Exhibit 10.1

Execution Copy

CLASS E UNIT AND COMMON UNIT PURCHASE AGREEMENT

BY AND AMONG

CONSTELLATION ENERGY PARTNERS LLC

AND

THE PURCHASERS NAMED HEREIN

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CLASS E UNIT AND COMMON UNIT PURCHASE AGREEMENT

CLASS E UNIT AND COMMON UNIT PURCHASE AGREEMENT, dated as of March 8, 2007 (this
“Agreement”), by and among Constellation Energy Partners LLC, a Delaware limited
liability company (“Constellation Energy”), and GPS Partners LLC, Lehman
Brothers MLP Partners, L.P., ZLP Fund, L.P. and Structured Finance Americas LLC
(each of GPS Partners LLC, Lehman Brothers MLP Partners, L.P., ZLP Fund, L.P.
and Structured Finance Americas LLC, a “Purchaser” and, collectively, the
“Purchasers”).

WHEREAS, simultaneously with the execution of this Agreement, Constellation
Energy is entering into definitive purchase agreements to acquire certain oil
and gas properties and related assets in Oklahoma and Kansas and associated
equity interests, as more fully described in the EnergyQuest Acquisition
Agreements, upon the terms and conditions and for the consideration set forth in
the EnergyQuest Acquisition Agreements (the “EnergyQuest Acquisition”);

WHEREAS, Constellation Energy desires to finance a portion of the EnergyQuest
Acquisition through the sale of an aggregate of $60,000,021.92 of Class E Units
and Common Units and the Purchasers desire to purchase an aggregate of
$60,000,021.92 of Common Units and Class E Units from Constellation Energy, each
in accordance with the provisions of this Agreement;

WHEREAS, it is a condition to the obligations of the Purchasers and
Constellation Energy under this Agreement that the EnergyQuest Acquisition be
consummated;

WHEREAS, Constellation Energy has agreed to provide the Purchasers with certain
registration rights with respect to the Purchased Common Units and the Common
Units underlying the Class E Units acquired pursuant to this Agreement; and

WHEREAS, the Voting Agreement in the form attached as Exhibit D (the “Unitholder
Voting Agreement”) shall be executed by Constellation Energy Partners Holdings,
LLC (“CEPH”) pursuant to which CEPH shall unconditionally and irrevocably agree
to vote all of the Common Units owned by such unitholder in favor of the
conversion of Class E Units into Common Units as contemplated by Section 5.01 of
this Agreement;

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Constellation Energy and each of the Purchasers,
severally and not jointly, hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01. Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:

“8-K Filing” shall have the meaning specified in Section 5.06.

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“Action” against a Person means any lawsuit, action, proceeding, investigation
or complaint before any Governmental Authority, mediator or arbitrator.

“Additional Units” shall have the meaning specified in Section 5.02.

“Affiliate” means, with respect to a specified Person, any other Person, whether
now in existence or hereafter created, directly or indirectly controlling,
controlled by or under direct or indirect common control with such specified
Person. For purposes of this definition, “control” (including, with correlative
meanings, “controlling”, “controlled by” and “under common control with”) means
the power to direct or cause the direction of the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise.

“Agreement” shall have the meaning specified in the introductory paragraph.

“Basic Documents” means, collectively, this Agreement, the Registration Rights
Agreement, the Unitholder Voting Agreement, the Class E Amendment, the
EnergyQuest Acquisition Agreements and any and all other agreements or
instruments executed and delivered by the Parties to evidence the execution,
delivery and performance of this Agreement, and any amendments, supplements,
continuations or modifications thereto.

“Board of Managers” means the board of managers of Constellation Energy.

“Business Day” means any day other than a Saturday, a Sunday, or a legal holiday
for commercial banks in Houston, Texas or New York, New York.

“Buy-In” shall have the meaning specified in Section 8.08.

“Buy-In Price” shall have the meaning specified in Section 8.08.

“CEPH” shall have the meaning specified in the recitals.

“Class E Amendment” shall have the meaning specified in Section 2.01(a).

“Class E Unit Price” shall have the meaning specified in Section 2.01(c).

“Class E Units” means the Class E Units of Constellation Energy, as established
by the Class E Amendment.

“Closing” shall have the meaning specified in Section 2.02.

“Closing Date” shall have the meaning specified in Section 2.02.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Commission” means the United States Securities and Exchange Commission.

 

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“Commitment Amount” means the dollar amount set forth opposite each Purchaser’s
name on Schedule 2.01 to this Agreement under the heading “Gross Proceeds to
Issuer”.

“Common Units” means the Common Units of Constellation Energy representing class
B limited liability company interests.

“Common Unit Price” shall have the meaning specified in Section 2.01(c).

“Constellation Energy” shall have the meaning specified in the introductory
paragraph.

“Constellation Energy Financial Statements” shall have the meaning specified in
Section 3.03.

“Constellation Energy Material Adverse Effect” means any material and adverse
effect on (i) the assets, liabilities, financial condition, business,
operations, prospects or affairs of Constellation Energy and its Subsidiaries,
taken as a whole, measured against those assets, liabilities, financial
condition, business, operations, prospects or affairs reflected in the
Constellation Energy SEC Documents, (ii) the ability of Constellation Energy and
its Subsidiaries, taken as a whole, to carry out their business as of the date
of this Agreement or to meet their obligations under the Basic Documents on a
timely basis or (iii) the ability of Constellation Energy to consummate the
transactions under any Basic Document.

“Constellation Energy Related Parties” shall have the meaning specified in
Section 7.02.

“Constellation Energy SEC Documents” shall have the meaning specified in
Section 3.03.

“Delaware LLC Act” shall have the meaning specified in Section 3.02(a).

“EnergyQuest” means EnergyQuest Resources LP, a Delaware limited liability
company.

“EnergyQuest Acquisition” shall have the meaning specified in the recitals.

“EnergyQuest Acquisition Agreements” mean that certain (i) Purchase and Sale
Agreement dated as of March 8, 2007, between EnergyQuest and Oklahoma
Processing, as sellers, and Constellation Energy, as buyer, which is attached
hereto as Exhibit G-1 and (ii) Purchase and Sale Agreement, dated as of March 8,
2007, between EnergyQuest, Oklahoma Processing, Kansas Processing and Kansas
Production, as sellers, and Constellation Energy, as buyer, which is attached
hereto as Exhibit G-2.

“EnergyQuest Closing Date” means the date on which the EnergyQuest Acquisition
is consummated.

“EnergyQuest Material Adverse Effect” means any material and adverse effect on
the business, assets, liabilities, operations and prospects to be acquired by
Constellation Energy from EnergyQuest and its Subsidiaries pursuant to the
EnergyQuest Acquisition Agreements.

 

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“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, and the rules and regulations of the Commission promulgated thereunder.

“GAAP” means generally accepted accounting principles in the United States of
America in effect from time to time.

“Governmental Authority” shall include the country, state, county, city and
political subdivisions in which any Person or such Person’s Property is located
or that exercises valid jurisdiction over any such Person or such Person’s
Property, and any court, agency, department, commission, board, bureau or
instrumentality of any of them and any monetary authorities that exercise valid
jurisdiction over any such Person or such Person’s Property. Unless otherwise
specified, all references to Governmental Authority herein shall mean a
Governmental Authority having jurisdiction over, where applicable, Constellation
Energy, its Subsidiaries or any of their Property or any of the Purchasers.

“Indemnified Party” shall have the meaning specified in Section 7.03.

“Indemnifying Party” shall have the meaning specified in Section 7.03.

“Kane Family Interests” means the ownership interests of Robert M. Kane, Louise
Kane Roark, Ann Kane Seidman and Mark Kane and related parties in and to the
assets, properties and entities that are subject to Section 15 of the Operating
Agreement, dated May 3, 2006, by and among EnergyQuest, Bullseye Energy, Inc.
and certain other parties, which provision obligated Constellation Energy to
offer to purchase such ownership interests upon execution and delivery of the
EnergyQuest Acquisition Agreements.

“Kansas Processing” means Kansas Processing EQR LLC, a Delaware limited
liability company.

“Kansas Production” means Kansas Production EQR LLC, a Delaware limited
liability company.

“Law” means any federal, state, local or foreign order, writ, injunction,
judgment, settlement, award, decree, statute, law, rule or regulation.

“Lien” means any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is
based on the common law, statute or contract, and whether such obligation or
claim is fixed or contingent, and including the lien or security interest
arising from a mortgage, encumbrance, pledge, security agreement, conditional
sale or trust receipt or a lease, consignment or bailment for security purposes.

“Limited Liability Company Agreement” shall have the meaning specified in
Section 2.01(a).

“Lock-Up Date” means the earlier of (i) 90 days after the Closing Date and
(ii) the date that a registration statement under the Securities Act to permit
resale of the Purchased Common Units and the Common Units underlying the
Purchased Class E Units is declared effective by the Commission.

 

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“Oklahoma Processing” means Oklahoma Processing QRP, LLC, a Delaware limited
liability company.

“Party” or “Parties” means Constellation Energy and the Purchasers, individually
or collectively, as the case may be.

“Permitted Amount” shall have the meaning specified in Section 2.01(a).

“Person” means any individual, corporation, company, voluntary association,
partnership, joint venture, trust, limited liability company, unincorporated
organization or government or any agency, instrumentality or political
subdivision thereof, or any other form of entity.

“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.

“Purchase Price” means the aggregate of each Purchaser’s Commitment Amount set
forth opposite the Purchaser’s name on Schedule 2.01 to this Agreement under the
heading “Gross Proceeds to Issuer”.

“Purchased Class E Units” means the Class E Units to be issued and sold to the
Purchasers pursuant to this Agreement.

“Purchased Common Units” means the Common Units to be issued and sold to the
Purchasers pursuant to this Agreement.

“Purchaser” shall have the meaning specified in the introductory paragraph.

“Purchaser Material Adverse Effect” means any material and adverse effect on
(i) the ability of a Purchaser to meet its obligations under the Basic Documents
on a timely basis or (ii) the ability of a Purchaser to consummate the
transactions under any Basic Document.

