Exhibit 10.1

 

Execution Version

 

$700,000,000

HALCÓN RESOURCES CORPORATION

 

8.625% Senior Secured Notes due 2020

 

Purchase Agreement

 

April 21, 2015

 

J.P. Morgan Securities LLC

As Representative of the

several Initial Purchasers listed

in Schedule 1 hereto

 

c/o J.P. Morgan Securities LLC

383 Madison Avenue

New York, New York 10179

 

Ladies and Gentlemen:

 

Halcón Resources Corporation, a Delaware corporation (the “Company”), proposes
to issue and sell to the several initial purchasers listed in Schedule 1 hereto
(the “Initial Purchasers”), for whom you are acting as representative (the
“Representative”), $700,000,000 principal amount of its 8.625% Senior Secured
Notes due 2020 (the “Securities”).  The Securities will be issued pursuant to an
Indenture to be dated as of May 1, 2015 (the “Indenture”), among the Company,
the guarantors listed in Schedule 2 hereto (the “Guarantors”) and U.S. Bank
National Association, as trustee (the “Trustee”) and as collateral agent (the
“Collateral Agent”), and will be irrevocably and unconditionally guaranteed by
each of the Guarantors (the “Guarantees”).

 

This Purchase Agreement (this “Agreement”) is to confirm the agreement
concerning the purchase of the Securities from the Company by the Initial
Purchasers.

 

The Securities will be offered and sold to the Initial Purchasers without
registration under the Securities Act of 1933, as amended (the “Securities
Act”), in reliance upon an exemption pursuant to Section 4(a)(2) under the
Securities Act.  The Company and the Guarantors have prepared a preliminary
offering memorandum dated April 21, 2015 (the “Preliminary Offering Memorandum”)
and a pricing term sheet substantially in the form attached hereto as Annex D
(the “Pricing Term Sheet”) setting forth the terms of the Securities omitted
from the Preliminary Offering Memorandum and certain other information, and will
prepare an offering memorandum dated the date hereof (the “Offering Memorandum”)
setting forth information concerning the Company, the Guarantors, the Securities
and the Guarantees.  Copies of the Preliminary Offering Memorandum have been,
and copies of the Offering Memorandum will be, delivered by the Company to the
Initial Purchasers pursuant to the terms of this Agreement.  The Company hereby
confirms that it has authorized the use of the Preliminary Offering Memorandum,
the other Time of Sale Information (as defined below) and the Offering
Memorandum in connection with the offering and resale of the Securities by the
Initial Purchasers in the manner contemplated by this Agreement.  Capitalized
terms used but not defined herein shall have the meanings given to such terms in
the Preliminary Offering Memorandum.  References herein to the Preliminary
Offering Memorandum, the Time of Sale Information and the Offering Memorandum
shall be deemed to

 

--------------------------------------------------------------------------------

 

refer to and include any document incorporated by reference therein and any
reference to “amend,” “amendment” or “supplement” with respect to the
Preliminary Offering Memorandum or the Offering Memorandum shall be deemed to
refer to and include any documents filed after such date and incorporated by
reference therein.  References herein to the Preliminary Offering Memorandum,
the Time of Sale Information and the Offering Memorandum shall be deemed to
refer to and include the preliminary Canadian offering memorandum dated
April 21, 2015 (the “Preliminary Canadian Offering Memorandum”) and the Canadian
offering memorandum dated the date hereof (the “Final Canadian Offering
Memorandum”), respectively.

 

At or prior to the time when sales of the Securities were first made (the “Time
of Sale”), the Company had prepared the following information (collectively, the
“Time of Sale Information”): the Preliminary Offering Memorandum, as
supplemented and amended by the written communications listed on Annex B hereto.

 

The Securities and the Guarantees will be secured by a second-priority lien,
subject to Permitted Liens (as defined below), on substantially all of the
tangible and intangible assets of the Company and the Guarantors, now owned or
hereafter acquired by the Company and any Guarantor, that secure borrowings
under the Credit Agreement, dated as of February 8, 2012, among the Company, as
borrower, each of the lenders from time to time party thereto, and JPMorgan
Chase Bank, N.A., as administrative agent for the lenders (the “Credit
Agreement”), on a first-priority basis, subject to certain exceptions described
in the Indenture and the Collateral Documents (as defined below) (the
“Collateral”).  The Collateral shall be described in: (a) with respect to real
property required to be mortgaged the mortgages, deeds of trust or deeds to
secure debt to be executed or delivered on or before the date that is sixty (60)
days following the date hereof (collectively, the “Mortgages”) and (b) with
respect to personal property that constitutes Collateral, the Security Agreement
to be dated as of the Closing Date (as defined below) and entered into by the
Company and the Guarantors (the “Security Agreement”), each to be delivered to
the Trustee, granting a second-priority security interest in the Collateral,
subject to Permitted Liens, for the benefit of the Trustee and each holder of
the Securities and the successors and assigns of the foregoing.  The term
“Collateral Documents,” as used herein, shall mean the Mortgages and the
Security Agreement.  The rights of the holders of the Securities with respect to
the Collateral shall be further governed by the Intercreditor Agreement to be
dated as of the Closing Date, among the Company, the Guarantors, the Collateral
Agent and the agent for the lenders under the Credit Agreement (the
“Intercreditor Agreement”).

 

For purposes of this Agreement, “Operative Documents” means the Securities, the
Guarantees, the Collateral Documents, the Intercreditor Agreement and the
Indenture.

 

1.                                      Purchase and Resale of the Securities.

 

(a)                                 The Company agrees to issue and sell the
Securities to the several Initial Purchasers as provided in this Agreement, and
each Initial Purchaser, on the basis of the representations, warranties and
agreements set forth herein and subject to the conditions set forth herein,
agrees, severally and not jointly, to purchase from the Company the respective
principal amount of Securities set forth opposite such Initial Purchaser’s name
in Schedule 1 hereto at a price equal to 98.25% of the principal amount thereof
plus accrued interest, if any, from May 1, 2015 to the Closing Date.  The
Company will not be obligated to deliver any of the Securities except upon
payment for all the Securities to be purchased as provided herein.

 

(b)                                 The Company understands that the Initial
Purchasers intend to offer the Securities for resale on the terms set forth in
the Time of Sale Information.  Each Initial Purchaser, severally and not
jointly, represents, warrants and agrees that:

 

2

--------------------------------------------------------------------------------

 

(i)                                     it is a qualified institutional buyer
within the meaning of Rule 144A under the Securities Act (a “QIB”) and an
accredited investor within the meaning of Rule 501(a) of Regulation D under the
Securities Act (“Regulation D”);

 

(ii)                                  it has not solicited offers for, or
offered or sold, and will not solicit offers for, or offer or sell, the
Securities by means of any form of general solicitation or general advertising
within the meaning of Rule 502(c) of Regulation D or in any manner involving a
public offering within the meaning of Section 4(a)(2) of the Securities Act; and

 

(iii)                               it has not solicited offers for, or offered
or sold, and will not solicit offers for, or offer or sell, the Securities as
part of their initial offering except:

 

(A)                               within the United States to persons whom it
reasonably believes to be QIBs in transactions pursuant to Rule 144A under the
Securities Act (“Rule 144A”) and in connection with each such sale, it has taken
or will take reasonable steps to ensure that the purchaser of the Securities is
aware that such sale is being made in reliance on Rule 144A; or

 

(B)                               in accordance with the restrictions set forth
in Annex C hereto.

 

(c)                                  Each Initial Purchaser acknowledges and
agrees that the Company and, for purposes of the “no registration” opinions to
be delivered to the Initial Purchasers pursuant to Sections 6(c) and 6(e),
counsel for the Company and counsel for the Initial Purchasers, respectively,
may rely upon the accuracy of the representations and warranties of the Initial
Purchasers, and compliance by the Initial Purchasers with their agreements,
contained in paragraph (b) above (including Annex C hereto), and each Initial
Purchaser hereby consents to such reliance.

 

(d)                                 The Company acknowledges and agrees that the
Initial Purchasers may offer and sell Securities to or through any affiliate of
an Initial Purchaser and that any such affiliate may offer and sell Securities
purchased by it to or through any Initial Purchaser.

 

(e)                                  The Company and the Guarantors acknowledge
and agree that each Initial Purchaser is acting solely in the capacity of an
arm’s length contractual counterparty to the Company and the Guarantors with
respect to the offering of Securities contemplated hereby (including in
connection with determining the terms of the offering) and not as a financial
advisor or a fiduciary to, or an agent of, the Company, the Guarantors or any
other person.  Additionally, neither the Representative nor any other Initial
Purchaser is advising the Company, the Guarantors or any other person as to any
legal, tax, investment, accounting or regulatory matters in any jurisdiction. 
The Company and the Guarantors shall consult with their own advisors concerning
such matters and shall be responsible for making their own independent
investigation and appraisal of the transactions contemplated hereby, and neither
the Representative nor any other Initial Purchaser shall have any responsibility
or liability to the Company or the Guarantors with respect thereto. Any review
by the Representative or any Initial Purchaser of the Company, the Guarantors,
and the transactions contemplated hereby or other matters relating to such
transactions will be performed solely for the benefit of the Representative or
such Initial Purchaser, as the case may be, and shall not be on behalf of the
Company, the Guarantors or any other person.

 

3

--------------------------------------------------------------------------------

 

2.                                      Payment and Delivery.

 

(a)                                 Payment for and delivery of the Securities
will be made at the offices of Vinson & Elkins L.L.P. at 10:00 A.M., New York
City time, on May 1, 2015, or at such other time or place on the same or such
other date, not later than the fifth business day thereafter, as the
Representative and the Company may agree upon in writing.  The time and date of
such payment and delivery is referred to herein as the “Closing Date.”

 

(b)                                 Payment for the Securities shall be made by
wire transfer in immediately available funds to the account(s) specified by the
Company to the Representative against delivery to the nominee of The Depository
Trust Company (“DTC”), for the account of the Initial Purchasers, of one or more
global notes representing the Securities (collectively, the “Global Note”), with
any transfer taxes payable in connection with the sale of the Securities duly
paid by the Company.  The Global Note will be made available for inspection by
the Representative not later than 1:00 P.M., New York City time, on the business
day prior to the Closing Date.

 

3.                                      Representations and Warranties of the
Company and the Guarantors.  The Company and the Guarantors jointly and
severally represent and warrant to each Initial Purchaser that:

 

(a)                                 When the Securities and Guarantees are
issued and delivered pursuant to this Agreement, such Securities and Guarantees
will not be of the same class (within the meaning of Rule 144A under the
Securities Act) as securities of the Company or the Guarantors that are listed
on a national securities exchange registered under Section 6 of the Exchange Act
or that are quoted in a U.S. automated inter-dealer quotation system.

 

(b)                                 Neither the Company nor any subsidiary of
the Company is or, after giving effect to the offer and sale of the Securities
and the application of the proceeds therefrom as described under “Use of
Proceeds” in each of the Time of Sale Information and the Offering Memorandum,
will be an “investment company” or a company “controlled” by an “investment
company” within the meaning of the Investment Company Act of 1940, as amended,
and the rules and regulations of the Commission thereunder.

 

(c)                                  Assuming the accuracy of your
representations and warranties in Section 1(b), the purchase and resale of the
Securities pursuant hereto (including pursuant to the Exempt Resales) are exempt
from the registration requirements of the Securities Act.  No form of general
solicitation or general advertising within the meaning of Regulation D
(including, but not limited to, advertisements, articles, notices or other
communications published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising) was used
by the Company, the Guarantors, or any person acting on behalf of the Company or
the Guarantors (other than you, as to whom the Company and the Guarantors make
no representation) in connection with the offer and sale of the Securities.

 

(d)                                 No directed selling efforts within the
meaning of Rule 902 under the Securities Act were used by the Company, the
Guarantors, any affiliate of the Company or the Guarantors or any person acting
on behalf of the Company or the Guarantors (other than you, as to whom the
Company and the Guarantors make no representation) with respect to Securities
sold outside the United States in accordance with Regulation S, and the Company
and any person acting on its behalf (other than you, as to whom the Company and
the Guarantors make no representation) has complied with and will implement the
“offering restrictions” required by Rule 902 under the Securities Act.

 

4

--------------------------------------------------------------------------------

 

(e)                                  Each of the Preliminary Offering
Memorandum, the Time of Sale Information and the Offering Memorandum, each as of
its respective date, contains all the information specified in, and meeting the
requirements of, Rule 144A(d)(4) under the Securities Act.

 

(f)                                   The Preliminary Offering Memorandum, the
Time of Sale Information and the Offering Memorandum have been prepared by the
Company and the Guarantors for use by the Initial Purchasers in connection with
the Exempt Resales.  No order or decree preventing the use of the Preliminary
Offering Memorandum, the Time of Sale Information or the Offering Memorandum, or
any order asserting that the transactions contemplated by this Agreement are
subject to the registration requirements of the Securities Act has been issued,
and no proceeding for that purpose has commenced or is pending or, to the
knowledge of the Company or any of the Guarantors is contemplated.

 

(g)                                  The Time of Sale Information did not, as of
the Applicable Time, and will not, as of the Closing Date, contain an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided that no representation or warranty is
made as to information contained in or omitted from the Time of Sale Information
in reliance upon and in conformity with written information furnished to the
Company through the Representative by or on behalf of any Initial Purchaser
specifically for inclusion therein, which information is specified in
Section 7(e).

 

(h)                                 The Offering Memorandum will not, as of its
date or as of the Closing Date, contain an untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided that no representation or warranty is made as to information contained
in or omitted from the Offering Memorandum in reliance upon and in conformity
with written information furnished to the Company through the Representative by
or on behalf of any Initial Purchaser specifically for inclusion therein, which
information is specified in Section 7(e).

 

(i)                                     Neither the Company nor any Guarantor
has made any offer to sell or solicitation of an offer to buy the Securities
that would constitute a “free writing prospectus” (if the offering of the
Securities was made pursuant to a registered offering under the Securities Act),
as defined in Rule 405 under the Securities Act (a “Free Writing Offering
Document”) without the prior consent of the Representative; any such Free
Writing Offering Document the use of which has been previously consented to by
the Initial Purchasers is listed on Annex B.

 

(j)                                    The Time of Sale Information, when taken
together with each Free Writing Offering Document listed on Annex A hereto, did
not, as of the Applicable Time, and will not, as of the Closing Date, contain an
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided that no representation or warranty is
made as to information contained in or omitted from the Time of Sale Information
(or Free Writing Offering Document listed on Annex B hereto) in reliance upon
and in conformity with written information furnished to the Company through the
Representative by or on behalf of any Initial Purchaser specifically for
inclusion therein, which information is specified in Section 7(e).

