Overview

The Restructuring shall be implemented through the Chapter 11 Cases and pursuant to the Pre-Packaged Chapter 11 Plan with the support of the ad hoc committee of Second Lien Noteholders represented by Akin Gump Strauss Hauer & Feld LLP (the “Ad Hoc Committee”).

To effectuate the Restructuring, certain parties, including the Company and the Consenting Noteholders, shall execute a Restructuring Support Agreement (the “RSA”) consistent with the material terms set forth herein.² This Term Sheet shall be attached to, and incorporated into, the RSA.

The Chapter 11 Cases shall be funded by existing cash on hand in accordance with the terms of a cash collateral order acceptable to the Ad Hoc Committee. ³

The effective date of the Restructuring (the “Effective Date”) will be the date on which all conditions to the effectiveness of the Pre-Packaged Chapter 11 Plan have been satisfied or waived in accordance with its terms and the Pre-Packaged Chapter 11 Plan has been substantially consummated.

The current capital structure of the Company is as follows:

•  Indebtedness under that certain term loan agreement, dated as of April 28, 2017 (as may be amended, supplemented, amended and restated, or otherwise modified from time to time, the “Term Loan Agreement”), among the Company, as borrower, Angelo, Gordon Energy Servicer, LLC (“AGES”), as administrative agent (in such capacity, the “Administrative Agent”), AGES, as collateral agent, Macquarie Bank Limited, as issuing bank, and the lenders from time to time party thereto, comprised of a term loan (the “First Lien Term Loan”) in an aggregate principal amount outstanding of $143,500,000 as of June 30, 2017.

NTD: Any in-court process without the support of the First Lien Term Loan will be premised upon nonconsensual use of cash collateral or DIP financing to be provided by the Ad Hoc Committee.

•  Indebtedness under that certain indenture, dated as of March 31, 2016 (as may be amended, supplemented, amended and restated, or otherwise modified from time to time, the “Second Lien Notes Indenture”), by and among the Company, the guarantors named therein, and Wilmington Trust, National Association as trustee (the “Indenture Trustee”), comprised of the Company’s 1.00%/8.00% Senior Secured Second Lien Notes due 2020 (collectively, such notes, the “Second Lien Notes,” and, the holders thereof, the “Second Lien Noteholders”) in an aggregate principal amount outstanding of $587,606,000 as of June 30, 2017.

•  Indebtedness under that certain indenture dated as of July 14, 2014 (as amended in the First Supplemental Indenture, dated as of March 31, 2016, and as may be further amended, supplemented, amended and restated, or otherwise modified from time to time, the “2022 Notes Indenture”), by and among the Company, the guarantors named therein, and Wilmington Trust, National Association as trustee, comprised of 6.250% Senior Notes due 2022 (the “2022 Notes”) in an aggregate principal amount outstanding of $5,363,000 as of June 30, 2017.

•  Indebtedness under that certain indenture dated as of December 12, 2012 (as amended in the First Supplemental Indenture, dated as of March 31, 2016, and as may be further amended, supplemented, amended and restated, or otherwise modified from time to time, the “2020 Notes Indenture”), by and among the Company, the guarantors named therein, and Wilmington Trust, National Association as trustee, comprised of 8.875% Senior Notes due 2020 (the “2020 Notes” and, together with the 2022 Notes, the “Unsecured Notes”) in an aggregate principal amount outstanding of $7,333,000 as of June 30, 2017.

•  Equity interests in the Company, including shares of common stock (“Common Stock”) and shares of 6.0% Convertible Perpetual Preferred Stock, Series A (“Preferred Stock” and, together with Common Stock, the “Existing Equity Interests”, and the holders of the Existing Equity Interests, the “Existing Equityholders”).

•  Direct and indirect interests in the Company and certain of its direct and indirect subsidiaries and affiliates, other than the Existing Equity Interests (such interests, the “Intercompany Interests”).

•  “First Lien Term Loan Claims” shall mean any and all Claims arising under or related to the Term Loan Agreement in respect of the First Lien Term Loans.

•  “Second Lien Notes Claims” shall mean any and all Claims arising under or related to the Second Lien Notes Indenture in respect of the Second Lien Notes.

•  “Unsecured Notes Claims” shall mean any and all Claims arising under or related to: (i) the 2022 Notes Indenture in respect of the 2022 Notes and (ii) the 2020 Notes Indenture in respect of the 2020 Notes.

Administrative, Tax,

Other Priority and

Other Secured

Claims⁴

First Lien Term Loan

Claims

Second Lien Notes

Claims

The Second Lien Notes Claims shall be classified as: (i) allowed secured claims in an aggregate principal amount of $[    ] (the “Second Lien Secured Claims”) and (ii) allowed unsecured deficiency claims in an aggregate principal amount of $[    ] (the “Second Lien Deficiency Claims”).

•  On account of the Second Lien Secured Claims, each Second Lien Noteholder shall receive (a) its pro rata share of $[    ]⁵ million aggregate principal amount of new [8]% senior secured second lien notes due [2022] (the “New Notes”), [with interest payable in cash], such New Notes to be issued by the Reorganized Company (as defined below) as debt securities pursuant to a new indenture, and (b) its pro rata share of [x]% of newly issued common stock (the “New Common Stock”) of the reorganized Company (the “Reorganized Company”), subject to dilution on account of the MIP Equity (as defined below) and the New Common Stock issuable in respect of the Warrants (as defined below).