“Purchaser Related Parties” shall have the meaning specified in Section 7.01.

“Purchasers” shall have the meaning specified in the introductory paragraph.

“Registration Rights Agreement” means the Registration Rights Agreement,
substantially in the form attached to this Agreement as Exhibit C, to be entered
into at the Closing, among Constellation Energy and the Purchasers.

“Representatives” of any Person means the officers, managers, directors,
employees, Affiliates, control persons, counsel, investment bankers, agents and
other representatives of such Person.

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and the rules and regulations of the Commission promulgated thereunder.

 

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“Subsidiary” means, as to any Person, any corporation or other entity of which a
majority of the outstanding equity interest having by the terms thereof ordinary
voting power to elect a majority of the board of directors of such corporation
or other entity (irrespective of whether or not at the time any equity interest
of any other class or classes of such corporation or other entity shall have or
might have voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by such Person or one or more of
its Subsidiaries.

“Terminating Breach” shall have the meaning specified in Section 8.12(a)(ii).

“Unitholder Voting Agreement” shall have the meaning specified in the recitals.

“Unitholders” means the Unitholders of Constellation Energy (within the meaning
of the Limited Liability Company Agreement).

Section 1.02. Accounting Procedures and Interpretation. Unless otherwise
specified in this Agreement, all accounting terms used herein shall be
interpreted, all determinations with respect to accounting matters under this
Agreement shall be made, and all financial statements and certificates and
reports as to financial matters required to be furnished to the Purchasers under
this Agreement shall be prepared, in accordance with GAAP applied on a
consistent basis during the periods involved (except, in the case of unaudited
statements, as permitted by Form 10-Q promulgated by the Commission) and in
compliance as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the Commission with
respect thereto.

ARTICLE II

SALE AND PURCHASE

Section 2.01. Sale and Purchase. Contemporaneously with the consummation of the
EnergyQuest Acquisition and subject to the terms and conditions of this
Agreement, at the Closing, Constellation Energy hereby agrees to issue and sell
to each Purchaser, and each Purchaser hereby agrees, severally and not jointly,
to purchase from Constellation Energy, the number of Purchased Common Units and
the Purchased Class E Units, respectively, set forth opposite its name on
Schedule 2.01 hereto. Each Purchaser agrees to pay Constellation Energy the
Common Unit Price for each Purchased Common Unit and the Class E Unit Price for
each Purchased Class E Unit, in each case as set forth in Section 2.01(c). The
respective obligations of each Purchaser under this Agreement are several and
not joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under this Agreement. The failure or waiver of performance under this
Agreement by any Purchaser, or on its behalf, does not excuse performance by any
other Purchaser. Nothing contained herein or in any other Basic Document, and no
action taken by any Purchaser pursuant thereto, shall be deemed to constitute
the Purchasers as a partnership, an association, a joint venture or any other
kind of entity, or create a presumption that the Purchasers are in any way
acting in concert or as a group with respect to such obligations or the
transactions contemplated by any Basic Document. Except as otherwise provided in
this Agreement or the other Basic Documents, each Purchaser shall be entitled to
independently protect and enforce its rights, including the rights arising out
of this Agreement or out of the other Basic Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.

 

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(a) Common Units. The number of Purchased Common Units to be issued and sold to
each Purchaser shall be equal to the quotient determined by dividing (i) the
amount for such Purchaser under the column entitled “Common Units” on Schedule
2.01 by (ii) the Common Unit Price (as defined in Section 2.01(c) below), which
quotient shall be rounded, if necessary, down to the nearest whole number;
provided, however, that each Purchaser (i) acknowledges that in no event shall
Constellation Energy issue to the Purchasers an aggregate number of Common Units
in excess of 19.9% of Constellation Energy’s outstanding Common Units
immediately prior to such issuance (the “Permitted Amount”) and (ii) agrees to
decrease the aggregate number of Common Units and increase the aggregate number
of Class E Units to the extent required to cause the number of Common Units
issued to be less than the Permitted Amount. The Purchased Common Units shall
have those rights, preferences, privileges and restrictions governing the Common
Units as set forth in the Second Amended and Restated Operating Agreement of
Constellation Energy, dated as of November 20, 2006 (the “Limited Liability
Company Agreement”), as amended by an amendment to the Limited Liability Company
Agreement, in all material respects in the form of Exhibit A to this Agreement,
which Constellation Energy will cause to be adopted immediately prior to the
issuance and sale of Class E Units contemplated by this Agreement (the “Class E
Amendment”). References herein to the Limited Liability Company Agreement shall
include or exclude the Class E Amendment as the context requires.

(b) Class E Units. The number of Purchased Class E Units to be issued and sold
to each Purchaser shall be equal to the quotient determined by dividing (i) the
amount for such Purchaser under the column entitled “Class E Units” on Schedule
2.01 (including any increase in such number of Class E Units as a result of the
proviso contained in Section 2.01(a)) by (ii) the Class E Unit Price (as defined
in Section 2.01(c) below), which quotient shall be rounded, if necessary, down
to the nearest whole number. The Purchased Class E Units shall have those
rights, preferences, privileges and restrictions governing the Class E Units,
which shall be reflected in the Limited Liability Company Agreement, as amended
by the Class E Amendment.

(c) Consideration. The amount per Common Unit each Purchaser will pay to
Constellation Energy to purchase the Purchased Common Units (the “Common Unit
Price”) shall be $26.12. The amount per Class E Unit each Purchaser will pay to
Constellation Energy to purchase the Purchased Class E Units (the “Class E Unit
Price”) shall be $25.84.

Section 2.02. Closing. The execution and delivery of the Basic Documents (other
than this Agreement and the EnergyQuest Acquisition Agreements), the delivery of
certificates representing the Purchased Class E Units and the Purchased Common
Units, the payment by each Purchaser of its respective Commitment Amount and
execution and delivery of all other instruments, agreements and other documents
required by this Agreement (the “Closing”) shall take place on a date (the
“Closing Date”) concurrent with the EnergyQuest Closing Date, but on or prior to
May 3, 2007, provided that Constellation Energy shall have given each Purchaser
three (3) Business Days (or such shorter period as shall be agreeable to each of
the Parties) prior notice of such designated Closing Date, at the offices of
Andrews Kurth LLP, 600 Travis, Suite 4200, Houston, Texas 77002.

 

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ARTICLE III

REPRESENTATIONS AND WARRANTIES OF CONSTELLATION ENERGY

Constellation Energy represents and warrants to the Purchasers, on and as of the
date of this Agreement and on and as of the Closing Date, as follows:

Section 3.01. Corporate Existence. Constellation Energy: (i) is a limited
liability company duly organized, validly existing and in good standing under
the Laws of the State of Delaware; (ii) has all requisite limited liability
company power, and has all material governmental licenses, authorizations,
consents and approvals, necessary to own its Properties and carry on its
business as its business is now being conducted as described in the
Constellation Energy SEC Documents, except where the failure to obtain such
licenses, authorizations, consents and approvals would not reasonably be
expected to have a Constellation Energy Material Adverse Effect; and (iii) is
qualified to do business in all jurisdictions in which the nature of the
business conducted by it makes such qualifications necessary, except where
failure so to qualify would not reasonably be expected to have a Constellation
Energy Material Adverse Effect.

Section 3.02. Capitalization and Valid Issuance of Purchased Class E Units and
Purchased Common Units.

(a) As of the date of this Agreement, and prior to the issuance and sale of the
Purchased Class E Units and the Purchased Common Units, the issued and
outstanding membership interests of Constellation Energy consist of 11,093,894
Common Units, 226,406 Class A Units, Management Incentive Interests and Class D
Interests (each as defined in the Limited Liability Company Agreement). All of
the outstanding Common Units, Class A Units, the Management Incentive Interests
and Class D Interests have been duly authorized and validly issued in accordance
with applicable Law and the Limited Liability Company Agreement and are fully
paid (to the extent required by applicable Law and under the Limited Liability
Company Agreement) and non-assessable (except as such non-assessability may be
affected by Section 18-607 of the Delaware Limited Liability Company Act (the
“Delaware LLC Act”).

(b) Other than Constellation Energy’s existing Long-Term Incentive Plan,
Constellation Energy has no equity compensation plans that contemplate the
issuance of Common Units or any other class of equity (or securities convertible
into or exchangeable for Common Units or any other class of equity).
Constellation Energy has no outstanding indebtedness having the right to vote
(or convertible into or exchangeable for securities having the right to vote) on
any matters on which the Unitholders may vote. Except as set forth in the first
sentence of this Section 3.02(b), as contemplated by this Agreement or as are
contained in the Limited Liability Company Agreement, there are no outstanding
or authorized (i) options, warrants, preemptive rights, subscriptions, calls or
other rights, convertible securities, agreements, claims or commitments of any
character obligating Constellation Energy or any of its Subsidiaries to issue,
transfer or sell any limited liability company interests or other equity
interests in Constellation Energy or any of its Subsidiaries or securities
convertible into or

 

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exchangeable for such limited liability company interests or other equity
interests, (ii) obligations of Constellation Energy or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any limited liability company
interests or other equity interests in Constellation Energy or any of its
Subsidiaries or any such securities or agreements listed in clause (i) of this
sentence or (iii) voting trusts or similar agreements to which Constellation
Energy or any of its Subsidiaries is a party with respect to the voting of the
equity interests of Constellation Energy or any of its Subsidiaries.

(c)(i) All of the issued and outstanding equity interests of each of
Constellation Energy’s Subsidiaries are owned, directly or indirectly, by
Constellation Energy free and clear of any Liens (except for such restrictions
as may exist under applicable Law and except for such Liens as may be imposed
under Constellation Energy’s or Constellation Energy’s Subsidiaries’ credit
facilities filed as exhibits to the Constellation Energy SEC Documents), and all
such ownership interests have been duly authorized and validly issued and are
fully paid (to the extent required by applicable Law and the organizational
documents of Constellation Energy’s Subsidiaries, as applicable) and
non-assessable (except as non-assessability may be affected by Section 18-607 of
the Delaware LLC Act or the organizational documents of Constellation Energy’s
Subsidiaries, as applicable) and free of preemptive rights, with no personal
liability attaching to the ownership thereof, and (ii) except as disclosed in
the Constellation Energy SEC Documents, neither Constellation Energy nor any of
its Subsidiaries owns any shares of capital stock or other securities of, or
interest in, any other Person, or is obligated to make any capital contribution
to or other investment in any other Person.