 

(k)                                 The documents incorporated by reference in
the Time of Sale Information and the Offering Memorandum, at the time they were
filed with the Commission, complied in all material respects with the applicable
requirements of the Exchange Act and the rules and regulations of the Commission
thereunder, and none of such documents, when read together with

 

5

--------------------------------------------------------------------------------

 

the other information in the Time of Sale Information, contain an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, and any further documents so filed and
incorporated by reference in the Time of Sale Information and the Offering
Memorandum, when such documents are filed with the Commission will conform in
all material respects to the applicable requirements of the Exchange Act and the
rules and regulations of the Commission thereunder and will not, when read
together with the other information in the Time of Sale Information, contain an
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
are made, not misleading.

 

(l)                                     The statistical and market-related data
relating to the Company included or incorporated by reference in the Time of
Sale Information and the Offering Memorandum and the consolidated financial
statements of the Company and its subsidiaries are based on or derived from
sources that the Company believes to be reliable in all material respects.

 

(m)                             The Company has been duly incorporated, is
validly existing and is in good standing under the laws of State of Delaware,
with corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Time of Sale Information and the
Offering Memorandum; the Company is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction in which
such qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to qualify or to
be in good standing would not have a material adverse effect on the business,
properties, prospects, financial condition, stockholders’ equity or results of
operations of the Company and its subsidiaries taken as a whole (a “Material
Adverse Effect”); each subsidiary of the Company other than those subsidiaries
which would not, individually or in the aggregate, constitute a “significant
subsidiary” as defined in Item 1-02(w) of Regulation S-X (each such “significant
subsidiary,” a “Subsidiary”) is a corporation, partnership, limited liability
company or business trust duly incorporated or organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation or
organization, with the requisite entity power and authority to own, lease and
operate its properties, except where the failure to qualify or be in good
standing would not have a Material Adverse Effect.  The Company does not own or
control, directly or indirectly, any corporation, association or other corporate
entity that, individually or in the aggregate would constitute a Subsidiary,
other than the subsidiaries listed on Schedule 2 hereof.  On a consolidated
basis, the Company and its subsidiaries conduct their business as described in
the Time of Sale Information and the Offering Memorandum and each Subsidiary is
duly qualified as a foreign corporation, partnership, limited liability company,
business trust or other organization to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except where the failure to qualify or to be in good standing would not result
in a Material Adverse Effect.

 

(n)                                 The Company has the authorized
capitalization as set forth in the Time of Sale Information and the Offering
Memorandum, and all of the issued and outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
non-assessable.  Except as otherwise disclosed in the Time of Sale Information
and the Offering Memorandum, all of the issued and outstanding capital stock or
other ownership interests of each subsidiary of the Company (i) have been duly
authorized and validly issued, (ii) are fully paid and non-assessable and
(iii) are owned by the Company directly or through subsidiaries, free and clear
of any security interest, mortgage, pledge, lien, encumbrance, claim or equity
except as described in the Time of Sale Information and the Offering Memorandum
and except for such

 

6

--------------------------------------------------------------------------------

 

security interests, mortgages, pledges, liens, encumbrances, claims or equities
that would not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect.

 

(o)                                 The Company and each Guarantor has all
requisite corporate power, partnership or limited liability company and
authority, as applicable, to perform its obligations under the Indenture.  The
Indenture has been duly and validly authorized, executed and delivered by the
Company and the Guarantors and constitutes a valid and binding agreement of the
Company and the Guarantors, enforceable against the Company and the Guarantors
in accordance with its terms, except as such enforceability may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and
other laws relating to or affecting creditors’ rights generally and by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).  No qualification of the Indenture under the
Trust Indenture Act of 1939 (the “Trust Indenture Act”) is required in
connection with the offer and sale of the Securities contemplated hereby or in
connection with the Exempt Resales.  The Indenture conforms to the description
thereof in each of the Time of Sale Information and the Offering Memorandum.

 

(p)                                 The Company has all requisite corporate
power and authority to execute, issue, sell and perform its obligations under
the Securities.  The Securities have been duly authorized by the Company and,
when duly executed by the Company in accordance with the terms of the Indenture,
assuming due authentication of the Securities by the Trustee, upon delivery to
the Initial Purchasers against payment therefor in accordance with the terms
hereof, will be validly issued and delivered and will constitute valid and
binding obligations of the Company entitled to the benefits of the Indenture,
enforceable against the Company in accordance with their terms, except as such
enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium, and other laws relating to or affecting creditors’
rights generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).  The
Securities will conform in all material respects to the description thereof in
each of the Time of Sale Information and the Offering Memorandum.

 

(q)                                 Each Guarantor has all requisite corporate,
partnership or limited liability company power and authority, as applicable, to
execute, issue and perform its obligations under the Guarantees.  The Guarantees
have been duly and validly authorized, executed and delivered by the Guarantors
upon the due execution, authentication and delivery of the Securities in
accordance with the Indenture and the issuance of the Securities in the sale to
the Initial Purchasers contemplated by this Agreement, will constitute valid and
binding obligations of the Guarantors entitled to the benefits of the Indenture,
enforceable against the Guarantors in accordance with their terms, except as
such enforceability may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium, and other laws relating to or affecting
creditors’ rights generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law). 
The Guarantees will conform in all material respects to the description thereof
in each of the Time of Sale Information and the Offering Memorandum.

 

(r)                                    The Company and each Guarantor has all
requisite corporate, partnership or limited liability company power and
authority, as applicable, to execute, deliver and perform its obligations under
the Operative Documents.  The Operative Documents have been duly authorized by
the Company and each Guarantor and, when executed and delivered by the Company
and each Guarantor in accordance with the terms hereof and thereof, will be
validly executed and delivered and (assuming the due authorization, execution
and delivery thereof by the other parties thereto) will be the legally valid and
binding obligations of the Company and

 

7

--------------------------------------------------------------------------------

 

each Guarantor in accordance with the terms thereof, enforceable against the
Company and each Guarantor in accordance with their terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditor’s rights
generally, by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and, as to
rights of indemnification and contribution, by principles of public policy.  The
Operative Documents will conform in all material respects to the descriptions
thereof in each of the Time of Sale Information and the Offering Memorandum.

 

(s)                                   The Company and each Guarantor has all
requisite corporate power to execute, deliver and perform its obligations under
this Agreement.  This Agreement has been duly and validly authorized, executed
and delivered by the Company and each of the Guarantors.

 

(t)                                    The issue and sale of the Securities and
the Guarantees, the execution, delivery and performance by the Company and the
Guarantors of the Securities, the Guarantees, the Operative Documents to which
each is or will be a party (including, but not limited to, the filing of any
applicable financing statements pursuant to the Mortgages or any Security
Documents, the issuance and sale of the Securities and the Guarantees in respect
thereof, the compliance by the Company with all of the provisions of the
Securities, the grant and continuing creation and perfection of security
interests in the Collateral pursuant to the Mortgages and the Security Agreement
and compliance by the Company and each of the Guarantors with the terms thereof
and the consummation of the transactions contemplated by the Operative
Documents) and this Agreement, the application of the proceeds from the sale of
the Securities as described under “Use of Proceeds” in each of the Time of Sale
Information and the Offering Memorandum, the consummation of the transactions
contemplated hereby and thereby, will not (i) conflict with or result in a
breach or violation of any of the terms or provisions of, impose any lien,
charge or encumbrance upon any property or assets of the Company, the Guarantors
or their respective subsidiaries, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement, license, lease or other agreement or
instrument to which the Company, the Guarantors or any of their respective
subsidiaries is a party or by which the Company, the Guarantors or any of their
respective subsidiaries is bound or to which any of the property or assets of
the Company, the Guarantors or any of their respective subsidiaries is subject,
(ii) result in any violation of the provisions of the charter or by-laws (or
similar organizational documents) of the Company, the Guarantors or any of their
respective subsidiaries, or (iii) result in any violation by the Company, the
Guarantors or any of their respective subsidiaries of any statute or any
judgment, order, decree, rule or regulation of any court or governmental agency
or body having jurisdiction over the Company, the Guarantors or any of their
respective subsidiaries or any of their properties or assets, except, with
respect to clauses (i) and (iii), conflicts or violations that would not
reasonably be expected to have a Material Adverse Effect or would not, in the
aggregate, reasonably be expected to have a material adverse effect on ability
of the Company or any Guarantor to perform their obligations under this
Agreement.

 

(u)         Collateral Documents, Financing Statements and Collateral.

 

i.       Upon execution and delivery, the Mortgages will be effective to grant a
legal, valid and enforceable mortgage lien or security title and security
interest on all of the mortgagor’s right, title and interest in the real
property described therein (each, a “Mortgaged Property” and, collectively, the
“Mortgaged Properties”).  When the Mortgages are duly recorded in the proper
recorders’ offices or appropriate public records and the mortgage recording fees
and taxes in respect thereof are paid and

 

8

--------------------------------------------------------------------------------

 

compliance is otherwise had with the formal requirements of state law,
applicable to the recording of real estate mortgages generally, each such
Mortgage shall constitute a validly perfected and enforceable second-priority
lien or security title and security interest in the related Mortgaged Property
constituting Collateral for the benefit of the Trustee and the holders of the
Securities, subject only to Permitted Liens (as defined below) or liens and
encumbrances expressly set forth as an exception to the policies of title
insurance, if any, obtained to insure the lien of each Mortgage with respect to
each of the Mortgaged Properties (such encumbrances and exceptions, the
“Permitted Exceptions”), and as may be limited by (x) the effect of any
applicable bankruptcy, insolvency, fraudulent conveyance or similar law
affecting creditors’ rights generally and (y) general principles of equity
(regardless of whether considered in a proceeding in equity or at law),
including concepts of commercial reasonableness, good faith and fair dealing and
the possible unavailability of specific performance or injunctive relief
(collectively, the “Enforceability Exceptions”);

 

ii.      Upon execution and delivery, the Security Agreement will be effective
to grant a legal, valid and enforceable security interest in all of the
grantor’s right, title and interest in the Collateral (other than the Mortgaged
Properties);

 

iii.     Upon due and timely filing and/or recording of the financing statements
and Mortgages, as applicable, with respect to the Collateral described in the
Security Agreement and the equipment and fixtures described in the Mortgages
(the “Personal Property Collateral”), the security interests granted thereby
will constitute valid, perfected second-priority liens and security interests in
the Personal Property Collateral, to the extent such security interests can be
perfected by the filing and/or recording, as applicable, of financing statements
and Mortgages for the benefit of the Trustee and the holders of the Securities,
and such security interests will be enforceable in accordance with the terms
contained therein against all creditors of any grantor or mortgagor and subject
only to liens expressly permitted to be incurred or exist on the Collateral
under the Indenture (“Permitted Liens”); and

 

iv.     The Company and its subsidiaries collectively own, have rights in or
have the power and authority to collaterally assign rights in the Collateral,
free and clear of any liens other than the Permitted Liens.

 

(v)         No consent, approval, authorization or order of, or filing,
registration or qualification with, any court or governmental agency or body,
domestic or foreign, having jurisdiction over the Company is required for the
offering and sale of the Securities, the execution, delivery and performance by
the Company or any of the Guarantors of each of the Operative Documents to which
each is a party, the grant and perfection of security interests in the
Collateral pursuant to the Mortgages and the Security Agreement, and compliance
by each of the Company and each of the Guarantors with the terms thereof, or the
consummation by the Company of the other transactions contemplated by this
Agreement or the Operative Documents, except for such consents, approvals,
authorizations, orders, registrations, filings or qualifications which shall
have been obtained or made on or prior to the Closing Date as described in this
Agreement or as may

 

9

--------------------------------------------------------------------------------

 

be required by the securities or blue sky laws of the various states, the
Securities Act and the securities laws of any jurisdiction outside the United
States in which the Securities are offered and the recording of Mortgages and
the filing of any applicable financing statements pursuant to the Mortgages or
the Security Agreement.

 

(w)                               Except as disclosed in the Time of Sale
Information and the Offering Memorandum, there are no contracts, agreements or
understandings between the Company, any Guarantor and any person granting such
person the right to require the Company or any Guarantor to file a registration
statement under the Securities Act with respect to any securities of the Company
or any Guarantor owned or to be owned by such person.

 

(x)                                 Neither the Company, any Guarantor nor any
other person acting on behalf of the Company or any Guarantor has sold or issued
any securities that would be integrated with the offering of the Securities
contemplated by this Agreement pursuant to the Securities Act, the rules and
regulations thereunder or the interpretations thereof by the Commission.

 

(y)                                 Except as described in the Time of Sale
Information or the Offering Memorandum, neither the Company, the Guarantors nor
any of their respective subsidiaries has sustained, (i) since the date of the
latest audited financial statements included and incorporated by reference in
the Time of Sale Information and the Offering Memorandum, any loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, and, (ii) since such date, there has not
been (x) any change in the capital stock, partnership or limited liability
interests, as applicable, or long-term debt, of the Company, the Guarantors or
any of their respective subsidiaries or (y) any adverse change, or any
development involving a prospective adverse change, in or affecting the
business, properties, prospects, financial condition, stockholders’ equity or
results of operations of the Company and its subsidiaries, taken as a whole (a
“Material Adverse Change”), in the case of clause (i) or (ii)(x) above, except
as could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

(z)                                  The historical financial statements
(including the related notes and supporting schedules) of each of the Company
and its subsidiaries included and/or incorporated by reference in the Time of
Sale Information and the Offering Memorandum comply in all material respects
with the applicable requirements of the Act and the Exchange Act, as applicable,
and present fairly in all material respects the financial condition, results of
operations and cash flows of the entities purported to be shown thereby, at the
dates and for the periods indicated, and have been prepared in conformity with
accounting principles generally accepted in the United States applied on a
consistent basis throughout the periods involved.  The interactive data in
eXtensible Business Reporting Language (“XBRL”) included or incorporated by
reference in the Incorporated Documents fairly presents the financial
information called for in all material respects and has been prepared in
accordance with the Commission’s rules and guidelines applicable thereto.  The
other financial information and financial data included and incorporated by
reference in the Time of Sale Information and Offering Memorandum is, in all
material respects, accurately presented and prepared on a basis consistent with
such financial statements and the books and records of the Company.

 

(aa)                          Deloitte & Touche LLP, who have certified certain
financial statements of the Company, whose reports appear in the Time of Sale
Information and the Offering Memorandum or are incorporated by reference
therein, are independent registered public accountants as required by the Act
and the rules and regulations thereunder and the rules and regulations of the
Public Company Accounting Oversight Board (the “PCAOB”) during the periods
covered by the

 

10

--------------------------------------------------------------------------------

 

financial statements on which they reported contained in and incorporated by
reference in the Time of Sale Information and the Offering Memorandum.

