company or Obligor of this Note;

(e) there is no Proceeding pending or, to the knowledge of the Company or Obligor, threatened in writing against the Company or Obligor, which, if determined adversely, would reasonably be expected to have a Material Adverse Effect; and

(f) there is no judgment, order, ruling, or decree outstanding against the Company or Obligor that would reasonably be expected to have a Material Adverse Effect.

4. Certain Covenants.

(a) Until the obligations under this Note are repaid in full (including all Principal, Interest and Default Interest (if any)), Obligor shall conduct the business of Pogo and its Subsidiaries in the ordinary course, consistent with past practice during the nine (9) months prior to the closing of the transactions contemplated by the Purchase Agreement (including by maintaining levels of compensation to employees that are no more than such expenses and costs incurred by Pogo and its Subsidiaries for compensation to employees during the nine (9) months prior to the closing of the transactions contemplated by the Purchase Agreement), except that the Company or Obligor may pay its executives that compensation which has been approved by the Company’s compensation committee, with the advice of an independent compensation consultant, not to exceed $700,000 annually (which, for the avoidance of doubt, shall exclude compensation payable as deferred compensation after full satisfaction of this Note).

(b) Without limiting the foregoing, unless otherwise consented to in writing by each Holder, so long as the obligations under this Note are outstanding, Obligor shall not (i) transfer, sell, hypothecate, encumber, or dispose of any material assets of Pogo or its Subsidiaries except for (x) sales of inventory (including hydrocarbons produced) in the ordinary course of business on ordinary and market-based trade terms, (y) the creation of liens securing the Senior Debt (as defined below) or (z) other transactions consented to in writing by Holder, or (ii) acquire any material assets outside of the ordinary course of business.

(c) Until the obligations under this Note are repaid in full (including all Principal, Interest and Default Interest (if any)), (i) any net proceeds raised by Obligor, Pogo or any of their Subsidiaries in connection with the issuance of any equity or debt securities shall be used to repay (whether in full or in part) the accrued and outstanding obligations under this Note, and (ii) none of the Company, Obligor, SPAC Subsidiary, Pogo or any of their respective Subsidiaries shall incur additional indebtedness for borrowed money that is senior (in right or structurally (other than the indebtedness and other obligations under the Senior Loan Agreement)) or materially amend or restate the Senior Loan Agreement to allow for additional borrowings thereunder.

5. Subordination. Anything in this Note to the contrary notwithstanding, the Principal and any Interest, including Default Interest (collectively the “Subordinated Debt”), shall be subordinate and junior to all obligations (collectively the “Senior Debt”) owing to the lender (the “Senior Lender”) under the Debt Financing. Payment of this Note is subject to that certain Subordination Agreement of even date herewith between Holder, Obligor and Senior Lender. Unless permitted under the Subordination Agreement, Holder shall not accept nor receive any direct or indirect payment of or on account of the Subordinated Debt. Holder and Obligor hereby designate the Senior Lender as a third-party beneficiary of this Section 5. The subordination contained in this Section 5 shall be binding upon any transferee or nominee of Holder and any such transferee, by its acceptance of this Note shall be deemed to agree to the subordination and covenants and other agreements contained in this Section 5.

6. Notices.

All notices, instructions and other communications given hereunder or in connection herewith shall be in writing. Any such notice, instruction or communication shall be sent to:

If to Obligor to:

HNRA Upstream, LLC

3730 Kirby Drive, Suite 1200

Houston, Texas 77098

Attention: CFO

Email: mbtrotter@comcast.net

with a copy to (not constituting notice):

David M. Smith, General Counsel

HNR Acquisition Corp.

10142 Holly Chase Dr.

Houston, Texas 77042

Email: dmsmith@HNRA-NYSE.com

If to the Holder to:

Pogo Resources, LLC

4809 Cole Avenue

Suite 200

Dallas, Texas 75205

Attn: Kirk Pogoloff

with a copy to (not constituting notice):

CIC Pogo LP

3879 Maple Avenue

Suite 400

Dallas, Texas 75219

Attn: Chris Cowan, Bayard Friedman

7. Governing Law; Jurisdiction.

This Note shall be construed and enforced in accordance with the laws of the State of Texas, without regard to its conflicts of laws rules. Obligor hereby irrevocably and unconditionally submits, for itself and its property, to the non-exclusive jurisdiction of the courts of the State of Texas and of the United States federal courts located within Dallas County, Texas, and any appellate court of such courts, in any action or proceeding arising out of or relating to this Note, or for recognition or enforcement of any judgment, and Obligor hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such Texas court (or, to the extent permitted by law, in such federal court). Obligor agrees that a final, unappealable judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Note shall affect any right that the Holder may otherwise have to bring any action or proceeding relating to this Note against Obligor or its properties in the courts of any jurisdiction.

8. Waiver of Presentment.

Except as otherwise expressly provided in this Note, Obligor waives presentment for payment, demand, notice of nonpayment, diligence, notice of acceptance, notice of dishonor, demand for payment, protest of any dishonor, notice of protest, and protest of this Note and all other notices of any kind in connection with the delivery, acceptance, performance, default, or enforcement of the payment of this Note.

9. Severability.

In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, Obligor and the Holder shall negotiate in good faith with a view to the substitution therefor of a suitable and equitable solution in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid provision, provided, that the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be in any way impaired thereby, it being intended that all of the rights and privileges of the parties hereto shall be enforceable to the fullest extent permitted by Law.

10. Amendments.

This Note may not be changed, amended or modified except by agreement in writing signed by Obligor and the Holder.

11. Entire Agreement.

This Note, together with the Purchase Agreement and the other documents and agreements delivered at the closing pursuant to the express provisions of the Purchase Agreement, constitute the full and entire understanding and agreement of Obligor and the Holder hereto in respect of its subject matter, and supersedes all prior agreements, understandings (oral and written) and negotiations between or among Obligor or the Holder with regard to such subject matter.

[Signature page follows]

IN WITNESS WHEREOF, Obligor has caused this Note to be signed on its behalf, in its limited liability company name, by its duly authorized officer as an instrument under seal, as of November 15, 2023.

HNRA Upstream, LLC

By:	/s/ Mitchell B. Trotter
	Mitchell B. Trotter President

HNR Acquisition Corp (solely with respect to Sections 3 and 4)

By:	/s/ Mitchell B. Trotter
	Mitchell B. Trotter, Authorized Signer

Exhibit 10.3

EXECUTION VERSION

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of November 15, 2023, is by and between Pogo Royalty, LLC, a Texas limited liability company (the “Holder”) and HNR Acquisition Corp., a Delaware corporation (the “Company”).

RECITALS

A. The parties desire that, upon the terms and subject to the conditions and limitations set forth herein, the Company may issue to the Holder, (a) 2,000,000 Class B Units of HNRA Upstream, LLC (“OpCo”) (the “OpCo Class B Units”), which shall be equal to 2,000,000 shares of Class A common stock of the Company, par value $0.0001 per share (the “Class A Shares”) issuable upon exercise of the OpCo Holder Redemption Right (as defined in the Purchase Agreement) and (b) 2,000,000 shares of Class B common stock of the Company, par value $0.0001 per share (together with the Class A Shares, the “Common Stock”), pursuant to the Amended and Restated Membership Interest Purchase Agreement dated August 28, 2023 (the “Purchase Agreement”), subject to any proportional adjustment to reflect any stock split, combination of shares, stock dividend, reorganization, recapitalization or other similar event affecting the Common Stock occurring after the date of the Purchase Agreement and prior to the Closing so as to provide the Holder the same economic effect as contemplated by the Purchase Agreement prior to such change.

B. In consideration for the Seller (as defined in the Purchase Agreement) entering into, the Purchase Agreement, and to induce the Seller to execute and deliver the Purchase Agreement, the Company has agreed to provide the Holder with certain registration rights with respect to the Registrable Securities (as defined herein) as set forth herein;

AGREEMENT

NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements contained herein and in the Purchase Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, intending to be legally bound hereby, the Company and the Holder hereby agrees as follows:

1. Definitions.

Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:

(a) “Agreement” shall have the meaning assigned to such term in the preamble of this Agreement.

(b) “Allowable Grace Period” shall have the meaning assigned to such term in Section 3(o).

(d) “Business Day” means any day other than Saturday, Sunday or any other day on which commercial banks in New York, New York are authorized or required by law to remain closed.

(e) “Claims” shall have the meaning assigned to such term in Section 6(a).

(f) “Class A Shares” shall have the meaning assigned to such term in the recitals to this Agreement.

(g) “Commission” means the U.S. Securities and Exchange Commission or any successor entity.

(h) “Common Stock” shall have the meaning assigned to such term in the recitals to this Agreement.

(i) “Company” shall have the meaning assigned to such term in the preamble of this Agreement.

(j) “DWAC Shares” means shares of Common Stock that are (i) issued in electronic form, (ii) freely tradable and transferable and without restriction on resale and (iii) timely credited by the Company to the Holder’s or its designee’s specified Deposit/Withdrawal at Custodian (DWAC) account with DTC under its Fast Automated Securities Transfer (FAST) Program, or any similar program hereafter adopted by DTC performing substantially the same function.

(k) “Effective Date” means the date that the applicable Registration Statement has been declared effective by the Commission.

(l) “Holder” shall have the meaning assigned to such term in the preamble to this Agreement.

(m) “Holder Party” shall have the meaning assigned to such term in Section 6(a).

(n) “Indemnified Damages” shall have the meaning assigned to such term in Section 6(a).

(o) “Initial Registration Statement” shall have the meaning assigned to such term in Section 2(a).

(p) “Maximum Number of Securities” shall have the meaning assigned to such term in Section 2(f).

(q) “New Registration Statement” shall have the meaning assigned to such term in Section 2(b).

(r) “OpCo” shall have the meaning assigned to such term in the recitals to this Agreement.

(s) “OpCo Class A Units” shall have the meaning assigned to such term in the recitals to this Agreement.

(t) “OpCo Class B Units” shall have the meaning assigned to such term in the recitals to this Agreement.

(u) “Participating Holder” shall have the meaning assigned to such term in Section 2(e).

(v) “Person” means any person or entity, whether a natural person, trustee, corporation, partnership, limited partnership, limited liability company, trust, unincorporated organization, business association, firm, joint venture, governmental agency or authority.

(w) “Piggyback Registration” shall have the meaning assigned to such term in Section 2(h)(i).

(x) “Prospectus” means the prospectus in the form included in the Registration Statement at the applicable Effective Date of the Registration Statement, as supplemented from time to time by any Prospectus Supplement, including the documents incorporated by reference therein.

(y) “Prospectus Supplement” means any prospectus supplement to the Prospectus filed with the Commission from time to time pursuant to Rule 424(b) under the Securities Act, including the documents incorporated by reference therein.

(z) “Purchase Agreement” shall have the meaning assigned to such term in the recitals to this Agreement.

(aa) “register,” “registered,” and “registration” refer to a registration effected by preparing and filing one or more Registration Statements in compliance with the Securities Act and pursuant to Rule 415 and the declaration of effectiveness of such Registration Statement(s) by the Commission.

(bb) “Registrable Securities” means the shares of Class A Shares issuable upon the exercise of the OpCo Holder Redemption Right, as such term is defined in the Purchase Agreement.

(cc) “Registration Statement” means a registration statement or registration statements of the Company filed under the Securities Act covering the resale by the Holder of Registrable Securities, as such registration statement or registration statements may be amended and supplemented from time to time, including all documents filed as part thereof or incorporated by reference therein.

(dd) “Registration Period” shall have the meaning assigned to such term in Section 3(a).

(ee) “Rule 144” means Rule 144 promulgated by the Commission under the Securities Act, as such rule may be amended from time to time, or any other similar or successor rule or regulation of the Commission that may at any time permit the Holder to sell securities of the Company to the public without registration.

(ff) “Rule 415” means Rule 415 promulgated by the Commission under the Securities Act, as such rule may be amended from time to time, or any other similar or successor rule or regulation of the Commission providing for offering securities on a delayed or continuous basis.

(gg) “Staff” shall have the meaning assigned to such term in Section 2(b).

(hh) “Trading Day” means any days during the course of which the New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, the OTCQB, the OTCBB or the NYSE Euronext, whichever is at the time the principal trading exchange or market for the Common Stock is open for the exchange of securities.

(ii) “Underwritten Offering” means a registration effected by preparing and filing a registration statement, Prospectus or similar document in compliance with the requirements of the Securities Act, and the applicable rules and regulations promulgated thereunder, and such registration statement becoming effective.in which securities of the Company are sold to an underwriter in a firm commitment underwriting for distribution to the public.

(jj) “Underwritten Shelf Takedown” shall have the meaning assigned to such term in Section 2(e).

(kk) “Violations” shall have the meaning assigned to such term in Section 6(a).

2. Registration, Demand Rights and Piggyback Rights.

(a) Mandatory Registration. The Company shall, no later than thirty (30) days following the Closing as defined in the Purchase Agreement, file with the Commission an initial Registration Statement on Form S-1 (or any successor form) covering the resale by the Holders of all of the Registrable Securities so as to permit the resale of such Registrable Securities by the Holder under Rule 415 under the Securities Act (the “Initial Registration Statement”). The Company shall use its commercially reasonable efforts to have the Initial Registration Statement declared effective by the Commission as soon as reasonably practicable following the filing thereof with the Commission. The Company shall use commercially reasonable efforts to convert the Form S-1 (and any subsequent Registration Statement) to a shelf registration statement on Form S-3 as promptly as practicable after the Company is eligible to use a Form S-3 Shelf.

(b) Sufficient Number of Shares Registered. If at any time all Registrable Securities are not covered by the Initial Registration Statement filed pursuant to Section 2(a), the Company shall use its commercially reasonable efforts to file with the Commission one or more additional Registration Statements so as to cover all of the Registrable Securities not covered by such initial Registration Statement, in each case, as soon as practicable (taking into account any position of the staff of the Commission (“Staff”) with respect to the date on which the Staff will permit such additional Registration Statement(s) to be filed with the Commission and the rules and regulations of the Commission) (each such additional Registration Statement, a “New Registration Statement”). The Company shall use its commercially reasonable efforts to cause each such New Registration Statement to become effective as soon as reasonably practicable following the filing thereof with the Commission. Any such New Registration Statement shall be on Form S-3 to the extent that the Company is eligible to use such form at the time of filing. Otherwise, such New Registration Statement shall be on another appropriate form.

(c) Offering. If the Staff or the Commission seeks to characterize any offering pursuant to a Registration Statement filed pursuant to this Agreement as constituting an offering of securities that does not permit such Registration Statement to become effective and be used for resales by the Holder on a delayed or continuous basis under Rule 415, or if after the filing of any Registration Statement pursuant to Section 2(a) or Section 2(b), the Company is otherwise required by the Staff or the Commission to reduce the number of Registrable Securities included in such Registration Statement, then the Company shall reduce the number of Registrable Securities to be included in such Registration Statement (after consultation with the Holder and their legal counsel as to the specific Registrable Securities to be removed therefrom) until such time as the Staff and the Commission shall so permit such Registration Statement to become effective and be used as aforesaid. Notwithstanding anything in this Agreement to the contrary, if after giving effect to the actions referred to in the immediately preceding sentence, the Staff or the Commission does not permit such Registration Statement to become effective and be used for resales by the Holder on a delayed or continuous basis under Rule 415, the Company shall not request acceleration of the Effective Date of such Registration Statement, the Company shall promptly (but in no event later than 48 hours) request the withdrawal of such Registration Statement pursuant to Rule 477 under the Securities Act. In the event of any reduction in Registrable Securities pursuant to this paragraph, the Company shall use its commercially reasonable efforts to file one or more New Registration Statements with the Commission in accordance with Section 2(b) until such time as all Registrable Securities have been included in Registration Statements that have been declared effective and the Prospectuses contained therein are available for use by the Holder.

(d) Any Registrable Security shall cease to be a “Registrable Security” at the earliest of the following: (i) when a Registration Statement covering such Registrable Security becomes or has been declared effective by the Commission and such Registrable Security has been sold or disposed of pursuant to such effective Registration Statement; and (ii) when such Registrable Security is held by the Company or one of its Subsidiaries (as defined in the Purchase Agreement).

(e) Requests of Underwritten Shelf Takedowns. At any time and from time to time and when an effective Registration Statement is on file with the Commission, the Holder (the “Participating Holders”) may request to sell all or any portion of their Registrable Securities in an Underwritten Offering that is registered pursuant to such Registration Statement (each, an “Underwritten Shelf Takedown”); provided that the Company shall be obligated to effect an Underwritten Shelf Takedown only if such offering shall include Registrable Securities proposed to be sold by a Participating Holder with a total offering price reasonably expected to exceed, in the aggregate, $5 million. All requests for Underwritten Shelf Takedowns shall be made by giving written notice to the Company, which shall specify the approximate number of Registrable Securities proposed to be sold in the Underwritten Shelf Takedown. The Participating Holders shall have the right to select the managing underwriter or underwriters for such offering. The Participating Holders may demand not more than two (2) Underwritten Shelf Takedowns, pursuant to this Section 2(e), in any twelve (12) month period.

(f) Reduction of Underwritten Offering. If the managing underwriter or underwriters in an Underwritten Shelf Takedown advises the Company and the Participating Holders in writing that the dollar amount or number of Registrable Securities that such Participating Holders desire to sell, taken together with all other Common Stock or other equity securities, if any, that the Company desires to sell and all other Common Stock or other equity securities, if any, that have been requested to be sold in such Underwritten Offering pursuant to separate written contractual piggy-back registration rights held by any other stockholders, exceeds the maximum dollar amount or maximum number of equity securities that can be sold in such Underwritten Offering without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering (such maximum dollar amount or maximum number of such securities, as applicable, the “Maximum Number of Securities”), then the Company shall include in such Underwritten Offering, before including any Common Stock or other equity securities proposed to be sold by the Company or by other holders of Common Stock or other equity securities, (A) first, the Registrable Securities of the Participating Holders that can be sold without exceeding the Maximum Number of Securities, (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), Common Stock or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; and (C) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A) and (B), Common Stock or other equity securities for the account of other Persons that the Company is obligated to register pursuant to separate written contractual arrangements with such Persons, which can be sold without exceeding the Maximum Number of Securities.

(g) Withdrawal. Prior to the filing of the applicable “red herring” Prospectus or Prospectus Supplement used for marketing such Underwritten Shelf Takedown, the Participating Holders shall have the right to withdraw from such Underwritten Shelf Takedown for any or no reason whatsoever upon written notification to the Company and the underwriter or underwriters (if any) of their intention to withdraw from such Underwritten Shelf Takedown. If withdrawn, a demand for an Underwritten Shelf Takedown will not constitute a demand for an Underwritten Shelf Takedown by the Holder for purposes of Section 2(e). Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with an Underwritten Shelf Takedown prior to its withdrawal under this Section 2(g).

(h) Piggyback Registration.

(i) If, at any time after the date of this Agreement, the Company proposes to file a Registration Statement under the Securities Act with respect to an offering of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into equity securities, for its own account or for the account of stockholders of the Company (or by the Company and by the stockholders of the Company including, without limitation, pursuant to Section 2 hereof), other than a Registration Statement (i) filed in connection with any employee stock option or other benefit plan, (ii) for an exchange offer or offering of securities solely to the Company’s existing stockholders, (iii) for an offering of debt that is convertible into equity securities of the Company or (iv) for a dividend reinvestment plan, then the Company shall give written notice of such proposed filing to the Holder as soon as practicable but not less than fourteen (14) days before the anticipated filing date of such Registration Statement, which notice shall (A) describe the amount and type of securities to be included in such offering, the intended method(s) of distribution, and the name of the proposed managing underwriter or underwriters, if any, in such offering, and (B) offer to the Holder the opportunity to register the sale of such number of Registrable Securities as Holder may request in writing within five (5) days after receipt of such written notice (such registration, a “Piggyback Registration”). The Company shall, in good faith, cause such Registrable Securities to be included in such Piggyback Registration and shall use its best efforts to cause the managing underwriter or underwriters of a proposed Underwritten Offering to permit the Registrable Securities requested by the Holder pursuant to this Section 2(h) to be included in a Piggyback Registration on the same terms and conditions as any similar securities of the Company included in such Piggyback Registration and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. If the Holder proposes to distribute their Registrable Securities through an Underwritten Offering under this Section 2(h), Holder shall enter into an underwriting agreement in customary form with the underwriter(s) selected for such Underwritten Offering by the Company.

(ii) If the managing underwriter or underwriters in an underwritten registration that is to be a Piggyback Registration, in good faith, advises the Company and the Holder in writing that the dollar amount or number of shares of Common Stock that the Company desires to sell, taken together with (i) the shares of Common Stock, if any, as to which registration has been demanded pursuant to separate written contractual arrangements with Persons other than the Holder hereunder, (ii) the Registrable Securities as to which registration has been requested pursuant to Section 2(h) hereof, and (iii) the shares of Common Stock, if any, as to which registration has been requested pursuant to separate written contractual piggy-back registration rights of other stockholders of the Company, exceeds the Maximum Number of Securities, then:

(A) If the registration is undertaken for the Company’s account, the Company shall include in any such registration (x) first, Common Stock or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; (y) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (x), the Registrable Securities of the Holder exercising its rights to register their Registrable Securities pursuant to this Section 2(h) hereof which can be sold without exceeding the Maximum Number of Securities; and (z) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (x) and (y), Common Stock, if any, as to which registration has been requested pursuant to written contractual piggyback registration rights of other stockholders of the Company, which can be sold without exceeding the Maximum Number of Securities; and

(B) If the registration is pursuant to a request by Persons other than the Holder, then the Company shall include in any such registration (w) first, Common Stock or other equity securities, if any, of such requesting Persons, other than the Holder, which can be sold without exceeding the Maximum Number of Securities; (x) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (w), the Registrable Securities of the Holder exercising his rights to register his Registrable Securities pursuant to this Section 2(h) which can be sold without exceeding the Maximum Number of Securities; (y) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (w) and (x), Common Stock or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; and (z) fourth, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (w), (x) and (y), Common Stock or other equity securities for the account of other Persons that the Company is obligated to register pursuant to separate written contractual arrangements with such Persons, which can be sold without exceeding the Maximum Number of Securities.

(C) The Holder shall have the right to withdraw from a Piggyback Registration for any or no reason whatsoever upon written notification to the Company and the underwriter or underwriters (if any) of their intention to withdraw from such Piggyback Registration prior to the effectiveness of the Registration Statement filed with the Commission with respect to such Piggyback Registration. The Company (whether on its own good faith determination or as the result of a request for withdrawal by Persons pursuant to separate written contractual obligations) may withdraw a Registration Statement filed with the Commission in connection with a Piggyback Registration at any time prior to the effectiveness of such Registration Statement. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with the Piggyback Registration prior to its withdrawal.

(D) For purposes of clarity, any Piggyback Registration effected pursuant to this Section 2(h) hereof shall not be counted as an Underwritten Shelf Takedown under Section 2(e) hereof.

3. Related Obligations.

The Company shall use its commercially reasonable efforts to effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof, and, pursuant thereto, during the term of this Agreement, the Company shall have the following obligations:

(a) The Company shall promptly prepare and file with the Commission the Initial Registration Statement pursuant to Section 2(a) hereof and one or more New Registration Statements pursuant to Section 2(b) hereof with respect to the Registrable Securities, and the Company shall use its commercially reasonable efforts to cause each such Registration Statement to become effective as soon as practicable after such filing. Subject to Allowable Grace Periods, the Company shall keep each Registration Statement effective (and the Prospectus contained therein available for use) pursuant to Rule 415 for resales by the Holder on a continuous basis at all times until the earlier of (i) the date on which the Holder shall have sold all of the Registrable Securities covered by such Registration Statement or (ii) the date on which all such Registrable Securities cease to be “Registrable Securities” (the “Registration Period”). Notwithstanding anything to the contrary contained in this Agreement (but subject to the provisions of Section 3(o) hereof), the Company shall ensure that, when filed and at all times while effective, each Registration Statement (including, without limitation, all amendments and supplements thereto) and the Prospectus (including, without limitation, all amendments and supplements thereto) used in connection with such Registration Statement shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein (in the case of Prospectuses, in the light of the circumstances in which they were made) not misleading. The Company shall submit to the Commission, as soon as reasonably practicable after the date that the Company learns that no review of a particular Registration Statement will be made by the Staff or that the Staff has no further comments on a particular Registration Statement (as the case may be), a request for acceleration of effectiveness of such Registration Statement to a time and date as soon as reasonably practicable in accordance with Rule 461 under the Securities Act.

(b) Subject to Section 3(o) of this Agreement, the Company shall use its commercially reasonable efforts to prepare and file with the Commission such amendments (including, without limitation, post-effective amendments) and supplements to each Registration Statement and the Prospectus used in connection with each such Registration Statement, which Prospectus is to be filed pursuant to Rule 424 promulgated under the Securities Act, as may be necessary to keep each such Registration Statement effective (and the Prospectus contained therein current and available for use) at all times during the Registration Period for such Registration Statement, and, during such period, comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities of the Company required to be covered by such Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the Holder. Without limiting the generality of the foregoing, the Company covenants and agrees that at or before 8:30 a.m. (New York City time) on the second Business Day immediately following the Effective Date of the Initial Registration Statement and any New Registration Statement (or any post-effective amendment thereto), the Company shall file with the Commission in accordance with Rule 424(b) under the Securities Act the final Prospectus to be used in connection with sales pursuant to such Registration Statement (or post-effective amendment thereto). The Company consents to the use of the Prospectus (including, without limitation, any supplement thereto) included in each Registration Statement in accordance with the provisions of the Securities Act and with the securities or “Blue Sky” laws of the jurisdictions in which the Registrable Securities may be sold by the Holder, in connection with the resale of the Registrable Securities and for such period of time thereafter as such Prospectus (including, without limitation, any supplement thereto) (or in lieu thereof, the notice referred to in Rule 173(a) under the Securities Act) is required by the Securities Act to be delivered in connection with resales of Registrable Securities.

(c) The Company shall (A) permit legal counsel for the Holder an opportunity to review and comment upon (i) each Registration Statement at least five (5) Business Days prior to its filing with the Commission and (ii) all amendments and supplements to each Registration Statement (including, without limitation, the Prospectus contained therein) (except for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any similar or successor reports or Prospectus Supplements the contents of which is limited to that set forth in such reports) within a reasonable number of days prior to their filing with the Commission, and (B) shall reasonably consider any comments of the Holder and their legal counsel on any such Registration Statement or amendment or supplement thereto or to any Prospectus contained therein. The Company shall promptly furnish to the Holder and their counsel, without charge, (i) electronic copies of any correspondence from the Commission or the Staff to the Company or its representatives relating to each Registration Statement (which correspondence shall be redacted to exclude any material, non- public information regarding the Company or any of its Subsidiaries), (ii) after the same is prepared and filed with the Commission, one (1) electronic copy of each Registration Statement and any amendment(s) and supplement(s) thereto, including, without limitation, financial statements and schedules, all documents incorporated therein by reference, if requested by the Holder, and all exhibits and (iii) upon the effectiveness of each Registration Statement, one (1) electronic copy of the Prospectus included in such Registration Statement and all amendments and supplements thereto; provided, however, the Company shall not be required to furnish any document (other than the Prospectus, which may be provided in .PDF format) to the Holder and their legal counsel to the extent such document is available on EDGAR).

(d) Without limiting any obligation of the Company under the Purchase Agreement, the Company shall promptly furnish to the Holder, without charge, (i) after the same is prepared and filed with the Commission, at least one (1) electronic copy of each Registration Statement and any amendment(s) and supplement(s) thereto, including, without limitation, financial statements and schedules, all documents incorporated therein by reference, if requested by the Holder, all exhibits thereto, (ii) upon the effectiveness of each Registration Statement, one (1) electronic copy of the Prospectus included in such Registration Statement and all amendments and supplements thereto (or such other number of copies as the Holder may reasonably request from time to time) and (iii) such other documents, including, without limitation, copies of any final Prospectus and any Prospectus Supplement thereto, as the Holder may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities owned by the Holder; provided, however, the Company shall not be required to furnish any document (other than the Prospectus, which may be provided in .PDF format) to the Holder to the extent such document is available on EDGAR).

(e) The Company shall take such action as is reasonably necessary to (i) register and qualify, unless an exemption from registration and qualification applies, the resale by the Holder of the Registrable Securities covered by a Registration Statement under such other securities or “Blue Sky” laws of all applicable jurisdictions in the United States, (ii) prepare and file in those jurisdictions, such amendments (including, without limitation, post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be reasonably necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(e), (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify the Holder and their legal counsel of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or “Blue Sky” laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.

(f) The Company shall notify the Holder and their legal counsel in writing of the happening of any event, as promptly as reasonably practicable after becoming aware of such event, as a result of which the Prospectus included in a Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (of such supplement or amendment to the Holder and their legal counsel (or such other number of copies as such legal counsel or the Holder may reasonably request). The Company shall also promptly notify Holder and their legal counsel in writing (i) when a Prospectus or any Prospectus Supplement or post-effective amendment has been filed, when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to Holder and their legal counsel by facsimile or e-mail on the same day of such effectiveness), and when the Company receives written notice from the Commission that a Registration Statement or any post-effective amendment will be reviewed by the Commission, (ii) of any request by the Commission for amendments or supplements to a Registration Statement or related Prospectus or related information, (iii) of the Company’s reasonable determination that a post-effective amendment to a Registration Statement would be appropriate and (iv) of the receipt of any request by the Commission or any other federal or state governmental authority for any additional information relating to the Registration Statement or any amendment or supplement thereto or any related Prospectus. The Company shall respond as promptly as reasonably practicable to any comments received from the Commission with respect to a Registration Statement or any amendment thereto. Nothing in this Section 3(f) shall limit any obligation of the Company under the Purchase Agreement.

(g) The Company shall (i) use its commercially reasonable efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement or the use of any Prospectus contained therein, or the suspension of the qualification, or the loss of an exemption from qualification, of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible time and (ii) notify the Holder and their legal counsel of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding.

(h) The Company shall hold in confidence and not make any disclosure of information concerning the Holder provided to the Company unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement or is otherwise required to be disclosed in such Registration Statement pursuant to the Securities Act, (iii) the release of such information is ordered pursuant to a subpoena or other final, non- appealable order from a court or governmental body of competent jurisdiction, or (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other Transaction Document (as defined in the Purchase Agreement). The Company agrees that it shall, upon learning that disclosure of such information concerning the Holder is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to the Holder and allow the Holder, at the Holder’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.

(i) Without limiting any obligation of the Company under the Purchase Agreement, the Company shall use its commercially reasonable efforts to cause all of the Registrable Securities covered by each Registration Statement to be listed on the NYSE American or such other national stock exchange as applicable. The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section 3(i).

(j) The Company shall cooperate with the Holder and, to the extent applicable, facilitate the timely preparation and delivery of Registrable Securities, as DWAC Shares if requested by a Holder, to be offered pursuant to a Registration Statement and enable such DWAC Shares to be in such denominations or amounts (as the case may be) as the Holder may reasonably request from time to time. Holder hereby agrees that it shall cooperate with the Company, its counsel and transfer agent in connection with any issuances of DWAC Shares, and hereby represents, warrants and covenants to the Company that that it will resell such DWAC Shares only pursuant to the Registration Statement in which such DWAC Shares are included, in a manner described under the caption “Plan of Distribution” in such Registration Statement, and in a manner in compliance with all applicable U.S. federal and state securities laws, rules and regulations, including, without limitation, any applicable prospectus delivery requirements of the Securities Act. At the time such DWAC shares are offered and sold pursuant to the Registration Statement, such DWAC Shares shall be free from all restrictive legends may be transmitted by the transfer agent to the Holder by crediting an account at DTC as directed in writing by the Holder.

(k) Upon the written request of the Holder, the Company shall as soon as reasonably practicable after receipt of notice from the Holder and subject to Section 3(o) hereof, (i) incorporate in a Prospectus Supplement or post-effective amendment such information as the Holder reasonably request to be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being offered or sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities to be sold in such offering; (ii) make all required filings of such Prospectus Supplement or post-effective amendment after being notified of the matters to be incorporated in such Prospectus Supplement or post-effective amendment; and (iii) supplement or make amendments to any Registration Statement or Prospectus contained therein if reasonably requested by the Holder.

(l) The Company shall make generally available to its security holders (which may be satisfied by making such information available on EDGAR) as soon as practical, but not later than ninety (90) days after the close of the period covered thereby, an earnings statement (in form complying with, and in the manner provided by, the provisions of Rule 158 under the Securities Act) covering a twelve-month period beginning not later than the first day of the Company’s fiscal quarter next following the applicable Effective Date of each Registration Statement.

(m) The Company shall otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission in connection with any registration hereunder.

(n) Within one (1) Business Day after each Registration Statement which covers Registrable Securities is declared effective by the Commission, the Company shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with copies to the Holder) confirmation that such Registration Statement has been declared effective by the Commission.

(o) Notwithstanding anything to the contrary contained herein (but subject to the last sentence of this Section 3(o)), at any time after the Effective Date of a particular Registration Statement, the Company may, upon written notice to Holder, suspend Holder’s use of any prospectus that is a part of any Registration Statement (in which event the Holder shall discontinue sales of the Registrable Securities pursuant to such Registration Statement contemplated by this Agreement, but shall settle any previously made sales of Registrable Securities) if the Company (x) is pursuing an acquisition, merger, tender offer, reorganization, disposition or other similar transaction and the Company determines in good faith that (A) the Company’s ability to pursue or consummate such a transaction would be materially adversely affected by any required disclosure of such transaction in such Registration Statement or other registration statement or (B) such transaction renders the Company unable to comply with Commission requirements, in each case under circumstances that would make it impractical or inadvisable to cause any Registration Statement (or such filings) to be used by Holder or to promptly amend or supplement any Registration Statement contemplated by this Agreement on a post effective basis, as applicable, or (y) has experienced some other material non-public event the disclosure of which at such time, in the good faith judgment of the Company, would materially adversely affect the Company (each, an “Allowable Grace Period”); provided, however, that in no event shall the Holder be suspended from selling Registrable Securities pursuant to any Registration Statement for a period that exceeds 45 consecutive Trading Days or an aggregate of 90 days in any 365-day period. Upon disclosure of such information or the termination of the condition described above, the Company shall provide prompt notice, but in any event within one (1) Business Day of such disclosure or termination, to the Holder and shall promptly terminate any suspension of sales it has put into effect and shall take such other reasonable actions to permit registered sales of Registrable Securities as contemplated in this Agreement (including as set forth in the first sentence of Section 3(f) with respect to the information giving rise thereto unless such material, non-public information is no longer applicable). Notwithstanding anything to the contrary contained in this Section 3(o), the Company shall cause its transfer agent to deliver DWAC Shares to a transferee of the Holder in accordance with the terms of the Purchase Agreement in connection with any sale of Registrable Securities with respect to which (i) the Company has made a sale to Holder and (ii) the Holder have entered into a contract for sale, and delivered a copy of the Prospectus included as part of the particular Registration Statement to the extent applicable, in each case prior to the Holder’s receipt of the notice of an Allowable Grace Period and for which the Holder have not yet settled.

4. Obligations of the Holder.

(a) At least five (5) Business Days prior to the first anticipated filing date of each Registration Statement (or such shorter period to which the parties agree), the Company shall notify the Holder in writing of the information the Company requires from the Holder with respect to such Registration Statement. It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of the Holders that the Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it, as shall be reasonably required to effect and maintain the effectiveness of the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request.

(b) The Holder, by its acceptance of Registrable Securities, agree to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of each Registration Statement hereunder, unless the Holder have notified the Company in writing of the Holder’s election to exclude all of the Holder’s Registrable Securities from such Registration Statement.

(c) The Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(o) or the first sentence of Section 3(f), the Holder shall immediately discontinue disposition of Registrable Securities pursuant to any Registration Statement(s) covering such Registrable Securities until the Holder’s receipt of the copies of the supplemented or amended Prospectus contemplated by Section 3(o) or the first sentence of Section 3(f) or receipt of notice that no supplement or amendment is required. Notwithstanding anything to the contrary in this Section 4(c), the Company shall cause its transfer agent to deliver DWAC Shares to a transferee of the Holder in accordance with the terms of the Purchase Agreement in connection with any sale of Registrable Securities with respect to which the Holder have entered into a contract for sale prior to the Holder’s receipt of a notice from the Company of the happening of any event of the kind described in Section 3(o) or the first sentence of Section 3(f) and for which the Holder have not yet settled.

(d) The Holder covenants and agrees that they shall comply with the prospectus delivery and other requirements of the Securities Act as applicable to them in connection with sales of Registrable Securities pursuant to a Registration Statement.

5. Expenses of Registration.

All expenses of the Company, other than sales or brokerage commissions and fees and disbursements of counsel for, and other expenses of, the Holder, incurred in connection with registrations, filings or qualifications pursuant to Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees, printers and accounting fees, and fees and disbursements of counsel for the Company, shall be paid by the Company (“Registration Expenses”). Notwithstanding the foregoing, in an Underwritten Offering, reasonable fees and expenses of one (1) legal counsel selected by the Participating Holders shall be paid by the Company.

6. Indemnification.

(a) In the event any Registrable Securities are included in any Registration Statement under this Agreement, to the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend the Holder, each of its directors, officers, shareholders, members, partners, employees, agents, representatives (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding the lack of such title or any other title) and each Person, if any, who controls the Holder within the meaning of the Securities Act or the Exchange Act and each of the directors, officers, shareholders, members, partners, employees, agents, representatives (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding the lack of such title or any other title) of such controlling Persons (each, a “Holder Party” and collectively, the “Holder Parties”), against any losses, obligations, claims, damages, liabilities, contingencies, judgments, fines, penalties, charges, costs (including, without limitation, court costs, reasonable attorneys’ fees, costs of defense and investigation), amounts paid in settlement or expenses, joint or several, (collectively, “Claims”) reasonably incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the Commission, whether pending or threatened, whether or not a Holder Party is or may be a party thereto (“Indemnified Damages”), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other “Blue Sky” laws of any jurisdiction in which Registrable Securities are offered (“Blue Sky Filing”), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) any untrue statement or alleged untrue statement of a material fact contained in any Prospectus (as amended or supplemented) or in any Prospectus Supplement or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading (the matters in the foregoing clauses (i) and (ii) being, collectively, “Violations”). Subject to Section 6(c), the Company shall reimburse the Holders Parties, promptly as such expenses are incurred and are due and payable, for any reasonable legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (i) shall not apply to a Claim by a Holder Party arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by such Holder Party for such Holder Party expressly for use in connection with the preparation of such Registration Statement, Prospectus or Prospectus Supplement or any such amendment thereof or supplement thereto; (ii) shall not be available to the Holder to the extent such Claim is based on a failure of the Holder to deliver or to cause to be delivered the Prospectus (as amended or supplemented) made available by the Company (to the extent applicable), including, without limitation, a corrected Prospectus, if such Prospectus (as amended or supplemented) or corrected Prospectus was timely made available by the Company pursuant to Section 3(d) and then only if, and to the extent that, following the receipt of the corrected Prospectus no grounds for such Claim would have existed; and (iii) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld or delayed. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Holder Party and shall survive the transfer of any of the Registrable Securities by the Holder pursuant to Section 9.

(b) In connection with any Registration Statement in which a Holder is participating, such Holder agrees to severally and not jointly, indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6(a), the Company, each of its directors, each of its officers who signs the Registration Statement and each Person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act (each, an “Company Party”), against any Claim or Indemnified Damages to which any of them may become subject, under the Securities Act, the Exchange Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each case, to the extent, and only to the extent, that such Violation occurs in reliance upon and in conformity with written information relating to the Holder furnished to the Company by the Holder expressly for use in connection with such Registration Statement, the Prospectus included therein or any Prospectus Supplement thereto; and, subject to Section 6(c) and the below provisos in this Section 6(b), the Holders shall reimburse a Company Party any legal or other expenses reasonably incurred by such Company Party in connection with investigating or defending any such Claim; provided, however, the indemnity agreement contained in this Section 6(b) and the agreement with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Holder, which consent shall not be unreasonably withheld or delayed; and provided, further that the Holder shall be liable under this Section 6(b) for only that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to the Holder as a result of the applicable sale of Registrable Securities pursuant to such Registration Statement, Prospectus or Prospectus Supplement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Company Party and shall survive the transfer of any of the Registrable Securities by the Holder pursuant to Section 9.

(c) Promptly after receipt by an Holder Party or Company Party (as the case may be) under this Section 6 of notice of the commencement of any action or proceeding (including, without limitation, any governmental action or proceeding) involving a Claim, such Holder Party or Company Party (as the case may be) shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Holder Party or the Company Party (as the case may be); provided, however, an Holder Party or Company Party (as the case may be) shall have the right to retain its own counsel with the fees and expenses of such counsel to be paid by the indemnifying party if: (i) the indemnifying party has agreed in writing to pay such fees and expenses; (ii) the indemnifying party shall have failed promptly to assume the defense of such Claim and to employ counsel reasonably satisfactory to such Holder Party or Company Party (as the case may be) in any such Claim; or (iii) the named parties to any such Claim (including, without limitation, any impleaded parties) include both such Holder Party or Company Party (as the case may be) and the indemnifying party, and such Holder Party or such Company Party (as the case may be) shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Holder Party or such Company Party and the indemnifying party (in which case, if such Holder Party or such Company Party (as the case may be) notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the indemnifying party, then the indemnifying party shall not have the right to assume the defense thereof on behalf of the indemnified party and such counsel shall be at the expense of the indemnifying party, provided further that in the case of clause (iii) above the indemnifying party shall not be responsible for the reasonable fees and expenses of more than one (1) separate legal counsel for all Holder Parties or Company Parties (as the case may be). The Company Party or Holder Party (as the case may be) shall reasonably cooperate with the indemnifying party in connection with any negotiation or defense of any such action or Claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Company Party or Holder Party (as the case may be) which relates to such action or Claim. The indemnifying party shall keep the Company Party or Holder Party (as the case may be) reasonably apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its prior written consent; provided, however, the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Company Party or Holder Party (as the case may be), consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Company Party or Holder Party (as the case may be) of a release from all liability in respect to such Claim or litigation, and such settlement shall not include any admission as to fault on the part of the Company Party. For the avoidance of doubt, the immediately preceding sentence shall apply to Sections 6(a) and 6(b) hereof. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Company Party or Holder Party (as the case may be) with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Holder Party or Company Party (as the case may be) under this Section 6, except to the extent that the indemnifying party is materially and adversely prejudiced in its ability to defend such action.

(d) No Person involved in the sale of Registrable Securities who is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) in connection with such sale shall be entitled to indemnification from any Person involved in such sale of Registrable Securities who is not guilty of fraudulent misrepresentation.

(e) The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Damages are incurred; provided that any Person receiving any payment pursuant to this Section 6 shall promptly reimburse the Person making such payment for the amount of such payment to the extent a court of competent jurisdiction determines that such Person receiving such payment was not entitled to such payment.

(f) The indemnity and contribution provisions contained herein shall be in addition to (i) any cause of action or similar right of the Company or Holder Party against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.

7. Contribution.

To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however: (i) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 6 of this Agreement, (ii) no Person involved in the sale of Registrable Securities which Person is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) in connection with such sale shall be entitled to contribution from any Person involved in such sale of Registrable Securities who was not guilty of fraudulent misrepresentation; and (iii) contribution by any seller of Registrable Securities shall be limited in amount to the amount of net proceeds received by such seller from the applicable sale of such Registrable Securities pursuant to such Registration Statement. Notwithstanding the provisions of this Section 7, the Holder shall not be required to contribute, in the aggregate, any amount in excess of the amount by which the net proceeds actually received by the Holder from the applicable sale of the Registrable Securities subject to the Claim exceeds the amount of any damages that the Holder have otherwise been required to pay, or would otherwise be required to pay under Section 6(b), by reason of such untrue or alleged untrue statement or omission or alleged omission.

8. Reports Under the Exchange Act.

With a view to making available to the Holder the benefits of Rule 144, the Company agrees to:

(a) use its commercially reasonable efforts to make and keep public information available, as those terms are understood and defined in Rule 144;

(b) use its commercially reasonable efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act so long as the Company remains subject to such requirements (it being understood that nothing herein shall limit any of the Company’s obligations under the Purchase Agreement) and the filing of such reports and other documents is required for the applicable provisions of Rule 144;

(c) furnish to the Holder, promptly upon request, (i) a written statement by the Company, if true, that it has complied with the reporting, submission and posting requirements of Rule 144 and the Exchange Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company with the Commission if such reports are not publicly available via EDGAR, and (iii) such other information as may be reasonably requested to permit the Holder to sell such securities pursuant to Rule 144 without registration; and

(d) take such additional action as is reasonably requested by the Holder to enable the Holder to sell the Registrable Securities pursuant to Rule 144, including, without limitation, delivering all such legal opinions, consents, certificates, resolutions and instructions to the Company’s transfer agent as may be reasonably requested from time to time by the Holder and otherwise fully cooperate with Holder and Holder’s broker to effect such sale of securities pursuant to Rule 144.

9. Assignment of Registration Rights.

The Company shall not assign this Agreement or any of their respective rights or obligations hereunder. The Holder may assign this Agreement and its respective rights and obligations hereunder without the prior consent of the Company; provided, if the Holder assigns such rights, then it will promptly notify the Company of such assignment.

10. Amendment or Waiver.

No provision of this Agreement may be amended or waived by the parties from and after the date that is one Trading Day immediately preceding the date of filing of the Initial Registration Statement with the Commission. Subject to the immediately preceding sentence, no provision of this Agreement may be (i) amended other than by a written instrument signed by both parties hereto or (ii) waived other than in a written instrument signed by the party against whom enforcement of such waiver is sought. Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.

11. Miscellaneous.

(a) Solely for purposes of this Agreement, a Person is deemed to be a holder of Registrable Securities whenever such Person owns or is deemed to own of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from such record owner of such Registrable Securities.

(b) Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement shall be given in accordance with Section 11.2 of the Purchase Agreement.

(c) Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof. The Company and the Holder acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that either party shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement by the other party and to enforce specifically the terms and provisions hereof (without the necessity of showing economic loss and without any bond or other security being required), this being in addition to any other remedy to which either party may be entitled by law or equity.

(d) All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware. Each party hereby irrevocably submits to the exclusive jurisdiction of the federal courts sitting in Delaware, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

(e) The Transaction Documents set forth the entire agreement and understanding of the parties solely with respect to the subject matter thereof and supersedes all prior and contemporaneous agreements, negotiations and understandings between the parties, both oral and written, solely with respect to such matters. There are no promises, undertakings, representations or warranties by either party relative to subject matter hereof not expressly set forth in the Transaction Documents. Notwithstanding anything in this Agreement to the contrary and without implication that the contrary would otherwise be true, nothing contained in this Agreement shall limit, modify or affect in any manner whatsoever (i) the Conditions to Closing contained in Article VII of the Purchase Agreement or (ii) any of the Company’s obligations under the Purchase Agreement.

(f) This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors. This Agreement is not for the benefit of, nor may any provision hereof be enforced by, any Person, other than the parties hereto, their respective successors and the Persons referred to in Sections 6 and 7 hereof.

(g) The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision in which they are found.

(h) This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile signature or signature delivered by e-mail in a “.pdf” format data file, including any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com, www.echosign.adobe.com, etc., shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original signature.

(i) Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

(j) The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules of strict construction will be applied against any party.

IN WITNESS WHEREOF, the Holder and the Company have caused their respective signature page to this Registration Rights Agreement to be duly executed as of the date first written above.

	COMPANY:

	HNR Acquisition Corp.

	By:	/s/ Donald W. Orr
	Name:	Donald W. Orr
	Title:	President

	HOLDER:

	Pogo Royalty, LLC

	By:	/s/ Kirk Pogoloff
	Name:	Kirk Pogoloff
	Title:	Manager

[Signature Page]

Exhibit 10.4

EXECUTION VERSION

OPTION AGREEMENT

THIS OPTION AGREEMENT (this “Agreement”) is made as of November 15, 2023 (the “Effective Date”), by and between POGO ROYALTY, LLC, a Texas limited liability company, with offices at 4809 Cole Avenue, Suite 200, Dallas, Texas 75205 (“Pogo Royalty”), HNRA ROYALTIES, LLC a Delaware limited liability company with offices at 3730 Kirby Drive, Suite 1200 Houston, Texas 77098 (“HNRA Royalties”), and, solely with respect to Section 1.2, HNR ACQUISITION CORP, a Delaware corporation with offices at 3730 Kirby Drive, Suite 1200 Houston, Texas 77098 (“SPAC”). Pogo Royalty and HNRA Royalties may hereafter be referred to each as a “Party” and together as “Parties”. Capitalized terms shall have the meanings set forth on Exhibit A.

WHEREAS, Pogo Royalty owns certain overriding royalty interests in certain oil and gas assets owned by Pogo Resources, LLC (the “ORR Interest”) in oil, gas, and mineral leases covering lands in Eddy County, New Mexico as identified and described in that certain Conveyance of Overriding Royalty Interest from Pogo Resources, LLC and LH Operating, LLC to Pogo Royalty, LLC dated effective July 1, 2023, which assigned an undivided royalty interest equal in amount to ten percent (10%) of Pogo Resources, LLC’s and LH Operating, LLC’s interest all oil, gas and minerals in, under and produced from each lease described therein;

WHEREAS, SPAC has entered into that certain Amended and Restated Membership Interest Purchase Agreement (the “MIPA”), dated as of August 28, 2023, pursuant to which SPAC’s subsidiary Affiliates have agreed to acquire 100% of the membership interests of Pogo Resources, LLC;

WHEREAS, HNRA Royalties is a wholly-owned subsidiary of HNRA Investment, LLC, a Delaware limited liability company, which is a wholly-owned subsidiary of SPAC;

WHEREAS, in connection with the closing of the transactions contemplated by the MIPA, Pogo Royalty desires to grant to HNRA Royalties, and HNRA Royalties desires to accept from Pogo Royalty, an option to purchase the ORR Interest pursuant to the terms and conditions of this Agreement.

NOW THEREFORE, in consideration of the foregoing and the mutual covenants contained herein, the receipt and sufficiency of which is hereby acknowledged, Pogo Royalty and HNRA Royalties, intending to be legally bound, hereby agree as follows:

Article I
GRANT OF OPTION

Section 1.1 The Option; Expiration Date. Pogo Royalty hereby grants HNRA Royalties an irrevocable and exclusive option (the “Option”) to purchase, in one or more series of related transactions, all (but not less than all unless otherwise agreed) of the ORR Interest from Pogo Royalty for the Option Price (as defined below) at any time prior to the date that is twelve (12) months following the Effective Date (the “Expiration Date”) by giving Pogo Royalty written notice thereof from time to time (a “Option Notice”). Notwithstanding anything to the contrary contained herein, HNRA Royalties shall not have the right to exercise the Option at any time prior to the date that the Promissory Note (as defined in the MIPA) has been paid in full and satisfied. At no time prior to the Expiration Date shall Pogo Royalty convey, transfer, sell, or otherwise dispose of all or any portion of the ORR Interest to an unaffiliated third-party without the prior written consent of HNRA Royalties.

Section 1.2 Option Consideration. Upon execution of this Agreement, and as consideration for Pogo Royalty granting the Option, SPAC shall issue to Pogo Royalty 10,000 shares of SPAC Class a Common Stock (as defined in the MIPA), valued at $10.00 per share (the “Option Consideration”) for the purchase of the Option.

Section 1.3 Option Price. The purchase price for the ORR Interest upon exercise of the Option shall be (i) the product of (1) $30,000,000 and (2) the percentage of the ORR Interest for which the Option is being exercised at such time (with (1) and (2) together, the “Base Option Price”), plus (ii) an additional amount equal to interest on the Base Option Price of twelve percent (12%) per annum, compounded monthly, from the Effective Date through the date of acquisition of the ORR Interest so acquired, minus (iii) any amounts received by or attributable to Pogo Royalty in respect of the ORR Interest acquired from the month of production in which the Effective Date occurs through the date of the exercise of the Option (such aggregate purchase price in any one instance, the “Option Price”).

Section 1.4 Option Closing. The Option Notice shall include HNRA Royalties’s good faith determination of the Option Price, and Pogo Royalty shall have fifteen (15) business days to review the proposed Option Price and notify HNRA Royalties of any good faith objections to HNRA Royalties’s calculation. Pogo Royalty and HNRA Royalties shall work together in good faith to resolve any disputes with respect to the calculation of the Option Price. The consummation of the acquisition of the ORR Interest upon exercise of the Option shall occur within five (5) Days following Pogo Royalty’s acceptance of the Option Price.

Section 1.5 Exercise Date Deliverables. At the consummation of such purchase (the “Closing”), Pogo Royalty shall execute, acknowledge and deliver to HNRA Royalties (or its designee) such instruments as HNRA Royalties reasonably requests evidencing that the ORR Interest has been assigned to HNRA Royalties. Following the Closing, Pogo Royalty shall promptly remit to HNRA Royalties any and all amounts received by Pogo Royalty that are attributable to the ORR Interest after the date of the exercise of the Option.

Article II
Representations and Warranties

Section 2.1 Each Party represents to the other that:

(A) it is duly formed and validly existing under the laws of its jurisdiction of formation;

(B) it has the legal right and full power and authority to execute and deliver, and to exercise its rights and perform its obligations under, this Agreement;

(C) all corporate or company action required by it validly and duly to authorize the execution and delivery of, and to exercise its rights and perform its obligations under, this Agreement has been duly taken; and

(D) it is duly formed and validly existing under the laws of its jurisdiction of formation.

Section 2.2 Except as expressly provided in this Agreement or as required by law, no Party makes any warranties or guarantees to the other, either express or implied, with respect to the MIPA or any other subject matter not expressly set forth in this this Agreement, and, to the extent permitted by law, each Party disclaims and waives any implied warranties or warranties imposed by law.

Article III
TERMINATION

Section 3.1 Termination. This Agreement and the Option shall immediately terminate and be of no further force or effect upon the earlier of (a) Pogo Royalty’s transfer or assignment of all of the ORR Interest in accordance with this Agreement and (b) the date that is twelve (12) months following the Effective Date. Notwithstanding anything to the contrary contained herein, unless otherwise agreed by the Parties, (i) the rights of HNRA Royalties contained herein are personal to HNRA Royalties and may not be assigned or conveyed to any third-party, whether by merger, change of control, operation of law or otherwise, without the consent of Pogo Royalty and (ii) any assignment or transfer of any or all of the ORR Interest by Pogo Royalty after the Expiration Date shall be free and clear of this Agreement and this Agreement shall not be binding on any successor or assign of the ORR Interest assigned in accordance with this Agreement.

Article IV
MISCALLANEOUS

Section 4.1 Further Assurances. Subject to the terms and conditions of this Agreement, each Party shall (at its own cost and expense) at any time and from time to time, upon reasonable request, (i) do, execute, acknowledge and deliver, and cause to be done, executed, acknowledged and delivered, all such further acts, transfers or assignments as may be reasonably required to consummate the transactions in accordance with the terms hereof and (ii) take such other actions as may be reasonably required in order to carry out the intent of this Agreement; provided that in no event shall any Party be required to take any action which in the opinion of its counsel, is unlawful or would or could constitute a violation of any applicable law or require the approval of any Governmental Authority.

Section 4.2 Entire Agreement; Amendments. This Agreement supersedes all prior discussions and agreements between the Parties with respect to the subject matter hereof and contains the sole and entire agreement between the Parties hereto with respect to the subject matter hereof. This Agreement may be amended, supplemented or modified only by a written instrument duly executed by or on behalf of each Party.

Section 4.3 Assignment; Binding Effect. Neither this Agreement nor any right, interest or obligation hereunder may be assigned by either Party, whether by merger, change of control, operation of law or otherwise without the prior written consent of the other Party; provided, however, that no consent shall be required in the event an assignee is an Affiliate of the assignor. This Agreement is binding upon, inures to the benefit of and is enforceable by the Parties and their respective successors and permitted assigns.

Section 4.4 Governing Law; Jurisdiction; Waiver of Jury Trial. THIS AGREEMENT AND THE LEGAL RELATIONS BETWEEN THE PARTIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (EXCEPT THAT, WITH RESPECT TO ISSUES RELATED TO REAL PROPERTY FOR ASSETS LOCATED IN A SPECIFIC STATE, THE LAWS OF SUCH STATE SHALL GOVERN), WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. THE PARTIES HEREBY IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE STATE OR FEDERAL COURTS LOCATED IN DALLAS, TEXAS AND APPROPRIATE APPELLATE COURTS THEREFROM FOR THE RESOLUTION OF ANY DISPUTE, CONTROVERSY, OR CLAIM ARISING OUT OF OR IN RELATION TO THIS AGREEMENT, AND EACH PARTY HEREBY IRREVOCABLY AGREES THAT ALL ACTIONS, SUITS, AND PROCEEDINGS IN RESPECT OF SUCH DISPUTE, CONTROVERSY, OR CLAIM MAY BE HEARD AND DETERMINED IN SUCH COURTS. EACH PARTY HERETO WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT, OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

Section 4.5 Injunctive Relief. Each Party acknowledges and agrees that the other Party would suffer irreparable harm if the first Party failed to comply with its obligations arising pursuant to Article I. Accordingly, each Party hereby consents to and agrees that, in the event of a breach or threatened breach of Article I by the breaching Party, the injured Party shall have the right to exercise any and all rights by appropriate action either by law or in equity, including specific performance and other injunctive relief. The breaching Party further agrees that the injured Party shall not request that the injured Party post, nor shall the injured Party be obligated to post, a bond in connection with any equitable relief authorized pursuant to this Section 4.5.

Section 4.6 Counterparts. This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. Any facsimile or electronically transmitted copies hereof or signature hereon shall, for all purposes, be deemed originals.

Section 4.7 No Partnership. Nothing contained in this Agreement shall be construed to create an association, joint venture, trust or partnership covenant, obligation or liability on or with regard to any one or more of the parties to this Agreement.

Section 4.8 Interpretation. The headings used in this Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof. The Parties agree that the terms and provisions of this Agreement embody their mutual intent and that such terms and conditions are not to be construed more liberally in favor, nor more strictly against, either Party.

Section 4.9 Invalid Provisions. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future law, and if the rights or obligations of any Party under this Agreement will not be materially and adversely affected thereby, such provision will be fully severable, this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom and in lieu of such illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible.

Section 4.10 Notices. Unless otherwise specifically provided herein, any notice or other communication herein required or permitted to be given to Pogo Royalty or HNRA Royalties, shall be sent to such Person’s address as set forth in the first paragraph of this Agreement. Each notice hereunder shall be in writing and may be personally served or sent United States certified or registered mail or courier service and shall be deemed delivered on the date of receipt. Either Party may specify its proper address or any other post office address within the continental limits of the United States by giving notice to the other Party, in the manner provided in this Section 4.10, at least ten (10) Days prior to the effective date of such change of address.

Section 4.11 Waiver. The failure of Pogo Royalty or HNRA Royalties to insist upon strict performance of any provision hereof shall not constitute a waiver of or estoppel against asserting the right to require such performance in the future, nor shall a waiver or estoppel in any one instance constitute a waiver or estoppel with respect to a later breach of a similar nature or otherwise.

Section 4.12 Headings. Section headings herein are included herein for convenience of reference only and shall not constitute a part hereof for any other purpose or be given any substantive effect.

Section 4.13 Entire Agreement. THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT AMONG POGO ROYALTY AND HNRA ROYALTIES AND SUPERSEDES IN THEIR ENTIRETY ANY PRIOR WRITTEN OR ORAL AGREEMENT BETWEEN POGO ROYALTY AND HNRA ROYALTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF POGO ROYALTY AND HNRA ROYALTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG POGO ROYALTY AND HNRA ROYALTIES.

[Remainder of page intentionally blank]

IN WITNESS WHEREOF, this Agreement shall be effective for all purposes as of the Effective Date.

	POGO ROYALTY:

	POGO ROYALTY, LLC

	By:	/s/ Kirk Pogoloff
	Name:	Kirk Pogoloff
	Title:	Manager

Signature Page to Option Agreement

	HNRA ROYALTIES:

	HNR ROYALTIES, LLC

	By:	/s/ Mitchell B. Trotter
	Name:	Mitchell B. Trotter
	Title:	Chief Financial Officer

	SPAC, SOLELY FOR THE PURPOSES OF
	SECTION 1.2:

	HNRA ACQUISITION CORP

	By:	/s/ Mitchell B. Trotter
	Name:	Mitchell B. Trotter
	Title:	Chief Financial Officer

Signature Page to Option Agreement

Exhibit A

Definitions

As used herein, the following terms shall have the meaning given to them below:

“Affiliate” means, with respect to any Person, any other Person directly or indirectly, Controlling, Controlled by, or under common Control with, such Person, through one or more intermediaries or otherwise.

“Agreement” has the meaning given to it in the preamble to this Agreement

“Base Option Price” has the meaning given to it in Section 1.3 to this Agreement

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

“Day” means each period of twenty-four (24) consecutive hours beginning and ending at 7:00 A.M., Mountain Time. The reference date for any Day shall be the calendar date upon which the twenty- four (24) hour period commences.

“Effective Date” has the meaning given to it in the preamble to this Agreement

“Expiration Date” has the meaning given to it in Section 1.1 to this Agreement

“FIBT” means First International Bank & Trust, a North Dakota state banking institution.

“Governmental Authority” means any federal, state, municipal, national or other government, governmental department, commission, board, bureau, court, agency or instrumentality or political subdivision thereof or any entity or officer exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case whether associated with a state of the United States, the United States, or a foreign entity or government.

“HNRA Royalties” has the meaning given to it in the preamble to this Agreement

“MIPA” has the meaning given to it in the recitals to this Agreement

“Option” has the meaning given to it in Section 1.1 to this Agreement

“Option Consideration” has the meaning given to it in Section 1.2 to this Agreement

“Option Notice” has the meaning given to it in Section 1.1 to this Agreement

“Option Price” has the meaning given to it in Section 1.2 Section 1.3 to this Agreement

“ORR Interest” has the meaning given to it in the recitals to this Agreement

“Party” and “Parties” has the meaning given to it in the preamble to this Agreement

“Person” means and includes natural persons, corporations, limited partnerships, general partnerships, limited liability companies, limited liability partnerships, joint stock companies, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and Governmental Authorities.

“Pogo Royalty” has the meaning given to it in the preamble to this Agreement

“SPAC” has the meaning given to it in the preamble to this Agreement

Exhibit A

Exhibit 10.5

EXECUTION VERSION

DIRECTOR NOMINATION AND BOARD OBSERVER AGREEMENT

THIS DIRECTOR NOMINATION AND BOARD OBSERVER AGREEMENT (this “Agreement”) is made and entered into as of November 15, 2023, by and between HNR Acquisition Corp, a Delaware corporation (the “Company”), and CIC Pogo LP, a Delaware limited partnership (“CIC” or “Seller”). Capitalized terms used but not otherwise defined in this Agreement have the respective meanings given to them in the MIPA (as defined below).

WHEREAS, the Company and certain of its affiliates have consummated the purchase and the other transactions (collectively, the “Transactions”) contemplated by the Amended and Restated Membership Interest Purchase Agreement, dated as of August 28, 2023 (the “MIPA”), by and among Seller, DenCo Resources, LLC, a Texas limited liability company (“DenCo”), Pogo Resources Management, LLC, a Texas limited liability company (“Pogo Management”), 4400 Holdings, LLC, a Texas limited liability company, (“4400”), the Company, HNRA Partner, Inc., a Delaware corporation, (“SPAC Subsidiary”), HNRA Upstream, LLC, a Delaware limited liability company (“OpCo”, and together with the Company and SPAC Subsidiary, collectively “Buyer” and each a “Buyer”) and, solely with respect to Section 6.20 thereof, HNRAC Sponsors LLC, a Delaware limited liability company (“Sponsor”);

WHEREAS, OpCo has entered into the A&R OpCo LLC Agreement, pursuant to which it will issue OpCo Preferred Units, which are convertible into OpCo Class B Units, which are redeemable for shares of SPAC Class A Common Stock;

WHEREAS, Seller and the Company desire that, upon the Closing Date, Seller will appoint the Board Observers (as defined below) during the Board Observer Period (as defined below) to attend, in a non-voting observer capacity, meetings of the Board of the Company; and

WHEREAS, Seller desires that, upon the conversion of the OpCo Preferred Units owned by Seller at the time of conversion into OpCo Class B Units (the “Effective Time”), it will have representation on the Board of the Company; and

WHEREAS, in furtherance of the foregoing, Seller desires to have certain director nomination rights with respect to the Company, and the Company desires to provide Seller, on behalf of Seller, with such rights, in each case, on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficient of which are hereby acknowledged, each of the parties to this Agreement agrees as follows:

Article I

NOMINATION AND OBSERVER RIGHTS

Section 1.1. Board Nomination and Observer Rights.

(a) From the Closing Date until the later of (i) the date that Seller no longer holds any SPAC Class A Common Shares or SPAC Class B Common Shares and (ii) the repayment of the Promissory Note in accordance with its terms (the “Board Observer Period”), at every meeting of the board of directors of the Company (the “Board”), Seller has the right to appoint two board observers (the “Board Observers”) to attend, in a non-voting observer capacity, all meetings of the Board. The Board Observers shall advise and consult with members of the Board on pertinent matters and have the right to be heard at any meetings of the Board, but in no event shall the Board Observers: (i) be deemed to be a member of the Board, (ii) have the right to vote on any matter under consideration by the Board or otherwise have any power to cause the Company to take, or not to take, any action, (iii) have, or be deemed to have, or otherwise be subject to, any fiduciary duties to the Company or its stockholders applicable to the directors of the Company or (iv) have or possess any authority to bind the Company or any of its affiliates. For the avoidance of doubt, the Board Observers’ presence shall not be necessary to establish a quorum or count towards a quorum at any meeting of the Board. The Company shall reimburse the Board Observers for reasonably out-of-pocket expenses incurred in connection with the Board Observers’ attendance at Board meetings to the same extent such reimbursement is provided to any members of the Board.

(b) From the Effective Time until the termination of this Agreement in accordance with Section 2.1, at every meeting of the Board, or a committee thereof, or action by written consent, at or by which directors of the Company are appointed by the Board or are nominated to stand for election and elected by stockholders of the Company, Seller shall have the right to appoint or nominate for election to the Board, as applicable, such number of individuals as provided for by ‎Section 1.1(b)(i) through ‎Section 1.1(b)(ix), to serve as an independent director (in accordance with the NYSE American rules) of the Company (each such individual appointed or nominated by Seller for election to the Board pursuant to this Section ‎1.1(a), a “Nominee”).

(i) So long as Seller beneficially owns, in the aggregate, OpCo Class B Units which may be redeemed for ninety percent (90%) or more, of the outstanding SPAC Class A Common Stock, Seller shall have the right to appoint or nominate, as applicable, up to one-hundred percent (100%) of the total number of directors.

(ii) So long as Seller beneficially owns, in the aggregate, OpCo Class B Units which may be redeemed for eighty percent (80%) or more, but less than ninety (90%), of the outstanding SPAC Class A Common Stock, Seller shall have the right to appoint or nominate, as applicable, up to eighty percent (80%) of the total number of directors.

(iii) So long as Seller beneficially owns, in the aggregate, OpCo Class B Units which may be redeemed for seventy percent (70%) or more, but less than eighty (80%), of the outstanding SPAC Class A Common Stock, Seller shall have the right to appoint or nominate, as applicable, up to seventy percent (70%) of the total number of directors.

(iv) So long as Seller beneficially owns, in the aggregate, OpCo Class B Units which may be redeemed for sixty percent (60%) or more, but less than seventy (70%), of the outstanding SPAC Class A Common Stock, Seller shall have the right to appoint or nominate, as applicable, up to sixty percent (60%) of the total number of directors.

(v) So long as Seller beneficially owns, in the aggregate, OpCo Class B Units which may be redeemed for fifty percent (50%) or more, but less than sixty (60%), of the outstanding SPAC Class A Common Stock, Seller shall have the right to appoint or nominate, as applicable, up to fifty percent (50%) of the total number of directors.

(vi) So long as Seller beneficially owns, in the aggregate, OpCo Class B Units which may be redeemed for forty percent (40%) or more, but less than fifty (50%), of the outstanding SPAC Class A Common Stock, Seller shall have the right to appoint or nominate, as applicable, up to forty percent (40%) of the total number of directors.

(vii) So long as Seller beneficially owns, in the aggregate, OpCo Class B Units which may be redeemed for thirty percent (30%) or more, but less than forty (40%), of the outstanding SPAC Class A Common Stock, Seller shall have the right to appoint or nominate, as applicable, up to thirty percent (30%) of the total number of directors.

(viii) So long as Seller beneficially owns, in the aggregate, OpCo Class B Units which may be redeemed for twenty percent (20%) or more, but less than thirty (30%), of the outstanding SPAC Class A Common Stock, Seller shall have the right to appoint or nominate, as applicable, up to twenty percent (20%) of the total number of directors.

(ix) So long as Seller beneficially owns, in the aggregate, OpCo Class B Units which may be redeemed for ten percent (10%) or more, but less than twenty (20%), of the outstanding SPAC Class A Common Stock, Seller shall have the right to appoint or nominate, as applicable, up to ten percent (10%) of the total number of directors.

(c) The Company shall take all necessary actions within its control, including but not limited to calling a meeting of the Board or executing an action by unanimous written consent of the Board, such that, as of the Effective Time, the Nominees shall be elected by the Company’s stockholders or appointed to the Board as of the Effective Time (or as soon as practicable thereafter) as a director of the Company.

(d) From and after the Effective Time, the Company shall take all actions necessary (including, without limitation, calling special meetings of the Board and the stockholders of the Company and recommending, supporting and soliciting proxies) to ensure that: (i) each Nominee is included in the Board’s slate of nominees to the stockholders of the Company for the election of directors of the Company and recommended by the Board at any meeting of stockholders called for the purpose of electing directors of the Company; and (ii) each Nominee, if up for election, is included in the proxy statement prepared by management of the Company in connection with the Company’s solicitation of proxies or consents in favor of the foregoing for every meeting of the stockholders of the Company called with respect to the election of members of the Board, and at every adjournment or postponement thereof, and on every action or approval by written resolution of the stockholders of the Company or the Board with respect to the election of directors of the Company.

(e) If a Nominee ceases to serve for any reason, Seller shall be entitled to designate or nominate such person’s successor in accordance with this Agreement and the Board shall promptly fill the vacancy with such successor Nominee.

(f) The Company shall indemnify each Nominee on the same basis as all other members of the Board and pursuant to an indemnity agreement with terms that are no less favorable to such Nominee than the indemnity agreements entered into between the Company and its other non-employee directors.

(g) Each Nominee shall be entitled to compensation (including equity awards) that is consistent with the compensation received by other non-employee directors of the Company. In addition, the Company shall pay the reasonable, documented, out-of-pocket expenses incurred by such Nominee in connection with his or her services provided to or on behalf of the Company and its Subsidiaries, including attending Board and committee meetings or events attended on behalf of the Company or at the Company’s request.

(h) Notwithstanding the provisions of this Section 1.1, Seller shall not be entitled to designate a Person as a nominee to the Board upon a written determination by the Board or relevant committee thereof that the Person would not be qualified under any applicable law, rule or regulation to serve as a director of the Company. In such an event, Seller shall be entitled to select a Person as a replacement Nominee and the Company shall take all necessary actions within its control to cause that Person to be nominated as a Nominee, including, without limitation, taking such necessary actions to cause that Person to be nominated as a Nominee at the same meeting (or, if permitted, pursuant to the same action by written consent of the stockholders) as the initial Person was to be nominated.

Section 1.2. Board Materials. During the Board Observer Period, for so long as the Board Observers serve as a non-voting observers, each Board Observer shall be provided copies of all notices, minutes, consents, and other written materials that are provided to its directors (“Board Materials”) at substantially the same time and in substantially the same manner as such materials are delivered to the Company’s directors in their roles as members of the Board.

Section 1.3. Exclusions. Notwithstanding anything herein to the contrary, the Company may exclude the Board Observers from access to any Board Materials, meeting, or portion thereof if the Board concludes, acting in good faith, that (i) such exclusion is reasonably necessary to preserve the attorney-client or work product privilege between the Company and its counsel (provided, however, that any such exclusion shall only apply to such portion of such material or meeting which would be required to preserve such privilege); (ii) such Board Materials or discussion relates to the Company’s or its affiliates’ relationship, contractual or otherwise, with Seller or its affiliates or any actual or potential transactions between or involving the Company or its affiliates and Seller or its affiliates; or (iii) such exclusion is necessary to avoid a conflict of interest or disclosure that is restricted by any agreement to which the Company or any of its affiliates is a party or otherwise bound.

Section 1.4. Confidentiality. To the extent that any information obtained by the Board Observers from the Company (or any director, officer, employee, or agent thereof) is Confidential Information (as defined below), Seller shall, and shall cause the Board Observers to, treat any such Confidential Information as confidential in accordance with the terms and conditions set out in this Section 1.4. As used in this Agreement, “Confidential Information” means any and all information or data concerning the Company or its affiliates, whether in verbal, visual, written, electronic, or other form, which is disclosed to the Board Observers, in their role as Board Observers, by the Company or any director, officer, employee, or agent of the Company (including all Board Material that is non-public information), together with all information discerned from, based on, or relating to any of the foregoing which may be prepared or created by the Observer, Seller, or any of its affiliates, or any of their respective directors, officers, employees, agents, or advisors (each, a “Representative”). Seller shall, and shall cause the Board Observers to (a) retain all Confidential Information in strict confidence; (b) not release or disclose Confidential Information in any manner to any other person (other than disclosures to Seller, its affiliates, or to any of its or their Representatives who (i) have a need to know such information; and (ii) are informed of its confidential nature); and (c) use the Confidential Information solely in connection with Seller’s and the Board Observers’ rights hereunder, and not for any other purpose; provided, however, that the foregoing shall not apply to the extent Seller, its affiliates, any of its or their Representatives, or the Board Observers are compelled to disclose Confidential Information by judicial or administrative process, pursuant to the advice of its counsel, or by requirements of law; provided, further, however, that, if legally permissible, prior written notice of such disclosure shall be given to the Company so that the Company may take action, at its expense, to prevent such disclosure and any such disclosure is limited only to that portion of the Confidential Information which such person is compelled to disclose.

Article II

MISCELLANEOUS

Section 2.1. Termination. This Agreement shall terminate automatically and become void and of no further force or effect, without any notice or other action by any Person, as of the date that is the later of (i) the date that Seller no longer holds any SPAC Class A Common Shares or SPAC Class B Common Shares and (ii) the repayment of the Promissory Note in accordance with its terms.

Section 2.2. Notices. All notices, requests and other communications to the Company hereunder shall be in writing (including electronic transmission) and shall be given in accordance with the provisions of the MIPA. All notices, requests and other communications to Seller hereunder shall be in writing (including electronic transmission) to the following address and shall be given in accordance with the provisions of the MIPA:

If to Seller, to:

CIC Pogo LP

Oak Lawn Hall at Old Parkland

3879 Maple Avenue

Suite 400

Dallas, TX 75219

Attention: Chris Cowan

ccowan@cicpartners.com

with a copy to (which shall not constitute notice):

Baker Botts L.L.P.

2001 Ross Ave. Suite 900

Dallas, Texas 75201

Attention: Jon Platt

Email: jon.platt@bakerbotts.com

Section 2.3. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other terms, conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated by this Agreement is not affected in any manner materially adverse to any party hereto. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties hereto as closely as possible in a mutually acceptable manner in order that the Transactions contemplated by this Agreement be consummated as originally contemplated to the fullest extent possible.

Section 2.4. Assignment. No Party shall assign all or any part of this Agreement, nor shall any Party assign or delegate any of its rights or duties hereunder, without the prior written consent of the other Party, and any assignment or delegation made without such consent shall be void and of no effect. This Agreement shall inure to the benefit of, and be binding on and enforceable by and against, the parties and their respective successors and permitted assigns.

Section 2.5. No Third Party Beneficiaries. Nothing in this Agreement shall entitle any Person other than the parties to any claims, cause of action, remedy, or right of any kind.

Section 2.6. Entire Agreement. This Agreement constitutes the entire agreement between the parties pertaining to the subject matter hereof, and supersede all prior agreements, understandings, negotiations and discussions, whether oral or written, between the parties pertaining to the subject matter hereof.

