Exhibit 10.1

EXECUTION VERSION

PURCHASE AGREEMENT

This PURCHASE AGREEMENT (this “Agreement”), dated as of March 15, 2017, is made
by and among EXCO Resources, Inc., a Texas corporation (the “Company”), the
guarantors named in Schedule 1 hereto (the “Guarantors”) and each of the other
undersigned parties hereto (each, a “Purchaser” and, collectively, the
“Purchasers”). The Company, the Guarantors and the Purchasers are referred to
herein as the “Parties” and each a “Party.”

WHEREAS, the Company proposes to issue and sell (the “Offering”) to the several
Purchasers $300,000,000 aggregate principal amount of its 8.0% / 11.0% 1.5 Lien
Senior Secured PIK Toggle Notes due 2022 (the “Notes”) together with warrants
(the “Warrants”) exercisable for common stock, par value $0.001 per share (the
“Common Stock”), of the Company (the “Warrant Shares”). The Notes initially will
be fully and unconditionally guaranteed (the “Guarantees”) on a senior secured
basis, jointly and severally by the Guarantors. The Notes and the Guarantees are
herein collectively referred to as the “Securities” and the Notes, the
Guarantees and the Warrants are herein referred to as the “Offered Securities.”
The Securities will be issued pursuant to an Indenture to be dated as of
March 15, 2017 (the “Indenture”) among the Company, Wilmington Trust, National
Association, as trustee (the “Trustee”), and Wilmington Trust, National
Association, as collateral trustee (the “Collateral Trustee”). The Warrants will
be issued pursuant to a 1.5 Lien Note Warrant Agreement to be dated as of
March 15, 2017 (the “Warrant Agreement”) between the Company and Continental
Stock Transfer & Trust Company, as warrant agent. The number of Warrants to be
issued to the Purchasers will be equal to the aggregate principal amount of the
Notes divided by the Exercise Price (as defined in the Warrant Agreement) of the
Warrants. The Offered Securities will be issued and sold to the Purchasers
without being registered under the Securities Act of 1933, as amended (the
“Securities Act”), in reliance upon one or more exemptions therefrom;

WHEREAS, pursuant to and subject to the terms of the Indenture, the Company may
elect, at its option, to pay interest on the Notes in cash or by (1) issuing
shares of Common Stock of the Company (“PIK Shares” and, such payments, “PIK
Share Payments”) or (2) issuing new Notes (“PIK Notes” and, such payments, “PIK
Note Payments”). The Company’s issuance of PIK Shares and Warrant Shares is
conditioned on, among other things, the Company’s receipt of the requisite
consents of the holders of its shares of Common Stock, (1) to the issuances of
the PIK Shares and the Warrant Shares for purposes of the rules of the New York
Stock Exchange (if required) and (2) unless waived by the Company, with respect
to the amendment of the Company’s existing charter to increase its authorized
Common Stock under applicable Texas law (together, the “Requisite Shareholder
Approvals”);

WHEREAS, holders of the PIK Shares and the Warrants will have the registration
rights set forth in the Registration Rights Agreement, to be dated as of March
15, 2017 (the “Registration Rights Agreement”), among the Company and the
Purchasers. Pursuant to the Registration Rights Agreement, the Company will
agree to file with the Securities and Exchange Commission (the “SEC”), under the
circumstances set forth therein, a registration statement under the Securities
Act relating to the Warrant Shares and the PIK Shares;

WHEREAS, pursuant to and subject to the Security Documents (as defined below) to
be entered into among the Company, the Guarantors, the Trustee, the Collateral
Trustee and certain other parties thereto, as applicable, the obligations of the
Company and the Guarantors in relation to the Securities will be secured,
subject to certain permitted liens, on a first-priority basis (subject to the
Intercreditor Agreement and Permitted Prior Liens (as defined in the Indenture))
by liens on substantially all of the Company’s and the Guarantors’ assets
(collectively, the “Collateral”). The Collateral will be pledged pursuant to
certain Security Documents. In addition, the Collateral Trustee, the Trustee,
the Company and the Guarantors will enter into a collateral trust agreement (the
“Collateral Trust Agreement”) that will

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set forth the priority of payments from proceeds of Collateral. The term
“Security Documents” refers to the Collateral Trust Agreement and one or more
security agreements, pledge agreements, collateral assignments, mortgages,
collateral agency agreements, deeds of hypothec, and other agreements or
documents creating (or purporting to create) a security interest in the
Collateral in favor of the Collateral Trustee for the benefit of the holders of
the Securities as contemplated by the Indenture;

WHEREAS, on or prior to the Closing Date (as defined below), the Company intends
to (a) repay certain amounts outstanding under that certain Amended and Restated
Credit Agreement, dated as of July 31, 2013 (the “RBL Credit Agreement”), among
the Company, certain subsidiaries of the Company as guarantors, the lenders
party thereto and JPMorgan Chase Bank, N.A., as administrative agent thereunder,
and to amend the RBL Credit Agreement (such amended RBL Credit Agreement, the
“Amended RBL Credit Agreement”) to, among other things, provide for a reduction
of the aggregate amount of revolving commitments made available to the Company
thereunder to an amount equal to $150,000,000; (b) to the extent not refinanced
in full as provided in clause (c) below, amend that certain Term Loan Credit
Agreement, dated as of October 19, 2015 (the “TL Credit Agreement” and as
amended, the “Amended Second Lien Credit Agreement”), among the Company, certain
subsidiaries of the Company as guarantors, the lenders party thereto and
Wilmington Trust, National Association, as administrative agent and collateral
trustee thereunder, and (c) refinance (i) all of the indebtedness outstanding
under the Term Loan Credit Agreement, dated as of October 19, 2015 (the “FFH
Credit Agreement”), among the Company, certain subsidiaries of the Company as
guarantors, the lenders party thereto and Hamblin Watsa Investment Counsel Ltd.,
as administrative agent thereunder, and Wilmington Trust, National Association,
as collateral trustee thereunder and (ii) all or a portion of the indebtedness
under the TL Credit Agreement, in each case, pursuant to the 1.75 Lien Term Loan
Credit Agreement, to be dated on or about the Closing Date (the “1.75 Lien
Credit Agreement” and, collectively with the RBL Credit Agreement, the Amended
RBL Credit Agreement, the Amended Second Lien Credit Agreement, the “Financing
Documents”), among the Company, certain subsidiaries of the Company as
guarantors, the lenders party thereto and Wilmington Trust, National
Association, as administrative agent, and Wilmington Trust, National
Association, as collateral trustee thereunder (such refinancing transactions,
collectively, the “Financing Transactions”). The consummation of the Offering is
conditioned on the consummation of the Financing Transactions;

WHEREAS, this Agreement, the Indenture, the Securities, the PIK Shares, the PIK
Notes, the Warrants, the Warrant Shares, the Warrant Agreement, the Registration
Rights Agreement, the Collateral Trust Agreement, the Security Documents, the
Amended RBL Credit Agreement, the Amended Second Lien Credit Agreement, the 1.75
Lien Credit Agreement and each other agreement, document, and instrument to
which the Company or any Guarantor is or will be a party or which it has
executed and delivered, or will execute and deliver, in connection with the
Offering, the Financing Transactions and the transactions contemplated by this
Agreement are collectively referred to herein as the “Transaction Documents;”
the transactions contemplated hereby and thereby are collectively referred to
herein as the “Transactions;” and this Agreement, the Indenture, the Securities,
the PIK Shares, the PIK Notes, the Warrants, the Warrant Agreement, the
Registration Rights Agreement, the Collateral Trust Agreement, the Security
Documents and each other agreement, document, and instrument to which the
Company or any Guarantor is or will be a party or which it has executed and
delivered, or will execute and deliver, in connection with the Offering and the
transactions contemplated by this Agreement are collectively referred to herein
as the “Note Documents,”

WHEREAS, (a) each Purchaser has individually negotiated this Agreement with the
Company, (b) each Purchaser’s rights and obligations under this Agreement are
several and not joint with the obligations of any other Purchaser, and (c) the
rights and obligations of the Company with respect to each Purchaser are several
and not joint with respect to any other Purchaser; and

 

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WHEREAS, the Purchasers, the Company and the Guarantors wish to enter into this
Agreement, pursuant to which, and upon the terms and subject to the conditions
set forth herein, the Purchasers have severally and not jointly agreed to
purchase the Offered Securities and the Company and the Guarantors have agreed
to issue and sell the Offered Securities.

NOW, THEREFORE, in consideration of the mutual promises, agreements,
representations, warranties and covenants contained herein, each of the Parties
hereto hereby agrees as follows:

SECTION 1.    Purchase and Sale.

(a)    Subscription Amount. On the Closing Date (as defined below), upon the
terms and subject to the conditions set forth in this Agreement, the Company
agrees to issue and sell, and the Purchasers, severally and not jointly, agree
to purchase, (i) $300,000,000 aggregate principal amount of Notes, at a price
equal to 100.0% of the principal amount thereof, with the aggregate principal of
Notes for each Purchaser equal to such Purchaser’s Subscription Amount (as
defined below) as set forth on Schedule 2 hereto and on the signature page
hereto executed by such Purchaser and (ii) the number of Warrants for each
Purchaser set forth on Schedule 2 hereto (which is equal to the aggregate
principal amount of such Purchaser’s Notes divided by the Exercise Price (as
defined in the Warrant Agreement)). The aggregate amount to be paid by each
Purchaser for the Notes and Warrants purchased hereunder, as specified below
such Purchaser’s name on the signature page of this Agreement and next to the
heading “Subscription Amount,” in United States dollars and in immediately
available funds, is referred to herein as the “Subscription Amount.”