 

(bb)                          Netherland, Sewell & Associates (the “Company
Reservoir Engineer”), whose report dated January 28, 2015, is summarized or
excerpted in reports incorporated by reference, or included, in the Time of Sale
Information and the Offering Memorandum, was, as of the date of such report, and
is, as of the date hereof, an independent petroleum engineer with respect to the
Company.  The written engineering report prepared by the Company Reservoir
Engineer dated January 28, 2015 setting forth the proved reserves attributed to
the oil and gas properties of the Company and its subsidiaries accurately
reflects in all material respects the interests of the Company and its
subsidiaries in the properties therein as of December 31, 2014 and was prepared
in accordance with the Commission’s rules and regulations relating to the
reporting of oil and natural gas reserves; the information furnished by the
Company to the Company Reservoir Engineer for purposes of preparing its report,
including, without limitation, production, costs of operation and development,
current prices for production, agreements relating to current and future
operations and sales of production, was true, correct and complete in all
material respects on the date supplied and was prepared in accordance with
customary industry practices, as indicated in the letter of the Company
Reservoir Engineer dated January 28, 2015.

 

(cc)                            The Company and its subsidiaries have defensible
title to all of their interests in oil and gas properties (other than interests
earned under farm-out, participation or similar agreements in which an
assignment or transfer is pending) and all their interests in other real
property and good title to all other properties owned by them, in each case,
free and clear of all mortgages, pledges, liens, security interests, claims,
restrictions or encumbrances of any kind except (i) such as are described in the
Time of Sale Information and the Offering Memorandum, (ii) liens and
encumbrances under operating agreements, unitization and pooling agreements,
production sales contracts, farm-out agreements and other oil and gas
exploration participation and production agreements, in each case that secure
payment of amounts not yet due and payable for the performance of other
unmatured obligations and are of a scope and nature customary in the oil and gas
industry or arise in connection with drilling and production operations,
(iii) would not have a Material Adverse Effect, or (iv) Permitted Liens; except
as described in the Time of Sale Information and the Offering Memorandum or as
would not have a Material Adverse Effect, all of the leases and subleases of
real property of the Company or any of its subsidiaries and under which the
Company or any of its subsidiaries holds properties described in the Time of
Sale Information and the Offering Memorandum, are in full force and effect.

 

(dd)                          The Company and each of its subsidiaries have such
permits, licenses, patents, franchises, certificates of need and other approvals
or authorizations of governmental or regulatory authorities (“Permits”) as are
necessary under applicable law to own their properties and conduct their
businesses in the manner described in the Time of Sale Information and the
Offering Memorandum, except for any of the foregoing that would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect; each of the
Company and its subsidiaries has fulfilled and performed all of its obligations
with respect to the Permits, and no event has occurred that allows, or after
notice or lapse of time would allow, revocation or termination thereof or
results in any other impairment of the rights of the holder or any such Permits,
except for any of the foregoing that could not reasonably be expected to have a
Material Adverse Effect.

 

(ee)                            The Company and its subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as the Company
believes are adequate for the conduct of their business and the value of their
properties and is reasonably customary for companies engaged in

 

11

--------------------------------------------------------------------------------

 

similar industries, and all such insurance is in full force and effect.  The
Company has no reason to believe that it and its subsidiaries will not be able
to (i) renew their existing insurance coverage as and when such policies expire
or (ii) to obtain comparable coverage from similar institutions as may be
necessary or appropriate to conduct their business as currently conducted or
proposed to be conducted and at a cost that would not, individually or in the
aggregate, result in a Material Adverse Effect.

 

(ff)                              Other than as set forth in the Time of Sale
Information and the Offering Memorandum, there are no legal or governmental
proceedings pending to which the Company or any of its subsidiaries is a party
or of which any property of the Company or any of its subsidiaries is the
subject which if determined adversely to the Company, or such subsidiary, would
individually or in the aggregate, have a Material Adverse Effect or which would
materially and adversely affect the consummation of the transactions
contemplated under this Agreement or the Operative Documents or the performance
by the Company or any Guarantor of their obligations hereunder or thereunder;
and, to the Company’s and the Guarantors’ knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by others.

 

(gg)                            There are no contracts or other documents that
would be required to be described in a registration statement filed under the
Securities Act or filed as exhibits to a registration statement of the Company
pursuant to Item 601(10) of Regulation S-K, or a periodic report of the Company
under the Exchange Act that would be incorporated by reference therein, that
have not been described in the Time of Sale Information and the Offering
Memorandum.  The statements made in the Time of Sale Information and the
Offering Memorandum, insofar as they purport to constitute summaries of the
terms of the contracts and other documents that are so described, constitute
accurate summaries of the terms of such contracts and documents in all material
respects.  Neither the Company, the Guarantors nor any of their respective
subsidiaries has knowledge that any other party to any such contract or other
document has any intention not to render full performance as contemplated by the
terms thereof.

 

(hh)                          The statements made in the Time of Sale
Information and the Offering Memorandum under the captions “Business” (as
incorporated by reference from the Company’s Exchange Act Reports), “Certain
United States Federal Income Tax Considerations” and “Certain Considerations for
ERISA and Other U.S. Employee Benefit Plans,” insofar as they purport to
constitute summaries of the terms of statutes, rules or regulations, legal or
governmental proceedings or contracts and other documents, constitute accurate
summaries of the terms of such statutes, rules and regulations, legal and
governmental proceedings and contracts and other documents in all material
respects.

 

(ii)                                  No relationship, direct or indirect, that
would be required to be described in a registration statement of the Company
pursuant to Item 404 of Regulation S-K, exists between or among the Company or
any Guarantor and their respective subsidiaries, on the one hand, and the
directors, officers, stockholders, customers or suppliers of the Company or any
Guarantor and their respective subsidiaries, on the other hand, that has not
been described in the Time of Sale Information and the Offering Memorandum.

 

(jj)                                No labor disturbance by or dispute with the
employees of the Company or any of its subsidiaries exists or, to the knowledge
of the Company or any Guarantor, is imminent that could reasonably be expected
to have a Material Adverse Effect.

 

12

--------------------------------------------------------------------------------

 

(kk)                          (i) Each “employee benefit plan” (within the
meaning of Section 3(3) of the Employee Retirement Security Act of 1974, as
amended (“ERISA”)) for which the Company or any member of its “Controlled Group”
(defined as any organization which is a member of a controlled group of
corporations within the meaning of Section 414 of the Internal Revenue Code of
1986, as amended (the “Code”)) would have any liability (each a “Plan”) has been
maintained in compliance with its terms and with the requirements of all
applicable statutes, rules and regulations including ERISA and the Code in all
material respects; (ii) with respect to each Plan subject to Title IV of ERISA
(a) no “reportable event” (within the meaning of Section 4043(c) of ERISA) has
occurred or is reasonably expected to occur, (b) no “accumulated funding
deficiency” (within the meaning of Section 302 of ERISA or Section 412 of the
Code), whether or not waived, has occurred or is reasonably expected to occur,
(c) the fair market value of the assets under each Plan exceeds the present
value of all benefits accrued under such Plan (determined based on those
assumptions used to fund such Plan) and (d) neither the Company or any member of
its Controlled Group has incurred, or reasonably expects to incur, any liability
under Title IV of ERISA (other than contributions to the Plan or premiums to the
PBGC in the ordinary course and without default) in respect of a Plan (including
a “multiemployer plan”, within the meaning of Section 4001(c)(3) of ERISA); and
(iii) to the knowledge of the Company, each Plan that is intended to be
qualified under Section 401(a) of the Code is so qualified and nothing has
occurred, whether by action or by failure to act, which would cause the loss of
such qualification.

 

(ll)                                  The Company and each of its subsidiaries
has filed all federal, state, local and foreign income and franchise tax returns
required to be filed through the date hereof, subject to permitted extensions,
and paid all taxes due thereon, and (i) no tax deficiency has been determined
adversely to the Company, the Guarantors or any of their respective
subsidiaries, nor (ii) does the Company or any Guarantor have any knowledge of
any tax deficiencies that could, in the case of clause (i) or (ii) in the
aggregate, reasonably be expected to have a Material Adverse Effect.

 

(mm)                  There are no transfer taxes or other similar fees or
charges under Federal law or the laws of any state, or any political subdivision
thereof, required to be paid in connection with the execution and delivery of
this Agreement or the issuance by the Company or sale by the Company of the
Securities.

 

(nn)                          Since the date as of which information is given in
the Time of Sale Information and the Offering Memorandum and except as may
otherwise be described in the Time of Sale Information and the Offering
Memorandum, neither the Company nor any Guarantor has (i) incurred any material
liability or obligation, direct or contingent, other than liabilities and
obligations that were incurred in the ordinary course of business, (ii) entered
into any material transaction not in the ordinary course of business or
(iii) declared or paid any dividend on its capital stock.

 

(oo)                          Neither the Company nor any of its subsidiaries
(i) is in violation of its charter or by-laws (or similar organizational
documents), (ii) is in default, and no event has occurred that, with notice or
lapse of time or both, would constitute such a default, in the due performance
or observance of any term, covenant, condition or other obligation contained in
any indenture, mortgage, deed of trust, loan agreement, license or other
agreement or instrument to which it is a party or by which it is bound or to
which any of its properties or assets is subject, or (iii) is in violation of
any statute or any order, rule or regulation of any court or governmental agency
or body having jurisdiction over it or its property or assets or has failed to
obtain any license, permit, certificate, franchise or other governmental
authorization or permit necessary to the ownership of

 

13

--------------------------------------------------------------------------------

 

its property or to the conduct of its business, except in the case of clauses
(ii) and (iii), to the extent any such conflict, breach, violation or default
would not reasonably be expected to have a material adverse effect on the
ability of the Company or any Guarantor to perform their obligations under this
Agreement or any of the Operative Documents.

 

(pp)                          The Company and each of its subsidiaries (i) are,
and at all times prior hereto were, in compliance with all laws, regulations,
ordinances, rules, orders, judgments, decrees, permits or other legal
requirements of any governmental authority, including without limitation any
international, national, state, provincial, regional, or local authority,
relating to the protection of human health or safety, the environment, or
natural resources, or to hazardous or toxic substances or wastes, pollutants or
contaminants (“Environmental Laws”) applicable to such entity, which compliance
includes, without limitation, obtaining, maintaining and complying with all
permits and authorizations and approvals required by Environmental Laws to
conduct their respective businesses, and (ii) have not received notice of any
actual or alleged violation of Environmental Laws, or of any potential liability
for or other obligation concerning the presence, disposal or release of
hazardous or toxic substances or wastes, pollutants or contaminants, except in
the case of clause (i) or (ii) where such non-compliance, violation, liability,
or other obligation could not, in the aggregate, reasonably be expected to have
a Material Adverse Effect.  Except as described in the Time of Sale Information
and the Offering Memorandum, (A) there are no proceedings that are pending, or
known to be contemplated, against the Company or any of its subsidiaries under
Environmental Laws in which a governmental authority is also a party, other than
such proceedings regarding which it is reasonably believed no monetary sanctions
of $100,000 or more will be imposed (except for pending or contemplated
proceedings which are not material to the Company and its subsidiaries and were
not required to be disclosed in the documents incorporated by reference in the
Time of Sale Information), (B) the Company, and its subsidiaries are not aware
of any issues regarding compliance with Environmental Laws, or liabilities or
other obligations under Environmental Laws or concerning hazardous or toxic
substances or wastes, pollutants or contaminants, that could reasonably be
expected to have a Material Adverse Effect, and (C) none of the Company or its
subsidiaries anticipates material capital expenditures other than in the
ordinary course of business relating to Environmental Laws.

 

(qq)                          None of the transactions contemplated by this
Agreement (including, without limitation, the use of the proceeds from the sale
of the Securities), will violate or result in a violation of Section 7 of the
Exchange Act, or any regulation promulgated thereunder, including, without
limitation, Regulations T, U and X of the Board of Governors of the Federal
Reserve System.

 

(rr)                                The statements contained in the Time of Sale
Information and the Offering Memorandum under the caption “Description of the
Notes,” insofar as they purport to constitute a summary of the terms of the
Indenture, the Securities, the Guarantees and the Operative Documents and under
the captions “Description of Our Other Indebtedness” and “Plan of Distribution”
insofar as they purport to describe the provisions of the documents referred to
therein, are accurate in all material respects.

 

(ss)                              The Company and its affiliates have not taken,
directly or indirectly, any action designed to or that has constituted or that
could reasonably be expected to cause or result in the stabilization or
manipulation of the price of any security of the Company or the Guarantors in
connection with the offering of the Securities.

 

(tt)                                The Company and each of its subsidiaries
maintain a system of internal control over financial reporting (as such term is
defined in Rule 13a-15(f) of the Exchange Act) that

 

14

--------------------------------------------------------------------------------

 

complies with the requirements of the Exchange Act and that has been designed
by, or under the supervision of, the Company’s principal executive and principal
financial officers, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles in the
United States.  The Company and each of its subsidiaries maintains internal
accounting controls that are sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s general or
specific authorization, (ii) transactions are recorded as necessary to permit
preparation of the Company’s financial statements in conformity with accounting
principles generally accepted in the United States and to maintain
accountability for its assets, (iii) access to the Company’s assets is permitted
only in accordance with management’s general or specific authorization, (iv) the
recorded accountability for the Company’s assets is compared with existing
assets at reasonable intervals and appropriate action is taken with respect to
any differences, and (v) the interactive data in XBRL included or incorporated
by reference in the Time of Sale Information and the Offering Memorandum fairly
presents the information called for in all material respects and is prepared in
accordance with the Commission’s rules and guidelines applicable thereto.

 

(uu)                          (i) The Company and each of its subsidiaries have
established and maintain disclosure controls and procedures (as such term is
defined in Rule 13a-15 under the Exchange Act), (ii) such disclosure controls
and procedures are designed to ensure that the information required to be
disclosed by the Company in the reports they file or submit under the Exchange
Act (assuming the Company was required to file or submit such reports under the
Exchange Act) is accumulated and communicated to management of the Company and
its subsidiaries, including their respective principal executive officers and
principal financial officers, as appropriate, to allow timely decisions
regarding required disclosure to be made; and (iii) such disclosure controls and
procedures are effective in all material respects to perform the functions for
which they were established.

 

(vv)                          Since the date of the most recent balance sheet of
the Company and its consolidated subsidiaries audited by Deloitte & Touche LLP
and reviewed by the audit committee of the board of directors of the Company,
(i) the Company has not been advised of by its auditors, nor has it identified
(A) any material weaknesses in the design or operation of internal controls, and
(B) any fraud, whether or not material, that involves management or other
employees who have a significant role in the internal controls of the Company
and each of its subsidiaries; and (ii) there have been no changes in internal
controls or in other factors that have materially affected or are reasonably
likely to materially affect internal controls.

 

(ww)                      No subsidiary of the Company is currently prohibited,
directly or indirectly, from paying any dividends to the Company, from making
any other distribution on such subsidiary’s capital stock, from repaying to the
Company any loans or advances to such subsidiary from the Company or from
transferring any of such subsidiary’s property or assets to the Company or any
other subsidiary of the Company, except as described in the Time of Sale
Information and the Offering Memorandum.