Section 2.7. Governing Law. This Agreement and any claims, actions or Proceedings arising from this Agreement, whether in contract, tort, or otherwise shall be governed by, and construed in accordance with the Laws of the State of Delaware without giving effect to any choice or conflict of Law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Laws of any other jurisdiction.

Section 2.8. Jurisdiction; WAIVER OF TRIAL BY JURY. Any Action based upon, arising out of or related to this Agreement or the transactions contemplated hereby may be brought in federal and state courts located in the State of Delaware, and each of the parties irrevocably submits to the exclusive jurisdiction of each such court in any such Action, waives any objection it may now or hereafter have to personal jurisdiction, venue or to convenience of forum, agrees that all claims in respect of the Action shall be heard and determined only in any such court, and agrees not to bring any Action arising out of or relating to this Agreement or the transactions contemplated hereby in any other court. Nothing herein contained shall be deemed to affect the right of any party hereto to serve process in any manner permitted by Law or to commence legal proceedings or otherwise proceed against the other party hereto in any other jurisdiction, in each case, to enforce judgments obtained in any Action brought pursuant to this Section 2.8. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION BASED UPON, ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE SUBJECT MATTER HEREOF.

Section 2.9. Specific Performance. The parties hereto acknowledge that the rights of each party hereto to consummate the transactions contemplated hereby are unique and recognize and affirm that in the event of a breach of this Agreement by any party hereto, money damages may be inadequate and such non-breaching party may have no adequate remedy at law. Accordingly, the parties hereto agree that such non-breaching party shall have the right to enforce its rights and the other party’s obligations hereunder by an action or actions for specific performance and/or injunctive relief (without posting of bond or other security), including any order, injunction or decree sought by such non-breaching party to cause the other party to perform its/their respective agreements and covenants contained in this Agreement and to cure breaches of this Agreement, without the necessity of proving actual harm and/or damages or posting a bond or other security therefore. Each party hereto further agrees that the only permitted objection that it may raise in response to any action for any such equitable relief is that it contests the existence of a breach or threatened breach of this Agreement.

Section 2.10. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or e-mail shall be as effective as delivery of a manually executed counterpart of the Agreement.

Section 2.11. Amendment; Waivers. No amendment, modification, or discharge of this Agreement, and no waiver under this Agreement, shall be valid or binding unless set forth in writing and duly executed by the Party against whom enforcement of the amendment, modification, discharge, or waiver is sought. Any such waiver shall constitute a waiver only with respect to the specific matter described in such writing and shall in no way impair the rights of the Party granting such waiver in any other respect or at any other time. The waiver by either of the parties of a breach of or a default under any of the provisions of this Agreement, or to exercise any right or privilege under this Agreement, shall not be construed as a waiver of any other breach or default of a similar nature, or as a waiver of any of such provisions, rights, or privileges under this Agreement.

Section 2.12. Rights Cumulative. Except as otherwise expressly limited by this Agreement, all rights and remedies of each of the parties hereto under this Agreement will be cumulative, and the exercise of one or more rights or remedies will not preclude the exercise of any other right or remedy available under this Agreement or law.

Section 2.13. Further Assurances. Each of the parties hereto shall execute and deliver such further instruments and do such further acts and things as may be required to carry out the intent and purpose of this Agreement.

Section 2.14. Enforcement. Each of the parties hereto covenants and agrees that the disinterested members of the Board have the right to enforce, waive or take any other action with respect to this Agreement on behalf of the Company.

Section 2.15. Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

[Signature Page Follows.]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as a deed as of the date first written above.

	HNRA ACQUISITION CORP.

	By:	/s/ Mitchell B. Trotter
	Name:	Mitchell B. Trotter
	Title:	Chief Financial Officer

	CIC Pogo LP

	By:	/s/ Fouad Bashour
	Name:	Fouad Bashour
	Title:	Manager

[Signature Page to Director Nomination Agreement]

Exhibit 10.6

EXECUTION VERSION

BACKSTOP AGREEMENT

This Backstop Agreement (the “Agreement”) is made as of November 15, 2023 (the “Execution Date”) by and among Pogo Royalty, LLC, a Texas limited liability company (“Pogo Royalty”), HNR Acquisition Corp., a Delaware corporation (the “Company” or the “SPAC”), HNRA Upstream, LLC, a Delaware limited liability company (“OpCo”), and the persons listed as Founders on the signature pages hereto (individually, each a “Founder” and, collectively, the “Founders”). Except as otherwise indicated herein, capitalized terms used herein are defined in Section 8 hereof.

WHEREAS, CIC Pogo LP, a Delaware limited partnership (“CIC”), DenCo Resources, LLC, a Texas limited liability company (“DenCo”), Pogo Resources Management, LLC, a Texas limited liability company (“Pogo Management”), 4400 Holdings, LLC, a Texas limited liability company (“4400” and, together with CIC, DenCo and Pogo Management, collectively, “Seller” and each a “Seller”), the Company, OpCo and HNRAC Sponsors LLC, a Delaware limited liability company (“Sponsor”), solely with respect to Section 6.20 thereof, entered into that certain Amended and Restated Membership Interest Purchase Agreement, dated as of August 28, 2023 (as amended from time to time, the “MIPA”), pursuant to which, OpCo agreed to acquire and accept from Seller, and Seller agreed to contribute, assign and convey to OpCo, all of Seller’s right title and interest to 99.0% of the outstanding membership interests of Pogo Resources, LLC, a Texas limited liability company (“Pogo”);

WHEREAS, pursuant to the MIPA, OpCo will amend and restate its limited liability company agreement (the “A&R LLC Agreement”) whereby OpCo will authorize the issuance of 2,000,000 units as the Class A Convertible Preferred Units (the “Class A Preferred Units”);

WHEREAS, as part of the Aggregate Consideration (as defined in the MIPA) to be paid to Pogo Royalty by OpCo pursuant to the MIPA, OpCo has agreed to issue up to 2,000,000 Class A Preferred Units to Pogo Royalty (such number of shares of Class A Preferred Units actually issued to Pogo Royalty, the “Seller Units”) concurrent with the closing of the transactions contemplated by the MIPA (such date, the “Effective Date”);

WHEREAS, upon issuance of the Class A Preferred Units to Pogo Royalty, the Founders have agreed to place into trust certain shares of the Company’s Class A common stock, par value $0.0001 per share (the “SPAC Class A Common Stock”), held by the Founders and to purchase certain Seller Units from Pogo Royalty pursuant to the terms and conditions of this Agreement; and

WHEREAS, prior to the Effective Date, the Founders will have given binding instructions to place at least 1,300,000 shares of SPAC Class A Common Stock as reflected on Exhibit A (the “Trust Shares”) into trust once all Trust Shares are not restricted by transfer (the “Lockup Expiration Date”) pursuant to Section 3 of that certain letter agreement, by and between the SPAC and the Sponsor, dated February 10, 2022 (the “Letter Agreement”), and to be governed by a trust agreement, in a form mutually agreed to by the parties, by and among the Founders and a trustee or broker, mutually agreeable between the parties (the “Trust Agreement”) whereby the Founders will agree not to sell or borrow against the Trust Shares, except for purposes of financing the purchase of Seller Units as governed by this Agreement and the Trust Agreement until the termination of this Agreement or with the prior written consent of Pogo Royalty.

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

Section 1. Trust Account. On the Lockup Expiration Date, the Founders agree to place the Trust Shares into a trust account pursuant to the terms of the Trust Agreement. In addition, the Company and OpCo agree to use their reasonable best efforts to cause, prior to December 31, 2023, additional Persons who are subject to the Letter Agreement to place shares of SPAC Class A Common Stock into escrow and execute joinders to this Agreement and the Trust Agreement so that the total aggregate number of shares of SPAC Common Stock subject to the Trust Agreement equals 1,500,000. Upon signing joinders to this Agreement, such Persons shall be considered “Founders” hereunder and such shares shall be considered “Trust Shares.”

Section 2. Grant of Put Option.

(a) Right to Sell. Subject to the terms and conditions of this Agreement, at any time on or after the Lockup Expiration Date up to the and until the date this Agreement is terminated in accordance with Section 8 herein, Pogo Royalty shall have the right (the “Put Right”), but not the obligation, to cause the Founders to, jointly and severally, purchase Seller Units at the Put Purchase Price (as defined below) as indicated in the Put Exercise Notice (as defined below), subject to the Put Maximum (as defined below). The Put Right may only be exercised by Pogo Royalty up to two (2) times prior to the termination of this Agreement.

(b) Procedures. If Pogo Royalty desires to sell any of Seller Units pursuant to Section 2(a), Pogo Royalty shall deliver to the Founders a written notice (the “Put Exercise Notice”) exercising the Put Right and specifying the number of Seller Units to be sold up to the Put Maximum (the “Put Units”) by Pogo Royalty to the Founders and the closing date, which shall take place no less than 30 days following receipt by Founder of the Put Exercise Notice (each a “Put Right Closing Date”). By delivering the Put Exercise Notice, Pogo Royalty will represent to the Founders that (A) Pogo Royalty has full right, title, and interest in and to the Put Units, (B) Pogo Royalty has all the necessary power and authority and has taken all necessary action to sell such Put Units as contemplated by this Section 2 and (C) the Put Units are free and clear of any and all mortgages, pledges, security interests, options, rights of first offer, encumbrances, or other restrictions or limitations of any nature whatsoever other than those arising as a result of or under the terms of this Agreement or the A&R LLC Agreement.

(c) Consummation of Sale. The Founders will pay the Put Purchase Price in full for the Put Units by wire transfer of immediately available funds to the account(s) of Pogo Royalty as designated by Pogo Royalty on the Put Right Closing Date.

(d) Cooperation. The Founders and Pogo Royalty shall each take all actions as may be reasonably necessary to consummate the sale contemplated by this Section 2, including, without limitation, entering into agreements and delivering certificates and instruments and consents as may be deemed necessary or appropriate; provided, that such documents shall not impose any liability on Pogo Royalty.

(e) Closing. At the closing of any sale and purchase pursuant to this Section 2, Pogo Royalty shall deliver to the Founders a certificate or certificates representing the Put Units to be sold (if any) or by such other transfer as contemplated by the A&R LLC Agreement, accompanied by limited liability company unit powers and all necessary transfer taxes paid and stamps affixed, if necessary, against receipt of the Put Purchase Price.

Section 3. Put Purchase Price. In the event Pogo Royalty exercises the Put Right hereunder, the purchase price per unit at which the Founders shall be required to purchase the Put Units (the “Put Purchase Price”), shall be equal to the Original Liquidation Preference plus the product of (i) the number of days elapsed since the Effective Date and (ii) the Original Liquidation Preference divided by 730. The “Original Liquidation Preference” shall be $10.00 per Seller Unit.

Section 4. Representations and Warranties of the Company. As a material inducement to the Founders to enter into this Agreement and purchase the Put Units, the Company and OpCo hereby represents and warrants that:

(a) Organization and Corporate Power. The Company and OpCo is, respectively, a corporation and a limited liability company, each of which is duly organized, validly existing and in good standing under the laws of Delaware and is qualified to do business in every jurisdiction in which its ownership of property or conduct of business requires it to qualify. Each of the Company and OpCo has all requisite power and authority and all material licenses, permits and authorizations necessary to own and operate its properties and to carry on its business as now conducted and presently proposed to be conducted, and all requisite power and authority to carry out the transactions contemplated by this Agreement.

(b) Capital Stock. All of the issued and outstanding shares of capital stock of the Company have been duly and validly authorized and issued. All of the issued and outstanding units of OpCo have been duly and validly authorized and issued. All Class A Preferred Units to be purchased by the Founders from Pogo Royalty pursuant to Section 2 have been duly authorized, and are validly issued, fully paid and nonassessable.

(c) Authorization; No Breach; Compliance with Laws. The execution, delivery and performance of this Agreement and any other agreement contemplated hereby to which either the Company or OpCo is a party have been duly authorized by either the Company or OpCo, as applicable. The execution, delivery and performance of this Agreement by either the Company or OpCo and the consummation of the transactions contemplated hereby will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which either the Company or OpCo is a party or by which either the Company or OpCo is bound or to which any of the property or assets of the Company or OpCo is subject, (ii) result in any violation of the provisions of the charter, by-laws or equivalent organizational documents of the Company or OpCo or (iii) result in any violation of any statute, including, without limitation, the Delaware General Corporation Law or the Delaware Limited Liability Company Act, or any order, rule or regulation of any court or governmental agency or body having jurisdiction over either the Company or OpCo any of their properties or assets. No consent, approval, authorization or order of, or filing or registration with, any such court or governmental agency or body is required for the execution, delivery and performance of this Agreement by either the Company or OpCo and the consummation of the transactions contemplated hereby.

(d) Broker’s Fees. There is no investment banker, broker, finder or other intermediary or advisor that has been retained by or is authorized to act on behalf of either the Company or OpCo, or any of their Affiliates who might be entitled to any fee, commission or reimbursement of expenses as a result of consummation of the transactions contemplated hereby.

Section 5. Representations and Warranties of the Founders. As a material inducement to the Company and Pogo Royalty to enter into this Agreement, the Founders hereby, jointly and severally, represent and warrant that:

(a) Authorization; No Breach. The execution of this Agreement by the Founders and the consummation by the Founders of the transactions contemplated hereby will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which such Founder is a party or by which such Founder is bound or to which any of its property or assets is subject, nor will such actions result in any violation of the provisions of any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over such Founder or its property or assets in each case in a manner that would adversely impact the Founders’ ability to purchase the Put Units hereunder; and, except for such consents, approvals, authorizations, registrations or qualifications as may be required under applicable federal and state securities laws in connection with the purchase of the Put Units, no consent, approval, authorization or order of, or filing or registration with, any such court or governmental agency or body is required for the execution, delivery and performance of this Agreement by the Founders and the consummation by the Founders of the transactions contemplated hereby in each case in a manner that would adversely impact the Founders’ ability to purchase the Put Units and perform its obligations hereunder.

(b) Share Ownership. Each Founder has full right, title, and interest in and to the shares of SPAC Class A Common Stock as reflected on Exhibit A, and such shares of SPAC Class A Common Stock are free and clear of any and all mortgages, pledges, security interests, options, rights of first offer, encumbrances, or other restrictions or limitations of any nature whatsoever other than those arising as a result of or under the terms of this Agreement and the Letter Agreement.

(c) Broker’s Fees. There is no investment banker, broker, finder or other intermediary or advisor that has been retained by or is authorized to act on behalf of the Founders who might be entitled to any fee, commission or reimbursement of expenses from either the Company or any of its Affiliates as a result of consummation of the transactions contemplated hereby.

Section 6. Sales to Company or Sales to Founders, individually. From time to time, upon mutual agreement between the Company and Pogo Royalty, the Company may purchase Seller Units from Pogo Royalty, and Pogo Royalty may sell Seller Units to the Company, at the Put Purchase Price in accordance with the terms of this Agreement, without giving effect to the Put Maximum. From time to time, upon mutual agreement between Pogo Royalty and any individual Founder or group of Founders, such Founder(s) may purchase Seller Units from Pogo Royalty, and Pogo Royalty may sell Seller Units to such Founder(s), at the Put Purchase Price in accordance with the terms of this Agreement, without giving effect to the Put Maximum. If the parties agree to purchase Seller Units pursuant to this Section 6 within the first 30 days following the original issuance date of the Class A Preferred Units, the purchase price for any amount of Seller Units in excess of $10,000,000 will be at the Original Liquidation Preference.

Section 7. No Short Selling. Until this Agreement is terminated, neither Pogo Royalty nor any of its Affiliates will engage in any transaction which is designed to sell short the SPAC Class A Common Stock of the Company or any other publicly traded securities of the Company. In addition, Pogo Royalty represents that as of the date of this Agreement, neither it nor any of its Affiliates has any existing short position in the SPAC Class A Common Stock, nor has Pogo Royalty or any of its Affiliates executed any derivative instruments with any third party, which in either case is designed to dispose of the SPAC Class A Common Stock.

Section 8. Termination. This Agreement shall automatically be terminated on earlier of: (i) the date that is 6 months following the Lockup Expiration Date and, (ii) if the Put Right is exercised by Pogo Royalty, the last possible Put Right Closing Date. In addition, this Agreement may be terminated at any time prior to such date by mutual written consent of the Company, Pogo Royalty, and the Founders.

Section 9. Definitions. For the purposes of this Agreement, the following terms have the meanings set forth below:

“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under direct or indirect common control with such Person. For purposes of this definition, “control” when used with respect to any specified Person means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative of the foregoing.

“Person” means an individual, a partnership, a corporation, a limited liability company, association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.

“Put Maximum” means, (i) at the time of the first Put Exercise Notice, the number of Seller Units with a Put Purchase Price equal to the amount that equals the (a) simple average of the daily VWAP of the SPAC Class A Common Stock during the five (5) Trading Days prior to the date of the Put Exercise Notice, multiplied by (b) the Trust Shares, multiplied by (c) 0.50; and (ii) at the time of the second Put Exercise Notice, the number of Seller Units with a Put Purchase Price equal to the amount that equals the greater of (a) the (A) Put Maximum at the time of the first Put Exercise Notice, minus (B) the total Put Purchase Price paid by the Founders at the time of the first Put Right Closing Date, and (b) the (A) simple average of the daily VWAP of the SPAC Class A Common Stock during the five (5) Trading Days prior to the date of the second Put Exercise Notice, multiplied by (B) the Trust Shares, multiplied by (C) 0.50, minus (D) the total Put Purchase Price paid by the Founders at the time of the first Put Right Closing Date.

“Trading Day” means any days during the course of which the Principal Market on which the SPAC Class A Common Stock is listed or admitted to trading is open for the exchange of securities.

“VWAP” means, for any Trading Day, the per share daily volume weighted average price of the Common Stock for such Trading Day on the New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, the OTCQB, the OTCBB or the NYSE Euronext, whichever is at the time the principal trading exchange or market for the Common Stock (the “Principal Market”) from 9:30 a.m. Eastern Time through 4:00 p.m. Eastern Time, or, if such price is not available, “VWAP” shall mean the market value per share of SPAC Class A Common Stock on such Trading Day as determined, using a volume-weighted average method, by a nationally recognized independent investment banking firm reasonably acceptable to Pogo Royaltys.

Section 10. Miscellaneous.

(a) Successors and Assigns. All covenants and agreements in this Agreement by or on behalf of any of the parties hereto will bind and inure to the benefit of the respective successors and assigns of the parties hereto whether so expressed or not; provided that neither this Agreement nor any of the rights, interests, or obligations hereunder may be assigned by any party, including, without limitation, by nature of sale of Seller Units to a third-party, without the prior written consent of the other parties hereto, which such consent shall not be unreasonably withheld, conditioned, or delayed. For the avoidance of doubt, the Put Right does not transfer with the sale, transfer or change of ownership of any Class A Preferred Unit without the express approval of the Company.

(b) Survival of Representations and Warranties. All representations and warranties contained herein shall survive the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.

(c) No Third-Party Beneficiaries. This Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other person any legal or equitable right, benefit, or remedy of any nature whatsoever, under or by reason of this Agreement.

(d) Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

(e) Construction. Whenever the context requires, each term stated in either the singular or the plural shall include the singular and the plural, and pronouns stated in either the masculine, the feminine or the neuter gender shall include the masculine, feminine and neuter. All references to Sections and Paragraphs refer to sections and paragraphs of this Agreement. The use of the word “including” in this Agreement shall be by way of example rather than limitation.

(f) Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of the parties hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. Except as otherwise set forth in this Agreement, no failure to exercise, or delay in exercising, any rights, remedy, power, or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power, or privilege.

(g) Counterparts; Facsimile Signature. This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together shall constitute one and the same Agreement. This Agreement may be executed by facsimile signature.

(h) Governing Law. This Agreement will be governed in all respects by the laws of the State of Delaware, without regard to the principles of conflicts of law of such state.

(i) Notices. All notices which are required or may be given pursuant to this Agreement shall be sufficient in all respects if given in writing and delivered personally, by facsimile, by email or by registered or certified mail, postage prepaid, as follows or at such other address as any party may notify the other party of from time to time:

If to Pogo Royalty:

CIC Pogo LP

Oak Lawn Hall at Old Parkland

3879 Maple Avenue

Suite 400

Dallas, TX 75219

Attention: Chris Cowan

Email: ccowan@cicpartners.com

with copies (which shall not constitute notice) to:

Baker Botts L.L.P.

2001 Ross Ave. Suite 900

Dallas, Texas 75201

Attention: Jon Platt

Email: jonplatt@bakerbotts.com

If to the Company or OpCo:

HNR Acquisition Corp

3730 Kirby Drive, Suite 1200

Houston, Texas 77098

Attention: Donald W. Orr, President

Email: donald.orr@hnra-nyse.com

with copies (which shall not constitute notice) to:

Pryor Cashman LLP

7 Times Square

New York, New York 10036

Attention Matthew Ogurick

Email: mogurick@pryorcashman.com

HNR Acquisition Corp

10142 Holly Chase Drive

Houston, Texas 77042

Attention: David M. Smith, General Counsel

Email: dmsmith@hnra-nyse.com

If to a Founder, at the addresses reflected in Exhibit A

[Signature page follows]

IN WITNESS WHEREOF, the parties hereto have executed this Backstop Agreement on the date first written above.

	POGO ROYALTY:

	POGO ROYALTY, LLC

	By:	/s/ Kirk Pogoloff
	Name:	Kirk Pogoloff
	Title:	Manager

Signature Page to

Backstop Agreement

	COMPANY:

	HNR ACQUISITION CORP

	By:	/s/ Mitchell B. Trotter
	Name:	Mitchell B. Trotter
	Title:	Chief Financial Officer

	OPCO

	HNRA UPSTREAM, LLC

	By:	/s/ Mitchell B. Trotter
	Name:	Mitchell B. Trotter
	Title:	Chief Financial Officer

Signature Page to

Backstop Agreement

	FOUNDERS:

	JVS ALPHA PROPERTY, LLC

	By:	/s/ Joseph Salvucci, Jr.
	Name:	Joseph Salvucci, Jr.
	Title:	Vice President

Signature Page to

Backstop Agreement

	FOUNDERS:

	DANTE CARAVAGGIO, LLC

	By:	/s/ Dante Caravaggio
	Name:	Dante Caravaggio
	Title:	Sole Member

Signature Page to

Backstop Agreement

	FOUNDERS:

	/s/ Alan T. Cooke
	Alan T. Cooke

Signature Page to

Backstop Agreement

	FOUNDERS:

	/s/ Jesse Allen
	Jesse Allen

Signature Page to

Backstop Agreement

	FOUNDERS:

	/s/ Byron Blount
	Byron Blount

Signature Page to

Backstop Agreement

	FOUNDERS:

	/s/ John McKee
	John McKee

Signature Page to

Backstop Agreement

EXHIBIT A

Share Ownership

Name	Number of Trust Shares
Alan T. Cooke		40,000
Jesse Allen		30,000
Byron Blount		25,000
John McKee		10,000
JVS Alpha Property, LLC		940,000
Dante Caravaggio, LLC		300,000

Exhibit 10.7

FOUNDER PLEDGE AGREEMENT

This Founder Pledge Agreement (the “Agreement”) is made as of November 15, 2023 (the “Execution Date”) by and among HNR Acquisition Corp., a Delaware corporation (the “Company” or the “SPAC”) and the persons listed as Founders on the signature pages hereto (individually, each a “Founder” and, collectively, the “Founders”). Except as otherwise indicated herein, capitalized terms used herein are defined in Section 8 hereof.

WHEREAS, the Company has entered into that certain Amended and Restated Membership Interest Purchase Agreement, dated as of August 28, 2023 (the “MIPA”), CIC Pogo LP, a Delaware limited partnership (“CIC”), DenCo Resources, LLC, a Texas limited liability company (“DenCo”), Pogo Resources Management, LLC, a Texas limited liability company (“Pogo Management”), 4400 Holdings, LLC, a Texas limited liability company (“4400” and, together with CIC, DenCo and Pogo Management, collectively, “Seller” and each a “Seller”), HNRA Upstream, LLC, a Delaware limited liability company (“OpCo”), HNRA Partner, Inc., a Delaware corporation (“SPAC Subsidiary” and together with SPAC and OpCo, collectively, “Buyer” and each a “Buyer”) and, solely with respect to Section 6.20 of the Agreement, HNRAC Sponsors LLC, a Delaware limited liability company (“Sponsor”), pursuant to which Buyer agreed to acquire all of Seller’s right, title and interest in and to one hundred percent (100%) of the outstanding membership interests of Pogo Resources, LLC (the “Pogo”);

WHEREAS, as part of the Aggregate Consideration (as defined in the MIPA) to be paid to the Seller by OpCo pursuant to the MIPA, OpCo has agreed to issue up to 2,000,000 Class A Preferred Units to Pogo Royalty, LLC, a Texas limited liability company and affiliate of Seller (“Pogo Royalty” and such number of shares of Class A Preferred Units actually issued to Pogo Royalty, the “Seller Units”) concurrent with the closing of the transactions contemplated by the MIPA (such date, the “Effective Date”);

WHEREAS, as a closing condition, a backstop agreement substantially in the form attached hereto as Exhibit A (the “Backstop Agreement”) is to be executed between SPAC, OpCo, Pogo Royalty, and the Founders; and

WHEREAS, to induce the Founders to execute the Backstop Agreement, SPAC desire to enter into this Agreement with the Founders.

Section 1. Backstop Agreement; Trust Agreement. Prior to or on the Effective Date, the Founders shall enter into an escrow agreement, substantially in the form as attached hereto as Exhibit B (the “Trust Agreement”) and the Backstop Agreement. Pursuant to the Trust Agreement and the Backstop Agreement, the Founders shall place into trust 1,500,000 shares of SPAC’s Class A common stock, par value $0.0001 per share (the “SPAC Class A Common Stock”) as reflected on Exhibit C (the “Trust Shares”) once all Trust Shares are not restricted by transfer (the “Lockup Expiration Date”) pursuant to Section 3 of that certain letter agreement, by and between the SPAC and the Sponsor, dated February 10, 2022 (the “Letter Agreement”). The Founders agree not to sell or borrow against the Trust Shares, except for purposes of financing the purchase of the Seller Units as governed by the Backstop Agreement and the Trust Agreement until the termination of this Agreement or with the prior written consent of Pogo Royalty.

Section 2. Consideration to Founders. As consideration for Founders’ obligations pursuant to Section 1 above, SPAC shall provide consideration as provided in this Section 2.

(a) Pledge Shares; Pledge Warrants. Within sixty-one (61) days after the Effective Date, SPAC shall issue to Founders: (i) a number of newly issued shares of SPAC Class A Common Stock as provided on Exhibit C (the “Pledge Shares”), and (ii) warrants to purchase the number of shares provided on Exhibit C, which shall be exercisable for five (5) years from issuance at an exercise price of $11.50 per share (the “Pledge Warrants”).

(b) Lockup Shares. If the Backstop Agreement or the Trust Agreement is not terminated prior to the Lockup Expiration Date, then SPAC shall issue to Founders newly issued shares of SPAC Class A Common Stock (the “Lockup Shares”). SPAC shall issue the Lockup Shares within ten (10) Trading Days following the termination of the Backstop Agreement. The number of Lockup Shares issuable to each Founder shall be equal to: (i) (A) the number of Trust Shares for such Founder provided on Exhibit C, divided by (B) the simple average of the daily VWAP of the SPAC Class A Common Stock during the five (5) Trading Days prior to the date of the termination of the Backstop Agreement, subject to a minimum of $6.50 per share, multiplied by (C) the Guarantee Price (as defined hereafter), minus (ii) the number of Trust Shares for such Founder provided on Exhibit C. The “Guarantee Price” shall be determined as follows:

(1)

$10.00, if the Backstop Agreement is terminated between 1-29 calendar days after the Lock Expiration Period;

(2)

$10.50 if the Backstop Agreement is terminated between 30-59 calendar days after the Lock Expiration Period;

(3)

$11.00, if the Backstop Agreement is terminated between 60-89 calendar days after the Lock Expiration Period;

(4)

$11.50, if the Backstop Agreement is terminated between 90-119 calendar days after the Lock Expiration Period;

(5)

$12.00, if the Backstop Agreement is terminated between 120-149 calendar days after the Lock Expiration Period;

(6)

$12.50, if the Backstop Agreement is terminated between 150-179 calendar days after the Lock Expiration Period; or

(7)

$13.00, if the Backstop Agreement is terminated 180 calendar days or more after the Lock Expiration Period.

(c) Return Shares. After the purchase of Class A Preferred Units from Pogo Royalty pursuant to the Backstop Agreement, each such Founder (each, a “Selling Founder”) shall immediately (but no longer than two (2) Trading Days) transfer the purchased Class A Preferred Units to SPAC. Within ten (10) Trading Days following the transfer of the Class A Preferred Units to SPAC, SPAC shall issue to such Selling Founder a number of newly issued shares of SPAC Class A Common Stock equal to the number of Trust Shares sold by such Selling Founder to meet such Selling Founder’s obligations under the Backstop Agreement to purchase the Class A Preferred Units (the “Return Shares” and together with the Pledge Shares, the Pledge Warrants, and the Lockup Shares, the “Securities”).

Section 3. Representations and Warranties of the Company. As a material inducement to the Founders to enter into this Agreement, the Company hereby represents and warrants that:

(a) Organization and Corporate Power. The Company is a corporation, which is duly organized, validly existing and in good standing under the laws of Delaware and is qualified to do business in every jurisdiction in which its ownership of property or conduct of business requires it to qualify. The Company has all requisite power and authority and all material licenses, permits and authorizations necessary to own and operate its properties and to carry on its business as now conducted and presently proposed to be conducted, and all requisite power and authority to carry out the transactions contemplated by this Agreement.

(b) No Conflicts. The execution, delivery and performance of this Agreement and the consummation by the Company of the transactions contemplated hereby do not violate, conflict with or constitute a default under (i) the Certificate of Incorporation or Bylaws of the Company, (ii) any agreement, indenture or instrument to which the Company is a party, or (iii) any law, statute, rule or regulation to which the Company is subject, or any agreement, order, judgment or decree to which the Company is subject.

(c) Title to Securities. Upon issuance in accordance with the terms hereof, the Founders will have or receive good title to the Securities, free and clear of all liens, claims and encumbrances of any kind, other than (a) transfer restrictions hereunder and other agreements to which the Securities may be subject which have been notified to the Founders in writing, (b) transfer restrictions under federal and state securities laws, and (c) liens, claims or encumbrances imposed due to the actions of the Founders

(d) No Adverse Actions. There are no actions, suits, investigations or proceedings pending, threatened against or affecting the Company which: (i) seek to restrain, enjoin, prevent the consummation of or otherwise affect the transactions contemplated by this Agreement or (ii) question the validity or legality of any transactions contemplated by this Agreement or seeks to recover damages or to obtain other relief in connection with such transactions.

Section 4. Representations, Warranties, and Agreements of the Founders. As a material inducement to the Company to enter into this Agreement, the Founders hereby each , severally and not jointly, represent and warrant to the Company and agrees with the Company as follows::

(a) No Government Recommendation or Approval. Such Founder understands that no federal or state agency has passed upon or made any recommendation or endorsement of the offering of the Securities.

(b) No Conflicts. The execution, delivery and performance of this Agreement and the consummation by such Founder of the transactions contemplated hereby do not violate, conflict with or constitute a default under (i) the formation and governing documents of such Founder, if applicable, (ii) any agreement, indenture or instrument to which such Founder is a party or (iii) any law, statute, rule or regulation to which such Founder is subject, or any agreement, order, judgment or decree to which such Founder is subject.

(c) Organization and Authority. Such Founder possesses all requisite power and authority necessary to carry out the transactions contemplated by this Agreement. Upon execution and delivery by such Founder, this Agreement is a legal, valid and binding agreement such Founder, enforceable against such Founder in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance or similar laws affecting the enforcement of creditors’ rights generally and subject to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).

(d) Experience, Financial Capability and Suitability. Such Founder is: (i) sophisticated in financial matters and is able to evaluate the risks and benefits of the investment in the Securities and (ii) able to bear the economic risk of its investment in the Securities for an indefinite period of time because the Securities have not been registered under the Securities Act (as defined below) and therefore cannot be sold unless subsequently registered under the Securities Act or an exemption from such registration is available. Such Founder is capable of evaluating the merits and risks of its investment in the Company and has the capacity to protect its own interests. Such Founder must bear the economic risk of this investment until the Securities are sold pursuant to: (i) an effective registration statement under the Securities Act or (ii) an exemption from registration available with respect to such sale. Such Founder is able to bear the economic risks of an investment in the Securities and to afford a complete loss of such Founder’s investment in the Securities.

(e) Accredited Investor. Such Founder represents that it is an “accredited investor” as such term is defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”) and acknowledges the sale contemplated hereby is being made in reliance on a private placement exemption to “accredited investors” within the meaning of Section 501(a) of Regulation D under the Securities Act or similar exemptions under state law.

(f) Investment Purposes. Such Founder is acquiring the Securities solely for investment purposes, for such Founder’s own account and not for the account or benefit of any other person, and not with a view towards the distribution or dissemination thereof. Such Founder did not decide to enter into this Agreement as a result of any general solicitation or general advertising within the meaning of Rule 502 under the Securities Act.

(g) Restrictions on Transfer. Such Founder understands the Securities are being offered and issued in a transaction not involving a public offering within the meaning of the Securities Act (including, without limitation, Section 4(a)(2) and/or Regulation 506(b)). Such Founder understands the Securities will be “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, and such Founder understands that the certificates or book-entries representing the Securities will contain a legend in respect of such restrictions. If in the future such Founder decides to offer, resell, pledge or otherwise transfer the Securities, such Securities may be offered, resold, pledged or otherwise transferred only pursuant to: (i) registration under the Securities Act, or (ii) an available exemption from registration. Such Founder agrees that if any transfer of its Securities or any interest therein is proposed to be made, as a condition precedent to any such transfer, such Founder may be required to deliver to the Company an opinion of counsel satisfactory to the Company. Absent registration or an exemption, such Founder agrees not to resell the Securities.

(h) No Governmental Consents. No governmental, administrative or other third party consents or approvals are required, necessary or appropriate on the part of such Founder in connection with the transactions contemplated by this Agreement.

(i) No Bad Actor. Such Founder hereby represents that none of the “Bad Actor” disqualifying events described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”) is applicable to such Founder or any of its Rule 506(d) Related Parties (as defined below), except, if applicable, for a Disqualification Event as to which Rule 506(d)(2)(ii) or (iii) or (d)(3) is applicable. Such Founder hereby agrees that it shall notify the Company promptly in writing in the event a Disqualification Event becomes applicable to such Founder or any of its Rule 506(d) Related Parties, except, if applicable, for a Disqualification Event as to which Rule 506(d)(2)(ii) or (iii) or (d)(3) is applicable. For purposes of this paragraph, “Rule 506(d) Related Party” shall mean a person or entity that is a beneficial owner of the such Founder’s securities for purposes of Rule 506(d) of the Act.

(j) Anti-Terrorism. Such Founder is not a Person with whom a United States citizen, entity organized under the laws of the United States or its territories or entity having its principal place of business within the United States or any of its territories (collectively, a “U.S. Person”), is prohibited from transacting business of the type contemplated by this Agreement, whether such prohibition arises under United States law, regulation, executive orders and lists published by the Office of Foreign Assets Control, Department of the Treasury (“OFAC”) (including those executive orders and lists published by OFAC with respect to Persons that have been designated by executive order or by the sanction regulations of OFAC as Persons with whom U.S. Persons may not transact business or must limit their interactions to types approved by OFAC, such Persons, “Specially Designated Nationals and Blocked Persons”) or otherwise. Neither such Founder nor any Person who owns an interest in such Founder is a Person with whom a U.S. Person, including a United States financial institution as defined in 31 U.S.C. 5312, as periodically amended, is prohibited from transacting business of the type contemplated by this Agreement, whether such prohibition arises under United States law, regulation, executive orders and lists published by OFAC (including those executive orders and lists published by OFAC with respect to Specially Designated Nationals and Blocked Persons) or otherwise.

(k) Accredited Investor Verification. Upon request by the Company, each Founder shall deliver to the Company a letter from its legal counsel verifying its status as an accredited investor as such term is defined in Rule 501(a) of Regulation D under the Securities Act, and such letter to be made in a form acceptable to the Company and its counsel.

Section 5. Restrictions on Transfer.

(a) Securities Law Restrictions. Each Founder agrees not to sell, transfer, pledge, hypothecate or otherwise dispose of all or any part of the Securities unless, prior thereto (a) such Founder received prior written consent of the Company, (b) a registration statement on the appropriate form under the Securities Act and applicable state securities laws with respect to the Securities proposed to be transferred shall then be effective or (c) the Company has received an opinion from counsel reasonably satisfactory to the Company, that such registration is not required because such transaction is exempt from registration under the Securities Act and the rules promulgated by the Securities and Exchange Commission thereunder and with all applicable state securities laws.

(b) Restrictive Legends. Any certificates representing the Securities shall have endorsed thereon legends substantially as follows:

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL, IS AVAILABLE.”

(c) Registration Rights. Each Founder acknowledges that the Securities are being purchased pursuant to an exemption from the registration requirements of the Securities Act and will become freely tradable only after certain conditions are met.

Section 6. No Short Selling. Until this Agreement is terminated, the Founders will not engage in any transaction which is designed to sell short the SPAC Class A Common Stock of the Company or any other publicly traded securities of the Company.

Section 7. Termination. This Agreement shall automatically be terminated upon the issuance of all Securities issuable, or potentially issuable, pursuant to Section 1 hereof. In addition, this Agreement may be terminated at any time prior to such date by mutual written consent of the Company a Majority of Founders.

Section 8. Definitions. For the purposes of this Agreement, the following terms have the meanings set forth below:

“Majority of Founders” means, at any time of determination, the holders of more than fifty percent (50%) of the Trust Shares.

“Person” means an individual, corporation, partnership, joint venture, association, joint stock company, trust, trustee, estate, company, unincorporated organization, real estate investment trust, government or any agency or political subdivision thereof, or any other form of entity.

“Trading Day” means any days during the course of which the Principal Market on which the SPAC Class A Common Stock is listed or admitted to trading is open for the exchange of securities.

Section 9. Miscellaneous.

(g) Counterparts; Facsimile Signature. This Agreement may be executed in one or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or any other form of electronic delivery, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.

(h) Governing Law. This Agreement will be governed in all respects by the laws of the State of Delaware, without regard to the principles of conflicts of law of such state.

If to the Company:

HNR Acquisition Corp

3730 Kirby Drive, Suite 1200

Houston, Texas 77098

Attention: Donald W. Orr, President

Email: donald.orr@hnra-nyse.com

with copies (which shall not constitute notice) to:

Pryor Cashman LLP

7 Times Square

New York, New York 10036

Attention Matthew Ogurick

Email: mogurick@pryorcashman.com

HNR Acquisition Corp

10142 Holly Chase Drive

Houston, Texas 77042

Attention: David M. Smith, General Counsel

Email: dmsmith@hnra-nyse.com

If to a Founder, at the addresses reflected in Exhibit C.

[Signature page follows]

IN WITNESS WHEREOF, the parties hereto have executed this Founder Pledge Agreement on the date first written above.

	COMPANY:

	HNR ACQUISITION CORP

	By:	/s/ Mitchell B. Trotter
	Name:	Mitchell B. Trotter
	Title:	Chief Financial Officer

Signature Page to

Founder Pledge Agreement

	FOUNDERS:

	JVS ALPHA PROPERTY, LLC

	By:	/s/ Joseph Salvucci, Jr.
	Name:	Joseph Salvucci, Jr.
	Title:	Vice President

Signature Page to

Founder Pledge Agreement

	FOUNDERS:

	DANTE CARAVAGGIO, LLC

	By:	/s/ Dante Caravaggio
	Name:	Dante Caravaggio
	Title:	Sole Member

Signature Page to

Founder Pledge Agreement

	FOUNDERS:

	/s/ Alan T. Cooke
	Alan T. Cooke

Signature Page to

Founder Pledge Agreement

	FOUNDERS:

	/s/ Jesse Allen
	Jesse Allen

Signature Page to

Founder Pledge Agreement

	FOUNDERS:

	/s/ Byron Blount
	Byron Blount

Signature Page to

Founder Pledge Agreement

	FOUNDERS:

	/s/ John McKee
	John McKee

Signature Page to

Founder Pledge Agreement

EXHIBIT A

Form of Backstop Agreement

BACKSTOP AGREEMENT

This Backstop Agreement (the “Agreement”) is made as of [________], 2023 (the “Execution Date”) by and among Pogo Royalty, LLC, a Texas limited liability company (“Pogo Royalty”), HNR Acquisition Corp., a Delaware corporation (the “Company” or the “SPAC”), HNRA Upstream, LLC, a Delaware limited liability company (“OpCo”), and the persons listed as Founders on the signature pages hereto (individually, each a “Founder” and, collectively, the “Founders”). Except as otherwise indicated herein, capitalized terms used herein are defined in Section 8 hereof.

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Section 2. Grant of Put Option.

(d) Right to Sell. Subject to the terms and conditions of this Agreement, at any time on or after the Lockup Expiration Date up to the and until the date this Agreement is terminated in accordance with Section 8 herein, Pogo Royalty shall have the right (the “Put Right”), but not the obligation, to cause the Founders to, jointly and severally, purchase Seller Units at the Put Purchase Price (as defined below) as indicated in the Put Exercise Notice (as defined below), subject to the Put Maximum (as defined below). The Put Right may only be exercised by Pogo Royalty up to two (2) times prior to the termination of this Agreement.

(e) Procedures. If Pogo Royalty desires to sell any of Seller Units pursuant to Section 2(a), Pogo Royalty shall deliver to the Founders a written notice (the “Put Exercise Notice”) exercising the Put Right and specifying the number of Seller Units to be sold up to the Put Maximum (the “Put Units”) by Pogo Royalty to the Founders and the closing date, which shall take place no less than 30 days following receipt by Founder of the Put Exercise Notice (each a “Put Right Closing Date”). By delivering the Put Exercise Notice, Pogo Royalty will represent to the Founders that (A) Pogo Royalty has full right, title, and interest in and to the Put Units, (B) Pogo Royalty has all the necessary power and authority and has taken all necessary action to sell such Put Units as contemplated by this Section 2 and (C) the Put Units are free and clear of any and all mortgages, pledges, security interests, options, rights of first offer, encumbrances, or other restrictions or limitations of any nature whatsoever other than those arising as a result of or under the terms of this Agreement or the A&R LLC Agreement.

(f) Consummation of Sale. The Founders will pay the Put Purchase Price in full for the Put Units by wire transfer of immediately available funds to the account(s) of Pogo Royalty as designated by Pogo Royalty on the Put Right Closing Date.

(g) Cooperation. The Founders and Pogo Royalty shall each take all actions as may be reasonably necessary to consummate the sale contemplated by this Section 2, including, without limitation, entering into agreements and delivering certificates and instruments and consents as may be deemed necessary or appropriate; provided, that such documents shall not impose any liability on Pogo Royalty.

(h) Closing. At the closing of any sale and purchase pursuant to this Section 2, Pogo Royalty shall deliver to the Founders a certificate or certificates representing the Put Units to be sold (if any) or by such other transfer as contemplated by the A&R LLC Agreement, accompanied by limited liability company unit powers and all necessary transfer taxes paid and stamps affixed, if necessary, against receipt of the Put Purchase Price.

(e) Organization and Corporate Power. The Company and OpCo is, respectively, a corporation and a limited liability company, each of which is duly organized, validly existing and in good standing under the laws of Delaware and is qualified to do business in every jurisdiction in which its ownership of property or conduct of business requires it to qualify. Each of the Company and OpCo has all requisite power and authority and all material licenses, permits and authorizations necessary to own and operate its properties and to carry on its business as now conducted and presently proposed to be conducted, and all requisite power and authority to carry out the transactions contemplated by this Agreement.

(f) Capital Stock. All of the issued and outstanding shares of capital stock of the Company have been duly and validly authorized and issued. All of the issued and outstanding units of OpCo have been duly and validly authorized and issued. All Class A Preferred Units to be purchased by the Founders from Pogo Royalty pursuant to Section 2 have been duly authorized, and are validly issued, fully paid and nonassessable.

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(g) Authorization; No Breach; Compliance with Laws. The execution, delivery and performance of this Agreement and any other agreement contemplated hereby to which either the Company or OpCo is a party have been duly authorized by either the Company or OpCo, as applicable. The execution, delivery and performance of this Agreement by either the Company or OpCo and the consummation of the transactions contemplated hereby will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which either the Company or OpCo is a party or by which either the Company or OpCo is bound or to which any of the property or assets of the Company or OpCo is subject, (ii) result in any violation of the provisions of the charter, by-laws or equivalent organizational documents of the Company or OpCo or (iii) result in any violation of any statute, including, without limitation, the Delaware General Corporation Law or the Delaware Limited Liability Company Act, or any order, rule or regulation of any court or governmental agency or body having jurisdiction over either the Company or OpCo any of their properties or assets. No consent, approval, authorization or order of, or filing or registration with, any such court or governmental agency or body is required for the execution, delivery and performance of this Agreement by either the Company or OpCo and the consummation of the transactions contemplated hereby.

(h) Broker’s Fees. There is no investment banker, broker, finder or other intermediary or advisor that has been retained by or is authorized to act on behalf of either the Company or OpCo, or any of their Affiliates who might be entitled to any fee, commission or reimbursement of expenses as a result of consummation of the transactions contemplated hereby.

(l) Authorization; No Breach. The execution of this Agreement by the Founders and the consummation by the Founders of the transactions contemplated hereby will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which such Founder is a party or by which such Founder is bound or to which any of its property or assets is subject, nor will such actions result in any violation of the provisions of any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over such Founder or its property or assets in each case in a manner that would adversely impact the Founders’ ability to purchase the Put Units hereunder; and, except for such consents, approvals, authorizations, registrations or qualifications as may be required under applicable federal and state securities laws in connection with the purchase of the Put Units, no consent, approval, authorization or order of, or filing or registration with, any such court or governmental agency or body is required for the execution, delivery and performance of this Agreement by the Founders and the consummation by the Founders of the transactions contemplated hereby in each case in a manner that would adversely impact the Founders’ ability to purchase the Put Units and perform its obligations hereunder.

(m) Share Ownership. Each Founder has full right, title, and interest in and to the shares of SPAC Class A Common Stock as reflected on Exhibit A, and such shares of SPAC Class A Common Stock are free and clear of any and all mortgages, pledges, security interests, options, rights of first offer, encumbrances, or other restrictions or limitations of any nature whatsoever other than those arising as a result of or under the terms of this Agreement and the Letter Agreement.

(n) Broker’s Fees. There is no investment banker, broker, finder or other intermediary or advisor that has been retained by or is authorized to act on behalf of the Founders who might be entitled to any fee, commission or reimbursement of expenses from either the Company or any of its Affiliates as a result of consummation of the transactions contemplated hereby.

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Section 9. Definitions. For the purposes of this Agreement, the following terms have the meanings set forth below:

“Trading Day” means any days during the course of which the Principal Market on which the SPAC Class A Common Stock is listed or admitted to trading is open for the exchange of securities.

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Section 10. Miscellaneous.

(j) Successors and Assigns. All covenants and agreements in this Agreement by or on behalf of any of the parties hereto will bind and inure to the benefit of the respective successors and assigns of the parties hereto whether so expressed or not; provided that neither this Agreement nor any of the rights, interests, or obligations hereunder may be assigned by any party, including, without limitation, by nature of sale of Seller Units to a third-party, without the prior written consent of the other parties hereto, which such consent shall not be unreasonably withheld, conditioned, or delayed. For the avoidance of doubt, the Put Right does not transfer with the sale, transfer or change of ownership of any Class A Preferred Unit without the express approval of the Company.

(k) Survival of Representations and Warranties. All representations and warranties contained herein shall survive the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.

(l) No Third-Party Beneficiaries. This Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other person any legal or equitable right, benefit, or remedy of any nature whatsoever, under or by reason of this Agreement.

(m) Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

(n) Construction. Whenever the context requires, each term stated in either the singular or the plural shall include the singular and the plural, and pronouns stated in either the masculine, the feminine or the neuter gender shall include the masculine, feminine and neuter. All references to Sections and Paragraphs refer to sections and paragraphs of this Agreement. The use of the word “including” in this Agreement shall be by way of example rather than limitation.

(o) Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of the parties hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. Except as otherwise set forth in this Agreement, no failure to exercise, or delay in exercising, any rights, remedy, power, or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power, or privilege.

(p) Counterparts; Facsimile Signature. This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together shall constitute one and the same Agreement. This Agreement may be executed by facsimile signature.

(q) Governing Law. This Agreement will be governed in all respects by the laws of the State of Delaware, without regard to the principles of conflicts of law of such state.

(r) Notices. All notices which are required or may be given pursuant to this Agreement shall be sufficient in all respects if given in writing and delivered personally, by facsimile, by email or by registered or certified mail, postage prepaid, as follows or at such other address as any party may notify the other party of from time to time:

If to Pogo Royalty:

CIC Pogo LP

Oak Lawn Hall at Old Parkland

3879 Maple Avenue

Suite 400

Dallas, TX 75219

Attention: Chris Cowan

Email: ccowan@cicpartners.com

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with copies (which shall not constitute notice) to:

Baker Botts L.L.P.

2001 Ross Ave. Suite 900

Dallas, Texas 75201

Attention: Jon Platt

Email: jonplatt@bakerbotts.com

If to the Company or OpCo:

HNR Acquisition Corp

3730 Kirby Drive, Suite 1200

Houston, Texas 77098

Attention: Donald W. Orr, President

Email: donald.orr@hnra-nyse.com

with copies (which shall not constitute notice) to:

Pryor Cashman LLP

7 Times Square

New York, New York 10036

Attention Matthew Ogurick

Email: mogurick@pryorcashman.com

HNR Acquisition Corp

10142 Holly Chase Drive

Houston, Texas 77042

Attention: David M. Smith, General Counsel

Email: dmsmith@hnra-nyse.com

If to a Founder, at the addresses reflected in Exhibit A

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EXHIBIT B

Form of Trust Agreement

SHARE ESCROW AGREEMENT

THIS ESCROW AGREEMENT (“Agreement”) is made and entered into as of November 15, 2023, by and among the persons listed as Founders on the signature pages hereto (individually, each a “Founder” and, collectively, the “Founders”), Pogo Royalty, LLC, a Texas limited liability company (“Pogo Royalty”), HNR Acquisition Corp, a Delaware corporation (the “Company” or the “SPAC”), and Continental Stock Transfer & Trust Company, a New York corporation (“Escrow Agent”).

WHEREAS, CIC Pogo LP, a Delaware limited partnership (“CIC”), DenCo Resources, LLC, a Texas limited liability company (“DenCo”), Pogo Resources Management, LLC, a Texas limited liability company (“Pogo Management”), 4400 Holdings, LLC, a Texas limited liability company (“4400” and, together with CIC, DenCo and Pogo Management, collectively, “Seller” and each a “Seller”), the Company, HNRA Upstream, LLC, a Delaware limited liability company (“OpCo”) and HNRAC Sponsors LLC, a Delaware limited liability company (“Sponsor”), solely with respect to Section 6.20 thereof, entered into that certain Amended and Restated Membership Interest Purchase Agreement, dated as of August 28, 2023 (as amended from time to time, the “MIPA”), pursuant to which, OpCo agreed to acquire and accept from Seller, and Seller agreed to contribute, assign and convey to OpCo, all of Seller’s right title and interest to 99.0% of the outstanding membership interests of Pogo Resources, LLC, a Texas limited liability company;

WHEREAS, pursuant to the MIPA, OpCo will amend and restate its limited liability company agreement (the “A&R LLC Agreement”) whereby OpCo will authorize the issuance of 2,000,000 units as the Class A Convertible Preferred Units (the “Class A Preferred Units”);

WHEREAS, as part of the Aggregate Consideration (as defined in the MIPA) to be paid to Pogo Royalty by OpCo pursuant to the MIPA, OpCo has agreed to issue up to 2,000,000 Class A Preferred Units to Pogo Royalty (such number of shares of Class A Preferred Units actually issued to Pogo Royalty, the “Seller Units”) concurrent with the closing of the transactions contemplated by the MIPA; and

WHEREAS, in connection with the MIPA, Pogo Royalty, the Company, OpCo, and the Founders have entered into that certain Backstop Agreement (the “Backstop Agreement”) as of the date even herewith, pursuant to which, the Founders have agreed to place up to 1,300,000 shares as reflected on Exhibit A (the “Escrow Shares”) of the Company’s Class A common stock, par value $0.0001 per share (the “SPAC Class A Common Stock”) owned by the Founders into an account once all Escrow Shares are not restricted by transfer (the “Lockup Expiration Date”) pursuant to Section 3 of that certain letter agreement, by and between the SPAC and the Sponsor, dated February 10, 2022, whereby the Founders will agree not to sell or borrow against the Escrow Shares, except for purposes of financing the purchase of the Seller Units (as defined in the Backstop Agreement) governed by the Backstop Agreement and this Agreement until the termination of the Backstop Agreement or with the prior written consent of Pogo Royalty; and

WHERAS, in connection with the MIPA and the Backstop Agreement (collectively, the “Underlying Agreements”), Pogo Royalty, the Company, and the Founders (the “Parties”) desire to deliver the Escrow Shares to be held in escrow and disbursed in accordance with this Agreement.

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NOW THEREFORE, in consideration of the foregoing and of the mutual covenants hereinafter set forth, the Parties hereto agree as follows:

1. Appointment

(a) The Founders and Pogo Royalty hereby appoint the Escrow Agent as its escrow agent for the purposes set forth herein, and the Escrow Agent hereby accepts such appointment under the terms and conditions set forth herein.

(b) All capitalized terms with respect to the Escrow Agent shall be defined herein. The Escrow Agent shall act only in accordance with the terms and conditions contained in this Agreement and shall have no duties or obligations with respect to the MIPA or the Backstop Agreement pursuant to this Agreement.

2. Escrow Shares

(a) Upon the Lockup Expiration Date, the Founders shall deposit with the Escrow Agent the Escrow Shares. The Escrow Agent shall hold the Escrow Shares as a book-entry position registered in the name of “Continental Stock Transfer & Trust as Escrow Agent for the benefit of [FOUNDER NAME].”

(b) During the term of this Agreement, the Founders shall have the right to exercise voting rights with respect to the Escrow Shares, in proportion to their holdings as described on Exhibit A. With respect to any matter for which the Escrow Shares are permitted to vote, the Escrow Agent shall vote, or cause to be voted the Escrow Shares as directed by the Founders. In the absence of direction from the Founders, the Escrow Agent shall not vote any of the shares comprising the Escrow Shares.

(c) During the term of this Agreement, the Founders shall not Transfer, and the Escrow Agent shall not permit the Transfer, of the Escrow Shares, except as provided in Section 3 of this Agreement. For the purposes of this Agreement, “Transfer” means, with respect to an Escrow Share, directly or indirectly, any sale, assignment, transfer by bequest, devise or descent, conveyance (including a conveyance in trust), granting of an encumbrance, hypothecation, or pledge, or other transfer or disposition of such share or any legal or beneficial interest in such share, whether or not for value and whether voluntary or involuntary or by operation of law. For purposes of this Agreement, a Transfer includes, without limitation, a transfer of the Escrow Shares to a broker or other nominee (regardless of whether or not there is a corresponding change in beneficial ownership) and the transfer of, or entering into an agreement with respect to, voting control over the Escrow Shares by proxy or otherwise; provided, however, that the following will not be considered a Transfer: (i) the grant of a revocable proxy to officers or directors of the Company at the request of the Board of Directors of the Company, in connection with actions to be taken at an annual or special meeting of stockholders or in connection with any action by written consent of the stockholders solicited by the Board of Directors of the Company, or (ii) any acquisition or disposition (including by judicial determination) of a community property interest in the Escrow Shares that does not result in a disposition by a holder the Escrow Shares of either his or her economic interest in such Escrow Shares or an acquisition of exclusive voting control by another person (including the spouse or former-spouse of such holder) of the Escrow Shares.

(d) [RESERVED].

(e) In the event of any stock split, reverse stock split, stock dividend, recapitalization, reorganization, merger, consolidation, combination, exchange of shares, liquidation, spin-off or other similar change in capitalization or event, or any distribution to holders of the SPAC Class A Common Stock, other than a regular cash dividend, the Escrow Shares shall be appropriately adjusted on a pro rata basis and consistent with the terms of the Agreements.

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(f) The Parties agree that the Escrow Shares shall (i) not be subject to set off by the Escrow Agent or any of its affiliates, (ii) not be subject to any attachment, mortgage, lien, pledge, charge, hypothecation, right of third person, assessment, security interest or encumbrance of any kind, whether consensual, statutory, or otherwise, any conditional sale or voting agreement or proxy, including any agreement to give any of the foregoing, any trustee process or any other judicial process of any creditor of any Party or the Escrow Agent (a “Lien”), other than Liens arising pursuant to applicable securities laws, and (iii) be held and disbursed solely for the purposes and in accordance with the terms of this Agreement, except as otherwise provided in Section 11 below.

3. Disposition and Termination.

(a) Except as provided in Section 3(d) below, the Escrow Agent shall allow a Transfer or disburse the Escrow Shares or any part thereof only in accordance with and upon: (i) written instructions of each of Pogo Royalty and the Founder whose Escrow Shares are at interest (a “Joint Written Direction”), duly executed by an authorized person of Pogo Royalty and the Founder whose Escrow Shares are at interest (or counterparts thereof), or (ii) a written instruction, order or judgment (x) which has not been reversed, stayed, modified, amended, enjoined, set aside, annulled or suspended, (y) with respect to which no request for a stay, motion or application for reconsideration or rehearing, notice of appeal or petition for certiorari is filed within the deadline provided by applicable statute or regulation or as to which any appeal that has been taken or any petition for certiorari that has been or may be filed has been resolved by the highest court to which the order or judgment was appealed or from which certiorari was sought and (z) as to which the deadlines for filing such request, motion, petition, application, appeal or notice referred to in clause (y) above have expired of a court of competent jurisdiction (a “Final Order”).

(b) Not later than five (5) Business Days after receipt of a Joint Written Direction or five (5) Business Days after receipt of a Final Order, in either case, directing the Escrow Agent to permit the Transfer or disbursement of the Escrow Shares in accordance with the terms and provisions of such Joint Written Direction or Final Order, the Escrow Agent shall disburse such Escrow Shares in accordance therewith.

(c) Any Joint Written Direction or Final Order may instruct the Escrow Agent to release all or any portion of the remainder Escrow Shares.

(d) Upon the date that is six (6) months following the Lockup Expiration Date, the Escrow Agent shall release all remaining Escrow Shares to the Founders in proportion to the Founder’s holdings on Exhibit A.

(e) Upon the delivery of all the Escrow Shares by the Escrow Agent in accordance with the terms of this Agreement, this Agreement shall terminate, subject to the provisions of Section 6.

(f) Unless otherwise directed in a Joint Written Direction or Final Order, if, pursuant to any distribution made in accordance with this Section 3, the Escrow Agent will deliver Escrow Shares to a Founder (or its designee), the Escrow Agent shall also concurrently deliver to such person all dividends received on account of such shares and held by the Escrow Agent at such time.

4. Escrow Agent.

(a) The Escrow Agent hereby agrees and covenants with the Parties that it shall perform all of its obligations under this Agreement and shall not deliver custody or possession of any of the Escrow Shares to anyone, except pursuant to the express terms of this Agreement or as otherwise required by applicable law. The Escrow Agent shall have only those duties as are specifically and expressly provided herein, which shall be deemed purely ministerial in nature, and no other duties shall be implied. The Escrow Agent shall neither be responsible for, nor chargeable with, knowledge of, nor have any requirements to comply with, the terms and conditions of any other agreement, instrument or document by or between any other person or entity, in connection herewith, if any, including without limitation the Underlying Agreement or nor shall the Escrow Agent be required to determine if any person or entity has complied with any such agreements, nor shall any additional obligation of the Escrow Agent be inferred from the terms of such agreements, even though reference thereto may be made in this Agreement.

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(b) In the event of any conflict between the terms and provisions of this Agreement, those of the Underlying Agreements, or any other agreement by or between any other person or entity, the terms and conditions of this Agreement shall control.

(c) The Escrow Agent may rely upon and shall not be liable for acting or refraining from acting upon any written notice, document, instruction or request furnished to it hereunder and believed by it to be genuine and to have been signed or presented by the without inquiry and without requiring substantiating evidence of any kind. The Escrow Agent shall not be liable to any beneficiary or other person for refraining from acting upon any instruction setting forth, claiming, containing, objecting to, or related to the transfer or distribution of the Escrow Shares, or any portion thereof, unless such instruction shall have been delivered to the Escrow Agent in accordance with Section 2 hereof and the Escrow Agent has been able to satisfy any applicable security procedures as may be required hereunder and as set forth in Section 10. The Escrow Agent shall be under no duty to inquire into or investigate the validity, accuracy or content of any such document, notice, instruction or request. The Escrow Agent shall have no duty to solicit any payments which may be due nor shall the Escrow Agent have any duty or obligation to confirm or verify the accuracy or correctness of any amounts deposited with it hereunder.

(d) The Escrow Agent shall not be liable for any action taken, suffered or omitted to be taken by it in good faith except to the extent that a final adjudication of a court of competent jurisdiction determines that the Escrow Agent’s gross negligence or willful misconduct was the primary cause of any loss to either or the beneficiary. The Escrow Agent may execute any of its powers and perform any of its duties hereunder directly or through affiliates or agents.

(e) The Escrow Agent may consult with counsel, accountants and other skilled persons to be selected and retained by it. The Escrow Agent shall not be liable for any action taken, suffered or omitted to be taken by it in accordance with, or in reliance upon, the advice or opinion of any such counsel, accountants or other skilled persons except to the extent that a final adjudication of a court of competent jurisdiction determines that the Escrow Agent’s gross negligence or willful misconduct was the primary cause of any loss. In the event that the Escrow Agent shall be uncertain or believe there is some ambiguity as to its duties or rights hereunder or shall receive instructions, claims or demands from hereto which, in its opinion, conflict with any of the provisions of this Agreement, it shall be entitled to refrain from taking any action and its sole obligation shall be to keep safely all the property held in escrow until it shall be given a direction in writing which eliminates such ambiguity or uncertainty to the satisfaction of the Escrow Agent or by a final and non-appealable order or judgement of a court of competent jurisdiction agrees to pursue any redress or recourse in connection with any dispute without making the Escrow Agent a party to the same.

5. Succession.

(a) The Parties, acting jointly, may remove the Escrow Agent at any time, with or without cause, by giving to the Escrow Agent fifteen (15) calendar days’ advance notice in writing of such removal signed by the authorized representatives of each Party. The Escrow Agent may resign and be discharged from its duties or obligations hereunder by giving thirty (30) days’ advance notice in writing of such resignation to specifying a date when such resignation a date when such resignation shall take effect, provided that such resignation shall not take effect until a successor escrow agent has been appointed in accordance with this Section 5. If the Founders and Pogo Royalty have failed to appoint a successor Escrow Agent prior to the expiration of thirty (30) days following receipt of the notice of resignation, the Escrow Agent may petition any court of competent jurisdiction for the appointment of a successor escrow agent or for other appropriate relief, and any such resulting appointment shall be binding upon all of the parties hereto. The Escrow Agent’s sole responsibility after such thirty (30) day notice period expires shall be to hold the Escrow Shares (without any obligation to reinvest the same) and to deliver the same to a designated substitute Escrow Agent, if any, or in accordance with the directions of a final order or judgement of a court of competent jurisdiction, at which time of delivery the Escrow Agent’s obligations hereunder shall ease and terminate, subject to the provisions of Section 7 below. In accordance with Section 7 below, the Escrow Agent shall have the right to withhold, as security, an amount of shares equal to any dollar amount due and owing to the Escrow Agent, plus any costs and expenses the Escrow Agent shall reasonably believe may be incurred by the Escrow Agent in connection with the termination of this Agreement.

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(b) Any entity into which the Escrow Agent may be merged or converted or with which it may be consolidated, or any entity to which all or substantially all the escrow business may be transferred, shall be the Escrow Agent under this Agreement without further act.

6. Compensation and Reimbursement. The Escrow Agent shall be entitled to compensation for its services under this Agreement as Escrow Agent and for reimbursement for its reasonable out-of-pocket costs and expenses, in the amounts and payable as set forth on Schedule 2, which such compensation and expenses shall be paid by the Company. The Escrow Agent shall also be entitled to payments of any amounts to which the Escrow Agent is entitled under the indemnification provisions contained herein as set forth in Section 7. The obligations set forth in this Section 6 shall survive the resignation, replacement or removal of the Escrow Agent or the termination of this Agreement.

7. Indemnity

(a) The Escrow Agent shall be indemnified and held harmless by the Company from and against any expenses, including counsel fees and disbursements, or loss suffered by the Escrow Agent in connection with any action, suit or other proceeding involving any claim which in any way, directly or indirectly, arises out of or relates to this Agreement, the services of the Escrow Agent hereunder, other than expenses or losses arising from the gross negligence or willful misconduct of the Escrow Agent. Promptly after the receipt by the Escrow Agent of notice of any demand or claim or the commencement of any action, suit or proceeding, the Escrow Agent shall notify the other parties hereto in writing. In the event of the receipt of such notice, the Escrow Agent, in its sole discretion, may commence an action in the Nature of Interpleader in any state of federal court located in New York County, State of New York.

(b) The Escrow Agent shall not be liable for any action taken or omitted by it in good faith and in the exercise of its own best judgement, and may rely conclusively and shall be protected in acting upon any order, notice, demand, certificate, opinion or advice of counsel (including counsel chosen by the Escrow Agent), statement, instrument, report or other paper or document (not only as to its due execution and the validity and effectiveness of its provisions, but also as to the truth and acceptability of any information therein contained) which is believed by the Escrow Agent to be genuine and to be signed or presented by the proper person or persons. The Escrow Agent shall not be bound by any notice or demand, or any waiver, modification, termination or rescission of this Agreement unless evidenced by a writing delivered to the Escrow Agent are affected, unless it shall have given its prior written consent thereto.

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(c) The Escrow Agent shall not be liable for any action taken by it in good faith and believed by it to be authorized or within the rights or powers conferred upon it by this Agreement, and may consult with counsel of its own choice and shall have full and complete authorization and indemnification, for any action take or suffered by it hereunder in good faith and in accordance with the opinion of such counsel.

(d) This Section 7 shall survive termination of this Agreement or the resignation, replacement or removal of the Escrow Agent for any reason.

8. Patriot Act Disclosure/Taxpayer Identification Numbers/Tax Reporting.

(a) Patriot Act Disclosure. Section 326 of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA PATRIOT Act”) requires the Escrow Agent to implement reasonable procedures to verify the identity of any person that opens a new account with it. Accordingly, the Founders acknowledge that Section 326 of the USA PATRIOT Act and the Escrow Agent’s identity verification procedures require the Escrow Agent to obtain information which may be used to confirm the Founders’ identity including without limitation name, address and organizational documents (“identifying information”). The Founders agrees to provide the Escrow Agent with and consent to the Escrow Agent obtaining from third parties any such identifying information required as a condition of opening an account with or using any service provided by the Escrow Agent.

(b) Such underlying transaction does not constitute an installment sale requiring any tax reporting or withholding of imputed interest or original issue discount to the Internal Revenue Service or other taxing authority.

9. Notices.

(a) All communications hereunder shall be in writing and all notices and communications hereunder shall be deemed to have been duly given and made if in writing and if (i) served by personal delivery upon the party for whom it is intended, (ii) delivered by registered or certified mail, return receipt requested, or by Federal Express or similar overnight courier, or (iii) sent by facsimile or email, electronically or otherwise, to the party at the address set forth below, or such other address as may be designated in writing hereafter, in the same manner, by such party:

If to a Founder, at the addresses reflected in Exhibit A.

If to the Escrow Agent:

Continental Stock Transfer and Trust
One State Street — 30th Floor
New York, New York 10004
Facsimile No: (212) 616-7615
Attention:

If to Pogo Royalty:

CIC Pogo LP

Oak Lawn Hall at Old Parkland

3879 Maple Avenue

Suite 400

Dallas, TX 75219

Attention: Chris Cowan

Email: ccowan@cicpartners.com

B-6

with copies (which shall not constitute notice) to:

Baker Botts L.L.P.

2001 Ross Ave. Suite 900

Dallas, Texas 75201

Attention: Jon Platt

Email: jonplatt@bakerbotts.com

If to the Company:

HNR Acquisition Corp

3730 Kirby Drive, Suite 1200

Houston, Texas 77098

Attention: Donald W. Orr, President

Email: donald.orr@hnra-nyse.com

with copies (which shall not constitute notice) to:

Pryor Cashman LLP

7 Times Square

New York, New York 10036

Attention Matthew Ogurick

Email: mogurick@pryorcashman.com

HNR Acquisition Corp

10142 Holly Chase Drive

Houston, Texas 77042

Attention: David M. Smith, General Counsel

Email: dmsmith@hnra-nyse.com

(b) Notwithstanding the above, in the case of communications delivered to the Escrow Agent, such communications shall be deemed to have been given on the date received by an officer of the Escrow Agent or any employee of the Escrow Agent who reports directly to any such offer at the above-referenced office. In the event that the Escrow Agent, in its sole discretion, shall determine that an emergency exists, the Escrow Agent may use such other means of communication as the Escrow Agent deems appropriate. For purposes of this Agreement, “Business Day” shall mean any day other than a Saturday, Sunday or any other day on which the Escrow Agent located at the notice address set forth above is authorized or required by law or executive order to remain closed.

10. Security Procedures.

(a) Notwithstanding anything to the contrary as set forth in Section 9, any instructions setting forth, claiming, containing, objecting to, or in any way related to the transfer distribution, including but not limited to any transfer instructions that may otherwise be set forth in a written instruction permitted pursuant to Section 2 of this Agreement, may be given to the Escrow Agent only by confirmed facsimile or other electronic transmission (including e-mail) and no instruction for or related to the transfer or distribution of the Escrow Shares, or any portion thereof, shall be deemed delivered and effective unless the Escrow Agent actually shall have received such instruction by facsimile or other electronic transmission (including e-mail) at the number or e-mail address provided by the Escrow Agent in accordance with Section 9 and as further evidenced by a confirmed transmittal to that number.

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(b) In the event transfer instructions are so received by the Escrow Agent by facsimile or other electronic transmission (including e-mail), the Escrow Agent is authorized to seek confirmation of such instructions by telephone call-back to the person or persons designated on Schedule 1 hereto, and the Escrow Agent may rely upon the confirmation of anyone purporting to be the person or persons so designated. The persons and telephone numbers for call-backs may be changed only in writing actually received and acknowledged by the Escrow Agent. If the Escrow Agent is unable to contact any of the authorized representatives identified in Schedule 1, the Escrow Agent is hereby authorized both to receive written instructions from and seek confirmation of such instructions by officers of the Company (collectively, the “Senior Officers”), as the case may be, which shall include the titles of Chief Executive Officer, General Counsel, Chief Financial Officer, President of Executive Vice President, as the Escrow Agent may select. Such Senior Officer shall deliver to the Escrow Agent a fully executed incumbency certificate, and the Escrow Agent may rely upon the confirmation of anyone purporting to be any such officer.

(c) The Founders acknowledge that the Escrow Agent is authorized to deliver the Escrow Shares to the custodian account of recipient designated by the Founders in writing.

11. Compliance with Court Officers. In the event that any escrow property shall be attached, garnished or levied upon by any court order, or the delivery thereof shall be stayed or enjoined by an order of a court, or any order, judgement of decree shall be made or entered by any court order affecting the property deposited under this Agreement, the Escrow Agent is hereby expressly authorized, in its sole discretion, to obey and comply with all writs, orders or decrees so entered or whether with or without jurisdiction, and in the event that the Escrow Agent reasonably obeys or complies with any such writ, order or decree it shall not be liable to any of the parties hereto or to any other person, entity, firm or corporation, by reason of such compliance notwithstanding such writ, order or decree by subsequently reversed, modified, annulled, set aside or vacated.

12. Miscellaneous.

(a) Except for changes to transfer instructions as provided in Section 10, the provisions of this Agreement may be waived, altered, amended or supplemented, in whole or in part, only by a writing signed by the Escrow Agent and the Parties. Neither this Agreement nor any right or interest hereunder may be assigned in whole or in part by any party hereto except as provided in Section 5.

(b) This Agreement shall be governed by and construed under the laws of the State of New York. Each party hereto irrevocably waives any objection on the grounds of venue, forum non-convenience or any similar grounds and irrevocably consents to service of process by mail or in any other manner permitted by applicable law and consents to the jurisdiction of any court of the State of New York or United States federal court, in each case, sitting in New York County, New York. To the extent that in any jurisdiction any party may now or hereafter be entitled to claim for itself or its assets, immunity from suit, execution attachment (before or after judgement), or other legal process, such party shall not claim, and it hereby irrevocably waives, such immunity. The parties further hereby waive any right to a trial by jury with respect to any lawsuit or judicial proceedings arising or relating to this Agreement.

(c) No party to this Agreement is liable to any other party for losses due to, or if it is unable to perform its obligations under the terms of this Agreement because of, acts of God, fire, war, terrorism, floods, strikes, electrical outages, equipment or transmission failure, or other causes reasonably beyond its control.

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(d) 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. All signatures of the parties to this Agreement may be transmitted by facsimile or other electronic transmission (including e-mail), and such facsimile or other electronic transmission (including e-mail) will, for all purposes, be deemed to be the original signature of such party whose signature it reproduces, and will be binding upon such party.

(e) If any provision of this Agreement is determined to be prohibited or unenforceable by reason of any applicable law of a jurisdiction, then such provision shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions thereof, and any such prohibition or unenforceability in such jurisdiction shall not invalidate or render unenforceable such provisions in any other jurisdiction.

(f) A person who is not a party to this Agreement shall have no right to enforce any term of this Agreement.