(d) The offer and sale of the Purchased Class E Units and the Purchased Common
Units and the membership interests represented thereby will be duly authorized
by Constellation Energy pursuant to the Limited Liability Company Agreement
prior to the Closing and, when issued and delivered to the Purchasers against
payment therefor in accordance with the terms of this Agreement, will be validly
issued, fully paid (to the extent required by applicable Law and the Limited
Liability Company Agreement) and non-assessable (except as such
non-assessability may be affected by Section 18-607 of the Delaware LLC Act) and
will be free of any and all Liens and restrictions on transfer, other than
restrictions on transfer under the Limited Liability Company Agreement, the
Registration Rights Agreement and applicable state and federal securities Laws
and other than such Liens as are created by the Purchasers.

(e) The Common Units issuable upon conversion of the Class E Units, and the
membership interests represented thereby, upon issuance in accordance with the
terms of the Class E Units as reflected in the Class E Amendment, and upon
receipt of the required Unitholder approval, will be duly authorized by
Constellation Energy pursuant to the Limited Liability Company Agreement, and
will be validly issued, fully paid (to the extent required by applicable Law and
the Limited Liability Company Agreement) and non-assessable (except as such
non-assessability may be affected by Section 18-607 of the Delaware LLC Act) and
will be free of any and all Liens and restrictions on transfer, other than
restrictions on transfer under the Limited Liability Company Agreement and under
applicable state and federal securities Laws and other than such Liens as are
created by the Purchasers.

(f) The Purchased Common Units and the Purchased Class E Units will be issued in
compliance with all applicable rules of NYSE Arca. Prior to the Closing Date,
the

 

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Purchased Common Units and the Common Units underlying the Purchased Class E
Units will have been approved for quotation on NYSE Arca subject to official
notice of issuance. Constellation Energy’s currently outstanding Common Units
are listed on NYSE Arca and Constellation Energy has not received any notice of
delisting.

(g) The Purchased Common Units and the Purchased Class E Units shall have those
rights, preferences, privileges and restrictions governing the Common Units as
set forth in the Limited Liability Company Agreement, as amended by the Class E
Amendment. A true and correct copy of the Limited Liability Company Agreement,
as amended through the date hereof (but excluding the Class E Amendment), has
been filed by Constellation Energy with the Commission on November 28, 2006 as
Exhibit 3.1 to Constellation Energy’s Current Report on Form 8-K. The Purchased
Class E Units shall have those rights, preferences, privileges and restrictions
governing the Class E Units, which shall be reflected in the Limited Liability
Company Agreement, as amended by the Class E Amendment.

Section 3.03. Constellation Energy SEC Documents. Constellation Energy has
timely filed with the Commission all forms, registration statements, reports,
schedules and statements required to be filed by it under the Exchange Act or
the Securities Act (all such documents filed on or prior to the date of this
Agreement, collectively, the “Constellation Energy SEC Documents”). The
Constellation Energy SEC Documents, including any audited or unaudited financial
statements and any notes thereto or schedules included therein (the
“Constellation Energy Financial Statements”), at the time filed (in the case of
registration statements, solely on the dates of effectiveness) (except to the
extent corrected by a subsequently filed Constellation Energy SEC Document filed
prior to the date of this Agreement) (i) did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, (ii) complied in all
material respects with the applicable requirements of the Exchange Act and the
Securities Act, as the case may be, and (iii) complied as to form in all
material respects with applicable accounting requirements and with the published
rules and regulations of the Commission with respect thereto. The Constellation
Energy Financial Statements were prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q
of the Commission) and fairly present (subject in the case of unaudited
statements to normal, recurring and year-end audit adjustments) in all material
respects the consolidated financial position and status of the business of
Constellation Energy as of the dates thereof and the consolidated results of its
operations and cash flows for the periods then ended. PricewaterhouseCoopers LLP
is an independent registered public accounting firm with respect to
Constellation Energy and has not resigned or been dismissed as independent
registered public accountants of Constellation Energy as a result of or in
connection with any disagreement with Constellation Energy on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedures.

Section 3.04. No Material Adverse Change. Except as set forth in or contemplated
by the Constellation Energy SEC Documents, and except for the proposed
EnergyQuest Acquisition, which has been disclosed to, and discussed with, each
of the Purchasers, since December 31, 2005, Constellation Energy and its
Subsidiaries have conducted their business in

 

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the ordinary course, consistent with past practice, and there has been no
(i) change that has had or would reasonably be expected to have a Constellation
Energy Material Adverse Effect, (ii) acquisition or disposition of any material
asset by Constellation Energy or any of its Subsidiaries or any contract or
arrangement therefor, otherwise than for fair value in the ordinary course of
business, (iii) material change in Constellation Energy’s accounting principles,
practices or methods or (iv) incurrence of material indebtedness (other than the
incurrence of such indebtedness as is contemplated in connection with the
EnergyQuest Acquisition).

Section 3.05. Litigation. Except as set forth in the Constellation Energy SEC
Documents, there is no Action pending or, to the knowledge of Constellation
Energy, contemplated or threatened against Constellation Energy or any of its
Subsidiaries or any of their respective officers, directors or Properties, which
(individually or in the aggregate) reasonably would be expected to have a
Constellation Energy Material Adverse Effect or which challenges the validity of
this Agreement.

Section 3.06. No Breach. The execution, delivery and performance by
Constellation Energy of the Basic Documents to which it is a party and all other
agreements and instruments in connection with the transactions contemplated by
the Basic Documents, and compliance by Constellation Energy with the terms and
provisions hereof and thereof, do not and will not (a) violate any provision of
any Law, governmental permit, determination or award having applicability to
Constellation Energy or any of its Subsidiaries or any of their respective
Properties, (b) conflict with or result in a violation of any provision of the
Certificate of Formation of Constellation Energy or the Limited Liability
Company Agreement or any organizational documents of any of Constellation
Energy’s Subsidiaries, (c) require any consent, approval or notice under or
result in a violation or breach of or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under (i) any note, bond, mortgage, license, or
loan or credit agreement to which Constellation Energy or any of its
Subsidiaries is a party or by which Constellation Energy or any of its
Subsidiaries or any of their respective Properties may be bound or (ii) any
other agreement, instrument or obligation, or (d) result in or require the
creation or imposition of any Lien upon or with respect to any of the Properties
now owned or hereafter acquired by Constellation Energy or any of its
Subsidiaries, except in the cases of clauses (a), (c) and (d) where such
violation, default, breach, termination, cancellation, failure to receive
consent or approval, or acceleration with respect to the foregoing provisions of
this Section 3.06 would not, individually or in the aggregate, reasonably be
expected to have a Constellation Energy Material Adverse Effect.

Section 3.07. Authority. Constellation Energy has all necessary limited
liability company power and authority to execute, deliver and perform its
obligations under the Basic Documents to which it is a party and to consummate
the transactions contemplated thereby; the execution, delivery and performance
by Constellation Energy of each of the Basic Documents to which it is a party,
and the consummation of the transactions contemplated thereby, have been duly
authorized by all necessary action on its part; and the Basic Documents
constitute the legal, valid and binding obligations of Constellation Energy,
enforceable in accordance with their terms, except as such enforceability may be
limited by bankruptcy, insolvency, fraudulent transfer and similar Laws
affecting creditors’ rights generally or by general principles of equity.

 

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Except as contemplated by this Agreement, no approval by the Unitholders is
required as a result of Constellation Energy’s issuance and sale of the
Purchased Class E Units or the Purchased Common Units.

Section 3.08. Approvals. Except as contemplated by this Agreement or as required
by the Commission in connection with Constellation Energy’s obligations under
the Registration Rights Agreement, no authorization, consent, approval, waiver,
license, qualification or written exemption from, nor any filing, declaration,
qualification or registration with, any Governmental Authority or any other
Person is required in connection with the execution, delivery or performance by
Constellation Energy of any of the Basic Documents to which it is a party,
except where the failure to receive such authorization, consent, approval,
waiver, license, qualification or written exemption or to make such filing,
declaration, qualification or registration would not, individually or in the
aggregate, reasonably be expected to have a Constellation Energy Material
Adverse Effect.

Section 3.09. MLP Status. Constellation Energy met for the taxable year ended
December 31, 2006 the gross income requirements of Section 7704(c)(2) of the
Code, and accordingly Constellation Energy is not, and does not reasonably
expect to be, taxed as a corporation for U.S. federal income tax purposes or for
applicable tax purposes. Constellation Energy indicated in the Form K-1 for the
year ended December 31, 2006, that its Unitholders may be subject to state
income taxes in Alabama.

Section 3.10. Investment Company Status. Constellation Energy is not an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended.

Section 3.11. Offering. Assuming the accuracy of the representations and
warranties of the Purchasers contained in this Agreement, the sale and issuance
of the Purchased Class E Units and the Purchased Common Units pursuant to this
Agreement are exempt from the registration requirements of the Securities Act,
and neither Constellation Energy nor any authorized Representative acting on its
behalf has taken or will take any action hereafter that would cause the loss of
such exemption.

Section 3.12. Certain Fees. No fees or commissions will be payable by
Constellation Energy to brokers, finders or investment bankers with respect to
the sale of any of the Purchased Class E Units or the Purchased Common Units or
the consummation of the transactions contemplated by this Agreement. The
Purchasers shall not be liable for any such fees or commissions. Constellation
Energy agrees that it will indemnify and hold harmless each of the Purchasers
from and against any and all claims, demands or liabilities for broker’s,
finder’s, placement or other similar fees or commissions incurred by
Constellation Energy or alleged to have been incurred by Constellation Energy in
connection with the sale of Purchased Class E Units or Purchased Common Units or
the consummation of the transactions contemplated by this Agreement.