(b)    The Closing. The closing (the “Closing”) of the purchase and sale of the
Offered Securities hereunder shall take place at the offices of Kirkland &
Ellis, LLP, 600 Travis St., Suite 3300, Houston, Texas 77002, at 8:00 A.M.,
Houston time, on March 15, 2017, or at such other time or place on the same or
such other date, not later than the fifth business day thereafter, as the
Purchasers and the Company may agree upon in writing. The time and date of such
payment and delivery is referred to herein as the “Closing Date.”

(c)    Deliveries.

(i)    To effect the purchase and sale of Offered Securities, upon the terms and
subject to the conditions set forth in this Agreement, at the Closing (i) the
Company shall issue and deliver to each Purchaser a certificate or certificates
registered in the name of such Purchaser, representing the Notes and the
Warrants to be issued and delivered to such Purchaser as set forth on the
signature page hereto, against payment in full by such Purchaser of its
Subscription Amount and (ii) each Purchaser shall cause a wire transfer in same
day funds to an account of the Company designated in writing by the Company to
the Purchasers in an amount equal to such Purchaser’s Subscription Amount.

(ii)    On or prior to the Closing Date, the Company and the Guarantors shall
deliver or cause to be delivered to each Purchaser the following:

(A)    a legal opinion of Kirkland & Ellis LLP, counsel for the Company and the
Guarantors, dated the Closing Date and addressed to each Purchaser, in form and
substance reasonably satisfactory to the Purchasers, substantially to the effect
set forth in Exhibit A hereto;

(B)    satisfactory evidence of the good standing of the Company and the
Guarantors in their respective jurisdictions of organization and their good
standing in

 

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such other jurisdictions as the Purchasers may reasonably request, in each case
in writing or any standard form of telecommunication from the appropriate
governmental authorities of such jurisdictions;

(C)    a certificate, dated as of the Closing Date, signed on behalf of the
Company and each Guarantor by a senior executive officer thereof certifying to
the effect that (1) no action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any federal,
state or foreign governmental or regulatory authority that would, as of the
Closing Date, prevent the issuance or sale of the Offered Securities; and no
injunction or order of any federal, state or foreign court shall have been
issued that would, as of the Closing Date, prevent the issuance or sale of the
Offered Securities; (2) the representations and warranties of the Company and
each of the Guarantors contained herein are true and correct on the date hereof
and on and as of the Closing Date; and (3) the Company and each of the
Guarantors have performed and complied in all material respects with all of
their covenants and agreements contained in this Agreement required to be
performed or complied with on or prior to the Closing Date;

(D)    a certificate of solvency, dated the Closing Date, executed by the
principal financial officer of the Company in the form of Exhibit B attached
hereto;

(E)    copies of the Indenture and the Warrant Agreement, in each case, duly
executed by the Company, the Guarantors, the Trustee, the Collateral Trustee and
the Warrant Agent, as applicable, in form and substance reasonably satisfactory
to the Purchasers;

(F)    copies of the Notes and the Warrants, in each case, duly executed by the
Company, the Guarantors, and the Trustee or the Warrant Agent, as applicable, in
form and substance reasonably satisfactory to the Purchasers;

(G)    a copy of the Registration Rights Agreement, duly executed by the
Company, in form and substance reasonably satisfactory to the Purchasers;

(H)    copies of the Security Documents, in each case, duly executed by the
Company and the Guarantors, as applicable, and the other parties thereto, in
form and substance reasonably satisfactory to the Purchasers; and

(I)    copies of the Amended RBL Credit Agreement, the Amended Second Lien
Credit Agreement and the 1.75 Lien Credit Agreement, in each case, duly executed
by the parties thereto, in form and substance reasonably satisfactory to the
Purchasers.

(iii)    On or prior to the Closing Date, each Purchaser shall deliver or cause
to be delivered to the Company the Registration Rights Agreement duly executed
by such Purchaser and a completed Questionnaire (as defined below) regarding
investor status duly executed by such Purchaser.

 

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(d)    Closing Conditions.

(i)    The obligations of the Company hereunder shall be subject to the
satisfaction on or prior to the Closing Date of each of the following
conditions:

(A)    no action shall have been taken and no statute, rule, regulation or order
shall have been enacted, adopted or issued by any federal, state or foreign
governmental or regulatory authority that would, as of the Closing Date, prevent
the issuance or sale of the Offered Securities; and no injunction or order of
any federal, state or foreign court shall have been issued that would, as of the
Closing Date, prevent the issuance or sale of the Offered Securities;

(B)    the representations and warranties of the Purchasers contained herein
shall be true and correct on the date hereof and on and as of the Closing Date;
and

(C)    the Purchasers shall have performed and complied in all material respects
with all of their covenants and agreements contained in this Agreement required
to be performed or complied with on or prior to the Closing Date.

(ii)    The respective obligations of the Purchasers hereunder in connection
with the Closing are subject to the following conditions being met:

(A)    no action shall have been taken and no statute, rule, regulation or order
shall have been enacted, adopted or issued by any federal, state or foreign
governmental or regulatory authority that would, as of the Closing Date, prevent
the issuance or sale of the Offered Securities; and no injunction or order of
any federal, state or foreign court shall have been issued that would, as of the
Closing Date, prevent the issuance or sale of the Offered Securities;

(B)    the representations and warranties of the Company and each of the
Guarantors contained herein shall be true and correct on the date hereof and on
and as of the Closing Date;

(C)    the Company and the Guarantors shall have performed and complied in all
material respects with all of their covenants and agreements contained in this
Agreement required to be performed or complied with on or prior to the Closing
Date.

(D)    there shall have been no Material Adverse Effect (as defined below) with
respect to the Company since the date of this Agreement which in the
determination of the Purchasers would make it impracticable to proceed with the
consummation of the Offering;

(E)    the delivery by the Company and the Guarantors of the items set forth in
Section 1(c) of this Agreement;

(F)    the Amended RBL Credit Agreement shall have become effective and shall
(x) provide for a borrowing base of $150,000,000 (with a maximum possible
borrowing base of up to $200,000,000) with terms and economic provisions
(including financial covenants and covenant levels) reasonably satisfactory to
the Purchasers, and (y) permit the maximum issuances of warrants and equity
interests in the Company contemplated by the Transactions (whether pursuant to
the Warrants, PIK Share Payments or otherwise) without causing any event of
default);

(G)    lenders holding at least 50.1% of the term loans under the TL Credit
Agreement and lenders holding 100% of the term loan under the FFH Credit
Agreement shall have agreed to exchange their term loans for terms loans under
the 1.75 Lien Credit Agreement, subject only to the closing;

 

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(H)    each of the Amended Second Lien Credit Agreement and the 1.75 Lien Credit
Agreement shall have become effective concurrently with the occurrence of the
closing of the Offering;

(I)    the security interests created pursuant to the Security Documents shall
be effective, and, to the extent perfection is capable of being obtained on or
prior to the Closing Date given the use of reasonable best efforts and subject
to the applicable grace periods set forth in the Indenture, the Collateral
Trustee shall hold valid and perfected first-priority security interests in the
Collateral (subject only to any permitted liens under the Indenture) securing
the Securities for the benefit of the Secured Parties (as defined in the
Indenture) on or prior to, and as of, the Closing Date;

(J)    the Purchasers shall have received all fees and other amounts due and
payable on or prior to the Closing Date, and, to the extent invoiced,
reimbursement or payment of all out-of-pocket expenses required to be reimbursed
or paid by the Company and the Guarantors hereunder, including all fees,
expenses and disbursements of counsel for the Purchasers to the extent invoiced
on or prior to the Closing Date, together with such additional amounts as shall
constitute such counsel’s reasonable estimate of expenses and disbursements to
be incurred by such counsel in connection with the Security Documents and the
completion of post-closing matters contemplated by the Transaction Documents (it
being understood that such estimate shall not thereafter preclude further
settling of accounts between the Company, the Guarantors and the Purchasers);

(K)    the Purchasers shall be reasonably satisfied that, as of the Closing Date
and after giving effect to the Transactions, there shall not have occurred and
be continuing any “going concern” or similar default or event of default under
the documentation governing the RBL Credit Agreement, the Second Lien Credit
Agreement or the documentation governing the Company’s 7.500% Senior Notes due
2018 and 8.500% Senior Notes due 2022; and

(L)    at any time prior to the Closing Date, a banking moratorium shall not
have been declared either by the United States or New York authorities nor shall
there have occurred any outbreak or escalation of hostilities or other national
or international crisis or calamity, or any change in the United States or
international financial markets, or any substantial change or development
involving a prospective substantial change in U.S. or international political,
financial or economic conditions, in each case, in the reasonable judgment of
such Purchaser, makes it impracticable or inadvisable to purchase the Offered
Securities at the Closing.

(e)    Affiliated Purchasers. Subject to applicable law, each Purchaser shall
have the right to arrange for one or more of its Affiliated Entities (each, an
“Affiliated Purchaser”) to purchase all or any portion of such Purchaser’s
Offered Securities, on the terms and subject to the conditions in this
Agreement, by written notice to the Company at least one (1) Business Day prior
to the Closing Date, which notice shall be signed by the applicable Purchaser
and each of its applicable Affiliated Purchasers (i.e., for clarity, those
purchasing all or any portion of such Purchaser’s Offered Securities) and
pursuant to which each such Affiliated Purchaser shall agree to all the terms of
this Agreement as if it were a Purchaser, including that it can make each
representation in Section 3 of this Agreement as if it were a

 

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Purchaser. Any such Affiliated Purchaser shall deliver a completed Questionnaire
concurrently with the delivery of the written notice referred to above. In no
event will any such arrangement relieve such Purchaser of its obligations under
this Agreement if its Affiliated Purchaser(s) fail to perform such obligations
in accordance with the terms and conditions of this Agreement. The term
“Affiliated Entity,” with respect to any person, means any fund or other entity
that is directly or indirectly controlled by the same manager or other person(s)
as such first person.