(g) The parties represent, warrant and covenant that each document, notice, instruction or request provided by such party to the other party shall comply with applicable laws and regulations. Where, however, the conflicting provisions of any such applicable law may be waived, they are hereby irrevocably waived by the parties hereto to the fullest extent permitted by law, to the end that this Agreement shall be enforced as written. Except as expressly provided in Section 7 above, nothing in this Agreement, whether express or implied, shall be construed to give to any person or entity other than the Escrow Agent and the Company, the Founders, or Pogo Royalty any legal or equitable right, remedy, interest or claim under or in respect of this Agreement or the Escrow Shares escrowed hereunder.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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EXHIBIT C

Founders

Name	Number of Initial Trust Shares	Number of Pledge Shares	Number of Pledge Warrants
Alan T. Cooke	40,000	4,000	4,000
Jesse Allen	30,000	3,000	3,000
Byron Blount	25,000	2,500	2,500
John McKee	10,000	1,000	1,000
JVS Alpha Property, LLC	940,000	94,000	94,000
Dante Caravaggio, LLC	300,000	30,000	30,000

C-1

Exhibit 10.8

Execution Version

SENIOR SECURED TERM LOAN AGREEMENT

HNR ACQUISITION CORP,
as Borrower,

HNRA UPSTREAM, LLC, HNRA PARTNER, INC., POGO RESOURCES, LLC, and

LH OPERATING, LLC, as Guarantors,

and

FIRST INTERNATIONAL BANK & TRUST,

as Lender

$28,000,000.00 Senior Secured Term Loan

November 15, 2023

TABLE OF CONTENTS

			Page

Article I Definitions and References			1
	Section 1.1	Defined Terms	1
	Section 1.2	Exhibits and Schedules; Additional Definitions	23
	Section 1.3	Terms Generally; References and Titles	24
	Section 1.4	Calculations and Determinations	24
	Section 1.5	Rounding	24
	Section 1.6	Times of Day	25
	Section 1.7	Joint Preparation; Construction of Indemnities and Releases	25
	Section 1.8	Divisions	25
	Section 1.9	Designation of Unrestricted Subsidiaries	25

Article II The Loan			26
	Section 2.1	The Loan; Note	26
	Section 2.2	Reserved	26
	Section 2.3	Use of Proceeds	26
	Section 2.4	Interest Rates and Fees	26
	Section 2.5	Scheduled Repayments of Loans	27
	Section 2.6	Optional Prepayments	27
	Section 2.7	Mandatory Prepayments	27
	Section 2.8	Debt Service Reserve Account	28

Article III Payments to Lender			28
	Section 3.1	General Procedures	28
	Section 3.2	Increased Costs	29
	Section 3.3	Funding Losses	30
	Section 3.4	Taxes	30

Article IV Conditions Precedent to Lending			32
	Section 4.1	Conditions Precedent to the Loan	32

Article V Representations and Warranties			35
	Section 5.1	No Default	35
	Section 5.2	Organization and Good Standing	35
	Section 5.3	Authorization	36
	Section 5.4	No Conflicts or Consents	36
	Section 5.5	Enforceable Obligations	36
	Section 5.6	Financial Statements	36
	Section 5.7	Other Obligations and Restrictions	37
	Section 5.8	Full Disclosure	37
	Section 5.9	Litigation	37
	Section 5.10	ERISA Plans and Liabilities	38
	Section 5.11	Environmental and Other Laws	38
	Section 5.12	Names and Places of Business	39
	Section 5.13	Subsidiaries	39

	Section 5.14	Government Regulation	39
	Section 5.15	Solvency	39
	Section 5.16	Taxes	39
	Section 5.17	Title to Properties; Intellectual Property	40
	Section 5.18	Regulation U	40
	Section 5.19	Leases and Contracts; Performance of Obligations	41
	Section 5.20	Marketing Arrangements	41
	Section 5.21	Right to Receive Payment for Future Production	42
	Section 5.22	Operation of Oil and Gas Properties	42
	Section 5.23	Ad Valorem and Severance Taxes	42
	Section 5.24	Insurance	43
	Section 5.25	Anti-Corruption Laws; Sanctions	43
	Section 5.26	Beneficial Ownership	43
	Section 5.27	EEA Financial Institution	43
	Section 5.28	Bank Accounts	43

Article VI Affirmative Covenants			43
	Section 6.1	Payment and Performance	43
	Section 6.2	Books, Financial Statements and Reports	44
	Section 6.3	Other Information and Inspections	46
	Section 6.4	Notice of Material Events and Change of Address	47
	Section 6.5	Maintenance of Properties	47
	Section 6.6	Maintenance of Existence and Qualifications	48
	Section 6.7	Payment of Trade Liabilities, Taxes, etc	48
	Section 6.8	Insurance	48
	Section 6.9	Performance on Borrower’s Behalf	49
	Section 6.10	Compliance with Agreements and Law; Permits	49
	Section 6.11	Environmental Matters; Environmental Reviews.	49
	Section 6.12	Shareholder Indebtedness	50
	Section 6.13	Guaranties	50
	Section 6.14	Agreement to Deliver Security Documents	50
	Section 6.15	Production Proceeds	51
	Section 6.16	Perfection and Protection of Security Interests and Liens	51
	Section 6.17	Leases and Contracts; Performance of Obligations	52
	Section 6.18	Operating Account	52
	Section 6.19	Hedging Contracts	52
	Section 6.20	Unrestricted Subsidiaries	53
	Section 6.21	ORR Option Financing	53
	Section 6.22	Post-Closing Covenant	54

Article VII Negative Covenants			54
	Section 7.1	Indebtedness	54
	Section 7.2	Limitation on Liens	55
	Section 7.3	Hedging Contracts	55
	Section 7.4	Limitation on Mergers, Issuances of Securities	55
	Section 7.5	Limitation on Dispositions	56
	Section 7.6	Limitation on Distributions and Subordinated Debt Payments	57

	Section 7.7	Limitation on Investments	57
	Section 7.8	Transactions with Affiliates	57
	Section 7.9	Negative Pledge; Certain Prohibited Restrictions; ERISA	57
	Section 7.10	Conduct of Business	58
	Section 7.11	Amendments to Organizational Documents and Material Contracts	58
	Section 7.12	Fiscal Year	58
	Section 7.13	Proceeds of Loans	58
	Section 7.14	Gas Imbalances, Take-or-Pay or Other Prepayments	59
	Section 7.15	Non-Qualified ECP Guarantors	59
	Section 7.16	Sale and Leaseback Transactions	59
	Section 7.17	Accounts	59
	Section 7.18	Debt Service Coverage Ratio	59

Article VIII Events of Default and Remedies			59
	Section 8.1	Events of Default	59
	Section 8.2	Remedies	62
	Section 8.3	Application of Proceeds After Acceleration	62
	Section 8.4	Equity Cure	63

Article IX Reserved			64

Article X Miscellaneous			64
	Section 10.1	Waivers and Amendments; Acknowledgments	64
	Section 10.2	Survival of Agreements; Cumulative Nature	65
	Section 10.3	Notices; Effectiveness; Electronic Communication	65
	Section 10.4	[Reserved].	67
	Section 10.5	Approved Counterparty	67
	Section 10.6	Consultation with Counsel	67
	Section 10.7	Expenses; Indemnity; Damage Waiver.	67
	Section 10.8	Successors and Assigns; Joint and Several Liability	68
	Section 10.9	Confidentiality	69
	Section 10.10	Governing Law; Submission to Process	70
	Section 10.11	Limitation on Interest	71
	Section 10.12	Severability	71
	Section 10.13	Counterparts; Integration; Effectiveness; Electronic Execution	72
	Section 10.14	No Advisory or Fiduciary Responsibility	72
	Section 10.15	USA PATRIOT Act Notice	73
	Section 10.16	Right of Setoff	73
	Section 10.17	Payments Set Aside	73

iii

SCHEDULES AND EXHIBITS

Schedule 1	-	Disclosure Schedule
Schedule 2	-	Security Schedule
Schedule 3	-	Material Contracts
Schedule 4	-	Initial Annual Budget
Schedule 5	-	Shareholder Indebtedness
Exhibit A	-	Promissory Note
Exhibit B	-	Borrowing Request
Exhibit C	-	Compliance Certificate
Exhibit D	-	Form of Intercreditor Agreement

SENIOR SECURED TERM LOAN AGREEMENT

THIS SENIOR SECURED TERM LOAN AGREEMENT is made as of November 15, 2023, by and among HNR ACQUISITION CORP, a Delaware corporation (“Borrower”), HNRA UPSTREAM, LLC, a Delaware limited liability company, HNRA PARTNER, INC., a Delaware corporation, POGO RESOURCES, LLC, a Texas limited liability company, and LH OPERATING, LLC, a Texas limited liability company (each as a “Guarantor”), and FIRST INTERNATIONAL BANK & TRUST, a North Dakota state banking institution (“Lender”).

W I T N E S S E T H:

In consideration of the Loan made by Lender to Borrower, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows:

Article I
Definitions and References

Section 1.1 Defined Terms. As used in this Agreement, each of the following terms has the meaning given to such term in this Section 1.1, or in the sections and subsections referred to below:

“Additional Debt Service Reserve Deposit” has the meaning given to such term in Section 2.8.

“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the Person specified.

“Agreement” means this Senior Secured Term Loan Agreement.

“Annual Budget” means the annual projected cash flows and capital expenditures of Borrower and its Subsidiaries for each Fiscal Year for Borrower and its Subsidiaries prepared by Borrower and delivered to Lender pursuant to Section 6.2(f).

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

“Approved Counterparty” means a counterparty to a Hedging Contract with a Loan Party that at the time of entering into such Hedging Contract is (a) Cargill, Incorporated, (b) any other Person whose senior unsecured long-term debt obligations are rated A+ or higher by S&P and A1 or higher by Moody’s (or whose obligations under the applicable Hedging Contract are guaranteed by an Affiliate of such Person meeting such rating standards) or (c) any other Person approved by Lender in writing in its sole discretion.

“ASC” means the Financial Accounting Standards Board Accounting Standards Codification, as in effect from time to time.

“Bankruptcy Code” means the United States Bankruptcy Code, Title 11 U.S.C.

“Beneficial Ownership Certification” means a certification regarding beneficial ownership required by the Beneficial Ownership Regulation, which certification shall be substantially similar in form and substance to the form of Certification Regarding Beneficial Owners of Legal Entity Customers published jointly, in May 2018, by the Loan Syndications and Trading Association and Securities Industry and Financial Markets Association.

“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.

“Board” means, with respect to each Loan Party: (a) if it is a corporation, its board of directors, (b) if it is a limited liability company managed by managers, its board of managers, if it has such a board, and otherwise its managers acting collectively, (c) if it is a limited liability company managed by its members, such members, acting collectively, (d) if it is a partnership with one or more general partners that are corporations or limited liability companies, the Board of each such general partner, and (e) in any other situation, the equivalent governing body exercising the function of a board of directors or the natural person(s) exercising similar functions.

“Borrower” has the meaning given to such term in the preamble to this Agreement.

“Business Day” means a day, other than a Saturday or Sunday, on which commercial banks are open for business with the public in North Dakota and Houston, Texas.

“Business Proceeds” means any source of income or payment received by or on behalf of a Loan Party, including (a) any proceeds from the sales of Hydrocarbons, (b) any Net Cash Proceeds, (c) proceeds from Hedging Contracts and (d) any other cash or Cash Equivalents received by a Loan Party from whatever source; provided that (i) advances under the Loan and (ii) permitted issuances of debt or Equity shall not constitute “Business Proceeds.”

“Capital Deposit Account” means account number 4501784529 located at Lender subject to a Deposit Account Control Agreement into which Borrower shall deposit net proceeds from any Equity issuances.

“Capital Lease Obligation” means, with respect to any Person and any Capital Lease to which it or its assets are subject, the amount of the obligation of such Person as the lessee under such Capital Lease that should, in accordance with GAAP, appear as a liability with respect to such Capital Lease on the balance sheet of such Person (or on any consolidated balance sheet that includes such Person’s assets and liabilities).

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

“Cash Equivalents” means Investments in:

(a) marketable obligations, maturing within 12 months after acquisition thereof, issued or unconditionally guaranteed by the United States or an instrumentality or agency thereof and entitled to the full faith and credit of the United States;

(b) demand deposits, and time deposits (including certificates of deposit) maturing within 12 months from the date of deposit thereof, with a domestic office of any national or state bank or trust company that is organized under the Laws of the United States or any state therein, which has capital, surplus and undivided profits of at least $500,000,000, and whose long term certificates of deposit are rated at least Aa3 by Moody’s or AA- by S&P;

(c) open market commercial paper, maturing within 270 days after acquisition thereof, rated in the highest grade by Moody’s or S&P; and

(d) deposits in money market funds investing exclusively in Investments described in the preceding clauses (a) through (c).

“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.

“Closing Date” means the date on which all of the conditions precedent set forth in Section 4.1 shall have been satisfied or waived.

“Collateral” means all Property of any kind that is subject to a Lien in favor of Lender (for the benefit of the Secured Parties) or that, under the terms of any Security Document, is purported to be subject to such a Lien, in each case that secures all or any part of the Secured Obligations.

“Collateral Value” or “Collateral Valuation” means at any time an amount reasonably determined by Lender equal to the discounted projected net future cash flow of the anticipated production from reserves attributable to the Oil and Gas Properties projected by Lender in its sole discretion to be brought onto production prior to the Maturity Date.

“Collateral Value Deficiency” has the meaning given to such term in Section 2.7(a).

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), and any successor statute, or any rule, regulation or order of the U.S. Commodity Futures Trading Commission (or the application or official interpretation of any thereof).

“Compliance Certificate” means a certificate in the form of Exhibit C attached hereto.

“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.

“Consolidated” refers to the consolidation of any Person, in accordance with GAAP, with its properly consolidated subsidiaries. References herein to Borrower’s Consolidated financial statements, financial position, financial condition, liabilities, etc. refer to the consolidated financial statements, financial position, financial condition, liabilities, etc. of Borrower and its Consolidated Subsidiaries.

“Consolidated Net Income” means with respect to Borrower and its Consolidated Subsidiaries, for any period, the aggregate of the net income (or loss) of Borrower and its Consolidated Subsidiaries after allowances for Taxes for such period, determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded from such net income (to the extent otherwise included therein) the following: (a) the net income of any Person in which Borrower or any Consolidated Subsidiary has an interest (which interest does not cause the net income of such other Person to be consolidated with the net income of Borrower and its Consolidated Subsidiaries in accordance with GAAP) except to the extent of the amount of dividends or distributions actually paid in such period by such other Person to Borrower or to a Consolidated Subsidiary, as the case may be; (b) the net income (but not loss) of any Consolidated Subsidiary to the extent that the declaration or payment of dividends or similar distributions by that Consolidated Subsidiary is not at the time permitted by operation of the terms of its charter or any agreement, instrument or governmental requirement applicable to such Consolidated Subsidiary, or is otherwise restricted or prohibited in each case determined in accordance with GAAP; (c) the net income (or loss) of any Person acquired in a pooling-of-interests transaction for any period prior to the date of such transaction; (d) any extraordinary gains or losses, including gains or losses attributable to Property sales not in the ordinary course of business; and (e) the cumulative effect of a change in accounting principles and any gains or losses attributable to write ups or write downs of assets.

“Consolidated Subsidiaries” means each Restricted Subsidiary of Borrower (whether now existing or hereafter created or acquired) the financial statements of which shall be (or should have been) consolidated with the financial statements of Borrower in accordance with GAAP, but excluding all Unrestricted Subsidiaries.

“Debt Service Coverage Ratio” means, measured annually, the ratio of Borrower’s and its Consolidated Subsidiaries’ EBITDAX for such Fiscal Year just ended divided by the aggregate principal, interest and fees due and owing by Borrower under this Agreement during the Fiscal Year just ended.

“Debt Service Reserve Account” means the Deposit Account of Borrower subject to a Deposit Account Control Agreement to pay (or supplement Borrower’s payments of) the Obligations pursuant to Section 2.8 hereof.

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

“Default” means any Event of Default and any default, event or condition that would, with the giving of any requisite notices or the passage of any requisite periods of time, or both constitute an Event of Default.

“Default Rate” means, at the time in question, with respect to the Loan, (a) for so long as an Event of Default is continuing as a result of Borrower’s failure to comply with Section 7.18, the rate per annum equal to 4.00% above the interest rate then in effect for the Loan pursuant to Section 2.4(a) hereof, and (b) for so long as an Event of Default is continuing under Section 8.1 (other than a Default under clause (a) above), the rate per annum equal to 2.00% above the interest rate then in effect for the Loan pursuant to Section 2.4(a) hereof, provided that, in each case, no Default Rate charged by any Person shall ever exceed the Highest Lawful Rate. The Default Rate under clause (a) and (b) shall not be additive (i.e. the Default Rate shall be 4.00% or 2.00% above the interest rate then in effect for the Loan pursuant to Section 2.4(a); such amounts shall not be summed in the event of multiple Events of Default).

“Deposit Account Control Agreement” means an agreement in form and substance establishing Lender’s “control” of a Deposit Account as contemplated by Section 9-104 of the UCC.

“Deposit Accounts” means, collectively, (a) all of the “deposit accounts” (as such term is defined in the UCC) of the Loan Parties, and in any event shall include all of the accounts and sub-accounts relating to any of the foregoing accounts, and (b) all of the cash, funds, checks, notes, and instruments from time to time on deposit in any of the accounts or sub-accounts described in clause (a) of this definition.

“Depositary Bank” means First International Bank & Trust, a North Dakota state banking institution.

“Disclosure Schedule” means Schedule 1 hereto, as it may be amended, supplemented or otherwise modified from time to time by Borrower with the consent of Lender.

“Disposition” means the sale, assignment, farm-out, conveyance, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any Property or asset by any Person (or any agreement or commitment to do any of the foregoing), including any assignment, novation, monetization, termination or close out of any Hedging Contract; provided that the creation of a Permitted Lien is not a Disposition. “Dispose” has the correlative meaning.

“Disqualified Capital Stock” means any Equity in a Person that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event, matures or is mandatorily redeemable for any consideration other than other Equity in such Person (which would not constitute Disqualified Capital Stock), pursuant to a sinking fund obligation or otherwise, or is convertible or exchangeable for Indebtedness or redeemable for any consideration other than other Equity in such Person (which would not constitute Disqualified Capital Stock) at the option of the holder thereof, in whole or in part (but if in part only with respect to such amount that meets the criteria set forth in this definition), on or prior to the date that is 181 days after the earlier of the Maturity Date and payment in full of the Obligations.

“Distribution” means (a) any dividend, distribution, or other payment made by a Loan Party on or in respect of any Equity in such Loan Party or any other Loan Party, or (b) any payment made by a Loan Party to purchase, redeem, acquire, retire, cancel, or terminate any Equity in such Loan Party or any other Loan Party.

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

“EBITDAX” means, for any period, the sum of Consolidated Net Income for such period plus (a) the following expenses or charges to the extent deducted from Consolidated Net Income in such period: (i) interest, (ii) Taxes, (iii) depreciation, (iv) depletion, (v) amortization, (vi) exploration expenses, including plugging and abandonment expenses, (vii) non-cash losses under FASB ASC 815 as a result of changes in the fair market value of derivatives, (viii) hedge modifications, (ix) all non-cash costs with respect to equity compensation or other executive compensation and benefits and (x) (A) costs, charges, and expenses incurred in connection with the Transaction and (B) costs and expenses incurred in connection with any Investments permitted hereunder; provided that the aggregate amount of add backs under this clause (B) shall not exceed $5,000,000 in any 12-month period as certified by a Responsible Officer in any applicable Compliance Certificate, minus (b) to the extent included in Consolidated Net Income in such period, all non-cash gains.

“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

“EEA Member Country” means any of the member states of the European Union (including, for the avoidance of doubt, the United Kingdom), Iceland, Liechtenstein, and Norway.

“EEA Resolution Authority” means any public administrative authority, or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

“Eligible Contract Participant” means, with respect to any Swap, a Person that is an “eligible contract participant”, as defined in the Commodity Exchange Act, with respect to such Swap.

“Environmental Laws” means any and all Laws relating to the environment or to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes into the environment including ambient air, surface water, ground water, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes or to the remediation of any part of the environment in connection with any of the foregoing.

“Equity” in any Person means any share of capital stock issued by such Person, any general or limited partnership interest, profits interest, capital interest, membership interest, or other equity interest in such Person, any option, warrant or any other right to acquire any share of capital stock or any partnership, profits, capital, membership or other equity interest in such Person, and any other voting security issued by such Person.

“ERISA” means the Employee Retirement Income Security Act of 1974, and any successor statutes or statute, together with all rules and regulations promulgated with respect thereto.

“ERISA Affiliate” means each Loan Party and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control that, together with such Loan Party, are (or were at any time in the past six years) treated as a single employer under Section 414 of the Internal Revenue Code.

“ERISA Plan” means any “employee pension benefit plan” as defined in Section 3(2) of ERISA (other than a Multiemployer Plan) that is subject to Title IV of ERISA or Section 412 of the Internal Revenue Code and maintained, contributed to or required to be contributed to by any ERISA Affiliate and with respect to which any Loan Party has a fixed or contingent liability.

“ERISA Plan Funding Rules” means the rules in the Internal Revenue Code and ERISA (and related regulations and other guidance) regarding minimum funding standards and minimum required contributions to ERISA Plans as set forth in Sections 412, 430 and 436 of the Internal Revenue Code and Sections 302 and 303 of ERISA (and as set forth in Section 412 of the Internal Revenue Code and Section 302 of ERISA for periods prior to the effective date of the Pension Protection Act of 2006).

“Event of Default” has the meaning given to such term in Section 8.1.

“Excess Cash Flow” means, as of such date measured, an amount calculated as follows: the Loan Parties’ Net Cash Flow for such period less (a) the amount of cash set aside to pay amounts then due and owing in the ordinary course of the Loan Parties’ business to unaffiliated third parties (based upon supporting information reasonably satisfactory to Lender), less (b) total payments of principal, interest and fees on the Note and such amounts permitted under this Agreement to be paid on the Sellers’ Note paid by Borrower during such period, less (c) the amount of the Additional Debt Service Reserve Deposit less (d) general and administrative costs allowed to be paid in such period under this Agreement, in each case of the foregoing, all calculated for Borrower and its Consolidated Subsidiaries in accordance with GAAP.

“Excluded Swap Obligation” means, with respect to any Loan Party individually, any Swap Obligation if, and to the extent that, all or a portion of any guaranty by such Loan Party of, or any grant by such Loan Party of a Lien to secure, or the provision by such Loan Party of other support of, such Swap Obligation is or becomes illegal under the Commodity Exchange Act by virtue of such Loan Party’s failure for any reason to constitute an Eligible Contract Participant at the time such guaranty, grant of a Lien or provision of support of, such Swap Obligation becomes effective or any other time such Loan Party is by virtue of such guaranty or grant of a Lien otherwise deemed under the Commodity Exchange Act to become liable for such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one transaction, only those transactions for which such guaranty, grant of a Lien, or provision of other support is or becomes illegal shall constitute Excluded Swap Obligations.

“Excluded Taxes” means any of the following Taxes imposed on or with respect to Lender or required to be withheld or deducted from a payment to Lender, (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 Lender being organized under the Laws of, or having its principal office or its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) United States federal withholding Taxes imposed on amounts payable to or for the account of Lender with respect to an applicable interest in the Loan pursuant to a Law in effect on the date on which (i) Lender acquires such interest in the Loan or (ii) Lender changes its lending office, (c) any Tax attributable to Lender’s failure to comply with Section 3.4(g), and (d) any United States federal withholding Taxes imposed under FATCA.

“Existing Credit Agreement” means that certain Loan Agreement dated June 25, 2019 among Pegasus Bank, as lender, Pogo, and the other parties thereto, as amended, supplemented, or otherwise modified prior to the Closing Date.

“Existing Credit Documents” means (a) the Existing Credit Agreement, (b) the promissory notes made by Pogo thereunder, and (c) all deeds of trust, mortgages, security agreements, and other documents, instruments or agreements executed and delivered in connection therewith by any Loan Party, or any predecessor in interest to any Loan Party.

“Existing Hedging Contracts” means the Hedging Contracts described under the Disclosure Schedule outstanding as of the Closing Date.

“Existing Indebtedness” means all Indebtedness outstanding under the Existing Credit Documents on the Closing Date.

“Extraordinary Receipt” means any cash received by or paid to or for the account of any Person not in the ordinary course of business, including Tax refunds, pension plan reversions, proceeds of insurance (other than proceeds of business interruption insurance to the extent such proceeds constitute compensation for lost earnings), condemnation awards (and payments in lieu thereof), indemnity payments and any purchase price adjustments.

“FATCA” means Sections 1471 through 1474 of the Internal Revenue 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, any agreement entered into pursuant to Section 1471(b)(1) of the Internal Revenue Code, any intergovernmental agreement entered into in connection with the implementation of such Sections of the Internal Revenue Code, and any fiscal or regulatory legislation, rules or practices adopted pursuant to such intergovernmental agreement.

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

“Financial Officer” means, for any Person, the chief executive officer, the chief financial officer, president or the vice president of finance of such Person. Unless otherwise specified, all references herein to a Financial Officer means a Financial Officer of Borrower.

“Fiscal Quarter” means a 3-month period ending on March 31, June 30, September 30 or December 31 of any year.

“Fiscal Year” means a 12-month period ending on December 31 of any year.

“Flood Insurance Regulations” means (a) the National Flood Insurance Act of 1968 as now or hereafter in effect or any successor statute thereto, (b) the Flood Disaster Protection Act of 1973 as now or hereafter in effect or any successor statute thereto, (c) the National Flood Insurance Reform Act of 1994 (amending 42 USC § 4001, et seq.), as the same may be amended or recodified from time to time, and (d) the Flood Insurance Reform Act of 2004 and any regulations promulgated thereunder.

“GAAP” means those generally accepted accounting principles and practices that are recognized as such by the Financial Accounting Standards Board (or any generally recognized successor) and that, in the case of Loan Parties and their Consolidated Subsidiaries, are applied for all periods after the date hereof in a manner consistent with the manner in which such principles and practices were applied to the Initial Financial Statements. If any change in any accounting principle or practice is required by the Financial Accounting Standards Board (or any such successor) in order for such principle or practice to continue as a generally accepted accounting principle or practice, all reports and financial statements required hereunder with respect to any Loan Party or with respect to any Loan Party and its Consolidated Subsidiaries may be prepared in accordance with such change, but all calculations and determinations to be made hereunder may be made in accordance with such change only after notice of such change is given to Lender, and Lender agrees to such change insofar as it affects the accounting of such Loan Party and its Consolidated Subsidiaries.

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

“Guarantor” means HNRA OpCo, OpCo Sub, Pogo and LH Operating and any other Person who has guaranteed some or all of the Obligations pursuant to a guaranty listed on the Security Schedule or any other Person who has guaranteed some or all of the Obligations and who has been accepted by Lender as a Guarantor or any Subsidiary of Borrower that now or hereafter executes and delivers a guaranty to Lender pursuant to Section 6.13.

“Hazardous Materials” means any substances regulated under any Environmental Law, whether as pollutants, contaminants, or chemicals, or as industrial, toxic or hazardous substances or wastes, or otherwise.

“Hedging Contract” means (a) any agreement providing for swaps, floors, puts, caps, calls, collars, forward sales or forward purchases involving interest rates, commodities or commodity prices, equities, currencies, or bonds, or indexes based on any of the foregoing, (b) any option or obligation to enter into any of the foregoing agreements, (c) any option, futures or forward contract traded on an exchange, and (d) any other derivative agreement similar to any of the foregoing. If multiple transactions are entered into under a master agreement, each such transaction that constitutes a Hedging Contract will be a separate Hedging Contract for the purposes of this Agreement.

“Hedging Obligations” means all obligations arising from time to time under Hedging Contracts entered into from time to time between Borrower or any other Loan Party and a Secured Approved Counterparty including the Existing Hedging Contracts; provided that if such counterparty ceases to be a Secured Approved Counterparty hereunder, Hedging Obligations shall only include such obligations to the extent arising from transactions entered into at the time such counterparty was a Secured Approved Counterparty hereunder.

“Highest Lawful Rate” means, with respect to Lender to whom Obligations are owed, the maximum nonusurious rate of interest that Lender is permitted under applicable Law to contract for, take, charge, or receive with respect to such Obligations. All determinations herein of the Highest Lawful Rate, or of any interest rate determined by reference to the Highest Lawful Rate, shall be made separately for Lender as appropriate to assure that the Loan Documents are not construed to obligate any Person to pay interest to Lender at a rate in excess of the Highest Lawful Rate applicable to Lender.

“HNRA OpCo” means HNRA Upstream, LLC a Delaware limited liability company, a majority owned Subsidiary of Borrower and a Guarantor, with all equity owned by Borrower except for not more than 2,000,000 of its Class B Units (as defined in the HNRA OpCo A&R LLC Agreement) and not more than 2,000,000 of its Preferred Units (as defined in the HNRA OpCo A&R LLC Agreement) (which are convertible into Class B Units) held by the Sellers.

“HNRA OpCo A&R LLC Agreement” means the Amended and Restated Limited Liability Company Agreement of HNRA OpCo, dated as of November 15, 2023 and substantially in the form attached as Exhibit E to the MIPA, as the same may be amended, restated, or otherwise modified from time to time in accordance with the terms of this Agreement.

“HoldCo ORR Subsidiary” means HNRA Royalties LLC, a Delaware limited liability company, an Unrestricted Subsidiary.

“Hydrocarbons” means crude oil, natural gas, casinghead gas, condensate, natural gas liquids, and all other liquid or gaseous hydrocarbons, together with all products separated, processed or refined therefrom.

“Indebtedness” of any Person means Liabilities in any of the following categories (without duplication):

(a) indebtedness for borrowed money;

(b) obligations to pay the deferred purchase price of Property, insurance, or services;

(d) obligations that (i) would under GAAP be shown on such Person’s balance sheet as a liability, and (ii) are payable more than 1 year from the date of creation or incurrence thereof (other than reserves for Taxes and reserves for contingent obligations);

(e) obligations arising under Hedging Contracts (on a net basis to the extent netting is provided for in the applicable Hedging Contract), excluding any portion thereof that would be accounted for as an interest expense under GAAP;

(f) principal under Capital Lease Obligations;

(g) indebtedness arising under conditional sales or other title retention agreements relating to Property purchased by such Person;

(h) obligations owing under direct or indirect guaranties of Indebtedness of any other Person or otherwise constituting obligations to purchase or acquire or to otherwise protect or insure a creditor against loss in respect of Indebtedness of any other Person (such as obligations under working capital maintenance agreements, agreements to keep-well, or agreements to purchase Indebtedness, assets, goods, securities or services), but excluding endorsements in the ordinary course of business of negotiable instruments in the course of collection;

(i) obligations (for example, repurchase agreements, mandatorily redeemable preferred stock and sale/leaseback agreements) consisting of an obligation to purchase or redeem securities or other Property of such Person, if such Liabilities arise out of or in connection with the sale or issuance of the same or similar securities or Property;

(j) reimbursement obligations under letters of credit or applications or reimbursement agreements therefor;

(k) indebtedness with respect to banker’s acceptances;

(l) Disqualified Capital Stock;

(m) obligations with respect to payments received in consideration of oil, gas, or other minerals yet to be acquired or produced at the time of payment (including obligations under “take-or-pay” contracts to deliver gas in return for payments already received and the undischarged balance of any production payment created by such Person or for the creation of which such Person directly or indirectly received payment); or

(n) non-contingent obligations with respect to other obligations to deliver goods or services in consideration of advance payments therefor;

provided, however, that the “Indebtedness” of any Person shall not include Liabilities that were incurred by such Person on ordinary trade terms to vendors, suppliers, or other Persons providing goods and services for use by such Person in the ordinary course of its business, unless and until such Liabilities are outstanding more than 90 days past the original invoice or billing date therefor.

“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) of this definition, Other Taxes.

“Initial Financial Statements” means Borrower’s and Pogo’s pro forma balance sheet and other financial statements as of June 30, 2023.

“Insolvent” means with respect to any Person, that (a) such Person is insolvent (as such term is defined in the Bankruptcy Code, and with all terms used in this definition that are defined in the Bankruptcy Code having the meanings ascribed to those terms in the text and interpretive case law applicable to the Bankruptcy Code), (b) the sum of such Person’s debts, including absolute and contingent liabilities, the Obligations or guarantees thereof, exceeds the value of such Person’s assets, at a fair valuation, (c) such Person’s capital is unreasonably small for the business in which such Person is engaged and intends to be engaged, or (d) such Person has incurred (whether under the Loan Documents or otherwise), or intends to incur debts that will be beyond its ability to pay as such debts mature. In determining whether a Person is “Insolvent” all rights of contribution of each Loan Party against the other Loan Parties under the guaranty of the Obligations, at law, in equity or otherwise shall be taken into account.

“Intercreditor Agreement” means an intercreditor agreement among the Loan Parties, one or more Approved Counterparties named therein and Lender, with Lender acting as collateral agent for the benefit of the Secured Parties, as amended and in effect from time to time, in the form of Exhibit D attached hereto.

“Internal Revenue Code” means the United States Internal Revenue Code of 1986, as amended from time to time, and any successor statute or statutes, together with all rules and regulations promulgated with respect thereto.

“Investment” means, for any Person, (a) the acquisition (whether for cash, Property, services or securities or otherwise) of Equity in any other Person or any agreement to make any such acquisition (including any “short sale” or any sale of any securities at a time when such securities are not owned by the Person entering into such short sale) or the making of any capital contribution with respect to Equity owned in any other Person; (b) the making of any deposit with, advance or loan to, purchase or other acquisition of any Indebtedness of, or other extension of credit (or commitment to extend credit) to, any other Person (including any such transaction in the form of the purchase of Property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such Property to such Person, but excluding any such advance, loan or extension of credit having a term not exceeding 90 days representing the purchase price of inventory or supplies sold by such Person in the ordinary course of business); (c) the purchase (in one or a series of transactions) of property of another Person if, upon such purchase, such Property is reported by the purchaser in its financial statements as a business unit; or (d) the entering into of any guarantee of, or other surety obligation with respect to, Indebtedness of any other Person.

“Law” means any statute, law, regulation, ordinance, rule, treaty, judgment, order, decree, permit, concession, franchise, license, agreement or other governmental restriction of the United States or any state or political subdivision thereof or of any foreign country or any department, province or other political subdivision thereof. Any reference to a Law includes any amendment or modification to such Law, and all regulations, rulings, and other Laws promulgated under such Law.

“Lender” has the meaning given to such term in the preamble to this Agreement.

“Lender’s Offer” has the meaning given to such term in Section 6.21(b) of this Agreement.

“LH Operating” means LH Operating, LLC a Texas limited liability company, a Wholly-Owned Subsidiary of Pogo and a Guarantor.

“Liabilities” means, as to any Person, all indebtedness, liabilities and obligations of such Person, whether matured or unmatured, liquidated or unliquidated, primary or secondary, direct or indirect, absolute, fixed or contingent, and whether or not required to be considered pursuant to GAAP.

“Lien” means, with respect to any Property or assets, any right or interest therein of a creditor to secure Liabilities owed to it or any other arrangement with such creditor that provides for the payment of such Liabilities out of such Property or assets or that allows such creditor to have such Liabilities satisfied out of such property or assets prior to the general creditors of any owner thereof, including any lien, mortgage, security interest, pledge, deposit, production payment, rights of a vendor under any title retention or conditional sale agreement or lease substantially equivalent thereto, Tax lien, mechanic’s or materialman’s lien, or any other charge or encumbrance for security purposes, whether arising by Law or agreement or otherwise, but excluding any right of offset that arises without agreement in the ordinary course of business. “Lien” also means any filed financing statement, any registration of a pledge (such as with an issuer of uncertificated securities), or any other arrangement or action that would serve to perfect a lien described in the preceding sentence, regardless of whether such financing statement is filed, such registration is made, or such arrangement or action is undertaken before or after such Lien exists.

“Loan” has the meaning given to such term in Section 2.1.

“Loan Documents” means this Agreement, the Note, the Security Documents, the Intercreditor Agreements, Seller Subordination Agreement, Shareholder Subordination Agreements and each other document, instrument, certificate and agreement executed and delivered by any Loan Party in favor of or provided to Lender in connection with this Agreement or otherwise referred to herein or contemplated hereby. “Loan Documents” do not include Hedging Contracts.

“Loan Parties” means Borrower and each Guarantor, now or hereafter subject to this Agreement but expressly excluding any Unrestricted Subsidiary.

“Material Adverse Change” means (a) a material adverse change in, or material adverse effect on (i) Borrower’s Consolidated financial condition, (ii) Borrower’s Consolidated business, assets, properties, liabilities (actual or contingent), operations, condition (financial or otherwise), or (iii) Borrower’s ability to timely pay the Obligations or any Loan Party’s ability to perform its material obligations under any Loan Document to which it is a party, (b) a material impairment of the rights and remedies of a Secured Party under any Loan Document, or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party.

“Material Contract” means each contract or other written arrangement of any Loan Party (other than any Loan Document) (a) set forth on Schedule 3 hereto, (b) for which breach, nonperformance, cancellation or failure to renew could reasonably be expected to result in a Material Adverse Change, or (c) providing for, evidencing, securing or otherwise relating to any obligation of Borrower or any of the other Loan Parties to pay in a principal amount in excess of $1,000,000 for which the aggregate yearly payments (whether to or from any such Loan Party) exceed $1,000,000 per year.

“Maturity Date” means November 15, 2026.

“MIPA” means that certain Amended and Restated Membership Interest Purchase Agreement dated August 28, 2023, by and among the Sellers, as seller, Borrower, HNRA OpCo and OpCo Sub, each as a buyer, and solely with respect to Section 6.20 therein, HNRAC Sponsors, LLC, a Delaware limited liability company, as sponsor.

“Monthly Payment Amount” means a monthly payment of $669,296.93; provided that such amount shall be recalculated following any reduction of the principal amount of the Loan as a result of any prepayment hereunder (including prepayments calculated under Section 2.5(b), Section 2.6 or Section 2.7). Following such recalculation, the Monthly Payment Amount shall be a fixed monthly amount necessary to full amortize the remaining outstanding principal balance of the Loan (after giving effect to such prepayment) over the remaining period from the date of such prepayment through the date that is five years after the Closing Date.

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto that is a nationally recognized rating agency.

“Mortgaged Oil and Gas Property” means any Oil and Gas Property owned by any Loan Party that is specifically made subject to the Liens existing and to exist under the terms of any mortgages or deeds of trust burdening real property that are now or hereafter executed and delivered by any Loan Party in favor of Lender as security for the payment or performance of the Obligations, as such mortgages or deeds of trust may be amended, modified, supplemented or restated from time to time.

“Multiemployer Plan” means any plan described in Section 4001(a)(3) of ERISA.

“Net Cash Flow” means at any time for Borrower and its Consolidated Subsidiaries, (a) the net cash flow from operating activities for such period calculated in accordance with GAAP, plus (b) the net cash gains or losses, as applicable, under any Hedging Obligations during such period, plus (c) any Net Cash Proceeds during such period, plus (d) any other cash or Cash Equivalents received by or on behalf of the Loan Parties during such period but excluding (a) any cash or Cash Equivalents received by or on behalf of Borrower from (x) Equity contributions made to it or (y) issuances of Equity interests of Borrower, (b) any cash or Cash Equivalents received or held in the Debt Service Reserve Account and (c) any purchase price or working capital adjustments or indemnity payments received under the MIPA.

“Net Cash Proceeds” means with respect to any Disposition by any Loan Party or any of its Subsidiaries, or any Extraordinary Receipt received or paid to the account of any Loan Party or any of its Subsidiaries, the excess, if any, of (a) the sum of cash and Cash Equivalents received in connection with such transaction (including any cash or Cash Equivalents received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) over (b) the sum of (i) the reasonable and customary out-of-pocket expenses incurred by such Loan Party or such Subsidiary in connection with such transaction, and (ii) income Taxes reasonably estimated to be actually payable as a result of any gain recognized in connection therewith; provided that Net Cash Proceeds shall not include any such amounts to the extent received in connection with any Disposition that is not prohibited by Section 7.5 to the extent such amounts are reinvested in assets used or useful in the Loan Parties’ business within 180 days of the date of such Disposition.

“Note” means a promissory note in the form of Exhibit A attached hereto.

“Obligation” means any part of the Obligations.

“Obligations” means all Liabilities from time to time owing by any Loan Party to Lender under or pursuant to any of the Loan Documents.

“OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury.

“Oil and Gas Property” means any interest (of any kind and however arising) of a Loan Party in (a) any oil, gas and/or mineral lease, oil, gas or mineral property, mineral servitude and/or mineral right of any kind (including mineral fee interests, leasehold interests, interests in pooled units or other units, farmout interests, overriding royalty and royalty interests, net profits interests, oil payment interests, production payment interests and other types of mineral interests and all rights to receive or share in Hydrocarbons upon production or in the proceeds thereof), and (b) any wells, wellhead equipment, pumping units, flowlines, tanks, buildings, injection facilities, saltwater disposal facilities, compression facilities, or other equipment used in connection with the foregoing, including any gathering, treating, storage, processing or handling assets or systems; provided that in no event shall the ORR Rights be considered part of the Oil and Gas Property unless and until the same becomes part of the Collateral as contemplated by Section 6.21(b).

“Oil and Gas Valuation” means each oil and gas valuation prepared by Lender in its sole discretion pursuant to Section 6.2(g).

“OpCo Sub” means HNRA Partner, Inc., a Delaware corporation, a Wholly-Owned Subsidiary of Borrower and a Guarantor.

“Operating Account” means account numbers 4501784487 and 4501784842 located at Lender subject to a Deposit Account Control Agreement and any other operating account of a Loan Party located at Lender subject to a Deposit Account Control Agreement.

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

“Origination Fee” has the meaning given to such term in Section 2.4(d).

“ORR Option Agreement” means that certain Option Agreement dated as of August 28, 2023, by and between Pogo Royalty, LLC, a Texas limited liability company, HNRA OpCo, and, solely with respect to Section 7.12 therein, Borrower.

“ORR Rights” means any rights acquired by HNRA OpCo or any of its Affiliates upon the exercise of the “Option” (as defined in the ORR Option Agreement), including without limitation, the “ORR Interest” (as defined in the ORR Option Agreement).

“ORR Subsidiary” means HNRA Royalties LLC, a Delaware limited liability company, an Unrestricted Subsidiary.

“Other Connection Taxes” means, with respect to Lender, Taxes imposed as a result of a present or former connection between Lender and the jurisdiction imposing such Tax (other than connections arising from Lender 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 the 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.

“Participant” has the meaning given to such term in Section 10.8(b).

“Participant Register” has the meaning given to such term in Section 10.8(b).

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

“Payment in Full” means the termination of all commitments, loans, letters of credit or other obligations under any Loan Documents and payment in full of all Obligations (other than contingent indemnification obligations).

“Permitted Investments” means

(a) Investments in Cash Equivalents;

(b) existing Investments described in the Disclosure Schedule;

(d) Investments in Unrestricted Subsidiaries with amounts deposited in the Capital Deposit Account;

(e) Loans and advances to officers, directors, or employees of any Loan Party in the ordinary course of business (including for travel, entertainment, and relocation expenses) in an aggregate amount not to exceed $100,000 at any time outstanding;

(f) Investments by any Loan Party of, in, or to another Loan Party;

(g) Investments consisting of guarantees of Indebtedness that is permitted to exist under Section 7.1; and

(g) In addition to Investments otherwise expressly permitted by clauses (a) – (f) above, Investments by the Borrower or any other Loan Party in an aggregate amount (valued at cost) not to exceed $1,000,000 during the term of this Agreement.

“Permitted LC Indebtedness” means Indebtedness of any Loan Party in respect of letters of credit so long as the outstanding aggregate amount of such Indebtedness does not exceed (i) $1,405,000 at any time outstanding at any time while the Existing Letters of Credit and Backstop Letters of Credit are outstanding, (ii) $2,100,000 outstanding during the interim time while the outstanding Existing Letters of Credit and Backstop Letters of Credit are being replaced by a letter of credit issued hereunder in replacement and termination of such outstanding letters of credit and (iii) $700,000 at any time outstanding at any time after the Existing Letters of Credit and Backstop Letters of Credit are terminated.

“Permitted Liens” means:

(a) statutory Liens for Taxes, assessments or other governmental charges or levies that are not yet delinquent or that are being contested in good faith by appropriate action and for which adequate reserves have been maintained in accordance with GAAP;

(b) landlords’, operators’, carriers’, warehousemen’s, repairmen’s, mechanics’, materialmen’s, or other like Liens that do not secure Indebtedness, in each case only to the extent arising in the ordinary course of business and only to the extent securing obligations that are not delinquent or that are being contested in good faith by appropriate proceedings and for which adequate reserves have been maintained in accordance with GAAP;

(c) minor defects and irregularities in title to any property, so long as such defects and irregularities neither secure Indebtedness nor materially impair the value of such property or the use of such property for the purposes for which such property is held;

(d) deposits of cash, letters of credit, or securities to secure the performance of bids, trade contracts, leases, statutory obligations and other obligations of a like nature (excluding appeal bonds) incurred in the ordinary course of business and not constituting Indebtedness;

(e) Liens under the Security Documents;

(f) easements, restrictions, servitudes, permits, conditions, covenants, exceptions or reservations in any property of any Loan Party for the purpose of roads, pipelines, transmission lines, transportation lines, gathering lines, distribution lines for the removal of gas, oil, coal or other minerals or timber, and other like purposes, or for the joint or common use of real estate, rights of way, facilities and equipment, that do not secure Indebtedness and that do not materially interfere with the future development of such property or with cash flow from such property;

(g) judgment and attachment Liens not giving rise to an Event of Default, provided that any appropriate legal proceedings that may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within which such proceeding may be initiated shall not have expired, and no action to enforce such Lien has been commenced, and such Liens are covered by a bond or insurance reasonably acceptable to Lender;

(h) pledges or deposits in connection with workers’ compensation, unemployment insurance and other social security legislations;

(i) Liens under joint operating agreements, pooling or unitization agreements or similar contractual arrangements arising in the ordinary course of the business of any Loan Party to secure amounts owing under such agreements and contracts, which amounts are not more than 90 days past due or are being contested in good faith by appropriate action and for which adequate reserves have been maintained in accordance with GAAP;

(j) encumbrances consisting of deed restrictions, zoning restrictions, easements, governmental or environmental permitting and operation restrictions, the exercise by Governmental Authorities or third parties of eminent domain or condemnation rights, or any other similar restrictions on the use of the Oil and Gas Properties, none of which materially impairs the use of such property by Borrower or any Subsidiary in the operation of its business, and none of which is or shall be violated in any material respect by existing or proposed operations;

(k) cash collateral securing Permitted LC Indebtedness;

(l) Liens securing indebtedness permitted by Section 7.1(f); and

(m) all lessors’ royalties, and overriding royalties that do not constitute Indebtedness, reversionary interests and other burdens on or deductions from the proceeds of production with respect to each Oil and Gas Property (in each case) that do not operate to reduce the net revenue interest for such Oil and Gas Property (if any) as reflected in any Security Document or increase the working interest for such Oil and Gas Property (if any) as reflected in any Security Document without a corresponding increase in the corresponding net revenue interest.

“Permitted Tax Distributions” means with respect to each Loan Party so long as it is a disregarded entity or taxable as a partnership for United States federal income tax purposes, distributions to each member, limited partner, or other direct or indirect owner of such Person in an amount equal to not more than the estimated aggregate annual amount of Taxes payable by such owner on account of its ownership of such Person, assuming (a) each such owner is subject to the highest marginal United States federal, state, and local tax rates applicable to an individual resident in (or, if higher, a corporation doing business in) New York, New York and (b) Section 199A of the Internal Revenue Code does not apply, provided that such distributions in respect of an Unrestricted Subsidiary shall be permitted only to the extent that cash distributions were made by such Unrestricted Subsidiary to any Loan Party for such purpose.

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

“Plan” means any employee benefit plan (as defined in Section 3(3) of ERISA) established by a Loan Party and any ERISA Plan.

“Pogo” means Pogo Resources, LLC, a Texas limited liability company, a Wholly-Owned Subsidiary of Borrower and a Guarantor.

“Prime Rate” means, the rate per annum equal to the rate of interest which Lender announces on the Closing Date as its “Prime Rate” which rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer.

“Projected Oil and Gas Production” means the projected production of oil or gas (measured by volume unit or BTU equivalent, not sales price) for the term of the contracts or a particular month, as applicable, from reserves that are at the time of determination, Proved Developed Producing Reserves attributable to Oil and Gas Properties owned by the Loan Parties, after deducting projected production from any properties or interests sold or under contract for sale that had been included in such prior Oil and Gas Valuation and after adding projected production from any properties or interests acquired by the Loan Parties after the date of such prior Oil and Gas Valuation and otherwise are satisfactory to Lender.

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

“Proved Reserves” means “Proved Reserves” as defined in the Petroleum Resources Management System as in effect at the time in question (in this definition, the “PRMS”) prepared by the Oil and Gas Reserves Committee of the Society of Petroleum Engineers and reviewed and jointly sponsored by the World Petroleum Council, the American Association of Petroleum Geologists and the Society of Petroleum Evaluation Engineers (or any generally recognized successor organizations). “Proved Developed Producing Reserves” or “PDP Reserves” means Proved Reserves that are categorized as “Developed Producing Reserves” in the PRMS, “Proved Developed Nonproducing Reserves” means Proved Reserves that are categorized as “Developed Nonproducing Reserves” in the PRMS, and “Proved Undeveloped Reserves” means Proved Reserves that are categorized as “Undeveloped Reserves” in the PRMS.

“Purchase Money Indebtedness” means Indebtedness of which the proceeds are used to finance the acquisition, construction, or improvement of inventory, equipment or other property in the ordinary course of business.

“Qualified ECP Guarantor” means, in respect of any Swap Obligation, any Loan Party that is not an individual/a natural person and that has total assets exceeding $10,000,000 at the time the relevant guarantee or grant of the relevant security interest becomes effective with respect to such Swap Obligation or such other Person as constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder and can cause another Person to qualify as an “eligible contract participant” at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

“Regulation U” means Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by banks for the purpose of purchasing or carrying margin stocks applicable to member banks of the Federal Reserve System.

“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.

“Responsible Officer” means, with respect to any Person, the Chief Executive Officer, President, or Chief Financial Officer of such Person and, if such Person is a partnership or limited liability company, the Chief Executive Officer, Principal, President, or Chief Financial Officer of a general partner or manager of such Person; provided that, Lender shall have received a certificate of such Person certifying as to the incumbency and genuineness of the signature of each such officer. Any document delivered hereunder or under any other Loan Document that is signed by a Responsible Officer of a Person shall be conclusively presumed to have been authorized by all necessary corporate, limited liability company, 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 such Person.

“Restricted Subsidiary” means any Subsidiary of Borrower that is not an Unrestricted Subsidiary.

“S&P” means Standard & Poor’s Ratings Services (a division of The McGraw Hill Companies) and any successor thereto that is a nationally recognized rating agency.

“Sanctioned Country” means, at any time, a country, region, or territory which is itself the subject or target of any Sanctions.

“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC, the U.S. Department of State, the United Nations Security Council, the European Union, any European Union member state, His Majesty’s Treasury of the United Kingdom or any other relevant Sanctions authority, (b) any Person operating, organized, or resident in a Sanctioned Country and any other Person that is the subject or target of Sanctions, or (c) any Person owned or controlled by any such Person or Persons described in the preceding clauses (a) or (b).

“Sanctions” means all economic or financial sanctions or trade embargoes imposed, administered, or enforced from time to time by (a) the U.S. government, including those administered by OFAC or the U.S. Department of State, or (b) the United Nations Security Council, the European Union, any European Union member state, His Majesty’s Treasury of the United Kingdom, or any other relevant sanctions authority.

“SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

“Secured Approved Counterparty” means an Approved Counterparty party to an Intercreditor Agreement.

“Secured Obligations” means all Obligations and all Hedging Obligations.

“Secured Parties” means Lender, each Secured Approved Counterparty and any other Person the Secured Obligations owing to which are, or are purported to be, secured by the Collateral under the terms of the Security Documents.

“Security Documents” means the mortgages, security agreements, deposit account security agreements, subordination agreements, intercreditor agreements, and other documents listed in the Security Schedule and all other security agreements, deeds of trust, mortgages, chattel mortgages, pledges, guaranties, financing statements, continuation statements, extension agreements, subordination agreements, intercreditor agreements, and other agreements or instruments now or hereafter delivered by any Loan Party to Lender in connection with this Agreement or any transaction contemplated hereby to secure or guarantee the payment of any part of the Secured Obligations or the performance of any Loan Party’s other duties and obligations under the Loan Documents.

“Security Schedule” means Schedule 2 hereto.

“Seller Subordination Agreement” means that certain Subordination Agreement between the Sellers and Lender subordinating payment of the Sellers’ Note in favor of Borrower’s Secured Obligations.

“Sellers” means, collectively, CIC Pogo LP, a Delaware limited partnership, DenCo Resources, LLC, a Texas limited liability company, Pogo Resources Management, LLC, a Texas limited liability company, and 4400 Holdings, LLC, a Texas limited liability company.

“Sellers’ Note” means that certain unsecured promissory note in the amount of $15,000,000 from Borrower to the Sellers in partial consideration for the Transaction subject to the Seller Subordination Agreement.

“Shareholder Indebtedness” means Indebtedness incurred by Borrower as more fully described on Schedule 5 attached hereto.

“Shareholder Subordination Agreements” means each Subordination Agreement among Borrower, Guarantors, each Subordinated Lender and Lender subordinating payment of the Shareholders’ Notes of the applicable Subordinated Lender in favor of Borrower’s Secured Obligations.

“Shareholders’ Note” means each certain unsecured promissory note, which collectively total in the amount of $3,609,000.00 from Borrower to the persons listed on Schedule 5 attached hereto.

“Specified Acquisition Agreement Representations” means the representations and warranties relating to Pogo and its Subsidiaries and its “Assets” as defined in the MIPA that are material to the interests of the Lender but only to the extent that Borrower has the right to terminate its obligations under the MIPA as a result of a breach of such representations and warranties in the MIPA.

“Specified Equity Contribution” means any direct or indirect investment in Borrower to cure a breach of the Debt Service Coverage Ratio (and designated in writing at or about the time made as being a Specified Equity Contribution) in cash in the form of a capital contribution to Borrower or the purchase of common Equity securities issued by Borrower (or other Equity securities issued by Borrower and reasonably acceptable to Lender, but not Disqualified Capital Stock) to the extent such capital contribution is used to reduce the outstanding Indebtedness.

“Specified Representations” means the representations and warranties of Loan Parties relating to corporate or other organizational existence, Borrower authority (as to delivery, execution and performance of the Credit Agreement and other Loan Documents required to be delivered on the Closing Date), binding effect of the Loan Documents on Loan Parties, solvency as of the Closing Date (after giving effect to the Transactions) of Borrower and Loan Parties, on a consolidated basis, no conflicts of the Loan Documents with charter or other organizational documents of Loan Parties, the Investment Company Act, Federal Reserve margin regulations, use of loan proceeds not violating OFAC, use of loan proceeds not violating the Federal Corrupt Practices Act, the Patriot Act, use of proceeds, and the creation, validity and perfection of security interests.

“Subordinated Indebtedness” means Indebtedness incurred by a Loan Party subordinated to the Secured Obligations pursuant to a subordination, intercreditor, or other similar agreement in form and substance reasonably satisfactory to Lender entered into between Lender and the other creditor.

“Subordinated Lender” means each Subordinated Lender as such term is defined in the Shareholder Subordination Agreements.

“Subsidiary” means, with respect to any Person (the “parent”) at any date, (a) any other Person the accounts of which would be Consolidated with those of the parent in the parent’s Consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, or (b) any other Person in which more than 50% of the Equity or more than 50% of the ordinary voting power (irrespective of whether or not at the time Equity of any other class or classes of such Person shall have or might have voting power by reason of the happening of any contingency) are, as of such date, owned or held by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.

“Swap” means any “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.

“Swap Obligation” means any obligation to pay or perform under any Swap, whether as a party to such Swap or by providing any guarantee of or provision of support for such Swap.

“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.

“Termination Event” means (a) the occurrence with respect to any ERISA Plan of (i) a reportable event described in Section 4043(c)(5) or (6) of ERISA or (ii) any other reportable event described in Section 4043(c) of ERISA other than such a reportable event for which the 30-day notice requirement has been waived, or (b) the withdrawal by any ERISA Affiliate from an ERISA 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 that is treated as such a withdrawal under Section 4062(e) of ERISA, or (c) the filing of a notice of intent to terminate any ERISA Plan or the treatment of any ERISA Plan amendment as a termination under Section 4041 of ERISA, or (d) the institution of proceedings to terminate any ERISA Plan by the PBGC under Section 4042 of ERISA, or (e) any other event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any ERISA Plan, or (f) any failure by any ERISA Plan to satisfy the ERISA Plan Funding Rules, whether or not waived, or (g) the filing pursuant to Section 412(c) of the Internal Revenue Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any ERISA Plan, the failure to make by its due date a required installment under Section 430(j) of the Internal Revenue Code with respect to any ERISA Plan, or (h) a determination that any ERISA Plan is, or is expected to be, an at-risk plan (as defined in Section 430 of the Internal Revenue Code or Section 303 of ERISA) and the funding target attainment percentage (as defined in Section 430 of the Internal Revenue Code or Section 303 of ERISA) for such plan is, or is expected to be, less than 60 percent, or (i) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent, upon any ERISA Affiliate.

“Third Party Financing” has the meaning given to such term in Section 6.21(c) of this Agreement.

“Threshold Amount” means $1,000,000.

“Transaction” means the purchase by Borrower, indirectly through HNRA OpCo and OpCo Sub of all the outstanding Equity in Pogo pursuant to the terms and conditions of the MIPA.

“UCC” means the Uniform Commercial Code in effect in the State of North Dakota from time to time or of any other state the Laws of which are required to be applied in connection with the perfecting of security interests in any Collateral.

“United States” and “U.S.” mean the United States of America.

“Unrestricted Subsidiary” means ORR Subsidiary, Holdings ORR Subsidiary, and any Subsidiary of Borrower designated by Borrower as an “Unrestricted Subsidiary” after the Closing Date in connection with exercise of the ORR Option Agreement in accordance with, and subject to the satisfaction of the conditions set forth in, Section 1.9. Notwithstanding anything in this Agreement to the contrary, no Guarantor will be deemed an “Unrestricted Subsidiary.”

“Wholly-Owned Subsidiary” means any Subsidiary in which 100% of the Equity, at the time as of which any determination is being made, is owned, beneficially and of record, by a Person, or by one or more of the other Wholly-Owned Subsidiaries of such Person, or both.

“Withholding Agent” means Borrower and Lender.

Section 1.2 Exhibits and Schedules; Additional Definitions. All Exhibits and Schedules attached to this Agreement are a part hereof for all purposes. Reference is hereby made to the Security Schedule for the meaning of certain terms defined therein and used but not defined herein, which definitions are incorporated herein by reference.

Section 1.3 Terms Generally; References and Titles. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “or” is not exclusive. The word “shall” shall be construed to have the same meaning and effect as the word “will”. References to a Person’s “discretion” means its sole and absolute discretion. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented, restated or otherwise modified (subject to any restrictions on such amendments, supplements, restatements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (e) any reference to any Law herein shall, unless otherwise specified, refer to such Law, as amended, modified or supplemented from time to time and (f) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. References to any document, instrument, or agreement shall include all exhibits, schedules, and other attachments thereto and shall include all documents, instruments, or agreements issued or executed in replacement thereof. Titles appearing at the beginning of any subdivisions are for convenience only and do not constitute any part of such subdivisions and shall be disregarded in construing the language contained in such subdivisions. The phrases “this section” and “this subsection” and similar phrases refer only to the sections or subsections hereof in which such phrases occur. Accounting terms have the meanings assigned to them by GAAP. References to “days” shall mean calendar days, unless the term “Business Day” is used.

Section 1.4 Calculations and Determinations. Each determination by Lender of amounts to be paid under Article III or any other matters that are to be determined hereunder by Lender shall, in the absence of manifest error, be conclusive and binding. Unless otherwise expressly provided herein or unless Lender otherwise consents all financial statements and reports furnished to Lender hereunder shall be prepared and all financial computations and determinations pursuant hereto shall be made in accordance with GAAP. Notwithstanding the foregoing, all financial statements delivered hereunder shall be prepared, and all financial covenants contained herein shall be calculated, without giving effect to any election under ASC Topic 825 (or any similar accounting principle) permitting a Person to value its financial liabilities at the fair value thereof.

Section 1.5 Rounding. Any financial ratios required to be maintained by Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

Section 1.6 Times of Day. Unless otherwise specified, all references herein to times of day shall be references to Central time (daylight or standard, as applicable).

Section 1.7 Joint Preparation; Construction of Indemnities and Releases. This Agreement and the other Loan Documents have been reviewed and negotiated by sophisticated parties with access to legal counsel and no rule of construction shall apply hereto or thereto that would require or allow any Loan Document to be construed against any party because of its role in drafting such Loan Document. All indemnification and release provisions of this Agreement shall be construed broadly (and not narrowly) in favor of the Persons receiving indemnification or being released.

Section 1.8 Divisions. For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware Law (or any comparable event under a different jurisdiction’s Laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized on the first date of its existence by the holders of its Equity at such time.

Section 1.9 Designation of Unrestricted Subsidiaries.

(a) Unless designated in writing by Borrower to Lender in accordance with subsection (b) below, any Person that becomes a Subsidiary of Borrower or any of its Restricted Subsidiaries after the date hereof (whether by formation, acquisition or merger) shall be classified as a Restricted Subsidiary. On the date hereof, Holding ORR Subsidiary and ORR Subsidiary shall be the only Unrestricted Subsidiaries. Except as set forth in Section 1.9(b) below, unless otherwise agreed to in writing by Borrower and Lender, all other Subsidiaries of Borrower are Restricted Subsidiaries.

(b) In the event that ORR Subsidiary elects to acquire the ORR Rights by acquiring one or more existing entities that hold the ORR Rights, (i) Borrower shall give Lender written notice thereof and (ii) such entities shall become Unrestricted Subsidiaries.

(c) Borrower may designate by prior written notice thereof to Lender any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that (i) both before, and immediately after giving effect, to such designation, (A) no Default, Event of Default or Collateral Value Deficiency is continuing or would result from such designation, (B) Borrower shall be in compliance, on a pro forma basis, with the covenants set forth in Section 7.18, and (C) the representations and warranties of each Borrower and its Restricted Subsidiaries contained in this Agreement and each of the other Loan Documents shall be true and correct in all material respects (except that any representation and warranty that is qualified by materiality shall be true and correct in all respects) on such date (or, if stated to have been made expressly as of an earlier date, were true and correct in all material respects (except that any representation and warranty that is qualified by materiality shall be true and correct in all respects) as of such date), (ii) the designation of any Unrestricted Subsidiary as a Restricted Subsidiary shall constitute the incurrence at the time of designation of any Investment, Indebtedness, or Liens of such Subsidiary existing at such time, and each Borrower shall be in compliance with Article VII after giving effect to such designation, (iii) immediately after giving effect to such designation, such Borrower and such Subsidiary shall be in compliance with the requirements of Section 6.14 and (iv) Lender shall have received a certificate of a Responsible Officer, in form and substance reasonably satisfactory to Lender, certifying as to the satisfaction of the conditions and matters set forth in clauses (i)-(iii) above (and in the case of clause (i)(B) above, setting forth reasonably detailed calculations demonstrating compliance on a pro forma basis with the covenants set forth in Section 7.18).

Article II

The Loan

Section 2.1 The Loan; Note. Subject to the terms and conditions hereof, Lender agrees to make a term loan to Borrower on the Closing Date, in the principal amount of $28,000,000 (the “Loan”). Amounts borrowed under this Agreement and prepaid or otherwise paid may not be reborrowed. Interest on each Loan shall accrue and be due and payable as provided herein. The Loan shall be due and payable as provided herein and shall be due and payable in full on the Maturity Date. The obligation of Borrower to repay the Loan, together with interest accruing in connection therewith, shall be evidenced by the Note made by Borrower payable to Lender. The amount of principal owing on the Note at any given time shall be the amount of the Loan theretofore made minus all payments of principal theretofore received by Lender on the Note.

Section 2.2 Reserved.

Section 2.3 Use of Proceeds. Borrower shall use the Loan on the Closing Date as set forth in the Borrowing Request attached hereto as Exhibit B. In no event shall the funds from the Loan be used directly or indirectly by any Person for personal, family, household or agricultural purposes or for the purpose, whether immediate, incidental or ultimate, of purchasing, acquiring or carrying any “margin stock” (as such term is defined in Regulation U) or to extend credit to others directly or indirectly for the purpose of purchasing or carrying any such margin stock. Borrower represents and warrants that Borrower is not engaged principally, or as one of Borrower’s important activities, in the business of extending credit to others for the purpose of purchasing or carrying such margin stock. No part of the proceeds of any Loan, directly or indirectly, will be used for the purpose of financing the activities of any Person currently subject to any U.S. Sanctions administered by OFAC.

Section 2.4 Interest Rates and Fees.

(a) Interest Rates. Subject to subsection (b) below, the Loan shall bear interest on the amount advanced by Lender at a per annum rate (based on a 360-day year) equal to the Prime Rate plus 6.5%.

(b) Default Rate. If an Event of Default shall have occurred and be continuing the Loan shall bear interest at the applicable Default Rate.

(c) Late Payment Fee. If a payment (other than any payment due on the Maturity Date) is not paid within ten (10) days of the date due, Borrower shall pay a late fee, which shall be in addition to any interest due thereon, equal to the greater of (i) 2% of the amount of such past due payment or (ii) $100.

(d) Origination Fee. Borrower will pay to Lender a fee for making the facility available to Borrower (an “Origination Fee”) equal to $420,000 being due and payable on the Closing Date.

(e) Collateral Valuation Fee. Borrower will pay Lender for all reasonable costs, including costs of Lender’s Mineral Land Services Department, in determining the Collateral Value and inspections of Collateral; provided that, so long as there is no outstanding Event of Default, Borrower shall not be required to obtain third party reserve reports more frequently than once per year.

Section 2.5 Scheduled Repayments of Loans.

(a) Payments of principal and interest shall be due on the 15^th day of each calendar month (or next succeeding Business Day if the 15^th of any month is not a Business Day), beginning December 15, 2023, each in an amount equal to the Monthly Payment Amount, except that the principal and interest payment due on the Maturity Date shall be in the amount of the entire remaining principal amount of the Loan and all accrued but unpaid interest then outstanding.

(b) An additional one-time payment of principal shall be due on the date the quarterly financial report for the Fiscal Year ending December 31, 2024, is due to be delivered by Borrower to Lender in an amount that Excess Cash Flow exceeds the Debt Service Coverage Ratio of 1.35x as of the end of such Fiscal Quarter; provided that in no event shall the amount of the payment required pursuant to this Section 2.5(b) exceed $5,000,000.

Section 2.6 Optional Prepayments. Subject to Section 2.8, Borrower may, from time to time and without premium or penalty, prepay the Loans, in whole or in part, provided that the aggregate amount of each partial prepayment of principal of the Loan equals $1,000,000 (or, if less than $1,000,000, the remaining balance of the Loan) or any higher integral multiple of $500,000. Each prepayment of principal under this section shall be accompanied by all interest then accrued and unpaid on the principal so prepaid. Any principal or interest prepaid pursuant to this Section shall be in addition to, and not in lieu of, all payments otherwise required to be paid under the Loan Documents at the time of such prepayment and shall be applied in reverse order of maturity.

Section 2.7 Mandatory Prepayments.

(a) Collateral Value Deficiency. At any time the outstanding principal amount of the Loan exceeds 50% of the Collateral Value (any such excess, a “Collateral Value Deficiency”), Borrower shall, within 30 days after Lender gives notice of such fact to Borrower (such 30-day period, the “Notice Period”), prepay the principal of the Loan in an amount at least equal to such Collateral Value Deficiency, such prepayment to be made in full on or before the last day of the Notice Period.

(b) Dispositions. In connection with any sale by the Loan Parties of any Oil and Gas Properties restricted under Disposition requiring Lender’s consent under Section 7.5, to the extent required by Lender in connection with Lender’s consent for such sale or Disposition, Borrower shall make a prepayment of principal from the Net Cash Proceeds from the of such Collateral, provided nothing herein shall obligate Lender to consent to such sale or Disposition.

(c) Application of Mandatory Principal Payments. Any mandatory payments of principal required hereunder shall be applied to outstanding principal in reverse order of maturity and shall be in addition to, and not in lieu of, regularly scheduled principal payments.

(d) Payment of Interest. Each mandatory prepayment of principal under this Section shall be accompanied by all interest then accrued and unpaid on the principal so prepaid. Any principal or interest prepaid pursuant to this Section shall be in addition to, and not in lieu of, all payments otherwise required to be paid under the Loan Documents at the time of such prepayment.

Section 2.8 Debt Service Reserve Account.

(a) On the Closing Date, Borrower shall deposit at least $2,600,000 into the Debt Service Reserve Account and, within 60 days following the Closing Date, Borrower shall deposit such additional amounts such that the balance of the Debt Service Reserve Account shall be equal to $5,000,000 at all times.

(b) The Debt Service Reserve Account may be used by Lender at any time and from time to time, in Lender’s sole discretion, to pay (or to supplement Borrower’s payments of) the Obligations due in accordance with this Agreement. The Debt Service Reserve Account shall be held until depleted or disbursed in accordance with subsection (d) below, whichever shall be first to occur.

(c) Neither Lender’s failure to disburse funds from the Debt Service Reserve Account nor the insufficiency of the balance remaining in the Debt Service Reserve Account shall relieve Borrower of its obligation to pay the Obligations in full as they become due in accordance with this Loan Agreement.

(d) Upon full and irrevocable payment of all Obligations, Lender shall disburse to Borrower all funds, if any, remaining in the Debt Service Reserve Account.

Article III
Payments to Lender

Section 3.1 General Procedures. Borrower will make each payment to Lender, in lawful money of the United States, without set-off, deduction or counterclaim, and in immediately available funds. Each payment must be received by Lender not later than 2:00 p.m. on the date such payment becomes due and payable. Any payment received by Lender after such time will be deemed to have been made on the next following Business Day. Should any such payment become due and payable on a day other than a Business Day, the maturity of such payment shall be extended to the next succeeding Business Day, and, in the case of a payment of principal or past due interest, interest shall accrue and be payable thereon for the period of such extension as provided in the Loan Document under which such payment is due. Each payment under a Loan Document shall be due and payable to Lender at its offices specified in Section 10.3.

All payments applied to principal or interest shall be applied first to any interest then due and payable, then to principal then due and payable, and last to any prepayment of principal and interest in compliance with Sections 2.6, 2.7 and 2.8.

Section 3.2 Increased Costs.

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

(i) impose, increase, modify or deem applicable any reserve, assessment, 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, Lender;

(ii) subject Lender 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) with respect to this Agreement, the Loan, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto or change the basis of taxation of payments to Lender; or

(iii) impose on Lender any other condition, cost or expense (other than Taxes) affecting this Agreement;

and the result of any of the foregoing shall be to increase the cost to Lender or, as the case may be, to reduce the amount of any sum received or receivable by Lender (whether of principal, interest or any other amount) then, upon request of Lender, Borrower will pay to Lender such additional amount or amounts as will compensate Lender for such additional costs incurred or reduction suffered.

(b) Capital Requirements. If Lender determines in its reasonable discretion that any Change in Law affecting Lender or Lender’s holding company, if any, regarding capital or liquidity requirements, has or would have the effect of reducing the rate of return on Lender’s capital or on the capital of Lender’s holding company, if any, as a consequence of this Agreement, the Loan, to a level below that which Lender or Lender’s holding company could have achieved but for such Change in Law (taking into consideration Lender’s policies and the policies of Lender’s holding company with respect to capital adequacy or liquidity), then from time to time Borrower will pay to Lender such additional amount or amounts as will compensate Lender or Lender’s holding company for any such reduction suffered.

(c) Certificates for Reimbursement. A certificate of Lender setting forth the amount or amounts necessary to compensate Lender or its holding company, as the case may be, as specified in subsections (a) or (b) of this Section and delivered to Borrower, shall be conclusive absent manifest error. Borrower shall pay 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 Lender to demand compensation pursuant to this Section shall not constitute a waiver of Lender’s right to demand such compensation, provided that Borrower shall not be required to compensate Lender pursuant to this Section for any increased costs incurred or reductions suffered more than 9 months prior to the date that Lender notifies Borrower of the Change in Law giving rise to such increased costs or reductions, and of 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 3.3 Funding Losses. In addition to its other obligations hereunder, Borrower will indemnify Lender against, and reimburse Lender on demand for, any actual, out-of-pocket loss or expense incurred or sustained by Lender, as a result of the failure of the Loan to be made due to any condition precedent not being satisfied or due to any other action or inaction of any Loan Party. Such indemnification shall be on an after-Tax basis.

Section 3.4 Taxes.

(a) Defined Terms. For purposes of this Section 3.4, the term “applicable Law” includes FATCA.

(b) Payments Free of Taxes. Any and all payments by or on account of any obligation of Borrower hereunder or under any other Loan Document shall be made free and clear of and 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 (i) 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, (ii) 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), Lender 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. Without limiting the provisions of subsection (b) above, Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable Law, or at the option of Lender timely reimburse it for the payment of, any Other Taxes.

(d) Indemnification by Borrower. Borrower shall indemnify Lender, within 10 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) payable or paid by Lender or required to be withheld or deducted from a payment to Lender 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 as to the amount of such payment or liability delivered to Borrower by Lender shall be conclusive absent manifest error.

(e) 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 Lender 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 Lender.

(f) 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 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 subsection (f) (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 subsection (f), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this subsection (f) 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 indemnification payments or additional amounts giving rise to such refund had never been paid. This subsection (f) 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.

(g) Status of Lender.

(i) Lender shall deliver to Borrower, at the time or times reasonably requested by Borrower, such properly completed and executed documentation reasonably requested by Borrower as will permit payments made under any Loan Document to be made without withholding or at a reduced rate of withholding. In addition, Lender, if reasonably requested by Borrower, shall deliver such other documentation prescribed by applicable Law or reasonably requested by Borrower as will enable Borrower to determine whether or not 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 paragraphs (g)(ii) and (g)(iii) of this Section) shall not be required if in Lender’s reasonable judgment such completion, execution or submission would subject Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of Lender.

(ii) Without limiting the generality of the foregoing, Lender shall deliver to Borrower on or about the date on which Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of Borrower), executed copies of IRS Form W-9 certifying that Lender is exempt from U.S. federal backup withholding tax.

(iii) If a payment made to Lender under any Loan Document would be subject to United States federal withholding Tax imposed by FATCA if 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 Internal Revenue Code, as applicable), Lender shall deliver to Borrower at the time or times prescribed by Law and at such time or times reasonably requested by Borrower such documentation prescribed by applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Internal Revenue Code) and such additional documentation reasonably requested by Borrower as may be necessary for Borrower to comply with its obligations under FATCA and to determine that Lender has complied with its obligations under FATCA or to determine the amount, if any, to deduct and withhold from such payment. Solely for purposes of this clause (iii), “FATCA” shall include any amendments made to FATCA after the date of this Agreement. 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 in writing of its legal inability to do so.

(h) Survival. Each party’s obligations under this Section 3.4 shall survive the repayment, satisfaction or discharge of all obligations under any Loan Document.

Article IV

Conditions Precedent to Lending

Section 4.1 Conditions Precedent to the Loan. The obligation of Lender to make the Loan hereunder is subject to satisfaction of the following conditions precedent:

(a) Loan Documents. Lender shall have received duly executed (and properly acknowledged where applicable) and delivered counterparts of each Loan Document (i) in form, substance and date satisfactory to Lender, and (ii) in such numbers as Lender or its counsel may request. In connection with the execution and delivery of the Security Documents, Lender shall be reasonably satisfied that the Security Documents will, upon recording, create first priority, perfected Liens (subject to Permitted Liens) on all of the Loan Parties’ Oil and Gas Properties classified as Proved Reserves at such date.

(b) Organizational Documents; Incumbency. Lender shall have received (i) one or more certificates from the secretary, assistant secretary or another Responsible Officer of Borrower and each Loan Party, certifying as of the Closing Date to (1) attached copies of each such Person’s Organizational Documents, certified, to the extent applicable, as of a recent date by the appropriate governmental official and in form and substance reasonably satisfactory to Lender, including Borrower’s bylaws; (2) the offices and specimen signatures of the officers of such Persons who are authorized to execute Loan Documents in its name; and (3) attached resolutions of the Board of such Person approving and authorizing its execution, delivery and performance of this Agreement and each of the other Loan Documents to which it is a party or by which it or its assets may be bound; (ii) an existence and good standing certificate from the applicable Governmental Authority of each Person’s jurisdiction of incorporation, organization or formation and in each jurisdiction where its operations or property requires such qualification, each dated a recent date prior to the Closing Date; and (iii) such other documents as Lender may reasonably request.

(c) Closing Certificate. Lender shall have received a “Closing Certificate” of a Responsible Officer of Borrower, dated as of the Closing Date, in which such officer certifies to the satisfaction of each of the conditions set out in Section 4.1.

(d) Representations. The Specified Representations and the Specified Acquisition Agreement Representations shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that are already qualified or modified by materiality in the text thereof) on such date, except that any representation and warranty which by its terms is made as of a specified date shall be required to be true and correct only as of such specified date.

(e) Solvency Certificate. Lender shall have received a “Solvency Certificate” with respect to Borrower and its Consolidated Subsidiaries in form and substance satisfactory to Lender and duly and properly executed by a Financial Officer of Borrower after giving effect to the Transaction on a consolidated basis and dated as of the Closing Date.

(f) Annual Budget. Lender shall have received the Initial Annual Budget as of the Closing Date set forth on Schedule 4 hereto, which shall be in form and substance satisfactory to Lender.