Section 3.13. No Side Agreements. Except for: (i) the confidentiality agreements
entered into by and between each of the Purchasers and Constellation Energy and
(ii) the side letter between Constellation Energy and GPS Partners LLC relating
to a commitment fee, there are no other agreements by, among or between
Constellation Energy or its Affiliates, on the one

 

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hand, and any of the Purchasers or their Affiliates, on the other hand, with
respect to the transactions contemplated hereby nor promises or inducements for
future transactions between or among any of such parties.

Section 3.14. Class E Unit Vote. NYSE Arca has orally advised Constellation
Energy that issuance of the Purchased Class E Units on the terms contemplated
herein will not violate its shareholder approval in sub-paragraph (9) of Rule
5.3(b) of its rules for listed companies. The affirmative vote of a majority of
the total votes cast by the holders of Common Units (with the exception of the
Purchased Common Units, which are not entitled to vote according to the rules of
NYSE Arca) is the only approval required to approve the conversion of Class E
Units into Common Units. As of the date of this Agreement and based on
Constellation Energy’s records or third party records, CEPH is the beneficial
owner of 5,918,894 Common Units representing approximately 53% of the issued and
outstanding Common Units as of March 8, 2007.

Section 3.15. Unitholder Voting Agreement. At Closing, CEPH will enter into the
Unitholder Voting Agreement in the form attached hereto as Exhibit D.

Section 3.16. Internal Accounting Controls. Except as disclosed in the
Constellation Energy SEC Documents, Constellation Energy and its Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management’s general or specific authorization and
(iv) the recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.

Section 3.17. Preemptive Rights or Registration Rights. Except (i) as set forth
in the Limited Liability Company Agreement, (ii) as set forth in the other
organizational documents of Constellation Energy and its Subsidiaries, (iii) as
provided in the Basic Documents or (iv) for existing awards under Constellation
Energy’s Long-Term Incentive Plan, there are no preemptive rights or other
rights to subscribe for or to purchase, nor any restriction upon the voting or
transfer of, any capital stock or limited liability company or membership or
other equity interests of Constellation Energy or any of its Subsidiaries, in
each case pursuant to any other agreement or instrument to which any of such
Persons is a party or by which any one of them may be bound. None of the
execution of this Agreement, the issuance of the Purchased Class E Units or the
Purchased Common Units as contemplated by this Agreement or the conversion of
the Class E Units into Common Units gives rise to any rights for or relating to
the registration of any securities of Constellation Energy, other than pursuant
to the Registration Rights Agreement.

Section 3.18. Insurance. Constellation Energy and its Subsidiaries are insured
against such losses and risks and in such amounts as Constellation Energy
believes in its sole discretion to be prudent for its businesses. Constellation
Energy does not have any reason to believe that it or any Subsidiary will not be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business.

 

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Section 3.19. Acknowledgment Regarding Purchase of Purchased Common Units and
Purchased Class E Units. Constellation Energy acknowledges and agrees that
(i) each of the Purchasers is participating in the transactions contemplated by
this Agreement and the other Basic Documents at Constellation Energy’s request
and Constellation Energy has concluded that such participation is in
Constellation Energy’s best interest and is consistent with Constellation
Energy’s objectives and (ii) each of the Purchasers is acting solely in the
capacity of an arm’s length purchaser. Constellation Energy further acknowledges
that no Purchaser is acting or has acted as an advisor, agent or fiduciary of
Constellation Energy (or in any similar capacity) with respect to this Agreement
or the other Basic Documents and any advice given by any Purchaser or any of its
respective Representatives in connection with this Agreement or the other Basic
Documents is merely incidental to the Purchasers’ purchase of Purchased Common
Units and Purchased Class E Units. Constellation Energy further represents to
each Purchaser that Constellation Energy’s decision to enter into this Agreement
has been based solely on the independent evaluation of the transactions
contemplated hereby by Constellation Energy and its Representatives.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER

Each Purchaser, severally and not jointly, represents and warrants to
Constellation Energy with respect to itself, on and as of the date of this
Agreement and on and as of the Closing Date, as follows:

Section 4.01. Valid Existence. Such Purchaser (i) is duly organized, validly
existing and in good standing under the Laws of its respective jurisdiction of
organization and (ii) has all requisite power, and has all material governmental
licenses, authorizations, consents and approvals, necessary to own its
Properties and carry on its business as its business is now being conducted,
except where the failure to obtain such licenses, authorizations, consents and
approvals would not have and would not reasonably be expected to have a
Purchaser Material Adverse Effect.

Section 4.02. No Breach. The execution, delivery and performance by such
Purchaser of the Basic Documents to which it is a party and all other agreements
and instruments in connection with the transactions contemplated by the Basic
Documents to which it is a party, and compliance by such Purchaser with the
terms and provisions hereof and thereof and the purchase of the Purchased Class
E Units and the Purchased Common Units by such Purchaser do not and will not
(a) violate any provision of any Law, governmental permit, determination or
award having applicability to such Purchaser or any of its Properties,
(b) conflict with or result in a violation of any provision of the
organizational documents of such Purchaser or (c) require any consent (other
than standard internal consents), approval or notice under or result in a
violation or breach of or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration) under (i) any note, bond, mortgage, license, or loan or credit
agreement to which such Purchaser is a party or by which such Purchaser or any
of its Properties may be bound or (ii) any other such agreement, instrument or
obligation, except in the case of clauses (a) and (c) where such violation,
default, breach, termination, cancellation, failure to receive consent or
approval, or acceleration with respect to the foregoing provisions of this
Section 4.02 would not, individually or in the aggregate, reasonably be expected
to have a Purchaser Material Adverse Effect.

 

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Section 4.03. Investment. The Purchased Class E Units and the Purchased Common
Units are being acquired for such Purchaser’s own account, or the accounts of
clients for whom such Purchaser exercises discretionary investment authority
(all of whom such Purchaser represents and warrants are “accredited investors”
within the meaning of Rule 501 of Regulation D promulgated by the Commission
pursuant to the Securities Act), not as a nominee or agent, and with no present
intention of distributing the Purchased Class E Units or the Purchased Common
Units or any part thereof, and such Purchaser has no present intention of
selling or granting any participation in or otherwise distributing the same in
any transaction in violation of the securities Laws of the United States of
America or any state, without prejudice, however, to such Purchaser’s right at
all times to sell or otherwise dispose of all or any part of the Purchased Class
E Units or the Purchased Common Units under a registration statement under the
Securities Act and applicable state securities Laws or under an exemption from
such registration available thereunder (including, if available, Rule 144
promulgated thereunder). If such Purchaser should in the future decide to
dispose of any of the Purchased Class E Units or the Purchased Common Units,
such Purchaser understands and agrees (a) that it may do so only (i) in
compliance with the Securities Act and applicable state securities Law, as then
in effect, or pursuant to an exemption therefrom or (ii) in the manner
contemplated by any registration statement pursuant to which such securities are
being offered, and (b) that stop-transfer instructions to that effect will be in
effect with respect to such securities. Notwithstanding the foregoing, each
Purchaser may at any time enter into one or more total return swaps with respect
to such Purchaser’s Purchased Class E Units or Purchased Common Units with a
third party, provided that such transactions are exempt from registration under
the Securities Act.

Section 4.04. Nature of Purchaser. Such Purchaser represents and warrants to,
and covenants and agrees with, Constellation Energy that (a) it is an
“accredited investor” within the meaning of Rule 501 of Regulation D promulgated
by the Commission pursuant to the Securities Act and (b) by reason of its
business and financial experience it has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Purchased Class E
Units and the Purchased Common Units, is able to bear the economic risk of such
investment and, at the present time, would be able to afford a complete loss of
such investment.

Section 4.05. Receipt of Information; Authorization. Such Purchaser acknowledges
that it has (a) had access to the Constellation Energy SEC Documents, (b) had
access to information regarding the EnergyQuest Acquisition and its potential
effect on Constellation Energy’s operations and financial results and (c) been
provided a reasonable opportunity to ask questions of and receive answers from
Representatives of Constellation Energy regarding such matters.

Section 4.06. Restricted Securities. Such Purchaser understands that the
Purchased Class E Units and the Purchased Common Units it is purchasing are
characterized as “restricted securities” under the federal securities Laws
inasmuch as they are being acquired from Constellation Energy in a transaction
not involving a public offering and that under such Laws and applicable
regulations such securities may be resold without registration under the
Securities Act only in certain limited circumstances. In this connection, such
Purchaser represents that it is knowledgeable with respect to Rule 144 of the
Commission promulgated under the Securities Act.

 

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Section 4.07. Certain Fees. No fees or commissions will be payable by such
Purchaser to brokers, finders or investment bankers with respect to the sale of
any of the Purchased Class E Units or the Purchased Common Units or the
consummation of the transactions contemplated by this Agreement. Constellation
Energy will not be liable for any such fees or commissions. Such Purchaser
agrees, severally and not jointly with the other Purchasers, that it will
indemnify and hold harmless Constellation Energy from and against any and all
claims, demands or liabilities for broker’s, finder’s, placement or other
similar fees or commissions incurred by such Purchaser or alleged to have been
incurred by such Purchaser in connection with the purchase of Purchased Class E
Units or Purchased Common Units or the consummation of the transactions
contemplated by this Agreement.

Section 4.08. Legend. It is understood that the certificates evidencing the
Purchased Class E Units and the Purchased Common Units and the certificates
evidencing the Common Units issuable upon conversion of the Purchased Class E
Units initially will bear the following legend: “These securities have not been
registered under the Securities Act of 1933, as amended. These securities may
not be sold, offered for sale, pledged or hypothecated in the absence of a
registration statement in effect with respect to the securities under such Act
or pursuant to an exemption from registration thereunder and, in the case of a
transaction exempt from registration, unless sold pursuant to Rule 144 under
such Act or the issuer has received documentation reasonably satisfactory to it
that such transaction does not require registration under such Act.”