 

(xx)                          There is and has been no failure on the part of
the Company or, to the knowledge of the Company, any of its directors or
officers, in their capacities as such, to comply with any applicable provisions
of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in
connection therewith.

 

(yy)                          The section entitled “Management’s Discussion and
Analysis of Financial Condition and Results of Operations—Critical Accounting
Policies and Estimates” as incorporated

 

15

--------------------------------------------------------------------------------

 

by reference from the Company’s Exchange Act Reports in the Time of Sale
Information and the Offering Memorandum accurately and fully describes in all
material respects (A) the accounting policies that the Company believed as of
the date thereof were the most important in the portrayal of the Company’s
financial condition and results of operations and that required management’s
most difficult, subjective or complex judgments; (B) the judgments and
uncertainties affecting the application of critical accounting policies; and
(C) the likelihood that materially different amounts would be reported under
different conditions or using different assumptions and an explanation thereof.

 

(zz)                            Neither the Company nor any of its subsidiaries,
nor, to the knowledge of the Company and each of the Guarantors, any director,
officer, agent, affiliate or other person associated with or acting on behalf of
the Company or any of its subsidiaries has (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense relating to
political activity; (ii) made or taken an act in furtherance of an offer,
promise or authorization of any direct or indirect unlawful payment or benefit
to any foreign or domestic government official or employee , including of any
government-owned or controlled entity or of a public international organization,
or any person acting in an official capacity for or on behalf of any of the
foregoing, or any political party or party official or candidate for political
office; (iii) violated or is in violation of any provision of the Foreign
Corrupt Practices Act of 1977, as amended, or any applicable law or regulation
implementing the OECD Convention on Combating Bribery of Foreign Public
Officials in International Business Transactions, or committed an offence under
the Bribery Act 2010 of the United Kingdom, or any other applicable anti-bribery
or anti-corruption law; or (iv) made, offered, agreed, requested or taken an act
in furtherance of any unlawful bribe or other unlawful benefit, including,
without limitation, any rebate, payoff, influence payment, kickback or other
unlawful or improper payment or benefit.  The Company and its subsidiaries have
instituted, maintain and enforce, and will continue to maintain and enforce,
policies and procedures designed to promote and ensure compliance with
anti-bribery and anti-corruption laws to the extent such laws are applicable to
the business, assets and operations of the Company and its subsidiaries.

 

(aaa)                   The operations of the Company and its subsidiaries are
and have been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the applicable money laundering
statutes of all jurisdictions where the Company or any of its subsidiaries
conducts business, the rules and regulations thereunder and any related or
similar rules, regulations or guidelines, issued, administered or enforced by
any governmental agency (collectively, the “Anti-Money Laundering Laws”), and no
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any of its
subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to
the knowledge of the Company or any of the Guarantors, threatened.

 

(bbb)                   Neither the Company nor any of its subsidiaries,
directors, officers or employees, nor, to the knowledge of the Company or any of
the Guarantors, any agent, affiliate or other person associated with or acting
on behalf of the Company or any of its subsidiaries is currently the subject or
the target of any sanctions administered or enforced by the U.S. government,
(including, without limitation, the Office of Foreign Assets Control of the U.S.
Department of the Treasury (“OFAC”) or the U.S. Department of State and
including, without limitation, the designation as a “specially designated
national” or “blocked person”), the United Nations Security Council (“UNSC”),
the European Union, Her Majesty’s Treasury (“HMT”), or other relevant sanctions
authority (collectively, “Sanctions”), nor is the Company or any of its
subsidiaries located, organized or resident in a country or territory that is
the subject or target of Sanctions, including, without

 

16

--------------------------------------------------------------------------------

 

limitation, Cuba, Burma (Myanmar), Iran, North Korea, Sudan, Syria and Crimea
(each, a “Sanctioned Country”); and the Company will not directly or indirectly
use the proceeds of the offering of the Securities hereunder, or lend,
contribute or otherwise make available such proceeds to any subsidiary, joint
venture partner or other person or entity (i) to fund or facilitate any
activities of or business with any person that, at the time of such funding or
facilitation, is the subject or target of Sanctions, (ii) to fund or facilitate
any activities of or business in any Sanctioned Country or (iii) in any other
manner that will result in a violation by any person (including any person
participating in the transaction, whether as underwriter, initial purchaser,
advisor, investor or otherwise) of Sanctions.  For the past five years, the
Company and its subsidiaries have not knowingly engaged in, are not now
knowingly engaged in and will not engage in any dealings or transactions with
any person that at the time of the dealing or transaction is or was the subject
or the target of Sanctions or with any Sanctioned Country.

 

(ccc)                      The Company has not taken any action or omitted to
take any action (such as issuing any press release relating to any Securities
without an appropriate legend) which may result in the loss by any of the
Initial Purchasers of the ability to rely on any stabilization safe harbor
provided by the Financial Services Authority under the Financial Services and
Markets Act 2000 (the “FSMA”). The Company has been informed of the guidance
relating to stabilization provided by the Financial Services Authority, in
particular in Section MAR 2 Annex 2G of the Financial Services Handbook.

 

(ddd)                   Immediately after the consummation of the issuance and
sale of the Securities in accordance with the terms of this Agreement, each of
the Company and each of the Guarantors will be Solvent. As used in this
paragraph, the term “Solvent” means, with respect to a particular date, that on
such date (i) the present fair market value (or present fair saleable value) of
the assets of the Company and its subsidiaries and the Guarantors and their
subsidiaries are not less than the total amount required to pay the probable
liabilities of the Company and its subsidiaries and the Guarantors and their
subsidiaries on their total existing debts and liabilities (including contingent
liabilities) as they become absolute and matured, (ii) the Company and its
subsidiaries and the Guarantors and their subsidiaries are able to realize upon
their assets and pay their debts and other liabilities, contingent obligations
and commitments as they mature and become due in the normal course of business,
(iii) assuming the sale of the Securities as contemplated by this Agreement, the
Time of Sale Information and the Offering Memorandum, the Company and its
subsidiaries and the Guarantors and their subsidiaries are not incurring debts
or liabilities beyond their ability to pay as such debts and liabilities mature
and (iv) the Company and its subsidiaries and the Guarantors and their
subsidiaries are not engaged in any business or transaction, and are not about
to engage in any business or transaction, for which their property would
constitute unreasonably small capital after giving due consideration to the
prevailing practice in the industry in which the Company and its subsidiaries
and the Guarantors and their subsidiaries are engaged. In computing the amount
of such contingent liabilities at any time, it is intended that such liabilities
will be computed at the amount that, in the light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.

 

(eee)                      As of the date hereof (i) all royalties, rentals,
deposits and other amounts owed under the oil and gas leases constituting the
oil and gas properties of the Company and its subsidiaries have been properly
and timely paid (other than amounts held in suspense accounts pending routine
payments or related to disputes about the proper identification of royalty
owners), and no amount of proceeds from the sale or production attributable to
the oil and gas properties of the Company and its subsidiaries are currently
being held in suspense by any purchaser thereof, except where such amounts due
could not, individually or in the aggregate, have a Material

 

17

--------------------------------------------------------------------------------

 

Adverse Effect, and (ii) there are no claims under take-or-pay contracts
pursuant to which natural gas purchasers have any make-up rights affecting the
interests of the Company and its subsidiaries in their oil and gas properties,
except where such claims could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.

 

(fff)                         Except as described in the Time of Sale
Information and the Offering Memorandum, there are no material off-balance sheet
transactions (including, without limitation, transactions related to, and the
existence of, “variable interest entities” within the meaning of Financial
Accounting Standards Board Accounting Standards Codification Topic 810),
arrangements, obligations (including contingent obligations), or any other
relationships with unconsolidated entities or other persons, that would
reasonably be expected to have a material current or future effect on the
Company’s financial condition, changes in financial condition, results of
operations, liquidity, capital expenditures, capital resources, or significant
components of revenues or expenses.

 

(ggg)                      Neither the Company nor any of its subsidiaries is a
party to any contract, agreement or understanding with any person (other than
this Agreement) that could give rise to a valid claim against the Initial
Purchasers for a brokerage commission, finder’s fee or like payment in
connection with the offering and sale of the Securities.

 

(hhh)                   No forward-looking statement (within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act) included
or incorporated by reference in the Time of Sale Information or the Offering
Memorandum has been made without a reasonable basis at the time such statement
was made or has been disclosed other than in good faith.

 

(iii)                               Neither the Company nor any of its
subsidiaries is in violation of or has received notice of any violation with
respect to any federal or state law relating to discrimination in the hiring,
promotion or pay of employees, nor any applicable federal or state wage and hour
laws, the violation of any of which could reasonably be expected to have a
Material Adverse Effect.

 

Any certificate signed by any officer of the Company or any Guarantor and
delivered to the Representative or counsel for the Initial Purchasers in
connection with the offering of the Securities shall be deemed a representation
and warranty by the Company or any such Guarantor, jointly and severally, as to
matters covered thereby, to each Initial Purchaser.

 

4.                                      Further Agreements of the Company and
the Guarantors.  The Company and the Guarantors jointly and severally covenant
and agree with each Initial Purchaser that:

 

(a)                                 The Company will deliver, without charge, to
the Initial Purchasers as many copies of the Preliminary Offering Memorandum,
any other Time of Sale Information, any Issuer Written Communication and the
Offering Memorandum (including all amendments and supplements thereto) as the
Representative may reasonably request.

 

(b)                                 Before finalizing the Offering Memorandum or
making or distributing any amendment or supplement to any of the Time of Sale
Information or the Offering Memorandum or filing with the Commission any
document that will be incorporated by reference therein, the Company will
furnish to the Representative and counsel for the Initial Purchasers a copy of
the proposed Offering Memorandum or such amendment or supplement or document to
be incorporated by reference therein for review, and will not distribute any
such proposed Offering Memorandum, amendment or supplement or file any such
document with the Commission to which the Representative reasonably objects.

 

18

--------------------------------------------------------------------------------

 

(c)                                  Before making, preparing, using,
authorizing, approving or referring to any Issuer Written Communication, the
Company and the Guarantors will furnish to the Representative and counsel for
the Initial Purchasers a copy of such written communication for review and will
not make, prepare, use, authorize, approve or refer to any such written
communication to which the Representative reasonably objects.

 

(d)                                 The Company will advise the Representative
promptly, and confirm such advice in writing, (i) of the issuance by any
governmental or regulatory authority of any order preventing or suspending the
use of any of the Time of Sale Information, any Issuer Written Communication or
the Offering Memorandum or the initiation or threatening of any proceeding for
that purpose; (ii) of the occurrence of any event at any time prior to the
completion of the initial offering of the Securities as a result of which any of
the Time of Sale Information, any Issuer Written Communication or the Offering
Memorandum as then amended or supplemented would include any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing when such Time of
Sale Information, Issuer Written Communication or the Offering Memorandum is
delivered to a purchaser, not misleading; and (iii) of the receipt by the
Company of any notice with respect to any suspension of the qualification of the
Securities for offer and sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and the Company will use its
reasonable best efforts to prevent the issuance of any such order preventing or
suspending the use of any of the Time of Sale Information, any Issuer Written
Communication or the Offering Memorandum or suspending any such qualification of
the Securities and, if any such order is issued, will obtain as soon as possible
the withdrawal thereof.

 

(e)                                  If at any time prior to the Closing Date
(i) any event shall occur or condition shall exist as a result of which any of
the Time of Sale Information as then amended or supplemented would include any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading or (ii) it is necessary to amend or
supplement the Time of Sale Information to comply with law, the Company will
immediately notify the Initial Purchasers thereof and forthwith prepare and,
subject to paragraph (b) above, furnish to the Initial Purchasers such
amendments or supplements to the Time of Sale Information (or any document to be
filed with the Commission and incorporated by reference therein) as may be
necessary so that the statements in any of the Time of Sale Information as so
amended or supplemented (including such documents to be incorporated by
reference therein) will not, in the light of the circumstances under which they
were made, be misleading or so that any of the Time of Sale Information will
comply with law.

 

(f)                                   If at any time prior to the completion of
the initial offering of the Securities (i) any event shall occur or condition
shall exist as a result of which the Offering Memorandum as then amended or
supplemented would include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances existing when the Offering Memorandum is
delivered to a purchaser, not misleading or (ii) it is necessary to amend or
supplement the Offering Memorandum to comply with law, the Company will
immediately notify the Initial Purchasers thereof and forthwith prepare and,
subject to paragraph (b) above, furnish to the Initial Purchasers such
amendments or supplements to the Offering Memorandum (or any document to be
filed with the Commission and incorporated by reference therein) as may be
necessary so that the statements in the Offering Memorandum as so amended or
supplemented (including such document to be incorporated by reference therein)
will not, in the light of the circumstances existing when the Offering

 

19

--------------------------------------------------------------------------------

 

Memorandum is delivered to a purchaser, be misleading or so that the Offering
Memorandum will comply with law.

 

(g)                                  The Company will qualify the Securities for
offer and sale under the securities or Blue Sky laws of such jurisdictions as
the Representative shall reasonably request and will continue such
qualifications in effect so long as required for the offering and resale of the
Securities; provided that neither the Company nor any of the Guarantors shall be
required to (i) qualify as a foreign corporation or other entity or as a dealer
in securities in any such jurisdiction where it would not otherwise be required
to so qualify, (ii) file any general consent to service of process in any such
jurisdiction or (iii) subject itself to taxation in any such jurisdiction if it
is not otherwise so subject.

 

(h)                                 During the period from the date hereof
through and including the date that is sixty (60) days after the date hereof,
the Company and each of the Guarantors will not, without the prior written
consent of the Representative, offer, sell, contract to sell or otherwise
dispose of any debt securities issued or guaranteed by the Company or any of the
Guarantors and having a tenor of more than one year.

 

(i)                                     The Company will apply the net proceeds
from the sale of the Securities as described in each of the Time of Sale
Information and the Offering Memorandum under the heading “Use of Proceeds.”

 

(j)                                    While the Securities remain outstanding
and are “restricted securities” within the meaning of Rule 144(a)(3) under the
Securities Act, the Company and each of the Guarantors will, during any period
in which the Company is not subject to and in compliance with Section 13 or
15(d) of the Exchange Act, furnish to holders of the Securities and prospective
purchasers of the Securities designated by such holders, upon the request of
such holders or such prospective purchasers, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.

 

(k)                                 The Company will assist the Initial
Purchasers in arranging for the Securities to be eligible for clearance and
settlement through DTC.

 

(l)                                     The Company will not, and will not
permit any of its affiliates (as defined in Rule 144 under the Securities Act)
to, resell any of the Securities that have been acquired by any of them, except
for Securities purchased by the Company or any of its affiliates and resold in a
transaction registered under the Securities Act.