(g) Governmental Authorizations and Consents. Each Loan Party shall have obtained all governmental authorizations from any Governmental Authority and all consents of other Persons, in each case that are necessary or reasonably deemed by Lender to be advisable in connection with the transactions contemplated by the Loan Documents and the Loan Parties’ ownership and operation of the Collateral and each of the foregoing shall be in full force and effect and in form and substance reasonably satisfactory to Lender. All applicable waiting periods shall have expired without any action being taken or threatened by any competent authority that would restrain, prevent or otherwise impose adverse conditions on the transactions contemplated by the Loan Documents or the financing thereof and no action, request for stay, petition for review or rehearing, reconsideration, or appeal with respect to any of the foregoing shall be pending, and the time for any applicable agency to take action to set aside its consent on its own motion shall have expired.

(h) Shareholder Indebtedness. Lender shall have received fully executed copies of the Shareholder Subordination Agreements evidencing sixty percent (60%) of the aggregate principal sum of the Shareholders’ Notes outstanding as of the date hereof.

(i) Evidence of Insurance. Lender shall have received a certificate from Loan Parties’ insurance broker or other evidence reasonably satisfactory to Lender that all insurance required to be maintained pursuant to Section 6.8 is in full force and effect and that Lender, for the benefit of the Secured Parties, has been named as additional insured and lender loss payee thereunder as its interests may appear and to the extent required under Section 6.8.

(j) Opinions of Counsel to Loan Parties. Lender shall have received executed copies of written opinions of counsel to Loan Parties, opining as to such matters as Lender may reasonably request, dated as of the Closing Date and otherwise in form and substance reasonably satisfactory to Lender with respect to the Loan Documents and the Transaction (and each Loan Party hereby instructs such counsel to deliver such opinions to Lender).

(k) Fees. Borrower shall have (i) paid to Lender the fees required to be paid on the Closing Date pursuant to this Agreement or any commitment agreement heretofore entered into, and (ii) paid to Lender’s reasonable and documented counsel fees and expenses incurred in negotiation and preparation of the Loan Documents, and for estimated fees charged by filing officers and other public officials incurred or to be incurred in connection with filing any recordation of any Security Documents and for which invoices have been presented as of the Closing Date.

(l) Financial Statements. Lender shall have received the Initial Financial Statements, which shall be in form reasonably satisfactory to Lender, together with a certificate by a Responsible Officer certifying to the Initial Financial Statements.

(m) Title. Lender shall have received title reports, summaries, and/or title opinions in form, substance and authorship reasonably satisfactory to Lender, with respect to Loan Parties’ oil and gas reserves representing not less than 80% of the Collateral Value. Lender acknowledges and agrees that the foregoing has been satisfied as of the Closing Date.

(n) No Litigation. There shall not exist any action, suit, investigation, litigation or proceeding or other legal or regulatory developments, pending or threatened in any court or before any arbitrator or Governmental Authority that would reasonably be expected to result in a Material Adverse Change.

(o) Completion of the Transaction. All conditions precedent shall have been satisfied and not waived or amended and all partnership, corporate, company, regulatory approvals, and other proceedings taken in connection with the Transaction and all documents incidental thereto necessary to effect the Transaction shall have been consummated in form and substance to Lender and its counsel.

(p) Material Adverse Change. No event or circumstance shall have occurred or be continuing since the date of the Initial Financial Statements that has had, or could be reasonably expected to cause, either individually or in the aggregate, a Material Adverse Change.

(q) “Know Your Customer” Documentation. Lender shall have received from the Loan Parties, to the extent requested by Lender, all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act and the Beneficial Ownership Regulation, no later than 10 days prior to the Closing Date to the extent requested at least 15 days prior to the Closing Date.

(r) Material Contracts. Lender shall have received a copy of each Material Contract (including all waivers, supplements, or amendments thereto) and a certificate of a Responsible Officer of Borrower, dated as of the Closing Date, in which such Responsible Officer certifies that Borrower has delivered to Lender a true, correct, and complete copy of each Material Contract (including all waivers, supplements, or amendments thereto).

(s) Discharge of Existing Liens and Indebtedness. Lender shall have received documents, in form and substance satisfactory to Lender, (i) confirming that with the making of the Loan, all Lien terminations, UCC-3 termination statements and other documentation evidencing the termination of Liens, if any, on any Loan Party’s Property securing the Existing Indebtedness shall be delivered to Lender, and (ii) providing for the payment in full of the Existing Indebtedness except for (A) Pegasus Bank Letter of Credit No. 1192 (as amended) in the principal amount of $213,750.00 for the benefit of American Contractors Indemnity Company and/or U.S. Specialty Insurance Company Tokio Marine HCC Surety (the “Pogo LC”), (B) Pegasus Bank Letter of Credit No. 1196 (as amended) in the principal amount of $416,250.00 for the benefit of American Contractors Indemnity Company and/or U.S. Specialty Insurance Company Tokio Marine HCC Surety (the “LH LC”, and together with the Pogo LC, the “Existing Letters of Credit”). Borrower shall cause each Existing Letter of Credit to be backstopped by one or more letters of credit issued on the account of Borrower (the “Backstop Letters of Credit”) and secured by a pledge of shares in Borrower granted by David Smith.

(t) Material Agreements. Borrower shall have delivered to Lender a certificate certifying that the documents attached thereto are true and correct copies of all material agreements then existing between a Loan Party and another Loan Party or between a Loan Party and any Affiliate of any Loan Party, including all waivers, supplements or amendments thereto, in each case, in the form existing on the Closing Date, and the terms thereof shall be reasonably satisfactory to Lender in form and substance.

(u) Due Diligence. Lender shall have completed satisfactory due diligence review of the assets, liabilities, business, operations and condition (financial or otherwise) of the Loan Parties, including, a review of their Oil and Gas Properties and all legal, financial, accounting, governmental, environmental, Tax and regulatory matters, and fiduciary aspects of the financing contemplated hereby.

(v) Hedging Contracts. Borrower shall have delivered to Lender a certificate certifying that the Loan Parties have complied with the Hedging Contracts covenant under Section 6.19(a).

(w) Other Documentation. Lender shall have received all documents and instruments that Lender has then reasonably requested, in addition to those described in this Section 4.1. All such additional documents and instruments shall be reasonably satisfactory to Lender in form, substance and date.

Article V

Representations and Warranties

To confirm Lender’s understanding concerning Loan Parties and their businesses, Properties and obligations and to induce Lender to enter into this Agreement and to extend credit hereunder, Borrower represents and warrants on behalf of itself and the other Loan Parties to Lender:

Section 5.1 No Default. No Default has occurred that is continuing.

Section 5.2 Organization and Good Standing. Each Loan Party is duly organized, validly existing and, as applicable, in good standing under the Laws of its jurisdiction of organization, having all powers required to carry on its business and enter into and carry out the transactions contemplated hereby. Each Loan Party is duly qualified, in good standing, and authorized to do business in all other jurisdictions within the United States wherein Collateral or a principal office of a Loan Party is located, except where the failure to so qualify would not reasonably be expected to result in a Material Adverse Change. Each Loan Party has taken all actions and procedures customarily taken in order to enter, for the purpose of conducting business or owning Property, each jurisdiction outside the United States wherein the character of the Properties owned or held by it or the nature of the business transacted by it makes such actions and procedures desirable.

Section 5.3 Authorization. Each Loan Party has duly taken all action necessary to authorize the execution and delivery by it of the Loan Documents to which it is a party and to authorize the consummation of the transactions contemplated thereby and the performance of its obligations thereunder. Borrower is duly authorized to borrow funds hereunder.

Section 5.4 No Conflicts or Consents. The execution and delivery by the various Loan Parties of the Loan Documents to which each is a party, the performance by each of its obligations under such Loan Documents, and the consummation of the transactions contemplated by the various Loan Documents, do not and will not (a) conflict with, violate or result in a breach of any provision of (i) any Law, (ii) the Organizational Documents of any Loan Party, or (iii) any Material Contract applicable to or binding upon any Loan Party, (b) result in the acceleration of any Indebtedness owed by any Loan Party, or (c) result in or require the creation of any Lien upon any assets or Properties of any Loan Party except as expressly contemplated or permitted in the Loan Documents. Except (x) as expressly contemplated in the Loan Documents and (y) such as have been obtained or made and are in full force and effect, no permit, consent, approval, authorization or order of, and no notice to or filing with, any Governmental Authority or third party is required on the part of or in respect of a Loan Party in connection with the execution, delivery or performance by any Loan Party of any Loan Document or to consummate any transactions contemplated by the Loan Documents.

Section 5.5 Enforceable Obligations. This Agreement is, and the other Loan Documents when duly executed and delivered will be, legal, valid and binding obligations of each Loan Party that is a party hereto or thereto, enforceable against such Loan Party in accordance with its terms except as such enforcement may be limited by bankruptcy, insolvency or similar Laws of general application relating to the enforcement of creditors’ rights and by general principles of equity.

Section 5.6 Financial Statements.

(a) Borrower has heretofore furnished to Lender true, correct and complete copies of the Initial Financial Statements. The Initial Financial Statements (other than any pro forma financial statements or any projections) present fairly, in accordance with GAAP, Borrower’s Consolidated financial position at the date or dates thereof and the Consolidated results of Borrower’s operations and Borrower’s Consolidated cash flows for the period or periods thereof, subject to year-end audit adjustments and the absence of footnotes in the case of unaudited financial statements. All Initial Financial Statements that are pro forma financial statements or projections were prepared in good faith based upon assumptions specified therein with such pro forma adjustments as have been accepted by Lender.

(b) Since the date of the Initial Financial Statements, no event or condition has occurred that could reasonably be expected to cause a Material Adverse Change.

Section 5.7 Other Obligations and Restrictions. No Loan Party has any outstanding Liabilities of any kind (including contingent obligations, Tax assessments, and unusual forward or long-term commitments) that are, in the aggregate, material to Borrower or material with respect to Borrower’s Consolidated financial condition and not shown in the Initial Financial Statements or disclosed in Section 5.7 of the Disclosure Schedule or otherwise permitted under Section 7.1. Except as shown in the Initial Financial Statements or disclosed in Section 5.7 of the Disclosure Schedule, no Loan Party is subject to or restricted by any agreement, franchise, contract, deed, charter restriction, or other instrument or restriction that could reasonably be expected to cause a Material Adverse Change.

Section 5.8 Full Disclosure. No certificate, statement or other information delivered herewith or heretofore by any Loan Party to Lender in connection with the negotiation of this Agreement or in connection with any transaction contemplated hereby contains any untrue statement of a material fact or omits to state any material fact known to any officer of a Loan Party after due inquiry (other than industry-wide risks normally associated with the types of businesses conducted by the Loan Parties) necessary to make the statements contained herein or therein not misleading as of the date made or deemed made. There is no fact known to any officer of a Loan Party after due inquiry (other than industry-wide risks normally associated with the types of businesses conducted by the Loan Parties) that has not been disclosed to Lender in writing that could reasonably be expected to cause a Material Adverse Change. Each report required to be delivered by Borrower pursuant to Section 6.2(e), as of the date of (or as of the date(s) otherwise set forth in) such report, sets forth, a true and complete list of all of all of the Hedging Contracts of Borrower and each Subsidiary, the material terms thereof (including the type, effective date, term or termination date, and notional amounts or volumes), the estimated net mark-to-market value thereof, any credit support agreements relating thereto (other than Loan Documents), a summary of any collateral thereunder, and the counterparty to each such Hedging Contract.

Section 5.9 Litigation. Except as disclosed in the Initial Financial Statements or in Section 5.9 of the Disclosure Schedule: (a) there are no actions, suits or legal, equitable, arbitrative or administrative proceedings pending, or to the knowledge of any Loan Party threatened, against any Loan Party or affecting any Collateral before any Governmental Authority that could reasonably be expected to cause a Material Adverse Change, (b) there are no outstanding judgments, injunctions, writs, rulings or orders by any such Governmental Authority against any Loan Party or any Loan Party’s stockholders, partners, members, directors or officers or affecting any Collateral or any of its material assets or Property that could reasonably be expected to cause a Material Adverse Change, and (c) there are no actions, suits or legal, equitable, arbitrative or administrative proceedings or demands pending (or, to any Loan Party’s knowledge, threatened) that could reasonably be expected to adversely affect the rights of Borrower and its Subsidiaries in and to any such Collateral, including any that challenge or otherwise pertain to Borrower’s or any of its Subsidiaries’ title to such Collateral or the rights to produce and sell Hydrocarbons therefrom.

Section 5.10 ERISA Plans and Liabilities. All currently existing ERISA Plans are listed in Section 5.10 of the Disclosure Schedule. Except as disclosed in the Initial Financial Statements, or in Section 5.10 of the Disclosure Schedule, no Termination Event has occurred with respect to any ERISA Plan, and no event or circumstance has occurred or exists that could reasonably be expected to constitute or result in a Termination Event. Except as could not, in the aggregate, reasonably be expected to result in liability in excess of $1,000,000, all ERISA Affiliates are in compliance in all material respects with ERISA, the Internal Revenue Code and other applicable Laws with respect to each Plan. No ERISA Affiliate is required to contribute to, or has any other absolute or contingent liability in respect of, any Multiemployer Plan or any ERISA Plan subject to Section 4064 of ERISA. There are no pending or, to the best knowledge of Borrower, threatened claims, actions or lawsuits with respect to any Plan that could reasonably be expected to have a Material Adverse Change, and there has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Change. Except as set forth in Section 5.10 of the Disclosure Schedule: (a) the current value of each ERISA Plan’s benefit liabilities does not exceed the current value of such ERISA Plan’s assets available for the payment of such benefits by more than the Threshold Amount, (b) neither Borrower nor any other ERISA Affiliate is obligated to provide benefits to any retired employees (or their dependents) under any employee welfare benefits plan (as defined in Section 3(1) of ERISA) other than continuation coverage required by the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and (c) neither Borrower nor any other ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or Section 4212(c) of ERISA.

Section 5.11 Environmental and Other Laws. Except as disclosed in Section 5.11 of the Disclosure Schedule, to the knowledge of any officer of the Loan Parties after due inquiry: (a) the Loan Parties are conducting their businesses in material compliance with all applicable Laws, including Environmental Laws, and have, and are in compliance with, all licenses and permits required under any such Laws, except as could not, in the aggregate, reasonably be expected to result in liability to such Loan Party in excess of $1,000,000; (b) no Loan Party has received written notice that any of the operations or properties of any Loan Party is the subject of federal, state or local investigation evaluating whether any material remedial action is needed to respond to a release of any Hazardous Materials into the environment or to the improper storage or disposal (including storage or disposal at offsite locations) of any Hazardous Materials; (c) no Loan Party (and to the knowledge of the officers of Borrower after due inquiry, no other Person) has filed any notice under any Law indicating that any Loan Party is responsible for the improper release into the environment, or the improper storage or disposal, of any material amount of any Hazardous Materials or that any Hazardous Materials have been improperly released, or are improperly stored or disposed of, upon any property of any Loan Party; (d) no Loan Party has transported or arranged for the transportation of any Hazardous Material to any location that is (i) listed on the National Priorities List under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, listed for possible inclusion on such National Priorities List by the Environmental Protection Agency in its Comprehensive Environmental Response, Compensation and Liability Information System List, or listed on any similar state list or (ii) the subject of federal, state or local enforcement actions or other investigations that may lead to claims against any Loan Party for clean-up costs, remedial work, damages to natural resources or for personal injury claims (whether under Environmental Laws or otherwise), except as could not, in the aggregate, reasonably be expected to result in liability to such Loan Party in excess of $1,000,000; and (e) no Loan Party otherwise has any known material contingent liability under any Environmental Laws or in connection with the release into the environment, or the storage or disposal, of any Hazardous Materials, except as could not, in the aggregate, reasonably be expected to result in liability to such Loan Party in excess of $1,000,000. Each Loan Party undertook, at the time of its acquisition of each of its material properties, all commercially reasonable inquiry into the previous ownership and uses of such properties and any potential environmental liabilities associated therewith.

Section 5.12 Names and Places of Business. No Loan Party has, during the 5 years preceding the Closing Date, been known by, or used any other trade or fictitious name, except as disclosed in Section 5.12 of the Disclosure Schedule or been organized in a jurisdiction other than its jurisdiction of organization as of the date hereof. Except as otherwise indicated in Section 5.12 of the Disclosure Schedule or otherwise disclosed in writing to Lender, the chief executive office and principal place of business of each Loan Party are (and since such Loan Party’s organization have been) located at the address of Borrower set out in Section 10.3. Except as indicated in Section 5.12 of the Disclosure Schedule or otherwise disclosed in writing to Lender, no Loan Party has any other office or place of business.

Section 5.13 Subsidiaries. Section 5.13 of the Disclosure Schedule (as supplemented from time to time by Borrower in written notices to Lender) sets forth a true, correct and complete description of (a) the Subsidiaries of Borrower and the ownership of such Subsidiaries’ outstanding Equity and (b) any other Equity in any other Person that are owned by Borrower or any of its Subsidiaries. Each Subsidiary listed under Section 5.13 of the Disclosure Schedule is a Restricted Subsidiary unless specifically designated as an Unrestricted Subsidiary therein. All of Borrower’s Equity in its Subsidiaries, and all other Equity set forth in such section of the Disclosure Schedule, have been duly authorized and are validly issued, fully paid and non-assessable. Except for Liens under the Loan Documents and Permitted Liens, Borrower and its indicated Subsidiaries own such Subsidiaries and Equity free and clear of any Liens and other restrictions (including any restrictions on the right to vote, sell or otherwise dispose of any such Equity) and free and clear of any preemptive rights, rescission rights, or other rights to subscribe for or to purchase or repurchase any such Equity.

Section 5.14 Government Regulation. Neither Borrower nor any other Loan Party owing Obligations is (a) an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended, or (b) subject to regulation under the Federal Power Act, as amended, or any other Law that regulates the incurring by such Person of Indebtedness, including Laws relating to common contract carriers or the sale of electricity, gas, steam, water or other public utility services.

Section 5.15 Solvency. Upon giving effect to the making of the Loans, the execution and delivery of the Loan Documents by the Loan Parties and the consummation of the Transaction contemplated hereby and thereby, no Loan Party will be Insolvent.

Section 5.16 Taxes. Each Loan Party has filed all United States Federal income Tax returns and all other material Tax returns that are required to be filed by it and have paid all Taxes due pursuant to such returns or pursuant to any material assessment received by any Loan Party and all other penalties or charges. The charges, accruals and revenues on the books of each Loan Party in respect of Taxes and other governmental charges are, in the opinion of Borrower, adequate. No Loan Party has given or been requested to give a waiver of the statute of limitations relating to the payment of any federal income or other material Taxes.

Section 5.17 Title to Properties; Intellectual Property. Each Loan Party has (a) good and defensible title to, or valid leasehold interests in, all of the Oil and Gas Properties covered by the most recently delivered Oil and Gas Valuation, and (b) good and valid title to, or valid leasehold interests in, licenses of, or rights to use, all other Collateral owned or leased by such Loan Party and all of its other material properties and assets necessary or used in the ordinary conduct of its business, in each case free and clear of all Liens, encumbrances, or adverse claims other than Permitted Liens and of all impediments to the use of such properties and assets in such Loan Party’s business, except that no representation or warranty is made with respect to any Oil and Gas Property to which no Proved Reserves are properly attributed. Other than changes that arise pursuant to non-consent provisions of operating agreements or other agreements (if any) described in Exhibit A to any Security Document: (x) each Loan Party owns the net interests in production attributable to the wells and units of such Loan Party evaluated in the most recently delivered Oil and Gas Valuation subject to Permitted Liens and (y) the ownership of such properties does not in the aggregate in any material respect obligate such Loan Party to bear the costs and expenses relating to the drilling, development and operations of such properties in an amount materially in excess of the working interest of such properties set forth in the most recently delivered Oil and Gas Valuation. Each Oil and Gas Valuation at any time delivered pursuant to Section 6.2 correctly states the working interests and net revenue interests of the Loan Parties in the Proved Reserves that are the subject of such Oil and Gas Valuation. Except for obligations to contribute a proportionate share of the costs of defaulting co-owners, no Loan Party is obligated, at any time during the production life of the Oil and Gas Property, to bear any percentage share of the costs and expenses relating to the drilling, development and production of such Proved Reserves in excess of such working interests, and (subject to the Loan Documents) each Loan Party is entitled, at any time during the production life of the Oil and Gas Property, to receive percentage shares of the revenues from the production of such Proved Reserves that are at least equal to such net revenue interests. Each Loan Party possesses all licenses, permits, franchises, patents, copyrights, trademarks and trade names, and other intellectual property (or otherwise possesses the right to use such intellectual property without violation of the rights of any other Person) that are necessary to carry out its business as presently conducted and as presently proposed to be conducted hereafter, and no Loan Party is in violation in any material respect of the terms under which it possesses such intellectual property or the right to use such intellectual property. No Loan Party has granted control over any Deposit Accounts to any Person, other than Lender and the bank with which any Deposit Account is maintained.

Section 5.18 Regulation U. No Loan Party is engaged in the business of extending credit for the purpose of purchasing or carrying “margin stock” (as such term is defined in Regulation U), and no proceeds of the Loan will be used for a purpose that violates Regulation U.

Section 5.19 Leases and Contracts; Performance of Obligations. The leases, contracts, servitudes and other agreements forming a part of the Oil and Gas Properties of the Loan Parties covered by the most recently delivered Oil and Gas Valuation are in full force and effect. All rents, royalties and other payments due and payable under such leases, contracts, servitudes and other agreements, or under any Permitted Liens, or otherwise attendant to the ownership or operation of any Oil and Gas Properties covered by the most recently delivered Oil and Gas Valuation, have been properly and timely paid when due, except where the Loan Parties are in good faith disputing such rents, royalties and other payments by appropriate proceedings and have set aside on their books adequate reserves therefore. To the knowledge of any officer of the Loan Party after due inquiry, no Loan Party is in default with respect to its obligations (and no Loan Party is aware of any default by any third party with respect to such third party’s obligations) under any such leases, contracts, servitudes and other agreements, or under any Permitted Liens, or otherwise attendant to the ownership or operation of any part of the Oil and Gas Properties covered by the most recently delivered Oil and Gas Valuation, where such default could adversely affect the ownership or operation of such Oil and Gas Properties. No Loan Party is currently accounting for any royalties, or overriding royalties or other payments out of production, on a basis (other than delivery in kind) less favorable to such Loan Party than proceeds received by such Loan Party (calculated at the well) from sale of production, and no Loan Party has any liability (or alleged liability) to account for the same on any such less favorable basis.

Section 5.20 Marketing Arrangements. Except as set forth in Section 5.20 of the Disclosure Schedule, no Oil and Gas Property covered by the most recently delivered Oil and Gas Valuation is subject to any contractual or other arrangement (a) whereby payment for production is or can be deferred for a substantial period after the month in which such production is delivered (in the case of oil, not in excess of 60 days, and in the case of gas, not in excess of 90 days), or (b) whereby payments are made to a Loan Party other than by checks, drafts, wire transfers, or other similar writings, instruments or communications for the immediate payment of money. Except for production sales contracts, processing agreements, transportation agreements and other agreements relating to the marketing of production that are listed in Section 5.20 of the Disclosure Schedule in connection with the Oil and Gas Properties to which such contract or agreement relates: (i) no Oil and Gas Property is subject to any contractual or other arrangement for the sale, processing or transportation of production (or otherwise related to the marketing of production) that cannot be canceled by such Loan Party on 120 days’ (or less) notice or that does not provide for the prices to be paid for such production to float with the market at least as often as monthly, and (ii) all contractual or other arrangements for the sale, processing or transportation of production (or otherwise related to the marketing of production) are bona fide arm’s length transactions with third parties not affiliated with the Loan Parties. Each Loan Party is presently receiving a price for all production from (or attributable to) each Oil and Gas Property covered by the most recently delivered Oil and Gas Valuation that is subject to a production sales contract or marketing contract that is computed in all material respects in accordance with the terms of such contract, and no Loan Party is having deliveries of production from any such Oil and Gas Property curtailed materially below such property’s delivery capacity, except for curtailments caused (1) by an act or event of force majeure not reasonably within the control of and not caused by the fault or negligence of a Loan Party and which by the exercise of reasonable diligence such Loan Party is unable to prevent or overcome, or (2) by routine maintenance requirements in the ordinary course of business.

Section 5.21 Right to Receive Payment for Future Production. Except as set forth in Section 5.21 of the Disclosure Schedule, no Loan Party, nor any Loan Party’s predecessors in title, has received prepayments (including payments for gas not taken pursuant to “take or pay” or other similar arrangements) for any Hydrocarbons produced or to be produced from any Oil and Gas Properties covered by the most recently delivered Oil and Gas Valuation after the date hereof. Except as set forth in Section 5.21 of the Disclosure Schedule, no Oil and Gas Property covered by the most recently delivered Oil and Gas Valuation is subject to any “take or pay,” gas imbalances or other similar arrangement (a) as a result of which Hydrocarbons produced from such Oil and Gas Property may be required to be delivered to one or more third parties without current payment (or without full payment) therefor or (b) that is determined in whole or in part by reference to the production or transportation of Hydrocarbons from other properties. Except as set forth in Section 5.21 of the Disclosure Schedule, there is no Oil and Gas Property covered by the most recently delivered Oil and Gas Valuation with respect to which any Loan Party, or any Loan Party’s predecessors in title, has, prior to the date hereof, taken more (“overproduced”), or less (“underproduced”), gas from the lands covered thereby (or pooled or unitized therewith) than its ownership interest in such Oil and Gas Property would entitle it to take; and Section 5.21 of the Disclosure Schedule accurately reflects, for each well or unit with respect to which such an imbalance is shown thereon to exist, (i) whether such Loan Party is overproduced or underproduced and (ii) the volumes (in cubic feet or British thermal units) of such overproduction or underproduction and the effective date of such information. Since the date of this Agreement, no material changes have occurred in such overproduction or underproduction except those that have been reported as required pursuant to Section 6.2. No Oil and Gas Property covered by the most recently delivered Oil and Gas Valuation is subject to any regulatory refund obligation and, to the best of each Loan Party’s knowledge, no facts exist that might cause the same to be imposed.

Section 5.22 Operation of Oil and Gas Properties. The Oil and Gas Properties covered by the most recently delivered Oil and Gas Valuation (and all properties unitized therewith) are being (and, to the extent the same could adversely affect the ownership or operation of the Oil and Gas Properties covered by the most recently delivered Oil and Gas Valuation after the date hereof, have in the past been) in all material respects maintained, operated and developed in a good and workmanlike manner, in accordance with prudent industry standards and in conformity with all applicable Laws and in conformity with all oil, gas or other mineral leases and other contracts and agreements forming a part of the Oil and Gas Property covered by the most recently delivered Oil and Gas Valuation and in conformity with the Permitted Liens. Except as set forth in Section 5.22 of the Disclosure Schedule, no Oil and Gas Property covered by the most recently delivered Oil and Gas Valuation is subject to having allowable production after the date hereof reduced below the full and regular allowable (including the maximum permissible tolerance) because of any overproduction (whether or not the same was permissible at the time) prior to the date hereof and all oil and gas wells located on the Oil and Gas Properties covered by the most recently delivered Oil and Gas Valuation (or properties unitized therewith) have been drilled and completed within the boundaries of the applicable Oil and Gas Properties or within limits otherwise permitted by a valid and enforceable pooling, unit, or other agreement or contract or by applicable Law. Except as set forth in Section 5.22 of the Disclosure Schedule, there are no dry holes, or otherwise inactive wells, located on the Oil and Gas Properties covered by the most recently delivered Oil and Gas Valuation or on lands pooled or unitized therewith, except for wells that have been properly plugged and abandoned. Each Loan Party has all governmental licenses and permits which are material or necessary to owning and operating its Oil and Gas Properties covered by the most recently delivered Oil and Gas Valuation, and no Loan Party has received notice of any violations in respect of any such licenses or permits.

Section 5.23 Ad Valorem and Severance Taxes. Each Loan Party has paid and discharged all material ad valorem Taxes that are due and payable and have been assessed against its Oil and Gas Property or any part thereof and all material production, severance and other similar Taxes that are due and payable and have been assessed against, or measured by, the production or the value, or proceeds, of the production therefrom.

Section 5.24 Insurance. Each Loan Party and its Oil and Gas Properties are insured with financially sound and reputable insurance companies that are not Affiliates of such Loan Party, in such amounts, with such deductibles and covering such risks as are required to comply with Section 6.8. No Loan Party owns any Building (as defined in the applicable Flood Insurance Regulations) or Manufactured (Mobile) Home (as defined in the applicable Flood Insurance Regulations) that is material to the operations of such Loan Party or for which such Loan Party has ascribed a material value.

Section 5.25 Anti-Corruption Laws; Sanctions. 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. Borrower has implemented and maintains in effect for itself and its Subsidiaries policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, compliance by Borrower, its Subsidiaries, and their respective officers, employees, directors, and agents with Anti-Corruption Laws and applicable Sanctions. None of Borrower, any of its Subsidiaries or any directors, officer, employee, or Affiliate of Borrower or any of its Subsidiaries, or to the knowledge of Borrower after due inquiry, any agent of Borrower or any of its Subsidiaries, is an individual or entity that is, or is 50% or more owned (individually or in the aggregate, directly or indirectly) or controlled by individuals or entities (including any agency, political subdivision or instrumentality of any government) that are (a) the target of any Sanctions or (b) located, organized or resident in a country or territory that is, or whose government is, the subject of Sanctions.

Section 5.26 Beneficial Ownership. As of the Closing Date, the information included in each Beneficial Ownership Certification, if any, is true and correct in all respects.

Section 5.27 EEA Financial Institution. No Loan Party is an EEA Financial Institution.

Section 5.28 Bank Accounts. No Loan Party maintains any account, nor does any account exist for the benefit of a Loan Party, with any bank or financial institution other than the Operating Account, the Debt Service Reserve Account and the Capital Deposit Account, each subject to a Deposit Account Control Agreement.

Article VI
Affirmative Covenants

To conform with the terms and conditions under which Lender is willing to have credit outstanding to Borrower, and to induce Lender to enter into this Agreement and extend credit hereunder, Borrower covenants and agrees that until the full and final payment of the Obligations and the termination of this Agreement (other than contingent indemnification obligations and other contingent obligations not then due and payable), unless Lender has previously agreed otherwise:

Section 6.1 Payment and Performance. Each Loan Party will pay all amounts due under the Loan Documents to which it is a party in accordance with the terms thereof and will observe, perform and comply with every covenant, term and condition set forth in the Loan Documents to which it is a party. Borrower will cause each other Loan Party to observe, perform and comply with every such term, covenant and condition in any Loan Document.

Section 6.2 Books, Financial Statements and Reports. Each Loan Party will at all times maintain full and accurate books of account and records. Borrower will maintain and will cause its Subsidiaries to maintain a standard system of accounting, will maintain its Fiscal Year, and will furnish the following statements and reports to Lender at Borrower’s expense:

(a) Annual Financial Statements. As soon as available, and in any event within 120 days after the end of each Fiscal Year (commencing with the Fiscal Year ending December 31, 2023), Borrower will furnish its annual federal income Tax returns (subject to any applicable extensions) and the audited Consolidated and consolidating balance sheet and related statements of income, owners’ equity and cash flows of Borrower and its Consolidated Subsidiaries as of the end of and for such Fiscal Year, each setting forth in comparative form the corresponding figures for the preceding Fiscal Year and together with all notes thereto, prepared in accordance with GAAP, together with an unqualified opinion, based on an audit using generally accepted auditing standards, by an independent certified public accounting firm of nationally recognized standing selected by Borrower and reasonably acceptable to Lender (it being agreed that Marcum LLP is acceptable), stating that such financial statements have been so prepared.

(b) Quarterly Financial Statements. As soon as available, and in any event within 50 days after the end of each Fiscal Quarter (other than the fourth Fiscal Quarter of each Fiscal Year) (commencing with the first full Fiscal Quarter ending after the Closing Date), Borrower will furnish the unaudited Consolidated and consolidating balance sheet and related statements of income, owners’ equity and cash flows of Borrower and its Consolidated Subsidiaries as of the end of and for such Fiscal Quarter and the then elapsed portion of the then current Fiscal Year, each setting forth in comparative form the corresponding figures for the corresponding portion of the preceding Fiscal Year, prepared in accordance with GAAP, subject to changes resulting from normal year-end adjustments and the absence of footnotes and reviewed by an independent certified public accounting firm of nationally recognized standing selected by Borrower and acceptable to Lender.

(c) Monthly Financial Statements. As soon as available, and in any event within 45 days after the end of each calendar month commencing the first full month following the Closing Date, Borrower will furnish an internally prepared unaudited and unreviewed Consolidated and consolidating balance sheet and related statements of income, owners’ equity and cash flows of Borrower and its Consolidated Subsidiaries as of the end of each month, each setting forth in comparative form the corresponding figures for the prior month, prepared in accordance with GAAP.

(d) Certificate of Responsible Officer – Compliance. Together with each set of financial statements furnished under Section 6.2(a) or Section 6.2(b), Borrower will furnish a Compliance Certificate, signed by a Financial Officer of Borrower, (i) certifying that such financial statements present fairly in all material respects the financial condition and results of operations of the Persons reported on (subject, in the case of quarterly financial statements, to normal year-end adjustments and the absence of footnotes), (ii) stating whether any change in GAAP or in the application thereof that is applicable to Borrower has occurred since the date of Borrower’s most recent annual financial statements and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate, (iii) stating that the Financial Officer has reviewed the Loan Documents and that no Default exists at the end of such Fiscal Quarter or Fiscal Year, as applicable, or at the time of such certificate (or specifying the nature and period of existence of any such Default), and (iv) with respect to the financial statements furnished under Section 6.2(a), Borrower’s Debt Service Coverage Ratio for the Fiscal Year then ended.

(e) Report on Hedging Contracts. Together with each monthly financial statement furnished under Section 6.2(c), or any other time at the request of Lender, Borrower will furnish a report certified by a Responsible Officer (in form reasonably satisfactory to Lender) describing all Hedging Contracts of Borrower and each of its Subsidiaries, setting forth the type, effective date, term or termination date, and notional amounts or volumes, the estimated net mark-to-market value thereof, any credit support agreements relating thereto (other than Loan Documents) and a summary of any collateral thereunder, and the counterparty to each such Hedging Contract.

(f) Annual Budget. Within 60 days after the end of each Fiscal Year of Borrower, Borrower will furnish the Annual Budget for Borrower and its Subsidiaries for the current Fiscal Year prepared by the management of Borrower detailing the projected cash flows and capital expenditures of Borrower and its Subsidiaries for such current Fiscal Year.

(g) Semi-annual Oil and Gas Valuation. Borrower will furnish such information requested by Lender for evaluation of its semi-annual Collateral Valuation of the Oil and Gas Properties owned by Borrower commencing May 15, 2024, or more often to the extent requested by Lender, provided Borrower shall not be required to obtain third party reserve reports more frequently than once a year, such information to include a certificate from a Responsible Officer certifying on behalf of Borrower that in all material respects: (i) except as set forth on an exhibit to the certificate, on a net basis there are no gas imbalances, take or pay or other prepayments in excess of the volume specified in Section 5.21 with respect to the Oil and Gas Properties that would require any Loan Party to deliver Hydrocarbons either generally or produced from any Oil and Gas Property at some future time without then or thereafter receiving full payment therefor, (ii) none of the Oil and Gas Properties have been sold or assigned since the date of such Oil and Gas Valuation except as set forth on an exhibit to the certificate, which certificate shall list all such Oil and Gas Properties and no new Oil and Gas Properties have been acquired since the date of the prior Oil and Gas Valuation, (iii) attached to the certificate is a list of all marketing agreements entered into subsequent to the later of the date hereof or the most recently delivered Oil and Gas Valuation which Borrower could reasonably be expected to have been obligated to list in Section 5.20 of the Disclosure Schedule had such agreement been in effect on the date hereof, and (iv) attached thereto is a schedule of the Oil and Gas Properties that are mortgaged under Security Documents that shows the percentage of the total value of the Oil and Gas Properties that are mortgaged to Lender.

(h) Production Report and Lease Operating Statements. Concurrently with delivery to the monthly financial reports, furnish copies of monthly production and royalty reports for such month describing by lease or unit the gross and net volume of production and sales attributable to production during such month from the Oil and Gas Properties and describing the related severance Taxes, other Taxes, and leasehold operating expenses and capital costs attributable thereto and incurred during such month.

(i) Other Accounting Reports. Promptly upon receipt thereof, Borrower will furnish a copy of each other report or letter submitted to any Loan Party by independent accountants in connection with any annual, interim or special audit made by them of the books of any such Loan Party, and a copy of any delivered written response by such Loan Party, or the Board of such Loan Party, to such letter or report.

(j) Purchasers of Production. Upon request by Lender from time to time, Borrower will furnish a list, by name and address, of those Persons who are then purchasing production from the Mortgaged Oil and Gas Properties, giving each such purchaser’s owner number for the applicable Loan Party and each such purchaser’s property number for each such Oil and Gas Property.

(k) Information Regarding the Loan Parties. At least 10 Business Days (or such lesser amount of prior notice as may be acceptable to Lender) prior to any such proposed change, Borrower will furnish written notice of any change in (i) any Loan Party’s corporate, company or partnership name, (ii) the jurisdiction in which any Loan Party is incorporated, formed, or otherwise organized, (iii) the location of any Loan Party’s chief executive office, (iv) any Loan Party’s identity or corporate, company or partnership structure, (v) any Loan Party’s federal taxpayer identification number, or (vi) any other amendment, modification or supplement to the Organizational Documents of any Loan Party.

(l) Public Filings. Promptly after the same become publicly available, Borrower will furnish copies of all financial statements, reports, notices and proxy statements sent by any Loan Party to its equity holders generally and all registration statements, periodic reports and other statements and schedules filed by any Loan Party with any securities exchange, the SEC or any similar Governmental Authority.

(m) Notices of Casualty Events. Borrower will furnish prompt written notice of the occurrence of any casualty event or the commencement of any condemnation proceeding that could reasonably be expected to result in a casualty event.

(n) Notices of Environmental Matters. Borrower will furnish to Lender the information concerning environmental matters that is from time to time required under Section 6.11.

Section 6.3 Other Information and Inspections. Each Loan Party will furnish to Lender any information that Lender may from time to time reasonably request be furnished concerning any provision of the Loan Documents, any Collateral, or any matter in connection with the businesses, properties, prospects, financial condition and operations of any Loan Party, including all reports obtained by any Loan Party with respect to environmental matters that Lender from time to time reasonably requests in writing and all evidence that Lender from time to time reasonably requests in writing as to the accuracy and validity of or compliance with all representations, warranties and covenants made by any Loan Party in the Loan Documents, the satisfaction of all conditions contained therein, and all other matters pertaining thereto. Each Loan Party will permit representatives appointed by Lender (including independent accountants, auditors, agents, attorneys, appraisers and any other Persons) to visit and inspect during normal business hours any of such Loan Party’s property, including its books of account, other books and records, and any facilities or other business assets, and to make extra copies therefrom and photocopies and photographs thereof, and to write down and record any information such representatives obtain, and each Loan Party shall permit Lender or its representatives to investigate and verify the accuracy of the information furnished to Lender in connection with the Loan Documents and to discuss all such matters with its officers, employees and representatives.

Section 6.4 Notice of Material Events and Change of Address. Borrower will promptly and in no event later than the 5^th Business Day, after becoming aware thereof, notify Lender in writing, stating that such notice is being given pursuant to this Agreement, of:

(a) the occurrence of any Default;

(b) the acceleration of the maturity of any Indebtedness owed by any Loan Party in an aggregate principal amount of $100,000 or more, or the occurrence of any event which, with the giving of notice or the passage of time, or both, would allow any such acceleration;

(c) the occurrence of any default by any Loan Party under any indenture, mortgage, agreement, contract or other instrument to which any of them is a party or by which any of them or any of their Properties is bound, if such default could reasonably be expected to cause a Material Adverse Change;

(d) the occurrence of any Termination Event;

(e) the filing or commencement of, or the threat in writing of, any action, suit, proceeding, investigation or arbitration by or before any arbitrator or Governmental Authority against or affecting any Loan Party that has not previously disclosed in writing to Lender or any material adverse development in any action, suit, proceeding, investigation or arbitration (whether or not previously disclosed to Lender) that, in either case, if adversely determined, could reasonably be expected to result in (i) the obligation of any Loan Party to pay damages or make remediation expenditures in excess of the Threshold Amount, (ii) the disruption or delay of any Loan Party’s operations that could reasonably be expected to reduce annual revenues by more than the Threshold Amount, or (iii) any Material Adverse Change; and

(f) the occurrence of any other development that results in, or could reasonably be expected to result in, a Material Adverse Change.

Upon the occurrence of any of the foregoing events, the Loan Parties will take all necessary or appropriate steps to remedy promptly any such Material Adverse Change, Default, acceleration, potential acceleration, default, or Termination Event, to defend any such action, suit, proceeding, investigation or arbitration and to resolve all controversies on account of any of the foregoing. Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer of Borrower setting forth details of the occurrence referred to therein and stating what action, if any, the applicable Loan Party has taken or proposes to take with respect thereto.

Section 6.5 Maintenance of Properties. Each Loan Party will maintain, preserve, protect, and keep all Collateral and all other material Property used or useful in the conduct of its business in good condition (ordinary wear and tear excepted) in accordance with prudent industry standards, and in material compliance with all applicable Laws, in material conformity with all applicable contracts, servitudes, leases and agreements, and will from time to time make all repairs, renewals and replacements needed to enable the business and operations carried on in connection therewith to be promptly and advantageously conducted at all times.

Section 6.6 Maintenance of Existence and Qualifications. Each Loan Party will maintain and preserve its legal existence and its rights and powers to do business in full force and effect and will qualify to do business in all states or jurisdictions where required by applicable Law, except where the failure to maintain such rights and powers or to be so qualified would not reasonably be expected to cause a Material Adverse Change, provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 7.5.

Section 6.7 Payment of Trade Liabilities, Taxes, etc. Each Loan Party will (a) timely file all federal and state income and other material Tax returns required to be filed (taking into account any applicable extensions); (b) timely pay all federal and state income and other material Taxes imposed before the same become delinquent (including employment Taxes); (c) no later than 90 days after the original invoice billing date therefore, or, if earlier, when due in accordance with its terms, pay and discharge all material Liabilities owed by it to vendors, suppliers and other Persons providing goods and services to it; (d) pay and discharge before the same becomes delinquent all other material Liabilities now or hereafter owed by it, other than royalty payments suspended in the ordinary course of business; and (e) maintain appropriate accruals and reserves for all of the foregoing in accordance with GAAP. Each Loan Party may, however, delay paying or discharging any of the foregoing so long as it is in good faith contesting the validity thereof by appropriate proceedings and has set aside on its books adequate reserves therefore that are in compliance with GAAP.

Section 6.8 Insurance.

(a) Each Loan Party will at all times maintain insurance with responsible and reputable insurance companies or associations (including comprehensive general liability, hazard, and business interruption insurance) with respect to its business and properties (including all real properties leased or owned by it), in such amounts and covering such risks as required by any Governmental Authority having jurisdiction with respect thereto or as carried generally in accordance with sound business practice by similarly situated companies in similar businesses. If any Loan Party fails to maintain such insurance, Lender may arrange for such insurance, but at Borrower’s expense and without any responsibility on the part of Lender for obtaining the insurance, the solvency of the insurance companies, the adequacy of the coverage, or the collection of claims. During the continuance of any Event of Default, Lender shall have the sole right (both in the name of Lender and in the name of the Loan Parties), to file claims under any insurance policies, to receive, receipt and give acquittance for any payments that may be payable thereunder, and to apply such payments to the Secured Obligations, and to execute any and all endorsements, receipts, releases, assignments, reassignments or other documents that may be necessary to effect the collection, compromise or settlement of any claims under any such insurance policies.

(b) On or prior to the Closing Date and annually thereafter, at the same time as annual financial statements are required under Section 6.2(a), Borrower will furnish or cause to be furnished to Lender a summary of the insurance coverage of the Loan Parties and certificates from the Loan Parties’ insurance brokers confirming such coverage, all in form and substance reasonably satisfactory to Lender, and, if requested, copies of the applicable policies. Each Loan Party will cause any insurance policies covering any Collateral to be endorsed (i) to provide that such policies may not be cancelled, reduced or affected in any manner for any reason without 30 days prior notice to Lender (or 10 days for non-payment), (ii) to name Lender as an additional insured (in the case of all liability insurance policies) and lender loss payee (in the case of all casualty and property insurance policies) as applicable to the Mortgaged Oil and Gas Properties, and (iii) to provide for such other matters as Lender may reasonably require.

Section 6.9 Performance on Borrower’s Behalf. If any Loan Party fails to pay any Taxes, insurance premiums, expenses, attorneys’ fees or other amounts it is required to pay under any Loan Document, Lender may (but need not) pay all or any part thereof. Borrower shall immediately reimburse Lender for any such payments and Borrower’s obligation to do so shall constitute an Obligation owed hereunder that is due and payable on the date such amount is paid by Lender.

Section 6.10 Compliance with Agreements and Law; Permits. Each Loan Party will observe, perform, and comply with all material obligations it is required to perform under the terms of each indenture, mortgage, deed of trust, security agreement, lease, franchise, agreement, contract or other instrument or obligation to which it is a party or by which it or any of its properties is bound except where the failure to so observe, perform, and comply would not reasonably be expected to result in liability to such Loan Party in excess of $250,000. Each Loan Party will conduct its business and affairs in compliance with all Laws applicable thereto, including all Anti-Corruption Laws and applicable Sanctions in all material respects. Borrower will maintain in effect and enforce policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, compliance by Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions. Each Loan Party will cause all material licenses and permits necessary or appropriate for the conduct of its business and the ownership and operation of its property used and useful in the conduct of its business to be at all times maintained in good standing and in full force and effect.

Section 6.11 Environmental Matters; Environmental Reviews.

(a) Each Loan Party will comply in all material respects with all Environmental Laws now or hereafter applicable to such Loan Party, as well as all contractual obligations and agreements with respect to environmental remediation or other environmental matters, and shall obtain, at or prior to the time required by applicable Environmental Laws, all environmental, health and safety permits, licenses and other authorizations that are material or necessary to the conduct of its operations and will maintain such authorizations in full force and effect. No Loan Party will do anything or permit anything to be done that will subject any of its properties to any remedial obligations under, or result in noncompliance with applicable permits and licenses issued under, any applicable Environmental Laws, assuming disclosure to the applicable Governmental Authorities of all relevant facts, conditions and circumstances, except as could not, in the aggregate, reasonably be expected to result in liability to such Loan Party in excess of $250,000. Upon any notice of any noncompliance with Environmental Laws, upon Lender’s request, Borrower will provide at its own expense an environmental inspection of the property that is the subject of such notice and audit of their environmental compliance procedures and practices, in each case from an engineering or consulting firm reasonably approved by Lender.

(b) Borrower will promptly (and in any event within 5 days after receipt thereof) furnish to Lender copies of all written notices of violation, orders, claims, citations, complaints, penalty assessments, suits or other proceedings received by any Loan Party, or of which Borrower otherwise has notice, pending or threatened against any Loan Party by any Governmental Authority with respect to any alleged material violation of or material non-compliance with any Environmental Laws or any permits, licenses or authorizations in connection with any Loan Party’s ownership or use of its properties or the operation of its business.

(c) Borrower will promptly (and in any event within 5 days after receipt thereof) furnish to Lender all requests for information, notices of claim, demand letters, and other notifications, received by Borrower in connection with any Loan Party’s ownership or use of its properties or the conduct of its business, relating to potential responsibility with respect to any investigation or clean-up of Hazardous Material at any location.

Section 6.12 Shareholder Indebtedness. On or before December 15, 2023, Lender shall have received fully executed copies of the Shareholder Subordination Agreements evidencing one hundred percent (100%) of the principal amount of the Shareholders’ Notes outstanding as of such date.

Section 6.13 Guaranties. Each Restricted Subsidiary of Borrower now existing or created, acquired or coming into existence after the date hereof shall, promptly and in any event within 10 days after it has become a Restricted Subsidiary of Borrower (or such later date as Lender may agree), execute and deliver to Lender an absolute and unconditional guaranty of the timely repayment of the Secured Obligations and the due and punctual performance of the obligations of Borrower hereunder, which guaranty shall be satisfactory to Lender in form and substance. Each Restricted Subsidiary of Borrower existing on the date hereof shall duly execute and deliver such a guaranty prior to the making of the Loan hereunder. Borrower will cause each of its Restricted Subsidiaries to deliver to Lender, simultaneously with its delivery of such a guaranty, written evidence satisfactory to Lender and its counsel that such Restricted Subsidiary has taken all action necessary to duly approve and authorize its execution, delivery and performance of such guaranty and any other documents that it is required to execute.

Section 6.14 Agreement to Deliver Security Documents.

(a) Borrower agrees to deliver and to cause each other Loan Party to deliver, to further secure the Obligations whenever reasonably requested by Lender, deeds of trust, mortgages, chattel mortgages, security agreements, financing statements and other Security Documents in form and substance satisfactory to Lender for the purpose of granting, confirming, and perfecting first and prior Liens or security interests in any real or personal property now owned or hereafter acquired by any Loan Party. Borrower agrees to deliver and to cause each other Loan Party to deliver, whenever requested by Lender, in its discretion, transfer orders or letters in lieu thereof with respect to the production and proceeds of production from the Collateral, in form and substance satisfactory to Lender. Upon receipt of any notice, claim or demand from any third party alleging any defect in title with respect to a material Mortgage Oil and Gas Property, Borrower also agrees to deliver, upon request of Lender, favorable title reports, summaries, and/or title opinions or updates of title reports, summaries, and/or title opinions from legal counsel reasonably acceptable to Lender with respect to such Mortgaged Oil and Gas Property, based upon abstract or record examinations to dates reasonably acceptable to Lender and (a) stating that such Loan Party has good and defensible title to such properties and interests, free and clear of all Liens other than Permitted Liens, (b) confirming that such properties and interests are subject to Security Documents securing the Obligations that constitute and create legal, valid and duly perfected first deed of trust or mortgage Liens in such properties and interests and first priority assignments of and security interests in the oil and gas attributable to such properties and interests and the proceeds thereof, and (c) covering such other matters as Lender may reasonably request.

(b) Notwithstanding the foregoing nor any other provision in this Agreement, unless and until Lender finances Borrower’s exercise of the Option under the ORR Option Agreement pursuant to Section 6.21, neither the ORR Rights nor the ORR Option Agreement shall constitute Collateral.

Section 6.15 Production Proceeds. Notwithstanding that, by the terms of the various Security Documents, the Loan Parties are and will be assigning to Lender, for the benefit of the Secured Parties, all of the production and proceeds of production accruing to the property encumbered thereby, so long as no Event of Default has occurred and is continuing Lender hereby grants a license to such Loan Parties that they may continue to receive from the purchasers of production all such proceeds of production, subject, however, to the Liens and assignments created under the Security Documents, which Liens and assignments are hereby affirmed and ratified. Whenever any Event of Default has occurred and is continuing, this license shall automatically terminate and Lender may exercise all rights and remedies granted under the Security Documents, including the right to obtain possession of all proceeds of production then held by the Loan Parties or to receive directly from the purchasers of production all proceeds thereof. In no case shall any failure, whether intentioned or inadvertent, by Lender to collect directly any such proceeds of production constitute in any way a waiver, remission or release of any of its rights under the Security Documents, nor shall any release of any proceeds of production by Lender to the Loan Parties constitute a waiver, remission, or release of any other proceeds of production or of any rights of Lender or Secured Parties to collect other proceeds of production thereafter. No production of any Loan Party is being sold except to purchasers of production who have been instructed or are being instructed to pay proceeds thereof to the Operating Account.

Section 6.16 Perfection and Protection of Security Interests and Liens. Each Loan Party shall from time to time deliver to Lender any financing statements, continuation statements, extension agreements, amendments to Security Documents, and other documents, properly completed and executed (and acknowledged when required) by such Loan Party in form and substance satisfactory to Lender, which Lender reasonably requests for any of the following purposes: (a) to perfect, confirm, or protect any Lien or other rights in Collateral securing any Secured Obligations, and (b) to cure any defects or potential defects in such Security Documents; provided that the same shall not materially increase any Loan Party’s obligations, or materially decrease any Loan Party’s rights, under the Loan Documents. Each Loan Party hereby authorizes Lender to file (without the signature of any Loan Party where permitted by Law) one or more financing or continuation statements, and amendments thereto, relative to all or any part of the collateral describing the Collateral as “all assets” or “all personal property” of the applicable Loan Party or words of similar import.

Section 6.17 Leases and Contracts; Performance of Obligations. Subject to Dispositions permitted hereunder, each Loan Party will maintain in full force and effect all oil, gas or mineral leases, contracts, servitudes and other agreements forming a part of any Oil and Gas Property, to the extent the same cover or otherwise relate to such Oil and Gas Property, and each Loan Party will timely perform all of its obligations thereunder. Each Loan Party will properly and timely pay all rents, royalties and other payments due and payable under any such leases, contracts, servitudes and other agreements, or under the Permitted Liens, or otherwise attendant to its ownership or operation of any Oil and Gas Property (except where the amount thereof is being contested in good faith by appropriate proceedings and have set aside on their books adequate reserves therefore). Each Loan Party will promptly notify Lender of any claim (or any conclusion by such Loan Party) that such Loan Party is obligated to account for any royalties, or overriding royalties or other payments out of production, on a basis (other than delivery in kind) less favorable to such Loan Party than proceeds received by Loan Party (calculated at the well) from sale of production.

Section 6.18 Operating Account. Each Loan Party shall at all times deposit, or cause to be deposited, all Business Proceeds into the applicable Operating Account. Immediately following execution of this Agreement, Borrower shall direct all Persons that owe or are expected to owe Business Proceeds to forward all such amounts directly to the Operating Account. If a Loan Party has knowledge that any Person is in receipt of Business Proceeds that would otherwise be properly deposited in the Operating Account, Borrower shall promptly notify such Person and Lender in writing of such circumstance and shall direct such Person to deposit, or cause to be deposited, all such amounts in the Operating Account.

Section 6.19 Hedging Contracts.

(a) On the Closing Date, Borrower shall cause the Existing Hedging Contracts set forth in Section 6.19(a) of the Disclosure Schedule to continue in force and effect as between Pogo Resources, LLC and Cargill, Incorporated.

(b) On or prior to the Closing Date (or such longer period as may be approved by Lender in its sole discretion), the Loan Parties, collectively, shall enter into and maintain in effect at all times Hedging Contracts covering notional volumes of crude oil and natural gas, calculated separately:

(i) at least equal to 60% for each month during the first twelve months following the Closing Date;

(ii) at least equal to 50% for each month during 13^th through 24^th month following the Closing Date; and

(iii) at least equal to 40% for each month during the 25^th through 36^th month following the Closing Date,

in each case, of Projected Oil and Gas Production as of the Closing Date which Hedging Contracts (A) shall have the purpose and effect of fixing crude oil and natural gas prices in respect of such portion of the Projected Oil and Gas Production for each month in such period, (B) shall be on terms reasonably satisfactory to Lender (it being agreed that the Hedging Contracts in place on the Closing Date are satisfactory to Lender), and (C) shall otherwise comply with the limitations set forth in Section 7.3.

(c) Each Loan Party shall maintain in effect for their full term (and will not sell, assign, transfer, terminate, or novate) all of the Hedging Contracts required to be maintained in effect pursuant to this Section 6.19, including all of the Hedging Contracts in existence within 30 days after the Closing Date.

Section 6.20 Unrestricted Subsidiaries. Borrower:

(a) will cause the management, business and affairs of each of Borrower and its Restricted Subsidiaries, on the one hand, and the Unrestricted Subsidiaries, on the other hand, to be conducted in such a manner (including by keeping separate books of account, furnishing separate financial statements of the Unrestricted Subsidiaries to creditors and potential creditors thereof and by not permitting Properties of Borrower and its Restricted Subsidiaries to be commingled with the Properties of the Unrestricted Subsidiaries) so that each Unrestricted Subsidiary will be treated as a corporate entity separate and distinct from any of the Loan Parties;

(b) will not, and will not permit any of its Restricted Subsidiaries to, incur, assume or suffer to exist any guarantee by Borrower or such Restricted Subsidiary of, or be or become liable for or subject to offset for any Indebtedness of any Unrestricted Subsidiary; and

Section 6.21 ORR Option Financing.

(a) In the event ORR Subsidiary intends to exercise the Option under the ORR Option Agreement and to obtain new loan financing in connection therewith, Borrower shall notify Lender at least 45 days in advance in writing and request Lender’s proposal of terms and conditions upon which Lender is willing to finance ORR Subsidiary’s exercise of the Option.

(b) In the event Lender submits a written proposal to finance the exercise of the Option (“Lender’s Offer”) that is acceptable to Borrower and ORR Subsidiary in their sole discretion, Lender, Borrower and ORR Subsidiary shall negotiate and document such financing as an amendment to this Agreement, and upon exercise of the Option, the ORR Rights shall be pledged by ORR Subsidiary as Collateral to secure the Obligations.

(c) In the event Lender declines to finance ORR Subsidiary’s exercise of the Option or if ORR Subsidiary obtains loan financing from another Person on terms that are, in the aggregate, more favorable than Lender’s Offer (“Third Party Financing”), and ORR Subsidiary elects to accept the Third Party Financing, then in connection with and prior to exercising the Option, (i) Borrower shall notify Lender in writing of its election to exercise the Option, the terms of the Third Party Financing (to the extent disclosure thereof is not prohibited by any applicable confidentiality restriction) and the date by which the Option shall be exercised, and (ii) the ORR Subsidiary shall be free to obtain the Third Party Financing and exercise the Option.

Section 6.22 Post-Closing Covenant. No later than forty-five (45) days after the Closing Date, Borrower shall deliver a revised certificate from Loan Parties’ insurance broker or other evidence reasonably satisfactory to Lender that all insurance required to be maintained pursuant to Section 6.8 is in full force and effect for at least twelve (12) months following the Closing Date, and that Lender, for the benefit of the Secured Parties, has been named as additional insured and lender loss payee thereunder as its interests may appear and to the extent required under Section 6.8.

Article VII
Negative Covenants

To conform with the terms and conditions under which Lender is willing to have credit outstanding to Borrower, and to induce Lender to enter into this Agreement and make the Loans, Borrower covenants and agrees that until the full and final payment of the Obligations and the termination of this Agreement (other than contingent indemnification obligations and other contingent obligations not then due and payable), unless Lender has previously agreed otherwise:

Section 7.1 Indebtedness. No Loan Party will incur, assume, allow to exist, or in any manner owe or be liable for Indebtedness except:

(a) the Obligations;

(b) the subordinated Sellers’ Note, subject to the Seller Subordination Agreement;

(c) in addition to the Sellers’ Note, other Indebtedness presently outstanding under the instruments and agreements described in Section 7.1 of the Disclosure Schedule (excluding the Existing Indebtedness which shall be paid in full at the Closing Date) in the principal amounts disclosed in such Section 7.1, and any renewals or extensions of such Indebtedness so long as the principal amount or interest charged thereon is not increased;

(d) Indebtedness arising under Hedging Contracts permitted under Section 7.3;

(e) Indebtedness constituting a guaranty by any Loan Party of Indebtedness of one or more other Loan Party that is permitted to be incurred and remain outstanding under this Section 7.1;

(f) Capital Lease Obligations and Purchase Money Indebtedness in an aggregate principal amount that does not exceed $500,000 at any time outstanding;

(g) Indebtedness associated with worker’s compensation claims, bonds or surety obligations required by applicable Law or contract by third parties in the ordinary course of business in connection with the operation of, or provision for the abandonment and remediation of, the Oil and Gas Properties of the Loan Parties;

(h) Permitted LC Indebtedness;

(i) other unsecured Indebtedness in an amount not to exceed $500,000;

(j) Shareholder Indebtedness, subject to compliance with Section 4.1(h) and Section 6.12 hereof; and

(k) Endorsements of negotiable instruments for collection in the ordinary course of business.

Section 7.2 Limitation on Liens. Except for Permitted Liens, no Loan Party will create, assume or permit to exist any Lien upon any of the Properties or assets that it now owns or hereafter acquires.

Section 7.3 Hedging Contracts. No Loan Party will be a party to or in any manner be liable on any Hedging Contract except:

(a) Subject to subsection (b) of this Section 7.3, Hedging Contracts with an Approved Counterparty that are not entered into not for speculative purposes the notional volumes of which (when aggregated with other commodity Hedging Contracts then in effect) do not exceed, as of the date such Hedging Contract is entered into (and for each month during the period during which such Hedging Contract is in effect, determined, in the case of contracts that are not settled on a monthly basis, by a monthly proration acceptable to Lender), the applicable percentages set forth in Section 6.19(a).

(b) If, after the end of any calendar quarter, commencing with the first full calendar quarter ending after the Closing Date, Borrower determines that the aggregate notional volumes of all Hedging Contracts in respect of commodities for such calendar quarter (other than basis differential swaps on volumes already hedged pursuant to other Hedging Contracts) exceeded 100% of actual production of Hydrocarbons in such calendar quarter, then Borrower (i) shall promptly notify Lender of such determination and (ii) if requested by Lender, shall, within 45 days following such request, terminate, create off-setting positions, or otherwise unwind or monetize existing Hedging Contracts such that, at such time, future hedging volumes will not exceed 100% of reasonably anticipated projected production for the then-current and any succeeding calendar quarters.

(c) In no event shall any Hedging Contract contain any requirement, agreement or covenant for any Loan Party to post collateral, credit support (including in the form of letters of credit) or margin to secure their obligations under such Hedging Contract or to cover market exposures except to the extent permitted under the Intercreditor Agreement.

(d) Unless instructed by Lender pursuant to Section 7.3(b), no Loan Party will terminate or monetize any Hedging Contract in respect of commodities without the prior written consent of Lender.

Section 7.4 Limitation on Mergers, Issuances of Securities. No Loan Party will merge or consolidate with or into any other Person or sell, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its Property to any other Person (each of the foregoing transactions, a “consolidation”), or liquidate or dissolve or enter into any plan of division (or any comparable event), except that any Subsidiary of Borrower may participate in a consolidation with (a) another Subsidiary of Borrower, so long as a Guarantor is the surviving Person, or (b) Borrower, so long as Borrower is the surviving Person. No Loan Party other than Borrower will issue any Equity, provided that Subsidiaries of Borrower may issue additional Equity to Borrower so long as no change of control exists after giving effect to such issuance. Each Subsidiary of Borrower shall be a Wholly-Owned Subsidiary except as described in the definition of HNRA OpCo (and the impact the same has on the ownership of the Subsidiaries of HNRA OpCo), and no Loan Party shall have any foreign subsidiaries.

Section 7.5 Limitation on Dispositions. No Loan Party will Dispose of any of its Properties or any interest therein, except the following, provided that the proceeds thereof are deposited in the Operating Account:

(a) sales of inventory (including oil and gas sold as produced and seismic data) that is sold in the ordinary course of business on ordinary trade terms;

(b) Distributions permitted under Section 7.6, Investments permitted by Section 7.7, and the liquidation of Cash Equivalents;

(c) the sale or Disposition of machinery and equipment no longer used or useful in the business of the applicable Loan Party;

(d) the Disposition of obsolete or worn-out property in the ordinary course of business;

(e) Dispositions by a Loan Party to any other Loan Party;

(f) Dispositions resulting from any taking or condemnation of any Property of any Loan Party by any Governmental Authority or any assets subject to a casualty;

(g) subject to the prior written consent of Lender, such consent not to be unreasonably withheld, the entering into of any agreement or commitment to make a Disposition so long as such Disposition will result in Payment in Full substantially simultaneously therewith; and

(h) so long as no Default, Event of Default or Collateral Value Deficiency has occurred and is continuing or would result therefrom, Dispositions of Equity in Unrestricted Subsidiaries.

Without the written consent of Lender, no Loan Party will abandon or consent to the abandonment of, any oil or gas well constituting Collateral so long as such well is capable (or is subject to being made capable through drilling, reworking or other operations that it would be commercially feasible to conduct) of producing oil, gas, or other hydrocarbons or other minerals in commercial quantities (as determined without considering the effect of any Security Document). No Loan Party will elect not to participate in a proposed operation on any Oil and Gas Property constituting Collateral where the effect of such election would be the forfeiture either temporarily (e.g., until a certain sum of money is received out of the forfeited interest) or permanently of any interest in the Collateral.

Section 7.6 Limitation on Distributions and Subordinated Debt Payments. No Loan Party will declare or make directly or indirectly any Distribution or make any payment on the Sellers’ Note, other than:

(a) Distributions payable in additional common Equity in the Loan Party making the Distribution, so long as Borrower’s direct and indirect interests in any of its Restricted Subsidiaries are not thereby reduced;

(b) redemptions of Borrower’s Equity at the Closing Date pursuant to the MIPA;

(d) payments on the Sellers’ Note permitted under the Seller Subordination Agreement; and

(e) payments on the Shareholders’ Note permitted under the Shareholder Subordination Agreements.

Section 7.7 Limitation on Investments. No Loan Party will make any Investments other than Permitted Investments.

Section 7.8 Transactions with Affiliates. No Loan Party will enter into any transaction with any Affiliate of a Loan Party (other than other Loan Parties and any natural persons) other than as permitted by Sections 1.9 and 6.21, unless (a) such transaction is upon fair and reasonable terms no less favorable to it than it would obtain in a comparable arm’s length transaction with a Person not an Affiliate and (b) any Liens or security interests granted to an Affiliate by a Loan Party are subordinated in a manner and on terms and conditions satisfactory to Lender in its sole discretion.

Section 7.9 Negative Pledge; Certain Prohibited Restrictions; ERISA.

(a) Except as expressly provided for in the Loan Documents, no Loan Party will, directly or indirectly, enter into, create, or otherwise allow to exist any contractual restriction or other consensual restriction on its ability (or the ability of any other Loan Party) (other than under the Loan Documents, or any agreements relating to Capital Lease Obligations or purchase money obligations permitted by this Agreement, but then only with respect to the property that is the subject of such Capital Lease or purchase money obligation) to:

(i) grant Liens to Lender for the benefit of the Secured Parties on or in respect of its Properties,

(ii) pay dividends or make other Distributions to any other Loan Party,

(iii) redeem Equity in such Loan Party that is held by any other Loan Party,

(iv) repay the Loan and other Liabilities owing by such Loan Party to any other Loan Party, or

(v) transfer any assets of such Loan Party to any other Loan Party,

except for (1) documents creating Liens which are described in clause (b) or (f) of the definition of “Permitted Liens” (but then only with respect to the property that is the subject of the applicable lease, license or other document or restriction described in such clauses), (2) customary limitations and restrictions contained in, and limited to the property covered by, specific leases, licenses, conveyances, partnership agreements and co-owners’ agreements, and similar conveyances and agreements, (3) customary restrictions on the assignment or transfer of any contract or agreement that are contained in such contract or agreement, (4) any restriction imposed on particular properties pursuant to an agreement entered into for a sale of such properties not prohibited by Section 7.5 pending the closing of such sale, (5) any restriction imposed on the Equity owned in any Subsidiary pursuant to an agreement entered into for a sale of such Equity not prohibited by Section 7.5 pending the closing of such sale or (6) restrictions set forth in the Seller Note.

(b) No Loan Party will enter into any contractual restriction or other consensual restriction (other than pursuant to the Loan Documents) on the ability of any Loan Party to enter into amendments or supplements to the Loan Documents.

(c) No ERISA Affiliate will incur any obligation to contribute to any Multiemployer Plan or any plan subject to Section 4064 of ERISA.

(d) Borrower shall not repay the Sellers’ Note except from Borrower’s Capital Deposit Account.

Section 7.10 Conduct of Business. The Loan Parties will not engage in any businesses other than the exploration, development and production of Oil and Gas Properties and activities ancillary thereto. The Loan Parties will not acquire any Oil and Gas Properties not located within the geographical boundaries of the United States of America.

Section 7.11 Amendments to Organizational Documents and Material Contracts. No Loan Party will make, enter into or permit any modification, supplement, release or waiver of its Organizational Documents or any Material Contract without the prior consent of Lender, which shall not be unreasonably withheld, conditioned or delayed, other than (a) minor modifications that do not in any material respect increase the obligations thereunder, or limit the rights thereunder, of any Loan Party, and (b) other modifications that could not reasonably be expected to be adverse to the interests of the Secured Parties.

Section 7.12 Fiscal Year. No Loan Party shall, nor shall it permit any of its Subsidiaries to, change its Fiscal Year end from December 31.

Section 7.13 Proceeds of Loans.

(a) Borrower will not permit the proceeds of the Loan to be used for any purpose other than those permitted by Section 2.3.

(b) Borrower will not use, and shall cause that its Subsidiaries and its or their respective directors, officers, employees and agents shall not use, the proceeds of the Loan (i) 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, (ii) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country to the extent such activities, businesses or transaction would be prohibited by Sanctions if conducted by a corporation incorporated in the United States or (c) in any manner that would result in the violation of any Sanctions applicable to any party hereto.

Section 7.14 Gas Imbalances, Take-or-Pay or Other Prepayments. No Loan Party will allow gas imbalances, take-or-pay or other prepayments (other than any gas imbalances, take-or-pay and other prepayments set forth in Section 5.21 of the Disclosure Schedule or on the most recent certificate delivered pursuant to Section 6.2(g)) with respect to the Oil and Gas Properties of such Loan Party that would require such Loan Party to deliver Hydrocarbons at some future time without then or within 90 days thereafter receiving full payment therefor to exceed one bcf of gas (on an mcf equivalent basis) in the aggregate for all such Loan Parties.

Section 7.15 Non-Qualified ECP Guarantors. Borrower shall not permit itself or any other Loan Party that is not a Qualified ECP Guarantor to own, at any time, any Proved Reserves.

Section 7.16 Sale and Leaseback Transactions. No Loan Party will, directly or indirectly, enter into any arrangement with any Person whereby in a substantially contemporaneous transaction such Loan Party sells or transfers all or substantially all of its right, title and interest in an asset and, in connection therewith, acquires or leases back the right to use such asset.

Section 7.17 Accounts. No Loan Party shall maintain any account, nor permit any account to exist for the benefit of a Loan Party, with any bank or financial institution other than the Operating Account, the Debt Service Reserve Account, and the Capital Deposit Account which shall both be subject to a Deposit Account Control Agreement. Borrower shall not deposit any funds in the Capital Deposit Account except for proceeds from the sale of Borrower’s Equity.

Section 7.18 Debt Service Coverage Ratio. Borrower shall not permit its Debt Service Coverage Ratio to be less than 1.35 to 1 as of the end of any Fiscal Year, commencing with the Fiscal Year ending December 31, 2023.

Article VIII
Events of Default and Remedies

Section 8.1 Events of Default. Each of the following events constitutes an “Event of Default” under this Agreement:

(a) Any Loan Party fails to pay any principal or interest component of the Loan when due and payable whether at the due date thereof or at a date fixed for prepayment or as a contingent or other payment becomes due and payable or as a result of acceleration or otherwise;

(b) Any Loan Party fails to deposit amounts such that the balance of the Debt Service Reserve Account shall be equal to $5,000,000 in the Debt Service Reserve Account as required in Section 2.8, or to pay any Obligation (other than the Obligations referred to in subsection (a) of this Section 8.1) when due and payable, whether at the due date thereof or at a date fixed for prepayment or as a contingent or other payment becomes due and payable or as a result of acceleration or otherwise, and (except with respect to any such payments due on the Maturity Date) such failure is not remedied in full within 5 Business Days after the same becomes due;

(c) Borrower fails to cure any Collateral Value Deficiency within the time periods set forth in Section 2.7(a), or any Loan Party fails to duly observe, perform or comply with any covenant, agreement or provision of Section 6.4, Section 6.6, Section 6.18 or Article VII;

(d) Any Loan Party fails (other than as referred to in subsections (a), (b), or (c) of this Section 8.1) to duly observe, perform or comply with any covenant, agreement, condition or provision of any Loan Document to which it is a party and such failure remains unremedied for a period of 30 days after notice of such failure is given by Lender to Borrower;

(e) Any representation or warranty previously, presently or hereafter made in writing by or on behalf of any Loan Party in connection with any Loan Document shall prove to have been false or incorrect in any material respect on any date on or as of which made;

(f) Any Loan Party (i) fails to pay any portion, when such portion is due, of any of its Indebtedness in excess of the Threshold Amount, and such failure continues after the applicable grace period, if any, (ii) breaches or defaults in the performance (beyond the applicable grace period with respect thereto, if any) of any term, provision or condition contained in any such Indebtedness, or any other event shall occur or condition exist, the effect of which default, event or condition under this clause (ii) is to cause, or to permit the holder(s) of such Indebtedness or the lender(s) under any agreement evidencing or governing such Indebtedness to cause, any portion of such Indebtedness to become due prior to its stated maturity or any commitment to lend under any agreement evidencing or governing such Indebtedness to be terminated prior to its stated expiration date, or (iii) any portion of such Indebtedness shall be declared to be due and payable or required to be prepaid or repurchased (other than by a regularly scheduled payment) prior to the stated maturity thereof;

(g) (i) A Termination Event occurs that, when taken together with all other Termination Events that have occurred, has resulted or would reasonably be expected to result in, liability of any Loan Party in an aggregate amount in excess of the Threshold Amount, or (ii) any other event or condition shall occur or exist with respect to a Plan and such event or condition, together with all other such events or conditions and Termination Events, if any, could reasonably be expected to result in a Material Adverse Change;

(h) Any Loan Party:

(i) suffers the entry against it of a judgment, decree or order for relief by a Governmental Authority of competent jurisdiction in an involuntary proceeding commenced under any applicable Debtor Relief Laws now or hereafter in effect, or files an answer admitting the material allegations of a petition filed against it in any such proceeding, or any proceeding under any Debtor Relief Law commenced against it remains undismissed for a period of 60 days; or

(ii) commences a voluntary case under any applicable Debtor Relief Laws now or hereafter in effect; or applies for or consents to the entry of an order for relief in an involuntary case under any such Debtor Relief Law; or makes a general assignment for the benefit of creditors, or fails to contest in a timely and appropriate manner, any proceeding or petition described in the immediately preceding subsection (i), or applies for or consents to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Loan Party or for a substantial part of its assets; or is generally not paying (or admits in writing its inability to pay) its debts as such debts become due; or takes corporate or other action authorizing any of the foregoing; or

(iii) suffers the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of all or a substantial part of its assets or of any part of the Collateral in a proceeding brought against or initiated by it, and such appointment or taking possession is neither made ineffective nor discharged within 60 days after the making thereof, or such appointment or taking possession is at any time consented to, requested by, or acquiesced to by it; or

(iv) suffers the entry against it of (1) one or more final judgments or orders for the payment of money in an aggregate amount (as to all such judgments or orders) in excess of the Threshold Amount (not covered by insurance), or (2) one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Change and, in either case, (x) enforcement proceedings are commenced by any creditor upon such judgment or order, or (y) there is a period of 60 consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or

(v) suffers a writ or warrant of attachment or any similar process to be issued by any Governmental Authority against all or any substantial part of its assets or any part of the Collateral, and such writ or warrant of attachment or any similar process is not stayed or released within 60 days after the entry or levy thereof or after any stay is vacated or set aside;

(i) Any provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect or ceases to create valid and perfected Liens of the priority required thereby on the Collateral purported to be covered thereby; or any Loan Party contests in writing the validity or enforceability of any provision of any Loan Document; or any Loan Party denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any provision of any Loan Document; or

(j) The occurrence of any Material Adverse Change.

Upon the occurrence of an Event of Default described in subsection (h)(i), (h)(ii) or (h)(iii) of this Section 8.1 with respect to any Loan Party, all of the Obligations shall thereupon be immediately due and payable, without demand, presentment, notice of demand or of dishonor and nonpayment, protest, notice of protest, notice of intention to accelerate, declaration or notice of acceleration, or any other notice or declaration of any kind, all of which are hereby expressly waived by Borrower and each Loan Party who at any time ratifies or approves this Agreement. Upon any such acceleration, any obligation of Lender to make any further the Loan hereunder shall be permanently terminated. During the continuance of any other Event of Default, Lender at any time and from time to time may, without notice to Borrower or any other Loan Party, do either or both of the following: (1) terminate any obligation of Lender to make any further loans hereunder, and (2) declare any or all of the Obligations immediately due and payable, and all such Obligations shall thereupon be immediately due and payable, without demand, presentment, notice of demand or of dishonor and nonpayment, protest, notice of protest, notice of intention to accelerate, declaration or notice of acceleration, or any other notice or declaration of any kind, all of which are hereby expressly waived by Borrower and each Loan Party who at any time ratifies or approves this Agreement.