Section 4.09. No Side Agreements. Except for: (i) the confidentiality agreements
entered into by and between each of the Purchasers and Constellation Energy and
(ii) the side letter between Constellation Energy and GPS Partners LLC relating
to a commitment fee, there are no other agreements by, among or between
Constellation Energy or its Affiliates, on the one hand, and such Purchaser or
its Affiliates (in the case of clause (ii), solely with respect to GPS Partners
LLC), on the other hand, with respect to the transactions contemplated hereby
nor promises or inducements for future transactions between or among any of such
parties. Notwithstanding the foregoing, with respect to Lehman Brothers Inc.,
the representation made in this Section 4.09 is made only by Lehman Brothers MLP
Partners, L.P., as currently configured, and does not apply to Lehman Brothers
Inc. or any of its Affiliates, other than Lehman Brothers MLP Partners, L.P., as
currently configured.

ARTICLE V

COVENANTS

Section 5.01. Shareholder Vote With Respect to Conversion.

(a) Constellation Energy shall, in accordance with applicable Law and the
Limited Liability Company Agreement, take all action necessary to convene a
meeting of its Unitholders to consider and vote upon the conversion of the Class
E Units into Common Units as soon as practicable, but in any event not later
than 90 days following the Closing Date. Unless required by law, Constellation
Energy shall not be required to solicit approval from Unitholders

 

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for such conversion provided that as of the record date to be established for
determining the holders of record of Common Units entitled to vote at such
meeting, CEPH owns of record more than a majority of the issued and outstanding
Common Units and the Unitholder Voting Agreement is in full force and effect.
Subject to fiduciary duties under applicable Law, if proxies are to be solicited
for such existing shareholders, the Board of Managers shall, in connection with
such meeting, recommend approval of the conversion of the Class E Units into
Common Units and shall take all other lawful action to solicit the approval of
the conversion of the Class E Units into Common Units by the Unitholders, except
that Constellation Energy may, but shall not be required to, hire any proxy
solicitation firm in connection with such meeting.

(b) If the conversion of the Class E Units into Common Units is not approved by
the Unitholders at the meeting contemplated by Section 5.01(a), upon written
notice from the Purchasers holding a majority of the Class E Units,
Constellation Energy shall be obligated to convene another meeting of its
Unitholders on the terms set forth in Section 5.01(a) (except that such meeting
shall take place no later than 90 days after the meeting contemplated by
Section 5.01(a)), and the Board of Managers shall again be obligated to take the
actions set forth in Section 5.01(a) with respect to such meeting. If the
approval of Constellation Energy’s Unitholders is not obtained at this second
meeting of Unitholders, then Constellation Energy shall be obligated to include
the conversion of Class E Units into Common Units as a proposal to be voted upon
at no more than two subsequent meetings of its Unitholders within 90 days after
the preceding meeting, and its Board of Managers shall remain obligated to take
the actions set forth in Section 5.01(a) with respect to each such meeting.

Section 5.02. Subsequent Public Offerings. Without the written consent of the
holders of a majority of the Purchased Class E Units and the Purchased Common
Units, taken as a whole, from the date of this Agreement until the Lock-Up Date,
Constellation Energy shall not, and shall cause its directors, officers and
Affiliates not to, grant, issue or sell any Common Units, Class E Units or other
equity or voting securities of Constellation Energy, any securities convertible
into or exchangeable therefor or take any other action that may result in the
issuance of any of the foregoing, other than (i) the issuance of the Purchased
Class E Units and the Purchased Common Units, (ii) the issuance of Awards (as
defined in Constellation Energy’s Long-Term Incentive Plan) or the issuance of
Common Units upon the exercise of options to purchase Common Units granted
pursuant to Constellation Energy’s existing Long-Term Incentive Plan, (iii) the
issuance or sale of up to an aggregate of 5,000,000 Common Units issued or sold
in a registered public offering to finance future acquisition(s) that are
accretive to cash flow per Common Unit (or the repayment of indebtedness
incurred in connection with such accretive acquisitions) at a price no less than
110% of the Common Unit Price or Class E Unit Price, as the case may be, or in a
private offering to finance future acquisition(s) that are expected to be
accretive to cash flow per Common Unit (or the repayment of indebtedness
incurred in connection with such accretive acquisition(s)) at a price no less
than 105% of the Common Unit Price or Class E Unit Price, as the case may be,
(iv) the issuance of up to 1,000,000 Units as purchase price consideration in
connection with future acquisition(s) that are expected to be accretive to cash
flow per Common Unit and (v) the issuance of up to $30 million in additional
Class E Units and Common Units (“Additional Units”) the proceeds of which will
be used to fund a portion of the purchase price by Constellation Energy of the
Kane Family Interests in the assets and entities that are subject to the
tag-along obligation associated with the

 

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EnergyQuest Acquisition, provided that offers to purchase such Additional Units
will be made to private investors ($20 million of which shall be allocated the
Purchasers pro rata based on the allocations in Schedule 2.01, and the balance,
if any, to such Purchasers and/or not more than one additional investor selected
by Constellation Energy) at a price per Common Unit and Class E Unit to be
determined in a manner consistent with the formula used to calculate the Common
Unit Price and Class E Unit Price in Section 2.01(c), provided, however, that
each Purchaser shall have the right, but not the obligation, to purchase such
Additional Units. Notwithstanding the foregoing, Constellation Energy shall not,
and shall cause its directors, officers and Affiliates not to, sell, offer for
sale or solicit offers to buy any security (as defined in the Securities Act)
that would be integrated with the sale of the Purchased Class E Units or the
Purchased Common Units in a manner that would require the registration under the
Securities Act of the sale of the Purchased Class E Units or the Purchased
Common Units to the Purchasers.

Section 5.03. Vote For Conversion of Class E Units. At any meeting (including
adjournments or postponements thereof) of Constellation Energy’s Unitholders
held to consider approval of the conversion of the Class E Units into Common
Units (including the special meeting of Unitholders contemplated by
Section 5.01), each of the Purchasers and Constellation Energy agrees to vote
(and Constellation Energy agrees to cause its Affiliates to vote) all of its
respective Common Units, with the exception of the Purchased Common Units, which
are not entitled to vote according to the rules of NYSE Arca, in favor of the
conversion of the Class E Units into Common Units.

Section 5.04. Purchaser Lock-Up. Without the prior written consent of
Constellation Energy, each Purchaser agrees that from and after the Closing it
will not sell any of its Purchased Class E Units or Purchased Common Units prior
to the Lock-Up Date; provided, however, that each Purchaser may: (i) enter into
one or more total return swaps or similar transactions at any time with respect
to the Purchased Class E Units or the Purchased Common Units purchased by such
Purchaser; or (ii) transfer its Purchased Class E Units or Purchased Common
Units to an Affiliate of such Purchaser or to any other Purchaser or an
Affiliate of such other Purchaser provided that such Affiliate agrees to the
restrictions in this Section 5.04.

Section 5.05. Action. Each of the Parties hereto shall use its commercially
reasonable efforts promptly to take or cause to be taken all action and promptly
to do or cause to be done all things necessary, proper or advisable under
applicable Law and regulations to consummate and make effective the transactions
contemplated by this Agreement. Without limiting the foregoing, Constellation
Energy and each Purchaser will, and Constellation Energy shall cause each of its
Subsidiaries to, use its commercially reasonable efforts to make all filings and
obtain all consents of Governmental Authorities that may be necessary or, in the
reasonable opinion of the Purchasers or Constellation Energy, as the case may
be, advisable for the consummation of the transactions contemplated by this
Agreement and the other Basic Documents.

Section 5.06. Non-Disclosure; Interim Public Filings. Constellation Energy
shall, on or before 8:30 a.m., New York time, on the first Business Day
following execution of this Agreement, issue a press release acceptable to the
Purchasers disclosing all material terms of the transactions contemplated
hereby. Before 8:30 a.m., New York Time, on the first Business Day following the
Closing Date, Constellation Energy shall file a Current Report on Form 8-K with

 

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the Commission (the “8-K Filing”) describing the terms of the transactions
contemplated by this Agreement and the other Basic Documents and including as
exhibits to such Current Report on Form 8-K this Agreement and the other Basic
Documents, in the form required by the Exchange Act. Thereafter, Constellation
Energy shall timely file any filings and notices required by the Commission or
applicable Law with respect to the transactions contemplated hereby and provide
or otherwise make available (which may include providing copies on Constellation
Energy’s or the Commission’s website) copies thereof to the Purchasers promptly
after filing. Except with respect to the 8-K Filing and the press release
referenced above (a copy of which will be provided to the Purchasers for their
review as early as practicable prior to its filing), Constellation Energy shall,
at least two Business Days prior to the filing or dissemination of any
disclosure required by this Section 5.06, provide a copy thereof to the
Purchasers for their review. Constellation Energy and the Purchasers shall
consult with each other in issuing any press releases or otherwise making public
statements or filings and other communications with the Commission or any
regulatory agency or NYSE Arca (or other exchange on which securities of
Constellation Energy are listed or traded) with respect to the transactions
contemplated hereby, and neither Party shall issue any such press release or
otherwise make any such public statement, filing or other communication without
the prior consent of the other, except if such disclosure is required by Law, in
which case the disclosing Party shall promptly provide the other Party with
prior notice of such public statement, filing or other communication.
Notwithstanding the foregoing, Constellation Energy shall not publicly disclose
the name of any Purchaser, or include the name of any Purchaser in any press
release, without the prior written consent of such Purchaser except to the
extent the names of the Purchasers are included in this Agreement as filed as an
exhibit to the 8-K Filing and the press release referred to in the first
sentence above. Constellation Energy shall not, and shall cause each of its
respective Representatives not to, provide any Purchaser with any material
non-public information regarding Constellation Energy from and after the
issuance of the above-referenced press release without the express written
consent of such Purchaser.

Section 5.07. Use of Proceeds. Constellation Energy shall use the collective
proceeds from the sale of the Purchased Class E Units and the Purchased Common
Units to partially finance the EnergyQuest Acquisition.

Section 5.08. Class E Amendment. Constellation Energy shall cause the Class E
Amendment to be adopted immediately prior to the issuance and sale of the Class
E Units contemplated by this Agreement.