 

(m)                             Neither the Company nor any of its affiliates
(as defined in Rule 501(b) of Regulation D) will, directly or through any agent,
sell, offer for sale, solicit offers to buy or otherwise negotiate in respect
of, any security (as defined in the Securities Act), that is or will be
integrated with the sale of the Securities in a manner that would require
registration of the Securities under the Securities Act.

 

(n)                                 None of the Company or any of its affiliates
or any other person acting on its or their behalf (other than the Initial
Purchasers, as to which no covenant is given) will (i) solicit offers for, or
offer or sell, the Securities by means of any form of general solicitation or
general advertising within the meaning of Rule 502(c) of Regulation D or in any
manner involving a public offering within the meaning of Section 4(a)(2) of the
Securities Act or (ii) engage in any directed selling efforts within the meaning
of Regulation S, and all such persons will comply with the offering restrictions
requirement of Regulation S.

 

20

--------------------------------------------------------------------------------

 

(o)                                 Neither the Company nor any of the
Guarantors will take, directly or indirectly, any action designed to or that
could reasonably be expected to cause or result in any stabilization or
manipulation of the price of the Securities.

 

(p)                                 The Company and each Guarantor (i) shall
complete on or prior to the Closing Date all filings and other similar actions
required in connection with the creation and perfection of security interests in
the Collateral as and to the extent contemplated by the Indenture and the
Collateral Documents and (ii) shall take all actions necessary to maintain such
security interests and to perfect security interests in any Collateral acquired
after the Closing Date, in each case as and to the extent contemplated by the
Indenture and the Collateral Documents; provided that Company and each Guarantor
shall execute and deliver the Mortgages on or before the date that is sixty (60)
days following the Closing Date.

 

5.                                      Certain Agreements of the Initial
Purchasers.        Each Initial Purchaser hereby represents and agrees that it
has not and will not use, authorize use of, refer to, or participate in the
planning for use of, any written communication that constitutes an offer to sell
or the solicitation of an offer to buy the Securities other than (i) the
Preliminary Offering Memorandum and the Offering Memorandum, (ii) any written
communication that contains either (a) no “issuer information” (as defined in
Rule 433(h)(2) under the Securities Act) or (b) “issuer information” that was
included (including through incorporation by reference) in the Time of Sale
Information or the Offering Memorandum, (iii) any written communication listed
on Annex A or prepared pursuant to Section 4(c) (including any electronic road
show) above, (iv) any written communication prepared by such Initial Purchaser
and approved by the Company and the Representative in advance in writing or
(v) any written communication relating to or that contains the preliminary or
final terms of the Securities or their offering and/or other information that
was included (including through incorporation by reference) in the Time of Sale
Information or the Offering Memorandum.

 

6.                                      Conditions of Initial Purchasers’
Obligations.  The respective obligations of each of the Initial Purchasers
hereunder are subject to the accuracy, when and on and as of the date hereof and
on the Closing Date of the representations and warranties of the Company and
each of the Guarantors contained herein, to the performance by the Company and
each of the Guarantors of their respective covenants and other obligations
hereunder and to the following additional conditions:

 

(a)                                 The Initial Purchasers shall not have
discovered and disclosed to the Company on or prior to the Closing Date that the
Time of Sale Information or the Offering Memorandum, or any amendment or
supplement thereto, contains an untrue statement of a fact which, in the opinion
of Vinson & Elkins LLP, counsel to the Initial Purchasers, is material or omits
to state a fact which, in the opinion of such counsel, is material and is
necessary in order to make the statements therein, in the light of the
circumstances then prevailing, not misleading.

 

(b)                                 All corporate proceedings and other legal
matters incident to the authorization, form and validity of this Agreement, the
Securities, the Guarantees, the Operative Documents, the Indenture, the Time of
Sale Information and the Offering Memorandum, and all other legal matters
relating to this Agreement and the transactions contemplated hereby shall be
reasonably satisfactory in all material respects to counsel for the Initial
Purchasers, and the Company and the Guarantors shall have furnished to such
counsel all documents and information that they may reasonably request to enable
them to pass upon such matters.

 

(c)                                  Mayer Brown LLP shall have furnished to the
Initial Purchasers its written opinion, as counsel to the Company and the
Guarantors, addressed to the Initial Purchasers and

 

21

--------------------------------------------------------------------------------

 

dated the Closing Date, in form and substance reasonably satisfactory to the
Initial Purchasers, substantially in the form of Exhibit A hereto.

 

(d)                                 David Elkouri, General Counsel of the
Company shall have furnished to the Initial Purchasers his written opinion, as
counsel to the Company and the Guarantors, addressed to the Initial Purchasers
and dated the Closing Date, in form and substance reasonably satisfactory to the
Initial Purchasers, substantially in the form of Exhibit B hereto.

 

(e)                                  Mark Mize, Executive Vice President, Chief
Financial Officer and Treasurer of the Company shall have furnished to the
Initial Purchasers a certificate, addressed to the Initial Purchasers and dated
the Closing Date, in form and substance reasonably satisfactory to the Initial
Purchasers, substantially in the form of Exhibit C hereto.

 

(f)                                   The Initial Purchasers shall have received
from Vinson & Elkins LLP, counsel for the Initial Purchasers, such opinion or
opinions, dated the Closing Date, with respect to the issuance and sale of the
Securities, the Time of Sale Information, the Offering Memorandum and other
related matters as the Initial Purchasers may reasonably require, and the
Company shall have furnished to such counsel such documents and information as
such counsel reasonably requests for the purpose of enabling them to pass upon
such matters.

 

(g)                                  At the time of execution of this Agreement,
the Initial Purchasers shall have received from Deloitte & Touche LLP a letter,
in form and substance satisfactory to the Initial Purchasers, addressed to the
Initial Purchasers and dated the date hereof (i) confirming that they are
independent public accountants within the meaning of the Securities Act and are
in compliance with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission and
(ii) stating, as of the date hereof (or, with respect to matters involving
changes or developments since the respective dates as of which specified
financial information is given in the Time of Sale Information, as of a date not
more than three days prior to the date hereof), the conclusions and findings of
such firm with respect to the financial information and (iii) covering such
other matters as are ordinarily covered by accountants’ “comfort letters” to
underwriters in connection with registered public offerings.

 

(h)                                 With respect to the letter of Deloitte &
Touche LLP, referred to in the preceding paragraph and delivered to the Initial
Purchasers concurrently with the execution of this Agreement (the “initial
letter”), the Company shall have furnished to the Initial Purchasers a
“bring-down letter” of such accountants, addressed to the Initial Purchasers and
dated the Closing Date (i) confirming that they are independent public
accountants within the meaning of the Securities Act and are in compliance with
the applicable requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as of the Closing
Date (or, with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in each of
the Time of Sale Information or the Offering Memorandum, as of a date not more
than three days prior to the date of the Closing Date), the conclusions and
findings of such firm with respect to the financial information and other
matters covered by the initial letter, and (iii) confirming in all material
respects the conclusions and findings set forth in the initial letter

 

(i)                                     Except as described in the Time of Sale
Information and the Offering Memorandum, (i) neither the Company, any Guarantor
nor any of their respective subsidiaries shall have sustained, since the date of
the latest audited financial statements included and incorporated by reference
in the Time of Sale Information and the Offering Memorandum, any loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not

 

22

--------------------------------------------------------------------------------

 

covered by insurance, or from any labor dispute or court or governmental action,
order or decree, or (ii) since such date, there shall not have been any change
in the capital stock or long-term debt of the Company, any Guarantor or any of
their respective subsidiaries or any change, or any development involving a
prospective change, in or affecting the business, properties, prospects,
financial condition, stockholders’ equity or results of operations of the
Company, the Guarantors and their respective subsidiaries, taken as a whole, the
effect of which, in any such case described in clause (i) or (ii), is,
individually or in the aggregate, in the judgment of the Representative, so
material and adverse as to make it impracticable or inadvisable to proceed with
the offering or the delivery of the Securities being delivered on the Closing
Date on the terms and in the manner contemplated in the Time of Sale Information
and the Offering Memorandum.

 

(j)                                    At the time of execution of this
Agreement, the Initial Purchasers shall have received from the Company Reservoir
Engineer an initial letter (an “initial expert letter”), in form and substance
satisfactory to the Initial Purchasers, addressed to the Initial Purchasers and
dated the date hereof and a subsequent letter dated as of the Closing Date,
which such letter shall cover the period from any initial expert letter to the
Closing Date, confirming that they are independent with respect to the Company
and stating the conclusions and findings of such firm with respect to matters
pertaining to the Company’s use of the reports of proved reserves from the
Company Reservoir Engineer.

 

(k)                                 The Company and each Guarantor shall have
furnished or caused to be furnished to the Initial Purchasers dated as of the
Closing Date a certificate of the Chief Executive Officer and Chief Financial
Officer of the Company and each Guarantor, or other officers satisfactory to the
Initial Purchasers, as to such matters as the Representative may reasonably
request, including, without limitation, a statement that:

 

i.      The representations, warranties and agreements of the Company and the
Guarantors in Section 3 are true and correct on and as of the Closing Date, and
the Company and the Guarantors have complied with all its agreements contained
herein and satisfied all the conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date; and

 

ii.     They have examined the Time of Sale Information and the Offering
Memorandum, and, in their opinion, (A) the Time of Sale Information, as of the
Applicable Time and as of the Closing Date, and the Offering Memorandum, as of
its date and as of the Closing Date, did not and do not contain any untrue
statement of a material fact and did not and do not omit to state a material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading and (B) since the date of the Time of
Sale Information and the Offering Memorandum, no event has occurred which should
have been set forth in a supplement or amendment to the Time of Sale Information
and the Offering Memorandum.

 

(l)                                     Subsequent to the earlier of the
Applicable Time and the execution and delivery of this Agreement (i) no
downgrading shall have occurred in the rating accorded the Company’s debt
securities by any “nationally recognized statistical rating organization,” as
such term is used in Section 15E of the Exchange Act, and (ii) no such
organization shall have publicly announced that it has under surveillance or
review, or has changed its outlook with respect to, its rating of the Securities
or of any other debt securities issued or guaranteed by the Company or any of
the Guarantors (in each case, other than an announcement with positive
implications of a possible upgrading).

 

23

--------------------------------------------------------------------------------

 

(m)                             The Securities shall be eligible for clearance
and settlement through DTC.

 

(n)                                 The Initial Purchasers shall have received
conformed counterparts of the Security Agreement that shall have been executed
and delivered by duly authorized officers of each party thereto, in form and
substance reasonably satisfactory to the Representative.

 

(o)                                 The Initial Purchasers shall have received
conformed counterparts of the Intercreditor Agreement that shall have been
executed and delivered by duly authorized officers of each party thereto, in
form and substance reasonably satisfactory to the Representative.

 

(p)                                 Except as otherwise contemplated by the
Security Agreement, each document (including any Uniform Commercial Code
financing statement) required by the Security Agreement, or under law or
reasonably requested by the Representative, in each case, to be filed,
registered or recorded, or delivered for filing on or prior to the Closing Date,
for the benefit of the holders of the Securities, a perfected second-priority
lien and security interest in the Personal Property Collateral that can be
perfected by the making of such filings, registrations or recordations, prior
and superior to the right of any other person (other than Permitted Liens),
shall be executed and in proper form for filing, registration or recordation.

 

(q)                                 On or prior to the Closing Date, the Initial
Purchasers shall have received satisfactory evidence that the Company and the
Guarantors maintain insurance with respect to the Collateral as specified by the
Security Agreement.

 

(r)                                    The Securities and the notation of
guarantees shall be executed by the Company and the Guarantors in substantially
the respective forms set forth in the Indenture and the Securities shall be
authenticated and delivered by the Trustee in accordance with the Indenture.

 

All opinions, letters, evidence and certificates mentioned above or elsewhere in
this Agreement shall be deemed to be in compliance with the provisions hereof
only if they are in form and substance reasonably satisfactory to counsel for
the Initial Purchasers.

 

7.                                      Indemnification and Contribution.

 

(a)                                 The Company and each Guarantor, hereby
agrees, jointly and severally, to indemnify and hold harmless each Initial
Purchaser, its affiliates, directors, officers and employees and each person, if
any, who controls any Initial Purchaser within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or action
relating to purchases and sales of Securities), to which that Initial Purchaser,
affiliate, director, officer, employee or controlling person may become subject,
under the Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained (A) in any Free Writing
Offering Document, the Preliminary Offering Memorandum, the Time of Sale
Information or the Offering Memorandum or in any amendment or supplement
thereto, (B) in any Blue Sky application or other document prepared or executed
by the Company or any Guarantor (or based upon any written information furnished
by the Company or any Guarantor) specifically for the purpose of qualifying any
or all of the Securities under the securities laws of any state or other
jurisdiction (any such application, document or information being hereinafter
called a “Blue Sky Application”), or (C) in any materials or information
provided to investors by, or with the approval of, the Company or any Guarantor
in connection with the marketing of the offering of the Securities (“Marketing

 

24

--------------------------------------------------------------------------------

 

Materials”), including any road show or investor presentations made to investors
by the Company (whether in person or electronically) or any materials prepared,
or approved, by the Company for the purpose of compliance with the Canadian
securities laws, or (ii) the omission or alleged omission to state in any Free
Writing Offering Document, the Preliminary Offering Memorandum, the Time of Sale
Information or the Offering Memorandum, or in any amendment or supplement
thereto, or in any Blue Sky Application or in any Marketing Materials, any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, and shall
reimburse each Initial Purchaser and each such affiliate, director, officer,
employee or controlling person promptly upon demand for any legal or other
expenses reasonably incurred by that Initial Purchaser, affiliate, director,
officer, employee or controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the Company and
the Guarantors shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of, or is based upon, any
untrue statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Offering Memorandum, the Time of Sale Information or
Offering Memorandum, or in any such amendment or supplement thereto, or in any
Blue Sky Application or in any Marketing Materials, in reliance upon and in
conformity with written information concerning such Initial Purchaser furnished
to the Company through the Representative by or on behalf of any Initial
Purchaser specifically for inclusion therein, which information consists solely
of the information specified in Section 7(e).  The foregoing indemnity agreement
is in addition to any liability that the Company or the Guarantors may otherwise
have to any Initial Purchaser or to any affiliate, director, officer, employee
or controlling person of that Initial Purchaser.