NTD: Amount of New Notes to be issued TBD and subject to (i) ongoing review and diligence by Akin and Blackhill and (ii) negotiations between the Ad Hoc Committee and AGES on behalf of the lenders party to the Term Loan Agreement.

•  The Second Lien Deficiency Claims shall be classified and shall vote together with the Unsecured Notes Claims, and shall share ratably with the Unsecured Notes Claims in [y]%⁶ of the New Common Stock, subject to dilution on account of the MIP Equity and the New Common Stock issuable in respect of the Warrants.

Unsecured Notes

Claims

General Unsecured

Claims

Existing Equity

Interests in the

Company

Intercompany

Interests

NTD: Subject to agreement on all terms of the Warrants.

Board

Members/Governance

As of the Effective Date, the existing corporate governance documents will be amended and restated or terminated, as necessary, to, among other things, set forth the rights and obligations of the parties (consistent with this Term Sheet) (collectively, the “Corporate Governance Documents”). Subject to the terms of this Term Sheet, the RSA, and the Pre-Packaged Chapter 11 Plan, the Corporate Governance Documents shall be acceptable to the Ad Hoc Committee in their sole discretion.

The board of directors of the Reorganized Company (the “New Board”) will be composed of seven (7) directors, one of whom shall be the chief executive officer of the Company (the “CEO”), and six (6) of whom shall be designated by the Ad Hoc Committee. The Ad Hoc Committee shall agree to meet and interview upon reasonable notice any existing members of the Board of Directors who wish to be interviewed. The members of the New Board (other than the CEO) shall initially be appointed seriatim by the members of the existing board of directors (or by members of the board of directors that have been appointed by members of the existing board of directors) and otherwise composed in a manner consistent with the provisions of the Term Loan Agreement.¹⁰

Management

Incentive Plan

The Restructuring transaction and recomposition of board to be structured to prevent the occurrence of a change of control under the Term Loan Agreement.

Restructuring Fees

and Expenses

Employment

Agreements¹¹

NTD: Subject to ongoing review and diligence by Akin and Blackhill.

the employment agreements and the change of control policy, executive severance policy, and any other employment, compensation or benefit plan, policy, and program of the Company that provides for enhanced payouts or entitlements or for the acceleration of vesting upon a change of control shall be modified such that the Restructuring shall not constitute a change of control thereunder.

Employment agreements, including such additions, deletions, and modifications thereto as may be required by the Ad Hoc Committee, shall be in form and substance acceptable to the Ad Hoc Committee in its sole discretion and shall be agreed to on or prior to the filing of the Chapter 11 Cases.

The Ad Hoc Committee, in its sole discretion, shall determine whether to modify, assume and/or reject employment, compensation and benefit plans, policies (including severance policies), and programs of the Company and its direct and indirect subsidiaries and its affiliates on or prior to the filing of the plan supplement to the Pre-Packaged Chapter 11 Plan.

Indemnification

Obligations

[The Rex Entities’ indemnification obligations in place as of the Effective Date, whether in the bylaws, certificates of incorporation or formation, limited liability company agreements, other organizational or formation documents, board resolutions, management or indemnification agreements, employment contracts, or otherwise, for the directors and the officers that are currently employed by, or serving on the board of directors of, any of the Rex Entities, as of the date of the filing of the Chapter 11 Cases shall be assumed pursuant to the Pre-Packaged Chapter 11 Plan and the Debtors shall maintain their current D&O coverage in place as of the Effective Date for current and former directors and officers.

On or about the Effective Date, the Rex Entities shall obtain tail D&O insurance coverage on market terms for their current and former directors and officers.]¹²

Governing Law and

Forum

Conditions Precedent

to Consummation of

the Pre-Packaged

Chapter 11 Plan

The Pre-Packaged Chapter 11 Plan shall contain customary conditions to effectiveness in form and substance to be agreed upon by the Rex Entities and the Ad Hoc Committee, including, without limitation:

•  The Pre-Packaged Chapter 11 Plan and all documentation with respect to the Pre-Packaged Chapter 11 Plan and all documents contained in any supplement thereto, including any exhibits, schedules, amendments, modifications or supplements thereto, which shall be in form and substance acceptable to the Debtors and the Ad Hoc Committee, and otherwise consistent with the terms and conditions described in this Term Sheet or the RSA;

•  Any Corporate Governance Documents, which shall be in form and substance acceptable to the Ad Hoc Committee in their sole discretion;

•  The Bankruptcy Court shall have entered an order in form and substance acceptable to the Debtors and the Ad Hoc Committee approving the disclosure statement related to the Pre-Packaged Chapter 11 Plan;

•  The order confirming the Pre-Packaged Chapter 11 Plan, in form and substance acceptable to the Debtors and the Ad Hoc Committee and otherwise consistent with the terms and conditions described in this Term Sheet or the RSA, as applicable, shall have been entered and shall have become a final order that is not stayed;

•  As of the Effective Date, the aggregate amount of all allowed or projected administrative expense and priority claims shall not exceed $[    ];¹³ and

•  The Debtors shall have paid the Restructuring Expenses in full, in cash.

NTD: Subject to ongoing review and diligence by Akin and Blackhill.