Section 5.09. Tax Information. Constellation Energy shall cooperate with the
Purchasers and provide the Purchasers with any reasonably requested tax
information related to their ownership of the Purchased Common Units and the
Purchased Class E Units.

ARTICLE VI

CLOSING CONDITIONS

Section 6.01. Conditions to the Closing.

(a) Mutual Conditions. The respective obligation of each Party to consummate the
purchase and issuance and sale of the Purchased Common Units and the

 

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Purchased Class E Units shall be subject to the satisfaction on or prior to the
Closing Date of each of the following conditions (any or all of which may be
waived by a particular Party on behalf of itself in writing, in whole or in
part, to the extent permitted by applicable Law):

(i) no Law shall have been enacted or promulgated, and no action shall have been
taken, by any Governmental Authority of competent jurisdiction which
temporarily, preliminarily or permanently restrains, precludes, enjoins or
otherwise prohibits the consummation of the transactions contemplated by this
Agreement or makes the transactions contemplated by this Agreement illegal;

(ii) there shall not be pending any Action by any Governmental Authority seeking
to restrain, preclude, enjoin or prohibit the transactions contemplated by this
Agreement; and

(iii) Constellation Energy shall have consummated the EnergyQuest Acquisition
substantially on the terms set forth in the EnergyQuest Acquisition Agreements
executed on the date hereof (without giving effect to the waiver of any material
conditions by Constellation Energy thereunder).

(b) Each Purchaser’s Conditions. The respective obligation of each Purchaser to
consummate the purchase of its Purchased Common Units and Purchased Class E
Units shall be subject to the satisfaction on or prior to the Closing Date of
each of the following conditions (any or all of which may be waived by a
particular Purchaser on behalf of itself in writing, in whole or in part, to the
extent permitted by applicable Law):

(i) Constellation Energy shall have performed and complied with the covenants
and agreements contained in this Agreement in all material respects that are
required to be performed and complied with by Constellation Energy on or prior
to the Closing Date;

(ii) the representations and warranties of Constellation Energy contained in
this Agreement that are qualified by materiality or Constellation Energy
Material Adverse Effect shall be true and correct when made and as of the
Closing Date and all other representations and warranties of Constellation
Energy contained in this Agreement shall be true and correct in all material
respects when made and as of the Closing Date, in each case as though made at
and as of the Closing Date (except that representations or warranties made as of
a specific date shall be required to be true and correct as of such date only);

(iii) since the date of this Agreement, no Constellation Energy Material Adverse
Effect shall have occurred and be continuing;

(iv) since the date of this Agreement, no EnergyQuest Material Adverse Effect
shall have occurred and be continuing;

(v) Constellation Energy shall have adopted the Class E Amendment in all
material respects in the form attached as Exhibit A to this Agreement;

 

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(vi) NYSE Arca shall have approved the Purchased Common Units and the Common
Units underlying the Purchased Class E Units for quotation, subject to official
notice of issuance; and no notice of delisting from NYSE Arca shall have been
received by Constellation Energy with respect to the Common Units;

(vii) Constellation Energy shall have delivered, or caused to be delivered, to
the Purchasers at the Closing, Constellation Energy’s closing deliveries
described in Section 6.02 of this Agreement; and

(viii) the Unitholder Voting Agreement shall have been executed by the intended
parties thereto and shall be in full force and effect.

(c) Constellation Energy’s Conditions. The obligation of Constellation Energy to
consummate the sale of the Purchased Common Units and the Purchased Class E
Units to each of the Purchasers shall be subject to the satisfaction on or prior
to the Closing Date of the following conditions with respect to each Purchaser
individually and not the Purchasers jointly (which may be waived by
Constellation Energy in writing, in whole or in part, to the extent permitted by
applicable Law):

(i) each Purchaser shall have performed and complied with the covenants and
agreements contained in this Agreement in all material respects that are
required to be performed and complied with by that Purchaser on or prior to the
Closing Date;

(ii) the representations and warranties of each Purchaser contained in this
Agreement that are qualified by materiality or Purchaser Material Adverse Effect
shall be true and correct when made and as of the Closing Date and all other
representations and warranties of such Purchaser contained in this Agreement
shall be true and correct in all material respects when made and as of the
Closing Date, in each case as though made at and as of the Closing Date (except
that representations or warranties made as of a specific date shall be required
to be true and correct as of such date only);

(iii) since the date of this Agreement, no Purchaser Material Adverse Effect
shall have occurred and be continuing; and

(iv) each Purchaser shall have delivered, or caused to be delivered, to
Constellation Energy at the Closing, such Purchaser’s closing deliveries
described in Section 6.03 of this Agreement.

Section 6.02. Constellation Energy Deliveries. At the Closing, subject to the
terms and conditions of this Agreement, Constellation Energy will deliver, or
cause to be delivered, to each Purchaser:

(a) the Purchased Common Units and the Purchased Class E Units by delivering
certificates (bearing the legend set forth in Section 4.08) evidencing such
Purchased Common Units and such Purchased Class E Units at the Closing, all free
and clear of any Liens, encumbrances or interests of any other party;

 

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(b) the Officer’s Certificate substantially in the form attached to this
Agreement as Exhibit E;

(c) opinions addressed to the Purchasers from outside legal counsel to
Constellation Energy and from the General Counsel of Constellation Energy, each
dated the Closing Date, substantially similar in substance to the form of
opinions attached to this Agreement as Exhibit B;

(d) the Registration Rights Agreement in substantially the form attached to this
Agreement as Exhibit C, which shall have been duly executed by Constellation
Energy;

(e) a certificate of the Secretary of Constellation Energy dated as of the
Closing Date, as to certain matters;

(f) a certificate dated as of a recent date of the Secretary of State of the
State of Delaware with respect to the due organization and good standing in the
State of Delaware of Constellation Energy;

(g) the Unitholder Voting Agreement in substantially the form attached to this
Agreement as Exhibit D, which shall have been duly executed by CEPH; and

(h) a receipt, dated the Closing Date, executed by Constellation Energy and
delivered to each Purchaser certifying that Constellation Energy has received
the Purchase Price with respect to the Purchased Class E Units and the Purchased
Common Units issued and sold to all Purchasers.

Section 6.03. Purchaser Deliveries. At the Closing, subject to the terms and
conditions of this Agreement, each Purchaser will deliver, or cause to be
delivered, to Constellation Energy:

(a) payment to Constellation Energy of such Purchaser’s Commitment Amount by
wire transfer(s) of immediately available funds to an account designated by
Constellation Energy in writing at least two (2) Business Days (or such shorter
period as shall be agreeable to all Parties hereto) prior to the Closing;

(b) the Registration Rights Agreement in substantially the form attached to this
Agreement as Exhibit C, which shall have been duly executed by such Purchaser;
and

(c) an Officer’s Certificate substantially in the form attached to this
Agreement as Exhibit F.

ARTICLE VII

INDEMNIFICATION, COSTS AND EXPENSES

Section 7.01. Indemnification by Constellation Energy. Constellation Energy
agrees to indemnify each Purchaser and its Representatives (collectively,
“Purchaser Related Parties”) from, and hold each of them harmless against, any
and all actions, suits, proceedings (including any investigations, litigation or
inquiries), demands and causes of action, and, in connection therewith, and
promptly upon demand, pay and reimburse each of them for all costs, losses,

 

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liabilities, damages or expenses of any kind or nature whatsoever, including the
reasonable fees and disbursements of counsel and all other reasonable expenses
incurred in connection with investigating, defending or preparing to defend any
such matter that may be incurred by them or asserted against or involve any of
them as a result of, arising out of or in any way related to (i) any actual or
proposed use by Constellation Energy of the proceeds of any sale of the
Purchased Class E Units or the Purchased Common Units or (ii) the breach of any
of the representations, warranties or covenants of Constellation Energy
contained herein; provided that such claim for indemnification relating to a
breach of a representation or warranty is made prior to the expiration of such
representation or warranty.

Section 7.02. Indemnification by Purchasers. Each Purchaser agrees, severally
and not jointly, to indemnify Constellation Energy and its Representatives
(collectively, “Constellation Energy Related Parties”) from, and hold each of
them harmless against, any and all actions, suits, proceedings (including any
investigations, litigation or inquiries), demands and causes of action, and, in
connection therewith, and promptly upon demand, pay and reimburse each of them
for all costs, losses, liabilities, damages or expenses of any kind or nature
whatsoever, including the reasonable fees and disbursements of counsel and all
other reasonable expenses incurred in connection with investigating, defending
or preparing to defend any such matter that may be incurred by them or asserted
against or involve any of them as a result of, arising out of or in any way
related to the breach of any of the representations, warranties or covenants of
such Purchaser contained herein.