(f)    Expenses. Whether or not the Transactions are consummated or this
Agreement is terminated, the Company and each of the Guarantors jointly and
severally agree to pay or cause to be paid all costs and expenses (including any
related taxes) incident to the performance of their respective obligations
hereunder, including without limitation, (i) the costs incident to the
authorization, issuance, sale, preparation and delivery of the Offered
Securities and any taxes payable in that connection; (ii) the costs of
reproducing and distributing each of the Transaction Documents; (iii) the fees
and expenses of the Company’s and each of the Guarantor’s counsel, independent
accountants and reserve engineers; (iv) the fees and expenses of the Trustee,
the Collateral Trustee and any paying agent (including related fees and expenses
of any counsel to such parties); (v) the fees and all expenses related to the
creation, documentation and perfection of any security interests in the
Collateral, including the Security Documents (including the fees and expenses of
the Purchasers, including fees and disbursements of Shearman & Sterling LLP);
and (vi) all out-of-pocket costs and expenses (including the reasonable and
documented fees and expenses of Shearman & Sterling LLP) reasonably incurred by
the Purchasers in connection with this Agreement and the Transactions.

SECTION 2.    Representations and Warranties of the Company and the Guarantors.
The Company and the Guarantors jointly and severally represent and warrant to,
and agree with, the Purchasers as set forth below. Except for representations,
warranties and agreements that are expressly limited as to a particular date or
a particular Party, each representation, warranty and agreement is made by the
Company and each of the Guarantors as of the date hereof and as of the Closing
Date after giving effect to the Transactions:

(a)    Organization and Qualification. The Company has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
State of Texas, with the corporate power and authority to own its properties and
conduct its business as currently conducted, and, except as has not had and
could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, has been duly qualified as a foreign corporation for
the transaction of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any business so
as to require such qualification. Each Guarantor has been duly organized and is
validly existing in good standing under the laws of its jurisdiction of
organization, with the corporate or analogous power and authority to own its
properties and conduct its business as currently conducted, and, except as has
not had and could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, has been duly qualified as a foreign
corporation, limited liability company or partnership, as applicable, for the
transaction of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any business so
as to require such qualification. Each subsidiary of the Company that is a
“significant subsidiary” within the meaning of Rule 1-02(w) of Regulation S-X
under the Securities Act and each of the entities in which the Company, directly
or indirectly, owns fifty-percent (50%) or less (each, a “Joint Venture”) has
been duly organized and is validly existing in good standing under the laws of
its jurisdiction of organization, with the corporate or analogous power and
authority to own its properties and conduct its business as currently conducted,
and, except as has not had and could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, has been duly
qualified as a foreign corporation, limited liability company or partnership, as
applicable, for the transaction of business and is in good standing under the
laws of each other

 

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jurisdiction in which it owns or leases properties or conducts any business so
as to require such qualification. The Company does not own an interest in or
control, directly or indirectly, any corporation, association or other entity
other than the subsidiaries and the Joint Ventures listed on Schedule 2 of this
Agreement and a less than 5% interest in Azure Midstream Holdings, LLC. For the
purpose of this Agreement, “Material Adverse Effect” means any material adverse
change, effect, event, development (including, for the avoidance of doubt, the
discovery of new or previously unknown information), circumstance or occurrence,
or any of the foregoing involving a prospective change, effect, event,
development, circumstance or occurrence, in the condition (financial or
otherwise) or in the earnings, business, operations, assets or prospects of
Company or its subsidiaries, taken as a whole, which would affect the ability of
the Company or any Guarantor to carry out its business as of the date of this
Agreement or which would affect the ability of the Company or any Guarantor to
perform its obligations under the Transaction Documents.

(b)    Corporate Power and Authority. Each of the Company and the Guarantors has
the requisite corporate or other power and authority to enter into, execute and
deliver this Agreement, the other Transactions Documents and, assuming receipt
of the Requisite Shareholder Approvals, to perform its respective obligations
and consummate the Transactions, including the issuance of the Offered
Securities (including any PIK Notes), the Warrant Shares and any PIK Shares.
Each of the Company and the Guarantors has taken all necessary corporate action
required for the due authorization of the Transaction Documents, as applicable,
the performance of its obligations thereunder and the consummation of the
Transactions.

(c)    Capitalization. The authorized capital stock of the Company consists of
780,000,000 shares of Common Stock of which, as of the date of this Agreement,
282,964,129 shares were outstanding, of which 2,342,344 are shares of restricted
stock issued pursuant to and subject to the vesting requirements of compensatory
equity plans of the Company in effect as of the date hereof (the “Company Stock
Plans”) (excluding, for the avoidance of doubt, (i) shares held in treasury,
(ii) a maximum of 7,658,057 additional shares of unvested, performance-based
restricted share units reserved for issuance under the Company Stock Plans and
(iii) a maximum of 1,030,000 performance-based restricted share units which may
only be settled in cash), and 10,000,000 shares of Preferred Stock, par value
$0.001 per share (the “Preferred Stock”), of which, as of the date of this
Agreement, no shares are either designated or issued and outstanding. As of the
date of this Agreement, the Company held 594,663 shares of Common Stock in its
treasury. As of the date of this Agreement, no shares of Common Stock or
Preferred Stock were reserved for issuance, except for 2,117,387 shares of
Common Stock reserved for issuance under the Company Stock Plans upon the
exercise of stock options outstanding as of such date and granted under the
Company Stock Plans, with a weighted average exercise price of $12.70 per share,
7,658,057 performance-based restricted share units reserved for issuance under
the Company Stock Plans subject to achievement of certain criteria (excluding,
for the avoidance of doubt, 1,030,000 performance-based restricted share units
which may only be settled in cash) and an aggregate of 80,000,000 shares of
Common Stock underlying the warrants held by Energy Strategic Advisory Services
LLC. The outstanding shares of Common Stock have been duly authorized and are
validly issued and outstanding, fully paid and non-assessable, and subject to no
preemptive rights (and were not issued in violation of any preemptive rights,
the Company’s articles of incorporation or by-laws, or any applicable laws).
Except as set forth above or in connection with the Transactions and the warrant
held by Energy Strategic Advisory Services LLC, there are no (A) shares of
capital stock or other equity interests or voting securities of the Company
authorized, reserved for issuance, issued or outstanding, (B) options, warrants,
calls, preemptive rights, subscription or other rights, instruments, agreements,
arrangements or commitments of any character, obligating the Company or any of
its subsidiaries to issue, transfer

 

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or sell or cause to be issued, transferred or sold any shares of capital stock
or other equity interest or voting security in the Company or any securities or
instruments convertible into or exchangeable for such shares of capital stock or
other equity interests or voting securities, or obligating the Company or any of
its subsidiaries to grant, extend or enter into any such option, warrant, call,
preemptive right, subscription or other right, instrument, agreement,
arrangement or commitment, (C) except with respect to the vesting, settlement or
forfeiture of, or tax payment or withholding with respect to, any equity-based
awards under the Company Stock Plans, outstanding contractual obligations of the
Company or any of its subsidiaries to repurchase, redeem or otherwise acquire
any capital stock or other equity interest or voting securities of the Company
or (D) issued or outstanding restricted stock awards, units, rights to receive
any capital stock or other equity interest or voting securities of the Company
on a deferred basis, or rights to purchase or receive any capital stock or
equity interest or voting securities issued or granted by the Company to any
current or former director, officer, employee or consultant of the Company. No
subsidiary of the Company owns any shares of Common Stock or other equity
interest or voting securities of the Company. There are no voting trusts or
other agreements or understandings to which the Company or any of its
subsidiaries is a party with respect to the voting of the Common Stock or other
equity interest or voting securities of the Company. All the outstanding shares
of common stock or other equity interests of each subsidiary of the Company and
the Company’s interest in the Joint Ventures have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned directly
or indirectly by the Company, free and clear of any lien, charge, encumbrance,
security interest, restriction on voting or transfer or any other claim of any
third party, except pursuant to the Transaction Documents, the RBL Credit
Agreement, the Second Lien Credit Agreement and the organizational and
governance documents of each of the Joint Ventures listed on Schedule 2 of this
Agreement.

(d)    Purchase Agreement. This Agreement has been duly authorized, executed and
delivered by the Company and each of the Guarantors.

(e)    The Indenture. The Indenture has been duly authorized by the Company and
each of the Guarantors and, when duly executed and delivered in accordance with
its terms by each of the parties thereto, the Indenture will constitute a valid
and legally binding agreement of the Company and each of the Guarantors,
enforceable against the Company and each of the Guarantors in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or similar laws
affecting the enforcement of creditors’ rights generally or by equitable
principles relating to enforceability (collectively, the “Enforceability
Exceptions”).

(f)    The Notes and the Guarantees. The Notes (including any PIK Notes) have
been duly authorized by the Company and, when duly executed, authenticated,
issued and delivered as provided in the Indenture and paid for as provided
herein, will constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their terms, subject to the
Enforceability Exceptions, and will be entitled to the benefits of the
Indenture; and the Guarantees have been duly authorized by each of the
Guarantors and, when the Notes have been duly executed, authenticated, issued
and delivered as provided in the Indenture and paid for as provided herein, will
be valid and legally binding obligations of each of the Guarantors, enforceable
against each of the Guarantors in accordance with their terms, subject to the
Enforceability Exceptions, and will be entitled to the benefits of the
Indenture.

(g)    The PIK Shares. Subject to the Requisite Shareholder Approvals, the
issuance of the PIK Shares has been duly and validly authorized by the Company
and, when any PIK Shares are issued and delivered pursuant to PIK Share
Payments, the PIK Shares will be duly authorized, validly issued and delivered
and fully paid and non-assessable, free and clear of all taxes, liens,
preemptive rights, rights of first refusal, subscription and similar
encumbrances.