 

(b)                                 Each Initial Purchaser, severally and not
jointly, hereby agrees to indemnify and hold harmless the Company, each
Guarantor, their respective officers and employees, each of their respective
directors, and each person, if any, who controls the Company or any Guarantor
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which the Company, any Guarantor
or any such director, officer, employee or controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained (A) in any
Free Writing Offering Document, Preliminary Offering Memorandum, the Time of
Sale Information or the Offering Memorandum or in any amendment or supplement
thereto, (B) in any Blue Sky Application, or (C) in any Marketing Materials, or
(ii) the omission or alleged omission to state in any Free Writing Offering
Document, Preliminary Offering Memorandum, the Time of Sale Information or the
Offering Memorandum, or in any amendment or supplement thereto, or in any Blue
Sky Application or in any Marketing Materials any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information concerning
such Initial Purchaser furnished to the Company through the Representative by or
on behalf of that Initial Purchaser specifically for inclusion therein, which
information is limited to the information set forth in Section 7(e).  The
foregoing indemnity agreement is in addition to any liability that any Initial
Purchaser may otherwise have to the Company, any Guarantor or any such director,
officer, employee or controlling person.

 

(c)                                  Promptly after receipt by an indemnified
party under paragraphs (a) or (b) of this Section 7 of notice of any claim or
the commencement of any action, the indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party under paragraphs
(a) or

 

25

--------------------------------------------------------------------------------

 

(b) of this Section 7, notify the indemnifying party in writing of the claim or
the commencement of that action; provided, however, that the failure to notify
the indemnifying party shall not relieve it from any liability that it may have
under paragraphs (a) or (b) of this Section 7 except to the extent it has been
materially prejudiced (through the forfeiture of substantive rights or defenses)
by such failure and; provided, further, that the failure to notify the
indemnifying party shall not relieve it from any liability that it may have to
an indemnified party otherwise than under this paragraph (a) or (b) of this
Section 7.  If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party.  After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 7 for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided,
however, that the Initial Purchasers shall have the right to employ counsel to
represent jointly the Initial Purchasers and their respective affiliates,
directors, officers, employees and controlling persons who may be subject to
liability arising out of any claim in respect of which indemnity may be sought
by the Initial Purchasers against the Company or any Guarantor under this
Section 7, if (i) the Company, the Guarantors and the Initial Purchasers shall
have so mutually agreed; (ii) the Company and the Guarantors have failed within
a reasonable time to retain counsel reasonably satisfactory to the Initial
Purchasers; (iii) the Initial Purchasers and their respective affiliates,
directors, officers, employees and controlling persons shall have reasonably
concluded, based on the advice of counsel, that there may be legal defenses
available to them that are different from or in addition to those available to
the Company and the Guarantors; or (iv) the named parties in any such proceeding
(including any impleaded parties) include both the Initial Purchasers or their
respective affiliates, directors, officers, employees or controlling persons, on
the one hand, and the Company and the Guarantors, on the other hand, and
representation of both sets of parties by the same counsel would present a
conflict due to actual or potential differing interests between them, and in any
such event the fees and expenses of such separate counsel shall be paid by the
Company and the Guarantors.  No indemnifying party shall (x) without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding and does not
include a statement as to, or an admission of fault, culpability or a failure to
act by or on behalf of any indemnified party, or (y) be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with the consent of
the indemnifying party or if there be a final judgment of the plaintiff in any
such action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of such
settlement or judgment.

 

(d)                                 If the indemnification provided for in this
Section 7 shall for any reason be unavailable to or insufficient to hold
harmless an indemnified party under Section 7(a) or 7(b) in respect of any loss,
claim, damage or liability, or any action in respect thereof, referred to
therein, then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company and the Guarantors, on the one hand, and the
Initial Purchasers, on the other, from the offering of the Securities, or
(ii) if the allocation provided by

 

26

--------------------------------------------------------------------------------

 

clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company and the Guarantors, on the
one hand, and the Initial Purchasers, on the other, with respect to the
statements or omissions that resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations.  The relative benefits received by the Company and the
Guarantors, on the one hand, and the Initial Purchasers, on the other, with
respect to such offering shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Securities purchased under this
Agreement (before deducting expenses) received by the Company and the
Guarantors, on the one hand, and the total discounts and commissions received by
the Initial Purchasers with respect to the Securities purchased under this
Agreement, on the other hand, bear to the total gross proceeds from the offering
of the Securities under this Agreement as set forth on the cover page of the
Offering Memorandum.  The relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Company, the Guarantors, or the Initial Purchasers, the intent of the parties
and their relative knowledge, access to information and opportunity to correct
or prevent such statement or omission.  For purposes of the preceding two
sentences, the net proceeds deemed to be received by the Company shall be deemed
to be also for the benefit of the Guarantors, and information supplied by the
Company shall also be deemed to have been supplied by the Guarantors.  The
Company, the Guarantors, and the Initial Purchasers agree that it would not be
just and equitable if contributions pursuant to this Section 7(d) were to be
determined by pro rata allocation (even if the Initial Purchasers were treated
as one entity for such purpose) or by any other method of allocation that does
not take into account the equitable considerations referred to herein.  The
amount paid or payable by an indemnified party as a result of the loss, claim,
damage or liability, or action in respect thereof, referred to above in this
Section 7(d) shall be deemed to include, for purposes of this Section 7(d), any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim. 
Notwithstanding the provisions of this Section 7(d), no Initial Purchaser shall
be required to contribute any amount in excess of the amount by which the net
proceeds from the sale of the Securities initially purchased by it exceeds the
amount of any damages that such Initial Purchaser has otherwise paid or become
liable to pay by reason of any untrue or alleged untrue statement or omission or
alleged omission.  No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.  The Initial Purchasers’ obligations to contribute as
provided in this Section 7(d) are several in proportion to their respective
purchase obligations and not joint.

 

(e)                                  The Initial Purchasers severally confirm
and the Company and the Guarantors acknowledge and agree that the statements
contained in the second sentence under the heading “Plan of Distribution” in the
Time of Sale Information and the Offering Memorandum are correct and constitute
the only information concerning such Initial Purchasers furnished in writing to
the Company or any Guarantor by or on behalf of the Initial Purchasers
specifically for inclusion in any Free Writing Offering Document, the
Preliminary Offering Memorandum, the Time of Sale Information, the Offering
Memorandum, or in any amendment or supplement thereto or in any Blue Sky
Application or in any Marketing Materials.

 

(f)                                   The remedies provided for in this
Section 7 are not exclusive and shall not limit any rights or remedies that may
otherwise be available to any Indemnified Person at law or in equity.

 

27

--------------------------------------------------------------------------------

 

8.                                      Termination.  This Agreement may be
terminated in the absolute discretion of the Representative, by notice to the
Company, if after the execution and delivery of this Agreement and on or prior
to the Closing Date (i) trading generally shall have been suspended or
materially limited on the New York Stock Exchange or the over-the-counter
market; (ii) trading of any securities issued or guaranteed by the Company or
any of the Guarantors shall have been suspended on any exchange or in any
over-the-counter market; (iii) a general moratorium on commercial banking
activities shall have been declared by federal or New York State authorities; or
(iv) there shall have occurred any outbreak or escalation of hostilities or any
change in financial markets or any calamity or crisis, either within or outside
the United States, that, in the judgment of the Representative, is material and
adverse and makes it impracticable or inadvisable to proceed with the offering,
sale or delivery of the Securities on the terms and in the manner contemplated
by this Agreement, the Time of Sale Information and the Offering Memorandum.

 

9.                                      Defaulting Initial Purchaser.

 

(a)                                 If, on the Closing Date, any Initial
Purchaser defaults on its obligation to purchase the Securities that it has
agreed to purchase hereunder, the non-defaulting Initial Purchasers may in their
discretion arrange for the purchase of such Securities by other persons
satisfactory to the Company on the terms contained in this Agreement.  If,
within 36 hours after any such default by any Initial Purchaser, the
non-defaulting Initial Purchasers do not arrange for the purchase of such
Securities, then the Company shall be entitled to a further period of 36 hours
within which to procure other persons satisfactory to the non-defaulting Initial
Purchasers to purchase such Securities on such terms.  If other persons become
obligated or agree to purchase the Securities of a defaulting Initial Purchaser,
either the non-defaulting Initial Purchasers or the Company may postpone the
Closing Date for up to five full business days in order to effect any changes
that in the opinion of counsel for the Company or counsel for the Initial
Purchasers may be necessary in the Time of Sale Information, the Offering
Memorandum or in any other document or arrangement, and the Company agrees to
promptly prepare any amendment or supplement to the Time of Sale Information or
the Offering Memorandum that effects any such changes.  As used in this
Agreement, the term “Initial Purchaser” includes, for all purposes of this
Agreement unless the context otherwise requires, any person not listed in
Schedule 1 hereto that, pursuant to this Section 9, purchases Securities that a
defaulting Initial Purchaser agreed but failed to purchase.

 

(b)                                 If, after giving effect to any arrangements
for the purchase of the Securities of a defaulting Initial Purchaser or Initial
Purchasers by the non-defaulting Initial Purchasers and the Company as provided
in paragraph (a) above, the aggregate principal amount of such Securities that
remains unpurchased does not exceed one-eleventh of the aggregate principal
amount of all the Securities, then the Company shall have the right to require
each non-defaulting Initial Purchaser to purchase the principal amount of
Securities that such Initial Purchaser agreed to purchase hereunder plus such
Initial Purchaser’s pro rata share (based on the principal amount of Securities
that such Initial Purchaser agreed to purchase hereunder) of the Securities of
such defaulting Initial Purchaser or Initial Purchasers for which such
arrangements have not been made.

 

(c)                                  If, after giving effect to any arrangements
for the purchase of the Securities of a defaulting Initial Purchaser or Initial
Purchasers by the non-defaulting Initial Purchasers and the Company as provided
in paragraph (a) above, the aggregate principal amount of such Securities that
remains unpurchased exceeds one-eleventh of the aggregate principal amount of
all the Securities, or if the Company shall not exercise the right described in
paragraph (b) above, then this Agreement shall terminate without liability on
the part of the non-defaulting Initial Purchasers.  Any termination of this
Agreement pursuant to this Section 9 shall be without liability on the part of
the Company or the Guarantors, except that the Company and each of the
Guarantors will continue to be liable for the

 

28

--------------------------------------------------------------------------------

 

payment of expenses as set forth in Section 10 hereof and except that the
provisions of Section 7 hereof shall not terminate and shall remain in effect.

 

(d)                                 Nothing contained herein shall relieve a
defaulting Initial Purchaser of any liability it may have to the Company, the
Guarantors or any non-defaulting Initial Purchaser for damages caused by its
default.

 

10.                               Payment of Expenses.

 

(a)                                 Whether or not the transactions contemplated
by this Agreement are consummated or this Agreement is terminated, the Company
and each of the Guarantors jointly and severally agree to pay or cause to be
paid all costs and expenses incident to the performance of their respective
obligations hereunder, including without limitation, (i) the costs incident to
the authorization, issuance, sale, preparation and delivery of the Securities
and any taxes payable in that connection; (ii) the costs incident to the
preparation and printing of the Preliminary Offering Memorandum, any other Time
of Sale Information, any Issuer Written Communication and the Offering
Memorandum (including any amendment or supplement thereto) and the distribution
thereof; (iii) the costs of reproducing and distributing each of the Transaction
Documents; (iv) the fees and expenses of the Company’s and the Guarantors’
counsel and independent accountants; (v) the fees and expenses incurred in
connection with the registration or qualification and determination of
eligibility for investment of the Securities under the laws of such
jurisdictions as the Representative may designate and the preparation, printing
and distribution of a Blue Sky Memorandum (including the related fees and
expenses of counsel for the Initial Purchasers); (vi) any fees charged by rating
agencies for rating the Securities; (vii) the fees and expenses of the Trustee,
the Collateral Agent and any paying agent (including related fees and expenses
of any counsel to such parties); (viii) all expenses and application fees
incurred in connection with the approval of the Securities for book-entry
transfer by DTC; (ix) the fees and expenses incurred with respect to creating,
documenting and perfecting the security interests in the Collateral as
contemplated by the Collateral Documents (including the related fees and
expenses of counsel to the Initial Purchasers for all periods prior to and after
the Closing Date); and (x) all expenses incurred by the Company in connection
with any “road show” presentation to potential investors.

 

(b)                                 If (i) this Agreement is terminated pursuant
to Section 8, (ii) the Company for any reason fails to tender the Securities for
delivery to the Initial Purchasers or (iii) the Initial Purchasers decline to
purchase the Securities for any reason permitted under this Agreement, the
Company and each of the Guarantors jointly and severally agree to reimburse the
Initial Purchasers for all out-of-pocket costs and expenses (including the fees
and expenses of their counsel) reasonably incurred by the Initial Purchasers in
connection with this Agreement and the offering contemplated hereby.

 

11.                               Persons Entitled to Benefit of Agreement. 
This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and the officers and directors and any
controlling persons referred to herein, and the affiliates of each Initial
Purchaser referred to in Section 7 hereof.  Nothing in this Agreement is
intended or shall be construed to give any other person any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
contained herein.  No purchaser of Securities from any Initial Purchaser shall
be deemed to be a successor merely by reason of such purchase.

 

12.                               Survival.  The respective indemnities, rights
of contribution, representations, warranties and agreements of the Company, the
Guarantors and the Initial Purchasers contained in this Agreement or made by or
on behalf of the Company, the Guarantors or the Initial Purchasers pursuant to
this Agreement or any certificate delivered pursuant hereto shall survive the
delivery of and payment for the Securities and shall

 

29

--------------------------------------------------------------------------------

 

remain in full force and effect, regardless of any termination of this Agreement
or any investigation made by or on behalf of the Company, the Guarantors, the
Initial Purchasers, and the affiliates, directors, officers and employees and
each person, if any, who controls the Company, any Guarantors or any Initial
Purchaser in the manner described in Section 7.

 

13.                               Certain Defined Terms.  For purposes of this
Agreement, (a) except where otherwise expressly provided, the term “affiliate”
has the meaning set forth in Rule 405 under the Securities Act; (b) the term
“business day” means any day other than a day on which banks are permitted or
required to be closed in New York City; (c) the term “subsidiary” has the
meaning set forth in Rule 405 under the Securities Act; (d) the term “Exchange
Act” means the Securities Exchange Act of 1934, as amended; and (e) the term
“written communication” has the meaning set forth in Rule 405 under the
Securities Act.

 

14.                               Compliance with USA Patriot Act.  In
accordance with the requirements of the USA Patriot Act (Title III of Pub. L.
107-56 (signed into law October 26, 2001)), the Initial Purchasers are required
to obtain, verify and record information that identifies their respective
clients, including the Company, which information may include the name and
address of their respective clients, as well as other information that will
allow the Initial Purchasers to properly identify their respective clients.

 

15.                               Miscellaneous.

 

(a)                                 Any action by the Initial Purchasers
hereunder may be taken by J.P. Morgan Securities LLC on behalf of the Initial
Purchasers, and any such action taken by J.P. Morgan Securities LLC shall be
binding upon the Initial Purchasers.