Section 8.2 Remedies. If any Event of Default shall occur and be continuing, Lender may protect and enforce its rights under the Loan Documents by any appropriate proceedings including proceedings for specific performance of any covenant or agreement contained in any Loan Document. All rights, remedies and powers conferred upon Lender under the Loan Documents shall be deemed cumulative and not exclusive of any other rights, remedies or powers available under the Loan Documents or at Law or in equity.

Section 8.3 Application of Proceeds After Acceleration. After the exercise of remedies provided for in Section 8.2 (or after the Loan has automatically become immediately due and payable) and except as expressly provided in the Intercreditor Agreement to the contrary, any amounts received on account of the Secured Obligations shall be applied by Lender in the following order:

First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to Lender (including fees and time charges for attorneys who may be employees of Lender) payable in accordance with the terms hereof and amounts payable under Article III) (excluding other amounts provided for in clauses “Second”, “Third” or “Fourth” below) payable to Lender in its capacity as such;

Second, to payment of that portion of the Secured Obligations constituting fees, indemnities and other amounts (excluding other amounts provided for in clauses “Third” or “Fourth” below) payable to the Secured Parties (including fees, charges and disbursements of counsel to the respective Secured Parties and amounts payable under Article III), 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 Secured Obligations constituting accrued and unpaid interest on the Loans;

Fourth, to payment, pro rata, of that portion of the Secured Obligations constituting unpaid principal of the Loan and obligations under Hedging Contracts then due and payable; and

Last, the balance, if any, after all of the Secured Obligations have been indefeasibly paid in full, as otherwise required by Law;

provided that, to the extent that any Excluded Swap Obligations exist with respect to Borrower or any Guarantor, monies or property received from Borrower or such Guarantor or from the proceeds of any Collateral provided by Borrower or such Guarantor may not be shared with Approved Counterparties to the extent that doing so would violate the Commodity Exchange Act (but to the maximum extent allowed under applicable law the amounts received or recovered from the other Loan Parties will instead be allocated to Approved Counterparties as necessary to achieve the overall ratable applications of monies and property intended by this Section but for this proviso).

Section 8.4 Equity Cure. If the Loan Parties would otherwise fail to comply with the covenant set forth in Section 7.18 with respect to any Fiscal Year, until the thirtieth (30th) day after delivery of the Compliance Certificate for such Fiscal Year (the “Equity Cure Deadline”), Borrower shall have the right to issue Equity securities (other than Disqualified Capital Stock), the proceeds of which shall be deemed to increase EBITDAX with respect solely to such Fiscal Year by the amount thereof; provided that (a) the proceeds of such Equity securities are actually received by Borrower no later than the Equity Cure Deadline of such Fiscal Year, and (b) such proceeds shall be applied within ten (10) Business Days after receipt by Borrower to prepay the Loan. If, after giving effect to the foregoing pro forma adjustment (but not, for the avoidance of doubt, giving pro forma effect to any repayment of the Loan in connection therewith), the Loan Parties are in compliance with the covenant set forth in Section 7.18, the Loan Parties shall be deemed to have satisfied the requirements of Section 7.18 as of the relevant date of determination with the same effect as though there had been no failure to comply, and the applicable breach or Default of Section 7.18 that had occurred shall be deemed cured for purposes of this Agreement; provided that (i) the equity cure provisions in this Section 8.4 may not be used with respect to (A) more than one (1) financial covenant test date during any period of two (2) consecutive Fiscal Years or (B) more than five (5) financial covenant test dates in the aggregate during the term of this Agreement (it being understood that if, with respect to any Fiscal Year (or last day thereof, as applicable), Borrower receives a Specified Equity Contribution that cures the covenant set forth in Section 7.18 for the same Fiscal Year, such occurrence will only count as one financial covenant test date for purposes of this clause (i)), (ii) with respect to each two (2) Fiscal Year period, there shall be at least one (1) Fiscal Year in respect of which no Specified Equity Contribution is made, and (iii) the amount of any Specified Equity Contribution shall be no greater than the amount required to cause Borrower to be in compliance with Section 7.18 for any applicable period. Notwithstanding anything else herein to the contrary with respect to any breach of Section 7.18, in no event shall Lender have any right to any exercise any right or remedy under this Article VIII until the Equity Cure Deadline (unless another Event of Default not arising from the breach of Section 7.18 is then continuing).

Article IX
Reserved

Article X

Miscellaneous

Section 10.1 Waivers and Amendments; Acknowledgments.

(a) Waivers and Amendments. No failure or delay (whether by course of conduct or otherwise) by Lender in exercising any right, power or remedy that Lender may have under any of the Loan Documents shall operate as a waiver thereof or of any other right, power or remedy, nor shall any single or partial exercise by Lender of any such right, power or remedy preclude any other or further exercise thereof or of any other right, power or remedy. No waiver of any provision of any Loan Document and no consent to any departure therefrom shall ever be effective unless it is in writing and signed as provided below in this Section, and then such waiver or consent shall be effective only in the specific instances and for the purposes for which given and to the extent specified in such writing. No notice to or demand on any Loan Party shall in any case of itself entitle any Loan Party to any other or further notice or demand in similar or other circumstances. This Agreement and the other Loan Documents set forth the entire understanding between the parties hereto with respect to the transactions contemplated herein and therein and supersede all prior discussions and understandings with respect to the subject matter hereof and thereof, and no waiver, consent, release, modification or amendment of or supplement to this Agreement or the other Loan Documents shall be valid or effective against any party hereto unless the same is in writing and signed by (i) if such party is Borrower, by Borrower, and (ii) if such party is Lender, by Lender.

(b) Acknowledgments and Admissions. Borrower hereby represents, warrants, acknowledges and admits that (i) it has been advised by counsel in the negotiation, execution and delivery of the Loan Documents to which it is a party, (ii) it has made an independent decision to enter into this Agreement, the other Loan Documents to which it is a party, without reliance on any representation, warranty, covenant or undertaking by Lender, whether written, oral or implicit, other than as expressly set out in this Agreement or in another Loan Document delivered on or after the date hereof, (iii) there are no representations, warranties, covenants, undertakings or agreements by Lender as to the Loan Documents except as expressly set out in this Agreement or in another Loan Document delivered on or after the date hereof, (iv) Lender does not have a fiduciary obligation toward Borrower with respect to any Loan Document or the transactions contemplated thereby, (v) the relationship pursuant to the Loan Documents between Borrower and the other Loan Parties, on one hand, and Lender, on the other hand, is and shall be solely that of debtor and creditor, respectively, (vi) no partnership or joint venture exists with respect to the Loan Documents between any Loan Party and Lender, (vii) should an Event of Default or Default occur or exist, Lender will determine in its discretion and for its own reasons what remedies and actions it will or will not exercise or take at that time, (viii) without limiting any of the foregoing, Borrower is not relying upon any representation or covenant by Lender, or any representative thereof, and no such representation or covenant has been made, that Lender will, at the time of an Event of Default or Default, or at any other time, waive, negotiate, discuss, or take or refrain from taking any action permitted under the Loan Documents with respect to any such Event of Default or Default or any other provision of the Loan Documents, and (ix) Lender has relied upon the truthfulness of the acknowledgments in this Section in deciding to execute and deliver this Agreement and to become obligated hereunder.

(c) Joint Acknowledgment. This written 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.

Section 10.2 Survival of Agreements; Cumulative Nature. All of Loan Parties’ various representations, warranties, covenants and agreements in the Loan Documents shall survive the execution and delivery of this Agreement and the other Loan Documents and the performance hereof and thereof, including the making or granting of the Loan and the delivery of the Note and the other Loan Documents, and shall further survive until all of the Obligations are paid in full to Lender and Lender’s obligations to Borrower hereunder are terminated. Notwithstanding the foregoing or anything herein to the contrary, any Obligations under Sections 3.2 through 3.4, and any obligations that any Person may have to indemnify or compensate Lender shall survive any termination of this Agreement and any other Loan Document. In addition, Article VIII shall survive until all of the Security Documents have been terminated. The representations, warranties, indemnities, and covenants made by the Loan Parties in the Loan Documents, and the rights, powers, and privileges granted to Lender in the Loan Documents, are cumulative, and, except for expressly specified waivers and consents, no Loan Document shall be construed in the context of another to diminish, nullify, or otherwise reduce the benefit to Lender of any such representation, warranty, indemnity, covenant, right, power or privilege. In particular and without limitation, no exception set out in this Agreement to any representation, warranty, indemnity, or covenant herein contained shall apply to any similar representation, warranty, indemnity, or covenant contained in any other Loan Document, and each such similar representation, warranty, indemnity, or covenant shall be subject only to those exceptions that are expressly made applicable to it by the terms of the various Loan Documents.

Section 10.3 Notices; Effectiveness; Electronic Communication.

(a) Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), 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 follows and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

	If to Borrower or any other Loan Party:		HNR Acquisition Corp
			Attn: CFO
			3730 Kirby Drive, Suite 1200
			Houston, Texas 77098
			Email: mbtrotter@comcast.net

			and

			HNR Acquisition Corp
			Attn: David M. Smith, General Counsel

	10142 Holly Chase Dr.
	Houston, Texas 77042
	Email: dmsmith@HNRA-NYSE.com

with a copy to, which shall not constitute notice, and any failure to provide a copy shall not constitute a breach by Lender:	Pryor Cashman LLP Attn: Matthew Ogurick 7 Times Square
	New York, NY 10036
	Email: mogurick@pryorcashman.com

If to Lender:	First International Bank & Trust
	Attn:	Mitch Cook, Market President – Twin Cities
	3600 Minnesota Drive, Suite 70
	Edina, MN 55435
	Telephone No.: (763) 465-7727
	Email: mcook@FIBT.com

with a copy to, which shall not constitute notice:	First International Bank & Trust
	Attn:	Cathrine Grimsrud, Managing Director of Mineral and Land Services, Vice President
	1601 N. 12th Street
	Bismarck, ND 58501
	Telephone No.: (701) 842-7516
	Email: cgrimsrud@FIBT.com

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 delivered through electronic communications, to the extent provided in subsection (b) below, shall be effective as provided in said subsection (b).

(b) Electronic Communications. Notices and other communications to Lender hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by Lender. Lender or Borrower or any other Loan Party 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 Lender and Borrower otherwise agree, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described in the foregoing clause (i), of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii) above, if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient.

(c) Change of Address, Etc. Any party hereto may change its address or email address for notices and other communications hereunder by notice to the other parties hereto.

Section 10.4 [Reserved].

Section 10.5 Approved Counterparty. Except as otherwise expressly set forth herein or in any Loan Document, no Approved Counterparty that obtains the benefits of Section 8.3 or any Loan Document by virtue of the provisions hereof or thereof shall have any right to notice of any action or to consent to, direct or object to any action hereunder or under any other Loan Document or otherwise in respect of the Collateral (including the release or impairment of any Collateral). Notwithstanding any other provision of this Article X to the contrary, Lender shall not be required to verify the payment of, or that other satisfactory arrangements have been made with respect to, obligations arising under Hedging Obligations unless Lender has received written notice of such obligations, together with such supporting documentation as Lender may request, from the applicable Approved Counterparty.

Section 10.6 Consultation with Counsel. Borrower acknowledges that it has been advised to consult with independent legal counsel of such party’s choosing regarding the meaning and binding effect of this Agreement and the other Loan Documents and each and every term hereof and thereof prior to executing such documents. Borrower agrees that Lender may consult with legal counsel selected by Lender and shall not be liable for any action taken or suffered in good faith by it in accordance with the advice of such counsel. Borrower ACKNOWLEDGES THAT HAYNES AND BOONE, LLP IS COUNSEL FOR LENDER, AND THAT SUCH FIRM DOES NOT REPRESENT ANY OF THE OTHER PARTIES OR THEIR AFFILIATES IN CONNECTION WITH THIS TRANSACTION.

Section 10.7 Expenses; Indemnity; Damage Waiver.

(a) Costs and Expenses. Borrower shall promptly pay (i) all transfer, stamp, mortgage, documentary or other similar Taxes, assessments or charges levied by any governmental or revenue authority in respect of this Agreement or any of the other Loan Documents or any other document or transaction referred to herein or therein, (ii) all reasonable expenses incurred by Lender and their Affiliates (including reasonable fees and expenses of attorneys, consultants, reserve engineers, Lender’s Mineral Land Services Department, accountants, and other advisors, travel costs, and other miscellaneous expenses) in connection with (1) the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents, or any amendments, modifications, or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (2) the filing, recording, refiling and re-recording of any Loan Documents and any other documents or instruments or further assurances required to be filed or recorded or refiled or re-recorded by the terms of any Loan Document, (3) any action reasonably required in the course of administration hereof, or (4) monitoring or confirming (or preparation or negotiation of any document related to) any Loan Party’s compliance with any covenants or conditions contained in this Agreement or in any Loan Document including the determination and monitoring of the Collateral Value and inspection of the Collateral, and (iii) all reasonable out-of-pocket expenses incurred by or on behalf of Lender (including reasonable fees and expenses of attorneys, consultants, reserve engineers, accountants, and other advisors, travel costs, court costs, and miscellaneous expenses) (A) in connection with the preservation of any rights under the Loan Documents, the exercise or enforcement of any rights or remedies under the Loan Documents (including this Section), or the defense of any such exercise or enforcement, or (B) in connection with any workout, restructuring or negotiations in respect of the Loans.

(b) Indemnification. Borrower shall indemnify Lender and each Related Party of Lender (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the reasonable fees, charges and disbursements of any counsel for any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any third party or by Borrower or any other Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) any Loan or the use or proposed use of the proceeds therefrom, (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by Borrower or any of its Subsidiaries, or any environmental liability related in any way to Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party thereto. The foregoing indemnification will apply whether or not such liabilities and costs are in any way or to any extent owed, in whole or in part, under any claim or theory of strict liability or caused, in whole or in part, by any negligent act or omission of any kind by any Indemnitee, provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and non-appealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee, (y) result from a claim brought by Borrower or any other Loan Party against an Indemnitee for any material breach in bad faith of such Indemnitee’s obligations hereunder, under any other Loan Document, if Borrower or such Loan Party has obtained a final and non-appealable judgment in its favor on such claim as determined by a court of competent jurisdiction or (z) arise solely out of any claim, action, suit, inquiry, litigation, investigation or proceeding that does not involve an act or omission by a Loan Party and that is brought solely by one or more Indemnities against one or more other Indemnities. This Section shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.

(c) Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable Law, no party hereto shall assert, and each party hereby waives, any claim against any other party hereto, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, the Loan or the use of the proceeds thereof. No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement, the other Loan Documents or the transactions contemplated hereby or thereby except to the extent such damages 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 Indemnitee.

(d) Payments. All amounts due under this Section shall be payable not later than 10 Business Days after demand therefor.

(e) Survival. Each party’s obligations under this Section shall survive the termination of the Loan Documents and payment of the Obligations hereunder.

Section 10.8 Successors and Assigns; Joint and Several Liability.

(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 neither Borrower nor any other Loan Party may assign or otherwise transfer any of its rights or obligations under any Loan Document without the prior written consent of Lender. Lender may (i) assign or otherwise transfer any of its rights or obligations under this Agreement and the other Loan Documents at any time to one or more Persons, provided that no assignment shall be made to any competitor of the Loan Parties, (ii) assign or otherwise transfer any of its rights or obligations under this Agreement and the other Loan Documents by way of participation in accordance with the provisions of subsection (b) of this Section and (iii) assign or otherwise transfer any of its rights or obligations under this Agreement and the other Loan Documents by way of pledge or assignment of a security interest subject to the restrictions in subsection (c) of this Section. 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 subsection (b) of this Section and, to the extent expressly contemplated hereby, the Related Parties of Lender) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Participations. Lender may at any time, without the consent of, or notice to, Borrower or any other Loan Party, sell participations to any Person (other than a natural Person, Borrower or any of Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of Lender’s rights and/or obligations under this Agreement (including all or a portion of the Loan owing to it); provided that (i) Lender’s obligations under this Agreement shall remain unchanged, (ii) Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) Borrower shall continue to deal solely and directly with Lender in connection with Lender’s rights and obligations under this Agreement.

Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.2, 3.3, and 3.4 (subject to the requirements and limitations therein to the same extent as if it were Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section); provided that such Participant shall not be entitled to receive any greater payment under Sections 3.2 or 3.4, with respect to any participation, than 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. To the extent permitted by Law, each Participant also shall be entitled to the benefits of Section 10.17 as though it were Lender. In the event Lender sells a participation, Lender may, acting solely for this purpose as a non-fiduciary agent of Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loan or other obligations under the Loan Documents (the “Participant Register”). The Participant Register may be available for inspection by Borrower at any reasonable time and from time to time upon reasonable prior written notice; provided that Lender shall have no obligation to disclose all or any portion of the Participant Register (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) to any Person 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 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.

(c) Certain Pledges. 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 Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release Lender from any of its obligations hereunder or substitute any such pledgee or assignee for Lender as a party hereto.

(d) Joint and Several Liability. All Obligations that are incurred by two or more Loan Parties shall be their joint and several obligations and liabilities.

Section 10.9 Confidentiality. Lender 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 and that Lender shall be responsible for any breach by any of them); (b) to the extent required or requested by any regulatory authority purporting to have jurisdiction over such Person or its Related Parties (including any self-regulatory authority, such as the National Association of Insurance Commissioners); (c) to the extent required by applicable Laws or regulations or by any subpoena or similar legal process; (d) to any other party hereto; (e) to the extent necessary in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder; (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights and obligations under this Agreement, or (ii) any actual or prospective party (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to Borrower and its obligations, this Agreement or payments hereunder; (g) on a confidential basis to any rating agency in connection with rating Borrower or its Subsidiaries or the credit facilities provided by this Agreement; (h) with the consent of Borrower; or (i) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section, or (y) becomes available to Lender or any of its Affiliates on a nonconfidential basis from a source other than a Loan Party.

For purposes of this Section, “Information” means all information received from Borrower or any of its Subsidiaries relating to Borrower or any of its Subsidiaries or any of their respective businesses, other than any such information that is available to Lender on a nonconfidential basis prior to disclosure by Borrower or any of its Subsidiaries, provided that, in the case of information received from Borrower or any of its Subsidiaries after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section 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.

Section 10.10 Governing Law; Submission to 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 North Dakota.

(b) Submission to Jurisdiction. Borrower and each other Loan Party 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 Lender, 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 North Dakota sitting in CASS COUNTY, and of the United States District Court of the District of NORTH DAKOTA, 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 North Dakota 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 Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against Borrower or any other Loan Party or its properties in the courts of any jurisdiction.

(c) Waiver of Venue. Borrower and each other Loan Party irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in subsection (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 10.3. Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by applicable Law.

(e) Waiver of Jury Trial, Punitive Damages, etc. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, (I) 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), AND (II) ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LEGAL PROCEEDING ANY “SPECIAL DAMAGES”, AS DEFINED BELOW. EACH PARTY HERETO (X) 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 (Y) 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. AS USED IN THIS SECTION, “SPECIAL DAMAGES” INCLUDES ALL SPECIAL, CONSEQUENTIAL, EXEMPLARY, OR PUNITIVE DAMAGES (REGARDLESS OF HOW NAMED), BUT DOES NOT INCLUDE ANY PAYMENTS OR FUNDS THAT ANY PARTY HERETO AS EXPRESSLY PROMISED TO PAY OR DELIVER TO ANY OTHER PARTY HERETO.

Section 10.11 Limitation on Interest. Lender, the Loan Parties and any other parties to the Loan Documents intend to contract in strict compliance with applicable usury Law from time to time in effect. In furtherance thereof such Persons stipulate and agree that none of the terms and provisions contained in the Loan Documents shall ever be construed to create a contract to pay, for the use, forbearance or detention of money, interest in excess of the maximum amount of interest permitted to be charged by applicable Law from time to time in effect. Neither any Loan Party nor any present or future guarantors, endorsers, or other Persons hereafter becoming liable for payment of any Obligation shall ever be liable for unearned interest thereon or shall ever be required to pay interest thereon in excess of the maximum amount that may be lawfully contracted for, charged, or received under applicable Law from time to time in effect, and the provisions of this Section shall control over all other provisions of the Loan Documents that may be in conflict or apparent conflict herewith. Lender expressly disavows any intention to contract for, charge, or collect excessive unearned interest or finance charges in the event the maturity of any Obligation is accelerated. If (a) the maturity of any Obligation is accelerated for any reason, (b) any Obligation is prepaid and as a result any amounts held to constitute interest are determined to be in excess of the legal maximum, or (c) Lender or any other holder of any or all of the Obligations shall otherwise collect moneys that are determined to constitute interest that would otherwise increase the interest on any or all of the Obligations to an amount in excess of that permitted to be charged by applicable Law then in effect, then all sums determined to constitute interest in excess of such legal limit shall, without penalty, be promptly applied to reduce the then outstanding principal of the related Obligations or, at Lender’s or holder’s option, promptly returned to Borrower or the other payor thereof upon such determination. In determining whether or not the interest paid or payable, under any specific circumstance, exceeds the maximum amount permitted under applicable Law, Lender and Loan Parties (and any other payors thereof) shall to the greatest extent permitted under applicable Law, (i) characterize any non-principal payment as an expense, fee or premium rather than as interest, (ii) exclude voluntary prepayments and the effects thereof, and (iii) amortize, prorate, allocate, and spread the total amount of interest throughout the entire contemplated term of the instruments evidencing the Obligations in accordance with the amounts outstanding from time to time thereunder and the maximum legal rate of interest from time to time in effect under applicable Law in order to lawfully contract for, charge, or receive the maximum amount of interest permitted under applicable Law. As used in this Section the term “applicable Law” means the Laws of the State of North Dakota or the Laws of the United States, whichever Laws allow the greater interest, as such Laws now exist or may be changed or amended or come into effect in the future.

Section 10.12 Severability. If any term or provision of any Loan Document shall be determined to be illegal or unenforceable all other terms and provisions of the Loan Documents shall nevertheless remain effective and shall be enforced to the fullest extent permitted by applicable Law.

Section 10.13 Counterparts; Integration; Effectiveness; Electronic Execution.

(a) This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Agreement.

(b) Borrower hereby acknowledges the receipt of a copy of this Agreement and all other Loan Documents. Lender may, on behalf of Borrower, create a microfilm or optical disk or other electronic image of this Agreement and any or all of the Loan Documents. Lender may store the electronic image of this Agreement and the other Loan Documents in their electronic form and then destroy the paper originals as part of Lender’s normal business practices, with the electronic image deemed to be an original and of the same legal effect, validity and enforceability as the paper originals. Lender is authorized, when appropriate, to convert any note into a “transferable record” under the Uniform Electronic Transactions Act.

Section 10.14 No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction contemplated by this Agreement, each Loan Party acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (a) the credit facilities provided for hereunder and any related services in connection therewith (including in connection with any amendment, waiver, or other modification hereof or of any other Loan Document) are an arm’s-length commercial transaction between each Loan Party, on the one hand, and Lender, on the other hand, and each Loan Party is capable of evaluating and understanding and understands and accepts the terms, risks, and conditions of the transactions contemplated hereby and by the other Loan Documents (including any amendment, waiver, or other modification hereof or thereof); (b) in connection with the process leading to such transaction, Lender is and has been acting solely as a principal and is not the financial advisor, agent, or fiduciary for any Loan Party or any of its Affiliates, stockholders, creditors, or employees or any other Person; (c) Lender has not assumed nor will assume an advisory, agency, or fiduciary responsibility in favor any Loan Party with respect to any of the transactions contemplated hereby or the process leading thereto, including with respect to any amendment, waiver, or other modification hereof or of any other Loan Document (irrespective of whether any Lender has advised or is currently advising any Loan Party or any of its Affiliates on other matters) and Lender has no obligation to any Loan Party or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; (d) Lender and its Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Loan Parties and their Affiliates, and Lender has no obligation to disclose any of such interests by virtue of any advisory, agency, or fiduciary relationship; and (e) Lender will not provide any legal, accounting, regulatory, or tax advice with respect to any of the transactions contemplated hereby (including any amendment, waiver, or other modification hereof or of any other Loan Document) and each Loan Party has consulted its own legal, accounting, regulatory, and tax advisors to the extent it has deemed appropriate. Each of the Loan Parties hereby waives and releases, to the fullest extent permitted by Law, any claims that it may have against Lender with respect to any breach or alleged breach of agency or fiduciary duty.

Section 10.15 USA PATRIOT Act Notice. Lender hereby notifies each Loan Party that, pursuant to the requirements of the Patriot Act, it is required to obtain, verify, and record information that identifies each Loan Party, which information includes the name and address of each Loan Party and other information that will allow Lender to identify each Loan Party in accordance with the Patriot Act.

Section 10.16 Right of Setoff. Subject to the Intercreditor Agreement, if an Event of Default shall have occurred and be continuing, Lender and its Affiliates are hereby authorized at any time and from time to time, to the fullest extent permitted by applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held, and other obligations (in whatever currency) at any time owing, by Lender or any such Affiliate, to or for the credit or the account of Borrower or any other Loan Party against any and all of the obligations of Borrower or such Loan Party now or hereafter existing under this Agreement, any other Loan Document to Lender or its Affiliates, irrespective of whether or not Lender or its Affiliate shall have made any demand under this Agreement, any other Loan Document and although such obligations of Borrower or such Loan Party may be contingent or unmatured or are owed to a branch, office, or Affiliate of Lender different from the branch, office, or Affiliate holding such deposit or obligated on such Indebtedness. The rights of Lender and its Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that Lender or its Affiliates may have. Lender agrees to notify Borrower promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.

Section 10.17 Payments Set Aside. To the extent that any payment by or on behalf of Borrower is made to Lender or 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 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, 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.

[The remainder of this page is intentionally left blank]

IN WITNESS WHEREOF, this Agreement is executed as of the date first written above.

	HNR ACQUISITION CORP,
	as Borrower

	By:
		Name:
		Title:

	HNRA UPSTREAM, LLC,
	as Guarantor

	By:
		Name:
		Title:

	HNRA PARTNER, INC.
	as Guarantor

	By:
		Name:
		Title:

	POGO RESOURCES, LLC,
	as Guarantor

	By:
		Name:
		Title:

	LH OPERATING, LLC,
	as Guarantor

	By:
		Name:
		Title:

Signature Page to Term Loan Agreement

	FIRST INTERNATIONAL BANK & TRUST,
	as Lender

	By:
		Name:
		Title:

Signature Page to Term Loan Agreement

Exhibit 10.9

Execution Version

Pledge and Security Agreement

This PLEDGE AND SECURITY AGREEMENT (this “Agreement”) is made as of November 15, 2023, by HNR ACQUISITION CORP, a Delaware corporation (“Borrower”), HNRA UPSTREAM, LLC, a Delaware limited liability company, HNRA PARTNER, INC., a Delaware corporation, POGO RESOURCES, LLC, a Texas limited liability company, LH OPERATING, LLC, a Texas limited liability company, and EACH OF THE OTHER ENTITIES OR INDIVIDUALS WHO BECOME A PARTY HERETO (collectively, the “Debtors” and each individually a “Debtor”) in favor of FIRST INTERNATIONAL BANK & TRUST, a North Dakota state banking institution, as lender (“Lender”), for the benefit of the Secured Parties (defined in the Term Loan Agreement referenced below).

WHEREAS, Borrower, the other Debtors and Lender have entered into that certain Term Loan Agreement dated as of the date hereof (as amended, restated, supplemented, renewed or otherwise modified from time to time, the “Term Loan Agreement”; capitalized terms used herein but not defined herein shall have the meaning assigned to such terms in the Term Loan Agreement);

WHEREAS, pursuant to the Term Loan Agreement, Borrower has entered into or may enter into certain Hedging Contracts with Secured Approved Counterparties, which constitute Secured Obligations under the Term Loan Agreement;

WHEREAS, each Debtor desires to grant a security interest in and pledge its interest in the Collateral (defined herein) it owns, whether now or hereafter acquired, for repayment of the obligations, as provided herein;

WHEREAS, it is a condition precedent to the effectiveness of the Term Loan Agreement that each Debtor execute and deliver this Agreement; and

WHEREAS, each Debtor has determined that valuable benefits will be derived by it as a result of the Term Loan Agreement and the extension of credit made (and to be made) by Lender and the other Secured Parties, and each Debtor desires to grant a security interest in (and pledge and assign as applicable) the Collateral to Lender, for the benefit of the Secured Parties, as herein provided.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Article I
Security Interest

Section 1.01 Grant of Security Interest. As security for the prompt payment and performance of the Obligations (hereinafter defined) in full when due, whether at maturity, by acceleration or otherwise (including amounts that would become due but for the operation of the provisions of the Bankruptcy Code), each Debtor hereby pledges, grants, transfers, hypothecates and assigns to Lender, for the benefit of the Secured Parties, a continuing security interest in all of such Debtor’s right, title and interest in, to and under the Collateral.

Section 1.02 Collateral. The Collateral consists of the following properties, assets and rights owned by the Debtors, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof (collectively, the “Collateral”):

(a) all goods (including inventory, equipment and any accessions thereto), fixtures, money, instruments (including promissory notes), documents, accounts, Oil and Gas Properties, as-extracted collateral, chattel paper (whether tangible or electronic), deposit accounts, commodity accounts, securities accounts, letter-of-credit rights (whether or not the letter of credit is evidenced by a writing), securities and all other investment property, other property supporting obligations, any other contract rights or rights to the payment of money, insurance claims and proceeds, and all general intangibles (including all payment intangibles) of each Debtor;

(b) all Equity Interests, including without limitation Equity Interests of the Issuers described on Schedule II, together with the certificates or instruments representing such Equity Interests, to the extent certificated (or any addendum thereto);

(c) any and all additional Equity Interests; securities convertible or exchangeable into, and warrants, options, or other rights to purchase, Equity Interests; the certificates or instruments representing such Equity Interests, convertible or exchangeable securities, warrants, options, or other rights to purchase; and all dividends, cash, options, warrants, rights, instruments, and other property or proceeds from time to time received, receivable, or otherwise distributed in respect of or in exchange for any or all of such Equity Interests;

(d) all liens and security interests (together with the documents evidencing such security interests) granted to each Debtor by an obligor to secure such obligor’s obligations owing under any instrument, chattel paper, or contract that is pledged hereunder or with respect to which a security interest in such Debtor’s rights in such instrument, chattel paper, or contract is granted hereunder;

(e) all guaranties given by any Person for the benefit of any Debtor which guarantees obligations of an obligor under any instrument, chattel paper, or contract, which are pledged hereunder;

(f) all governmental approvals, permits, licenses, authorizations, consents, rulings, tariffs, rates, certifications, waivers, exemptions, filings, claims, orders, judgments and decrees (each a “Governmental Approval”), to the extent permitted by Law and except to the extent deemed ineffective under the Code or principles of equity; provided that any Governmental Approval that by its terms or by operation of law would be void, voidable, terminable or revocable if mortgaged, pledged or assigned hereunder is expressly excepted and excluded from the terms of this Agreement, including the grant of security interest in Section 1.01;

(g) all commercial tort claims listed on Schedule III hereto;

(h) (i) all copyrights (whether statutory or common law, registered or unregistered), works protectable by copyright, copyright registrations, copyright licenses, and copyright applications of each Debtor, including, without limitation, all of such Debtor’s right, title, and interest in and to all copyrights registered in the United States Copyright Office or anywhere else in the world; (ii) all renewals, extensions, and modifications thereof; (iii) all income, licenses, royalties, damages, profits, and payments relating to or payable under any of the foregoing; (iv) the right to sue for past, present, or future infringements of any of the foregoing; and (v) all other rights and benefits relating to any of the foregoing throughout the world; in each case, whether now owned or hereafter acquired by such Debtor;

(i) (i) all patents, patent applications, patent licenses, and patentable inventions of each Debtor, including, without limitation, registrations, recordings, and applications thereof in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state thereof or any other country or any political subdivision thereof, and all of the inventions and improvements described and claimed therein; (ii) all continuations, divisions, renewals, extensions, modifications, substitutions, reexaminations, continuations-in-part, or reissues of any of the foregoing; (iii) all income, royalties, profits, damages, awards, and payments relating to or payable under any of the foregoing; (iv) the right to sue for past, present, and future infringements of any of the foregoing; and (v) all other rights and benefits relating to any of the foregoing throughout the world; in each case, whether now owned or hereafter acquired by such Debtor;

(j) (i) all trademarks, trademark licenses, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, certification marks, collective marks, logos, other business identifiers, all registrations, recordings, and applications thereof, including, without limitation, registrations, recordings, and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state thereof or any other country or any political subdivision thereof; (ii) all reissues, extensions, and renewals thereof; (iii) all income, royalties, damages, and payments now or hereafter relating to or payable under any of the foregoing, including, without limitation, damages or payments for past or future infringements of any of the foregoing; (iv) the right to sue for past, present, and future infringements of any of the foregoing; (v) all rights corresponding to any of the foregoing throughout the world; and (vi) all goodwill associated with and symbolized by any of the foregoing, in each case, whether now owned or hereafter acquired by such Debtor;

(k) all present and future automobiles, trucks, truck tractors, trailers, semi-trailers, or other motor vehicles or rolling stock, now owned or hereafter acquired by any Debtor;

(l) all Hedging Contracts; and

(m) all proceeds, replacements, additions to and substitutions for, and books and records related to, the property set forth in (a)-(l) above.

Section 1.03 Excluded Assets. Notwithstanding anything herein to the contrary, in no event shall the Collateral include or the security interest granted under Section 1.01 hereof attach to, nor shall the definition of “Collateral” or any other term used in the definition of the Collateral include any of the following (collectively, the “Excluded Assets”):

(a) any lease, instrument, license, contract, property rights, and any assets subject thereto, if and for so long as the grant of such security interest shall constitute or result in (i) the abandonment, invalidation or unenforceability of such Debtor’s rights or interest therein or (ii) a violation of any anti-transfer or anti-assignment provisions thereof, or a breach or termination pursuant to the terms of, or a default under, any such lease, instrument, license, contract, property rights or agreement (other than to the extent that any such term would be rendered ineffective pursuant to the Code of any relevant jurisdiction or any other applicable Law (including the Bankruptcy Code) or principles of equity) that would be reasonably expected to result in a liability or other adverse consequence to such Debtor that is reasonably significant to such Debtor in relation to the value of the applicable Property; provided, however, that the Collateral shall include and such security interest shall attach immediately at such time as the condition causing such abandonment, invalidation, unenforceability, breach, termination or default shall be remedied and, to the extent severable, shall attach immediately to any portion of such lease, instrument, license, contract, property rights or agreement that does not result in any of the consequences specified in clause (i) or (ii) above;

(b) any assets to the extent a security interest in such assets would result in materially adverse tax consequences as approved in writing by Lender in its sole discretion (and has provided Borrower written notice of such determination and that such assets will not constitute “Collateral” and has not revoked such notice);

(c) any property to the extent that such grant is prohibited by requirements of Law or any Governmental Authority or is prohibited under any agreement relating to such property and the violation of such prohibition would cause a Debtor to lose its interest in or rights with respect to such property, except to the extent that Article 9 of the Code would render such prohibition ineffective;

(d) any Building or Manufactured (Mobile) Home (as defined in any Flood Insurance Regulations); and

(e) any Equity Interest in any Unrestricted Subsidiary, the ORR Rights and the ORR Option Agreement and any other rights or property derived under the ORR Option Agreement.

Section 1.04 Continuing Security Interest. This Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full force and effect until Payment in Full, (b) be binding upon each Debtor, its successors and assigns and (c) inure to the benefit of Lender, its successors and assigns, together with the rights and remedies of Lender hereunder. Lender may assign or otherwise transfer (in whole or in part) its interest in any of the Collateral, to any other Person or entity, and such other Person or entity shall thereupon become vested with all the rights and benefits in respect thereof under this Agreement. Each Debtor hereby acknowledges and agrees that Lender and any other Person receiving a security interest in the Collateral pursuant to the remainder of this sentence, may grant a security interest in the Collateral. Upon Payment in Full, the security interest granted herein shall terminate and all rights to the Collateral shall revert to the Debtors. Upon any such termination, Lender will upon request from the Debtors, at the Debtors’ sole expense, execute and deliver to the Debtors such documents to evidence such termination.

Section 1.05 Fraudulent Conveyance. Notwithstanding anything contained herein to the contrary, it is the intention of each Debtor, Lender and the other Secured Parties that the amount of the Obligations secured by each Debtor’s interests in any of its property shall not exceed the maximum amount permitted by fraudulent conveyance, fraudulent transfer and other similar Law, rule or regulation of any Governmental Authority applicable to such Debtor. Accordingly, notwithstanding anything to the contrary contained in this Agreement or in any other agreement or instrument executed in connection with the payment of any of the Obligations, the amount of the Obligations secured by each Debtor’s interests in any of its property pursuant to this Agreement shall be limited to an aggregate amount equal to the largest amount that would not render such Debtor’s obligations hereunder or the Liens and security interest granted to Lender hereunder subject to avoidance under Section 548 of the United States Bankruptcy Code or any comparable provision of any other applicable Law.

Article II
Definitions

Section 2.01 Certain Definitions. As used in this Agreement, the following terms shall have the following meanings:

“Code” means the Uniform Commercial Code as presently in effect in the State of North Dakota, or the applicable state governing creation, perfection, and priority of a security interest and the exercise of remedies related thereto. Unless otherwise defined herein or otherwise indicated by the context herein, all terms which are defined in the Code shall have their respective meanings as used in Article 9 of the Code.

“Equity Interests” means all securities, shares, units, options, warrants, interests, participations, or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company, or similar entity, whether voting or nonvoting, certificated or uncertificated, including general partner partnership interests, limited partner partnership interests, common stock, preferred stock, or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended).

“Excluded Account” means (a) any deposit account specifically and exclusively used for payroll, payroll taxes and other employee wage, salary, worker’s compensation and benefit payments to or for the benefit of any Debtor’s employees and (b) (x) escrow accounts and (y) trust accounts, in each case entered into in the ordinary course of business and consistent with prudent business practice conduct where the applicable Debtor holds the funds exclusively for the benefit of an unaffiliated third party and (c) any deposit account that is a zero-balance disbursement account.

“Issuers” means (a) each issuer or other Person whose Equity Interests are provided for in the Collateral and (b) each of the Persons identified as an Issuer on Schedule II attached hereto (or any addendum thereto) and, in the case of both (a) and (b), any successors thereto, whether by merger or otherwise.

“Obligations” means:

(a) the Secured Obligations (including all future advances that may from time to time be made under the Term Loan Agreement);

(b) any sums advanced or expenses or costs incurred by Lender that are made or incurred pursuant to, or permitted by, the terms hereof or of the Term Loan Agreement, plus interest thereon at the rate herein or therein specified or otherwise agreed upon, from the date of the advances or the incurring of such expenses or costs until reimbursed;

(c) the obligations of any Restricted Subsidiary to the Secured Parties now or hereafter existing or arising, under or in connection with the Term Loan Agreement or any other Loan Document, whether for principal, interest, fees, costs, expenses or otherwise, and however created and whether direct or indirect, primary or secondary, fixed or absolute or contingent, joint or several (including all such amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. §362(a), and the operation of Sections 502(b) and 506(b) of the Bankruptcy Code, 11 U.S.C. §502(b) and §506(b) and any other similar provisions arising under applicable Governmental Authority); and

(d) any extensions, refinancings, modifications or renewals of all such indebtedness and obligations described in paragraphs (a) through (c) above, whether or not the Debtors execute any extension agreement or renewal instrument. For the avoidance of doubt, the “Obligations” shall not include any Excluded Swap Obligations.

“Obligor” means any Person liable (whether directly or indirectly, primarily or secondarily) for the payment or performance of any of the Obligations whether as maker, co-maker, endorser, guarantor, accommodation party, general partner or otherwise.

“Permitted Minority Interests” means not more than 2,000,000 Class B Units (as defined in the HNRA OpCo A&R LLC Agreement) of HNRA OpCo and not more than 2,000,000 Preferred Units (as defined in the HNRA OpCo A&R LLC Agreement) of HNRA OpCo (which are convertible into Class B Units) held by the Sellers.

“Pledged Securities” means, collectively, the Collateral consisting of Equity Interests and any Collateral constituting securities.

Article III
Representations and Warranties

In order to induce Lender to accept this Agreement, each Debtor represents and warrants to Lender (which representations and warranties will survive the creation and performance of the Obligations) that:

Section 3.01 Ownership; No Encumbrances. Each Debtor is, and as to any property acquired after the date hereof which is included within the Collateral, each Debtor will be, the owner of all such Collateral subject to no liens other than Permitted Liens.

Section 3.02 Pledged Securities.

(a) All Collateral that is Pledged Securities is duly authorized, validly issued, fully paid, and non-assessable (to the extent such concepts are relevant with respect thereto) and the transfer thereof is not subject to any restrictions, other than restrictions imposed by applicable securities and corporate Laws or the organizational documents of the Debtors or the Issuers. The Pledged Securities consist of 100% of the Equity Interests of the Issuers owned by the Debtors. Except with respect to Permitted Minority Interests, no other Equity Interests of the Issuers are issued, reserved for issuance or outstanding, and there are no other options, warrants or other rights presently outstanding to purchase or otherwise acquire any authorized but unissued or unauthorized Equity Interests of the Issuers. Except as set forth in the HNRA OpCo A&R LLC Agreement, none of the Pledged Securities are subject to preemptive rights. To the extent the Pledged Securities are certificated, each Debtor has delivered to Lender all certificates or other instruments or documents representing or evidencing the Pledged Securities, together with corresponding assignment or transfer powers duly executed in blank by such Debtor, and such powers have been duly and validly executed and are binding and enforceable against such Debtor in accordance with their terms. All Pledged Securities are listed on Schedule II hereto.

(b) Each Issuer is duly organized, currently existing, and in good standing in its jurisdiction of organization; there have been no amendments, modifications, or supplements to any agreement or certificate creating any of the Issuers, of which Lender has not been advised in writing; and no approval or consent of the directors, managers or partners of any of the Issuers, as applicable, is required as a condition to the validity and enforceability of the security interest created hereby or the consummation of the transactions contemplated herein which has not been duly obtained by the Debtors.

Section 3.03 Authority; No Required Consent. Each Debtor has the full right and authority to execute and perform this Agreement and to create the security interest and pledges and assignments created by this Agreement. This Agreement constitutes a legal, valid and binding obligation of each Debtor enforceable in accordance with its terms, subject to applicable Debtor Relief Laws and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law. The making and performance by each Debtor of this Agreement (a) will not violate any of its organizational documents, (b) will not violate any applicable Laws or regulations, (c) will not violate any order of any applicable Governmental Authority, (d) will not violate any agreement regarding debt or other agreement to which any Debtor is a party, or by which any Debtor or any of its property is bound, or be in conflict with, result in a breach of or constitute (with due notice and/or lapse of time) a default under any indenture or other agreement, or (e) will not result in the creation or imposition of any lien upon the Collateral other than Permitted Liens. All consents, approvals, licenses and authorizations of, and filings and registrations with (other than the filing of financing statements), any Governmental Authority have been obtained or made and are in full force and effect as required under applicable Law and regulations for any of the following: (i) the due execution, delivery and performance by each Debtor of this Agreement, (ii) the grant by each Debtor of the security interest granted by this Agreement, (iii) the perfection of such security interest, or (iv) the exercise by Lender of its rights and remedies under this Agreement.

Section 3.04 First Priority Security Interest. The security interest in the Collateral granted pursuant to this Agreement (upon filing of necessary financing statements) is a valid and perfected (to the extent a security interest may be perfected therein by the filing of a financing statement under the Code) first-priority security interest in the Collateral, enforceable against each Debtor and all third parties and secures payment of the Obligations, which security interest is first and prior to all other security interests in the Collateral except for any Permitted Liens.

Section 3.05 No Filings By Third Parties. No financing statement or other public notice or recording covering the Collateral is on file in any public office (except for filings in connection with Permitted Liens) and, other than in connection with Permitted Liens, no Debtor will execute or authorize the filing of any such financing statement or other public notice or recording until Payment in Full.

Section 3.06 Location of Each Debtor; Tax I.D. Number. Each Debtor’s principal place of business and chief executive office, as applicable, are located at the address set forth on Schedule I hereto. Each Debtor’s federal income tax identification number, jurisdiction of organization and organization identification number are each set forth on Schedule I hereto.

Section 3.07 Accuracy of Information. All statements or other information provided by the Debtors to Lender describing or with respect to the Collateral is, or (in the case of subsequently furnished information) will be when provided, correct and complete in all material respects. If at any time a Debtor owns any uncertificated Equity Interests in any of the Issuers which become certificated, such Debtor shall promptly deliver such certificates along with blank transfer powers to Lender. The delivery at any time by a Debtor to Lender of additional Collateral or of additional descriptions of Collateral shall constitute a representation and warranty by such Debtor to Lender that the representations and warranties of this Article III are correct insofar as they would pertain to such Collateral or the descriptions thereof.

Article IV
Covenants and Agreements

Each Debtor will at all times comply with the covenants and agreements contained in this Article IV, from the date hereof until Payment in Full.

Section 4.01 Change in Location of Each Debtor. Each Debtor will give Lender written notice within ten (10) Business Days prior to (or such later date as Lender may agree) any change (a) in such Debtor’s corporate or legal name, (b) in such Debtor’s entity type or corporate structure or in the jurisdiction in which such Person is incorporated or formed, (c) in the location of such Debtor’s chief executive office or principal place of business, (d) in such Debtor’s organizational identification number in its jurisdiction of organization, and (e) in such Debtor’s federal taxpayer identification number.

Section 4.02 Operation of the Collateral. The Debtors agree to maintain and use the Collateral solely in the conduct of its own business, in a reasonably prudent manner, and in conformity with all applicable permits or licenses. The Debtors shall comply in all material respects with all applicable statutes, Laws, ordinances and regulations. The Debtors shall not use the Collateral in any unlawful manner or for any unlawful purposes, or in any manner or for any purpose that would expose the Collateral to penalty, forfeiture or capture, or that would render inoperative any insurance in connection with the Collateral.

Section 4.03 Condition. The Debtors shall maintain, service and repair the Collateral so as to keep it in good working order and condition, ordinary wear and tear excepted. Each of the Debtors with respect to Collateral owned by it shall replace within a reasonable time all parts that may be worn out, lost, destroyed or otherwise rendered unfit for use, but are still necessary for such Debtor’s business, with appropriate replacement parts. The Debtors shall obtain and maintain in good standing at all times all applicable permits, licenses, registrations and certificates respecting the Collateral.

Section 4.04 Assessments. Each Debtor shall promptly pay when due all material Taxes levied or assessed against such Debtor or with respect to the Collateral or any part thereof, unless being contested as permitted under the Term Loan Agreement.

Section 4.05 No Encumbrances. Except as otherwise expressly permitted by the Term Loan Agreement, the Debtors agree not to suffer or permit any Lien against the Collateral or any part thereof other than Permitted Liens.

Section 4.06 Proceeds of Collateral. At the request of Lender after the occurrence and during the continuance of a Default, each Debtor will deliver to Lender as Collateral, promptly upon receipt, all proceeds delivered to such Debtor from the sale or disposition of any Collateral. Nothing in this Section 4.06 shall be construed to permit sales or dispositions of Collateral not otherwise permitted by the terms of this Agreement or the Term Loan Agreement.

Section 4.07 No Transfer.

(a) Unless expressly permitted pursuant to the Term Loan Agreement, the Debtors shall not, without the prior written consent of Lender, sell, assign, transfer, lease, charter, encumber, hypothecate or dispose of the Collateral, or any part thereof, or interest therein, or enter into any agreement to do any of the foregoing, and additionally, with respect to the Pledged Securities, the Debtors shall not grant any option, warrant, or other right with respect to, any of the Pledged Securities. No Debtor will exercise any preemptive right that it may be granted as a member or shareholder of the Issuers in its organizational documents.

(b) Unless expressly permitted pursuant to the Term Loan Agreement, to the extent any Issuer is controlled by any Debtor and/or its Affiliates, without the prior written consent of Lender, (i) except as set forth in the HNRA OpCo A&R LLC Agreement, such Debtor shall not permit such Issuer to issue any additional Equity Interests either in addition to or in substitution for the Pledged Securities, except issuances to such Debtor on terms acceptable to Lender, and in connection with any such acceptable issuance, such Debtor shall pledge hereunder immediately upon such Debtor’s acquisition (directly or indirectly) thereof, any and all additional Equity Interests of the Issuers, (ii) each Debtor shall not permit such Issuer to sell, lease, or dispose of all or substantially all of its assets in a single transaction or a series of transactions, (iii) each Debtor shall promptly perform, observe, and otherwise comply in all material respects with each and every covenant, agreement, requirement, and condition set forth in its organizational documents, and shall do or cause to be done all things necessary or appropriate to keep each of the Issuers in full force and effect and the rights of each Debtor and Lender thereunder unimpaired, (iv) such Debtor shall notify Lender of the occurrence of any default or breach or event of default or breach under its organizational documents, and (v) such Debtor shall not consent to the merger, consolidation, entering into a plan of division (or any comparable event) of any Issuer with any other Person or the wind-up, liquidation dissolution of any Issuer.

(c) The Debtors shall take any action necessary, required, or reasonably requested by Lender to allow it to fully enforce its security interest in the Collateral, including, without limitation, the filing of any claims to allow Lender to fully enforce its security interest in the Collateral with any court, liquidator, trustee, custodian, receiver, or other like person or party.

Section 4.08 Records and Information. Each Debtor shall keep accurate and complete records of the Collateral (including proceeds). Subject to limitations set forth in the Term Loan Agreement, upon reasonable written notice, Lender may have access to, examine, audit, make extracts from and inspect without hindrance or delay each Debtor’s records and files related to the Collateral. Each Debtor will promptly provide written notice to Lender of all information that in any way relates to or affects the filing of any financing statement or other public notices or recordings, or the delivery and possession of items of Collateral for the purpose of perfecting a security interest in the Collateral.

Section 4.09 Indemnification and Reimbursement of Expenses.

(a) Each Debtor shall indemnify Lender and each Related Party of Lender (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the reasonable fees, charges and disbursements of any counsel for any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any third party or by A DEBTOR or any other Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, the Term Loan Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) any Loan or the use or proposed use of the proceeds therefrom, (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by a Debtor or any of its Subsidiaries, or any environmental liability related in any way to a Debtor or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by a Debtor or any other Loan Party, and regardless of whether any Indemnitee is a party thereto. The foregoing indemnification will apply whether or not such liabilities and costs are in any way or to any extent owed, in whole or in part, under any claim or theory of strict liability or caused, in whole or in part, by any negligent act or omission of any kind by any Indemnitee, provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and non-appealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee, (y) result from a claim brought by a Debtor or any other Loan Party against an Indemnitee for any material breach in bad faith of such Indemnitee’s obligations hereunder, under any other Loan Document, if a Debtor or such Loan Party has obtained a final and non-appealable judgment in its favor on such claim as determined by a court of competent jurisdiction or (z) arise solely out of any claim, action, suit, inquiry, litigation, investigation or proceeding that does not involve an act or omission by a Loan Party and that is brought solely by one or more Indemnities against one or more other Indemnities. This Section shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.

(b) All amounts for which each Debtor is liable pursuant to this Section 4.09 shall be due and payable by each Debtor to Lender upon demand. If any Debtor fails to make such payment upon demand (or if demand is not made due to an injunction or stay arising from bankruptcy or other proceedings) and Lender pays such amount, the same shall be due and payable by such Debtor to Lender as applicable, together with interest thereon from the date incurred until paid by such Debtor at the Default Rate.

Section 4.10 [Reserved].

Section 4.11 Authorization to File Financing Statements. The Debtors hereby irrevocably authorize Lender at any time and from time to time until Payment in Full to file in any filing office, in any Uniform Commercial Code jurisdiction any initial financing statements and amendments thereto that (a) indicate the Collateral (i) as all assets of the Debtors or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the Uniform Commercial Code of the state or such jurisdiction, or (ii) as being of an equal or lesser scope or with greater detail and (b) provide any other information required by part 5 of Article 9 of the Uniform Commercial Code of the state of each applicable Debtor’s formation, for the sufficiency or filing office acceptance of any financing statement or amendment, including (i) whether each Debtor is an organization, the type of organization and any organizational identification number issued to such Debtor and (ii) in the case of a financing statement filed as a fixture filing or indicating Collateral as as-extracted collateral or timber to be cut, a sufficient description of real property to which the Collateral relates. The Debtors agree to furnish any such information to Lender promptly upon Lender’s reasonable request.

Section 4.12 Further Assurances. Each Debtor shall do, make, procure, execute and deliver all such additional and further acts, things, deeds, interests and assurances as Lender may reasonably request from time to time to protect, assure and enforce Lender’s rights and remedies.

Section 4.13 Other Actions. To further the attachment, perfection and first priority of, and the ability of Lender to enforce, Lender’s security interest in the Collateral, and without limitation on the Debtors’ other obligations in this Agreement, the Debtors agree, in each case at the Debtors’ expense, to take the following actions with respect to the following Collateral:

(a) Promissory Notes and Tangible Chattel Paper. If any Debtor shall at any time hold or acquire any promissory notes or tangible chattel paper having a value in excess of $100,000, such Debtor shall promptly notify Lender, and upon request from Lender, promptly endorse, assign and deliver the same to Lender to be held as Collateral, accompanied by such instruments of transfer or assignment duly executed in blank as Lender may from time to time specify.

(b) Deposit Accounts. For each Deposit Account that any Debtor opens or maintains other than any Excluded Account, such Debtor shall, pursuant to a control agreement in form and substance satisfactory to Lender, cause the depositary bank to comply during the continuance of a Default with instructions from Lender to such depositary bank directing the disposition of funds from time to time credited to such Deposit Account, without further consent of such Debtor. Lender agrees that it shall not give any instructions to any depositary bank directing the disposition of funds credited to a Deposit Account unless a Default shall then be continuing.

(c) Investment Property. If any Debtor shall at any time hold or acquire any certificated securities constituting Collateral, such Debtor shall forthwith endorse, assign and deliver the same to Lender, to be held as Collateral, accompanied by such instruments of transfer or assignment duly executed in blank as Lender may from time to time specify. If any securities now or hereafter acquired by any Debtor constituting Collateral are uncertificated and are issued to such Debtor or its nominee directly by the Issuer thereof, such Debtor shall promptly notify Lender thereof and, at Lender’s request (i) certificate such securities and deliver such certificates to Lender or (ii) pursuant to an agreement in form and substance reasonably satisfactory to Lender, cause the Issuer to agree to comply with instructions from Lender as to such securities upon the occurrence and during the continuance of a Default, without further consent of such Debtor or such nominee. If at any time any Debtor owns any uncertificated Equity Interests in any of the Issuers which become certificated, such Debtor shall promptly deliver such certificates along with blank transfer powers to Lender. No Debtor shall take any action that would allow any Pledged Securities which are not currently classified as a “security” under Article 8 of the Code to become classified as a “security” under Article 8 of the Code. If any securities constituting Collateral, whether certificated or uncertificated, or other investment property now or hereafter acquired by any Debtor are held by such Debtor or its nominee through a securities intermediary or commodity intermediary, such Debtor shall immediately notify Lender thereof and, at Lender’s request and option, pursuant to an agreement in form and substance satisfactory to Lender, cause such securities intermediary or (as the case may be) commodity intermediary to agree to comply with entitlement orders or other instructions from Lender to such securities intermediary as to such securities or other investment property upon the occurrence and during the continuance of a Default, or (as the case may be) to apply any value distributed on account of any commodity contract as directed by Lender to such commodity intermediary, in each case without further consent of such Debtor or such nominee. The provisions of this paragraph shall not apply to any financial assets credited to a securities account for which Lender is the securities intermediary. In the event that any Pledged Securities are not listed on Schedule II hereto, the Debtors shall update and supplement Schedule II to reflect such Pledged Securities.

(d) Collateral in Possession of a Bailee. If any Collateral having a value in excess of $100,000 is at any time in the possession of a bailee (excluding any equipment in the possession of a repair shop or other similar arrangement), each Debtor shall immediately notify Lender thereof and, at Lender’s request and option, shall promptly use commercially reasonable efforts to obtain an acknowledgement from the bailee, in form and substance reasonably satisfactory to Lender, that the bailee holds such Collateral for the benefit of Lender, and that such bailee agrees to comply, without further consent of such Debtor, with instructions from Lender as to such Collateral after a Default.

(e) Electronic Chattel Paper and Transferable Records. If any Debtor at any time holds or acquires an interest in any electronic chattel paper or any “transferable record,” as that term is defined in Section 201 of the federal Electronic Signatures in Global and National Commerce Act, or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction, in each case, having a value in excess of $100,000, such Debtor shall promptly notify Lender thereof and, at the request and option of Lender, shall take such action as Lender may reasonably request to vest in Lender control, under Section 9-105 of the Code, of such electronic chattel paper or control under Section 201 of the federal Electronic Signatures in Global and National Commerce Act or, as the case may be, Section 16 of the Uniform Electronic Transactions Act, as so in effect in such jurisdiction, of such transferable record. Lender agrees with such Debtor that Lender will arrange, pursuant to procedures satisfactory to Lender and so long as such procedures will not result in Lender’s loss of control, for such Debtor to make alterations to the electronic chattel paper or transferable record permitted under Section 9-105 of the Code or, as the case may be, Section 201 of the federal Electronic Signatures in Global and National Commerce Act or Section 16 of the Uniform Electronic Transactions Act for a party in control to make without loss of control, unless a Default has occurred and is continuing or would occur after taking into account any action by such Debtor with respect to such electronic chattel paper or transferable record.

(f) Letter-of-Credit Rights. If any Debtor is at any time a beneficiary under a letter of credit having a value in excess of $100,000, such Debtor shall promptly notify Lender thereof and, at the request and option of Lender, such Debtor shall, pursuant to an agreement in form and substance satisfactory to Lender, either (i) arrange for the issuer and any confirmer or other nominated person of such letter of credit to consent to an assignment to Lender of the proceeds of the letter of credit, or (ii) arrange for Lender to become the transferee beneficiary of the letter of credit.

(g) Commercial Tort Claims. If any Debtor shall at any time hold or acquire a commercial tort claim having a value in excess of $100,000, other than those listed on Schedule III hereto, such Debtor shall immediately notify Lender in a writing signed by such Debtor of the particulars thereof and grant to Lender in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to Lender.

(h) Other Actions as to Any and All Collateral. Each Debtor further agrees, at the reasonable request of Lender, to take any and all other actions Lender may reasonably determine to be necessary or useful for the attachment, perfection and first priority (subject to Permitted Liens) of, and the ability of Lender to enforce, Lender’s security interest in any and all of the Collateral, including, without limitation, (i) executing, delivering and, where appropriate, filing financing statements and amendments relating thereto under the Code, to the extent, if any, that such Debtor’s signature thereon is required therefor, (ii) causing Lender’s name to be noted as secured party on any certificate of title for titled goods having a value in excess of $100,000 if such notation is a condition to attachment, perfection or priority of, or ability of Lender to enforce, Lender’s security interest in such Collateral, (iii) complying with any provision of any statute, regulation or treaty of the United States as to any Collateral if compliance with such provision is a condition to attachment, perfection or priority of, or ability of Lender to enforce, Lender’s security interest in such Collateral, (iv) using commercially reasonable efforts to obtain governmental and other third party waivers, consents and approvals in form and substance reasonably satisfactory to Lender, including, without limitation, any consent of any licensor, lessor or other person obligated on Collateral, (v) using commercially reasonable efforts to obtain waivers from mortgagees and landlords at any location of a Debtor at which Collateral having a value in excess of $100,000 is located in form and substance satisfactory to Lender and (vi) taking all actions under the Code or under any other Law, as reasonably determined by Lender, to be applicable in any relevant Uniform Commercial Code or other jurisdiction.

Section 4.14 Additional Provisions Regarding Accounts. The following provisions shall apply to all accounts included within the Collateral:

(a) Definitions. The term “account” as used in this Agreement, shall have the same meaning as set forth in the Code in effect as of the date of execution hereof, and as set forth in any amendment to the Code which becomes effective after the date of execution hereof.

(b) Additional Warranties. As of the time any Debtor’s account becomes subject to the security interest granted hereby, such Debtor shall be deemed further to have warranted as to each and all such accounts as follows (i) each account and all papers and documents relating thereto are genuine and in all respects what they purport to be; (ii) each account is valid and subsisting and arises out of a bona fide sale of goods sold and delivered to, or out of and is a loan made to or for services theretofore actually rendered by such Debtor to, the account debtor named in the account; (iii) the amount of the account represented as owing is, to the best knowledge of such Debtor, the correct amount actually and unconditionally owing except for normal cash discounts and is not subject to any setoffs, credits, defenses, deductions or countercharges; and (iv) such Debtor is the owner thereof free and clear of any charges, liens, security interests, adverse claims and encumbrances of any and every nature whatsoever.

(c) Collection of Accounts. Lender shall have the right in its own name or in the name of any Debtor, upon the occurrence and continuance of a Default, to require any Debtor forthwith to transmit all proceeds of collection of accounts to Lender, to notify any and all account debtors to make payments of the accounts directly to Lender, to demand, collect, receive, receipt for, sue for, compound and give acquittal for, any and all amounts due or to become due on the accounts and to endorse the name of any Debtor on all commercial paper given in payment or part payment thereof, and in Lender’s discretion to file any claim or take any other action or proceeding that Lender may reasonably deem necessary or appropriate to protect and preserve and realize upon the accounts and related Collateral. Unless and until a Default has occurred and is continuing and Lender elects to collect accounts and the privilege of any Debtor to collect accounts is revoked by Lender in writing, each Debtor shall continue to collect accounts. Lender shall have no duty or obligation whatsoever to collect any account, or to take any other action to preserve or protect the Collateral; provided, however, should Lender elect to collect any account or take possession of any Collateral after a Default has occurred and is continuing, the Debtors release Lender from any claim or claims for loss or damage arising from any act or omission in connection therewith, except loss or damage resulting from the gross negligence or willful misconduct of Lender, as determined in a final non-appealable judgment of a court of competent jurisdiction.

(d) Identification and Assignment of Accounts. Upon Lender’s request DURING THE CONTINUANCE OF A DEFAULT, THE Debtors shall take such action and execute and deliver such documents as Lender may reasonably request in order to identify, confirm, mark, segregate and assign accounts and to evidence Lender’s interest in the same. Without limitation of the foregoing, the Debtors, upon the occurrence and continuation of a Default, agree to assign all of their accounts to Lender, identify and mark accounts as being subject to the security interest granted hereby, mark Debtors’ books and records to reflect such assignments, and forthwith to transmit to Lender in the form as received by the Debtors any and all proceeds of collection of such accounts.

Article V
Rights, Duties and Powers of Lender

Except as otherwise provided in this Article V, the following rights, duties and powers of Lender are applicable irrespective of whether a Default occurs and is continuing:

Section 5.01 Discharge Encumbrances. If not timely discharged by the Debtors, Lender, at its option, during the continuance of a Default, but without any obligation whatsoever to do so, may (a) discharge taxes, claims, charges, Liens, security interests, assessments or other encumbrances of any and every nature whatsoever that are not permitted under the Term Loan Agreement at any time levied, placed upon or asserted against the Collateral, (b) place and pay for insurance on the Collateral that is required by the Term Loan Agreement, including insurance that only protects Lender’s interest, (c) pay for the repair, improvement, testing, maintenance and preservation of the Collateral that is required by the Term Loan Agreement, (d) pay any filing, recording, registration, licensing or certification fees or other fees and charges related to the Collateral that are required by the Term Loan Agreement, or (e) take any other action to preserve and protect the Collateral and Lender’s rights and remedies under this Agreement as Lender may reasonably deem necessary or appropriate. The Debtors agree that Lender shall have no duty or obligation whatsoever to take any of the foregoing actions. The Debtors agree to promptly reimburse Lender upon demand for any payment made or any expense incurred by Lender pursuant to this authorization. The payments and expenditures, together with interest thereon from date incurred until paid by the Debtors at the Default Rate, which the Debtors agree to pay within five (5) Business Days from the date incurred, shall constitute additional Obligations and shall be secured by and entitled to the benefits of this Agreement.

Section 5.02 Cumulative and Other Rights. The rights, powers and remedies of Lender hereunder are in addition to all rights, powers and remedies given by law or in equity. The exercise by Lender of any one or more of the rights, powers and remedies herein shall not be construed as a waiver of any other rights, powers and remedies, including, without limitation, any other rights of set-off. If any of the Obligations are given in renewal, extension for any period or rearrangement, or applied toward the payment of debt secured by any Lien, Lender shall be, and is hereby, subrogated to all the rights, titles, interests and Liens securing the debt so renewed, extended, rearranged or paid.

Section 5.03 Disclaimer of Certain Duties.

(a) The powers conferred upon Lender by this Agreement are to protect the Secured Parties’ interest in the Collateral and shall not impose any duty upon Lender to exercise any such powers. The Debtors hereby agree that Lender shall not be liable for, nor shall the Obligations be diminished by, Lender’s delay or failure to collect upon, foreclose, sell, take possession of or otherwise obtain value for the Collateral.

(b) Except as otherwise expressly provided herein or in the Term Loan Agreement, Lender shall not be under any duty whatsoever to make or give any presentment, notice of dishonor, protest, demand for performance, notice of non-performance, notice of intent to accelerate, notice of acceleration, or other notice or demand in connection with any Collateral or the Obligations, or to take any steps necessary to preserve any rights against any Obligor or other Person and the Debtors hereby waive all of the foregoing. The Debtors waive any right of marshaling in respect of any and all Collateral, any right to require Lender to proceed against any Obligor or other Person, any right to exhaust any Collateral or any right to enforce any other remedy which Lender now has or may hereafter have against any Obligor or other Person.

Section 5.04 Record Ownership of Securities. Upon the occurrence and during the continuance of a Default, Lender at any time may have any Collateral that is Pledged Securities and that is in the possession of Lender, or its nominee or nominees, registered in its name, or in the name of its nominee or nominees, as Lender; and, as to any Collateral that is Pledged Securities so registered, each Debtor shall execute and deliver (or cause to be executed and delivered) to Lender all such proxies, powers of attorney, dividend coupons or orders, and other documents as Lender may request for the purpose of enabling Lender to exercise the voting rights and powers which it is entitled to exercise under this Agreement or to receive the dividends and other distributions and payments in respect of such Collateral that is Pledged Securities or proceeds thereof which it is authorized to receive and retain under this Agreement.

Section 5.05 Voting of Securities. As long as no Event of Default exists, each Debtor is entitled to exercise all voting rights pertaining to any Pledged Securities; provided, however, that no vote shall be cast or consent, waiver, or ratification given or action taken without the prior written consent of Lender which would (a) be inconsistent with or violate any provision of this Agreement or any other Loan Document or (b) amend, modify, or waive any term, provision or condition of any charter document, or other agreement relating to, evidencing, providing for the issuance of, or securing the Collateral; and provided further that each Debtor shall give Lender at least ten (10) Business Days’ prior written notice in the form of an officer’s certificate of the manner in which it intends to exercise, or the reasons for refraining from exercising, any voting or other consensual rights pertaining to the Collateral or any part thereof which might have a Material Adverse Change on the value of the Collateral or any part thereof. If a Default is continuing and if Lender elects to exercise such right, the right to vote any Pledged Securities shall be vested exclusively in Lender. To this end, each Debtor hereby irrevocably constitutes and appoints Lender the proxy and attorney-in-fact of such Debtor, with full power of substitution, to vote, and to act with respect to, any and all Collateral that is Pledged Securities standing in the name of such Debtor or with respect to which such Debtor is entitled to vote and act, subject to the express agreement of Lender that such proxy may not be exercised unless an Event of Default is continuing. The proxy herein granted is coupled with an interest, is irrevocable, and shall continue until Payment in Full or the Event of Default has been cured or waived, whichever comes first.

Section 5.06 Modification of Obligations; Other Security. Each Debtor waives (a) any and all notice of acceptance, creation, modification, rearrangement, renewal or extension for any period of any instrument executed by any Obligor in connection with the Obligations and (b) any defense of any Obligor by reason of disability, lack of authorization, cessation of the liability of any Obligor or for any other reason. The Debtors authorize Lender, without notice or demand and without any reservation of rights against the Debtors and without affecting the Debtors’ liability hereunder or on the Obligations, from time to time to (i) take and hold other property of the Debtors, other than the Collateral, as security for the Obligations, and exchange, enforce, waive and release any or all of the Collateral, (ii) apply the Collateral in the manner permitted by any Loan Document and (iii) renew, extend for any period, accelerate, amend or modify, supplement, enforce, compromise, settle, waive or release the obligations of any Obligor or any instrument or agreement of such other Person with respect to any or all of the Obligations or Collateral.

Article VI
Default

Section 6.01 Default. A “Default” shall exist if an “Event of Default” as defined in the Term Loan Agreement exists.

Section 6.02 Remedies. Upon the occurrence and during the continuance of a Default, Lender, at its option, shall be entitled to exercise any one or more of the following remedies (all of which are cumulative):

(a) Lender, at its option, may declare the Obligations or any part thereof immediately due and payable, without demand, notice of intention to accelerate, notice of acceleration, notice of nonpayment, presentment, protest, notice of dishonor, or any other notice whatsoever (except for notices, grace periods and opportunities to cure expressly mentioned herein or in the Term Loan Agreement), all of which are hereby waived by each Debtor and any maker, endorser, guarantor, surety or other party liable in any capacity for any of the Obligations.

(b) Lender shall have all of the rights and remedies provided for in this Agreement or any other Loan Document, the rights and remedies under the Code, and any and all of the rights and remedies at law and equity, all of which shall be deemed cumulative. Without limiting the foregoing, the Debtors agree that Lender shall have the right to (i) require the Debtors to assemble the Collateral and make it available to Lender at a place designated by Lender that is reasonably convenient to both parties, which such Debtors agree to do, (ii) take possession of the Collateral, with or without process of law, and, in this connection, enter any premises where the Collateral is located to remove same, to render it unusable, or to dispose of same on such premises, (iii) sell, lease or otherwise dispose of the Collateral, by public or private proceedings, for cash or credit, without assumption of credit risk, (iv) whether before or after Default, collect and receipt for, compound, compromise, and settle, and give releases, discharges and acquittances with respect to, any and all amounts owed by any Person with respect to the Collateral and/or (v) send a notice of control to any depositary bank to instruct such depositary bank to comply with instructions from Lender and to exercise its right of exclusive control with respect to the Deposit Accounts. Unless the Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Lender will send the Debtors reasonable notice of the time and place of any public sale or of the time after which any private sale or other disposition will be made. Any requirement of reasonable notice to the Debtors shall be met if such notice is mailed, postage prepaid, or delivered by courier or delivery service, to the Debtors at the addresses set forth on Schedule I hereto at least ten (10) days before the day of any public sale or at least ten (10) days before the time after which any private sale or other disposition will be made.

(c) The Debtors shall be liable for and agree to pay the reasonable expenses incurred by Lender in enforcing its rights and remedies, in retaking, holding, testing, repairing, improving, selling, leasing or disposing of the Collateral, or like expenses, including, without limitation, attorneys’ fees and legal expenses incurred by Lender. These expenses, together with interest thereon on and from the date incurred until paid by the Debtors at the Default Rate, which the Debtors agree to pay, shall constitute additional Obligations and shall be secured by and entitled to the benefits of this Agreement.

(d) Proceeds received by Lender from disposition of the Collateral shall be applied in accordance with Section 8.3 of the Term Loan Agreement. The Debtors shall be entitled to any surplus if one results after lawful application of the proceeds. The Debtors shall remain liable for any deficiency.

(e) The rights and remedies of Lender are cumulative and the exercise of any one or more of the rights or remedies shall not be deemed an election of rights or remedies or a waiver of any other right or remedy. Lender may remedy any Default without waiving the Default remedied and may waive any Default without waiving any other prior or subsequent Default.

Section 6.03 Sale of Pledged Securities.

(a) The Debtors agree that, because of the Securities Act of 1933, as amended, or the rules and regulations promulgated thereunder (collectively, the “Securities Act”), or any other Laws or regulations, and for other reasons, there may be legal or practical restrictions or limitations affecting Lender in any attempts to dispose of certain portions of the Pledged Securities and for the enforcement of its rights. For these reasons, Lender is hereby authorized by the Debtors, but not obligated, upon the occurrence and during the continuance of a Default, to sell all or any part of the Pledged Securities at private sale, subject to investment letter or in any other manner which will not require the Pledged Securities, or any part thereof, to be registered in accordance with the Securities Act or any other Laws or regulations, at a reasonable price at such private sale or other distribution in the manner mentioned above. The Debtors understand that Lender may in its discretion approach a limited number of potential purchasers and that a sale under such circumstances may yield a lower price for the Pledged Securities, or any part thereof, than would otherwise be obtainable if such Collateral were either afforded to a larger number or potential purchasers, registered under the Securities Act, or sold in the open market. The Debtors agree that any such private sale made under this Section 6.03(a) shall be deemed to have been made in a commercially reasonable manner, and that Lender has no obligation to delay the sale of any Pledged Securities to permit the issuer thereof to register it for public sale under any applicable federal or state securities Laws.

(b) Lender is authorized, in connection with any such sale, (i) to restrict the prospective bidders on or purchasers of any of the Pledged Securities to a limited number of sophisticated investors who will represent and agree that they are purchasing for their own account for investment and not with a view to the distribution or sale of any of such Pledged Securities and (ii) to impose such other limitations or conditions in connection with any such sale as Lender reasonably deems necessary in order to comply with applicable Law. The Debtors covenant and agree that they will execute and deliver such documents and take such other action as Lender reasonably deems necessary in order that any such sale may be made in compliance with applicable Law. Upon any such sale Lender shall have the right to deliver, assign, and transfer to the purchaser thereof the Pledged Securities so sold. Each purchaser at any such sale shall hold the Pledged Securities so sold absolutely free from any claim or right of the Debtors of whatsoever kind, including any equity or right of redemption of the Debtors. Following any such sale, the Debtors, to the extent permitted by applicable Law, hereby specifically waive all rights of redemption, stay, or appraisal which they have or may have under any Law now existing or hereafter enacted.

(c) The Debtors agree that ten (10) days’ written notice from Lender to the Debtors of Lender’s intention to make any such public or private sale or sale at a broker’s board or on a securities exchange shall constitute reasonable notice under the Code. Such notice shall (i) in case of a public sale, state the time and place fixed for such sale, (ii) in case of a sale at a broker’s board or on a securities exchange, state the board or exchange at which such a sale is to be made and the day on which the Pledged Securities, or the portion thereof so being sold, will first be offered for sale at such board or exchange and (iii) in the case of a private sale, state the day after which such sale may be consummated. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Lender may fix in the notice of such sale. At any such sale, the Pledged Securities may be sold in one lot as an entirety or in separate parcels, as Lender may determine. Lender shall not be obligated to make any such sale pursuant to any such notice. Lender may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned.

(d) In case of any sale of all or any part of the Pledged Securities on credit or for future delivery, the Pledged Securities so sold may be retained by Lender until the selling price is paid by the purchaser thereof, but Lender shall not incur any liability in case of the failure of such purchaser to take up and pay for the Pledged Securities so sold and in case of any such failure, such Pledged Securities may again be sold upon like notice. Lender, instead of exercising the power of sale herein conferred upon it, may proceed by a suit or suits at law or in equity to foreclose the security interests granted pursuant to this Agreement and sell the Pledged Securities, or any portion thereof, under a judgment or decree of a court or courts of competent jurisdiction.

(e) Without limiting the foregoing, or imposing upon Lender any obligations or duties not required by applicable Law, the Debtors acknowledge and agree that, in foreclosing upon any of the Pledged Securities, or exercising any other rights or remedies provided Lender hereunder or under applicable Law, Lender may, but shall not be required to, (i) qualify or restrict prospective purchasers of the Pledged Securities by requiring evidence of sophistication or creditworthiness, and requiring the execution and delivery of confidentiality agreements or other documents and agreements as a condition to such prospective purchasers’ receipt of information regarding the Pledged Securities or participation in any public or private foreclosure sale process, (ii) provide to prospective purchasers business and financial information regarding the Debtors or the Issuer available in the files of Lender at the time of commencing the foreclosure process, without the requirement that Lender obtain, or seek to obtain, any updated business or financial information or verify, or certify to prospective purchasers, the accuracy of any such business or financial information, or (iii) offer for sale and sell the Pledged Securities with or without first employing an appraiser, investment banker, or broker with respect to the evaluation of the Pledged Securities, the solicitation of purchasers for Pledged Securities, or the manner of sale of Pledged Securities.