 

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(h)    Collateral. The applicable pledging or granting entities under each
Security Document own the relevant Collateral covered by such Security Document,
free and clear of any security interest, mortgage, pledge, lien, hypothec,
encumbrance or claim, except for liens permitted under the terms of the
Indenture and any security interest, mortgage, pledge, lien, hypothec,
encumbrance or claim securing obligations or permitted to be incurred under the
Financing Documents.

(i)    Security Documents. Each of the Security Documents has been duly
authorized by the Company and each Guarantor (to the extent a party thereto),
and, when duly executed and delivered in accordance with its terms by each of
the parties thereto, will constitute a valid and legally binding agreement of
the Company (to the extent a party thereto) and each of the Guarantors (to the
extent a party thereto) enforceable against the Company (to the extent a party
thereto) and each of the Guarantors (to the extent a party thereto) in
accordance with its terms, subject to the Enforceability Exceptions. The
registration, recording or publication of financing statements and/or Security
Documents as contemplated by the Indenture and the Security Documents creates
(or, in the case of financing statements or Security Documents to be filed on or
after the Closing Date, will upon such registration create) a fully perfected
security interest and charge (or its equivalent) in all right, title and
interest of the Company and each of the Guarantors in its Collateral, to the
extent that a security interest in such Collateral may be perfected by such
registrations or publication, as security for the obligations of the Company and
the Guarantors under the Notes, the Guarantees and the Indenture, in each case
subject to no liens other than liens permitted under the terms of the Indenture
and the other Transaction Documents.

(j)    The Warrant Agreement. The Warrant Agreement has been duly authorized by
the Company and, when duly executed and delivered in accordance with its terms
by each of the parties thereto, the Warrant Agreement will constitute a valid
and legally binding agreement of the Company enforceable against the Company in
accordance with its terms, subject to the Enforceability Exceptions.

(k)    The Warrants. The Warrants have been duly authorized by the Company and,
when duly executed, issued and delivered as provided in the Warrant Agreement,
will constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their terms, subject to the
Enforceability Exceptions, and will be entitled to the benefits of the Warrant
Agreement;

(l)    The Warrant Shares. Subject to the Requisite Shareholder Approvals, the
issuance of the Warrant Shares has been duly and validly authorized by the
Company and, when the Warrant Shares are issued and delivered upon exercise of
the Warrants, the Warrant Shares will be duly authorized, validly issued and
delivered and fully paid and non-assessable, free and clear of all taxes, liens,
preemptive rights, rights of first refusal, subscription and similar
encumbrances.

(m)    No Violation or Default. Neither the Company nor any of its subsidiaries
is (i) in violation of its charter or by-laws or similar organizational
documents, (ii) in default, and no event has occurred that, with notice or lapse
of time or both, would constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound or

 

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to which any of the property or assets of the Company or any of its subsidiaries
is subject, or (iii) in violation of any law or statute or any judgment, order,
rule or regulation of any court or arbitrator or governmental or regulatory
authority, except, in the case of clauses (ii) and (iii) above, for any such
default or violation that could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

(n)    No Conflict. The execution, delivery and performance by the Company and
each of the Guarantors of each of the Transaction Documents to which it is a
party, the issuance and sale of the Offered Securities (including any PIK Notes)
and, subject to the Requisite Shareholder Approvals, the Warrant Shares and the
PIK Shares, and compliance by the Company and each of the Guarantors with the
terms thereof and the consummation of the Transactions will not (i) conflict
with or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, result in the termination, modification or
acceleration of, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of its subsidiaries is
subject, (ii) result in any violation of the provisions of the charter or
by-laws or similar organizational documents of the Company or any of its
subsidiaries, or (iii) result in the violation of any law or statute or any
judgment, order, rule or regulation of any court or arbitrator or governmental
or regulatory authority, except, in the case of clauses (i) and (iii) above, for
any such conflict, breach, violation, default, lien, charge or encumbrance that
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

(o)    Consents and Approvals. No approval, authorization, consent or order of
or filing with any federal, state, local or foreign governmental or regulatory
commission, board, body, authority or agency, or of or with the rules of the
NYSE, or approval of the shareholders of the Company or its subsidiaries, is
required in connection with the execution, delivery and performance by the
Company and each of the Guarantors of each of the Transaction Documents to which
it is a party, the issuance and sale by the Company of the Notes (including any
PIK Notes), the Warrants, the Warrant Shares and any PIK Shares and the issuance
by the Guarantors of the Guarantees or the consummation of the Transactions,
except (i) the registration under the Securities Act of the Warrant Shares and
the PIK Shares, (ii) such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or “blue sky” laws or
any applicable foreign securities laws in connection with issuance and sale of
the Offered Securities, (iii) the NYSE listing application and any other filings
required with the NYSE in connection with listing of the Warrant Shares and the
PIK Shares and (iv) the Requisite Shareholder Approvals with respect to the
Warrant Shares and the PIK Shares.

(p)    Company SEC Documents. Since January 1, 2014, the Company has filed or
furnished all required reports, schedules, forms, statements and other documents
(including exhibits and all other information incorporated therein) (the
“Company SEC Documents”) with the SEC. As of their respective dates, each of the
Company SEC Documents complied in all material respects with the requirements of
the Securities Act or the Securities Exchange Act of 1984, as amended (the
“Exchange Act”), as applicable, and the rules and regulations of the SEC
promulgated thereunder applicable to such Company SEC Documents. The Company has
filed with the SEC all “material contracts” (as such term is defined in Item
601(b)(10) of Regulation S-K under the Exchange Act) that are required to be
filed as exhibits to the Company SEC Documents.

 

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(q)    Financial Statements. Each of the financial statements and the related
notes of the Company and its consolidated subsidiaries included or incorporated
by reference in the Company SEC Documents comply in all material respects with
the applicable requirements of the Securities Act, the Exchange Act, and the
rules and regulations of the SEC thereunder, and fairly present, or will fairly
present, as the case may be, in all material respects the financial position,
results of operations and cash flows of the Company and its subsidiaries as of
the dates indicated and for the periods specified, subject, in the case of the
unaudited financial statements, to the absence of disclosures normally made in
footnotes and to customary year-end adjustments; such financial statements have
been prepared, or will be prepared, as the case may be, in conformity with U.S.
generally accepted accounting principles applied on a consistent basis
throughout the periods covered thereby (except as disclosed in the Company SEC
Documents filed before the date of this Agreement), and the supporting
schedules, if any, included or incorporated by reference in the Company SEC
Documents fairly present, in all material respects, the information required to
be stated therein; and the other financial information included or incorporated
by reference in the Company SEC Documents has been derived from the accounting
records of the Company and its subsidiaries and presents fairly, or will present
fairly, as the case may be, the information shown thereby. Neither the Company
nor any of the Company’s subsidiaries is a party to, or has any commitment to
become a party to, any joint venture, off-balance sheet partnership or any
similar agreement or arrangement, where the result, purpose or effect of such
agreement or arrangement is to avoid disclosure of any material transaction
involving, or material liabilities of, the Company or any of its subsidiaries in
the Company SEC Documents (including the financial statements contained
therein). Except to the extent specifically reflected or reserved against on the
September 30, 2016 consolidated balance sheet of the Company (including the
notes thereto) included in the Company’s Form 10-Q as filed with the SEC on
November 2, 2016, neither the Company nor any of its subsidiaries has any
(i) liabilities (whether or not accrued, fixed, contingent, asserted or known)
or (ii) any impairments (including impairments that would reasonably be expected
to occur or be taken) to assets or reserves, except for liabilities or
impairments, respectively, that (A) are otherwise disclosed in the Company SEC
Documents or (B) could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.

(r)    Independent Accountants. KPMG, LLP, who has certified certain financial
statements of the Company and its subsidiaries, was at the time of such
certification an independent registered public accounting firm with respect to
the Company and its subsidiaries, as required by the Securities Act and the
Exchange Act, and the applicable published rules and regulations thereunder and
the rules and regulations of the Public Company Accounting Oversight Board.

(s)    Title to Real and Personal Property. The Company and each of its
subsidiaries has good and marketable title to all material property (real and
personal), or has valid rights to lease or otherwise use, all items of real and
personal property that are material to the respective businesses of the Company
and its subsidiaries, free and clear of all liens, claims, security interests or
other encumbrances except those that (i) do not materially interfere with the
use made and proposed to be made of such property by the Company and its
subsidiaries, (ii) could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect, or (iii) were placed on such
property in connection with the RBL Credit Agreement, the Second Lien Credit
Agreement, the organizational documents of the Joint Ventures or as will be
placed on such property in connection with the Transactions.

(t)    Title to Intellectual Property. Except as could not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect,
the Company and its

 

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subsidiaries own or possess adequate rights to use all material patents, patent
applications, trademarks, service marks, trade names, trademark registrations,
service mark registrations, copyrights, licenses and know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) necessary for the conduct of their
respective businesses; and the conduct of their respective businesses will not
conflict in any material respect with any such rights of others, and the Company
and its subsidiaries have not received any notice of any claim of infringement
or conflict with any such rights of others.

(u)    Investment Company Act. Neither the Company nor any of its subsidiaries
is and, after giving effect to the Transactions and the application of the
proceeds thereof, none of them will be an “investment company” or an entity
“controlled” by an “investment company” within the meaning of the Investment
Company Act of 1940, as amended, and the rules and regulations of the SEC
thereunder (collectively, the “Investment Company Act”).

(v)    Energy Regulatory Status. Neither the Company nor any of its subsidiaries
(i) is subject to regulation as a “natural-gas company,” under the Natural Gas
Act or the regulations of the Federal Energy Regulatory Commission (“FERC”)
thereunder, (ii) subject to regulation as a “gas utility company,” a
“public-utility company,” or a “holding company” under the Public Utility
Holding Company Act of 2005, or FERC’s regulations thereunder, or (iii) subject
to regulation as a “public utility,” a “natural gas utility,” a “natural gas
company,” a “holding company,” or similar term under any state law or
regulation.