 

(b)                                 All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted and confirmed by any standard form of telecommunication. 
Notices to the Initial Purchasers shall be given to the Representative c/o J.P.
Morgan Securities LLC, 383 Madison Avenue, New York, New York 10179 (fax:
212-270-1063); Attention: Legal, with a copy to Vinson & Elkins L.L.P., 1001
Fannin, Suite 2500, Houston, Texas 77002, Attention: Jim Prince.  Notices to the
Company and the Guarantors shall be delivered or sent by mail, telex, overnight
courier or facsimile transmission to Halcón Resources Corporation, 1000
Louisiana Street, Suite 6700, Houston, Texas 77002, Attention: David Elkouri,
with a copy to Mayer Brown LLP, 700 Louisiana Street, Suite 3400, Houston, Texas
77002, Attention: William T. Heller IV.

 

(c)                                  This Agreement and any claim, controversy
or dispute arising under or related to this Agreement shall be governed by and
construed in accordance with the laws of the State of New York.

 

(d)                                 The Company and each of the Guarantors
hereby submit to the exclusive jurisdiction of the U.S. federal and New York
state courts in the Borough of Manhattan in The City of New York in any suit or
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.  The Company and each of the Guarantors waive any objection
which it may now or hereafter have to the laying of venue of any such suit or
proceeding in such courts.  Each of the Company and each of the Guarantors
agrees that final judgment in any such suit, action or proceeding brought in
such court shall be conclusive and binding upon the Company and each Guarantor,
as applicable, and may be enforced in any court to the jurisdiction of which
Company and each Guarantor, as applicable, is subject by a suit upon such
judgment.

 

(e)                                  Each of the parties hereto hereby waives
any right to trial by jury in any suit or proceeding arising out of or relating
to this Agreement.

 

30

--------------------------------------------------------------------------------

 

(f)                                   This Agreement may be signed in
counterparts (which may include counterparts delivered by any standard form of
telecommunication), each of which shall be an original and all of which together
shall constitute one and the same instrument.

 

(g)                                  No amendment or waiver of any provision of
this Agreement, nor any consent or approval to any departure therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
parties hereto.

 

(h)                                 The headings herein are included for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.

 

[Signature page follows]

 

31

--------------------------------------------------------------------------------

 

If the foregoing is in accordance with your understanding, please indicate your
acceptance of this Agreement by signing in the space provided below.

 

 

Very truly yours,

 

 

 

HALCÓN RESOURCES CORPORATION

 

 

 

 

 

By

/s/ Mark J. Mize

 

 

Mark J. Mize

 

 

Executive Vice President, Chief Financial Officer

 

 

and Treasurer

 

 

 

HALCÓN ENERGY PROPERTIES, INC.

 

HALCÓN FIELD SERVICES, LLC

 

HALCÓN HOLDINGS, INC.

 

HALCÓN OPERATING CO., INC.

 

HALCÓN RESOURCES OPERATING, INC.

 

HALCÓN LOUISIANA OPERATING, L.P.

 

 

By:

HALCÓN GULF STATES, LLC,

 

 

its General Partner

 

HALCÓN GULF STATES, LLC

 

HRC ENERGY LOUISIANA, LLC

 

HRC ENERGY, LLC

 

HRC OPERATING, LLC

 

HRC ENERGY RESOURCES (WV), INC.

 

HALCÓN ENERGY HOLDINGS, LLC

 

HALCÓN WILLISTON I, LLC

 

HALCÓN WILLISTON II, LLC

 

HRC PRODUCTION COMPANY

 

HK OIL & GAS, LLC

 

HK ENERGY OPERATING, LLC

 

HK LOUISIANA OPERATING, LLC

 

HK ENERGY, LLC

 

HK RESOURCES, LLC

 

THE 7711 CORPORATION

 

 

 

 

 

By

/s/ Mark J. Mize

 

 

Mark J. Mize

 

 

Executive Vice President, Chief Financial Officer

 

 

and Treasurer

 

[Signature Page to Purchase Agreement]

 

--------------------------------------------------------------------------------

 

Accepted: As of the date first written above

 

J.P. MORGAN SECURITIES LLC

 

 

 

For itself and on behalf of the

 

several Initial Purchasers listed

 

in Schedule 1 hereto.

 

 

 

 

 

By

/s/Nicholas Fersen

 

 

Authorized Signatory

 

 

[Signature Page to Purchase Agreement]

 

--------------------------------------------------------------------------------

 

Schedule 1

 

Initial Purchaser

 

Principal Amount

 

J.P. Morgan Securities LLC

 

$

136,500,000

 

Barclays Capital Inc.

 

70,000,000

 

Wells Fargo Securities, LLC

 

70,000,000

 

Credit Suisse Securities (USA) LLC

 

63,000,000

 

BMO Capital Markets Corp.

 

59,500,000

 

Merrill Lynch, Pierce, Fenner & Smith Incorporated

 

59,500,000

 

Jefferies LLC

 

35,000,000

 

SunTrust Robinson Humphrey, Inc.

 

35,000,000

 

ING Financial Markets LLC

 

28,000,000

 

Natixis Securities Americas LLC

 

28,000,000

 

BNP Paribas Securities Corp.

 

24,500,000

 

Capital One Securities, Inc.

 

24,500,000

 

Goldman, Sachs & Co.

 

24,500,000

 

RBC Capital Markets, LLC

 

24,500,000

 

Comerica Securities, Inc.

 

17,500,000

 

Total

 

$

700,000,000

 

 

Schedule 1 - 1

--------------------------------------------------------------------------------

 

Schedule 2

 

LIST OF GUARANTORS

 

Guarantor

 

State of Incorporation or
Organization

Halcón Energy Properties, Inc.

 

Delaware

Halcón Field Services, LLC

 

Delaware

Halcón Holdings, Inc.

 

Delaware

Halcón Operating Co., Inc.

 

Texas

Halcón Resources Operating, Inc.

 

Delaware

Halcón Louisiana Operating, L.P.

 

Delaware

Halcón Gulf States, LLC

 

Oklahoma

HRC Energy Louisiana, LLC

 

Delaware

HRC Energy Resources (WV), Inc.

 

Delaware

Halcón Energy Holdings, LLC

 

Delaware

Halcón Williston I, LLC

 

Texas

Halcón Williston II, LLC

 

Texas

HRC Production Company

 

Texas

HK Oil & Gas LLC

 

Texas

HRC Energy, LLC

 

Colorado

HRC Operating, LLC

 

Colorado

HK Energy Operating, LLC

 

Texas

HK Energy, LLC

 

Texas

HK Louisiana Operating, LLC

 

Texas

HK Resources, LLC

 

Delaware

The 7711 Corporation

 

Texas

 

Schedule 2 - 1

--------------------------------------------------------------------------------

 

ANNEX A

 

THE COMPANY’S ROAD SHOW PRESENTATION

 

[See attached]

 

--------------------------------------------------------------------------------

 

ANNEX B

 

ADDITIONAL TIME OF SALE INFORMATION

 

1.                                      Term sheet containing the terms of the
Securities, substantially in the form of Annex D.

 

--------------------------------------------------------------------------------

 

ANNEX C

 

RESTRICTIONS ON OFFERS AND SALES OUTSIDE THE UNITED STATES

 

In connection with offers and sales of Securities outside the United States:

 

(a)                                 Each Initial Purchaser acknowledges that the
Securities have not been registered under the Securities Act and may not be
offered or sold within the United States or to, or for the account or benefit
of, U.S. persons except pursuant to an exemption from, or in transactions not
subject to, the registration requirements of the Securities Act.

 

(b)                                 Each Initial Purchaser, severally and not
jointly, represents, warrants and agrees that:

 

(i)                                     Such Initial Purchaser has offered and
sold the Securities, and will offer and sell the Securities, (A) as part of
their distribution at any time and (B) otherwise until 40 days after the later
of the commencement of the offering of the Securities and the Closing Date, only
in accordance with Regulation S under the Securities Act (“Regulation S”) or
Rule 144A or any other available exemption from registration under the
Securities Act.

 

(ii)                                  None of such Initial Purchaser or any of
its affiliates or any other person acting on its or their behalf has engaged or
will engage in any directed selling efforts with respect to the Securities, and
all such persons have complied and will comply with the offering restrictions
requirement of Regulation S.

 

(iii)                               At or prior to the confirmation of sale of
any Securities sold in reliance on Regulation S, such Initial Purchaser will
have sent to each distributor, dealer or other person receiving a selling
concession, fee or other remuneration that purchases Securities from it during
the distribution compliance period a confirmation or notice to substantially the
following effect:

 

The Securities covered hereby have not been registered under the U.S. Securities
Act of 1933, as amended (the “Securities Act”), and may not be offered or sold
within the United States or to, or for the account or benefit of, U.S. persons
(i) as part of their distribution at any time or (ii) otherwise until 40 days
after the later of the commencement of the offering of the Securities and the
date of original issuance of the Securities, except in accordance with
Regulation S or Rule 144A or any other available exemption from registration
under the Securities Act.  Terms used above have the meanings given to them by
Regulation S.

 

(iv)                              Such Initial Purchaser has not and will not
enter into any contractual arrangement with any distributor with respect to the
distribution of the Securities, except with its affiliates or with the prior
written consent of the Company.

 

Terms used in paragraph (a) and this paragraph (b) and not otherwise defined in
this Agreement have the meanings given to them by Regulation S.

 

--------------------------------------------------------------------------------

 

ANNEX D

 

[g94573ks09i001.jpg]

 

HALCÓN RESOURCES CORPORATION

 

$700,000,000
 8.625% Senior Secured Notes due 2020

 

April 21, 2015

 

Pricing Supplement dated April 21, 2015 to the Preliminary Offering Memorandum
dated April 21, 2015 of Halcón Resources Corporation. This Pricing Supplement is
qualified in its entirety by reference to the Preliminary Offering Memorandum. 
The information in this Pricing Supplement supplements the Preliminary Offering
Memorandum and supersedes the information in the Preliminary Offering Memorandum
to the extent it is inconsistent with the information in the Preliminary
Offering Memorandum.  The information in the Preliminary Offering Memorandum
will be modified to the extent affected by the changes disclosed herein. 
Capitalized terms used in this Pricing Supplement but not defined have the
meanings given them in the Preliminary Offering Memorandum.

 

The notes have not been registered under the Securities Act of 1933, as amended
(the “Securities Act”), or the securities laws of any other jurisdiction. The
notes may not be offered or sold in the United States or to U.S. persons (as
defined in Regulation S) except in transactions exempt from, or not subject to,
the registration requirements of the Securities Act.  Accordingly, the notes are
being offered only to (1) “qualified institutional buyers” as defined in
Rule 144A under the Securities Act and (2) outside the United States to non-U.S.
persons in compliance with Regulation S under the Securities Act.

 

Issuer

Halcón Resources Corporation

 

 

Guarantors

The notes will be jointly and severally guaranteed by all the Issuer’s current
restricted subsidiaries and by any future restricted subsidiaries that guarantee
the Issuer’s indebtedness under a credit facility.

 

 

Title of Securities

8.625% Senior Secured Notes due 2020 (the “Notes”)

 

 

Collateral

The Notes will be secured by second-priority liens on substantially all of the
Issuer’s and its subsidiary guarantors’ assets that secure the Issuer’s
revolving credit facility, subject to the terms of the collateral trust
agreement and the intercreditor agreement. For additional information, please
read “Description of the Notes—Security for Notes,” “—Collateral Trust
Agreement” and “—The Intercreditor Agreement.”

 

 

Aggregate Principal Amount

$700,000,000 (increased from $500,000,000)

 

 

Use of Proceeds

Estimated net proceeds to the Issuer from the offering of Notes will be
approximately $687.2 million, after deducting the Initial Purchasers’ discounts
and commissions and estimated offering expenses. The Issuer intends to use the
net proceeds from this offering to repay a portion of the outstanding borrowings
under its revolving credit facility, which has been and will continue to be,
drawn upon to partially fund the Issuer’s capital expenditure program, and for
other general corporate purposes. Affiliates of certain of the initial
purchasers are lenders under the Issuer’s revolving credit facility, and
accordingly, will receive a portion of the proceeds from

 

--------------------------------------------------------------------------------

 

 

this offering pursuant to the repayment of borrowings under such facility.

 

 

Revised Capitalization

The “As Further Adjusted” column of the “Capitalization” table on page 54 of the
Preliminary Offering Memorandum is amended to show cash and cash equivalents of
$173.9 million, no borrowings outstanding under the revolving credit facility,
$700.0 million of 8.625% senior secured notes due 2020, total long-term debt of
$3,703.9 million and total capitalization of $5,776.0 million. A portion of the
“As Further Adjusted” cash and cash equivalents will be used to repay a portion
of the outstanding borrowings under the Issuer’s revolving credit facility.

 

 

Distribution

144A / Regulation S without registration rights

 

 

Maturity Date

February 1, 2020

 

 

Issue Price

100.000%, plus accrued interest, if any, from May 1, 2015

 

 

Coupon

8.625%

 

 

Yield to Maturity

8.625%

 

 

Spread to Treasury

+728 basis points

 

 

Benchmark Treasury

UST 1.375% due March 31, 2020

 

 

Interest Payment Dates

February 1 and August 1 of each year, beginning on August 1, 2015

 

 

Record Dates

January 15 and July 15 of each year

 

 

Trade Date

April 21, 2015

 

 

Settlement Date

May 1, 2015 (T+8)

 

We expect that delivery of the Notes will be made against payment therefor on or
about the eighth business day following the date of confirmation of orders with
respect to the Notes (this settlement cycle being referred to as “T+8”). Under
Rule 15c6-1 of the Securities and Exchange Act of 1934, as amended, trades in
the secondary market generally are required to settle in three business days,
unless the parties to any such trade expressly agree otherwise. Accordingly,
purchasers who wish to trade the notes on the date hereof or the next four
succeeding business days will be required, by virtue of the fact that the notes
initially will settle in T+8, to specify an alternate settlement cycle at the
time of any such trade to prevent a failed settlement and should consult their
own advisors.