Section 6.04 Attorney-in-Fact. Each Debtor hereby irrevocably appoints Lender as such Debtor’s attorney-in-fact, with full authority in the place and stead of such Debtor and in the name of such Debtor or otherwise, from time to time in Lender’s discretion upon the occurrence and during the continuance of a Default, and such appointment will be deemed to be coupled with an interest, but at such Debtor’s cost and expense and without notice to such Debtor, to take any action and to execute any assignment, certificate, financing statement, notification, document or instrument which Lender may deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation, to (a) evidence the security interest granted herein, (b) put parties on notice of this Agreement and (c) receive, endorse and collect all instruments made payable to such Debtor representing any payment or other distribution in respect of the Collateral or any part thereof and to give full discharge for the same.

Section 6.05 Reasonable Notice. If any applicable provision of any Law requires Lender to give reasonable notice of any sale or disposition or other action, the Debtors hereby agree that ten (10) days’ prior written notice shall constitute reasonable notice thereof. Such notice, in the case of public sale, shall state the time and place fixed for such sale and, in the case of private sale, the time after which such sale is to be made.

Section 6.06 Non-judicial Enforcement. Lender may enforce its rights hereunder without prior judicial process or judicial hearing, and to the extent permitted by Law, the Debtors expressly waive any and all legal rights which might otherwise require Lender to enforce their rights by judicial process.

Article VII
Miscellaneous Provisions

Section 7.01 Notices. Any notice required or permitted to be given under or in connection with this Agreement shall be given in accordance with the notice provisions of the Term Loan Agreement.

Section 7.02 Amendments and Waivers. Lender’s acceptance of partial or delinquent payments or any forbearance, failure or delay by Lender in exercising any right, power or remedy hereunder shall not be deemed a waiver of any obligation of the Debtors or any Obligor, or of any right, power or remedy of Lender, and no partial exercise of any right, power or remedy shall preclude any other or further exercise thereof. Lender may remedy any Default hereunder or in connection with the Obligations without waiving the Default so remedied. The Debtors hereby agree that if Lender agrees to a waiver of any provision hereunder, or an exchange of or release of the Collateral, or the addition or release of any Obligor or other Person, any such action shall not constitute a waiver of any of Lender’s other rights or of the Debtors’ obligations hereunder. This Agreement may be amended only by an instrument in writing executed jointly by the Debtors and Lender and may be supplemented only by documents delivered or to be delivered in accordance with the express terms hereof.

Section 7.03 Copy as Financing Statement. A photocopy or other reproduction of this Agreement or any financing statement covering the Collateral is sufficient as a financing statement, and the same may be filed with any appropriate filing authority for the purpose of perfecting Lender’s security interest in the Collateral without the requirement for a Debtor’s signature thereon.

Section 7.04 Possession of Collateral. Lender shall be deemed to have possession of any Collateral in transit to it or set apart for it (or, in either case, any of its agents, affiliates or correspondents).

Section 7.05 Redelivery of Collateral. If any sale or transfer of Collateral by Lender results in Payment in Full, and after such sale or transfer and discharge there remains a surplus of proceeds, Lender will deliver to applicable Debtor such excess proceeds in a commercially reasonable time; provided, however, that Lender shall not be liable for any interest, cost or expense in connection with any delay in delivering such proceeds to such Debtor.

Section 7.06 Liability for Collateral. The Debtors hereby agree that: (a) so long as Lender complies with its obligations, if any, under the Code, neither Lender nor the Secured Parties shall in any way or manner be liable or responsible for: (i) the safekeeping of the Collateral; (ii) any loss or damage thereto occurring or arising in any manner or fashion from any cause; (iii) any diminution in the value thereof; or (iv) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other Person; and (b) all risk of loss, damage, or destruction of the Collateral shall be borne by the Debtors.

Section 7.07 Governing Law. THIS AGREEMENT, THE SECURITY INTEREST GRANTED HEREBY AND EACH OTHER LOAN DOCUMENT, AND ALL MATTERS RELATING HERETO OR THERETO OR ARISING THEREFROM (WHETHER SOUNDING IN CONTRACT LAW, TORT LAW OR OTHERWISE), SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH DAKOTA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT UNITED STATES FEDERAL LAW PERMITS ANY LENDER TO CHARGE INTEREST AT THE RATE ALLOWED BY THE LAWS OF THE STATE WHERE SUCH LENDER IS LOCATED OR THE VALIDITY OR PERFECTION OF THE SECURITY INTERESTS HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NORTH DAKOTA.

Section 7.08 SUBMISSION TO JURISDICTION; WAIVER OF VENUE; SERVICE OF PROCESS; WAIVER OF JURY TRIAL. THE PROVISIONS IN SECTION 10.10(b)-(e) OF THE TERM LOAN AGREEMENT ARE HEREBY INCORPORATED INTO THIS Section 7.08 BY REFERENCE, MUTATIS MUTANDIS, AS A PART HEREOF.

Section 7.09 Additional Rights of Lender. Lender is expressly granted the following rights upon the occurrence and continuance of a Default: (a) to receive the Debtors’ share of all distributions and/or distributions in kind following dissolution of any of the Issuers and to hold the same in trust for the benefit of the Debtors as part of the Collateral; and (b) to exercise voting rights as to any of the Collateral. All of the foregoing may be exercised by Lender without liability, except to account for property actually received by it and except for liability arising from Lender’s gross negligence or willful misconduct.

Section 7.10 Continuing Security Agreement.

(a) Except as may be expressly applicable pursuant to Section 9-620 of the Code as amended from time to time, no action taken or omission to act by Lender hereunder, including, without limitation, any action taken or inaction pursuant to Section 6.02, shall be deemed to constitute a retention of the Collateral in satisfaction of the Obligations or otherwise to be in full satisfaction of the Obligations, and the Obligations shall remain in full force and effect until Lender shall have applied payments (including, without limitation, collections from Collateral) towards the Obligations and Payment in Full has occurred or until such subsequent time as is hereinafter provided in subsection (b) below.

(b) To the extent that any performance of or payments on the Obligations or proceeds of the Collateral are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, debtor in possession, receiver or other Person under any bankruptcy Law, common law or equitable cause, then to such extent the Obligations so satisfied shall be revived and continue as if such performance had not occurred or such payment or proceeds had not been received by Lender, and Lender’s security interests, rights, powers and remedies hereunder shall continue in full force and effect. In such event, this Agreement shall be automatically reinstated if it shall theretofore have been terminated pursuant to Section 7.11.

Section 7.11 Termination and Release.

(a) The granting of a security interest hereunder and all of Lender’s rights, powers and remedies in connection therewith shall remain in full force and effect until Payment in Full. Upon Payment in Full, this Agreement and Lender’s security interest hereunder shall automatically terminate and Lender, at the written request and expense of Debtors, will release, reassign and transfer to Debtors the Collateral that Debtors have provided and declare this Agreement to be of no further force or effect. Notwithstanding the foregoing, the reimbursement, indemnification and other provisions of Section 4.09, Section 7.06, Section 7.07 and Section 7.08 shall survive the termination of this Agreement and the payment and performance of the Obligations.

(b) If any of the Collateral shall be sold, transferred or otherwise disposed of by any Debtor in a transaction permitted by the Term Loan Agreement, then the security interest created pursuant hereto in such Collateral shall automatically be released, and Lender, at the request and sole expense of such Debtor, shall execute and deliver to such Debtor all releases and other documents reasonably necessary or advisable for the release of the security interest created hereby on such Collateral. At the request and sole expense of the Borrower, a Debtor shall be released from its obligations hereunder in the event that all the equity interests of such Debtor are sold, transferred or otherwise disposed of in a transaction permitted by the Term Loan Agreement; provided that the Borrower shall have delivered to the Lender, at least ten (10) Business Days (or such shorter period reasonably acceptable to the Lender) prior to the date of the proposed release, a written request for release identifying the relevant Debtor and the terms of the sale or other disposition in reasonable detail, including the price thereof and any expenses in connection therewith, together with a certification by the Borrower stating that such transaction is in compliance with the Term Loan Agreement and the other Loan Documents.

Section 7.12 Effectiveness. This Agreement becomes effective upon the execution hereof by the Debtors and delivery of the same to Lender, and is not necessary for Lender to execute any acceptance hereof or otherwise signify or express its acceptance hereof.

Section 7.13 No Third Party Beneficiaries. This Agreement is intended for the sole and exclusive benefit of Lender, acting for the benefit of the Secured Parties, the Secured Parties, and their respective successors and assigns, and shall not serve to confer any rights or benefits in favor of any Person not a party hereto other than the Secured Parties; and no other Person shall have any right to rely on this Agreement, or to derive any benefit herefrom. The Debtors shall not assign or transfer their rights, duties or obligations hereunder without the consent of Lender. There are no third party beneficiaries to this Agreement and no other Person (other than the parties hereto, and their respective successors and assigns) shall be entitled to rely on or enforce this Agreement other than the Secured Parties. Each and every right of Lender shall be cumulative and shall be in addition to any other remedy given hereunder or under any other Loan Document now or hereafter existing at law, in equity or by statute.

Section 7.14 Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Agreement. A set of counterparts executed by all the parties hereto shall be lodged with the Debtors and Lender.

Section 7.15 Additional Debtors. From time to time subsequent to the time hereof, additional debtors may become parties hereto as Debtors (each an “Additional Debtor”) by executing a supplement to this Agreement (“Security Agreement Supplement”) in form and substance satisfactory to Lender. Upon delivery of any such supplement to Lender, notice of which is hereby waived by the Debtors, each such Additional Debtor shall be a Debtor hereunder and shall be a party hereto as if such Additional Debtor were an original signatory hereof. Each Debtor expressly agrees that its obligations arising hereunder shall not be affected or diminished by the addition of any Additional Debtor. This Agreement shall be fully effective as to any Debtor that is or becomes a party hereto regardless of whether any such Person becomes or fails to become or ceases to be a Debtor hereunder. Each Debtor agrees that Schedule I, Schedule II and Schedule III hereto may be supplemented or amended pursuant to a Security Agreement Supplement and that, after giving effect to such supplements or addendums, each reference to Schedule I, Schedule II and Schedule III herein shall mean and be a reference to Schedule I, Schedule II and Schedule III, as supplemented or amended.

Section 7.16 Joint and Several Debtors. Each Debtor’s duties and liabilities under this Agreement are joint and several. Each of the Debtors jointly and severally hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-obligor, joint and several liability with the other Debtors with respect to the payment and performance of all of the Obligations, it being the intention of the parties hereto that all the Obligations shall be the joint and several obligations of each of the Debtors without preferences or distinction among them.

Section 7.17 Waiver of Subrogation. Until Payment in Full, and throughout any additional preferential period subsequent thereto, each Debtor hereby waives any and all rights of subrogation to which such Debtor may otherwise be entitled against any other Obligor as a result of any payment made by any Debtor pursuant to this Agreement.

Section 7.18 No Oral Agreements. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND SUPERSEDE ALL PRIOR UNDERSTANDINGS AND AGREEMENTS, WHETHER WRITTEN OR ORAL, RELATING TO THE TRANSACTIONS PROVIDED FOR HEREIN AND THEREIN. ADDITIONALLY, THIS AGREEMENT AND THE LOAN DOCUMENTS 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.

[Signature Page Follows]

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

	DEBTORS:

	HNR Acquisition Corp,
	as Debtor

	By:	/s/ David M. Smith
	Name:	David M. Smith
	Title:	Secretary

	HNRA UPSTREAM, LLC,
	as Debtor

	By:	/s/ David M. Smith
	Name:	David M. Smith
	Title:	Secretary

	HNRA PARTNER, INC.,
	as Debtor

	By:	/s/ David M. Smith
	Name:	David M. Smith
	Title:	Secretary

	POGO RESOURCES, LLC,
	as Debtor

	By:	/s/ David M. Smith
	Name:	David M. Smith
	Title:	Secretary

	LH OPERATING, LLC,
	as Debtor

	By:	/s/ David M. Smith
	Name:	David M. Smith
	Title:	Secretary

Signature Page to Pledge and Security Agreement

	LENDER:

	FIRST INTERNATIONAL BANK & TRUST,
	as Lender

	By:	/s/ Mitchell Cook
	Name:	Mitchell Cook
	Title:	Market President, Twin Cities

Signature Page to Pledge and Security Agreement

Exhibit 10.10

Execution Version

GUARANTY AGREEMENT

THIS GUARANTY AGREEMENT (this agreement, together with all amendments and restatements and all Joinders, this “Guaranty”), dated as of November 15, 2023 (the “Effective Date”), is made by each of the parties listed on the signature pages hereof as a “guarantor” and each other Person who becomes a party hereto pursuant to Section 17 (each, individually, a “Guarantor”, and collectively, the “Guarantors”) and, solely for purposes of Section 18(b), the Borrower (defined below), in favor of First International Bank & Trust, a North Dakota state banking institution (in such capacity, the “Lender”), for the benefit of the Guaranteed Parties (defined below) and is executed in connection with that certain Term Loan Agreement dated as of November 15, 2023 (as amended, restated or otherwise modified from time to time, the “Term Loan Agreement”) among HNR Acquisition Corp, a Delaware corporation (the “Borrower”), HNRA Upstream, LLC, a Delaware limited liability company (“HNRA OpCo”), HNRA Partner, Inc., a Delaware corporation (“OpCo Sub”), Pogo Resources, LLC, a Texas limited liability company (“Pogo”), LH Operating, LLC, a Texas limited liability company (“LH”, and together with Borrower, HNRA OpCo, OpCo Sub and Pogo, collectively, the “Obligors”), and the Lender.

WHEREAS, pursuant to the Term Loan Agreement, (i) the Lender has agreed to make a Loan to the Borrower and (ii) certain Secured Approved Counterparties have entered or may enter into Hedging Contracts with Borrower and/or other Obligors;

WHEREAS, as a condition to extending such credit to the Borrower and the other Obligors, the Lender has required the execution and delivery of this Guaranty;

WHEREAS, each Guarantor has determined that valuable benefits will be derived by it as a result of the Term Loan Agreement and the extension of credit made (and to be made) by the Lender and other Secured Parties; and

WHEREAS, each Guarantor has further determined that the benefits accruing to it from the Term Loan Agreement exceed each Guarantor’s anticipated liability under this Guaranty.

ACCORDINGLY, for value received, the sufficiency of which is hereby acknowledged, and in consideration of credit and financial accommodations heretofore or hereafter from time to time made or granted to the Borrower by the Secured Parties (herein referred to, collectively, as the “Guaranteed Parties” and each, individually, as a “Guaranteed Party”), each Guarantor hereby furnishes its guaranty of the Guaranteed Obligations (as hereinafter defined) as follows:

1. Definitions. Capitalized terms not otherwise defined herein have the meanings specified in the Term Loan Agreement, and, to the extent of any conflict, terms as defined herein shall control (provided that a more expansive or explanatory definition shall not be deemed a conflict).

2. Guaranty. Each Guarantor hereby absolutely, unconditionally and irrevocably guarantees, as a guaranty of payment and performance and not merely as a guaranty of collection, prompt payment when due, whether at stated maturity, by required prepayment, upon acceleration, demand or otherwise, and at all times thereafter, of any and all existing and future Indebtedness, including any such indebtedness and liabilities of every kind, nature and character, direct or indirect, absolute or contingent, liquidated or unliquidated, voluntary or involuntary and whether for principal, interest, premiums, fees indemnities, damages, costs, expenses or otherwise, of the Borrower or any Guarantor owing to the Guaranteed Parties arising under the Term Loan Agreement or the other Loan Documents, and whenever created, arising, evidenced or acquired (including all renewals, extensions, amendments, refinancings and other modifications thereof and all costs, reasonable attorneys’ fees, and expenses incurred by the Guaranteed Parties in connection with the collection or enforcement thereof), and whether recovery upon such Indebtedness may be or hereafter become unenforceable or shall be an allowed or disallowed claim under any proceeding or case commenced by or against the Borrower, any Guarantor under any Debtor Relief Laws, and including interest that accrues and expenses that are incurred or arise after the commencement by or against the Borrower of any proceeding under any Debtor Relief Laws (collectively, the “Guaranteed Obligations”). The Guaranteed Parties’ books and records showing the amount of the Guaranteed Obligations shall be admissible in evidence in any action or proceeding, and shall be binding upon the Guarantors and conclusive for the purpose of establishing the amount of the Guaranteed Obligations absent manifest error. This Guaranty shall not be affected by the genuineness, validity, regularity or enforceability of the Guaranteed Obligations or any instrument or agreement evidencing any Guaranteed Obligations, or by the existence, validity, enforceability, perfection, non-perfection or extent of any collateral therefor, or by any fact or circumstance relating to the Guaranteed Obligations which might otherwise constitute a defense to the obligations of any Guarantor under this Guaranty, and each Guarantor hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to any or all of the foregoing. Anything contained herein to the contrary notwithstanding, the obligations of any Guarantor hereunder at any time shall be limited to an 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 the Bankruptcy Code (Title 11, United States Code) or any comparable provisions of any similar federal or state law. Notwithstanding the foregoing, Guaranteed Obligations shall not include any Excluded Swap Obligations.

3. No Setoff or Deductions; Taxes; Payments. Each Guarantor shall make all payments hereunder without setoff or counterclaim and free and clear of and without deduction or withholding 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 (i) taxes based on or measured by the income or profits of any Guaranteed Party, including, for the avoidance of doubt, any franchise taxes and branch profits taxes; (ii) taxes imposed on amounts payable to or for the account of a Lender pursuant to a law in effect on the date on which such Lender acquires such interest in the Loan; (iii) taxes imposed under FATCA; or (iv) any tax attributable to a Lender’s failure to provide the documentation set forth in Section 3.4(g) of the Term Loan Agreement) is imposed upon any Guarantor with respect to any amount payable by it hereunder, such Guarantor will pay to the Lender, on the date on which such amount is due and payable hereunder, such additional amount in U.S. 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 Lender certificates, receipts, vouchers or other valid evidence 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 paragraph shall survive the payment in full of the Guaranteed Obligations and termination of this Guaranty.

4. Rights of the Guaranteed Parties. Each Guarantor consents and agrees that the Guaranteed Parties may, at any time and from time to time, without notice or demand, and without affecting the enforceability or continuing effectiveness hereof: (a) amend, extend, renew, compromise, discharge, accelerate or otherwise change the time for payment or the terms of the Guaranteed Obligations or any part thereof; (b) take, hold, exchange, enforce, waive, release, fail to perfect, sell, or otherwise dispose of any security for the payment of this Guaranty or any Guaranteed Obligations; (c) apply such security and direct the order or manner of sale thereof as the Guaranteed Parties in their sole discretion may determine; and (d) release or substitute one or more of any endorsers or other guarantors of any of the Guaranteed Obligations. Without limiting the generality of the foregoing, each Guarantor consents to the taking of, or failure to take, any action which might in any manner or to any extent vary the risks of such Guarantor under this Guaranty or which, but for this provision, might operate as a discharge of such Guarantor.

5. Certain Waivers. Each Guarantor waives (a) any defense arising by reason of any disability or other defense of the Borrower or any other Guarantor, or the cessation from any cause whatsoever (including any act or omission of any Guaranteed Party) of the liability of the Borrower; (b) any defense based on any claim that such Guarantor’s obligations exceed or are more burdensome than those of the Borrower; (c) the benefit of any statute of limitations affecting such Guarantor’s liability hereunder; (d) any right to require the Guaranteed Parties to proceed against the Borrower, proceed against or exhaust any security for the Guaranteed Obligations, or pursue any other remedy in the Guaranteed Parties’ power whatsoever and any defense based upon the doctrines of marshalling of assets or of election of remedies; (e) any benefit of and any right to participate in any security now or hereafter held by the Guaranteed Parties; and (f) to the fullest extent permitted by law, any and all other defenses or benefits that may be derived from or afforded by applicable law limiting the liability of or exonerating guarantors or sureties. Each Guarantor expressly waives all setoffs and counterclaims and all presentments, demands for payment or performance, notices of nonpayment or nonperformance, protests, notices of protest, notices of dishonor and all other notices or demands of any kind or nature whatsoever with respect to the Guaranteed Obligations, and all notices of acceptance of this Guaranty or of the existence, creation or incurrence of new or additional Guaranteed Obligations.

6. Obligations Independent. The obligations of each Guarantor hereunder are those of primary obligor, and not merely as surety, and are independent of the Guaranteed Obligations and the obligations of any other guarantor, and a separate action may be brought against each Guarantor to enforce this Guaranty whether or not the Borrower or any other person or entity is joined as a party.

7. Subrogation. No Guarantor shall exercise any right of subrogation, contribution (other than pursuant to Section 18(b)), indemnity, reimbursement or similar rights with respect to any payments it makes under this Guaranty until Payment in Full. If any amounts are paid to any Guarantor in violation of the foregoing limitation, then such amounts shall be held in trust for the benefit of the Guaranteed Parties and shall forthwith be paid to the Lender to reduce the amount of the Guaranteed Obligations, whether matured or unmatured.

8. Termination; Reinstatement. This Guaranty is a continuing and irrevocable guaranty of all Guaranteed Obligations now or hereafter existing and shall remain in full force and effect until Payment in Full. Upon Payment in Full, this Guaranty shall automatically terminate and Lender will upon request from Guarantors, at the Guarantors’ sole expense, execute and deliver to the Guarantors such documents to evidence such termination.

At the request and sole expense of the Borrower, a Guarantor shall be released from its obligations hereunder in the event that all the equity interests of such Guarantor are sold, transferred or otherwise disposed of in a transaction permitted by the Term Loan Agreement; provided that the Borrower shall have delivered to the Lender, at least ten Business Days (or such shorter period reasonably acceptable to the Lender) prior to the date of the proposed release, a written request for release identifying the relevant Guarantor and the terms of the sale or other disposition in reasonable detail, including the price thereof and any expenses in connection therewith, together with a certification by the Borrower stating that such transaction is in compliance with the Term Loan Agreement and the other Loan Documents.

Notwithstanding the foregoing, this Guaranty shall continue in full force and effect or be revived, as the case may be, if any payment by or on behalf of the Borrower or any Guarantor is made, or the Guaranteed Parties exercise their right of setoff, in respect of the Guaranteed Obligations 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 the Guaranteed Parties in their discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Laws or otherwise, all as if such payment had not been made or such setoff had not occurred and whether or not the Guaranteed Parties are in possession of or have released this Guaranty and regardless of any prior revocation, rescission, termination or reduction. The obligations of each Guarantor under this paragraph shall survive termination of this Guaranty.

9. Subordination. Each Guarantor hereby subordinates the payment of all obligations and indebtedness of the Borrower, any Subsidiary or any other Guarantor owing to such Guarantor, whether now existing or hereafter arising, including but not limited to any obligation of the Borrower or any Guarantor to such other Guarantor as subrogee of any Guaranteed Party or resulting from such Guarantor’s performance under this Guaranty, to the indefeasible payment in full in cash of all Guaranteed Obligations. If during the continuance of an Event of Default the Lender so requests, any such obligation or indebtedness of the Borrower or any Guarantor to such other Guarantor shall be enforced and performance received by such Guarantor as trustee for the Guaranteed Parties and the proceeds thereof shall be paid over to the Lender on account of the Guaranteed Obligations, but without reducing or affecting in any manner the liability of such Guarantor under this Guaranty.

10. Stay of Acceleration. In the event that acceleration of the time for payment of any of the Guaranteed Obligations is stayed, in connection with any case commenced by or against any Guarantor or the Borrower under any Debtor Relief Laws, or otherwise, all such amounts shall nonetheless be payable by each Guarantor immediately upon demand by the Lender.

11. Expenses. The Guarantors shall pay on demand all reasonable out-of-pocket out-of-pocket expenses, including without limitation reasonable out-of-pocket attorneys’ fees and expenses, in any way relating to the enforcement or protection of any Guaranteed Party’s rights under this Guaranty or in respect of the Guaranteed Obligations, including any incurred during any “workout” or restructuring in respect of the Guaranteed Obligations and any incurred in the preservation, protection or enforcement of any rights of the Guaranteed Parties in any proceeding under any Debtor Relief Laws. The obligations of each Guarantor under this paragraph shall survive the payment in full of the Guaranteed Obligations and termination of this Guaranty.

12. Miscellaneous. No provision of this Guaranty may be waived, amended, supplemented or modified, except by a written instrument executed by the Lender and each Guarantor. No failure by any Guaranteed Party to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy or power hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The rights and remedies herein provided are cumulative and not exclusive of any other rights, powers, privileges or remedies provided by law or in equity or under any other instrument, document or agreement now existing or hereafter arising. The unenforceability or invalidity of any provision of this Guaranty shall not affect the enforceability or validity of any other provision herein. Unless otherwise agreed by the Lender and each Guarantor in writing, this Guaranty is not intended to supersede or otherwise affect any other guaranty now or hereafter given by any Guarantor for the benefit of any Guaranteed Party or any term or provision thereof. This Guaranty may be executed in as many counterparts as necessary or convenient, including both counterparts that are executed on paper and counterparts that are electronic records and executed electronically, each of which, when so executed (and any copy of an executed counterpart that is an electronic record), shall be deemed to be an original, and all of which when taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Guaranty (or of any agreement or document required by this Guaranty and any amendment to this Guaranty) by facsimile or other electronic imaging means (e.g., “pdf” or “tif”) shall be as effective as delivery of an executed counterpart of this Guaranty.

13. Condition of Borrower. Each Guarantor acknowledges and agrees that it has the sole responsibility for, and has adequate means of, obtaining from the Borrower and any other Guarantor such information concerning the financial condition, business and operations of the Borrower and any such other Guarantor as such Guarantor requires, and that the Guaranteed Parties have no duty, and no Guarantor is relying on any Guaranteed Party at any time, to disclose to such Guarantor any information relating to the business, operations or financial condition of the Borrower or any other Guarantor or any other guarantor (the guarantor waiving any duty on the part of the Guaranteed Parties to disclose such information and any defense relating to the failure to provide the same).

14. Setoff. If and to the extent any payment is not made when due hereunder, the Guaranteed Parties may setoff and charge from time to time any amount so due against any or all of any Guarantor’s accounts or deposits with the Guaranteed Parties.

15. Representations and Warranties. Each Guarantor represents and warrants that (a) it is resident in the United States of America and duly organized and in good standing under the laws of the jurisdiction of its organization and has full capacity and right to make and perform this Guaranty, and all necessary authority has been obtained; (b) this Guaranty constitutes its legal, valid and binding obligation enforceable in accordance with its terms; (c) the making and performance of this Guaranty does not and will not violate applicable law, regulation or order, and does not and will not result in the breach of, or constitute a default or require any consent under, any indenture or other agreement regarding Liabilities binding upon such Guarantor or its properties or any material agreement, instrument, or document to which it is a party or by which it or any of its property may be bound or affected; (d) as of the date hereof, and after giving effect to all rights of contribution, each Guarantor is solvent and able to pay all of its liabilities as such liabilities mature and (e) all consents, approvals, licenses and authorizations of, and filings and registrations with, any Governmental Authority required under applicable law and regulations for the making and performance of this Guaranty have been obtained or made and are in full force and effect.

16. Indemnification and Survival. EACH GUARANTOR SHALL INDEMNIFY LENDER AND EACH RELATED PARTY OF LENDER (EACH SUCH PERSON BEING CALLED AN “INDEMNITEE”) AGAINST, AND HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED EXPENSES (INCLUDING THE REASONABLE FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE), INCURRED BY ANY INDEMNITEE OR ASSERTED AGAINST ANY INDEMNITEE BY ANY THIRD PARTY OR BY A GUARANTOR OR ANY OTHER LOAN PARTY ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF (I) THE EXECUTION OR DELIVERY OF THIS GUARANTY, THE TERM LOAN AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER OR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, (II) ANY LOAN OR THE USE OR PROPOSED USE OF THE PROCEEDS THEREFROM, (III) ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY OWNED OR OPERATED BY A GUARANTOR OR ANY OF ITS SUBSIDIARIES, OR ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO A GUARANTOR OR ANY OF ITS SUBSIDIARIES, OR (IV) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY, WHETHER BROUGHT BY A THIRD PARTY OR BY A GUARANTOR OR ANY OTHER LOAN PARTY, AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO. THE FOREGOING INDEMNIFICATION WILL APPLY WHETHER OR NOT SUCH LIABILITIES AND COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY OR CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY INDEMNITEE, PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES OR RELATED EXPENSES (X) ARE DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND NON-APPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE, (Y) RESULT FROM A CLAIM BROUGHT BY A GUARANTOR OR ANY OTHER LOAN PARTY AGAINST AN INDEMNITEE FOR ANY MATERIAL BREACH IN BAD FAITH OF SUCH INDEMNITEE’S OBLIGATIONS HEREUNDER, UNDER ANY OTHER LOAN DOCUMENT, IF A GUARANTOR OR SUCH LOAN PARTY HAS OBTAINED A FINAL AND NON-APPEALABLE JUDGMENT IN ITS FAVOR ON SUCH CLAIM AS DETERMINED BY A COURT OF COMPETENT JURISDICTION OR (Z) ARISE SOLELY OUT OF ANY CLAIM, ACTION, SUIT, INQUIRY, LITIGATION, INVESTIGATION OR PROCEEDING THAT DOES NOT INVOLVE AN ACT OR OMISSION BY A LOAN PARTY AND THAT IS BROUGHT SOLELY BY ONE OR MORE INDEMNITIES AGAINST ONE OR MORE OTHER INDEMNITIES. THIS SECTION SHALL NOT APPLY WITH RESPECT TO TAXES OTHER THAN ANY TAXES THAT REPRESENT LOSSES, CLAIMS, DAMAGES, ETC. ARISING FROM ANY NON-TAX CLAIM.

17. Additional Guarantors. Any Person who was not a “Guarantor” under this Guaranty at the time of initial execution hereof shall become a “Guarantor” hereunder by executing and delivering to the Lender a Guaranty Joinder in substantially the form of Exhibit A (each, a “Joinder”). Any such Person shall thereafter be deemed a “Guarantor” for all purposes under this Guaranty.

18. Guaranty Limitations and Rights of Contribution.

(a) In any action or proceeding involving any state corporate law, or any state or federal bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if the obligations of any Guarantor would otherwise, taking into account the provisions of Section 18(b), be held or determined to be void, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability hereunder, then, notwithstanding any other provision hereof to the contrary, the amount of such liability shall, without any further action by such Guarantor, the Lender, any Secured Party or any other Person, be automatically limited and reduced to the highest amount that is valid and enforceable and not subordinated to the claims of other creditors as determined in such action or proceeding.

(b) The Obligors hereby agree, as between themselves, that if any Guarantor shall become an Excess Funding Guarantor (as defined below) by reason of the payment by such Guarantor of any Guaranteed Obligations, then each other Guarantor shall, on demand of such Excess Funding Guarantor or the Lender (but subject to the next sentence), pay to such Excess Funding Guarantor an amount equal to such Guarantor’s Pro Rata Share (as defined below and determined, for this purpose, without reference to the properties, debts and liabilities of such Excess Funding Guarantor) of the Excess Payment (as defined below) in respect of such Guaranteed Obligations. The payment obligation of a Guarantor to any Excess Funding Guarantor hereunder shall be subordinate and subject in right of payment to the prior payment in full of the obligations of such Guarantor under the other provisions hereof and such Excess Funding Guarantor shall not exercise any right or remedy with respect to such excess until payment and satisfaction in full of all of such obligations. For purposes hereof, (i) “Excess Funding Guarantor” means, in respect of any Guaranteed Obligations, a Guarantor that has paid an amount in excess of its Pro Rata Share of such Guaranteed Obligations, (ii) “Excess Payment” means, in respect of any Guaranteed Obligations, the amount paid by an Excess Funding Guarantor in excess of its Pro Rata Share of such Guaranteed Obligations and (iii) “Pro Rata Share” means, for any Guarantor, the ratio (expressed as a percentage) of (x) the amount by which the aggregate fair saleable value of all properties of such Guarantor (excluding any shares of stock or other equity interest of any other Guarantor) exceeds the amount of all the debts and liabilities of such Guarantor (including contingent, subordinated, unmatured and unliquidated liabilities, but excluding the obligations of such Guarantor hereunder and any obligations of any other Guarantor that have been guaranteed by such Guarantor) to (y) the amount by which the aggregate fair saleable value of all properties of the Borrower and all of the Guarantors exceeds the aggregate amount of all the debts and liabilities (including contingent, subordinated, unmatured and unliquidated liabilities, but excluding any obligations of the Obligors hereunder and under the other Loan Documents) of all of the Guarantors, determined (A) with respect to any Guarantor that is a party hereto on the Effective Date, as of the Effective Date, and (B) with respect to any other Guarantor, as of the date such Guarantor becomes a Guarantor hereunder.

19. Term Loan Agreement. Each Guarantor acknowledges to Guaranteed Parties that certain representations and warranties in the Term Loan Agreement are applicable to it or its assets or operations, and each such representation and warranty is true and correct as of the date hereof, except with respect to any representation and warranty which by its terms is made as of a specified date, in which case such representation and warranty was true and correct as of such specified date. From the date hereof, each Guarantor covenants and agrees with the Guaranteed Parties that it will comply with, perform, and be bound by all covenants and agreements in the Term Loan Agreement and other Loan Documents that are applicable to it, its assets, or its operations, each of which is hereby ratified and confirmed. In the event of any conflict between the terms of this Guaranty and the Term Loan Agreement, the terms of the Term Loan Agreement shall govern and control in all respects.

20. GOVERNING LAW. THIS GUARANTY AND EACH OTHER LOAN DOCUMENT, AND ALL MATTERS RELATING HERETO OR THERETO OR ARISING THEREFROM (WHETHER SOUNDING IN CONTRACT LAW, TORT LAW OR OTHERWISE), SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH DAKOTA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT UNITED STATES FEDERAL LAW PERMITS ANY LENDER TO CHARGE INTEREST AT THE RATE ALLOWED BY THE LAWS OF THE STATE WHERE SUCH LENDER IS LOCATED.

21. SUBMISSION TO JURISDICTION; WAIVER OF VENUE; SERVICE OF PROCESS; WAIVER OF JURY TRIAL. THE PROVISIONS IN SECTIONS 10.10(B)-(E) OF THE TERM LOAN AGREEMENT ARE HEREBY INCORPORATED INTO THIS SECTION 21 BY REFERENCE, MUTATIS MUTANDIS, AS A PART HEREOF.

22. FINAL AGREEMENT. THIS GUARANTY REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

[This space is left intentionally blank. Signature page follows.]

IN WITNESS WHEREOF, each party hereto has caused this Guaranty to be duly executed and delivered by its duly authorized officer on the date first above written.

	BORROWER:

	HNR ACQUISITION CORP

	By:	/s/ David M. Smith
	Name:	David M. Smith
	Title:	Secretary

	GUARANTORS:

	HNRA UPSTREAM, LLC,

	By:	/s/ David M. Smith
	Name:	David M. Smith
	Title:	Secretary

	HNRA PARTNER, INC.,

	By:	/s/ David M. Smith
	Name:	David M. Smith
	Title:	Secretary

	POGO RESOURCES, LLC,

	By:	/s/ David M. Smith
	Name:	David M. Smith
	Title:	Secretary

	LH OPERATING, LLC,

	By:	/s/ David M. Smith
	Name:	David M. Smith
	Title:	Secretary

Signature Page to Guaranty

Agreed, acknowledged and accepted:

LENDER:

FIRST INTERNATIONAL BANK & TRUST,
as Lender

By:	/s/ Mitchell Cook
Name:	Mitchell Cook
Title:	Market President, Twin Cities

Signature Page to Guaranty

EXHIBIT A

Guaranty Joinder No. ___

THIS GUARANTY JOINDER NO. ___ (this “Guaranty Joinder”) is made as of ________ ____, 20__, to the Guaranty Agreement dated as of November 15, 2023 (such agreement, together with all amendments and restatements and all Joinders, the “Guaranty”), among the initial signatories thereto and each other Person which from time to time thereafter became a party thereto pursuant to Section 17 thereof (each, individually, a “Guarantor” and, collectively, the “Guarantors”), in favor of FIRST INTERNATIONAL BANK & TRUST, as lender (in such capacity, the “Lender”), for the benefit of Guaranteed Parties (as defined in the Guaranty referenced below).

BACKGROUND.

Reference is made to (i) that certain Term Loan Agreement dated as of November 15, 2023 (as amended, restated or otherwise modified from time to time, the “Term Loan Agreement”) between HNR Acquisition Corp, a Delaware corporation, as Borrower, and the Lender and (ii) that certain Guaranty dated as of November 15, 2023 (as amended, restated or otherwise modified from time to time, the “Guaranty”) by each of the Guarantors signatory thereto from time to time and HNR Acquisition Corp, in favor of the Lender for the benefit of the Guaranteed Parties.

Capitalized terms not otherwise defined herein have the meaning specified in the Guaranty. The Guaranty provides that additional parties may become Guarantors under the Guaranty by execution and delivery of this form of Guaranty Joinder. Pursuant to the provisions of Section 17 of the Guaranty, the undersigned is becoming an additional Guarantor under the Guaranty. The undersigned desires to become a Guarantor under the Guaranty in order to induce Guaranteed Parties to continue to perform their obligations under the Loan Documents.

AGREEMENT.

NOW, THEREFORE, the undersigned agrees with the Lender and each other Guaranteed Party as follows:

1. The undersigned, jointly and severally with the other Guarantors, irrevocably, absolutely, and unconditionally guarantees to each Guaranteed Party the prompt and complete payment and performance when due, and no matter how the same shall become due, of all of the Guaranteed Obligations. In accordance with the Guaranty, the undersigned hereby becomes a Guarantor under the Guaranty with the same force and effect as if it were an original signatory thereto as a Guarantor. The undersigned hereby (a) agrees to be bound in all respects by the terms and provisions of the Guaranty applicable to it as a Guarantor thereunder and (b) represents and warrants that the representations and warranties made by it as a Guarantor thereunder are true and correct in all material respects on and as of the date hereof, except (i) to the extent that any such representations and warranties are expressly limited to an earlier date, in which case, on and as of the date hereof, such representations and warranties continue to be true and correct in all material respects as of such specified earlier date and (ii) to the extent that any such representation and warranty is expressly qualified by materiality or by reference to Material Adverse Change, in which case such representation and warranty (as so qualified) is true and correct in all respects. Each reference to a “Guarantor” or an “Additional Guarantor” in the Guaranty shall be deemed to include the undersigned.

Exhibit A to Guaranty

2. Except as expressly supplemented hereby, the Guaranty shall remain in full force and effect in accordance with its terms.

3. THIS GUARANTY JOINDER AND The Guaranty shall be governed by, and construed in accordance with, the internal laws of the State of NORTH DAKOTA.

4. This Guaranty Joinder hereby incorporates by reference the provisions of the Guaranty, which provisions are deemed to be a part hereof, and this Guaranty Joinder shall be deemed to be a part of the Guaranty.

5. This Guaranty Joinder may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement.

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Exhibit A to Guaranty

EXECUTED as of the date above first written.

Address:		[ADDITIONAL GUARANTOR]


		By:
		Name:
		Title:

ACCEPTED BY:

FIRST INTERNATIONAL BANK & TRUST,
as Lender

By:
Name:
Title:

Exhibit A to Guaranty

Exhibit 10.11

HNR ACQUISITION CORP. 2023 OMNIBUS INCENTIVE PLAN

HNR ACQUISITION CORP. 2023 OMNIBUS INCENTIVE PLAN

1. PURPOSE

The Plan is intended to (a) provide eligible individuals with an incentive to contribute to the success of the Company and to operate and manage the Company’s business in a manner that provides for the Company’s long-term growth and profitability and that benefits its stockholders and other important stakeholders, including its employees and customers, and (b) provide a means of recruiting, rewarding, and retaining key personnel. To this end, the Plan provides for the grant of Awards of Options, SARs, Restricted Stock, RSUs, Dividend Equivalent Rights, Other Equity-Based Awards, and cash bonus awards. Any of these Awards may, but need not, be made as performance incentives to reward the holders of such Awards for the achievement of performance goals in accordance with the terms of the Plan. Options granted under the Plan may be Nonqualified Stock Options or Incentive Stock Options.

2. DEFINITIONS

For purposes of interpreting the Plan documents, including the Plan and Award Agreements, the following capitalized terms shall have the meanings specified below, unless the context clearly indicates otherwise:

2.1 “Affiliate” shall mean any Person that controls, is controlled by, or is under common control with the Company within the meaning of Rule 405 of Regulation C under the Securities Act, including any Subsidiary. For purposes of making a grant of Options or SARs, an entity shall not be considered an Affiliate unless the Company holds a Controlling Interest in such entity. The preceding sentence does not, however, apply for purposes of determining whether Service is uninterrupted for purposes of vesting, exercisability, or expiration of Options and SARs.

2.2 “Applicable Laws” shall mean the legal requirements relating to the Plan and the Awards under (a) applicable provisions of the Code, the Securities Act, the Exchange Act, any rules or regulations thereunder, and any other laws, rules, regulations, and government orders of any jurisdiction applicable to the Company or its Affiliates, (b) applicable provisions of the corporate, securities, tax, and other laws, rules, regulations, and government orders of any jurisdiction applicable to Awards granted to residents thereof, and (c) the rules of any Stock Exchange or Securities Market on which the Stock is listed or publicly traded.

2.3 “Award” shall mean a grant under the Plan of an Option, a SAR, Restricted Stock, a RSU, a Dividend Equivalent Right, a Performance Award, an Other Equity-Based Award, or cash.

2.4 “Award Agreement” shall mean the written agreement, in such written, electronic, or other form as determined by the Committee, between the Company and a Grantee that evidences and sets forth the terms and conditions of an Award.

2.5 “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act.

2.6 “Benefit Arrangement” shall mean any formal or informal plan or other arrangement for the direct or indirect provision of compensation to a Grantee (including groups or classes of Grantees or beneficiaries of which the Grantee is a member), whether or not such compensation is deferred, is in cash, or is in the form of a benefit to or for the Grantee.

2.7 “Board” shall mean the Board of Directors of the Company.

2.8 “Capital Stock” shall mean, with respect to any Person, any and all shares, interests, participations, or other equivalents (however designated, whether voting or non-voting) in equity of such Person, whether outstanding on the Effective Date or issued thereafter, including, without limitation, all shares of Stock.

2.9 “Cause” shall have the meaning set forth in an applicable agreement between a Grantee and the Company or an Affiliate, and in the absence of any such agreement, shall mean, with respect to any Grantee and as determined by the Committee, (a) gross negligence or willful misconduct in connection with the performance of duties; (b) conviction of, or pleading guilty or nolo contendere to, a criminal offense (other than minor traffic offenses); or (c) material breach of any term of any employment, consulting or other services, confidentiality, intellectual property, or non-competition agreements, if any, between such Grantee and the Company or an Affiliate. Any determination by the Committee regarding whether an event constituting Cause shall have occurred shall be final, binding, and conclusive.

2.10 “Change in Control” shall mean, subject to Section 18.11, the occurrence of any of the following:

(a) A transaction or a series of related transactions whereby any Person or Group (other than the Company or any Affiliate) becomes the Beneficial Owner of more than 50% of the total voting power of the Voting Stock of the Company, on a Fully Diluted Basis;

(b) Individuals who, as of the Effective Date, constitute the Board (the “Incumbent Board”) (together with any new directors whose election by such Incumbent Board or whose nomination by such Incumbent Board for election by the stockholders of the Company was approved by a vote of at least a majority of the members of such Incumbent Board then in office who either were members of such Incumbent Board or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the members of such Board then in office;

(c) The Company consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, the Company (regardless of whether the Company is the surviving Person), other than any such transaction in which the Prior Stockholders own directly or indirectly at least a majority of the voting power of the Voting Stock of the surviving Person in such merger or consolidation immediately after such transaction;

(d) The consummation of any direct or indirect sale, lease, transfer, conveyance, or other disposition (other than by way of reorganization, merger, or consolidation), in one transaction or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, to any Person or Group (other than the Company or any Affiliate), except any such transaction or series of transactions in which the Prior Stockholders own directly or indirectly at least a majority of the voting power of the Voting Stock of such Person or Group immediately after such transaction or series of transactions; or

(e) The consummation of a plan or proposal for the liquidation, winding up, or dissolution of the Company.

The Board shall have full and final authority, in its sole discretion, to determine conclusively whether a Change in Control has occurred pursuant to the above definition, the date of the occurrence of such Change in Control, and any incidental matters relating thereto.

2.11 “Code” shall mean the Internal Revenue Code of 1986, as amended, as now in effect or as hereafter amended, and any successor thereto. References in the Plan to any Code section shall be deemed to include, as applicable, regulations and guidance promulgated under such Code section.

2.12 “Committee” shall mean a committee of, and designated from time to time by resolution of, the Board, which shall be constituted as provided in Section 3.1.2 and Section 3.1.3 (or, if no Committee has been so designated, the Board).

2.13 “Company” shall mean HNR Acquisition Corp., a Delaware corporation, and any successor thereto.

2.14 “Controlling Interest” shall have the meaning set forth in Treasury Regulation § 1.414(c)-2(b)(2)(i); provided that (a) except as specified in clause (b), an interest of “at least 50 percent” shall be used instead of an interest of “at least 80 percent” in each case where “at least 80 percent” appears in Treasury Regulation § 1.414(c)-2(b)(2)(i), and (b) where a grant of Options or SARs is based on a legitimate business criterion, an interest of “at least 20 percent” shall be used instead of an interest of “at least 80 percent” in each case where “at least 80 percent” appears in Treasury Regulation § 1.414(c)-2(b)(2)(i).

2.15 “Disability” shall mean the inability of a Grantee to perform each of the essential duties of such Grantee’s position by reason of a medically determinable physical or mental impairment that is potentially permanent in character or that can be expected to last for a continuous period of not less than 12 months; provided that, with respect to rules regarding the expiration of an Incentive Stock Option following termination of a Grantee’s Service, Disability shall mean the inability of such Grantee to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment that can be expected to result in death or that has lasted or can be expected to last for a continuous period of not less than 12 months.

2.16 “Disqualified Individual” shall have the meaning set forth in Code § 280G(c).

2.17 “Dividend Equivalent Right” shall mean a right, granted to a Grantee pursuant to Article 12, entitling the Grantee thereof to receive, or to receive credits for the future payment of, cash, Stock, other Awards, or other property equal in value to dividend payments or distributions, or other periodic payments, declared or paid with respect to a number of shares of Stock specified in such Dividend Equivalent Right (or other Award to which such Dividend Equivalent Right relates) as if such shares of Stock had been issued to and held by the Grantee of such Dividend Equivalent Right as of the record date of the declaration thereof.

2.18 “Effective Date” shall mean the date the Plan is adopted by the Board, subject to approval of the Plan by the Company’s stockholders in accordance with Section 5.1.

2.19 “Employee” shall mean, as of any date of determination, an employee (including an officer) of the Company or an Affiliate.

2.20 “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, as now in effect or as hereafter amended, and any successor thereto.

2.21 “Fair Market Value” shall mean the fair market value of a share of Stock for purposes of the Plan, which shall be, as of any date of determination:

(a) If on such date the shares of Stock are listed on a Stock Exchange, or are publicly traded on another Securities Market, the Fair Market Value of a share of Stock shall be the closing price of the Stock as reported on such Stock Exchange or such Securities Market (provided that, if there is more than one such Stock Exchange or Securities Market, the Committee shall designate the appropriate Stock Exchange or Securities Market for purposes of the Fair Market Value determination). If there is no such reported closing price on such date, the Fair Market Value of a share of Stock shall be the closing price of the Stock on the next preceding day on which any sale of Stock shall have been reported on such Stock Exchange or such Securities Market.

(b) If on such date the shares of Stock are not listed on a Stock Exchange or publicly traded on a Securities Market, the Fair Market Value of a share of Stock shall be the value of the Stock as determined by the Committee by the reasonable application of a reasonable valuation method, in a manner consistent with Code § 409A.

Notwithstanding this Section 2.21 or Section 18.3, for purposes of determining taxable income and the amount of the related tax withholding obligation pursuant to Section 18.3, the Fair Market Value shall be determined by the Committee in good faith using any reasonable method it deems appropriate, to be applied consistently with respect to Grantees; provided that the Committee shall determine the Fair Market Value of shares of Stock for tax withholding obligations due in connection with sales, by or on behalf of a Grantee, of such shares of Stock subject to an Award to pay the Option Price, SAR Price, or any tax withholding obligation on the same date on which such shares may first be sold pursuant to the terms of the applicable Award Agreement (including broker-assisted cashless exercises of Options and SARs, as described in Section 14.3, and sell-to-cover transactions) in any manner consistent with applicable provisions of the Code, including, without limitation, by using the sale price of such shares on such date (or if sales of such shares are effectuated at more than one sale price, the weighted average sale price of such shares on such date) as the Fair Market Value of such shares, so long as such Grantee has provided the Company, or its designee or agent, with advance written notice of such sale.

2.22 “Family Member” shall mean, with respect to any Grantee as of any date of determination, (a) a Person who is a spouse, former spouse, child, stepchild, grandchild, parent, stepparent, grandparent, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother, sister, brother-in-law, or sister-in-law, including adoptive relationships, of such Grantee, (b) any Person sharing such Grantee’s household (other than a tenant or employee), (c) a trust in which any one or more of the Persons specified in clauses (a) and (b) (and such Grantee) own more than 50% of the beneficial interest, (d) a foundation in which any one or more of the Persons specified in clauses (a) and (b) (and such Grantee) control the management of assets, and (e) any other entity in which one or more of the Persons specified in clauses (a) and (b) (and such Grantee) own more than 50% of the voting interests.

2.23 “Fully Diluted Basis” shall mean, as of any date of determination, the sum of (a) the number of shares of Voting Stock outstanding as of such date of determination plus (b) the number of shares of Voting Stock issuable upon the exercise, conversion, or exchange of all then-outstanding warrants, options, convertible Capital Stock or indebtedness, exchangeable Capital Stock or indebtedness, or other rights exercisable for or convertible or exchangeable into, directly or indirectly, shares of Voting Stock, whether at the time of issue or upon the passage of time or upon the occurrence of some future event, and whether or not in-the-money as of such date of determination.

2.24 “Grant Date” shall mean, as determined by the Committee, the latest to occur of (a) the date as of which the Committee approves the Award, (b) the date on which the recipient of an Award first becomes eligible to receive an Award under Article 6 (for example, in the case of a new hire, the first date on which such new hire performs any Service), or (c) such date later than the dates specified in clauses (a) and (b) specified by the Committee in the corporate action approving the Award.

2.25 “Grantee” shall mean a Person who receives or holds an Award under the Plan.

2.26 “Group” shall have the meaning set forth in Exchange Act §§ 13(d) and 14(d)(2).

2.27 “Incentive Stock Option” shall mean an “incentive stock option” within the meaning of Code § 422.

2.28 “Nonqualified Stock Option” shall mean an Option that is not an Incentive Stock Option.

2.29 “Non-Employee Director” shall have the meaning set forth in Rule 16b-3 under the Exchange Act.

2.30 “Officer” shall have the meaning set forth in Rule 16a-1(f) under the Exchange Act.

2.31 “Option” shall mean an option to purchase one or more shares of Stock at a specified Option Price awarded to a Grantee pursuant to Article 8.

2.32 “Option Price” shall mean the per share exercise price for shares of Stock subject to an Option.

2.33 “Other Agreement” shall mean any agreement, contract, or understanding heretofore or hereafter entered into by a Grantee with the Company or an Affiliate, except an agreement, contract, or understanding that expressly addresses Code §§ 280G or 4999.

2.34 “Other Equity-Based Award” shall mean an Award representing a right or other interest that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to Stock, other than an Option, a SAR, Restricted Stock, an RSU, a Dividend Equivalent Right, or a Performance Award.

2.35 “Parachute Payment” shall mean a “parachute payment” within the meaning of Code § 280G(b)(2), or the corresponding provision of any subsequently enacted tax statute, as amended from time to time.

2.36 “Performance Award” shall mean an Award of Options, SARs, Restricted Stock, RSUs, Other Equity-Based Awards, or cash made subject to the achievement of Performance Measures (as provided in Article 13) over a Performance Period specified by the Committee.

2.37 “Performance Measures” shall mean performance criteria on which performance goals under Performance Awards are based.

2.38 “Performance Period” shall mean the period of time, up to ten years, during or over which the Performance Measures under Performance Awards must be met in order to determine the degree of payout or vesting with respect to any such Performance Awards.

2.39 “Person” shall mean an individual, a corporation, a partnership, a limited liability company, an association, a trust, or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof; provided that, for purposes of Section 2.10(a) and Section 2.10(d), Person shall have the meaning set forth in Exchange Act §§ 13(d) and 14(d)(2).

2.40 “Plan” shall mean this HNR Acquisition Corp. 2023 Omnibus Incentive Plan, as amended and/or restated from time to time.

2.41 “Prior Stockholders” shall mean the holders of equity securities that represented 100% of the Voting Stock of the Company immediately prior to a reorganization, merger, or consolidation involving the Company or any sale or other disposition of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole (or other equity securities into which the Stock or such other equity securities are converted as part of such reorganization, merger, or consolidation transaction).

2.42 “Restricted Period” shall mean a period of time established by the Committee during which an Award of Restricted Stock or RSUs is subject to restrictions.

2.43 “Restricted Stock” shall mean shares of Stock awarded to a Grantee pursuant to Article 10.

2.44 “RSU” shall mean restricted stock unit, which is a bookkeeping entry representing the equivalent of one share of Stock awarded to a Grantee pursuant to Article 10 that may be settled, subject to the terms and conditions of the applicable Award Agreement, in shares of Stock, cash, or a combination thereof.

2.45 “SAR” shall mean a stock appreciation right granted to a Grantee pursuant to Article 9.

2.46 “SAR Price” shall mean the per share exercise price of a SAR.

2.47 “Securities Act” shall mean the Securities Act of 1933, as amended, as now in effect or as hereafter amended, and any successor thereto.

2.48 “Securities Market” shall mean an established securities market.

2.49 “Separation from Service” shall have the meaning set forth in Code § 409A.

2.50 “Service” shall mean service qualifying a Grantee as a Service Provider to the Company or an Affiliate. Unless otherwise provided in the applicable Award Agreement, a Grantee’s change in position or duties shall not result in interrupted or terminated Service, so long as such Grantee continues to be a Service Provider to the Company or an Affiliate. Subject to the preceding sentence, any determination by the Committee whether a termination of Service shall have occurred for purposes of the Plan shall be final, binding, and conclusive. If a Service Provider’s employment or other Service relationship is with an Affiliate and the applicable entity ceases to be an Affiliate, a termination of Service shall be deemed to have occurred when such entity ceases to be an Affiliate unless the Service Provider transfers his or her employment or other Service relationship to the Company or any other Affiliate.

2.51 “Service Provider” shall mean (a) an Employee or director of the Company or an Affiliate, or (b) a consultant or adviser to the Company or an Affiliate (i) who is a natural person, (ii) who is currently providing bona fide services to the Company or an Affiliate, and (iii) whose services are not in connection with the Company’s sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company’s Capital Stock.

2.52 “Service Recipient Stock” shall have the meaning set forth in Code § 409A.

2.53 “Share Limit” shall have the meaning set forth in Section 4.1.

2.54 “Short-Term Deferral Period” shall have the meaning set forth in Code § 409A.

2.55 “Stock” shall mean the Class A Common Stock, par value $0.0001 per share, of the Company, or any security into which shares of Stock may be changed or for which shares of Stock may be exchanged as provided in Section 16.1.

2.56 “Stock Exchange” shall mean the New York Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or another established national or regional stock exchange.

2.57 “Subsidiary” shall mean any corporation (other than the Company) or non-corporate entity with respect to which the Company owns, directly or indirectly, 50% or more of the total combined voting power of all classes of Voting Stock. In addition, any other entity may be designated by the Committee as a Subsidiary, provided that (a) such entity could be considered as a subsidiary according to generally accepted accounting principles in the United States of America and (b) in the case of an Award of Options or SARs, such Award would be considered to be granted in respect of Service Recipient Stock under Code § 409A.

2.58 “Substitute Award” shall mean an Award granted upon assumption of, or in substitution for, outstanding awards previously granted under a compensatory plan of the Company, an Affiliate, or a business entity acquired or to be acquired by the Company or an Affiliate or with which the Company or an Affiliate has combined or shall combine.

2.59 “Ten Percent Stockholder” shall mean a natural Person who owns more than 10% of the total combined voting power of all classes of Voting Stock of the Company, the Company’s parent (if any), or any of the Company’s Subsidiaries. In determining stock ownership, the attribution rules of Code § 424(d) shall be applied.

2.60 “Voting Stock” shall mean, with respect to any Person, Capital Stock of any class or kind ordinarily having the power to vote for the election of directors, managers, or other voting members of the governing body of such Person. Without limiting the generality of the foregoing, the Stock shall be Voting Stock of the Company.

3. ADMINISTRATION OF THE PLAN

3.1 Committee.

3.1.1 Powers and Authorities.

The Committee shall administer the Plan and shall have such powers and authorities related to the administration of the Plan as are consistent with the Company’s certificate of incorporation and bylaws and Applicable Laws. Without limiting the generality of the foregoing, the Committee shall have full power and authority to take all actions and to make all determinations required or provided for under the Plan, any Award, or any Award Agreement and shall have full power and authority to take all such other actions and to make all such other determinations not inconsistent with the specific terms and provisions of the Plan that the Committee deems to be necessary or appropriate to the administration of the Plan, any Award, or any Award Agreement. All such actions and determinations shall be made by (a) the affirmative vote of a majority of the members of the Committee present at a meeting at which a quorum is present, or (b) the unanimous consent of the members of the Committee executed in writing or evidenced by electronic transmission in accordance with the Company’s certificate of incorporation and bylaws and Applicable Laws. Unless otherwise expressly determined by the Board, the Committee shall have the authority to interpret and construe all provisions of the Plan, any Award, and any Award Agreement, and any such interpretation or construction, and any other determination contemplated to be made under the Plan or any Award Agreement, by the Committee shall be final, binding, and conclusive on all Persons, whether or not expressly provided for in any provision of the Plan, such Award, or such Award Agreement.

In the event that the Plan, any Award, or any Award Agreement provides for any action to be taken by the Board or any determination to be made by the Board, such action may be taken or such determination may be made by the Committee constituted in accordance with this Section 3.1 if the Board has delegated the power and authority to do so to such Committee.

3.1.2 Composition of the Committee.

The Committee shall be a committee composed of not fewer than two directors of the Company designated by the Board to administer the Plan. Each member of the Committee shall (a) be a Non-Employee Director and (b) satisfy the composition requirements of any Stock Exchange on which the Stock is listed. Any action taken by the Committee shall be valid and effective whether or not members of the Committee at the time of such action are later determined not to have satisfied the requirements for membership set forth in this Section 3.1.2 or otherwise provided in any charter of the Committee. Without limiting the generality of the foregoing, the Committee may be the Compensation Committee of the Board or a subcommittee thereof.

3.1.3 Other Committees.

The Board also may appoint one or more committees of the Board, each composed of one or more directors of the Company, which (a) may administer the Plan with respect to Grantees who are not Officers or directors of the Company, (b) may grant Awards under the Plan to such Grantees, and (c) may determine all terms of such Awards subject, if applicable, to the requirements of Rule 16b-3 under the Exchange Act and the rules of any Stock Exchange or Securities Market on which the Stock is listed or publicly traded.

3.1.4 Delegation by the Committee.

If and to the extent permitted by Applicable Laws, the Committee, by resolution, may delegate some or all of its authority with respect to the Plan and Awards to the Chief Executive Officer of the Company and/or any other officer of the Company designated by the Committee, provided that the Committee may not delegate its authority hereunder (a) to make Awards to directors of the Company, (b) to make Awards to Employees who are (i) Officers or (ii) officers of the Company who are delegated authority by the Committee pursuant to this Section 3.1.4, or (c) to interpret the Plan, any Award, or any Award Agreement. Any delegation shall be subject to the restrictions and limits that the Committee specifies at the time of such delegation or thereafter. Nothing in the Plan shall be construed as obligating the Committee to delegate authority to any officer of the Company, and the Committee may at any time rescind the authority delegated to an officer of the Company appointed hereunder and delegate authority to one or more other officers of the Company. At all times, an officer of the Company delegated authority pursuant to this Section 3.1.4 shall serve in such capacity at the pleasure of the Committee. Any action undertaken by any such officer of the Company in accordance with the Committee’s delegation of authority shall have the same force and effect as if undertaken directly by the Committee, and any reference in the Plan to the “Committee” shall, to the extent consistent with the terms and limitations of such delegation, be deemed to include a reference to each such officer.

3.2 Board.

The Board, from time to time, may exercise any or all of the powers and authorities related to the administration and implementation of the Plan, as set forth in Section 3.1 and other applicable provisions of the Plan, as the Board shall determine, consistent with the Company’s certificate of incorporation and bylaws and Applicable Laws.

3.3 Terms of Awards.

3.3.1 Committee Authority.

Subject to the other terms and conditions of the Plan, the Committee shall have full and final authority to:

(a) designate Grantees;

(b) determine the type or types of Awards to be made to a Grantee;

(d) establish the terms and conditions of each Award (including the Option Price of any Option, the SAR Price for any SAR, and the purchase price for applicable Awards, the nature and duration of any restriction or condition (or provision for lapse thereof) relating to the vesting, exercise, transfer, or forfeiture of an Award or the shares of Stock subject thereto, the treatment of an Award in the event of a Change in Control (subject to applicable agreements), and any terms or conditions that may be necessary to qualify Options as Incentive Stock Options);

(e) prescribe the form of each Award Agreement evidencing an Award;

(f) subject to the limitation on repricing in Section 3.4, amend, modify, or supplement the terms of any outstanding Award, which authority shall include the authority, in order to effectuate the purposes of the Plan but without amending the Plan, to make Awards or to modify outstanding Awards made to eligible natural Persons who are foreign nationals or are natural Persons who are employed outside the United States to reflect differences in local law, tax policy, or custom; provided that, notwithstanding the foregoing, no amendment, modification, or supplement of the terms of any outstanding Award shall, without the consent of the Grantee thereof, impair such Grantee’s rights under such Award; and

(g) make Substitute Awards.

3.3.2 Forfeiture; Recoupment.

The Committee may reserve the right in an Award Agreement to cause a forfeiture of the gain realized by a Grantee with respect to an Award thereunder on account of actions taken by, or failed to be taken by, such Grantee in violation or breach of, or in conflict with, any (a) employment agreement, (b) non-competition agreement, (c) agreement prohibiting solicitation of Employees or clients of the Company or an Affiliate, (d) confidentiality obligation with respect to the Company or an Affiliate, (e) policy or procedure of the Company or an Affiliate, (f) other agreement, or (g) other obligation of such Grantee to the Company or an Affiliate, as and to the extent specified in such Award Agreement. If the Grantee of an outstanding Award is an Employee of the Company or an Affiliate and such Grantee’s Service is terminated for Cause, the Committee may annul such Grantee’s outstanding Award as of the date of the Grantee’s termination of Service for Cause.

Any Award granted pursuant to the Plan shall be subject to mandatory repayment by the Grantee to the Company to the extent set forth in the Plan or an Award Agreement or to the extent the Grantee is, or in the future becomes, subject to (1) any Company or Affiliate “clawback” or recoupment policy that is adopted to comply with the requirements of any Applicable Laws, or (2) any Applicable Laws that impose mandatory recoupment, under circumstances set forth in such Applicable Laws.

3.4 No Repricing Without Stockholder Approval.

Except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, distribution (whether in the form of cash, shares of Stock, other securities, or other property), stock split, extraordinary dividend, recapitalization, Change in Control, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of shares of Stock, or other securities or similar transaction), the Company may not: (a) amend the terms of outstanding Options or SARs to reduce the Option Price or SAR Price, as applicable, of such outstanding Options or SARs; (b) cancel outstanding Options or SARs in exchange for, or in substitution of, Options or SARs with an Option Price or SAR Price, as applicable, that is less than the Option Price or SAR Price, as applicable, of the original Options or SARs; or (c) cancel outstanding Options or SARs with an Option Price or SAR Price, as applicable, above the current Fair Market Value in exchange for cash or other securities, in each case, unless such action (i) is subject to and approved by the Company’s stockholders or (ii) would not be deemed to be a repricing under the rules of any Stock Exchange or Securities Market on which the Stock is listed or publicly traded.

3.5 Deferral Arrangement.

The Committee may permit or require the deferral of any payment pursuant to any Award into a deferred compensation arrangement, subject to such rules and procedures as it may establish, which may include provisions for the payment or crediting of interest or Dividend Equivalent Rights and, in connection therewith, provisions for converting such credits into RSUs that comply with the requirements of Code § 409A and for restricting deferrals to comply with hardship distribution rules affecting tax-qualified retirement plans subject to Code § 401(k)(2)(B)(IV), provided that no Dividend Equivalent Rights may be granted in connection with, or related to, an Award of Options or SARs. Any such deferrals shall be made in a manner that complies with Code § 409A, including, if applicable, with respect to when a Separation from Service occurs.

3.6 Registration; Share Certificates.

Notwithstanding any provision of the Plan to the contrary, the ownership of the shares of Stock issued under the Plan may be evidenced in such a manner as the Committee, in its sole discretion, deems appropriate, including by book-entry or direct registration (including transaction advices) or the issuance of one or more share certificates.

4. STOCK SUBJECT TO THE PLAN

4.1 Number of Shares of Stock Available for Awards.

Subject to such additional shares of Stock as shall be available for issuance under the Plan pursuant to Section 4.2 and Section 4.3(c), and subject to adjustment pursuant to Article 16, the maximum number of shares of Stock reserved for issuance under the Plan shall be equal to 1,400,000 shares of Stock (the “Share Limit”). Such shares of Stock may be authorized and unissued shares of Stock, treasury shares of Stock, or any combination of the foregoing, as may be determined from time to time by the Board or by the Committee. Any of the shares of Stock reserved and available for issuance under the Plan may be used for any type of Award under the Plan, and any or all of the shares of Stock reserved for issuance under the Plan shall be available for issuance pursuant to Incentive Stock Options.

4.2 Adjustments in Authorized Shares of Stock.

In connection with mergers, reorganizations, separations, or other transactions to which Code § 424(a) applies, the Committee shall have the right to cause the Company to assume awards previously granted under a compensatory plan of another business entity that is a party to such transaction and to grant Substitute Awards under the Plan for such awards. The Share Limit pursuant to Section 4.1 shall be increased by the number of shares of Stock subject to any such assumed awards and Substitute Awards. Shares available for issuance under a stockholder-approved plan of a business entity that is a party to such transaction (as appropriately adjusted, if necessary, to reflect such transaction) may be used for Awards under the Plan and shall not reduce the number of shares of Stock otherwise available for issuance under the Plan, subject to applicable rules of any Stock Exchange or Securities Market on which the Stock is listed or publicly traded.

4.3 Share Usage.

(a) Shares of Stock covered by an Award shall be counted as used as of the Grant Date for purposes of calculating the number of shares of Stock available for issuance under Section 4.1.

(b) Any shares of Stock that are subject to Awards, including shares of Stock acquired through dividend reinvestment pursuant to Article 10, shall be counted against the Share Limit set forth in Section 4.1 as one share of Stock for every one share of Stock subject to an Award. The number of shares of Stock subject to an Award of SARs shall be counted against the Share Limit set forth in Section 4.1 as one share of Stock for every one share of Stock subject to such Award regardless of the number of shares of Stock actually issued to settle such SARs upon the exercise of the SARs. At least the target number of shares of Stock issuable under a Performance Award grant shall be counted against the Share Limit set forth in Section 4.1 as of the Grant Date, but such number shall be adjusted to equal the actual number of shares of Stock issued upon settlement of the Performance Award to the extent different from such target number of shares of Stock.

(c) If any shares of Stock covered by an Award granted under the Plan are not purchased or are forfeited or expire or if an Award otherwise terminates without delivery of any Stock subject thereto or is settled in cash in lieu of shares, then the number of shares of Stock counted against the Share Limit with respect to such Award shall, to the extent of any such forfeiture, termination, expiration, or settlement, again be available for making Awards under the Plan.

(d) The number of shares of Stock available for issuance under the Plan shall not be increased by the number of shares of Stock (i) tendered, withheld, or subject to an Award granted under the Plan surrendered in connection with the purchase of shares of Stock upon exercise of an Option, (ii) that were not issued upon the net settlement or net exercise of a Stock-settled SAR granted under the Plan, (iii) deducted or delivered from payment of an Award granted under the Plan in connection with the Company’s tax withholding obligations as provided in Section 18.3, or (iv) purchased by the Company with proceeds from Option exercises.

5. TERM; AMENDMENT AND TERMINATION

5.1 Term.

The Plan shall become effective as of the Effective Date, subject to approval of the Plan by the Company’s stockholders within 12 months of the Effective Date. Upon approval of the Plan by the Company’s stockholders, all Awards made under the Plan on or after the Effective Date shall be fully effective as if the stockholders of the Company had approved the Plan on the Effective Date. If the Stockholders do not approve the Plan within 12 months of the Effective Date, any Awards made under the Plan on or after the Effective Date shall not be exercisable, settleable, or deliverable, except to the extent such Awards could have otherwise been made under the Plan. The Plan shall terminate on the first to occur of (a) 11:59PM ET on the day before the tenth anniversary of the Effective Date, (b) the date determined in accordance with Section 5.2, and (c) the date determined in accordance with Section 16.3. Upon such termination of the Plan, all outstanding Awards shall continue to have full force and effect in accordance with the provisions of the terminated Plan and the applicable Award Agreement (or other documents evidencing such Awards).

5.2 Amendment, Suspension, and Termination.

The Board may, at any time and from time to time, amend, suspend, or terminate the Plan; provided that, with respect to Awards theretofore granted under the Plan, no amendment, suspension, or termination of the Plan shall, without the consent of any Grantee affected thereby, impair the rights or obligations under any such Award. The effectiveness of any amendment to the Plan shall be conditioned on approval of such amendment by the Company’s stockholders to the extent provided by the Board or required by Applicable Laws; provided that no amendment shall be made to the no-repricing provisions of Section 3.4, the Option pricing provisions of Section 8.1, or the SAR pricing provisions of Section 9.1 without the approval of the Company’s stockholders.

6. AWARD ELIGIBILITY AND LIMITATIONS

6.1 Eligible Grantees.

Subject to this Article 6, Awards may be made under the Plan to (a) any Service Provider, as the Committee shall determine and designate from time to time, and (b) any other individual whose participation in the Plan is determined to be in the best interests of the Company by the Committee.

6.2 Stand-Alone, Additional, Tandem, and Substitute Awards.

Subject to Section 3.4, Awards granted under the Plan may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with, or in substitution or exchange for, (a) any other Award, (b) any award granted under another plan of the Company, an Affiliate, or any business entity that has been a party to a transaction with the Company or an Affiliate, or (c) any other right of a Grantee to receive payment from the Company or an Affiliate. Such additional, tandem, exchange, or Substitute Awards may be granted at any time. If an Award is granted in substitution or exchange for another Award, or for an award granted under another plan of the Company, an Affiliate, or any business entity that has been a party to a transaction with the Company or an Affiliate, the Committee shall require the surrender of such other Award or award under such other plan in consideration for the grant of such exchange or Substitute Award. In addition, Awards may be granted in lieu of cash compensation, including in lieu of cash payments under other plans of the Company or an Affiliate. Notwithstanding Section 8.1 and Section 9.1, but subject to Section 3.4, the Option Price of an Option or the SAR Price of a SAR that is a Substitute Award may be less than 100% of the Fair Market Value of a share of Stock on the original Grant Date; provided that such Option Price or SAR Price is determined in accordance with the principles of Code § 424 for any Incentive Stock Option and consistent with Code § 409A for any other Option or SAR.

7. AWARD AGREEMENT

Each Award granted pursuant to the Plan shall be evidenced by an Award Agreement, which shall be in such form or forms as the Committee shall from time to time determine. Award Agreements utilized under the Plan from time to time or at the same time need not contain similar provisions but shall be consistent with the terms of the Plan. Each Award Agreement evidencing an Award of Options shall specify whether such Options are intended to be Nonqualified Stock Options or Incentive Stock Options, and, in the absence of such specification, such Options shall be deemed to constitute Nonqualified Stock Options. In the event of any inconsistency between the Plan and an Award Agreement, the provisions of the Plan shall control.

8. TERMS AND CONDITIONS OF OPTIONS

8.1 Option Price.

The Option Price of each Option shall be fixed by the Committee and stated in the Award Agreement evidencing such Option. Except in the case of Substitute Awards, the Option Price of each Option shall be at least the Fair Market Value of one share of Stock on the Grant Date; provided that, in the event that a Grantee is a Ten Percent Stockholder, the Option Price of an Option granted to such Grantee that is intended to be an Incentive Stock Option shall be not less than 110% of the Fair Market Value of one share of Stock on the Grant Date. In no case shall the Option Price of any Option be less than the par value of one share of Stock.

8.2 Vesting and Exercisability.

Subject to Sections 8.3 and 16.3, each Option granted under the Plan shall become vested and/or exercisable at such times and under such conditions as shall be determined by the Committee and stated in the Award Agreement, in another agreement with the Grantee, or otherwise in writing; provided that no Option shall be granted to Grantees who are entitled to overtime under Applicable Laws that shall vest or be exercisable within a six-month period starting on the Grant Date.

8.3 Term.

Each Option granted under the Plan shall terminate, and all rights to purchase shares of Stock thereunder shall cease, on the tenth anniversary of the Grant Date of such Option, or under such circumstances and on such date prior thereto as is set forth in the Plan or as may be fixed by the Committee and stated in the Award Agreement relating to such Option; provided that, in the event that the Grantee is a Ten Percent Stockholder, an Option granted to such Grantee that is intended to be an Incentive Stock Option shall not be exercisable after the fifth anniversary of the Grant Date of such Option; and provided, further, that, to the extent deemed necessary or appropriate by the Committee to reflect differences in local law, tax policy, or custom with respect to any Option granted to a Grantee who is a foreign national or is a natural Person who is employed outside the United States, such Option may terminate, and all rights to purchase shares of Stock thereunder may cease, upon the expiration of a period longer than ten years from the Grant Date of such Option as the Committee shall determine.

8.4 Termination of Service.

Each Award Agreement with respect to the grant of an Option shall set forth the extent to which the Grantee thereof, if at all, shall have the right to exercise such Option following termination of such Grantee’s Service. Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of Service.

8.5 Limitations on Exercise of Option.

Notwithstanding any provision of the Plan to the contrary, in no event may any Option be exercised, in whole or in part, after the occurrence of an event referred to in Article 16 that results in the termination of such Option.

8.6 Method of Exercise.

Subject to the terms of Article 14 and Section 18.3, an Option that is exercisable may be exercised by the Grantee’s delivery to the Company or its designee or agent of notice of exercise on any business day, at the Company’s principal office or the office of such designee or agent, on the form specified by the Company and in accordance with any additional procedures specified by the Committee. Such notice shall specify the number of shares of Stock with respect to which such Option is being exercised and shall be accompanied by payment in full of the Option Price of the shares of Stock for which such Option is being exercised, plus the amount (if any) of federal and/or other taxes that the Company may, in its judgment, be required to withhold with respect to the exercise of such Option.

8.7 Rights of Holders of Options.

Unless otherwise stated in the applicable Award Agreement, a Grantee or other Person holding or exercising an Option shall have none of the rights of a stockholder of the Company (for example, the right to receive cash or dividend payments or distributions attributable to the shares of Stock subject to such Option, to direct the voting of the shares of Stock subject to such Option, or to receive notice of any meeting of the Company’s stockholders) until the shares of Stock subject thereto are fully paid and issued to such Grantee or other Person. Except as provided in Article 16, no adjustment shall be made for dividends, distributions, or other rights with respect to any shares of Stock subject to an Option for which the record date is prior to the date of issuance of such shares of Stock.