(w)    Taxes. The Company and its subsidiaries have paid all federal, state,
local and foreign taxes and filed all tax returns required to be paid or filed
through the date hereof, except for any failure to pay such taxes or file such
returns that could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect; and except as otherwise disclosed in the
Company SEC Documents, there is no material tax deficiency that has been, or
could reasonably be expected to be, asserted against the Company or any of its
subsidiaries or any of their respective properties or assets.

(x)    Licenses and Permits. The Company and its subsidiaries possess all
licenses, sub-licenses, certificates, permits and other authorizations issued
by, and have made all filings with, the appropriate federal, state, local or
foreign governmental or regulatory authorities that are necessary for the
ownership or lease of their respective properties or the conduct of their
respective businesses, except where the failure to possess or make the same
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; and except as described in the Company SEC Documents,
neither the Company nor any of its subsidiaries has received notice of any
revocation or modification of any such license, sub-license, certificate, permit
or authorization, except for any revocation or modification or failure to renew
that could not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect.

(y)    No Labor Disputes. Neither the Company nor its subsidiaries are involved
in any labor dispute with their respective employees nor, to the knowledge of
the Company, is any such dispute threatened except, in each case, for disputes
which could not reasonably be expected, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

(z)    Compliance With Environmental Laws. (i) The Company and its subsidiaries
(x) are in compliance with any and all applicable federal, state, local and
foreign laws, rules, regulations, requirements, decisions and orders relating to
the protection of human health or

 

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safety, the environment, natural resources, hazardous or toxic substances or
wastes, pollutants or contaminants (collectively, “Environmental Laws”); (y)
have received and are in compliance with all permits, licenses, certificates or
other authorizations or approvals required of them under applicable
Environmental Laws to conduct their respective businesses; and (z) have not
received notice of any actual or potential liability under or relating to any
Environmental Laws, including for the investigation or remediation of any
disposal or release of hazardous or toxic substances or wastes, pollutants or
contaminants, and have no knowledge of any event or condition that could
reasonably be expected to result in any such notice; and (ii) there are no costs
or liabilities associated with Environmental Laws of or relating to the Company
or its subsidiaries, except in the case of each of (i) and (ii) above, for any
such failure to comply, or failure to receive required permits, licenses,
certificates or other authorizations, or approvals, or cost or liability, as
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; and (iii) except as described in the Company SEC
Documents, (x) there are no proceedings that are pending, or that are known to
be contemplated, against the Company or any of its subsidiaries under any
Environmental Laws in which a governmental entity is also a party, other than
such proceedings regarding which it is reasonably believed no monetary sanctions
of $100,000 or more will be imposed, and (y) the Company and its subsidiaries
are not aware of any issues regarding compliance with Environmental Laws, or
liabilities or other obligations under Environmental Laws or concerning
hazardous or toxic substances or wastes, pollutants or contaminants, that could
reasonably be expected to have a material adverse effect on the capital
expenditures, earnings or competitive position of the Company and its
subsidiaries, and (z) none of the Company and its subsidiaries anticipates
material capital expenditures relating to any Environmental Laws.

(aa)    Compliance with ERISA. (i) Each employee benefit plan, within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended (“ERISA”), for which the Company or any member of its “Controlled
Group” (defined as any organization which is a member of a controlled group of
companies within the meaning of Section 414 of the Internal Revenue Code of
1986, as amended (the “Code”)) has or could have any liability (each, a “Plan”)
has been maintained in compliance, in all material respects, with its terms and
the requirements of any applicable statutes, orders, rules and regulations,
including but not limited to ERISA and the Code; (ii) no prohibited transaction,
within the meaning of Section 406 of ERISA or Section 4975 of the Code, has
occurred with respect to any Plan, excluding transactions effected pursuant to a
statutory, administrative or other applicable exemption (including individual
exemptions that have been or will be applied for with the U.S. Department of
Labor); (iii) no Plan that is subject to the funding rules of Sections 412 or
430 of the Code or Section 302 of ERISA has failed to satisfy the minimum
funding standards applicable to such Plan, whether or not waived, and no such
Plan has been determined to be, or is reasonably expected to be, in “at risk”
status (within the meaning of Section 430 of the Code or Section 303 of ERISA);
(iv) the fair market value of the assets of each Plan equals or exceeds the
present value of all benefits accrued under such Plan (determined based on those
assumptions used to fund such Plan); (v) no “reportable event” (within the
meaning of Section 4043(c) of ERISA) has occurred or is reasonably expected to
occur; (vi) each Plan that is intended to be qualified under Section 401(a) of
the Code is so qualified and to the knowledge of the Company and the Guarantors,
nothing has occurred, whether by action or by failure to act, which would cause
the loss of such qualification; and (vii) neither the Company nor any member of
its Controlled Group has incurred, nor reasonably expects to incur, any
liability under Title IV of ERISA (other than contributions to the Plan or
premiums to the Pension Benefit Guarantee Corporation, in the ordinary course
and without default) in respect of a Plan (including a “multiemployer plan,”
within the meaning of Section 4001(a)(3) of ERISA).

 

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(bb)    Disclosure Controls. The Company maintains an effective system of
“disclosure controls and procedures” (as defined in Rule 13a-15(e) of the
Exchange Act) that is designed to ensure that material information required to
be disclosed by the Company, including its consolidated subsidiaries, in reports
that it files or submits under the Exchange Act is recorded, processed,
summarized and reported as required under the Exchange Act within the time
periods specified in the SEC’s rules and forms, including controls and
procedures designed to ensure that such information is accumulated and
communicated to the Company’s management as appropriate to allow timely
decisions regarding required disclosure. The Company has carried out evaluations
of the effectiveness of its disclosure controls and procedures as required by
Rule 13a-15 of the Exchange Act.

(cc)    Accounting Controls. The Company and its subsidiaries maintain systems
of “internal control over financial reporting” (as defined in Rule 13a-15(f) of
the Exchange Act) that comply with the requirements of the Exchange Act and have
been designed by, or under the supervision of, their respective principal
executive and principal financial officers, or persons performing similar
functions, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with U.S. generally accepted accounting principles,
including, but not limited to 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
U.S. generally accepted accounting principles 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. As of
December 31, 2015, the last date such controls were required to be tested, there
were no material weaknesses or significant deficiencies in the Company’s
internal controls.

(dd)    Insurance. The Company and its subsidiaries have insurance covering
their respective properties, operations, personnel and businesses, including
business interruption insurance, which insurance is in amounts and insures
against such losses and risks as are adequate to protect the Company and its
subsidiaries and their respective businesses; and neither the Company nor any of
its subsidiaries has (i) received notice from any insurer or agent of such
insurer that capital improvements or other expenditures are required or
necessary to be made in order to continue such insurance or (ii) any reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage at reasonable cost from
similar insurers as may be necessary to continue its business.

(ee)    No Unlawful Payments. None of the Company, any of its subsidiaries or,
to the knowledge of the Company and each of the Guarantors, any director,
officer, or employee of the Company or any of its subsidiaries, or any agent, or
other person associated with or acting on behalf of the Company or any of its
subsidiaries has (i) used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expense relating to political activity;
(ii) made or taken an act in furtherance of an offer, promise or authorization
of any direct or indirect unlawful payment or benefit to any foreign or domestic
government official or employee, including of any government-owned or controlled
entity or of a public international organization, or any person acting in an
official capacity for or on behalf of any of the foregoing, or any political
party or party official or candidate for political office; (iii) violated or is
in violation of any provision of the Foreign Corrupt Practices Act of 1977, as
amended, or any applicable law or regulation implementing the OECD Convention on
Combating Bribery of Foreign Public Officials in International Business
Transactions, or committed an offence under the Bribery Act

 

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2010 of the United Kingdom, or any other applicable anti-bribery or
anti-corruption law; or (iv) made, offered, agreed, requested or taken an act in
furtherance of any unlawful bribe or other unlawful benefit, including, without
limitation, any rebate, payoff, influence payment, kickback or other unlawful or
improper payment or benefit. The Company and its subsidiaries have instituted,
maintain and enforce policies and procedures designed to promote and ensure
compliance with all applicable anti-bribery and anti-corruption laws.

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

(gg)    No Conflicts with Sanctions Laws. None of the Company, any of its
subsidiaries, or, to the knowledge of the Company and the Guarantors, any
director, officer, employee, agent or other person associated with or acting on
behalf of the Company or any of its subsidiaries is currently the subject or the
target of any sanctions administered or enforced by the U.S. government
(including, without limitation, the Office of Foreign Assets Control of the U.S.
Department of the Treasury or the U.S. Department of State and including,
without limitation, the designation as a “specially designated national” or
“blocked person”), the United Nations Security Council, the European Union, Her
Majesty’s Treasury, or other relevant sanctions authority (collectively,
“Sanctions”), nor is the Company, any of its subsidiaries or any of the
Guarantors located, organized or resident in a country or territory that is the
subject or the target of Sanctions, including, without limitation, Cuba, Iran,
North Korea, Sudan and Syria (each, a “Sanctioned Country”); and the Company
will not directly or indirectly use the proceeds of the offering of the Offered
Securities hereunder, or lend, contribute or otherwise make available such
proceeds to any subsidiary, joint venture partner or other person or entity
(i) to fund or facilitate any activities of or business with any person, that,
at the time of such funding or facilitation, is the subject or the target of
Sanctions, (ii) to fund or facilitate any activities of or business in any
Sanctioned Country or (iii) in any other manner that will result in a violation
by any person (including any person participating in the transaction, whether as
underwriter, advisor, investor or otherwise) of Sanctions. For the past five
years, the Company and its subsidiaries have not knowingly engaged in, and are
not now knowingly engaged in, any dealings or transactions with any person that
at the time of the dealing or transaction is or was the subject or the target of
Sanctions or with any Sanctioned Country.