 

 

Optional Redemption

On or after February 1, 2017, at the following redemption prices (expressed as a
percentage of principal amount), plus accrued and unpaid interest, if any, on
the Notes redeemed during the twelve-month period indicated beginning on
February 1 of the years indicated below:

 

 

 

 

Year

 

Price

 

 

 

 

 

 

 

2017

 

104.313

%

 

2018

 

102.156

%

 

2019 and thereafter

 

100.000

%

 

 

 

Make-Whole Redemption

Make-whole redemption at Treasury Rate + 50 basis points prior to February 1,
2017

 

 

Equity Clawback

Up to 35% at 108.625% plus accrued and unpaid interest prior to February 1, 2017

 

 

Change of Control

101% plus accrued and unpaid interest (following a Rating Decline)

 

--------------------------------------------------------------------------------

 

CUSIP and ISIN Numbers

Rule 144A CUSIP:                  40537Q AH3
Regulation S CUSIP:              U4057P AF2
Rule 144A ISIN:                     US40537QAH39
Regulation S ISIN:                  USU4057PAF28

 

 

Denominations

Minimum denominations of $2,000 and integral multiples of $1,000 in excess
thereof

 

 

Joint Book-Running Managers

J.P. Morgan Securities LLC
Barclays Capital Inc.
Wells Fargo Securities, LLC
Credit Suisse Securities (USA) LLC
BMO Capital Markets Corp.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Jefferies LLC
SunTrust Robinson Humphrey, Inc.
BNP Paribas Securities Corp.
Capital One Securities, Inc.
Goldman, Sachs & Co.
ING Financial Markets LLC
Natixis Securities Americas LLC
RBC Capital Markets, LLC
Comerica Securities, Inc.

 

This material is confidential and is for your information only and is not
intended to be used by anyone other than you. This information does not purport
to be a complete description of these Notes or the offering. Please refer to the
Preliminary Offering Memorandum for a complete description.

 

This communication is being distributed in the United States solely to Qualified
Institutional Buyers, as defined in Rule 144A under the Securities Act, and
outside the United States solely to Non-U.S. persons as defined under Regulation
S.

 

This communication does not constitute an offer to sell or the solicitation of
an offer to buy any securities in any jurisdiction to any person to whom it is
unlawful to make such offer or solicitation in such jurisdiction.

 

*A securities rating is not a recommendation to buy, sell or hold securities and
may be subject to revision or withdrawal at any time.

 

Any disclaimer or other notice that may appear below is not applicable to this
communication and should be disregarded.  Such disclaimer or notice was
automatically generated as a result of this communication being sent by
Bloomberg or another email system.

 

--------------------------------------------------------------------------------

 

Exhibit A

 

FORM OF OPINION OF MAYER BROWN

 

1.                                      The Company and each of the Guarantors
is a corporation, limited liability company or partnership, as applicable,
validly existing and in good standing under the laws of the state of its
incorporation or organization, with corporate, limited liability company or
partnership power and authority, as applicable to own its properties and conduct
its business as described in the Time of Sale Information.

 

2.                                      Based solely on certificates of public
officials, each of the Company and its Subsidiaries was duly qualified or
licensed to do business and is in good standing as a foreign corporation,
limited liability company or partnership, as applicable, in each jurisdiction
listed in Schedule     with respect to it as of the respective dates specified
in such Schedule.

 

3.                                      The Company and each of the Guarantors:

 

(a)                                 has taken all corporate, limited liability
company or partnership action, as applicable, necessary to authorize the
execution, delivery and performance of the Indenture and the Operative
Documents, including granting the security interests to be granted by it
pursuant to the Indenture and the Collateral Documents; and

 

(b)                                 has duly executed and delivered such
Indenture and such Operative Documents.

 

4.                                      This Agreement has been duly authorized,
executed and delivered by the Company and the Guarantors.

 

5.                                      Each of the Collateral Documents and the
Intercreditor Agreement has been duly authorized, executed and delivered by the
Company and each of the Guarantors party thereto and each of the Collateral
Documents and the Intercreditor Agreement constitutes a valid and binding
obligation of the Company and each of the Guarantors party thereto enforceable
against the Company and each of the Guarantors party thereto in accordance with
its terms, subject to the Enforceability Exceptions.

 

6.                                      The Collateral Documents create under
the Uniform Commercial Code as in effect in the State of New York (the “New York
UCC”) a security interest in favor of the Collateral Agent for the ratable
benefit of itself, the Trustee and the holders of the Securities in such of the
Collateral of the Company and each Guarantor party thereto that is of a type in
which a security interest can be created under Article 9 of the New York UCC.

 

7.                                      Each Financing Statement listed on
Schedule            hereto is in appropriate form for filing in the applicable
Filing Office specified on Schedule           hereto.  Upon the effective filing
of each Financing Statement listed on Schedule           hereto with the
applicable Filing Office specified on Schedule           hereto, the Collateral
Agent for the ratable benefit of itself, the Trustee and the holders of the
Securities will have a perfected security interest in that part of the
Collateral held by each of the Company and the Guarantors in which a security
interest may be perfected by the filing of a financing statement with such
Filing Office under the applicable Uniform Commercial Code.

 

--------------------------------------------------------------------------------

 

8.                                      Assuming the due authentication of the
Securities by the Trustee in accordance with the Indenture and payment for the
Securities by the Initial Purchasers in accordance with the Purchase Agreement:

 

(a)                                 the Securities will be the valid and binding
obligations of the Company, enforceable against it in accordance with its terms
and entitled to the benefits of the Indenture, and

 

(b)                                 the Guarantees will be the valid and binding
obligations of the Guarantors enforceable against the Guarantors in accordance
with their terms.

 

9.                                      Each of the Indenture and the Operative
Documents constitutes the valid and binding obligation of each Relevant Party
that is a party thereto, enforceable against such Relevant Party in accordance
with its terms.

 

10.                               The form of the Indenture complies with the
requirements of the Trust Indenture Act of 1939, as amended (the “TIA”).

 

11.                               The application of the proceeds from the
Securities by the Company as described under “Use of Proceeds” in the Time of
Sale Information and the Offering Memorandum, the execution and delivery by each
Relevant Party of the Operative Documents to which it is a party do not, and the
performance by each such Relevant Party of its obligations under the Operative
Documents (including, but not limited to, the filing of any applicable fixture
filings relating to the real property covered by the Mortgages and the filing of
any applicable financing statements pursuant to the Security Agreement) to which
it is a party and the grant and perfection of liens and security interests in
the Collateral pursuant to the Mortgages and the Security Agreement will not:

 

(a)                                 in the case of any Relevant Party (other
than the Other Party), violate its certificate of incorporation or bylaws,
certificate of formation, limited liability company agreement or limited
partnership agreement, as applicable;

 

(b)                                 breach or result in a default or the
creation of any lien under any agreement or instrument listed in
Schedule           (the “Applicable Contracts”) (except that we express no
opinion with respect to financial covenants and other similar provisions in any
Applicable Contract requiring financial calculations or determinations to
ascertain compliance, or any order, writ, judgment, injunction, decree,
determination or award listed in Schedule           ; or

 

(c)                                  result in a violation by any Relevant Party
of any Applicable Laws, the Delaware General Corporation Law, the Delaware
Limited Liability Company Act or the Delaware Revised Uniform Limited
Partnership Act or any judgment, order, rule or regulation of any court or
arbitrator or governmental or regulatory authority.

 

12.                               No authorization, approval or other action by,
and no notice to or filing with, any United States federal, Delaware, New York
or Texas governmental authority or regulatory body, or any third party that is a
party to an Applicable Contract, is required for: (a) the due execution,
delivery or performance by a Relevant Party of any Operative Document to which
it is a party, (b) the application of the proceeds from the Securities by the
Company as described under “Use of Proceeds” in the Time of Sale Information and
the Offering Memorandum, (c) the execution, delivery and performance by the
Company or any of the Guarantors of each of the Operative Documents to which
each is a party (including, but not limited to, the filing of any applicable
financing statements pursuant to the Mortgages or the Security Agreement), or
(d) the grant and perfection of security interests in the Collateral pursuant

 

--------------------------------------------------------------------------------

 

to the Mortgages and the Security Agreement, and compliance by the Company and
each of the Guarantors with the terms thereof.

 

13.                               No Relevant Party is, or as a result of the
transactions contemplated by the Operative Documents is or will be after
applying the proceeds from the offering as described in the Time of Sale
Information and the Offering Memorandum, required to register as an investment
company under the Investment Company Act.

 

14.                               Based upon the representations, warranties and
agreements of the Company and the Initial Purchasers in the Purchase Agreement,
it is not necessary in connection with the offer and sale of the Securities or
the Guarantees to the Initial Purchasers under the Purchase Agreement, or in
connection with the initial offer, resale or delivery of the Securities and the
Guarantees by the Initial Purchasers in the manner contemplated by the Purchase
Agreement, to register the Securities or the Guarantees under the Securities
Act, or to qualify the Indenture under the TIA, it being understood that no
opinion is expressed as to any subsequent resale of any Securities.

 

15.                               The statements set forth under the heading
“Description of the Notes” in the Time of Sale Information and the Offering
Memorandum insofar as such statements purport to summarize the terms of the
Indenture, the Securities and the Guarantees, accurately summarize such
documents in all material respects.

 

16.                               The statements set forth under the headings
“Description of Our Other Indebtedness”, “Certain United States Federal Income
Tax Considerations,” “Certain Considerations for ERISA and Other U.S. Employee
Benefit Plans” and “Plan of Distribution” in the Preliminary Offering Memorandum
and the Offering Memorandum, in each case insofar as such statements purport to
constitute summaries of the terms of statutes, rules, regulations or documents,
accurately summarize such statutes, rules, regulations and documents in all
material respects.

 

17.                               A Texas state court or a federal court sitting
in the State of Texas and applying Texas conflicts-of-laws principles would give
effect to the choice of New York law to govern the Transaction Documents.

 

18.                               The authorized capital stock of the Company is
as set forth in the Preliminary Offering Memorandum and the Offering Memorandum.

 

19.                               We are not representing any Relevant Party in
any pending litigation in which it is a named defendant that challenges the
validity or enforceability of, or seeks to enjoin the performance of, the
Transaction Documents.

 

Such counsel shall also furnish to the Initial Purchasers a written statement,
addressed to the Initial Purchasers and dated the Closing Date, in form and
substance satisfactory to the Initial Purchasers, to the effect that such
counsel reviewed the Time of Sale Information and the Offering Memorandum and
participated in conferences with officers and other representatives of the
Company, representatives of the Initial Purchasers and counsel for the Initial
Purchasers, and representatives of the independent public accountants and
independent reserve engineers for the Company at which the contents of the Time
of Sale Information and the Offering Memorandum and related matters were
discussed.  The purpose of such counsel’s professional engagement was not to
establish or confirm factual matters set forth in Time of Sale Information or
the Offering Memorandum, and such counsel has not undertaken to verify
independently any of such factual matters.  Moreover, many of the determinations
required to be made in the preparation of the Time of Sale Information and the
Offering Memorandum involve matters of a non-legal nature.  Subject to the
foregoing, such counsel confirm to you, on the basis of the information such

 

--------------------------------------------------------------------------------

 

counsel gained in the course of performing the services referred to above,
nothing came to such counsel’s attention that caused it to believe that:

 

(a)                                 the Time of Sale Information, as of
8:00 a.m., eastern time on April 21, 2015, contained any untrue statement of a
material fact or omitted to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, or

 

(b)                                 the Offering Memorandum, as of its date and
as of the date hereof, contained or contains any untrue statement of a material
fact or omitted or omits to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading;

 

provided that such counsel does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Time of Sale
Information or the Offering Memorandum (except as otherwise specifically stated
in paragraphs 15 and 16), and such counsel does not express any belief with
respect to the financial statements and related notes and schedules and other
financial data, accounting data, information or assessments of or reports on the
effectiveness of internal control over financial reporting, or oil and gas
reserves or prospects, production data or related geological data, or
statistical data derived from such financial, oil and gas reserves, prospects,
production data or geological data, contained in or omitted from the Time of
Sale Information or the Offering Memorandum.

 

[For the avoidance of doubt, the opinions of company counsel relating to the
Mortgages shall be delivered on or before the date that is sixty (60) days
following the Closing Date and promptly following the proper execution, filing
and recording of the Mortgages in the official real property records of the
counties where the Mortgage Properties are located, in each case as and to the
extent contemplated by the Indenture and the Collateral Documents.]

 

--------------------------------------------------------------------------------

 

Exhibit B

 

FORM OF OPINION OF COMPANY’S GENERAL COUNSEL

 

1.                                      All of the issued shares of capital
stock or other equity interests of each of the Company and its subsidiaries have
been duly authorized and validly issued, are fully paid and non-assessable and
(in the case of capital stock or other equity interests of the Company’s
subsidiaries) are owned directly or indirectly by the Company, free and clear of
all liens, encumbrances, equities or claims, except for (i) such liens,
encumbrances, equities or claims as described in the Preliminary Offering
Memorandum and the Final Offering Memorandum, (ii) such liens, encumbrances,
equities or claims as could not, in the aggregate, reasonably be expected to
have a Material Adverse Effect, or (iii) for Permitted Liens (each as defined in
the Purchase Agreement).

 

2.                                      To the knowledge of such counsel, there
are no legal or governmental proceedings pending or threatened to which the
Company or any of its subsidiaries is a party or of which any property or assets
of the Company or any of its subsidiaries is the subject that could reasonably
be expected to have a Material Adverse Effect or could reasonably be expected to
have a material adverse effect on the Company’s performance of the Agreement or
the consummation by the Company of the transactions contemplated therein.

 

--------------------------------------------------------------------------------

 

Exhibit C

 

FORM OF CHIEF FINANCIAL OFFICER’S CERTIFICATE

 

The undersigned, Mark Mize, the duly appointed Executive Vice President, Chief
Financial Officer and Treasurer of Halcón Resources Corporation (the “Company”),
after due inquiry hereby certifies on behalf of the Company, solely in the
undersigned’s capacity as Executive Vice President, Chief Financial Officer and
Treasurer of the Company, that in connection with the offering by the Company of
$700,000,000 aggregate principal amount of its 8.625% Senior Secured Notes due
2020 (the “Notes”), as described in the preliminary offering memorandum dated
April 21, 2015 (the “Preliminary Offering Memorandum”) and the related offering
memorandum dated April 21, 2015 (the “Final Offering Memorandum,” and together
with the Preliminary Offering Memorandum, the “Offering Memorandum”), that:

 

1.                                      The undersigned is responsible for
establishing and maintaining disclosure controls and procedures and internal
control over financial reporting for the Company, and the undersigned is
responsible for oversight and supervision of the Company’s financial and
accounting functions and staff.

 

2.                                      The undersigned has carefully examined
the preliminary unaudited financial and operational information set forth under
the caption “Summary—Recent Developments—First Quarter Update (Preliminary)” in
the Offering Memorandum (the “First Quarter Update”).

 

3.                                      The First Quarter Update has been
prepared (a) in accordance with the description thereof, and is subject to the
limitations, set forth in the Offering Memorandum, (b) in accordance with
accounting principles which are materially consistent with the principles used
to prepare the financial information included or incorporated by reference in
the Offering Memorandum for the year ended December 31, 2014, and (c) in good
faith based upon the Company’s internal records and information systems.

 

The undersigned is aware that this certificate is to assist J.P. Morgan
Securities LLC, as representatives of the several underwriters, in conducting
and documenting their investigation of the affairs of the Company in connection
with the Company’s offering of the Notes as described in the Offering
Memorandum.

 

--------------------------------------------------------------------------------