8.8 Delivery of Stock.

Promptly after the exercise of an Option by a Grantee and the payment in full of the Option Price with respect thereto, such Grantee shall be entitled to receive such evidence of such Grantee’s ownership of the shares of Stock subject to such Option as shall be consistent with Section 3.6.

8.9 Transferability of Options.

Except as provided in Section 8.10, during the lifetime of a Grantee of an Option, only such Grantee (or, in the event of such Grantee’s legal incapacity or incompetency, such Grantee’s guardian or legal representative) may exercise such Option. Except as provided in Section 8.10, no Option shall be assignable or transferable by the Grantee to whom it is granted, other than by will or the laws of descent and distribution.

8.10 Family Transfers.

If authorized in the applicable Award Agreement and by the Committee, in its sole discretion, a Grantee may transfer, not for value, all or part of an Option that is not an Incentive Stock Option to any Family Member. For the purpose of this Section 8.10, a transfer “not for value” is a transfer that is (a) a gift, (b) a transfer under a domestic relations order in settlement of marital property rights, or (c) unless Applicable Laws do not permit such transfer, a transfer to an entity in which more than 50% of the voting interests are owned by Family Members (and/or the Grantee) in exchange for an interest in such entity. Following a transfer under this Section 8.10, any such Option shall continue to be subject to the same terms and conditions as were applicable thereto immediately prior to such transfer. Subsequent transfers of transferred Options shall be prohibited except to Family Members of the original Grantee in accordance with this Section 8.10 or by will or the laws of descent and distribution. The provisions of Section 8.4 relating to termination of Service shall continue to be applied with respect to the original Grantee of the Option, following which such Option shall be exercisable by the transferee only to the extent, and for the periods specified, in Section 8.4.

8.11 Limitations on Incentive Stock Options.

An Option shall constitute an Incentive Stock Option only (a) if the Grantee of such Option is an Employee of the Company or any corporate Subsidiary, (b) to the extent specifically provided in the related Award Agreement, and (c) to the extent that the aggregate Fair Market Value (determined at the time such Option is granted) of the shares of Stock with respect to which all Incentive Stock Options held by such Grantee become exercisable for the first time during any calendar year (under the Plan and all other plans of the Company and its Affiliates) does not exceed $100,000. Except to the extent provided in the regulations under Code § 422, this limitation shall be applied by taking Options into account in the order in which they were granted.

8.12 Notice of Disqualifying Disposition.

If any Grantee shall make any disposition of shares of Stock issued pursuant to the exercise of an Incentive Stock Option under the circumstances provided in Code § 421(b) (relating to certain disqualifying dispositions), such Grantee shall notify the Company of such disposition immediately but in no event later than ten days thereafter.

9. TERMS AND CONDITIONS OF SARS

9.1 Right to Payment and SAR Price.

A SAR shall confer on the Grantee to whom it is granted a right to receive, upon exercise thereof, the excess of (a) the Fair Market Value of one share of Stock on the date of exercise, over (b) the SAR Price as determined by the Committee. The Award Agreement for a SAR shall specify the SAR Price, which shall be no less than the Fair Market Value of one share of Stock on the Grant Date of such SAR. SARs may be granted in tandem with all or part of an Option granted under the Plan or at any subsequent time during the term of such Option, in combination with all or any part of any other Award, or without regard to any Option or other Award; provided that a SAR that is granted in tandem with all or part of an Option shall have the same term, and expire at the same time, as the related Option; provided, further, that a SAR that is granted subsequent to the Grant Date of a related Option must have a SAR Price that is no less than the Fair Market Value of one share of Stock on the Grant Date of such SAR.

9.2 Other Terms.

The Committee shall determine, on the Grant Date or thereafter, the time or times at which, and the circumstances under which, a SAR may be exercised in whole or in part (including based on achievement of performance goals and/or future Service requirements); the time or times at which SARs shall cease to be or become exercisable following termination of Service or upon other conditions; the method of exercise, method of settlement, form of consideration payable in settlement, method by or forms in which shares of Stock shall be delivered or deemed to be delivered to Grantees, whether or not a SAR shall be granted in tandem or in combination with any other Award; and any and all other terms and conditions of any SAR; provided that no SARs shall be granted to Grantees who are entitled to overtime under Applicable Laws that shall vest or be exercisable within a six-month period starting on the Grant Date.

9.3 Term.

Each SAR granted under the Plan shall terminate, and all rights thereunder shall cease, on the tenth anniversary of the Grant Date of such SAR or under such circumstances and on such date prior thereto as is set forth in the Plan or as may be fixed by the Committee and stated in the Award Agreement relating to such SAR.

9.4 Rights of Holders of SARs.

Unless otherwise stated in the applicable Award Agreement, a Grantee or other Person holding or exercising a SAR shall have none of the rights of a stockholder of the Company (for example, the right to receive cash or dividend payments or distributions attributable to the shares of Stock underlying such SAR, to direct the voting of the shares of Stock underlying such SAR, or to receive notice of any meeting of the Company’s stockholders) until the shares of Stock underlying such SAR, if any, are issued to such Grantee or other Person. Except as provided in Article 16, no adjustment shall be made for dividends, distributions, or other rights with respect to any shares of Stock underlying a SAR for which the record date is prior to the date of issuance of such shares of Stock, if any.

9.5 Transferability of SARs.

Except as provided in Section 9.6, during the lifetime of a Grantee of a SAR, only the Grantee (or, in the event of such Grantee’s legal incapacity or incompetency, such Grantee’s guardian or legal representative) may exercise such SAR. Except as provided in Section 9.6, no SAR shall be assignable or transferable by the Grantee to whom it is granted, other than by will or the laws of descent and distribution.

9.6 Family Transfers.

If authorized in the applicable Award Agreement and by the Committee, in its sole discretion, a Grantee may transfer, not for value, all or part of a SAR to any Family Member. For the purpose of this Section 9.6, a transfer “not for value” is a transfer that is (a) a gift, (b) a transfer under a domestic relations order in settlement of marital property rights, or (c) unless Applicable Laws do not permit such transfer, a transfer to an entity in which more than 50% of the voting interests are owned by Family Members (and/or the Grantee) in exchange for an interest in such entity. Following a transfer under this Section 9.6, any such SAR shall continue to be subject to the same terms and conditions as were in effect immediately prior to such transfer. Subsequent transfers of transferred SARs shall be prohibited except to Family Members of the original Grantee in accordance with this Section 9.6 or by will or the laws of descent and distribution.

10. TERMS AND CONDITIONS OF RESTRICTED STOCK AND RSUS

10.1 Grant of Restricted Stock and RSUs.

Awards of Restricted Stock and RSUs may be made for consideration or for no consideration, other than the par value of the shares of Stock, which shall be deemed paid by past Service or, if so provided in the related Award Agreement or a separate agreement, the promise by the Grantee to perform future Service to the Company or an Affiliate.

10.2 Restrictions.

At the time a grant of Restricted Stock or RSUs is made, the Committee may, in its sole discretion, (a) establish a Restricted Period applicable to such Restricted Stock or RSUs and (b) prescribe restrictions in addition to or other than the expiration of the Restricted Period, including the achievement of corporate or individual performance goals, which may be applicable to all or any portion of such Restricted Stock or RSUs as provided in Article 13. Awards of Restricted Stock and RSUs may not be sold, transferred, assigned, pledged, or otherwise encumbered or disposed of during the Restricted Period or prior to the satisfaction of any other restrictions prescribed by the Committee with respect to such Awards.

10.3 Registration; Restricted Stock Certificates.

Pursuant to Section 3.6, to the extent that ownership of Restricted Stock is evidenced by a book-entry registration or direct registration (including transaction advices), such registration shall be notated to evidence the restrictions imposed on such Award of Restricted Stock under the Plan and the applicable Award Agreement. Subject to Section 3.6 and the immediately following sentence, the Company may issue, in the name of each Grantee to whom Restricted Stock has been granted, certificates representing the total number of shares of Restricted Stock granted to the Grantee, as soon as reasonably practicable after the Grant Date of such Restricted Stock. The Committee may provide in an Award Agreement with respect to an Award of Restricted Stock that either (a) the Secretary of the Company shall hold such certificates for such Grantee’s benefit until such time as such shares of Restricted Stock are forfeited to the Company or the restrictions applicable thereto lapse and such Grantee shall deliver a stock power to the Company with respect to each certificate, or (b) such certificates shall be delivered to such Grantee, provided that such certificates shall bear legends that comply with Applicable Laws and make appropriate reference to the restrictions imposed on such Award of Restricted Stock under the Plan and such Award Agreement.

10.4 Rights of Holders of Restricted Stock.

Unless the Committee provides otherwise in an Award Agreement and subject to the restrictions set forth in the Plan, any applicable Company program, and the applicable Award Agreement, holders of Restricted Stock shall have the right to vote such shares of Restricted Stock and the right to receive any dividend payments or distributions declared or paid with respect to such shares of Restricted Stock. The Committee may provide in an Award Agreement evidencing a grant of Restricted Stock that (a) any cash dividend payments or distributions paid on Restricted Stock shall be reinvested in shares of Stock, which may or may not be subject to the same vesting conditions and restrictions as applicable to such underlying shares of Restricted Stock or (b) any dividend payments or distributions declared or paid on shares of Restricted Stock shall only be made or paid upon satisfaction of the vesting conditions and restrictions applicable to such shares of Restricted Stock. Dividend payments or distributions declared or paid on shares of Restricted Stock that vest or are earned based on the achievement of performance goals shall not vest unless such performance goals for such shares of Restricted Stock are achieved, and if such performance goals are not achieved, the Grantee of such shares of Restricted Stock shall promptly forfeit and, to the extent already paid or distributed, repay to the Company such dividend payments or distributions. All stock dividend payments or distributions, if any, received by a Grantee with respect to shares of Restricted Stock as a result of any stock split, stock dividend, combination of stock, or other similar transaction shall be subject to the same vesting conditions and restrictions as applicable to such underlying shares of Restricted Stock.

10.5 Rights of Holders of RSUs.

10.5.1 Voting and Dividend Rights.

Holders of RSUs shall have no rights as stockholders of the Company (for example, the right to receive dividend payments or distributions attributable to the shares of Stock underlying such RSUs to direct the voting of the shares of Stock underlying such RSUs, or to receive notice of any meeting of the Company’s stockholders). The Committee may provide in an Award Agreement evidencing a grant of RSUs that the holder of such RSUs shall be entitled to receive Dividend Equivalent Rights, in accordance with Article 12.

10.5.2 Creditor’s Rights.

A holder of RSUs shall have no rights other than those of a general unsecured creditor of the Company. RSUs represent unfunded and unsecured obligations of the Company, subject to the terms and conditions of the applicable Award Agreement.

10.6 Termination of Service.

Unless the Committee provides otherwise in an Award Agreement, in another agreement with the Grantee, or otherwise in writing after such Award Agreement is issued, but prior to termination of Grantee’s Service, upon the termination of such Grantee’s Service, any Restricted Stock or RSUs held by such Grantee that have not vested, or with respect to which all applicable restrictions and conditions have not lapsed, shall immediately be deemed forfeited. Upon forfeiture of such Restricted Stock or RSUs, the Grantee thereof shall have no further rights with respect thereto, including any right to vote such Restricted Stock or any right to receive dividends or Dividend Equivalent Rights, as applicable, with respect to such Restricted Stock or RSUs.

10.7 Purchase of Restricted Stock and Shares of Stock Subject to RSUs.

The Grantee of an Award of Restricted Stock or vested RSUs shall be required, to the extent required by Applicable Laws, to purchase such Restricted Stock or the shares of Stock subject to such vested RSUs from the Company at a purchase price equal to the greater of (a) the aggregate par value of the shares of Stock represented by such Restricted Stock or such vested RSUs or (b) the purchase price, if any, specified in the Award Agreement relating to such Restricted Stock or such vested RSUs. Such purchase price shall be payable in a form provided in Article 14 or, in the sole discretion of the Committee, in consideration for Service rendered or to be rendered by the Grantee to the Company or an Affiliate.

10.8 Delivery of Shares of Stock.

Upon the expiration or termination of any Restricted Period and the satisfaction of any other conditions prescribed by the Committee, including, without limitation, any performance goals or delayed delivery period, the restrictions applicable to Restricted Stock or RSUs settled in shares of Stock shall lapse, and, unless otherwise provided in the applicable Award Agreement, a book-entry or direct registration (including transaction advices) or a certificate evidencing ownership of such shares of Stock shall, consistent with Section 3.6, be issued, free of all such restrictions, to the Grantee thereof or such Grantee’s beneficiary or estate, as the case may be. Neither the Grantee, nor the Grantee’s beneficiary or estate, shall have any further rights with regard to an RSU once the shares of Stock represented by such RSU have been delivered in accordance with this Section 10.8.

11. TERMS AND CONDITIONS OF OTHER EQUITY-BASED AWARDS

The Committee may, in its sole discretion, grant Awards in the form of Other Equity-Based Awards, as deemed by the Committee to be consistent with the purposes of the Plan. Awards granted pursuant to this Article 11 may be granted with vesting, value, or payment contingent on the achievement of one or more performance goals. The Committee shall determine the terms and conditions of Other Equity-Based Awards on the Grant Date or thereafter. Unless the Committee provides otherwise in an Award Agreement, in another agreement with the Grantee, or otherwise in writing after such Award Agreement is issued, but prior to termination of Grantee’s Service, upon the termination of a Grantee’s Service, any Other Equity-Based Awards held by such Grantee that have not vested, or with respect to which all applicable restrictions and conditions have not lapsed, shall immediately be deemed forfeited. Upon forfeiture of any Other Equity-Based Award, the Grantee thereof shall have no further rights with respect to such Other Equity-Based Award.

12. TERMS AND CONDITIONS OF DIVIDEND EQUIVALENT RIGHTS

12.1 Dividend Equivalent Rights.

A Dividend Equivalent Right may be granted hereunder, provided that no Dividend Equivalent Rights may be granted in connection with, or related to, an Award of Options or SARs. The terms and conditions of Dividend Equivalent Rights shall be specified in the Award Agreement therefor. Dividend equivalents credited to the holder of a Dividend Equivalent Right may be paid currently (with or without being subject to forfeiture or a repayment obligation) or may be deemed to be reinvested in additional shares of Stock or Awards, which may thereafter accrue additional Dividend Equivalent Rights (with or without being subject to forfeiture or a repayment obligation). Any such reinvestment shall be at the Fair Market Value thereof on the date of such reinvestment. Dividend Equivalent Rights may be settled in cash, shares of Stock, or a combination thereof, in a single installment or in multiple installments, all as determined in the sole discretion of the Committee. A Dividend Equivalent Right granted as a component of another Award may (a) provide that such Dividend Equivalent Right shall be settled upon exercise, settlement, or payment of, or lapse of restrictions on, such other Award and that such Dividend Equivalent Right shall expire or be forfeited or annulled under the same conditions as such other Award or (b) contain terms and conditions that are different from the terms and conditions of such other Award, provided that Dividend Equivalent Rights credited pursuant to a Dividend Equivalent Right granted as a component of another Award that vests or is earned based on the achievement of performance goals shall not vest unless such performance goals for such underlying Award are achieved, and if such performance goals are not achieved, the Grantee of such Dividend Equivalent Rights shall promptly forfeit and, to the extent already paid or distributed, repay to the Company payments or distributions made in connection with such Dividend Equivalent Rights.

12.2 Termination of Service.

Unless the Committee provides otherwise in an Award Agreement, in another agreement with the Grantee, or otherwise in writing after such Award Agreement is issued, a Grantee’s rights in all Dividend Equivalent Rights shall automatically terminate upon such Grantee’s termination of Service for any reason.

13. TERMS AND CONDITIONS OF PERFORMANCE AWARDS

13.1 Grant of Performance Awards.

Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Performance Awards in such amounts and on such terms as the Committee shall determine.

13.2 Value of Performance Awards.

Each grant of a Performance Award shall have an initial cash value or an actual or target number of shares of Stock that is established by the Committee as of the Grant Date. The Committee shall set performance goals in its discretion that, depending on the extent to which they are achieved, shall determine the amount of cash or value or number of shares of Stock that shall be paid out to the Grantee thereof.

13.3 Earning of Performance Awards.

Subject to the terms of the Plan, after the applicable Performance Period has ended, the Grantee of a Performance Award shall be entitled to receive a payout of the value earned under such Performance Award by such Grantee over such Performance Period, to be determined based on the extent to which the corresponding performance goals have been achieved.

13.4 Form and Timing of Payment of Performance Awards.

Payment of the value earned under a Performance Award shall be made, as determined by the Committee, in the form, at the time, and in the manner described in the applicable Award Agreement. Subject to the terms of the Plan, the Committee, in its sole discretion, (a) may pay the value earned under Performance Awards in the form of cash, shares of Stock, other Awards, or a combination thereof, including shares of Stock and/or Awards that are subject to any restrictions deemed appropriate by the Committee, and (b) shall pay the value earned under Performance Awards at the close of the applicable Performance Period, or as soon as reasonably practicable after the Committee has determined that the performance goal or goals relating thereto have been achieved; provided that, unless specifically provided in the Award Agreement for such Performance Awards, such payment shall occur no later than the 15^th day of the third month following the end of the calendar year in which such Performance Period ends. Any shares of Stock paid out under a Performance Award may be granted subject to any restrictions deemed appropriate by the Committee. The determination of the Committee with respect to the form of payout of such Awards shall be set forth in the Award Agreement for the Performance Award.

13.5 Performance Conditions.

The right of a Grantee to exercise or receive a grant or settlement of any Performance Award, and the timing thereof, may be subject to the achievement of such Performance Measures as may be specified by the Committee. The Committee may use such business criteria and other measures of performance as it may deem appropriate in establishing any performance conditions.

13.6 Performance Measures.

Performance under any Performance Measures (a) may be used to measure the performance of (i) the Company, its Subsidiaries, and other Affiliates as a whole, (ii) the Company, any Subsidiary, and/or any other Affiliate or any combination thereof, or (iii) any one or more business units or operating segments of the Company, any Subsidiary, and/or any other Affiliate, in each case as the Committee, in its sole discretion, deems appropriate and (b) may be compared to the performance of one or more other companies or one or more published or special indices designated or approved by the Committee for such comparison, as the Committee, in its sole discretion, deems appropriate. In addition, the Committee, in its sole discretion, may select a Performance Measure for comparison to performance under one or more stock market indices designated or approved by the Committee. The Committee shall also have the authority to provide for accelerated vesting of any Performance Award based on the achievement of performance goals pursuant to any Performance Measures. For the avoidance of doubt, nothing herein is intended to prevent the Committee from granting Awards subject to subjective performance conditions (including individual performance conditions).

14. FORMS OF PAYMENT

14.1 General Rule.

Payment of the Option Price for the shares of Stock purchased pursuant to the exercise of an Option or the purchase price, if any, for Restricted Stock or vested RSUs shall be made in cash or in cash equivalents acceptable to the Company.

14.2 Surrender of Shares of Stock.

To the extent that the applicable Award Agreement so provides, payment of the Option Price for shares of Stock purchased pursuant to the exercise of an Option or the purchase price, if any, for Restricted Stock or vested RSUs may be made all or in part through the tender or attestation to the Company of shares of Stock, which shall be valued, for purposes of determining the extent to which such Option Price or purchase price has been paid thereby, at their Fair Market Value on the date of such tender or attestation.

14.3 Cashless Exercise.

To the extent permitted by Applicable Laws and to the extent the Award Agreement so provides, payment of the Option Price for shares of Stock purchased pursuant to the exercise of an Option may be made all or in part by delivery (on a form acceptable to the Committee) of an irrevocable direction to a licensed securities broker acceptable to the Company to sell shares of Stock and to deliver all or part of the proceeds of such sale to the Company in payment of such Option Price and/or any withholding taxes described in Section 18.3.

14.4 Other Forms of Payment.

To the extent that the applicable Award Agreement so provides and/or unless otherwise specified in an Award Agreement, payment of the Option Price for shares of Stock purchased pursuant to exercise of an Option or the purchase price, if any, for Restricted Stock or vested RSUs may be made in any other form that is consistent with Applicable Laws, including (a) with respect to Restricted Stock or vested RSUs only, Service rendered or to be rendered by the Grantee thereof to the Company or an Affiliate and (b) with the consent of the Company, by withholding the number of shares of Stock that would otherwise vest or be issuable in an amount equal in value to the Option Price or purchase price or the required tax withholding amount.

15. REQUIREMENTS OF LAW

15.1 General.

The Company shall not be required to offer, sell, or issue any shares of Stock under any Award, whether pursuant to the exercise of an Option, a SAR, or otherwise, if the offer, sale, or issuance of such shares of Stock would constitute a violation by the Grantee, the Company, an Affiliate, or any other Person of any provision of the Company’s certificate of incorporation or bylaws or of Applicable Laws, including any federal or state securities laws or regulations. If at any time the Company shall determine, in its discretion, that the listing, registration, or qualification of any shares of Stock subject to an Award on any Stock Exchange or Securities Market or under any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the offering, sale, issuance, or purchase of shares of Stock in connection with any Award, no shares of Stock may be offered, sold, or issued to the Grantee or any other Person under such Award, whether pursuant to the exercise of an Option, a SAR, or otherwise, unless such listing, registration, or qualification shall have been effected or obtained free of any conditions not acceptable to the Company, and any delay caused thereby shall in no way affect the date of termination of such Award. Without limiting the generality of the foregoing, upon the exercise of any Option or any SAR that may be settled in shares of Stock or the delivery of any shares of Stock underlying an Award, unless a registration statement under the Securities Act is in effect with respect to the shares of Stock subject to such Award, the Company shall not be required to offer, sell, or issue such shares of Stock unless the Committee shall have received evidence satisfactory to it that the Grantee or any other Person exercising such Option or SAR or accepting delivery of such shares may acquire such shares of Stock pursuant to an exemption from registration under the Securities Act. Any determination by the Committee in connection with the foregoing shall be final, binding, and conclusive. The Company may register, but shall in no event be obligated to register, any shares of Stock or other securities issuable pursuant to the Plan pursuant to the Securities Act. The Company shall not be obligated to take any affirmative action in order to cause the exercise of an Option or a SAR or the issuance of shares of Stock or other securities issuable pursuant to the Plan or any Award to comply with any Applicable Laws. As to any jurisdiction that expressly imposes the requirement that an Option or SAR that may be settled in shares of Stock shall not be exercisable until the shares of Stock subject to such Option or SAR are registered under the securities laws thereof or are exempt from such registration, the exercise of such Option or SAR under circumstances in which the laws of such jurisdiction apply shall be deemed to be conditioned on the effectiveness of such registration or the availability of such an exemption.

15.2 Rule 16b-3.

During any time when the Company has any class of common equity securities registered under Exchange Act § 12, it is the intention of the Company that Awards pursuant to the Plan and the exercise of Options and SARs granted hereunder that would otherwise be subject to Exchange Act § 16(b) shall qualify for the exemption provided by Rule 16b-3 under the Exchange Act. To the extent that any provision of the Plan or action by the Committee does not comply with the requirements of such Rule 16b-3, such provision or action shall be deemed inoperative with respect to such Awards to the extent permitted by Applicable Laws and deemed advisable by the Committee and shall not affect the validity of the Plan. In the event that such Rule 16b-3 is revised or replaced, the Committee may exercise its discretion to modify the Plan in any respect necessary or advisable in its judgment to satisfy the requirements of, or to permit the Company to avail itself of the benefits of, the revised exemption or its replacement.

16. EFFECT OF CHANGES IN CAPITALIZATION

16.1 Changes in Stock.

If the number of outstanding shares of Stock is increased or decreased or the shares of Stock are changed into or exchanged for a different number of shares or kind of Capital Stock or other securities of the Company on account of any recapitalization, reclassification, stock split, reverse stock split, spin-off, combination of stock, exchange of stock, stock dividend or other distribution payable in capital stock, or other increase or decrease in shares of Stock effected without receipt of consideration by the Company occurring after the Effective Date, the number and kinds of shares of Capital Stock for which grants of Options and other Awards may be made under the Plan, including the Share Limit set forth in Section 4.1, which includes the number and kinds of issued shares of Capital Stock by which the Plan reserve may be increased annually, shall be adjusted proportionately and accordingly by the Committee. In addition, the number and kind of shares of Capital Stock for which Awards are outstanding shall be adjusted proportionately and accordingly by the Committee so that the proportionate interest of the Grantee therein immediately following such event shall, to the extent practicable, be the same as immediately before such event. Any such adjustment in outstanding Options or SARs shall not change the aggregate Option Price or SAR Price payable with respect to shares that are subject to the unexercised portion of such outstanding Options or SARs, as applicable, but shall include a corresponding proportionate adjustment in the per share Option Price or SAR Price, as the case may be. The conversion of any convertible securities of the Company shall not be treated as an increase in shares effected without receipt of consideration. Notwithstanding the foregoing, in the event of any distribution to the Company’s stockholders of securities of any other entity or other assets (including an extraordinary dividend, but excluding a non-extraordinary dividend, declared and paid by the Company) without receipt of consideration by the Company, the Board or the Committee constituted pursuant to Section 3.1.2 shall, in such manner as the Board or the Committee deems appropriate, adjust (a) the number and kind of shares of Capital Stock subject to outstanding Awards and/or (b) the aggregate and per share Option Price of outstanding Options and the aggregate and per share SAR Price of outstanding SARs as required to reflect such distribution.

16.2 Transactions That Do Not Constitute a Change in Control.

Subject to Section 16.3, if the Company shall be the surviving entity in any reorganization, merger, or consolidation of the Company with one or more other entities that does not constitute a Change in Control, any Award theretofore granted pursuant to the Plan shall pertain to and apply to the Capital Stock to which a holder of the number of shares of Stock subject to such Award would have been entitled immediately following such reorganization, merger, or consolidation, with a corresponding proportionate adjustment of the per share Option Price or SAR Price of any outstanding Option or SAR so that the aggregate Option Price or SAR Price thereafter shall be the same as the aggregate Option Price or SAR Price of the shares of Stock remaining subject to the Option or SAR as in effect immediately prior to such reorganization, merger, or consolidation. Subject to any contrary language in an Award Agreement, in another agreement with the Grantee, or as otherwise set forth in writing, any restrictions applicable to such Award shall apply as well to any replacement shares of Capital Stock subject to such Award received by the Grantee as a result of such reorganization, merger, or consolidation. In the event of any reorganization, merger, or consolidation of the Company referred to in this Section 16.2, Performance Awards shall be adjusted (including any adjustment to the Performance Measures or other performance goals applicable to such Awards deemed appropriate by the Committee) so as to apply to the Capital Stock that a holder of the number of shares of Stock subject to the Performance Awards would have been entitled to receive immediately following such reorganization, merger, or consolidation.

16.3 Change in Control in which Awards are not Assumed.

Except as otherwise provided in the applicable Award Agreement, in another agreement with the Grantee, or as otherwise set forth in writing, upon the occurrence of a Change in Control in which outstanding Awards are not being assumed or continued, the following provisions shall apply to such Awards, to the extent not assumed or continued:

(a) Immediately prior to the occurrence of such Change in Control, in each case with the exception of Performance Awards, all outstanding shares of Restricted Stock and all RSUs and Dividend Equivalent Rights shall be deemed to have vested, and all shares of Stock and/or cash subject to such Awards shall be delivered; and either or both of the following actions shall be taken:

(i) At least 15 days prior to the scheduled consummation of such Change in Control, all Options and SARs outstanding hereunder shall become immediately exercisable and shall remain exercisable for a period of 15 days. Any exercise of an Option or SAR during this 15-day period shall be conditioned on the consummation of the applicable Change in Control and shall be effective only immediately before the consummation thereof, and upon consummation of such Change in Control, the Plan and all outstanding but unexercised Options and SARs shall terminate, with or without consideration (including, without limitation, consideration in accordance with clause (ii)) as determined by the Committee in its sole discretion. The Committee shall send notice of an event that shall result in such a termination to all Persons who hold Options and SARs not later than the time at which the Company gives notice thereof to its stockholders.

(ii) The Committee may elect, in its sole discretion, to cancel any outstanding Awards of Options, SARs, Restricted Stock, RSUs or Dividend Equivalent Rights and pay or deliver, or cause to be paid or delivered, to the holder thereof an amount in cash or Capital Stock having a value (as determined by the Committee acting in good faith), in the case of Restricted Stock, RSUs, and Dividend Equivalent Rights (for shares of Stock subject thereto), equal to the formula or fixed price per share paid to holders of shares of Stock pursuant to such Change in Control and, in the case of Options or SARs, equal to the product of the number of shares of Stock subject to such Options or SARs multiplied by the amount, if any, by which (1) the formula or fixed price per share paid to holders of shares of Stock pursuant to such transaction exceeds (2) the Option Price or SAR Price applicable to such Options or SARs.

(b) For Performance Awards, if less than half of the Performance Period has lapsed, such Awards shall be treated as though the target performance thereunder has been achieved. If at least half of the Performance Period has lapsed, actual performance to date shall be determined as of a date reasonably proximate to the date of consummation of the Change in Control as determined by the Committee, in its sole discretion, and that level of performance thus determined shall be treated as achieved immediately prior to occurrence of the Change in Control. For purposes of the preceding sentence, if, based on the discretion of the Committee, actual performance is not determinable, the Performance Awards shall be treated as though the target performance has been achieved. After application of this Section 16.3(b), if any Awards arise from application of this Article 16, such Awards shall be settled under the applicable provision of Section 16.3(a).

16.4 Change in Control in which Awards are Assumed.

Except as otherwise provided in the applicable Award Agreement, in another agreement with the Grantee, or as otherwise set forth in writing, upon the occurrence of a Change in Control in which outstanding Awards are being assumed or continued, the following provisions shall apply to such Award, to the extent assumed or continued:

The Plan and the Options, SARs, Restricted Stock, RSUs, Dividend Equivalent Rights, and Other Equity-Based Awards granted under the Plan shall continue in the manner and under the terms so provided in the event of any Change in Control to the extent that provision is made in writing in connection with such Change in Control for the assumption or continuation of such Options, SARs, Restricted Stock, RSUs, Dividend Equivalent Rights, and Other Equity-Based Awards, or for the substitution for such Options, SARs, Restricted Stock, RSUs, Dividend Equivalent Rights, and Other Equity-Based Awards of new stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, and other equity-based awards relating to the Capital Stock of a successor entity, or a parent or subsidiary thereof, with appropriate adjustments as to the number of shares (disregarding any consideration that is not common stock) and exercise prices of options and stock appreciation rights.

16.5 Adjustments.

Adjustments under this Article 16 related to shares of Stock or other Capital Stock of the Company shall be made by the Committee, whose determination in that respect shall be final, binding, and conclusive. No fractional shares or other securities shall be issued pursuant to any such adjustment, and any fractions resulting from any such adjustment shall be eliminated in each case by rounding downward to the nearest whole share. The Committee may provide in the applicable Award Agreement as of the Grant Date, in another agreement with the Grantee, or otherwise in writing at any time thereafter with the consent of the Grantee, for different provisions to apply to an Award in place of those provided in Sections 16.1, 16.2, 16.3, and 16.4. This Article 16 shall not limit the Committee’s ability to provide for alternative treatment of Awards outstanding under the Plan in the event of a change in control event involving the Company that is not a Change in Control.

16.6 No Limitations on Company.

The making of Awards pursuant to the Plan shall not affect or limit in any way the right or power of the Company to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure or to merge, consolidate, dissolve, or liquidate, or to sell or transfer all or any part of its business or assets (including all or any part of the business or assets of any Subsidiary or other Affiliate) or to engage in any other transaction or activity.

17. PARACHUTE LIMITATIONS

If any Grantee is a Disqualified Individual, then, notwithstanding any other provision of the Plan or of any Other Agreement to the contrary and notwithstanding any Benefit Arrangement, any right of such Grantee to any exercise, vesting, payment, or benefit under the Plan shall be reduced or eliminated:

(a) to the extent that such right to exercise, vesting, payment, or benefit, taking into account all other rights, payments, or benefits to or for the Grantee under the Plan, all Other Agreements, and all Benefit Arrangements, would cause any exercise, vesting, payment, or benefit to such Grantee under the Plan to be considered a Parachute Payment; and

(b) if, as a result of receiving such Parachute Payment, the aggregate after-tax amounts received by the Grantee from the Company under the Plan, all Other Agreements, and all Benefit Arrangements would be less than the maximum after-tax amount that could be received by the Grantee without causing any such payment or benefit to be considered a Parachute Payment.

Except as required by Code § 409A or to the extent that Code § 409A permits discretion, the Committee shall have the right, in the Committee’s sole discretion, to designate those rights, payments, or benefits under the Plan, all Other Agreements, and all Benefit Arrangements that should be reduced or eliminated so as to avoid having such rights, payments, or benefits be considered a Parachute Payment; provided, that, to the extent any payment or benefit constitutes deferred compensation under Code § 409A, in order to comply with Code § 409A, except as otherwise provided in an applicable agreement between a Grantee and the Company or an Affiliate, the Company shall instead accomplish such reduction by first reducing or eliminating any cash payments (with the payments to be made furthest in the future being reduced first), then by reducing or eliminating any accelerated vesting of Performance Awards, then by reducing or eliminating any accelerated vesting of Options or SARs, then by reducing or eliminating any accelerated vesting of Restricted Stock or RSUs, then by reducing or eliminating any other remaining Parachute Payments.

18. GENERAL PROVISIONS

18.1 Disclaimer of Rights.

No provision in the Plan, any Award, or any Award Agreement shall be construed (a) to confer on any individual the right to remain in the Service of the Company or an Affiliate, (b) to interfere in any way with any contractual or other right or authority of the Company or an Affiliate either to increase or decrease the compensation or other payments to any Person at any time, or (c) to terminate any Service or other relationship between any Person and the Company or an Affiliate. In addition, notwithstanding any provision of the Plan to the contrary, unless otherwise stated in the applicable Award Agreement, in another agreement with the Grantee, or otherwise in writing, no Award granted under the Plan shall be affected by any change of duties or position of the Grantee thereof, so long as such Grantee continues to provide Service. The obligation of the Company to pay any benefits pursuant to the Plan shall be interpreted as a contractual obligation to pay only those amounts provided herein, in the manner and under the conditions prescribed herein. The Plan and Awards shall in no way be interpreted to require the Company to transfer any amounts to a third-party trustee or otherwise to hold any amounts in trust or escrow for payment to any Grantee or beneficiary under the terms of the Plan.

18.2 Nonexclusivity of the Plan.

Neither the adoption of the Plan nor the submission of the Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the right and authority of the Board or the Committee to adopt such other incentive compensation arrangements (which arrangements may be applicable either generally to a class or classes of individuals or specifically to a particular individual or particular individuals) as the Board or the Committee in their discretion determine desirable.

18.3 Withholding Taxes.

The Company or an Affiliate, as the case may be, shall have the right to deduct from payments of any kind otherwise due to a Grantee any federal, state, or local taxes of any kind required by Applicable Laws to be withheld with respect to the vesting of or other lapse of restrictions applicable to an Award or upon the issuance of any shares of Stock upon the exercise of an Option or pursuant to any other Award. At the time of such vesting, lapse of restrictions, or exercise, the Grantee shall pay in cash to the Company or an Affiliate, as the case may be, any amount that the Company or such Affiliate may reasonably determine to be necessary to satisfy such withholding obligation; provided that if there is a same-day sale of shares of Stock subject to an Award, the Grantee shall pay such withholding obligation on the day on which such same-day sale is completed. Subject to the prior approval of the Company or an Affiliate, which may be withheld by the Company or such Affiliate, as the case may be, in its sole discretion, the Grantee may elect to satisfy such withholding obligation, in whole or in part, (a) by causing the Company or such Affiliate to withhold shares of Stock otherwise issuable to the Grantee or (b) by delivering to the Company or such Affiliate shares of Stock already owned by the Grantee. The shares of Stock so withheld or delivered shall have an aggregate Fair Market Value equal to such withholding obligation. The Fair Market Value of the shares of Stock used to satisfy such withholding obligation shall be determined by the Company or such Affiliate as of the date on which the amount of tax to be withheld is to be determined. A Grantee who has made an election pursuant to this Section 18.3 may satisfy such Grantee’s withholding obligation only with shares of Stock that are not subject to any repurchase, forfeiture, unfulfilled vesting, or other similar requirements. The maximum number of shares of Stock that may be withheld from any Award to satisfy any federal, state, or local tax withholding requirements upon the exercise, vesting, or lapse of restrictions applicable to any Award or payment of shares of Stock pursuant to such Award, as applicable, may not exceed such number of shares of Stock having a Fair Market Value equal to the minimum statutory amount required by the Company or the applicable Affiliate to be withheld and paid to any such federal, state, or local taxing authority with respect to such exercise, vesting, lapse of restrictions, or payment of shares of Stock; provided, however, that for so long as Accounting Standards Update 2016-09 or a similar rule remains in effect, the Board or the Committee has full discretion to choose, or to allow a Grantee to elect, to withhold a number of Shares having an aggregate Fair Market Value that is greater than the applicable minimum statutory required withholding obligation (but such withholding may in no event be in excess of the maximum required statutory withholding amounts in such Grantee’s relevant tax jurisdiction).

18.4 Captions.

The use of captions in the Plan or any Award Agreement is for convenience of reference only and shall not affect the meaning of any provision of the Plan or such Award Agreement.

18.5 Construction.

Unless the context otherwise requires, all references in the Plan to “including” shall mean “including without limitation.”

18.6 Other Provisions.

Each Award granted under the Plan may contain such other terms and conditions not inconsistent with the Plan as may be determined by the Committee, in its sole discretion.

18.7 Number and Gender.

With respect to words used in the Plan, the singular form shall include the plural form, and the masculine gender shall include the feminine gender, as the context requires.

18.8 Severability.

If any provision of the Plan or any Award Agreement shall be determined to be illegal or unenforceable by any court of law in any jurisdiction, the remaining provisions hereof and thereof shall be severable and enforceable in accordance with their terms, and all provisions shall remain enforceable in any other jurisdiction.

18.9 Governing Law.

The Plan and the instruments evidencing the Awards hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the State of Delaware, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of the Plan and the instruments evidencing the Awards granted hereunder to the substantive laws of any other jurisdiction.

18.10 Foreign Jurisdictions.

To the extent the Committee determines that the material terms set by the Committee imposed by the Plan preclude the achievement of the material purposes of the Plan in jurisdictions outside the United States, the Committee shall have the authority and discretion to modify those terms and provide for such additional terms and conditions as the Committee determines to be necessary, appropriate, or desirable to accommodate differences in local law, policy, or custom or to facilitate administration of the Plan. The Committee may adopt or approve sub-plans, appendices, or supplements to, or amendments, restatements, or alternative versions of the Plan as in effect for any other purposes. The special terms and any sub-plans, appendices, supplements, amendments, restatements, or alternative versions, however, shall not include any provisions that are inconsistent with the terms of the Plan as in effect, unless the Plan could have been amended to eliminate such inconsistency without further approval by the Company’s stockholders.

18.11 Code § 409A.

The Plan is intended to comply with Code § 409A to the extent subject thereto, and, accordingly, to the maximum extent permitted, the Plan shall be interpreted and administered to be in compliance with Code § 409A. Any payments described in the Plan that are due within the Short-Term Deferral Period shall not be treated as deferred compensation unless Applicable Laws require otherwise. Any grant of an Option or SAR pursuant to the Plan is intended to comply with the “stock rights” exemption from Code § 409A. Notwithstanding any provision of the Plan to the contrary, to the extent required to avoid accelerated taxation and tax penalties under Code § 409A, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to the Plan during the six-month period immediately following the Grantee’s Separation from Service shall instead be paid on the first payroll date after the six-month anniversary of the Grantee’s Separation from Service (or the Grantee’s death, if earlier).

Furthermore, notwithstanding anything in the Plan to the contrary, in the case of an Award that is characterized as deferred compensation under Code § 409A, and pursuant to which settlement and delivery of the cash or shares of Stock subject to the Award is triggered based on a Change in Control, in no event shall a Change in Control be deemed to have occurred for purposes of such settlement and delivery of cash or shares of Stock if the transaction is not also a “change in the ownership or effective control of” the Company or “a change in the ownership of a substantial portion of the assets of” the Company as determined under Treasury Regulation § 1.409A-3(i)(5) (without regard to any alternative definition thereunder). If an Award characterized as deferred compensation under Code § 409A is not settled and delivered on account of the provision of the preceding sentence, the settlement and delivery shall occur on the next succeeding settlement and delivery triggering event that is a permissible triggering event under Code § 409A. No provision of this paragraph shall in any way affect the determination of a Change in Control for purposes of vesting in an Award that is characterized as deferred compensation under Code § 409A.

Notwithstanding the foregoing, neither the Company nor the Committee shall have any obligation to take any action to prevent the assessment of any excise tax or penalty on any Grantee under Code § 409A, and neither the Company or an Affiliate nor the Board or the Committee shall have any liability to any Grantee for such tax or penalty.

18.12 Limitation on Liability.

No member of the Board or the Committee shall be liable for any action or determination made in good faith with respect to the Plan, any Award, or any Award Agreement. Notwithstanding any provision of the Plan to the contrary, neither the Company, an Affiliate, the Board, the Committee, nor any person acting on behalf of the Company, an Affiliate, the Board, or the Committee shall be liable to any Grantee or to the estate or beneficiary of any Grantee or to any other holder of an Award under the Plan by reason of any acceleration of income, or any additional tax (including any interest and penalties), asserted by reason of the failure of an Award to satisfy the requirements of Code §§ 422 or 409A or by reason of Code § 4999, or otherwise asserted with respect to the Award; provided, that this Section 18.12 shall not affect any of the rights or obligations set forth in an applicable agreement between the Grantee and the Company or an Affiliate.

[Remainder of Page Intentionally Left Blank]

To record adoption of the Plan by the Board as of [_____________] and approval of the Plan by the Company’s stockholders as of [_____________], the Company has caused its authorized officer to execute the Plan.

	HNR ACQUISITION CORP.

	By:
	Name:
	Title:

Exhibit 21.1

SUBSIDIAIRES OF HNR ACQUISITION CORP

Subsidiaries		Place of Incorporation/Organization
HNRA Upstream, LLC		Delaware
HNRA Partner, Inc.		Delaware
HNRA Investment, LLC		Delaware
HNRA Royalties, LLC		Delaware
Pogo Resources, LLC		Texas
LH Operating, LLC		Texas

Exhibit 99.1

POGO RESOURCES, LLC

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2023 AND 2022

Financial Statements
Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	2
Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022	3
Condensed Consolidated Statements of Owners Equity for the three and nine months ended September 30, 2023 and 2022	4
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022	5
Notes to the Condensed Consolidated Financial Statements	6

POGO RESOURCES, LLC

CONDENSED CONSOLIDATED BALANCE SHEETS

	(Unaudited)
	September 30,			December 31,
	2023			2022
ASSETS
Current assets:
Cash and cash equivalents	$	3,269,278		$	2,016,315
Accounts receivable, net:
Crude oil and natural gas sales		3,148,691			2,862,945
Other		114,494			201,669
Prepaid expenses and other current assets		448,359			395,204
Total current assets		6,980,822			5,476,133
Crude oil and natural gas properties, successful efforts method:
Proved properties		69,467,547			64,799,213
Accumulated depreciation, depletion, amortization		(10,417,890	)		(9,592,296	)
Total oil and natural gas properties, net		59,049,657			55,206,917
Other property, plant and equipment, net		—			83,004
Operating lease, right of use asset, net		73,862			126,678
Note and interest receivable - related party		4,266,771			3,809,003
Long-term derivative instrument asset		8,902			—
Other assets		3,333			6,668
Total assets	$	70,383,347		$	64,708,403
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	2,925,247		$	1,218,054
Accrued liabilities		1,454,663			1,128,671
Royalties payable		981,567			617,163
Royalties payable – related party		808,329			—
Operating lease liabilities		62,518			70,232
Short-term derivative instrument liabilities		973,918			1,191,354
Total current liabilities		7,206,242			4,225,474
Long-term liabilities:
Debt, non-current		24,750,000			26,750,000
Operating lease liabilities, non-current		13,371			58,921
Asset retirement obligations		5,300,008			4,494,761
Other liabilities		675,000			675,000
Total liabilities	$	37,944,621		$	36,204,156
Commitments and contingencies
Equity:
Owner’s equity		32,438,726			28,504,247
Total liabilities and equity	$	70,383,347		$	64,708,403

POGO RESOURCES, LLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three months ended September 30,					Nine months ended September 30,
	2023			2022		2023			2022
Revenue:
Crude oil	$	6,314,104		$	10,021,672	$	19,814,847		$	29,877,117
Natural gas and natural gas liquids		256,741			520,810		719,383			1,618,259
Gain (loss) on derivative instruments, net		(1,436,100	)		205,116		(673,057	)		(3,698,181	)
Other revenue		143,714			102,783		461,435			102,783
Total revenue		5,278,459			10,850,381		20,322,608			27,899,978

Costs and operating expenses:
Production taxes, transportation and processing		602,449			924,845		1,774,310			2,745,314
Lease operating		2,449,140			2,014,095		7,354,304			6,096,096
Depletion, depreciation and amortization		426,838			445,902		1,285,830			1,168,541
Accretion of asset retirement obligations		200,789			320,330		809,423			876,848
General and administrative		981,751			490,485		3,111,130			1,831,005
Total costs and operating expenses		4,660,967			4,195,657		14,334,997			12,717,804
Operating income		617,492			6,654,724		5,987,611			15,182,174
Interest expense		554,262			313,406		1,429,200			720,093
Interest income		(92,520	)		—		(266,771	)		—
Loss on asset sales		816,011			—		816,011			—
Other expense (income)		(9,109	)		47,813		74,692			(6,948	)
Insurance policy recovery		—			—		—			(2,000,000	)
Net income (loss)	$	(651,152	)	$	6,293,505	$	3,934,479		$	16,469,029

POGO RESOURCES, LLC

CONDENSED CONSOLIDATED STATEMENTS OF OWNER’S EQUITY (UNAUDITED)

For the Three and Nine Months Ended September 30, 2023 and 2022

	Owner’s equity
Balance at December 31, 2021	$	12,201,851
Net income		1,617,262
Equity-based compensation		6,394
Balance at March 31, 2022		13,825,507
Net income		8,558,262
Balance at June 30, 2022		22,383,769
Net Income		6,293,505
Balance at September 30, 2022	$	28,677,274

	Owner’s equity
Balance at December 31, 2022	$	28,504,247
Net income		1,908,871
Balance at March 31, 2023		30,413,118
Net income		2,676,760
Balance at June 30, 2023		33,089,878
Net loss		(651,152	)
Balance at September 30, 2023	$	32,438,726

POGO RESOURCES, LLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Nine months ended September 30,
	2023			2022
Operating activities:
Net income	$	3,934,479		$	16,469,029

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion, and amortization expense		1,285,830			1,168,541
Accretion of asset retirement obligations		805,247			876,848
Equity-based compensation		-			6,394
Non-cash lease expense		(448	)		(627	)
Amortization of debt issuance costs		3,334			2,566
Change in fair value of unsettled derivatives		(226,338	)		(3,050,904	)
Change in other property, plant and equipment, net		83,004			—
Loss on sale of assets		816,011			—
Changes in operating assets and liabilities:
Accounts receivable		(198,571	)		(706,198	)
Prepaid expenses and other assets		(53,155	)		(7,918	)
Related party interest receivable		(266,771	)		—
Accounts payable		630,485			297,018
Accrued liabilities		1,498,725			(312,872	)
Net cash provided by operating activities		8,311,832			14,741,877
Investing activities:
Development of crude oil and gas properties		(4,867,872	)		(14,307,196	)
Issuance of related party note receivable		(190,997	)		—
Net cash used in investing activities		(5,058,869	)		(14,307,196	)
Financing activities:
Proceeds from issuance of long-term debt		—			4,000,000
Repayments of debt		(2,000,000	)		(3,000,000	)
Net cash provided by (used in) financing activities		(2,000,000	)		1,000,000
Net change in cash and cash equivalents		1,252,963			1,434,681
Cash and cash equivalents at beginning of period		2,016,315			1,066,042
Cash and cash equivalents at end of period	$	3,269,278		$	2,500,723

Cash paid during the period for:
Interest on debt	$	1,509,755		$	684,156
Amounts included in the measurement of operating lease liabilities	$	56,625		$	129,232
Supplemental disclosure of non-cash investing and financing activities:
Operating lease assets obtained in exchange for operating lease obligations	$	—		$	23,436
Impact to right-of-use assets and lease liabilities due to lease modification	$	—		$	51,626
Accrued purchases of property and equipment	$	1,740,662		$	851,849

POGO RESOURCES, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2023 and 2022

NOTE 1. ORGANIZATION AND NOTES OF OPERATIONS

Pogo Resources, LLC, a Texas company (either individually or together with its subsidiaries, as the context requires, “Pogo” or the “Company”), is an independent oil and natural gas company focused on the acquisition, development, exploration, and production of oil and natural gas properties in the Permian Basin. The Permian Basin is located in west Texas and southeastern New Mexico and is characterized by high oil and liquids-rich natural gas content, multiple vertical and horizontal target horizons, extensive production histories, long-lived reserves and historically high drilling success rates. The Company’s properties are in the Grayburg-Jackson Field in Eddy County, New Mexico, which is a sub-area of the Permian Basin. The Company focuses exclusively on vertical development drilling.

The Company is a limited liability company and is not subject to federal and state income taxes. However, it must file informational tax returns and all taxable income or loss flows through to the owners in their individual tax returns. The Company had no authorized, issued and outstanding units, thus earnings (loss) per unit is not shown for the periods presented.

Merger

As previously disclosed, on December 27, 2022, the Company entered into a membership interest purchase agreement (“MIPA”) with HNR Acquisition Corporation (“HNRA”). On August 28, 2023, the Company entered into an Amended and Restated Membership Interest Purchase Agreement (the “A&R MIPA”) with HNRA Upstream, LLC, a newly formed Delaware limited liability company which is managed by, and is a subsidiary of, HNRA (“OpCo”), and HNRA Partner, Inc., a newly formed Delaware corporation and wholly owned subsidiary of OpCo entered into an Amended and Restated Membership Interest Purchase Agreement (the “A&R MIPA”), which amended and restated the Prior MIPA in its entirety.

Pursuant to the A&R MIPA, at the closing of the transactions contemplated by the A&R MIPA (the “Closing”), (i) (A) HNRA will contribute to OpCo (1) all of its assets (excluding its interests in OpCo and the aggregate amount of cash required to satisfy any exercise by stockholders of their redemption rights) and (2) 2,000,000 newly issued shares of Class B common stock, par value $0.0001 per share (the “Class B Common Stock”), of the Company (such shares, the “Seller Class B Shares”) for purposes of delivery to Seller, and (B) in exchange therefor, OpCo will issue to HNRA a number of Class A common units (the “OpCo Class A Units”) of OpCo equal to the number of total shares of Class A common stock, par value $0.0001 per share (the “Class A Common Stock”), of the Company issued and outstanding immediately after the Closing (taking into account and following the exercise of redemption rights) (such transactions, the “SPAC Contribution”), (ii) immediately following the SPAC Contribution, OpCo will contribute $900,000 to SPAC Subsidiary in exchange for 100% of the outstanding common stock of SPAC Subsidiary (the “SPAC Subsidiary Contribution”), and (iii) immediately following the SPAC Subsidiary Contribution, Seller, which includes the Company, shall sell, contribute, assign, and convey to (A) OpCo, and OpCo shall acquire and accept from Seller, ninety-nine percent (99.0%) of the outstanding membership interests of the Company, and (B) SPAC Subsidiary, and SPAC Subsidiary shall purchase and accept from Seller, one percent (1.0%) of the outstanding membership interest of the Company (together with the ninety-nine (99.0%) interest, the “Target Interests”), in each case, in exchange for (x) $900,000 of the Cash Consideration (as defined below) in the case of SPAC Subsidiary and (y) the remainder of the Aggregate Consideration (as defined below) in the case of OpCo.

The “Aggregate Consideration” for the Target Interests will be (a), cash in the amount of $63,000,000 in immediately available funds (the “Cash Consideration”), (b) 2,000,000 Class B common units of OpCo (“OpCo Class B Units”) valued at $10.00 per unit (the “Common Unit Consideration”), which will be equal to and exchangeable into 2,000,000 shares of Class A Common Stock issuable upon exercise of the OpCo Exchange Right (as defined below), as reflected in the amended and restated limited liability company agreement of OpCo that will be effective at Closing (the “A&R OpCo LLC Agreement”) and (c) and the Seller Class B Shares; provided, that (i) a portion of the Cash Consideration not to exceed $15,000,000 may be payable through a promissory note to Seller (the “Seller Promissory Note”) to the extent the amount available for payment of the Cash Consideration at Closing (the “Minimum Cash Amount”) is less than $63,000,000 and (ii) a portion of the Cash Consideration not to exceed $20,000,000 may be payable through the issuance of up to 2,000,000 preferred units (the “OpCo Preferred Units” and together with the Opco Class A Units and the OpCo Class B Units, the “OpCo Units”) of OpCo (the “Preferred Unit Consideration”, and, together with the Common Unit Consideration, the “Unit Consideration”), to the extent the Minimum Cash Amount is less than $48,000,000. At Closing, 500,000 OpCo Class B Units (the “Escrowed Unit Consideration”) shall be placed in escrow with the an escrow agent for the benefit of Buyer pursuant to the Escrow Agreement and the indemnity provisions therein. The Aggregate Consideration is subject to adjustment in accordance with the A&R MIPA.

In connection with the A&R MIPA, OpCo and Seller agreed to cause the execution of an Option Agreement (the “Option Agreement”) by and between the Company and Pogo Royalty, LLC, a Texas limited liability company (“Pogo Royalty”), an affiliate of Seller. Pogo Royalty owns certain overriding royalty interests in certain oil and gas assets owned by Pogo Resources, LLC (the “ORR Interest”). Pursuant to the Option Agreement, Pogo Royalty will grant an irrevocable and exclusive option to HNRA to purchase the ORR Interest for the Option Price (defined below) at any time prior to the date that is twelve (12) months following the effective date of the Option Agreement. The option will not be exercisable while the Seller Promissory Note is outstanding.

The purchase price for the ORR Interest upon exercise of the option shall be (i) (1) $30,000,000 (the “Base Option Price”), plus (2) an additional amount equal to annual interest on the Base Option Price of twelve percent (12%), compounded monthly, from the effective date of the Option Agreement through the date of acquisition of the ORR Interest, minus (ii) any amounts received by Pogo Royalty in respect of the ORR Interest from the month of production in which the effective date of the Option Agreement occurs through the date of the exercise of the option (such aggregate purchase price, the “Option Price”).

The Option Agreement and the option will immediately terminate upon the earlier of (a) Pogo Royalty’s transfer or assignment of all of the ORR Interest in accordance with the Option Agreement and (b) the date that is twelve (12) months following the effective date of the Option Agreement.

Pogo Royalty obtained the ORR Interest effective July 1, 2023, when Pogo Resources, LLC transferred to Pogo Royalty, LLC an assigned an undivided royalty interest equal in amount to ten percent (10%) of Pogo Resources, LLC’s interest all oil, gas and minerals in, under and produced from each lease.

On November 13, 2023, the stockholders of HNRA approved the proposed transaction and as such the transaction plan, as previously disclosed above, was executed and closed.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unaudited Interim Financial Information

The accompanying unaudited condensed consolidated interim financial statements are presented in accordance with accounting principles generally accepted in the United States (“GAAP”) and in the opinion of management, all necessary adjustments, which are of normal recurring nature, have been made for a fair presentation of the results of the interim periods. These accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting.

There are non-controlling interests representing the economic interests held by other equity holders of subsidiaries that are not 100% owned by the Company. The subsidiaries in which there are economic interests held by other equity holders have ceased operating activities, have no retained earnings, and no income or loss. As such, even though there is the existence of a non-controlling interest, the Company will not present any specific financial statement line items related to non-controlling interest as all captions would be for $0.

The condensed consolidated balance sheet as of December 31, 2022 included herein was derived from the audited consolidated financial statements as of that date. The accompanying condensed consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2022. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the full year.

Comprehensive Income (Loss)

The Company did not have any other comprehensive income or loss for the three and six months ended June 30, 2023 and 2022. Accordingly, net income (loss) and comprehensive income (loss) are the same for the periods presented.

Summary of Significant Accounting Policies

There have been no significant changes, other than those disclosed within these interim condensed consolidated financial statements, to the Company’s significant accounting policies in Note 2. “Summary of Significant Accounting Policies,” of the notes to the consolidated financial statements for the year ended December 31, 2022 included in the HNRA Proxy Statement under the Securities Act of 1933 filed with the SEC.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting period. The Company periodically evaluates its estimates and adjust prospectively, if necessary.

These estimates are based on information available as of the date of the financial statements; therefore, actual results could differ materially from management’s estimates using different assumptions or under different conditions. Future production may vary materially from estimated oil and natural gas proved reserves. Actual future prices may vary significantly from price assumptions used for determining proved reserves and for financial reporting.

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (‘‘ASU 2016-13’’), which changes the impairment model for most financial assets. The ASU introduces a new credit loss methodology, Current Expected Credit Losses (CECL), which requires earlier recognition of credit losses, while also providing additional transparency about credit risk. Since its original issuance in 2016, the FASB has issued several updates to the original ASU. The CECL framework utilizes a lifetime “expected credit loss” measurement objective for the recognition of credit losses for loans, held-to-maturity securities and other receivables at the time the financial asset is originated or acquired. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. The methodology replaces the multiple existing impairment methods, which generally require that a loss be incurred before it is recognized. On January 1, 2023, the Company adopted the guidance prospectively. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.

NOTE 3. DERIVATIVES

Derivative Activities

The Company is exposed to volatility in market prices and basis differentials for natural gas, oil and natural gas liquids (“NGLs”), which impacts the predictability of its cash flows related to the sale of those commodities. These risks are managed by the Company’s use of certain derivative financial instruments. The company has historically used crude diff swaps, fixed price swaps, and costless collars. As of September 30, 2023, the Company’s derivative financial instruments consisted of costless collars, which are described below:

Costless Collars

Arrangements that contain a fixed floor price (“purchased put option”) and a fixed ceiling price (“sold call option”) based on an index price which, in aggregate, have no net cost. At the contract settlement date, (1) if the index price is higher than the ceiling price, the Company pays the counterparty the difference between the index price and ceiling price, (2) if the index price is between the floor and ceiling prices, no payments are due from either party, and (3) if the index price is below the floor price, the Company will receive the difference between the floor price and the index price.

Additionally, the Company will occasionally purchase an additional call option at a higher strike price than the aforementioned fixed ceiling price. Often this is accomplished in conjunction with the costless collar at no additional cost. If an additional call option is utilized, at the contract settlement date, (1) if the index price is higher than the sold call strike price but lower than the purchased option strike price, then the Company pays the difference between the index price and the sold call strike price, (2) if the index price is higher than the purchased call price, then the company pays the difference between the purchased call option and the sold call option, and the company receives payment of the difference between the index price and the purchased option strike price, (3) if the index price is between the purchased put strike price and the sold call strike price, no payments are due from either party, (4) if the index price is below the floor price, the Company will receive the difference between the floor price and the index price.

The following table sets forth the derivative volumes by year as of September 30, 2023:

	Price Collars
					Weighted		Weighted
			Weighted		average		average
	Volume		average floor		ceiling price		sold call
Period	(Bbls/month)		price ($/Bbl)		($/Bbl)		($/Bbl)
Q4 2023		20,000	$	65.00	$	100.00	$	72.25
Q1-Q4 2024		9,000	$	70.00	$	88.70	$	88.70

Derivative assets and liabilities

As of September 30, 2023, the Company is conducting derivative activities with one counterparty, which is secured by the lender in the Company’s bank credit facility. The Company believes the counterparty has acceptable credit risk, and the credit worthiness of the counterparty is subject to periodic review. The assets and liabilities are netted given that all positions are held by a single counterparty and subject to a master netting arrangement. The combined fair value of derivatives included in the accompanying condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022 is summarized below.

	As of September 30, 2023
	Gross fair			Amounts		Net fair
	value			netted		value
Commodity derivatives:
Short-term derivative asset	$	324,370		$	324,370		—
Long-term derivative asset		172,299			163,397		8,902
Short-term derivative liability		(1,298,288	)		324,370		(973,918	)
Long-term derivative liability		(163,397	)		163,397		—
Total derivative liability						$	(965,016	)

	As of December 31, 2022
	Gross fair			Amounts		Net fair
	value			netted		value
Commodity derivatives:
Short-term derivative asset	$	1,596,361		$	1,596,361	$	—
Long-term derivative asset		—			—		—
Short-term derivative liability		(2,787,715	)		1,596,361		(1,191,354	)
Long-term derivative liability		—			—		—
Total derivative liability						$	(1,191,354	)

The effects of the Company’s derivatives on the condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022 are summarized below:

	For the three months ended September 30,
	2023			2022

Total gain (loss) on unsettled derivatives	$	(835,360	)	$	462,021
Total gain (loss) on settled derivatives		(600,740	)		(256,905	)
Total gain (loss) on derivatives	$	(1,436,100	)	$	205,116

	For the nine months ended September 30,
	2023			2022

Total gain (loss) on unsettled derivatives	$	226,338		$	3,050,904
Total gain (loss) on settled derivatives		(899,395	)		(6,749,085	)
Total gain (loss) on derivatives	$	(673,057	)	$	(3,698,181	)

NOTE 4. FAIR VALUE MEASUREMENTS

Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the reporting date. The Company’s assets and liabilities that are measured at fair value at each reporting date are classified according to a hierarchy that prioritizes inputs and assumptions underlying the valuation techniques. This fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs and consists of three broad levels:

●

Level 1 – Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets as of the reporting date.

●

Level 2 – Observable market-based inputs or unobservable inputs that are corroborated by market data. These are inputs other than quoted prices in active markets included in Level 1 that are either directly or indirectly observable as of the reporting date.

●

Level 3 – Unobservable inputs that are not corroborated by market data and may be used with internally developed methodologies that result in management's best estimate of fair value.

As of September 30, 2023 and December 31, 2022, the Company had no material assets or liabilities measured at fair value on a recurring basis other than certain derivative instruments discussed below.

Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are as follows:

Derivatives

The Company's commodity price derivatives primarily represent crude oil collar contracts (some with long calls), fixed price swap contracts and differential swap contracts. The asset and liability measurements for the Company's commodity price derivative contracts are determined using Level 2 inputs. The asset and liability values attributable to the Company's commodity price derivatives were determined based on inputs that include, but not limited to, the contractual price of the underlying position, current market prices, crude oil forward curves, discount rates, and volatility factors. The Company had a net derivative liability of $965,016 and $1,191,354 as of September 30, 2023 and December 31, 2022, respectively, which are presented in short-term derivative instrument liabilities on the balance sheet.

Nonrecurring Basis

The carrying value of the Company’s financial instruments, consisting of cash, accounts receivable, accounts payable and accrued expenses, approximates their fair value due to the short maturity of such instruments. Financial instruments also consist of debt for which fair value approximates carrying values as the debt bears interest at fixed or variable rates which are reflective of current rates otherwise available to the Company. The Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.

NOTE 5. LEASES

The Company currently has operating leases associated with contracts for office space and their vehicle fleet. The Company’s leases have remaining lease terms ranging from approximately four months to two years. The vehicle leases are renewed on a month-to-month basis. The tables below, which present the components of lease costs and supplemental balance sheet information are presented on a gross basis. Other joint owners in the properties operated by the Company generally pay for their working interest share of costs associated with the vehicle leases.

The components of lease expense are presented as follows:

	For the three months ended September 30,				For the nine months ended September 30,
	2023		2022		2023		2022
Operating lease cost	$	17,812	$	22,054	$	56,177	$	119,495
Variable lease cost		882		1,583		2,646		5,666
Total lease costs	$	18,694	$	23,637	$	58,823	$	125,161

For the three months ended September 30, 2023 and 2022, $5,998 and $4,105, respectively, of the operating lease costs are recorded as lease operating expenses and $12,696 and $19,532, respectively, are recorded as general and administrative in the consolidated statements of operations. For the nine months ended September 30, 2023 and 2022, $20,737 and $45,886, respectively, of the operating lease costs are recorded as lease operating expenses and $38,086 and $79,275, respectively, are recorded as general and administrative in the consolidated statements of operations. Variable lease costs for the periods presented are recorded entirely to General and administrative in the consolidated statements of operations.

The table below presents the weighted average remaining lease terms and weighted average discounts rates for the Company’s leases as of the period presented:

	As of September 30,
	2023			2022
Weighted average remaining lease terms (in years)
Operating leases		0.84			0.50

Weighted average discount rate
Operating leases		3.36	%		2.71	%

NOTE 6. DEBT

Revolving Credit Facility

On June 25, 2019, the Company entered into a credit agreement (the “Credit Agreement”) with a banking institution for a revolving credit facility (the “Revolver”) that provided for a maximum facility amount of $50,000,000 and a letter of credit sublimit not to exceed ten percent of the available borrowing base. The Revolver is secured by substantially all the Company’s assets and has a maturity date of December 31, 2024, as extended most recently by an amendment to the Credit Agreement in August 2023. The borrowing base is redetermined the first day of May and November of each year. Borrowings under the Revolver bear interest at a rate equal to either the Base Rate (as defined in the Credit Agreement) plus a margin or the Secured Overnight Financing Rate (“SOFR”) plus a margin. Any unused portion of the available borrowing base is charged an annual interest rate of 0.375% on the average daily unused amount. Interest payments are payable quarterly in arrears until maturity, at which time all unpaid principal and accrued interest are due.

Through September 30, 2023, the Company entered into amendments one through six to the Credit Agreement and entered into letters addressing changes to the Borrowing Base and granting waivers. As noted above, the most recent amendment was signed in August 2023. Amongst other things, the amendments primarily updated the borrowing base (both increases and decreases) in accordance with the redetermined dates and/or extended the maturity date of the borrowing base and granted temporary waivers to hedging requirements. As of September 30, 2023 the borrowing base of the Revolver was $25,500,000. As of December 31, 2022, the borrowing base of the Revolver was $30,000,000.

As of September 30, 2023, the Company had $24,750,000 of outstanding borrowings under the Revolver and $702,600 of letters of credit outstanding, resulting in $47,400 of committed borrowing capacity available under the Revolver. As of December 31, 2022, the Company had $26,750,000 of outstanding borrowings under the Revolver and $702,600 of letters of credit outstanding, resulting in $2,547,400 of committed borrowing capacity available under the Revolver.

For the nine months ended September 30, 2023 and 2022, the annualized weighted average interest rate was 8.31% and 2.63%, respectively. Interest expense for the three months ended September 30, 2023 and 2022 was $554,262 and $313,406, respectively. Interest expense for the nine months ended September 30, 2023 and 2022 was $1,429,200 and $720,093, respectively.

Covenants

The Credit Agreement requires the Company meet specific financial covenants on a quarterly basis until the time the outstanding balances are fully repaid, which are: i) a current ratio greater than or equal to 1.0 and, ii) a debt to earnings before interest, tax, depreciation, amortization, and intangible drilling costs, non-recurring workover expenses, oil and gas exploration expense including dry hole and plugging and abandonment expense, and other consolidated non-cash losses or gains (“EBITDAX”) ratio less than 3.5. The Company was in compliance with these covenants for all periods presented.

NOTE 7. RELATED PARTY TRANSACTIONS

The Company’s members, executive committee, and management (collectively the “Policy Makers”) control other entities with which the Company transacts business. Consequently, the Policy Makers are in a position to influence the financial position and operating results of the Company and other entities that are under their control.

Triune Resources

In December of 2022, the Company entered into a related party promissory note receivable agreement with an entity controlled by owners of the Company in an amount of $4,000,000. The loan bears interest at a rate equal to that of the rate that the Company pays to borrow funds for its own account plus 0.5%. Accrued interest and principal are due at maturity on December 31, 2024.

Pogo Royalty

As disclosed in Note 1 above, the Company transferred a 10% ORR interest to Pogo Royalty for consideration of $10. As a result of this transaction, the Company recorded a loss on the sale of assets of $816,011 in the income statement. Additionally, on an ongoing basis the company records a royalty payable to be paid to Pogo Royalty. The balance as of September 30, 2023, is $802,115.

No other transactions with related parties that require disclosure occurred during the nine months ended September 30, 2023.

For the nine months ended September 30, 2022, the Company did not have any transactions with related parties that required disclosure.

NOTE 8. SUBSEQUENT EVENTS

The Company evaluated subsequent events through November 21, 2023, the date these financial statements were available to be issued. The Company did not identify any material subsequent events that required disclosure except for the closing of the transaction disclosed above in Note 1.

Exhibit 99.2

UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

Introduction

HNR Acquisition Corp is providing the following unaudited pro forma combined financial information to aid HNRA’s stockholders in their analysis of the financial aspects of the Purchase. The unaudited pro forma combined financial information has been prepared in accordance with Article 11 of Regulation S-X. The unaudited pro forma combined balance sheet as of September 30, 2023 combines the historical balance sheet of HNRA and the historical consolidated balance sheet of Pogo for such period on a pro forma basis as if the Purchase had been consummated on September 30, 2023.

The unaudited pro forma combined statement of operations for the nine months ended September 30, 2023 and the year ended December 31, 2022 combine the historical statements of operations of HNRA and Pogo for such periods on a pro forma basis as if the Purchase had been consummated on January 1, 2022.

The unaudited pro forma combined financial information has been presented for illustrative purposes only and is not necessarily indicative of the financial position and results of operations that would have been achieved had the Purchase occurred on the dates indicated. The unaudited pro forma combined financial information may not be useful in predicting the future financial condition and results of operations of the Post-Purchase company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors. The unaudited pro forma adjustments represent management’s estimates based on information available as of the date of the unaudited pro forma combined financial information and is subject to change as additional information becomes available and analyses are performed. This information should be read together with Pogo’s audited and unaudited consolidated financial statements and related footnotes, the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operation of Pogo,” HNRA’s audited financial statements and related footnotes and Management’s Discussion and Analysis for the year ended December 31, 2022 included in the Form 10-K for the year ended December 31, 2022 filed with the SEC on March 31, 2023 (the “HNRA Form 10-K”), the unaudited financial statements and related footnotes included in the Form 10-Q for the three and nine months ended September 30, 2023 filed with the SEC on November 13, 2023 (the “HNRA Form 10-Q”) and other financial information included in the prospectus. The unaudited pro forma combined financial information presented herein also reflect adjustments related to the deposit of $120,000 into the Trust Account for the payment of the October 13, 2023 extension payment.

The Purchase will be accounted for as a business combination in accordance with GAAP. HNRA was determined to be the accounting acquirer based on an evaluation of the following facts and circumstances:

●

HNRA’s senior management will comprise the senior management of the combined company;

●

HNRA will control a majority of the initial Board of Directors;

●

HNR Acquisition Corp’s existing equityholders will have a majority voting interest in the Post-Combination company.

As previously announced, HNR Acquisition Corp, a Delaware corporation (“HNRA” or the “Company”), entered into that certain Amended and Restated Membership Interest Purchase Agreement, dated as of August 28, 2023 (as amended, the “MIPA”), by and among HNRA, HNRA Upstream, LLC, a newly formed Delaware limited liability company which is managed by, and is a subsidiary of, HNRA (“OpCo”), and HNRA Partner, Inc., a newly formed Delaware corporation and wholly owned subsidiary of OpCo (“SPAC Subsidiary”, and together with the Company and OpCo, “Buyer” and each a “Buyer”), CIC Pogo LP, a Delaware limited partnership (“CIC”), DenCo Resources, LLC, a Texas limited liability company (“DenCo”), Pogo Resources Management, LLC, a Texas limited liability company (“Pogo Management”), 4400 Holdings, LLC, a Texas limited liability company (“4400” and, together with CIC, DenCo and Pogo Management, collectively, “Seller” and each a “Seller”), and, solely with respect to Section 6.20 of the MIPA, HNRAC Sponsors LLC, a Delaware limited liability company (“Sponsor”). HNRA’s stockholders approved the transactions contemplated by the MIPA at a special meeting of stockholders that was originally convened October 30, 2023, adjourned, and then reconvened on November 13, 2023 (the “Special Meeting”).

On November 15, 2023 (the “Closing Date”), as contemplated by the MIPA:

●

The current shares of common stock of HNRA were reclassified as Class A Common Stock, the of of Class B Common Stock have no economic rights but entitles its holder to one vote on all matters to be voted on by stockholders generally, holders of shares of Class A Common Stock and shares of Class B Common Stock will vote together as a single class on all matters presented to our stockholders for their vote or approval, except as otherwise required by applicable law or by the Second A&R Charter;

●

Immediately following the SPAC Subsidiary Contribution, Seller sold, contributed, assigned, and conveyed to (A) OpCo, and OpCo acquired and accepted from Seller, ninety-nine percent (99.0%) of the outstanding membership interests of Pogo Resources, LLC, a Texas limited liability company (“Pogo” or the “Target”), and (B) SPAC Subsidiary, and SPAC Subsidiary purchased and accepted from Seller, one percent (1.0%) of the outstanding membership interest of Target (together with the ninety-nine (99.0%) interest, the “Target Interests”), in each case, in exchange for (x) $900,000 of the Cash Consideration (as defined below) in the case of SPAC Subsidiary and (y) the remainder of the Aggregate Consideration (as defined below) in the case of OpCo (such transactions, together with the SPAC Contribution and SPAC Subsidiary Contribution, the “Business Combination”).

The “Aggregate Consideration” for the Target Interests was (a), cash in the amount of $31,074,127 in immediately available funds (the “Cash Consideration”), (b) 2,000,000 Class B common units of OpCo (“OpCo Class B Units”) valued at $10.00 per unit (the “Common Unit Consideration”), which will be equal to and exchangeable into 2,000,000 shares of Class A Common Stock issuable upon exercise of the OpCo Exchange Right (as defined below), as reflected in the amended and restated limited liability company agreement of OpCo that became effective at Closing (the “A&R OpCo LLC Agreement”), (c) and the Seller Class B Shares, (d) $15,000,000 payable through a promissory note to Seller (the “Seller Promissory Note”), (e) 2,000,000 preferred units (the “OpCo Preferred Units” and together with the Opco Class A Units and the OpCo Class B Units, the “OpCo Units”) of OpCo (the “Preferred Unit Consideration”, and, together with the Common Unit Consideration, the “Unit Consideration”), and (f) an agreement to, on or before November 21, 2023, Buyer shall settle and pay to Seller $1,925,873 from sales proceeds received from oil and gas production attributable to Pogo, including pursuant to its third party contract with affiliates of Chevron. At Closing, 500,000 Seller Class B Shares (the “Escrowed Share Consideration”) were placed in escrow for the benefit of Buyer pursuant to an escrow agreement and the indemnity provisions in the MIPA. The Aggregate Consideration is subject to adjustment in accordance with the MIPA.

Immediately upon the Closing, Pogo Royalty exercised the OpCo Exchange Right as it relates to 200,000 OpCo Class B units (and 200,000 shares of Class B Common Stock. After giving effect to the Business Combination, the redemption of public shares as described above and the exchange mentioned in the preceding sentence, there are currently (i) 5,097,009 shares of Class A Common Stock issued and outstanding, (ii) 1,800,000 shares of Class B Common Stock issued and outstanding and (iii) no shares of preferred stock issued and outstanding.

The OpCo Preferred Units will be automatically converted into OpCo Class B Units on the two-year anniversary of the issuance date of such OpCo Preferred Units (the “Mandatory Conversion Trigger Date”) at a rate determined by dividing (i) $20.00 per unit (the “Stated Conversion Value”), by (ii) the Market Price of the Class A Common Stock, (the “Conversion Price”). The “Market Price” means the simple average of the daily VWAP of the Class A Common Stock during the five (5) trading days prior to the date of conversion. On the Mandatory Conversion Trigger Date, the Company will issue a number of shares of Class B Common Stock to Seller equivalent to the number of OpCo Class B Units issued to Seller. If not exchanged sooner, such newly issued OpCo Class B Units shall automatically exchange into Class A Common Stock on the one-year anniversary of the Mandatory Conversion Trigger Date at a ratio of one OpCo Class B Unit for one share of Class Common Stock. An equivalent number of shares of Class B Common Stock must be surrendered with the OpCo Class B Units to the Company in exchange for the Class A Common Stock. As noted above, the OpCo Class B Units must be exchanged upon the one-year anniversary of the Mandatory Conversion Trigger Date.