(hh)    Solvency. On and immediately after the Closing Date, neither the Company
nor any of the Guarantors (after giving effect to the Transactions) will be
“insolvent” as defined under the United States Bankruptcy Code.

(ii)    No Restrictions on Subsidiaries. Except for any such restrictions in the
RBL Credit Agreement, the Second Lien Credit Agreement, the organizational
documents of the Joint Ventures or as will be contained in the Transaction
Documents, no subsidiary of the Company is currently prohibited, directly or
indirectly, under any agreement or other instrument to which it is a party or is
subject, from paying any dividends to the Company, from making any other

 

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distribution on such subsidiary’s capital stock or similar ownership interest,
from repaying to the Company any loans or advances to such subsidiary from the
Company or from transferring any of such subsidiary’s properties or assets to
the Company or any other subsidiary of the Company.

(jj)    Reserve Report Data. Other than as disclosed in the Company SEC
Documents, the oil and gas reserve estimates of the Company and its subsidiaries
for the fiscal years ended December 31, 2015, 2014 and 2013 are derived from
reports that have been prepared by or have been audited by either (a) Lee
Keeling and Associates, Inc. (b) Haas Petroleum Engineering Services Inc., (c)
Ryder Scott Company, L.P., (d) Netherland, Sewell & Associates, Inc. or (e) the
Company’s internal engineers, as set forth therein, and such reserves were
prepared in accordance with the Statement of Financial Accounting Standards
No. 69 and Rule 4-10 of Regulation S-X.

(kk)    Oil and Gas Properties. The Company and the Guarantors have good and
defensible title to all Proved Reserves included in the Oil and Gas Properties
(“proved Oil and Gas Properties”) described in the most recent Reserve Report
provided to the Purchasers, free and clear of all liens except liens permitted
pursuant to the Transaction Documents. All such proved Oil and Gas Properties
are valid, subsisting, and in full force and effect, and all rentals, royalties,
and other amounts due and payable in respect thereof have been duly paid.
Without regard to any consent or non-consent provisions of any joint operating
agreement covering any of the Company’s or any Guarantor’s proved Oil and Gas
Properties, the Company’s or the Guarantors share, as applicable, of (a) the
costs for each proved Oil and Gas Property described in the Reserve Report is
not materially greater than the decimal fraction set forth in the Reserve
Report, before and after payout, as the case may be, and described therein by
the respective designations “working interests,” “WI,” “gross working interest,”
“GWI,” or similar terms (except in such cases where there is a corresponding
increase in the net revenue interest), and (b) production from, allocated to, or
attributed to each such proved Oil and Gas Property is not materially less than
the decimal fraction set forth in the Reserve Report, before and after payout,
as the case may be, and described therein by the designations “net revenue
interest,” “NRI,” or similar terms. Each well drilled in respect of proved
producing Oil and Gas Properties described in the Reserve Report (1) is capable
of, and is presently, either producing Hydrocarbons in commercially profitable
quantities or in the process of being worked over or enhanced, and the Company,
or the Guarantor that owns such proved producing Oil and Gas Properties, is
currently receiving payments for its share of production, with no funds in
respect of any thereof being presently held in suspense, other than any such
funds being held in suspense pending delivery of appropriate division orders,
and (2) has been drilled, bottomed, completed, and operated in compliance with
all applicable laws, in the case of clauses (1) and (2), except where any
failure to satisfy clause (1) or to comply with clause (2) would not reasonably
be expected to have a Material Adverse Effect, and no such well which is
currently producing Hydrocarbons is subject to any penalty in production by
reason of such well having produced in excess of its allowable production. “Oil
and Gas Property” means: (a) direct and indirect interests in and rights with
respect to oil, gas, mineral and related properties and assets of any kind and
nature, direct or indirect, including, without limitation, wellbore interests,
working, royalty and overriding royalty interests, mineral interests, leasehold
interests, production payments, operating rights, net profits interests,
other non-working interests, contractual interests, non-operating interests and
rights in any pooled, unitized or communitized acreage by virtue of such
interest being a part thereof; (b) interests in and rights with respect to
Hydrocarbons other minerals or revenues therefrom and contracts and agreements
in connection therewith and claims and rights thereto (including oil and gas
leases, operating agreements, unitization, communitization and pooling
agreements and orders, division orders, transfer orders, mineral deeds, royalty
deeds, oil and gas sales, exchange and processing contracts and agreements and,
in each case, interests thereunder), and surface interests, fee interests,
reversionary interests, reservations and concessions related to any of the

 

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foregoing; (c) easements, rights-of-way, licenses, permits, leases, and other
interests associated with, appurtenant to, or necessary for the operation of any
of the foregoing; (d) interests in oil, gas, water, disposal and injection
wells, equipment and machinery (including well equipment and machinery), oil and
gas production, gathering, transmission, compression, treating, processing and
storage facilities (including tanks, tank batteries, pipelines and gathering
systems), pumps, water plants, electric plants, gasoline and gas processing
plants, refineries and other tangible or intangible, movable or immovable, real
or personal property and fixtures located on, associated with, appurtenant to,
or necessary for the operation of any of the foregoing; and (e) all seismic,
geological, geophysical and engineering records, data, information, maps,
licenses and interpretations. “Hydrocarbons” means all crude oil and condensate,
natural gas, distillate or sulphur, natural gas liquids and all products
recovered in the processing of natural gas (other than condensate) including,
without limitation, natural gasoline, coalbed methane gas, casinghead gas,
iso-butane, normal butane, propane and ethane (including such methane allowable
in commercial ethane), in each case, produced from or attributable to the Oil
and Gas Properties of the Company and the Guarantors. “Proved Reserves” means
those Oil and Gas Properties designated as proved (in accordance with SEC rules
and regulations) in the Reserve Report most recently delivered to the
Purchasers.

(ll)    Maintenance of Properties. Except for such acts or failures to act as
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, the Oil and Gas Properties (and properties unitized
therewith) of the Company and its subsidiaries have been maintained, operated
and developed in a good and workmanlike manner and in conformity with all
applicable laws, statutes, codes, ordinances, orders, determinations, rules,
regulations, judgments, decrees, injunctions, franchises, permits, certificates,
licenses, authorizations or other directives or requirements, whether now or
hereinafter in effect, including, without limitation, Environmental Laws, energy
and public utility laws and regulations and occupational, safety and health
standards or controls, of any appropriate federal, state, local or foreign
governmental or regulatory authorities and in conformity with the provisions of
all leases, subleases or other contracts comprising a part of the Oil and Gas
Properties and other contracts and agreements forming a part of the Oil and Gas
Properties of the Company and its subsidiaries. Specifically in connection with
the foregoing, except for those as could not be reasonably expected to have a
Material Adverse Effect, (a) no Oil and Gas Property of the Company or any
subsidiary is subject to having allowable production reduced below the full and
regular allowable (including the maximum permissible tolerance) because of any
overproduction (whether or not the same was permissible at the time) and
(b) none of the wells comprising a part of the Oil and Gas Properties (or
properties unitized therewith) of the Company and its subsidiaries is deviated
from the vertical more than the maximum permitted by Governmental Requirements,
and such wells are, in fact, bottomed under and are producing from, and the well
bores are wholly within, the Oil and Gas Properties (or in the case of wells
located on properties unitized therewith, such unitized properties) of the
Company and its subsidiaries. The wells drilled in respect of proved producing
Oil and Gas Properties described in the Reserve Report are capable of, and are
presently, either producing Hydrocarbons in commercially profitable quantities
or in the process of being worked over or enhanced, and the Company or the
Guarantors that owns such proved producing Oil and Gas Properties is currently
receiving payments for its share of production, with no funds in respect of any
thereof being presently held in suspense, other than any such funds being held
in suspense pending delivery of appropriate division orders. All pipelines,
wells, gas processing plants, platforms and other material improvements,
fixtures and equipment owned in whole or in part by the Company or any of its
subsidiaries that are necessary to conduct normal operations are being
maintained in a state adequate to conduct normal operations, and with respect to
such of the foregoing which are operated by the Company or any of its
subsidiaries, in a manner consistent with the past practices of the Company and
its subsidiaries (other than those the failure of which to maintain in
accordance with the foregoing could not reasonably be expected to have a
Material Adverse Effect).

 

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(mm)    No Pre-Emptive Rights. No person, firm or corporation has, or will have
at the Closing Date, any agreement or any option, right or privilege (whether
pre-emptive or contractual) capable of becoming an agreement, for the purchase
from the Company or any of the Guarantors, or issuance of, or subscription for,
any securities of the Company or any of the Guarantors, except as may be granted
pursuant to the Company’s existing stock incentive plans, stock purchase or
similar plans offered to directors, officers and employees in the ordinary
course of business or where the existence of such agreement, option, right or
privilege, whether or not exercised, would not reasonably be expected to have a
Material Adverse Effect.

(nn)    No Broker’s Fees. Except for the engagement letter between Credit Suisse
Securities (USA) LLC and the Company and the engagement letter between Seaport
Global Securities LLC and the Company, neither the Company nor any of its
subsidiaries is a party to any contract, agreement or understanding with any
person that would give rise to a claim against the Company for a financial
advisory fee, brokerage commission, finder’s fee or like payment in connection
with the Offering. Neither the Company nor any of its subsidiaries is a party to
any contract, agreement or understanding with any person that would give rise to
a claim against the Purchasers for a financial advisory fee, brokerage
commission, finder’s fee or like payment in connection with the Offering.

(oo)    Eligibility for Resale under Rule 144A. The Notes (including any PIK
Notes) are eligible for resale pursuant to Rule 144A and will not be, at the
Closing Date, of the same class as securities listed on a national securities
exchange registered under Section 6 of the Exchange Act or quoted in a U.S.
automated interdealer quotation system.