Section 7.03. Indemnification Procedure. Promptly after any Constellation Energy
Related Party or Purchaser Related Party (hereinafter, the “Indemnified Party”)
has received notice of any indemnifiable claim hereunder, or the commencement of
any action or proceeding by a third party, which the Indemnified Party believes
in good faith is an indemnifiable claim under this Agreement, the Indemnified
Party shall give the indemnitor hereunder (the “Indemnifying Party”) written
notice of such claim or the commencement of such action or proceeding, but
failure to so notify the Indemnifying Party will not relieve the Indemnifying
Party from any liability it may have to such Indemnified Party hereunder except
to the extent that the Indemnifying Party is materially prejudiced by such
failure. Such notice shall state the nature and the basis of such claim to the
extent then known. The Indemnifying Party shall have the right to defend and
settle, at its own expense and by its own counsel who shall be reasonably
acceptable to the Indemnified Party, any such matter as long as the Indemnifying
Party pursues the same diligently and in good faith. If the Indemnifying Party
undertakes to defend or settle, it shall promptly notify the Indemnified Party
of its intention to do so, and the Indemnified Party shall cooperate with the
Indemnifying Party and its counsel in all commercially reasonable respects in
the defense thereof and the settlement thereof. Such cooperation shall include
furnishing the Indemnifying Party with any books, records and other information
reasonably requested by the Indemnifying Party and in the Indemnified Party’s
possession or control. Such cooperation of the Indemnified Party shall be at the
cost of the Indemnifying Party. After the Indemnifying Party has notified the
Indemnified Party of its intention to undertake to defend or settle any such
asserted liability, and for so long as the Indemnifying Party diligently pursues
such defense, the Indemnifying Party shall not be liable for any additional
legal expenses incurred by the Indemnified Party in connection with any defense
or settlement of such asserted liability; provided, however, that the
Indemnified Party shall be entitled (i) at its expense, to

 

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participate in the defense of such asserted liability and the negotiations of
the settlement thereof and (ii) if (A) the Indemnifying Party has failed to
assume the defense or employ counsel reasonably acceptable to the Indemnified
Party or (B) if the defendants in any such action include both the Indemnified
Party and the Indemnifying Party and counsel to the Indemnified Party shall have
concluded that there may be reasonable defenses available to the Indemnified
Party that are different from or in addition to those available to the
Indemnifying Party or if the interests of the Indemnified Party reasonably may
be deemed to conflict with the interests of the Indemnifying Party, then the
Indemnified Party shall have the right to select a separate counsel and to
assume such legal defense and otherwise to participate in the defense of such
action, with the expenses and fees of such separate counsel and other expenses
related to such participation to be reimbursed by the Indemnifying Party as
incurred. Notwithstanding any other provision of this Agreement, the
Indemnifying Party shall not settle any indemnified claim without the consent of
the Indemnified Party, unless the settlement thereof imposes no liability or
obligation on, involves no admission of wrongdoing or malfeasance by, and
includes a complete release from liability of, the Indemnified Party, nor shall
the Indemnified Party settle any claim for which indemnification may be claimed
hereunder without at least three business days notice to the Indemnifying Party
of the terms and conditions of such settlement.

ARTICLE VIII

MISCELLANEOUS

Section 8.01. Interpretation. Article, Section, Schedule and Exhibit references
are to this Agreement, unless otherwise specified. All references to
instruments, documents, contracts and agreements are references to such
instruments, documents, contracts and agreements as the same may be amended,
supplemented and otherwise modified from time to time, unless otherwise
specified. The word “including” shall mean “including but not limited to”.
Whenever Constellation Energy or any Purchaser has an obligation under the Basic
Documents, the expense of complying with such obligation shall be an expense of
Constellation Energy or such Purchaser, as the case may be, unless otherwise
specified. Whenever any determination, consent or approval is to be made or
given by a Purchaser under this Agreement, such action shall be in such
Purchaser’s sole discretion unless otherwise specified. If any provision in the
Basic Documents is held to be illegal, invalid, not binding or unenforceable,
such provision shall be fully severable and the Basic Documents shall be
construed and enforced as if such illegal, invalid, not binding or unenforceable
provision had never comprised a part of the Basic Documents, and the remaining
provisions shall remain in full force and effect. The Basic Documents have been
reviewed and negotiated by sophisticated parties with access to legal counsel
and shall not be construed against the drafter.

Section 8.02. Survival of Provisions. The representations and warranties set
forth in this Agreement shall survive the execution and delivery of this
Agreement indefinitely. The covenants made in this Agreement or any other Basic
Document shall survive the closing of the transactions described herein and
remain operative and in full force and effect regardless of acceptance of any of
the Purchased Class E Units or the Purchased Common Units and payment therefor
and repayment, conversion, exercise or repurchase thereof. All indemnification
obligations of Constellation Energy and the Purchasers pursuant to Section 3.12,
Section 4.07 and Article VII of this Agreement shall remain operative and in
full force and effect unless such obligations are expressly terminated in a
writing by the Parties referencing the particular Article or Section, regardless
of any purported general termination of this Agreement.

 

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Section 8.03. No Waiver; Modifications in Writing.

(a) Delay. No failure or delay on the part of any Party in exercising any right,
power or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or remedy preclude any other
or further exercise thereof or the exercise of any right, power or remedy. The
remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to a Party at law or in equity or otherwise.

(b) Specific Waiver. Except as otherwise provided in this Agreement or the
Registration Rights Agreement, no amendment, waiver, consent, modification or
termination of any provision of this Agreement or any other Basic Document shall
be effective unless signed by each of the Parties or each of the original
signatories thereto affected by such amendment, waiver, consent, modification or
termination. Any amendment, supplement or modification of or to any provision of
this Agreement or any other Basic Document, any waiver of any provision of this
Agreement or any other Basic Document and any consent to any departure by
Constellation Energy from the terms of any provision of this Agreement or any
other Basic Document shall be effective only in the specific instance and for
the specific purpose for which made or given. Except where notice is
specifically required by this Agreement, no notice to or demand on any Party in
any case shall entitle any Party to any other or further notice or demand in
similar or other circumstances.

Section 8.04. Binding Effect; Assignment.

(a) Binding Effect. This Agreement shall be binding upon Constellation Energy,
each Purchaser, and their respective successors and permitted assigns. Except as
expressly provided in this Agreement, this Agreement shall not be construed so
as to confer any right or benefit upon any Person other than the Parties to this
Agreement and as provided in Article VII, and their respective successors and
permitted assigns.

(b) Assignment of Purchased Class E Units and Purchased Common Units. All or any
portion of a Purchaser’s Purchased Class E Units or Purchased Common Units
purchased pursuant to this Agreement may be sold, assigned or pledged by such
Purchaser, subject to compliance with applicable securities Laws, Sections 4.06
and 5.04 of this Agreement, and the Registration Rights Agreement.

(c) Assignment of Rights. Each Purchaser may assign all or any portion of its
rights and obligations under this Agreement without the consent of Constellation
Energy (i) to any Affiliate of such Purchaser or (ii) in connection with a total
return swap or similar transaction with respect to the Purchased Class E Units
or the Purchased Common Units purchased by such Purchaser, and in each case the
assignee shall be deemed to be a Purchaser hereunder with respect to such
assigned rights or obligations and shall agree to be bound by the provisions of
this Agreement. Except as expressly permitted by this Section 8.04(c), such
rights and obligations may not otherwise be transferred except with the prior
written consent of Constellation Energy (which consent shall not be unreasonably
withheld), in which case the assignee shall be deemed to be a Purchaser
hereunder with respect to such assigned rights or obligations and shall agree to
be bound by the provisions of this Agreement.

 

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Section 8.05. Aggregation of Purchased Class E Units and Purchased Common Units.
All Purchased Class E Units and Purchased Common Units held or acquired by
Persons who are Affiliates of one another shall be aggregated together for the
purpose of determining the availability of any rights under the Basic Documents.

Section 8.06. Confidentiality and Non-Disclosure. Notwithstanding anything
herein to the contrary, each Purchaser that has executed a confidentiality
agreement in favor of Constellation Energy shall continue to be bound by such
confidentiality agreement in accordance with the terms thereof until
Constellation Energy discloses on Form 8-K with the Commission the transactions
contemplated hereby.

Section 8.07. Communications. All notices and demands provided for hereunder
shall be in writing and shall be given by regular mail, registered or certified
mail, return receipt requested, facsimile, air courier guaranteeing overnight
delivery, electronic mail or personal delivery to the following addresses:

 

  (a) If to GPS Partners LLC:

GPS Partners LLC

100 Wilshire Boulevard, Suite 900

Santa Monica, California 90401

Attention: Jeff Farron

Phone: (310) 496-5365

Facsimile: (310) 496-5399

Email: farron@gpsfund.com

with a copy to:

Vinson & Elkins L.L.P.

2500 First City Tower

1001 Fannin Street, Suite 2500

Houston, Texas 77002

Attention: Jeffery K. Malonson, Esq.

Facsimile: (713) 615-5627

Email: jmalonson@velaw.com

 

  (b) If to Lehman Brothers MLP Partners, L.P.:

Lehman Brothers MLP Partners, L.P.

399 Park Avenue, 9th Floor

New York, New York 10022

Attention: Michael Cannon

Phone: (212) 526-0029

Facsimile: (646) 758-4208

Email: mcannon2@lehman.com

 

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  (c) If to ZLP Fund, L.P.:

ZLP Fund, L.P.

Harborside Financial Center

Plaza 10, Suite 301

Jersey City, New Jersey 07311

Attention: Daniel M. Lynch

Phone: (212) 440-0741

Facsimile: (201) 716-1425

Email: lynch@zimmerlucas.com

with a copy to:

Pillsbury Winthrop Shaw Pittman LLP

1540 Broadway

New York, New York 10036-4039

Attention: Jeffrey J. Delaney, Esq.

Phone: (212) 858-1000

Facsimile: (212) 858-1500

Email: Jeffrey.delaney@pillsburylaw.com

 

  (d) If to Structured Finance Americas LLC:

Structured Finance Americas, LLC

c/o Deutsche Bank Securities Inc.

60 Wall Street, 4th Floor

New York, New York 10005

Attention: Sunil Hariani

Phone: (212) 250-6340

Facsimile: (212) 797-9358

Email: equitynotice@list.db.com

with a copy to:

Structured Finance Americas, LLC c/o Deutsche Bank Securities Inc.

60 Wall Street, 13th Floor

New York, New York 10005

Attention: Elia Kourtesiadou

Facsimile: (732) 578-3927

 

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  (e) If to Constellation Energy Partners LLC:

Constellation Energy Partners LLC

111 Market Place

Baltimore, Maryland 21202

Attention: Lisa Mellencamp

Facsimile: (410) 468-3500

Email: lisa.mellencamp@constellation.com

with a copy to:

Andrews Kurth LLP

600 Travis, Suite 4200

Houston, Texas 77002

Attention: G. Michael O’Leary, Esq.

Facsimile: (713) 238-7130

Email: moleary@andrewskurth.com

or to such other address as Constellation Energy or such Purchaser may designate
in writing. All notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; upon actual
receipt if sent by registered or certified mail, return receipt requested, or
regular mail, if mailed; when receipt acknowledged, if sent via facsimile; and
upon actual receipt when delivered to an air courier guaranteeing overnight
delivery or via electronic mail.