Option Agreement

In connection with the Closing, HNRA Royalties, LLC, a newly formed Delaware limited liability company and wholly-owned subsidiary of HNRA (“HNRA Royalties”) and Pogo Royalty entered into an Option Agreement (the “Option Agreement”). Pogo Royalty owns certain overriding royalty interests in certain oil and gas assets owned by Pogo Resources, LLC (the “ORR Interest”). Pursuant to the Option Agreement, Pogo Royalty granted irrevocable and exclusive option to HNRA Royalty to purchase the ORR Interest for the Option Price (as defined below) at any time prior to November 15, 2024. The option is not exercisable while the Seller Promissory Note is outstanding.

The Option Agreement and the option will immediately terminate upon the earlier of (a) Pogo Royalty’s transfer or assignment of all of the ORR Interest in accordance with the Option Agreement and (b) November 15, 2024. As consideration for the Option Agreement, the Company issued 10,000 shares of Class A common stock to Pogo Royalty.

Director Nomination and Board Observer Agreement

Backstop Agreement

In connection with the Closing, HNRA entered a Backstop Agreement (the “Backstop Agreement”) with Pogo Royalty and certain of HNRA’s founders listed therein (the “Founders”) whereby the Pogo Royalty will have the right (“Put Right”) to cause the Founders to purchase Seller’s OpCo Preferred Units at a purchase price per unit equal to $10.00 per unit plus the product of (i) the number of days elapsed since the effective date of the Backstop Agreement and (ii) $10.00 divided by 730. Seller’s right to exercise the Put Right will survive for six (6) months following the date the Trust Shares (as defined below) are not restricted from transfer under the Letter Agreement (as defined in the MIPA) (the “Lockup Expiration Date”).

Founder Pledge Agreement

In consideration for entering into the Backstop agreement, the Company will issue the Founders an aggregate of 134,500 shares of Class A Common Stock.

Debt Financing

Senior Secured Term Loan Agreement

Pledge and Security Agreement

Guaranty Agreement

Forward Purchase Agreement

On November 2, 2023, HNR Acquisition Corp (the “Company” or “HNRA”) entered into an agreement with (i) Meteora Capital Partners, LP (“MCP”), (ii) Meteora Select Trading Opportunities Master, LP (“MSTO”), and (iii) Meteora Strategic Capital, LLC (“MSC” and, collectively with MCP and MSTO, “Seller”) (the “Forward Purchase Agreement”) for OTC Equity Prepaid Forward Transactions. For purposes of the Forward Purchase Agreement, HNRA is referred to as the “Counterparty”. Capitalized terms used herein but not otherwise defined shall have the meanings ascribed to such terms in the Forward Purchase Agreement.

Pursuant to the terms of the Forward Purchase Agreement, the Seller intends, but is not obligated, to purchase up to 3,000,000 shares (the “Purchased Amount”) of common stock, par value $0.0001 per share, of HNRA (“HNRA Shares”) concurrently with the closing of the transactions contemplated by the A&R MIPA, pursuant to the Seller’s FPA Funding Amount PIPE Subscription Agreement (as defined below), less the number of HNRA Shares purchased by the Seller separately from third parties through a broker in the open market (“Recycled Shares”). The Seller shall not be required to purchase an amount of HNRA Shares such that following such purchase, that Seller’s ownership would exceed 9.99% of the total HNRA Shares outstanding immediately after giving effect to such purchase, unless the Seller, at its sole discretion, waives such 9.99% ownership limitation. The Purchased Amount subject to the Forward Purchase Agreement is subject to reduction following a termination of the Forward Purchase Agreement with respect to such shares, as further described in the Forward Purchase Agreement.

The Forward Purchase Agreement provides for a prepayment shortfall in an amount in U.S. dollars equal to 0.50% of the product of the Recycled Shares and the Initial Price (defined below). Seller in its sole discretion may sell Recycled Shares (i) at any time following November 2, 2023 (the “Trade Date”) at prices greater than the Reset Price or (ii) commencing on the 180th day following the Trade Date at any sales price, in either case without payment by Seller of any Early Termination Obligation until such time as the proceeds from such sales equal 100% of the Prepayment Shortfall (as set forth under the section entitled “Shortfall Sales” in the Forward Purchase Agreement) (such sales, “Shortfall Sales,” and such Shares, “Shortfall Sale Shares”). A sale of Shares is only (a) a “Shortfall Sale,” subject to the terms and conditions herein applicable to Shortfall Sale Shares, when a Shortfall Sale Notice is delivered under the Forward Purchase Agreement, and (b) an Optional Early Termination, subject to the terms and conditions of the Forward Purchase Agreement applicable to Terminated Shares, when an OET Notice is delivered under the Forward Purchase Agreement, in each case the delivery of such notice in the sole discretion of the Seller (as further described in the “Optional Early Termination” and “Shortfall Sales” sections in the Forward Purchase Agreement).

The Forward Purchase Agreement provides that the Seller will be paid directly an aggregate cash amount (the “Prepayment Amount”) equal to (x) the product of (i) the number of HNRA Shares as set forth in a Pricing Date Notice and (ii) Per-Share Redemption Price as defined in HNRA’s Certificate of Incorporation, effective as of February 10, 2022, as amended from time to time (the “Initial Price”), less (y) the Prepayment Shortfall.

Counterparty will pay to the Seller the Prepayment Amount required under the Forward Purchase Agreement directly from the Counterparty’s Trust Account maintained by Continental Stock Transfer and Trust Company holding the net proceeds of the sale of the units in Counterparty’s initial public offering and the sale of private placement warrants (the “Trust Account”), no later than the earlier of (a) one Local Business Day after the Closing Date and (b) the date any assets from the Trust Account are disbursed in connection with the Purchase & Sale; except that to the extent that the Prepayment Amount is to be paid from the purchase of Additional Shares by Seller, such amount will be netted against such proceeds, with Seller being able to reduce the purchase price for the Additional Shares by the Prepayment Amount. For the avoidance of doubt, any Additional Shares purchased by the Seller will be included in the Number Purchased Amount under the Forward Purchase Agreement for all purposes, including for determining the Prepayment Amount.

Following the Closing, the reset price (the “Reset Price”) will be $10.00; provided that the Reset Price shall be reduced pursuant to a Dilutive Offering Reset immediately upon the occurrence of such Dilutive Offering. The Purchased Amount subject to the Forward Purchase Agreement shall be increased upon the occurrence of a Dilutive Offering Reset to that number of Shares equal to the quotient of (i) the Purchased Amount divided by (ii) the quotient of (a) the price of such Dilutive Offering divided by (b) $10.00.

From time to time and on any date following the Trade Date (any such date, an “OET Date”) and subject to the terms and conditions in the Forward Purchase Agreement, Seller may, in its absolute discretion, terminate the Transaction in whole or in part by providing written notice to Counterparty (the “OET Notice”), by the later of (a) the fifth Local Business Day following the OET Date and (b) no later than the next Payment Date following the OET Date, (which shall specify the quantity by which the Number of Shares shall be reduced (such quantity, the “Terminated Shares”)). The effect of an OET Notice shall be to reduce the Number of Shares by the number of Terminated Shares specified in such OET Notice with effect as of the related OET Date. As of each OET Date, Counterparty shall be entitled to an amount from Seller, and the Seller shall pay to Counterparty an amount, equal to the product of (x) the number of Terminated Shares and (y) the Reset Price in respect of such OET Date. The payment date may be changed within a quarter at the mutual agreement of the parties.

The “Valuation Date” will be the earlier to occur of (a) the date that is three (3) years after the date of the closing of the Purchase & Sale (the date of the closing of the Purchase & Sale, the “Closing Date”) pursuant to the A&R MIPA, (b) the date specified by Seller in a written notice to be delivered to Counterparty at Seller’s discretion (which Valuation Date shall not be earlier than the day such notice is effective) after the occurrence of any of (w) a VWAP Trigger Event, (x) a Delisting Event, (y) a Registration Failure or (z) unless otherwise specified therein, upon any Additional Termination Event, and (c) the date specified by Seller in a written notice to be delivered to Counterparty at Seller’s sole discretion (which Valuation Date shall not be earlier than the day such notice is effective). The Valuation Date notice will become effective immediately upon its delivery from Seller to Counterparty in accordance with the Forward Share Purchase Agreement.

On the “Cash Settlement Payment Date,” which is the tenth Local Business Day immediately following the last day of the Valuation Period, the Seller will remit to the Counterparty an amount equal to the Settlement Amount and will not otherwise be required to return to the Counterparty any of the Prepayment Amount and the Counterparty shall remit to the Seller the Settlement Amount Adjustment; provided, that if the Settlement Amount less the Settlement Amount Adjustment is a negative number and either clause (x) of Settlement Amount Adjustment applies or the Counterparty has elected pursuant to clause (y) of Settlement Amount Adjustment to pay the Settlement Amount Adjustment in cash, then neither the Seller nor the Counterparty shall be liable to the other party for any payment under the Cash Settlement Payment Date section of the Forward Purchase Agreement.

The Seller has agreed to waive any redemption rights with respect to any Recycled Shares in connection with the Purchase & Sale, as well as any redemption rights under HNRA’s Certificate of Incorporation that would require redemption by HNRA. Such waiver may reduce the number of HNRA Shares redeemed in connection with the Purchase & Sale, and such reduction could alter the perception of the potential strength of the Purchase & Sale. The Forward Purchase Agreement has been structured, and all activity in connection with such agreement has been undertaken, to comply with the requirements of all tender offer regulations applicable to the Purchase & Sale, including Rule 14e-5 under the Securities Exchange Act of 1934.

In Connection with the Closing, the Seller received $4,286,701 in cash, including $286,607 in fees and expenses from the Trust Account related to 50,070 Recycled Shares and 504,425 Additional Shares that the Company may be obligated to issue to the Seller pursuant to the Forward Purchase Agreement. The Seller also received 90,000 shares of Class A Common Stock as a transaction fee.

Non-Redemption Agreement

On November 13, 2023, HNRA entered into an agreement with (i) Meteora Capital Partners, LP (“MCP”), (ii) Meteora Select Trading Opportunities Master, LP (“MSTO”), and (iii) Meteora Strategic Capital, LLC (“MSC” and, collectively with MCP and MSTO, “Backstop Investor”) (the “Non-Redemption Agreement”) pursuant to which Backstop Investor agreed to reverse the redemption of 600,000 shares of common stock, par value $0.0001 per share, of HNRA (“Common Stock”). Immediately upon consummation of the closing of the transactions contemplated by the MIPA (the “Closing”), HNRA paid the Backstop Investor, in respect of the Backstop Investor Shares, an amount in cash equal to (x) the Backstop Investor Shares, multiplied by (y) the Redemption Price (as defined in HNRA’s amended and restated certificate of incorporation) minus $5.00, or $3,567,960.

Exchange Agreements

The Noteholders include JVS Alpha Property, LLC, a company which is controlled by Joseph Salvucci, Jr., a current member of the HNRA board of directors, Byron Blount, nominee member of the HNRA board of directors following the Closing, and Mitchell B. Trotter, the designated Chief Financial Officer and a nominee member of the HNRA board of directors following the Closing.

The unaudited pro forma adjustments are based on information currently available, assumptions, and estimates underlying the unaudited pro forma adjustments and are described in the accompanying notes. Actual results may differ materially from the assumptions used to present the accompanying unaudited pro forma combined financial information. Assumptions and estimates underlying the unaudited pro forma adjustments included in the unaudited pro forma combined financial statements are described in the accompanying notes.

HNR ACQUISITION CORP

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

AS OF SEPTEMBER 30, 2023

	HNR Acquisition Corp		POGO Resources LLC		Other Transaction Accounting				Combined Pro Forma
ASSETS
Current Assets
Cash	$	638,736	$	3,269,278	$	875,000			$	4,783,014
						2,725,000		A
						4,493,119		B
						27,331,008		C
						(31,074,127	)	D
						(2,600,000	)	C

Restricted cash						2,600,000		C		2,600,000
Accounts receivable – Oil and Gas sales		—		3,148,691		—				3,148,691
Accounts receivable – other		—		114,494		—				114,494
Prepaid expenses and other current assets		50,000		448,359		—				498,359
Total current assets		688,736		6,980,822		3,475,000				11,144,558

Non-current Assets
Right of Use Asset, operating leases		—		73,862		—				73,862
Oil and Gas properties, net		—		59,049,657		23,685,745		F		82,735,402
Note receivable, related party		—		4,266,771		(4,266,771	)	F		—
Marketable Securities held in Trust		48,974,196		—		(48,974,196	)			—
				—		388,283		O		—
		—		—		(49,362,479	)	B		—
		—		8,902		—				8,902
Other assets		150,000		3,333		(150,000	)	C		3,333
TOTAL ASSETS	$	49,812,932	$	70,383,347	$	(26,230,222	)		$	93,966,057

LIABILITIES, TEMPORARY EQUITY AND EQUITY
Current liabilities
Accounts payable	$	1,543,947	$	2,925,247	$	896,729			$	5,365,923
						1,065,000		E
						(168,271	)	A
Accrued expenses		—		1,454,663		—				1,454,663
Royalties payable		—		981,567		—				981,567
Royalties payable related party		—		808,329		—				808,329
Operating lease liabilities		—		62,518		—				62,518
Short-term derivative instrument liabilities		—		973,918		6,302,279		I		7,276,197
Franchise tax payable		30,000		—		—				30,000
Income tax payable		352,000		—		—				352,000
Notes payable from related party, net of discount		1,515,044		—		635,500				2,150,544
						2,725,000		A
						(2,089,500	)	A
Excise tax payable		436,665		—						436,665
Seller promissory note		—		—		15,000,000		D		15,000,000
Side letter payable						1,925,873		D		1,925,873
Deferred underwriting fee payable		1,800,000		—		(500,000	)	E		1,300,000
Total current liabilities		5,677,656		7,206,242		24,260,381				37,144,279

HNR ACQUISITION CORP

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

AS OF SEPTEMBER 30, 2023 — (Continued)

	HNR Acquisition Corp			POGO Resources LLC		Other Transaction Accounting				Combined Pro Forma
Long-term liabilities
Long-term debt, net		—			24,750,000		2,431,008				27,181,008
							(24,750,000	)	G
							27,181,008		C
Warrant liabilities		2,438,750			—		—				2,438,750
Right of use liability, operating leases		—			13,371		—				13,371
Other liabilities		—			675,000		—				675,000
Asset retirement obligation, net		—			5,300,008		—				5,300,008
Total liabilities		8,116,406			37,944,621		26,691,389				72,752,416
Commitments and Contingencies
Redeemable Common stock		48,592,196			—		(48,592,196	)			—
					—		770,283		N
							(36,383,179	)	H
							(7,854,661	)	I
							(5,124,639		I
EQUITY
Owners’ equity					32,438,726		(32,438,726	)	F		—
Series A Convertible Preferred stock
Class A common stock		—			—		962				962
							452		A
							20		F
							10		F
							301		J
							50		K
							24		L
							45		M
							60		I
Class B Common stock		—			—		180		D		180
Common stock		301			—		(301	)	J		—
Additional paid-in capital		—			—		14,992,910				14,992,910
							2,257,319		A
							1,353,980		F
							67,690		F
							1,499,950		K
							1,935,941		L
							4,878,090		M
							2,999,940		I
Retained earnings (accumulated deficit)		(6,895,971	)		—		(14,070,260	)			(20,966,231	)
							(4,500,965	)	E,J,K
							(9,055,775	)	I
							(513,520	)	N
Total Equity attributable to HNRA shareholders		(6,895,670	)		32,438,726		(31,515,235	)			(5,972,179	)
Noncontrolling interest		—			—		27,185,820		D		27,185,820
Total stockholder’s equity		(6,895,670	)		32,438,726		(4,329,415	)			21,213,641

TOTAL LIABILITIES, TEMPORARY EQUITY AND EQUITY	$	49,812,932		$	70,383,347	$	(26,230,222	)		$	93,966,057

HNR ACQUISITION CORP
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023

	HNR Acquisition Corp Historical			POGO Resources LLC Historical			Transaction Accounting				Combined Pro Forma
Revenue
Crude Oil	$	—		$	19,814,847		$	(1,981,485	)	O	$	17,883,362
Natural gas and natural gas liquids		—			719,383			(71,938	)	O		647,445
Loss on derivative instruments, net		—			(673,057	)		—				(673,057	)
Other Revenue		—			461,435			—				461,435
Total revenue		—			20,322,608			(2,053,423	)			18,269,185

Expenses:
Production taxes, transportation and processing		—			1,774,310			(177,431	)	O		1,596,879
Lease operating		—			7,354,304			—				7,354,304
Depletion, depreciation and amortization		—			1,285,830			89,380		P		1,375,210
Accretion of asset retirement obligations		—			809,423			—				809,423
General and administrative		1,927,221			3,111,130			1,307,500		Q		6,345,851
Franchise taxes		150,000			—			—				150,000
Total operating expenses		2,077,221			14,334,997			1,219,449				17,631,667
Income (loss) from operations		(2,077,221	)		5,987,611			(3,272,872	)			637,518

Other income (expense):
Amortization of debt discount		(1,073,338	)		—			—				(1,073,338	)
Other income (expense)		—			(74,692	)		—				(74,692	)
Change in Fair value warrant liability		(171,456	)		—			—				(171,456	)
Loss on asset sales		—			(816,011	)		—				(816,011	)
Gain on settlement of liabilities		787,500			—			—				787,500
Interest income		14,396			266,771			—				281,167
Interest expense		(182,925	)		(1,429,200	)		(3,613,047	)			(5,225,172	)
								(3,354,747	)	R
								(1,687,500	)	S
								1,429,200		T
Interest income on marketable securities held in Trust Account		2,417,604			—			(2,417,604	)	U		—
Total other income (expense)		1,791,781			(2,053,132	)		(6,030,651	)			(7,079,502	)
Income (loss) before income taxes		(285,440	)		3,934,479			(9,303,523	)			(5,654,484	)
Income tax expense		(130,335	)		—			130,335				—
Net income (loss)		(415,775	)		3,934,479			(9,173,188	)			(5,654,484	)
Net income (loss) attributable to noncontrolling interests		—			—			—				—
Net income (loss) attributable to HNR Acquisition Corp	$	(415,775	)	$	3,934,479		$	(9,173,188	)		$	(5,654,484	)
Weighted Average shares outstanding, Class A common stock – basic and diluted												5,145,446
Net income (loss) per share of Class A common stock – basic and diluted											$	(1.10	)
Weighted Average shares outstanding, redeemable common stock – basic and diluted		6,567,202
Net income (loss) per share of common stock – basic and diluted	$	0.07
Weighted average shares outstanding, non-redeemable common stock – basic and diluted		3,006,250
Net income (loss) per share of common stock – basic and diluted	$	(0.30	)

HNR ACQUISITION CORP
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2022

	HNR Acquisition Corp Historical			POGO Resources LLC Historical			Transaction Accounting (Assuming Minimum Redemptions)				Combined Pro Forma (Assuming Minimum Redemptions)
Revenue
Crude Oil	$	—		$	37,982,367		$	(3,798,237	)	W	$	34,184,130
Natural gas and natural gas liquids		—			1,959,411			(195,941	)	W		1,763,470
Other Revenue		—			255,952							255,952
Loss on derivative instruments, net		—			(4,793,790	)		—				(4,793,790	)
Total revenue		—			35,403,940			(3,994,178	)			31,409,762

Expenses:
Production taxes, transportation and processing		—			3,484,477			(348,448	)	W		3,136,029
Lease operating		—			8,418,739			—				8,418,739
Depletion, depreciation and amortization		—			1,613,402			465,386		X		2,078,788
Accretion of asset retirement obligations		—			1,575,296			—				1,575,296
General and administrative		1,598,013			2,953,202			3,852,633		Y		8,403,848
Franchise taxes		200,000			—			—				200,000
Total operating expenses		1,798,013			18,045,116			3,969,571				23,812,700
Income (loss) from operations		(1,798,013	)		17,358,824			(7,963,749	)			7,597,062

Other income (expense):
Other income (expense)		—			13,238			—				13,238
Insurance policy recovery		—			2,000,000			—				2,000,000
Interest income (expense)		969			(1,076,060	)		(5,646,937	)			(6,722,028	)
								(4,472,997	)	Z
								(2,250,000	)	AA
								1,076,060		AB
Interest income on marketable securities held in Trust Account		1,268,362			—			(1,268,362	)	AC		—
Total other income (expense)		1,269,331			937,178			(6,915,299	)			(4,708,790	)

Income (loss) before income taxes		(528,682	)		18,296,002			(14,879,048	)			2,888,272
Income tax (expense) benefit		(221,665	)		—			(384,872	)	AD		(606,537	)
Net income (loss)		(750,347	)		18,296,002			(15,263,920	)			2,281,735
Net income (loss) attributable to noncontrolling interests		—			—			—				—
Net income (loss) attributable to HNR Acquisition Corp	$	(750,347	)	$	18,296,002		$	(15,263,920	)		$	2,281,735
Weighted Average shares outstanding, Class A common stock – basic and diluted												5,139,585
Net income (loss) per share of Class A common stock – basic and diluted											$	0.44
Weighted Average shares outstanding, redeemable common stock – basic and diluted		7,538,014
Net income (loss) per share of common stock – basic and diluted	$	(0.02	)
Weighted average shares outstanding, non-redeemable common stock – basic and diluted		2,978,445
Net income (loss) per share of common stock – basic and diluted	$	(0.19	)

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

1. Basis of Presentation

The Purchase will be accounted for as an acquisition, in accordance with GAAP. The Company was deemed the accounting acquirer in the Purchase based on an analysis of the criteria outlined in Accounting Standards Codification (“ASC”) 805, Business Combinations. Pogo was deemed to be the predecessor entity of the Company. Accordingly, the historical financial statements of Pogo will become the historical financial statements of the Company, upon the consummation of the Purchase. Under the acquisition method of accounting, the assets and liabilities of Pogo will be recorded at their fair values measured as of the acquisition date. The excess of the purchase price over the estimated fair values of the net assets acquired, if applicable, will be recorded as goodwill.

The unaudited pro forma combined balance sheet as of September 30, 2023, assumes that the Purchase occurred on September 30, 2023. The unaudited pro forma combined statement of operations for the nine months ended September 30, 2023 and for the year ended December 31, 2022, reflects pro forma effect to the Purchase as if it had been completed on January 1, 2022.

Management has made significant estimates and assumptions in its determination of the pro forma adjustments. As the unaudited pro forma combined financial information has been prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented. The unaudited pro forma combined financial information does not give effect to any anticipated synergies, operating efficiencies, tax savings, or cost savings that may be associated with the Purchase.

The pro forma adjustments reflecting the consummation of the Purchase are based on certain currently available information and certain assumptions and methodologies that HNRA believes are reasonable under the circumstances. The unaudited pro forma adjustments, which are described in the accompanying notes, may be revised as additional information becomes available and is evaluated. Therefore, it is likely that the actual adjustments will differ from the pro forma adjustments and it is possible the difference may be material. HNRA believes that its assumptions and methodologies provide a reasonable basis for presenting all of the significant effects of the Purchase based on information available to management at the time and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma combined financial information.

The unaudited pro forma combined financial information is not necessarily indicative of what the actual results of operations and financial position would have been had the Purchase taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of the combined company. They should be read in conjunction with the historical financial statements and notes thereto of HNRA’s Form 10-K and Form 10-Q and Pogo included in this prospectus.

The following unaudited pro forma combined financial information has been prepared in accordance with Article 11 of Regulation S-X, as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses.” Release No. 33-10786 replaces the existing pro forma adjustment criteria with simplified requirements to depict the accounting for the Purchase (“Transaction Accounting Adjustments”) and present the reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur (“Management’s Adjustments”). HNRA has elected not to present Management’s Adjustments and will only be presenting Transaction Accounting Adjustments in the following unaudited pro forma combined financial information.

2. Accounting Policies

Upon consummation of the Purchase, management will perform a comprehensive review of the accounting policies of the two entities. As a result of the review, management may identify differences between the accounting policies of the two entities which, when conformed, could have a material impact on the financial statements of the combined company. Based on its initial analysis, management did not identify any differences that would have a material impact on the unaudited pro forma combined financial information. As a result, the unaudited pro forma combined financial information does not assume any differences in accounting policies.

3. Preliminary Purchase Price Allocation

The preliminary purchase price of Pogo has been allocated to the assets acquired and liabilities assumed for purposes of this pro forma financial information based on their estimated relative fair values. The purchase price allocations herein are preliminary. The final purchase price allocations for the Purchase will be determined after completion of a thorough analysis to determine the fair value of all assets acquired and liabilities assumed but in no event later than one year following the closing date of the acquisition. Accordingly, the final acquisition accounting adjustments could differ materially from the accounting adjustments included in the pro forma financial statements presented herein. Any increase or decrease in the fair value of the assets acquired and liabilities assumed, as compared to the information shown herein, could also change the portion of purchase price allocable to goodwill and could impact the operating results of the Company following the acquisition due to differences in purchase price allocation, depreciation and amortization related to some of these assets and liabilities.


Preliminary Purchase Price (maximum redemptions scenario):
Cash	$	31,074,127
Side Letter payable		1,925,873
Promissory note to Sellers of Pogo		15,000,000
10,000 HNRA Common stock options		67,700
200,000 HNRA Class A Common shares		1,354,000
1,800,000 OpCo Class B Units		12,186,000
2,000,000 OpCo Preferred Units		15,000,000
Total preliminary purchase consideration	$	76,607,700

Preliminary Purchase Price Allocation
Cash	$	3,269,728
Accounts receivable		3,263,185
Prepaid expenses		448,359
Operating lease assets		73,862
Property, plant and equipment		—
Oil & gas reserves		82,735,402
Derivative assets		8,902
Other assets		3,333
Accounts payable		(2,925,247	)
Accrued liabilities		(4,218,477	)
Asset retirement obligations, net		(5,300,008	)
Other liabilities		(675,000	)
Operating lease liability		(75,889	)
Net assets acquired	$	76,607,700

The preliminary fair value of the OpCo Class B Units is based on the equivalent of 1,800,000 shares of Class A common stock of HNR Acquisition Corp and a Closing price of the Company’s common stock at November 15, 2023, which was $6.77.

4. Adjustments to Unaudited Pro forma combined Financial Information

The unaudited pro forma combined financial information has been prepared to illustrate the effect of the Purchase and has been prepared for informational purposes only.

The pro forma combined provision for income taxes does not necessarily reflect the amounts that would have resulted had the combined company filed consolidated income tax returns during the periods presented.

The pro forma basic and diluted earnings per share amounts presented in the unaudited pro forma combined statement of operations are based upon the number of the combined company’s shares outstanding, assuming the Purchase occurred on January 1, 2021.

Transaction Adjustments

(A)

Reflects the deposit of $2,725,000 of working capital loans funded subsequent to September 30, 2023 and the conversion of $2,257,771 in principal and interest of certain working capital loans, pursuant to multiple exchange agreements, in exchange for 451,563 Class A common shares pursuant to the Exchange Agreements entered into with certain noteholders, including related parties as disclosed above.

(B)

Reflects the cash proceeds received upon disbursement of trust funds for redemptions, the forward purchase agreement and

(C)

Reflects net cash proceeds of $27,331,008 under a senior secured term loan in the amount of $28,000,000, net of closing costs of $668,992. Under the terms of the senior secured term loan, the Company must maintain a minimum cash balance of $2,600,000, reflected as restricted cash on the balance sheet, after closing of the MIPA.

(D)

Reflects the payment of the Base Purchase Price to the sellers of Pogo, consisting of the Cash Consideration of $31.0 million, the issuance of a $15.0 million seller note, side letter payable of $1.9 million, the issuance of 200,000 shares of Class A Common stock pursuant to the exercise of the OpCo Exchange Right, the issuance of 10,000 shares of Class A Common stock related to the Option Agreement, the issuance of 1,800,000 OpCo Class B units with an estimated fair value of $6.77 per share based on the Closing price of the Company’s common stock at November 15, 2023, and $15.0 million of OpCo Preferred Units. The estimated fair value of the OpCo Class B Units is presented as a noncontrolling interest until such time as the Exchange Right of the holders of OpCo Class B Units may be exercised. The OpCo Class B Units have no economic rights in OpCo, including, without limitation, no rights to distributions, profits or losses of OpCo, or any rights upon the occurrence of any liquidation of OpCo.

(E)

Reflects the payment of a portion of the deferred underwriting fee payable of $500,000 from HNRA’s initial public offering due to the closing. The estimated pro forma impact to accumulated deficit of $4,500,965 as of September 30, 2023 includes the $1,065,000 of closing costs accrued to accounts payable, $1,935,965 of transaction fees that will be settled through the issuance of 243,500 shares of common stock (based on an estimated price of $6.77 per share based on the Closing price of the Company’s common stock at November 15, 2023 for certain advisors), and $1,500,000 related to the fair value of shares to be issued to White Lion as a commitment fee in connection with Closing of the MIPA (see note J and K below).

(F)

Reflects the estimated fair value adjustments under the acquisition method of accounting from the preliminary purchase price allocation of the net assets of Pogo. See Note 3 to these unaudited proforma combined financial statements.

(G)

Reflects the elimination of Pogo long-term debt not assumed by HNRA in the Purchase.

(H)

Reflects the redemption of $36.4 million of temporary equity from the redemption of 3,323,707 shares of redeemable common stock from temporary equity to permanent equity as Class A common stock as a result of the Purchase.

(I)

Reflects the adjustments for the shares acquired by Meteora pursuant to the Non Redemption Agreements for 600,000 shares, with Meteora receiving $3,567,960 of funds from the Trust Account. Meteora also received $4,086,701 in funds from the Trust account pursuant to the Forward Purchase Agreement, whereby they acquired 50,070 Recycled Shares from Public Shareholders. The Company recognized a liability of $6,302,279 to account for the Forward Purchase Agreement as a derivative liability under FASB ASC 480 as of September 30, 2023. Changes in the fair value of the Forward Purchase Agreement will be recognized in earnings each reporting period. Meteora also received 90,000 shares of Class A Common Stock and $200,000 in cash as transaction fees.

(J)

Reflects the conversion of existing non-redeemable HNRA common stock to Class A common stock as a result of the Up-C structure.

(K)

Reflects the issuance of an estimated 500,000 shares of common stock with a value of $1,500,000 to White Lion as a commitment fee in connection with closing of the MIPA pursuant to the Common Stock Purchase Agreement. The estimated shares of common stock to be issued to White Lion are based on a stock price of $3.00 per share based on the Closing price of the Company’s common stock at November 16, 2023.

(L)

Reflects the issuance of an estimated 243,500 shares of common stock with a value of $1,935,965 to officers and advisors as a transaction fees in connection with closing of the MIPA. Includes 134,500 of shares to Founders related to the Founders Pledge Agreement. The estimated shares of common stock to be issued to White Lion are based on a stock price of $6.77 per share based on the Closing price of the Company’s common stock at November 15, 2023.

(M)

Reflects the remaining 445,626 unredeemed redeemable shares which are automatically converted into Class A Common Shares.

(N)

Reflects the change in value of the trust account and the redemption value of the shares to the actuals that were disbursed.

Adjustments to Unaudited Pro forma combined Statement of Operations

The pro forma adjustments included in the unaudited pro forma combined statement of operations for the nine months ended September 30, 2023, are as follows:

(O)

Reflects the reduction of the historical results of operations of POGO for the impact of the 10% overriding royalty interest in the acquired properties not acquired by the Company.

(P)

Reflects the adjustment to depletion, depreciation and amortization for the estimated new basis of property plant and equipment and oil and gas reserves as a result of the preliminary purchase price allocation.

(Q)

Reflects the adjustment to include $622,500 of quarterly salary of the Company’s officers, beginning after closing of the MIPA for three officers, pursuant to the Company’s compensation plan. This adjustment also includes the estimate of $270,000 of consulting fees payable to the Company’s President and an entity controlled by the Company’s Chairman pursuant to their consulting agreements entered into in February 2023, and $871,975 in expense related to one year of vesting of the RSU grants to those officers that pursuant to the Company’s compensation plan.

(R)

Reflects nine months of interest expense on the senior secured term loan pursuant to the Debt Commitment Letter, including amortization of deferred finance costs paid at closing. The senior secured term loan bear interest at Prime plus 6.5%.

(S)

Reflects nine months of interest expense related to the issuance of the Seller Promissory Note, as the pro forma closing of the Purchase is assumed to be January 1, 2022. The Seller Promissory Note will bear interest at the greater of 12% per annum or the highest interest rate applicable to HNR financing.

(T)

Reflects the reversal of historical interest expense of Pogo.

(U)

Reflects the reversal of interest income earned on marketable securities held in the Trust Account.

(V)

Represents the estimated income tax effect of the pro forma adjustments and calculated using the enacted applicable statutory income tax rates and the estimated income tax impact of historical Pogo results of operations being taxed under the Company’s structure as a C-Corporation.

The pro forma adjustments included in the unaudited pro forma combined statement of operations for the year ended December 31, 2022, are as follows:

(W)

Reflects the reduction of the historical results of operations of POGO for the impact of the 10% overriding royalty interest in the acquired properties not acquired by the Company.

(X)

(Y)

Reflects the adjustment to include $830,000 of annual salary of the Company’s officers beginning after closing of the MIPA for three officers, pursuant to the Company’s compensation plan. This adjustment also includes the estimate of $553,333 in expense related to one year of vesting of the RSU grants to those officers that pursuant to the Company’s compensation plan. Also includes $1,500,000 of expense for the shares of common stock to be issued to White Lion at closing of the MIPA in connect with the Common Stock Purchase Agreement and $360,000 of consulting fees payable and $609,300 of expense related to vesting of restricted stock grants to the Company’s President and an entity controlled by the Company’s Chairman pursuant to their consulting agreements entered into in February 2023.

(Z)

Reflects one year of interest expense on the senior secured term loan pursuant to the Debt Commitment Letter, including amortization of deferred finance costs paid at closing. The senior secured term loan is expected to bear interest at Prime plus 6.5%.

(AA)

Reflects a full year of interest expense related to the issuance of the Seller Promissory Note, as the pro forma closing of the Purchase is assumed to be January 1, 2022. The Seller Promissory Note will bear interest at the greater of 12% per annum or the highest interest rate applicable to HNR financing.

(AB)

Reflects the reversal of historical interest expense of Pogo.

(AC)

Reflects the reversal of interest income earned on marketable securities held in the Trust Account.

(AD)

5. Pro Forma Earnings per Share

Basic earnings per share is computed based on the historical weighted average number of shares of common stock outstanding during the period, and the issuance of additional shares in connection with the Purchase, assuming the shares were outstanding since January 1, 2022. As the Purchase is being reflected as if it had occurred at the beginning of the period presented, the calculation of weighted average shares outstanding for basic and diluted net loss per share assumes that the shares issuable in connection with the Purchase have been outstanding for the entire period presented. If the maximum number of Public Shares are redeemed, this calculation is retroactively adjusted to eliminate such shares for the entire period presented. Diluted earnings per share is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method.

The unaudited pro forma combined financial information has been prepared assuming three alternative levels of redemption for the nine months ended September 30, 2023 and for the year ended December 31, 2022:

	Pro Forma Combined
For the Nine Months Ended September 30, 2023
Pro forma net loss attributable to Class A common stockholders	$	(5,654,484	)
Pro forma net loss per share attributable to Class A common stockholders, basic and diluted	$	(1.10	)
Weighted average shares outstanding, basic and diluted		5,145,446
Excluded Securities⁽¹⁾
Public Warrants		8,625,000
Private Warrants		505,000

For the Year Ended December 31, 2022
Pro forma net income attributable to Class A common stockholders	$	2,281,735
Pro forma net income per share attributable to Class A common stockholders, basic and diluted	$	0.44
Weighted average shares outstanding, basic and diluted		5,139,585
Excluded Securities:⁽¹⁾
Public Warrants		8,625,000
Private Warrants		505,000

(1)

The potentially dilutive outstanding securities were excluded from the computation of pro forma net income per share, basic and diluted, because their effect would have been anti-dilutive, due to the exercise price of the Public Warrants and Private Warrants being greater that the average market price of the Company’s common stock.

6. Supplemental Oil and Gas Reserve Information (Unaudited)

Estimated Net Quantities of Oil and Gas Reserves

The pro forma estimates of proved oil and gas reserves and discounted future net cash flows for the Target Interests as of December 31, 2021 and December 31, 2022 were prepared by William M. Cobb & Associates, Inc. Users of this information should be aware that the process of estimating quantities of proved oil and gas reserves is very complex, requiring significant subjective decisions to be made in the evaluation of available geologic, engineering, and economic data for each reservoir. The data for any given reservoir may also change substantially over time as a result of numerous factors, including, but not limited to, additional development activity, evolving production history and continual reassessment of the viability of production under varying economic conditions. As a result, revisions to existing reserve estimates may occur from time to time. Although every reasonable effort is made to ensure reserve estimates reported represent the most accurate assessments possible, the subjective decisions and variance in available data for various reservoirs make estimates generally less precise than other estimates included in the statement of revenue and direct operating expenses disclosures.

The pro forma estimated proved net recoverable reserves presented below include only those quantities of oil and gas geologic and engineering data that demonstrate with reasonable certainty to be recoverable in future periods from known reservoirs under existing economic, operating and regulatory practices. Proved developed reserves represent only those reserves estimated to be recovered through existing wells. Proved undeveloped reserves include those reserves that may be recovered from new wells on undrilled acreage or from existing wells on which a relatively major expenditure for recompletion or secondary recovery operation is required. All of the pro forma properties’ proved reserves set forth herein are located in the Continental United States. The estimate of reserves and the standardized measure of discounted future net cash flows shown below reflect Pogo’s development plan for these properties.

The following tables set forth certain unaudited pro forma information concerning Pogo’s proved oil and gas reserves for the year ended December 31, 2022, giving effect to the Purchase as if it had occurred on January 1, 2022. The following tables provide a summary of the changes in estimated reserves for the periods presented and reconciles the changes from the original transaction estimates to the amended transaction estimates.

	Original Transaction								Reconciling Differences⁽²⁾								Amended Transaction
	HNRA (Mboe)		Pogo (Mboe)			Pro Forma Combined (Mboe)			HNRA (Mboe)		Pogo (Mboe)			Pro Forma Combined (Mboe)			HNRA (Mboe)		Pogo (Mboe)			Pro Forma Combined (Mboe)
Proved reserves as of January 1, 2022		—		18,487			18,487			—		(2,184	)		(2,184	)		—		16,303			16,303
Revisions of previous estimates⁽¹⁾		—		325			325			—		(29	)		(29	)		—		296			296
Extensions, discoveries and other additions		—		—			—			—		—			—			—		—			—
Purchases of reserves in place		—		—			—			—		—			—			—		—			—
Sales of reserves in place		—		—			—			—		—			—			—		—			—
Production		—		(473	)		(473	)		—		47			47			—		(426	)		(426	)
Proved reserves as of December 31, 2022		—		18,339			18,339			—		(2,166	)		(2,166	)		—		16,173			16,173
Proved developed reserves:
As of December 31, 2022		—		13,609			13,609			—		(1,608	)		(1,608	)		—		12,001			12,001
Proved undeveloped reserves:
As of December 31, 2022		—		4,730			4,730			—		(558	)		(558	)		—		4,172			4,172

(1)	The positive revision in 2022 is primarily attributable to the increase in year-end SEC commodity prices for oil and natural gas.

(2)	The reconciling differences as shown in the table above are the result of the 10% overriding royalty interest not acquired in the amended transaction.

Standardized Measure of Discounted Future Net Cash Flows

The pro forma standardized measure related to proved oil, gas and NGL reserves is summarized below. This summary is based on a valuation of proved reserves using discounted cash flows based on SEC pricing applicable for each year, costs and economic conditions and a 10% discount rate. The additions to proved reserves from new discoveries and extensions and the impact of changes in prices and costs associated with proved reserves could vary significantly from year to year. Accordingly, the information presented below is not an estimate of fair value and should not be considered indicative of any trends.

The pro forma standardized measure of discounted future cash flows does not purport, nor should it be interpreted to present, estimates of the fair value of the properties. An estimate of fair value would also take into account, among other things, the recovery of reserves not presently classified as proved, anticipated future changes in prices and costs and a discount factor more representative of the time value of money and risks inherent in reserve estimates.

The following summary sets forth future net cash flows relating to proved oil and gas reserves based on the standardized measure prescribed by FASB ASC Topic 932 and reconciles the changes from the original transaction estimates to the amended transaction estimates.

	Original Transaction								Reconciling Differences⁽¹⁾								Amended Transaction
	HNRA (Mboe)		Pogo (Mboe)			Pro Forma Combined (Mboe)			HNRA (Mboe)		Pogo (Mboe)			Pro Forma Combined (Mboe)			HNRA (Mboe)		Pogo (Mboe)			Pro Forma Combined (Mboe)
Future cash inflows	$	—	$	1,680,514		$	1,680,514		$	—	$	(198,481	)	$	(198,481	)		—		1,482,033			1,482,033
Future Cost
Production		—		(451,155	)		(451,155	)		—		16,450			16,450			—		(434,705	)		(434,705	)
Development		—		(124,216	)		(124,216	)		—		—			—			—		(124,216	)		(124,216	)
Future inflows before income tax		—		1,105,143			1,105,143			—		(182,031	)		(182,031	)		—		923,112			923,112
Future income tax expense		—		—			—			—		—			—			—		—			—
Future net cash flows		—		1,105,143			1,105,143			—		(182,031	)		(182,031	)		—		923,112			923,112
Discount of 10% per annum				(585,596	)		(585,596	)				96,144			96,144					(489,452	)		(489,452	)
Standardized measure of discounted future net cash flows	$	—	$	519,547		$	519,547		$	—	$	(85,887	)	$	(85,887	)	$	—	$	433,660		$	433,660

(1)	The reconciling differences as shown in the table above are the result of the 10% overriding royalty interest not acquired in the amended transaction.

In accordance with SEC and Financial Accounting Standards Board (“FASB”) requirements, our estimated net proved reserves and standardized measure at December 31, 2022 utilized prices (subsequently adjusted for quality and basis differentials) based on the twelve month unweighted average of the first of the month prices of West Texas Intermediate (“WTI”) oil price which equates to $93.67 per Bbl and an average Henry Hub spot gas price which equates to $6.358 per MMBtu of gas. Furthermore, future development costs include abandonment costs.

The following table sets forth the pro forma changes in standardized measure of discounted future net cash flows relating to proved oil and gas reserves for the periods indicated and reconciles the changes from the original transaction estimates to the amended transaction estimates.

Changes in Standardized Measure

	Original Transaction								Reconciling Differences⁽¹⁾								Amended Transaction
	HNRA (Mboe)		Pogo (Mboe)			Pro Forma Combined (Mboe)			HNRA (Mboe)		Pogo (Mboe)			Pro Forma Combined (Mboe)			HNRA (Mboe)		Pogo (Mboe)			Pro Forma Combined (Mboe)
Standardized measure, beginning of year	$	—	$	307,409		$	307,409		$	—	$	(57,226	)	$	(57,226	)	$	—	$	250,183		$	250,183
Accretion of discount				30,741			30,741					(5,723	)		(5,723	)				25,018			25,018
Net change in sales and transfer prices and in production (lifting) costs related to future production		—		176,448			176,448			—		(24,615	)		(24,615	)		—		151,833			151,833
Purchase of minerals in place		—		—			—			—		—			—			—		—			—
Changes in estimated future developments		—		12,926			12,926			—		—			—			—		12,926			12,926
Previously estimated development incurred during the period		—		2,100			2,100			—		—			—			—		2,100			2,100
Revision of quantity estimates		—		9,217			9,217			—		(1,182	)		(1,182	)		—		8,035			8,035
Net change in income taxes		—		—			—			—		—			—			—		—			—
Sales of oil and gas produced, net of production costs		—		(23,501	)		(23,501	)		—		3,646			3,646			—		(19,855	)		(19,855	)
Timing and other differences		—		4,207			4,207			—		(787	)		(787	)		—		3,420			3,420
Standardized measure, end of year	$	—	$	519,547		$	519,547			—		(85,887	)		(85,887	)		—	$	433,660		$	433,660

(1)	The reconciling differences as shown in the table above are the result of the 10% overriding royalty interest not acquired in the amended transaction.

Exhibit 99.3

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF POGO

The following discussion and analysis provide information that the management of Pogo Resources, LLC (referred to as the “Company”, “we”, “us”, “our” and “Pogo”) believes is relevant to an assessment and understanding of Pogo’s consolidated results of operations and financial condition. The discussion and analysis should be read together with the section of the Proxy Statement entitled “Summary Historical Consolidated Financial Information of Pogo”, Pogo’s interim unaudited condensed consolidated financial statements as of and for the three and nine months ended September 30, 2023 and 2022 and the related notes thereto included elsewhere in this Form 8-K.

This discussion and analysis contain forward-looking statements based upon Pogo’s current expectations, estimates and projections that involve risks and uncertainties. Actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors - Risks Related to Pogo” or elsewhere in this Proxy Statement.

Overview

We are an independent oil and natural gas company based in Texas and formed in 2017 that is focused on the acquisition, development, exploration, production and divestiture of oil and natural gas properties in the Permian Basin. The Permian Basin is located in west Texas and southeastern New Mexico and is characterized by high oil and liquids-rich natural gas content, multiple vertical and horizontal target horizons, extensive production histories, long-lived reserves and historically high drilling success rates. Pogo’s properties are in the Grayburg-Jackson Field in Eddy County, New Mexico, which is a sub-area of the Permian Basin. Pogo focuses primarily on production through waterflooding recovery methods.

Pogo is a limited liability company and is not subject to federal and state income taxes. However, it must file informational tax returns and all taxable income or loss flows through to the owners in their individual tax returns. Pogo had no authorized, issued and outstanding units for any of the financial periods presented in this Form 8-K and the Proxy Statement.

The Company’s assets as mentioned above consist of contiguous leasehold positions of approximately 13,700 gross (13,700 net) acres with an average working interest of 100%. We operate 100% of the net acreage across the Company’s assets, all of which is net operated acreage of vertical wells with average depths of approximately 3,810 feet.

Our average daily production for the three months ended September 30, 2023, was 1,023 barrel of oil equivalent (“Boe”) per day, and for the three months ended September 30, 2022 was 1,391 Boe per day. Our average daily production for the nine months ended September 30, 2023, was 1,129 barrel of oil equivalent (“Boe”) per day, and for the nine months ended September 30, 2022 was 1,323 Boe per day. The decrease in production is due to an increase in well downtime and the conveyance of the 10% Override royalty interest to Pogo Royalty, LLC during the three and nine months ended September 30,2023.

Impact of Coronavirus (“COVID-19”)

The COVID-19 pandemic resulted in a severe worldwide economic downturn , significantly disrupting the demand for oil throughout the world, and created significant volatility, uncertainty and turmoil in the oil and gas industry. The decrease in demand for oil, combined with pressures on the global supply-demand balance for oil and related products, resulted in oil prices declining significantly in late February 2020. Since mid-2020, oil prices have improved, with demand steadily increasing despite the uncertainties surrounding the COVID-19 variants, which have continued to inhibit a full global demand recovery. In addition, worldwide oil inventories are, from a historical perspective, very low and supply increases from the Organization of the Petroleum Exporting Countries (“OPEC”), Russia and other oil producing nations are not expected to be sufficient to meet forecasted oil demand growth in 2023, with many OPEC countries not able to produce at their OPEC agreed upon quota levels due to their lack of capital investments over the past few years in developing incremental oil supplies.

Global oil price levels will ultimately depend on various factors and consequences beyond the Company’s control, such as: (i) the effectiveness of responses to combat the COVID-19 virus and their impact on domestic and worldwide demand, (ii) the ability of OPEC, Russia and other oil producing nations to manage the global oil supply, (iii) the timing and supply impact of any Iranian sanction relief on Iran’s ability to export oil, (iv) additional actions by businesses and governments in response to the pandemic, (v) the global supply chain constraints associated with manufacturing delays, and (vi) political stability of oil consuming countries.

The Company continues to assess the impact of the COVID-19 pandemic on the Company and may modify its response as the impact of COVID-19 continues to evolve.

Selected Factors That Affect Our Operating Results

Our revenues, cash flows from operations and future growth depend substantially upon:

●

the timing and success of production and development activities;

●

the prices for oil and natural gas;

●

the quantity of oil and natural gas production from our wells;

●

changes in the fair value of the derivative instruments we use to reduce our exposure to fluctuations in the price of oil and natural gas;

●

our ability to continue to identify and acquire high-quality acreage and development opportunities; and

●

the level of our operating expenses.

In addition to the factors that affect companies in our industry generally, the location of substantially all of our acreage discussed above subjects our operating results to factors specific to these regions. These factors include the potential adverse impact of weather on drilling, production and transportation activities, particularly during the winter and spring months, as well as infrastructure limitations, transportation capacity, regulatory matters and other factors that may specifically affect one or more of these regions.

The price at which our oil and natural gas production are sold typically reflects either a premium or discount to the New York Mercantile Exchange (“NYMEX”) benchmark price. Thus, our operating results are also affected by changes in the oil price differentials between the applicable benchmark and the sales prices we receive for our oil production. Our oil price differential to the NYMEX benchmark price during the three and nine months ended September 30, 2023, was $(0.27) and $(0.88) per barrel, respectively, as compared to $0.95 and $0.93 per barrel, in the three and nine months ended September 30, 2022, respectively. Our natural gas price differential during the three and nine months ended September 30, 2023, was $0.24 and $0.14 per one thousand cubic feet (“Mcf”), respectively, as compared to $(3.36) and $(2.03) per one thousand cubic feet (“Mcf”), in the three and nine months ended September 30, 2022, respectively. Fluctuations in our price differentials and realizations are due to several factors such as gathering and transportation costs, takeaway capacity relative to production levels, regional storage capacity, gain/loss on derivative contracts and seasonal refinery maintenance temporarily depressing demand.

Market Conditions

The price that we receive for the oil and natural gas we produce is largely a function of market supply and demand. Because our oil and gas revenues are heavily weighted toward oil, we are more significantly impacted by changes in oil prices than by changes in the price of natural gas. World-wide supply in terms of output, especially production from properties within the United States, the production quota set by OPEC, and the strength of the U.S. dollar can adversely impact oil prices.

Historically, commodity prices have been volatile, and we expect the volatility to continue in the future. Factors impacting the future oil supply balance are world-wide demand for oil, as well as the growth in domestic oil production.

Prices for various quantities of natural gas and oil that we produce significantly impact our revenues and cash flows. The following table lists average NYMEX prices for oil and natural gas for the three and nine months ended September 30, 2023, and 2022.

	For the three months ended September 30,
	2023		2022
Average NYMEX Prices ⁽¹⁾
Oil (per Bbl)	$	82.30	$	93.18
Natural gas (per Mcf)	$	2.59	$	7.99

	For the nine months ended September 30,
	2023		2022
Average NYMEX Prices ⁽¹⁾
Oil (per Bbl)	$	77.38	$	98.79
Natural gas (per Mcf)	$	2.47	$	6.71

(1)

Based on average NYMEX closing prices.

For the three months ended September 30, 2023, the average NYMEX oil pricing was $82.30 per barrel of oil or 12% lower than the average NYMEX price per barrel for the three months ended September 30, 2022. Our settled derivatives decreased our realized oil price per barrel by $7.80 and $2.41 in the three months ended September 30, 2023, and 2022, respectively. For the three months ended September 30, 2023, our average realized oil price per barrel after reflecting settled derivatives and location differentials was $74.23 compared to $91.72 for the three months ended September 30, 2022.

The average NYMEX natural gas pricing for the three months ended September 30, 2023, was $2.59 per Mcf, or 68% lower than the average NYMEX price per Mcf for the three months ended September 30, 2022. For the three months ended September 30, 2023, our average realized natural gas price per Mcf was $2.83 compared to $4.63 for the three months ended September 30, 2022.

For the nine months ended September 30, 2023, the average NYMEX oil pricing was $77.38 per barrel of oil or 22% lower than the average NYMEX price per barrel for the nine months ended September 30, 2022. Our settled derivatives decreased our realized oil price per barrel by $3.47 and $22.53 in the nine months ended September 30, 2023, and 2022, respectively. For the nine months ended September 30, 2023, our average realized oil price per barrel after reflecting settled derivatives and location differentials was $73.03 compared to $77.19 for the nine months ended September 30, 2022.

The average NYMEX natural gas pricing for the nine months ended September 30, 2023, was $2.47 per Mcf, or 63% lower than the average NYMEX price per Mcf for the nine months ended September 30, 2022. For the nine months ended September 30, 2023, our average realized natural gas price per Mcf was $2.61 compared to $4.68 for the nine months ended September 30, 2022.

Pogo Royalty, LLC Overriding Royalty Interest Transaction

Effective July 1, 2023, the Company transferred to Pogo Royalty, LLC, a related party, an assigned an undivided overriding royalty interest (“ORRI”) equal in amount to ten percent (10%) of Pogo Resources, LLC’s and LH Operating, LLC’s interest all oil, gas and minerals in, under and produced from each lease. The consideration received for the 10% ORRI was $10. Thus, a loss of $816,011 was recorded as a result of the conveyance. Additionally, because of this transaction, the Company’s reserve balance was decreased as well on net production volumes. Additional details are discussed in Note 1 and Note 7 of notes to the consolidated financial statements.

Results of Operations

Three and nine months ended September 30, 2023 Compared to Three and nine months ended September 30, 2022 (unaudited)

For the three months ended September 30, 2023, 84% and 16% of sales volumes were attributable to crude and natural gas, respectively. For the nine months ended September 30, 2023, 85% and 15% of sales volumes were attributable to crude and natural gas, respectively. Further, as of September 30, 2023, the Company owned an interest in approximately 341 gross (341 net) producing wells.

The following table sets forth selected operating data for the periods indicated. Average sales prices are derived from accrued accounting data for the relevant period indicated.

	For the three months ended September 30,
	2023			2022
Net sales:
Oil sales	$	6,314,104		$	10,021,672
Natural gas		256,741			520,810
Gain (loss) on derivative instruments, net		(1,436,100	)		205,116
Other revenue		143,714			102,783
Total revenues	$	5,278,459		$	10,850,381

Average sales prices:
Oil (per Bbl)	$	82.03		$	94.13
Effect on gain (loss) of settled oil derivatives on average price (per Bbl)	$	(7.80	)	$	(2.41	)
Oil net of settled oil derivatives (per Bbl)	$	74.23		$	91.72

Natural gas (per Mcf)	$	2.83		$	4.63

Realized price on a Boe basis excluding settled commodity derivatives	$	71.35		$	84.20
Effect of gain (loss) on settled commodity derivatives on average price (per Boe)	$	(6.52	)	$	(2.05	)
Realized price on a Boe basis including settled commodity derivatives	$	64.83		$	82.15

Operating expenses
Lease operating expenses	$	2,449,140		$	2,014,095
Production taxes, transportation, and processing		602,449			924,845
Depreciation, depletion, and amortization expense		426,838			445,902
General and administrative		981,751			490,485
Accretion of asset retirement obligations		200,789			320,330
Total operating expenses	$	4,660,967		$	4,195,657

Costs and expenses (per Boe):
Lease operating expenses	$	26.60		$	16.09
Production taxes, transportation, and processing	$	6.54		$	7.39
Depreciation, depletion, and amortization expense	$	4.64		$	3.56
General and administrative	$	10.66		$	3.92
Accretion of asset retirement obligations	$	2.18		$	2.56

Net producing wells at period-end		341			342

	For the nine months ended September 30,
	2023			2022
Net sales:
Oil sales	$	19,814,847		$	29,877,117
Natural gas		719,383			1,618,259
Gain (loss) on derivative instruments, net		(673,057	)		(3,698,181	)
Other revenue		461,435			102,783
Total revenues	$	20,322,608		$	27,899,978

Average sales prices:
Oil (per Bbl)	$	76.50		$	99.72
Effect on gain (loss) of settled oil derivatives on average price (per Bbl)	$	(3.47	)	$	(22.53	)
Oil net of settled oil derivatives (per Bbl)	$	73.03		$	77.19

Natural gas (per Mcf)	$	2.61		$	4.68

Realized price on a Boe basis excluding settled commodity derivatives	$	67.34		$	88.16
Effect of gain (loss) on settled commodity derivatives on average price (per Boe)	$	(2.95	)	$	(18.89	)
Realized price on a Boe basis including settled commodity derivatives	$	64.39		$	69.27

Operating expenses
Lease operating expenses	$	7,354,304		$	6,096,096
Production taxes, transportation, and processing		1,774,310			2,745,314
Depreciation, depletion, and amortization expense		1,285,830			1,168,541
General and administrative		3,111,130			1,831,005
Accretion of asset retirement obligations		809,423			876,848
Total operating expenses	$	14,334,997		$	12,717,804

Costs and expenses (per Boe):
Lease operating expenses	$	24.12		$	17.06
Production taxes, transportation, and processing	$	5.82		$	7.68
Depreciation, depletion, and amortization expense	$	4.22		$	3.27
General and administrative	$	10.20		$	5.13
Accretion of asset retirement obligations	$	2.65		$	2.45

Net producing wells at period-end		341			342

Oil and Natural Gas Sales

Our revenues vary from year to year primarily as a result of changes in realized commodity prices and production volumes. For the three months ended September 30, 2023, our oil and natural gas sales decreased 38% from the three months ended September 30, 2022, driven by a 13% decrease in realized prices, excluding the effect of settled commodity derivatives, and a 26% decrease in production volumes. For the nine months ended September 30, 2023, our oil and natural gas sales decreased 35% from the nine months ended September 30, 2022, driven by a 23% decrease in realized prices, excluding the effect of settled commodity derivatives, and an 15% decrease in production volumes. The lower average price in the three months ended September 30, 2023, as compared to the three and nine months ended September 30, 2022 was driven by lower average NYMEX oil and natural gas prices. Realized production from oil and gas properties decreased due to an increase in well downtime as a result of power disruptions from weather events and due to the July 1, 2023 conveyance of the 10% overriding royalty interest to Pogo Royalty, LLC during the three and nine months ended September 30,2023.

Production for the comparable periods is set forth in the following table:

	For the three months ended September 30,				For the nine months ended September 30,
	2023		2022		2023		2022
Production:
Oil (MBbl)		77		106		259		300
Natural gas (MMcf)		91		112		275		346
Total (Mboe)⁽¹⁾		92		125		305		357

Average daily production:
Oil (Bbl)		855		1,183		959		1,110
Natural gas (Mcf)		1,007		1.249		1,021		1.280
Total (Boe)⁽¹⁾		1,023		1.391		1,129		1.323

(1)

Natural gas is converted to Boe at the rate of one-barrel equals nine Mcf based upon the approximate relative energy content of oil and natural gas, which is not necessarily indicative of the relationship of oil and natural gas prices.

Derivative Contracts

We enter into commodity derivatives instruments to manage the price risk attributable to future oil production. We recorded a loss on derivative contracts of $1,436,100 for the three months ended September 30, 2023, compared to a gain of $205,116 for the three months ended September 30, 2022. Lower commodity prices in the three months ended September 30, 2023, resulted in realized losses of $600,740 compared to realized losses of $256,905 for the three months ended September 30, 2022. For the three months ended September 30, 2023, unrealized losses were $835,360 compared to unrealized gains of $462,021 for the three months ended September 30, 2022.

We recorded a loss on derivative contracts of $673,057 for the nine months ended September 30, 2023, compared to a loss of $3,698,181 for the nine months ended September 30, 2022. Lower commodity prices in the nine months ended September 30, 2023, resulted in realized losses of $899,395 compared to realized losses of $6,749,084 for the nine months ended September 30, 2022. For the nine months ended September 30, 2023, unrealized gains were $226,338 compared to unrealized gains of $3,050,903 for the nine months ended September 30, 2022.

For the three months ended September 30, 2023, our average realized oil price per barrel after reflecting settled derivatives was $74.23 compared to $91.72, for the three months ended September 30, 2022. For the three months ended September 30, 2023, our settled derivatives decreased our realized oil price per barrel by $7.80 compared to decreasing the price per barrel by $2.41 for the three months ended September 30, 2022.

For the nine months ended September 30, 2023, our average realized oil price per barrel after reflecting settled derivatives was $73.03 compared to $77.19, for the nine months ended September 30, 2022. For the nine months ended September 30, 2023, our settled derivatives decreased our realized oil price per barrel by $3.47 compared to decreasing the price per barrel by $22.53 for the nine months ended September 30, 2022. As of September 30, 2023, we ended the period with a $965,016 net derivative liability compared to $1,191,354 as of December 31, 2022.

Other Revenue

Other revenue was $143,714 for the three months ended September 30, 2023, compared to $102,783 for the three months ended September 30, 2022. Other revenue was $461,435 for the nine months ended September 30, 2023, compared to $102,783 for the nine months ended September 30, 2022. The revenue is related to a new contract that the Company entered into to provide water services to a third party. The contract is for one year starting on September 1, 2022, and can be renewed by mutual agreement.

Lease Operating Expenses

Lease operating expenses were $2,449,140 for the three months ended September 30, 2023, compared to $2,014,095 for the three months ended September 30, 2022. On a per unit basis, production expenses increased 65% from $16.09 per Boe for the three months ended September 30, 2022, to $26.60 per Boe for the three months ended September 30, 2023, due to increases in proactive maintenance activities and increased oil field service costs. Additionally, because of the conveyance of the 10% ORRI, the net production volumes decreased, which increases the “per Boe” amounts. On an absolute dollar basis, the 22% increase in our production related expenses for the three months ended September 30, 2023, compared to the three months ended September 30, 2022, was primarily due to a 65% increase in per unit costs and partially offset by a 26% reduction in production volumes.

Lease operating expenses were $7,354,304 for the nine months ended September 30, 2023, compared to $6,096,096 for the nine months ended September 30, 2022. On a per unit basis, production expenses increased 41% from $17.07 per Boe for the nine months ended September 30, 2022, to $24.12 per Boe for the nine months ended September 30, 2023, due to increases in proactive maintenance activities and increased oil field service costs. Additionally, because of the conveyance of the 10% ORRI, the net production volumes decreased, which increases the “per Boe” amounts. On an absolute dollar basis, the 21% increase in our production related expenses for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, was primarily due to a 41% increase in per unit costs and partially offset by a 15% reduction in production volumes.

Production Taxes, Transportation and Processing

We pay production taxes, transportation and processing costs based on realized oil and natural gas sales. Production taxes, transportation and processing costs were $602,449 for the three months ended September 30, 2023, compared to $924,845 for the three months ended September 30, 2022. Production taxes, transportation and processing costs were $1,774,310 for the nine months ended September 30, 2023, compared to $2,745,314 for the nine months ended September 30, 2022. As a percentage of oil and natural gas sales, these costs were 9% in both the three and nine months ended September 30, 2023, and 2022. Production taxes, transportation, and processing as a percent of total oil and natural gas sales are consistent with historical trends.

Depletion, Depreciation and Amortization

Depletion, depreciation and amortization (“DD&A”) was $426,838 for the three months ended September 30, 2023, compared to $445,902 for the three months ended September 30, 2022. DD&A was $4.64 per Boe for the three months period ended September 30, 2023, compared to $3.56 per Boe for the three month period ended September 30, 2022. The aggregate decrease in DD&A expense for the three months period ended September 30, 2023, compared to the three month period ended September 30, 2022, was driven by a 26% decrease in production levels, partially offset by a 30% increase in the DD&A rate per Boe.

Depletion, depreciation and amortization (“DD&A”) was $1,285,830 for the nine months ended September 30, 2023, compared to $1,168,541 for the nine months ended September 30, 2022. DD&A was $4.22 per Boe for the nine months period ended September 30, 2023, compared to $3.27 per Boe for the nine month period ended September 30, 2022. The aggregate increase in DD&A expense for the nine months period ended September 30, 2023, compared to the nine month period ended September 30, 2022, was driven by a 29% increase in the DD&A rate per Boe, partially offset by a 15% decrease in production levels. The increase in the DD&A rate per Boe was driven by the increase in the oil and gas properties balance due to the development of the Seven Rivers waterflood interval and the decrease in the reserves balance due to the conveyance of the 10% overriding royalty interest to Pogo Royalty, LLC during Q3 2023.

Accretion of Asset Retirement Obligations

Accretion expense was $200,789 for the three months ended September 30, 2023, compared to $320,330 for the three months ended September 30, 2022. Accretion expense was $2.18 per Boe for the three months ended September 30, 2023, compared to $2.56 per Boe for the three months ended September 30, 2022.

Accretion expense was $809,423 for the nine months ended September 30, 2023, compared to $876,848 for the nine months ended September 30, 2022. Accretion expense was $2.65 per Boe for the nine months ended September 30, 2023, compared to $2.45 per Boe for the nine months ended September 30, 2022. The aggregate decrease in accretion expense for the three and nine months ended September 30, 2023, compared to the three and nine months ended September 30, 2022, was driven by changes in certain assumptions, specifically the inflation factor.

General and Administrative

General and administrative expenses were $981,751 for the three months ended September 30, 2023, compared to $490,485 for the three months ended September 30, 2022. General and administrative expenses were $3,111,130 for the nine months ended September 30, 2023, compared to $1,831,005 for the nine months ended September 30, 2022. The increase for general and administrative expenses is primarily due to increased cost of outsourced legal, professional, and accounting services as a result of the transaction disclosed in Note 1 in the notes to the consolidated financial statements.

Interest Expense

Interest expense was $554,262 for the three months ended September 30, 2023, compared to $313,406 for the three months ended September 30, 2022. Interest expense was $1,429,200 for the nine months ended September 30, 2023, compared to $720,093 for the nine months ended September 30, 2022. The increase was primarily due to an increase in the average amount of the revolving credit facility outstanding and a 547-basis point increase in the weighted average interest rate.

Interest Income

Interest income was $92,520 for the three months ended September 30, 2023, compared to $0 for the three months ended September 30, 2022. Interest income was $266,771 for the nine months ended September 30, 2023, compared to $0 for the nine months ended September 30, 2022. The increase was due to the Company entering into a related party promissory note receivable agreement in December 2022 with an entity controlled by owners of the Company in an amount of $4,000,000. The loan bears interest at a rate equal to that of the rate that the Company pays to borrow funds for its own account plus 0.5%. Accrued interest and principal are due at maturity on December 31, 2024.

Loss on asset sales

Loss on asset sales was $816,011 for the three and nine months ended September 30, 2023, compared to $0 for the three and nine months ended September 30, 2022. The increase was due to the loss that was recognized as a result of the conveyance of the 10% overriding royalty interest to Pogo Royalty, LLC during the three and nine months ended September 30,2023.

Liquidity and Capital Resources

Nine months ended September 30, 2023, Compared to nine months ended September 30, 2022 (unaudited)

Liquidity

Our main sources of liquidity have been internally generated cash flows from operations and credit facility borrowings. Our primary use of capital has been for the development of oil and gas properties and the return of initial invested capital to our owners. We continually monitor potential capital sources for opportunities to enhance liquidity or otherwise improve our financial position.

As of September 30, 2023, we had outstanding debt of $24,750,000 under our revolving credit facility and $702,600 of letters of credit outstanding, resulting in $47,400 of committed borrowing capacity available under the revolving credit facility. The revolving credit facility matures in December 2024. We had $3,316,678 of liquidity as of September 30, 2023, consisting of the committed borrowing capacity and $3,269,278 of cash and cash equivalents on hand.

With our cash on hand, cash flows from operations, and borrowing capacity under our revolving credit facility, we believe that we have sufficient cash flow and liquidity to fund our budgeted capital expenditures and operating expenses for at least the next twelve months. However, we may seek additional access to capital and liquidity. We cannot assure you, however, that any additional capital will be available to us on favorable terms or at all.

We expect to fund our near-term capital requirements and working capital needs with cash flows from operations and any available borrowing capacity under our revolving credit facility. Our capital expenditures could be curtailed if our cash flows decline from expected levels.

Cash Flows

Sources and uses of cash for the nine months ended September 30, 2023, and 2022, are as follows:

	(unaudited)
	Nine months ended September 30,
	2023			2022			Change
Net cash provided by operating activities	$	8,311,832		$	14,741,877		$	(6,430,045	)
Net cash used in investing activities		(5,058,869	)		(14,307,196	)		9,248,327
Net cash provided by financing activities		(2,000,000	)		1,000,000			(3,000,000	)
Net change in cash and cash equivalents	$	1,252,963		$	1,434,681		$	(181,718	)

Operating Activities

The decrease in net cash flow provided by operating activities during the nine months ended September 30, 2023, as compared to 2022 is primarily due to decreased net income as a result of decreased prices and production volumes.

Investing Activities

The decrease in net cash used in investing activities during the nine months ended September 30, 2023, as compared to 2022 is primarily due to a decrease in spend on the development of oil and gas properties and partially offset by increases in the issuance of related party notes.

Financing Activities

The decrease in net cash provided by financing activities during the nine months ended September 30, 2023, as compared to 2022 is due to repayments instead of additional draws on the revolving credit facility.

Off Balance Sheet Arrangements

As of and for the nine months ended September 30, 2023 and 2022, the Company did not have any off-balance sheet arrangements, as defined in the rules and regulations of the Securities and Exchange Commission (“SEC”).

Contractual Obligations

We have contractual commitments under our revolving credit facility which include periodic interest payments. See Note 6 to our interim condensed consolidated unaudited financial statements. We have contractual commitments that may require us to make payments upon future settlement of our commodity derivative contracts. See Note 3 to our interim condensed consolidated unaudited financial statements. We have short-term and long-term lease obligations primarily that relate to contracted drilling rigs, storage tanks, equipment, and office facilities. See Note 5 to our interim condensed consolidated unaudited financial statements.

The Company’s other liabilities represent current and noncurrent other liabilities that are primarily comprised of environmental contingencies, asset retirement obligations and other obligations for which neither the ultimate settlement amounts nor their timings can be precisely determined in advance. See Note 5 and Note 9 of notes to the consolidated financial statements as of and the periods ended December 31, 2022, and 2021, included in the Proxy Statement.

Critical Accounting Estimates

For a description of the Company’s critical accounting estimates, refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations of POGO for fiscal year 2022 in the Proxy Statement. We did not have any material changes in critical accounting estimates, judgements, and uncertainties during the first nine months of 2023.

New Accounting Pronouncements

The effects of new accounting pronouncements are discussed in Note 2 of notes to the consolidated financial statements.

Exhibit 99.4

HNR Acquisition Corp Announces Completion of its Business Combination by Acquisition of Pogo Resources, LLC; HNRA begins Managing and Operating the Grayburg-Jackson Oil Field; HNRA’s Stock will Continue to Trade on the NYSE American Stock Exchange

HOUSTON, TX / ACCESSWIRE / November 15, 2023 / HNR Acquisition Corp (NYSE American:HNRA) (the “Company” or “HNRA”), which was a special purpose acquisition company, today announced the completion of its business combination with Pogo Resources, LLC and its subsidiaries.

About the Business Combination through Acquisition

HNRA has completed its business combination through acquisition of all of the equity interests in Pogo Resources LLC and its subsidiaries (“Pogo”) whose assets include interests in the Grayburg-Jackson oil field in the prolific Permian Basin in Eddy County, New Mexico.

The Grayburg-Jackson oil field is located on the Northwest Shelf of the Permian Basin in Eddy County, New Mexico. According to the United States Geological Survey, the Northwest Shelf contains the largest recoverable reserves among all the unconventional basins in the United States. Pogo’s holdings comprise 13,700 contiguous leasehold acres, 343 producing wells and 207 injection wells for a total of 550 wells. Current production is approximately 1,400 barrels of oil and oil equivalent per day. Management expects to increase daily production to nearly 4,000 barrels of oil and oil equivalent in the next three (3) years in accordance with a reserve report by William M. Cobb & Associates, Inc. a 3^rd party engineering firm engaged by Pogo.

William M. Cobb Associates, Inc., a worldwide independent petroleum engineering firm founded in 1983, was retained in 2022 as an independent third party to estimate proven reserves and future income of the property. William M. Cobb & Associates, Inc. estimates proven reserves of $434 million. Pogo generated $35 million in revenues with solid cash flow and earnings in 2022.

The VP of Operations of HNRA has 40+ years of experience in similar water flood oil fields. HNRA also will retain all 12 field employees and supervisors. Field supervisors each have 10-15 years of extensive industry experience.

Joseph V. Salvucci, chairman of the board, said “Our management team worked extremely hard to find the right combination that met our business plan. Pogo Resources, LLC fit all of our criteria for revenues, earnings. The management team has many years of experience in the oil and gas business. We believe that there is a significant upside to grow the company and expand the revenues and profits”.

Dean Rojas, CEO, said, “In all the years I have worked in the petroleum industry, I have never seen such upside potential in one field as I see in the Grayburg-Jackson Field. Not only do I believe we will be increasing production by at least two and a half times to approximately 4,000 barrels a day in 36 months, but there is potential at deeper levels in the Field. Our research indicates that the stacked-play potential of the Northwest Shelf of the Permian Basin, combined with favorable drilling economics, supports our findings that by continuing to improve our leasehold position, well-spacing and completions, we will recover a greater portion of oil from the reserves. In addition, we have a superior management and operating team with many years of experience in the petroleum industry.”

Mitchell B. Trotter, CFO, said, “With free cash flow and growth, we expect to pay down debt and build a very strong balance sheet. With our philosophy in managing the Field, we will institute a hedging program to protect our profits while we grow and develop the Field.” He continued, “We intend to aggressively look to acquire working interests in substantial resources in the Permian Basin. We expect to expand the Grayburg-Jackson Field by focusing on acquisitions that complement our current footprint in the Permian Basin. By targeting working interests, contiguous acreage positions that have a history of predictability, and stable oil and gas production rates, we anticipate significant increases in revenues and profits.”

About HNR Acquisition Corp

Until today, HNRA was a blank check company (otherwise known as a special purpose acquisition company or SPAC) formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities. HNRA’s stock will continue to trade on the NYSE American Stock Exchange.

For more information on HNRA, the acquisition and the transaction, please visit the Company website: https://www.hnra-nyse.com/

Forward-Looking Statements

This press release includes “forward-looking statements” that involve risks and uncertainties that could cause actual results to differ materially from what is expected, including the funding of the Trust Account to further extend the period for the Company to consummate an initial business combination, if needed. Words such as “expects,” “believes,” “anticipates,” “intends,” “estimates,” “seeks,” “may,” “might,” “plan,” “possible,” “should” and variations and similar words and expressions are intended to identify such forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Such forward-looking statements relate to future events or future results, based on currently available information and reflect the Company’s management’s current beliefs. A number of factors could cause actual events or results to differ materially from the events and results discussed in the forward-looking statements. Important factors - including the availability of funds, the results of financing efforts and the risks relating to our business - that could cause actual results to differ materially from the Company’s expectations are disclosed in the Company’s documents filed from time to time on EDGAR (see www.edgar-online.com) and with the Securities and Exchange Commission (see www.sec.gov). Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Investor Relations

Michael J. Porter, President
PORTER, LEVAY & ROSE, INC.
mike@plrinvest.com

SOURCE: HNR Acquisition Corp.

Cover	Nov. 15, 2023
Document Type	8-K
Amendment Flag	false
Document Period End Date	Nov. 15, 2023
Current Fiscal Year End Date	--12-31
Entity File Number	001-41278
Entity Registrant Name	HNR ACQUISITION CORP
Entity Central Index Key	0001842556
Entity Tax Identification Number	85-4359124
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	3730 Kirby Drive
Entity Address, Address Line Two	Suite 1200
Entity Address, City or Town	Houston
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77098
City Area Code	713
Local Phone Number	834-1145
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false
Class A Common stock, par value $0.0001 per share
Title of 12(b) Security	Class A Common stock, par value $0.0001 per share
Trading Symbol	HNRA
Security Exchange Name	NYSEAMER
Redeemable warrants, exercisable for three quarters of one share of Class A Common Stock at an exercise price of $11.50 per share
Title of 12(b) Security	Redeemable warrants, exercisable for three quarters of one share of Class A Common Stock at an exercise price of $11.50 per share
Trading Symbol	HNRAW
Security Exchange Name	NYSEAMER

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