(pp)    No Registration Required. Assuming the accuracy of (i) the
representations and warranties in Section 3 and (ii) the information provided by
the Purchasers in the Questionnaires, the purchase of the Offered Securities and
any issuance of PIK Notes pursuant hereto are exempt from the registration
requirements of the Securities Act.

(qq)    No General Solicitation. No form of general solicitation or general
advertising within the meaning of Regulation D (including, but not limited to,
advertisements, articles, notices or other communications published in any
newspaper, magazine or similar medium or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising) was used by the Company, the Guarantors,
any of their respective affiliates or any of their respective representatives in
connection with the offer and sale of the Offered Securities.

(rr)    No Directed Selling Efforts. No directed selling efforts within the
meaning of Rule 902 under the Securities Act were used by the Company, the
Guarantors or any of their respective representatives with respect to Offered
Securities sold outside the United States to non-U.S. persons, and the Company,
any affiliate of the Company and any person acting on its or their behalf has
complied with and will implement the “offering restrictions” required by Rule
902 under the Securities Act.

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

 

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The Company and each of the Guarantors will take reasonable precautions designed
to ensure that any offer or sale, direct or indirect, in the United States or to
any U.S. person (as defined in Rule 902 under the Securities Act), of any
Offered Securities or any substantially similar security issued by the Company
or any Guarantor, within six months subsequent to the date on which the
distribution of the Offered Securities has been completed, is made under
restrictions and other circumstances reasonably designed not to affect the
status of the offer and sale of the Offered Securities in the United States and
to U.S. persons contemplated by this Agreement as transactions exempt from the
registration provisions of the Securities Act, including any sales pursuant to
Rule 144A under, or Regulations D or S of, the Securities Act.

SECTION 3.    Representations and Warranties of the Purchasers and the
Affiliated Purchasers. Each of the Purchasers, severally on behalf of and with
respect to itself only, and not jointly with any other Purchaser, represents and
warrants and agrees with the Company and the Guarantors as set forth below. To
the extent that an Affiliated Purchaser acquires Offered Securities from the
Company pursuant to this Agreement, such Affiliated Purchaser shall be deemed to
have made each of the representations and warranties below substituting
“Affiliated Purchaser” for “Purchaser” in this Section 3. Except for
representations, warranties and agreements that are expressly limited as to a
particular date, each representation, warranty and agreement is made as of the
date hereof and as of the Closing Date after giving effect to the Transactions:

(a)    Formation. Such Purchaser has been duly organized and is validly existing
in good standing under the laws of the jurisdiction of its formation.

(b)    Power and Authority. Such Purchaser has the requisite corporate (or
analogous) power and authority to enter into, execute and deliver this Agreement
and the other Transaction Agreements to which it is or will be a party and to
perform its obligations and consummate the Transactions and has taken all
necessary corporate (or analogous) action required for the due authorization of
the Transaction Agreements, the performance of its obligations thereunder and
the consummation of the Transactions.

(c)    Purchase Agreement. This Agreement has been duly authorized, executed and
delivered by such Purchaser.

(d)    Restricted Securities. Such Purchaser understands that the Offered
Securities (including any PIK Notes) have not been registered under the
Securities Act and may not be resold without registration under the Securities
Act except pursuant to a specific exemption from the registration provisions of
the Securities Act.

(e)    Investment Intent. Such Purchaser is acquiring the Offered Securities
(including any PIK Notes) for investment for its own account, and not with the
view to, or for resale in connection with, any distribution thereof not in
compliance with the Securities Act and any applicable state securities or “blue
sky” laws, and such Purchaser has no present intention of selling, granting any
participation in, or otherwise distributing the same, except in compliance with
the Securities Act and any applicable state securities or “blue sky” laws.

(f)    Sophistication. Such Purchaser is an “accredited investor” within the
meaning of Rule 501(a) promulgated under the Securities Act, all of the answers
and information set forth on the investor questionnaires (the “Questionnaires”)
attached hereto as Exhibit C and Exhibit D submitted to the Company is true and
correct, and such Purchaser has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of its
investment in the Offered Securities being acquired hereunder. With the
assistance of such

 

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Purchaser’s own professional advisors, to the extent that such Purchaser has
deemed appropriate, such Purchaser has made its own legal, tax, accounting and
financial evaluation of the merits and risks of an investment in the Offered
Securities and the consequences of this Agreement. Such Purchaser has considered
the suitability of the Offered Securities as an investment in light of its own
circumstances and financial condition and such Purchaser is able to bear any
economic risks associated with such investment. Such Purchaser agrees to furnish
any additional information reasonably requested by the Company or any of its
affiliates, to the extent necessary to assure compliance with applicable U.S.
federal and state securities laws in connection with such Purchaser’s purchase
of the Offered Securities. Without derogating from or limiting the
representations and warranties of the Company, such Purchaser acknowledges that
it has been afforded the opportunity to ask questions and receive answers
concerning the Company and to obtain additional information that it has
requested to verify the information contained herein. Notwithstanding the
foregoing, nothing contained herein will operate to modify or limit in any
respect the representations and warranties of the Company or to relieve it from
any obligations to such Purchaser for breach thereof or the making of misleading
statements or the omission of material facts in connection with the
Transactions.

(g)    Sufficient Funds. On the Closing Date, such Purchaser (or its applicable
Affiliated Purchaser(s), as applicable) will have available funds necessary to
consummate the closing of the Offering on the terms and conditions contemplated
by this Agreement.

(h)    Brokers and Finders. Neither such Purchaser nor any of its affiliates is
a party to any contract, agreement or understanding with any person that would
give rise to a claim against the Company for a financial advisory fee, brokerage
commission, finder’s fee or like payment in connection with the Offering.

SECTION 4.    Additional Covenants of the Company. Without derogating from the
obligations of the Company set forth elsewhere in this Agreement, the Company
agrees with the Purchasers as set forth below.

(a)    No Resales by the Company or the Guarantors. The Company and the
Guarantors will not, and will not permit any of their respective affiliates (as
defined in Rule 144 under the Securities Act) to, resell any of the Offered
Securities (including any PIK Notes) that have been acquired by any of them,
except for Offered Securities (including any PIK Notes) purchased by the
Company, the Guarantors or any of their respective affiliates and resold in a
transaction registered under the Securities Act.

(b)    Integration. The Company and the Guarantors agree not to sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any security
(as defined in the Securities Act) that would be integrated with the sale of the
Offered Securities in a manner that would require the registration under the
Securities Act of the sale to the Purchasers of the Offered Securities.

(c)    Disclosure. So long as any of the Notes (including any PIK Notes) or the
Warrants are outstanding, the Company and the Guarantors will, furnish at their
expense to the Purchasers, and, upon request, to the holders of the Notes
(including any PIK Notes) or the Warrants and prospective purchasers of the
Notes (including any PIK Notes) or the Warrants, the information required by
Rule 144A(d)(4) under the Securities Act (if any) unless such information is
publicly available.

 

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(d)    General Solicitation; Directed Selling Efforts. The Company and the
Guarantors agree not to solicit any offer to buy or sell the Offered Securities
by means of any form of general solicitation or general advertising (as those
terms are defined in Regulation D under the Securities Act), or by means of any
directed selling efforts (as defined in Rule 902 under the Securities Act) in
the United States in connection with any Offered Securities being offered and
sold pursuant to Regulation S under the Securities Act.

(e)    No Stabilization. Neither the Company nor any of the Guarantors will
take, directly or indirectly, any action designed to or that would reasonably be
expected to cause or result in any stabilization or manipulation of the price of
the Offered Securities.

(f)    Listing. The Company shall, following the Closing Date, take all action
reasonably necessary to effect the listing of the Warrant Shares and the PIK
Shares on the NYSE, upon official notice of issuance. Following the initial
listing of such shares, the Company shall use its reasonable best efforts to
maintain the listing of such shares for so long as Company’s Common Stock
continues to be listed on the NYSE or, if the Common Stock is not then listed on
the NYSE, on the primary national securities exchange or automated quotation
system on which the Common Stock is then listed or authorized for quotation or
on any over-the-counter market.

(g)    Reservation and Listing of Common Stock. Upon receipt of the Requisite
Shareholder Approvals, the Company shall maintain a reserve of the maximum
aggregate number of shares of Common Stock potentially issuable in the future
pursuant to the Transaction Documents, including any Warrant Shares issuable
upon exercise in full of all Warrants and any PIK Shares to be issued pursuant
to any PIK Share Payments.

(h)    Requisite Shareholder Approvals. As promptly as practicable after
execution of this Agreement, the Company shall, use its reasonable best efforts
to obtain the Requisite Shareholder Approvals.

SECTION 5.    Indemnification and Contribution.

(a)    Whether or not the Offering or the other Transactions are consummated or
this Agreement is terminated, the Company and each of the Guarantors (in such
capacity, each, an “Indemnifying Party”) jointly and severally shall indemnify
and hold harmless each Purchaser, each Affiliated Purchaser, and their
respective officers, directors, members, partners, employees, agents and
controlling persons (each, an “Indemnified Person”) from and against any and all
losses, claims, suits, proceedings, damages, liabilities, costs, and expenses
(including reasonable fees of counsel), joint or several, arising out of, or
related to circumstances (“Losses”) to which any Indemnified Person may become
subject arising out of or in connection with any action, claim, challenge,
litigation, suit, investigation, inquiry or proceeding (“Proceedings”) with
respect to the Offering, this Agreement, the other Transaction Documents or the
Transactions and shall reimburse the Indemnified Persons for any reasonable
legal or other out-of-pocket expenses incurred in connection with investigating,
responding to or defending any of the foregoing; provided that the foregoing
indemnification will not apply to Losses to the extent that they resulted
directly from (i) any material breach by such Indemnified Person of this
Agreement or (ii) gross negligence, bad faith or willful misconduct on the part
of the Indemnified Person. If for any reason the foregoing indemnification is
unavailable to any Indemnified Person or insufficient to hold it harmless, then
the Indemnifying Party shall contribute amounts in respect of such Losses in
such proportion as is appropriate to reflect not only the relative benefits
received by the Indemnifying Party, on the one hand, and the Indemnified Person,
on the other hand, but also the relative fault of the Indemnifying Party, on the
one hand and the Indemnified Person, on the other hand, as well as any relevant
equitable considerations. The

 

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indemnity, reimbursement and contribution obligations of the Indemnifying Party
under this Section 5 shall be in addition to any liability that the Indemnifying
Party may otherwise have to an Indemnified Person and shall bind and inure to
the benefit of any successors, assigns, heirs and personal representatives of
the Indemnifying Party and any Indemnified Person.