Section 8.08. Removal of Legend. Constellation Energy shall remove the legend
described in Section 4.08 from the certificates evidencing the Purchased Class E
Units or the Purchased Common Units and the certificates evidencing the Common
Units issuable upon the conversion of the Purchased Class E Units at the request
of a Purchaser submitting to Constellation Energy such certificates, together
with such other documentation as may be reasonably requested by Constellation
Energy or required by its transfer agent, unless Constellation Energy, with the
advice of counsel, reasonably determines that such removal is inappropriate;
provided that no opinion of counsel shall be required in the event a Purchaser
is effecting a sale of such Purchased Class E Units or Purchased Common Units
pursuant to Rule 144 under the Securities Act or an effective registration
statement. Constellation Energy shall cooperate with such Purchaser to effect
removal of such legend. The legend described in Section 4.08 shall be removed
and Constellation Energy shall issue a certificate without such legend to the
holder of Purchased Class E Units or Purchased Common Units upon which it is
stamped, if, unless otherwise required by state securities Laws, (i) such
Purchased Class E Units or Purchased Common Units are sold pursuant to an
effective Registration Statement, (ii) in connection with a sale, assignment or
other transfer, such holder provides Constellation Energy with an opinion of a
law firm reasonably acceptable to Constellation Energy (with any law firm set
forth under Section 8.07 being deemed acceptable), in a generally acceptable
form, to the effect that such sale, assignment or transfer of such Purchased
Class E Units or Purchased Common Units may be made without registration under
the applicable requirements of the Securities Act, or (iii) such holder provides
Constellation Energy with reasonable assurance that such Purchased Class E Units
or Purchased Common Units can be sold, assigned or transferred

 

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pursuant to Rule 144 or Rule 144A under the Securities Act. If Constellation
Energy shall fail for any reason or for no reason to issue to the holder of such
Purchased Class E Units or Purchased Common Units within three trading days
after prior written notice to Constellation Energy of the occurrence of any of
clause (i), clause (ii) or clause (iii) above a certificate without such legend
to the holder or if Constellation Energy fails to deliver unlegended Purchased
Class E Units or Purchased Common Units within three trading days of prior
written notice to Constellation Energy of the Purchaser’s election to receive
such unlegended Purchased Class E Units or Purchased Common Units pursuant to
clause (y) below, and if on or after such trading day the holder purchases (in
an open market transaction or otherwise) Class E Units or Common Units to
deliver in satisfaction of a sale by the holder of such Purchased Class E Units
or Purchased Common Units that the holder anticipated receiving without legend
from Constellation Energy (a “Buy-In”), then Constellation Energy shall, within
three Business Days after receipt by Constellation Energy of the holder’s
written request and in the holder’s discretion, either (x) pay cash to the
holder in an amount equal to the holder’s total purchase price (including
brokerage commissions, if any) for the Class E Units or Common Units so
purchased (the “Buy-In Price”), at which point Constellation Energy’s obligation
to deliver such unlegended Purchased Class E Units or Purchased Common Units
shall terminate, or (y) promptly honor its obligation to deliver to the holder
such unlegended Purchased Class E Units or Purchased Common Units as provided
above and pay cash to the holder in an amount equal to the excess (if any) of
the Buy-In Price over the product of (A) such number of Class E Units or Common
Units times (B) the closing bid price on the first Business Day after
Constellation Energy’s receipt of such Purchaser’s written notice of exercise.

Section 8.09. Entire Agreement. This Agreement and the other Basic Documents are
intended by the Parties as a final expression of their agreement and intended to
be a complete and exclusive statement of the agreement and understanding of the
Parties hereto and thereto in respect of the subject matter contained herein and
therein. There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein or therein with respect to the rights
granted by Constellation Energy or a Purchaser set forth herein or therein. This
Agreement and the other Basic Documents supersede all prior agreements and
understandings between the Parties with respect to such subject matter.

Section 8.10. Governing Law. This Agreement will be construed in accordance with
and governed by the Laws of the State of Delaware without regard to principles
of conflicts of Laws.

Section 8.11. Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different Parties hereto in separate counterparts,
each of which counterparts, when so executed and delivered, shall be deemed to
be an original and all of which counterparts, taken together, shall constitute
but one and the same Agreement.

Section 8.12. Termination.

(a) Notwithstanding anything herein to the contrary, this Agreement may be
terminated on or at any time prior to the Closing:

(i) by the mutual written consent of Constellation Energy and the Purchasers
entitled to purchase a majority of the Purchased Common Units and the Purchased
Class E Units based on their Commitment Amounts ; or

 

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(ii) by the written consent of the Purchasers entitled to purchase a majority of
the Purchased Common Units and the Purchased Class E Units based on their
Commitment Amounts or by Constellation Energy, (i) if any representation or
warranty of the other Party set forth in this Agreement shall be untrue in any
material respect when made, or (ii) upon a breach in any material respect of any
covenant or agreement on the part of the other set forth in this Agreement
(either (i) or (ii) above being a “Terminating Breach”); provided, that each
Terminating Breach would cause the conditions to the non-terminating Party’s
obligations not to be satisfied and such Terminating Breach is not cured within
20 days after receipt of written notice of such Terminating Breach from the
non-breaching Party.

(b) Notwithstanding anything herein to the contrary, this Agreement shall
automatically terminate on or at any time prior to the Closing:

(i) if the Closing shall not have occurred on or before May 3, 2007;

(ii) if the EnergyQuest Acquisition Agreements shall have been terminated
pursuant to their terms; or

(iii) if a Law shall have been enacted or promulgated, or if any Action shall
have been taken by any Governmental Authority of competent jurisdiction, in each
case which permanently restrains, precludes, enjoins or otherwise prohibits the
consummation of the transactions contemplated by this Agreement or makes the
transactions contemplated by this Agreement illegal.

(c) In the event of the termination of this Agreement as provided in
Section 8.12(a) or Section 8.12(b), this Agreement shall forthwith become null
and void. In the event of such termination, there shall be no liability on the
part of any Party hereto, except as set forth in Article VII of this Agreement
and Sections 8.12(d) and 8.13 of this Agreement and except with respect to the
requirement to comply with any confidentiality agreement in favor of
Constellation Energy; provided that nothing herein shall relieve any Party from
any liability or obligation with respect to any willful breach of this
Agreement.

(d) In the event of the termination of this Agreement as provided in
Section 8.12(b)(i), and if a Purchaser is not in breach or default in any
material respect under any of the terms of this Agreement, then Constellation
Energy shall pay to such Purchaser a fee equal to $1.00 per Common Unit and
$1.00 per Class E Unit based on each such Purchaser’s Commitment Amount.

Section 8.13. Expenses. Constellation Energy hereby covenants and agrees to
reimburse Vinson & Elkins L.L.P. for reasonable and documented costs and
expenses (including legal fees) incurred in connection with the negotiation,
execution, delivery and performance of the Basic Documents and the transactions
contemplated hereby and thereby, provided that such costs and

 

30

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expenses do not exceed $75,000 and that any request for such expense
reimbursement be accompanied by a detailed invoice for such amount. If any
action at law or equity is necessary to enforce or interpret the terms of the
Basic Documents, the prevailing Party shall be entitled to reasonable attorney’s
fees, costs and necessary disbursements in addition to any other relief to which
such Party may be entitled.

Section 8.14. Recapitalization, Exchanges, Etc. Affecting the Purchased Class E
Units and the Purchased Common Units. The provisions of this Agreement shall
apply to the full extent set forth herein with respect to any and all units of
Constellation Energy or any successor or assign of Constellation Energy (whether
by merger, consolidation, sale of assets or otherwise) which may be issued in
respect of, in exchange for or in substitution of, the Purchased Class E Units
or the Purchased Common Units, and shall be appropriately adjusted for
combinations, unit splits, recapitalizations and the like occurring after the
date of this Agreement.

Section 8.15. Obligations Limited to Parties to Agreement. Each of the parties
hereto covenants, agrees and acknowledges that no Person other than the
Purchasers (and their permitted assignees) and Constellation Energy shall have
any obligation hereunder and that, notwithstanding that one or more of the
Purchasers may be a corporation, partnership or limited liability company, no
recourse under this Agreement or the other Basic Documents or under any
documents or instruments delivered in connection herewith or therewith shall be
had against any former, current or future director, officer, employee, agent,
general or limited partner, manager, member, stockholder or Affiliate of any of
the Purchasers or Constellation Energy or any former, current or future
director, officer, employee, agent, general or limited partner, manager, member,
stockholder or Affiliate of any of the foregoing, whether by the enforcement of
any assessment or by any legal or equitable proceeding, or by virtue of any
applicable Law, it being expressly agreed and acknowledged that no personal
liability whatsoever shall attach to, be imposed on or otherwise be incurred by
any former, current or future director, officer, employee, agent, general or
limited partner, manager, member, stockholder or Affiliate of any of the
Purchasers or Constellation Energy or any former, current or future director,
officer, employee, agent, general or limited partner, manager, member,
stockholder or Affiliate of any of the foregoing, as such, for any obligations
of the Purchasers and Constellation Energy under this Agreement or the other
Basic Documents or any documents or instruments delivered in connection herewith
or therewith or for any claim based on, in respect of or by reason of such
obligation or its creation.

[The remainder of this page is intentionally left blank.]

 

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IN WITNESS WHEREOF, the Parties hereto execute this Agreement, effective as of
the date first above written.

 

CONSTELLATION ENERGY PARTNERS LLC

By:

 

/s/ Angela Minas

  Angela Minas   Chief Financial Officer

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GPS PARTNERS LLC

By:

 

/s/ Brett S. Messing

Name:

  Brett S. Messing

Title:

  Managing Partner

 

2

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LEHMAN BROTHERS MLP PARTNERS, L.P.

By:

 

/s/ Michael J. Cannon

Name:

  Michael J. Cannon

Title:

  Managing Director

 

3

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ZLP FUND, L.P.

By:

 

/s/ Craig M. Lucas

Name:

  Craig M. Lucas

Title:

  Managing Member

 

4

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STRUCTURED FINANCE AMERICAS LLC

By:

 

/s/ Sunil Hariani

Name:

  Sunil Hariani

Title:

 

By:

 

/s/ Andrea Leung

Name:

  Andrea Leung

Title:

 

 

5