(b)    Reasonably promptly after receipt by an Indemnified Person of notice of
the commencement of any Proceedings with respect to which the Indemnified Person
may be entitled to indemnification hereunder, such Indemnified Person will, if a
claim is to be made hereunder against the Indemnifying Party in respect thereof,
notify the Indemnifying Party in writing of the commencement thereof; provided
that (i) the omission to so notify the Indemnifying Party will not relieve the
Indemnifying Party from any liability that it may have hereunder except to the
extent it has been actually prejudiced by such failure and (ii) the omission to
so notify the Indemnifying Party will not relieve it from any liability that it
may have to an Indemnified Person otherwise than on account of this Section 5.
In case any such Proceeding is brought against any Indemnified Person and it
notifies the Indemnifying Party of the commencement thereof, the Indemnifying
Party will be entitled to participate therein, and, to the extent that it may
elect by written notice delivered to such Indemnified Person, to assume the
defense thereof, with counsel reasonably satisfactory to such Indemnified
Person; provided, that if the defendants in any such Proceeding include both
such Indemnified Person and the Indemnifying Party and such Indemnified Person
shall have concluded that there may be legal defenses available to it that are
different from or additional to those available to the Indemnifying Party, or
that there otherwise exists or may exist a conflict of interest, such
Indemnified Person shall have the right to select, at the expense of the
Indemnifying Party, one separate counsel (as well as one or more local
counsels), to assert such legal defenses and to otherwise participate in the
defense of such Proceeding on behalf of such Indemnified Person; provided,
further, that the right of the Indemnifying Party to so assume the defense of
any such Proceeding shall not apply, and the Indemnified Person shall be
permitted to instead assume the defense of any such Proceeding with separate
counsel (including one or more local counsels) of its choosing, at the expense
of the Indemnifying Party, to the extent that (w) the Indemnifying Party shall
not have employed counsel satisfactory to such Indemnified Person to represent
such Indemnified Person within a reasonable time after notice of commencement of
such Proceeding, (x) the Indemnifying Party is not, in the reasonable
determination of such Indemnified Person, diligently pursuing such defense,
(y) the Indemnifying Party shall not have elected to assume such defense
pursuant to written notice delivered to such Indemnified Person within ten
(10) calendar days after notice of commencement of such Proceeding or (z) such
Proceeding relates to any criminal action, indictment, allegation or
investigation or does not solely seek (and continue to solely seek) monetary
damages.

(c)    The Indemnifying Party shall not be liable under this Section 5 to an
Indemnified Person for any settlement of any Proceedings effected by such
Indemnified Person without the Indemnifying Party’s written consent (which
consent shall not be unreasonably withheld, delayed or conditioned). The
Indemnifying Party shall not, without the prior written consent of an
Indemnified Person, effect any settlement of any pending or threatened
Proceedings in respect of which indemnity has been sought hereunder by such
Indemnified Person unless (i) such settlement includes an unconditional release
of such Indemnified Person in form and substance satisfactory to such
Indemnified Person from all liability on the claims that are the subject matter
of such Proceedings and (ii) such settlement does not include any statement as
to or any admission of fault, culpability or a failure to act by or on behalf of
any Indemnified Person.

SECTION 6.    Termination. This Agreement may be terminated by any Purchaser, as
to such Purchaser’s obligations hereunder only and without any effect whatsoever
on the obligations between the Company and the other Purchasers, by written
notice to the other Parties, if the Closing has not been consummated on or
before March 15, 2017.

 

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SECTION 7.    Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given, if delivered personally,
by facsimile or sent by overnight courier as follows:

(a)    If to the Company or any Guarantor:

EXCO Resources, Inc.

12377 Merit Drive, Suite 1700

Dallas, Texas 75251

Facsimile: (817) 368-2087

Attention: Chief Financial Officer

with copies (which shall not constitute notice) to:

Haynes and Boone, LLP

2323 Victory Avenue, Suite 700

Dallas, Texas 75219

Email: scott.wallace@haynesboone.com

Facsimile: (214) 200-0674

Attention: Scott Wallace

and

Kirkland & Ellis LLP

600 Travis Street, Suite 3300

Houston, Texas 77002

Email: justin.hoffman@kirkland.com

Facsimile: (713) 835-3601

Attention: Justin F. Hoffman

(b)    If to a Purchaser, at the address set forth on such Purchaser’s signature
page hereto

or to such other address or addresses as shall be designated in writing. All
notices shall be effective when received.

SECTION 8.    Independent Nature of Purchasers. The 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. Each
Purchaser shall be responsible only for its own representations, warranties,
agreements and covenants hereunder. The decision of each Purchaser to purchase
the Offered Securities pursuant to this Agreement has been made by such
Purchaser independently of any other Purchaser and independently of any
information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company or any of its subsidiaries
which may have been made or given by any other Purchaser or by any agent or
employee of any other Purchaser, and no Purchaser or any of its agents or
employees shall have any liability to any other Purchaser (or any other person)
relating to or arising from any such information, materials, statements or
opinions. Nothing contained herein, and no action taken by any Purchaser
pursuant hereto, shall be deemed to constitute the Purchasers as a partnership,
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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. Except as otherwise provided in this Agreement, each
Purchaser shall be entitled to independently protect and enforce its rights,
including the rights arising out of this Agreement, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.

SECTION 9.    Assignment; Third Party Beneficiaries. Neither this Agreement nor
any of the rights, interests or obligations under this Agreement may be assigned
by any of the Parties (whether by operation of law or otherwise) without the
prior written consent of the other Parties, except that each Purchaser may
assign its rights, interests and/or obligations under this Agreement to any of
its Affiliated Purchasers pursuant to Section 1(e). Notwithstanding the
foregoing or anything to the contrary contained herein, subject to Section 1(e),
this Agreement, and any Purchaser’s rights, interests or obligations hereunder,
may be assigned, delegated or transferred, in whole or in part, by such
Purchaser to one or more of such Purchaser’s Affiliated Purchasers without the
prior written consent of the Company, provided that any such assignee assumes
the obligations of such Purchaser hereunder and agrees in writing to be bound by
the terms of this Agreement in the same manner as such Purchaser; provided, that
no such assignment shall relieve such Purchaser of its obligations hereunder if
such assignee fails to perform such obligations. Except as provided in Section 5
with respect to the Indemnified Persons and Section 11 with respect to
Non-Recourse Parties, this Agreement is not intended to and does not confer upon
any person other than the Parties hereto any rights or remedies under this
Agreement and nothing set forth in this Agreement shall confer upon or give to,
or be construed to confer upon or give to, any other person (including any
affiliates of the Company or any of its respective members, shareholders,
partners, directors, employees, officers or creditors or any successor thereto
or assignee thereof, or any third party claiming by or through any of the
foregoing) any benefits, rights or remedies under or by reason of, or any rights
to enforce or cause the Company to enforce, the obligations of any Purchaser or
its permitted assignees hereunder or any other provisions of this Agreement. Any
Indemnified Persons and any Non-Recourse Parties shall be entitled to enforce
and rely on the provisions listed in the immediately preceding sentence as if
they were a Party to this Agreement.

SECTION 10.    Prior Negotiations; Entire Agreement. This Agreement, together
with the documents and instruments attached as schedules, annexes or exhibits to
and referred to in this Agreement, constitutes the entire agreement of the
Parties with respect to the Offering and supersedes all prior agreements,
arrangements or understandings, whether written or oral, between the Parties or
any of their respective affiliates with respect to the transactions contemplated
hereby.

SECTION 11.    GOVERNING LAW; VENUE; Non-Recourse Parties. THIS AGREEMENT WILL
BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
EACH OF THE PARTIES HERETO CONSENTS TO SUBMIT ITSELF TO THE EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK LOCATED IN THE BOROUGH OF
MANHATTAN AND ANY UNITED STATES FEDERAL COURTS LOCATED IN THE SOUTHERN DISTRICT
OF NEW YORK, WITH RESPECT TO ANY CLAIM OR CAUSE OF ACTION ARISING UNDER OR
RELATING TO THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY, AND WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT, AND AGREES THAT ALL SERVICE OF
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED,
DIRECTED TO IT AT ITS ADDRESS AS SET FORTH IN SECTION 7, AND THAT SERVICE SO
MADE SHALL BE TREATED AS COMPLETED WHEN RECEIVED. EACH OF THE PARTIES HERETO
WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS AND WAIVES ANY OBJECTION TO
VENUE OF ANY ACTION INSTITUTED IN ANY SUCH COURT. THE COMPANY, THE GUARANTORS
AND THE PURCHASERS HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, SUIT, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED ON CONTRACT,

 

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TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY OR THE NEGOTIATION, ADMINISTRATION, PERFORMANCE,
AND ENFORCEMENT HEREOF. NOTHING IN THIS PARAGRAPH SHALL AFFECT THE RIGHT OF THE
PARTIES HERETO TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
NOTWITHSTANDING THE FOREGOING, EACH OF THE PARTIES HERETO AGREES THAT EACH OF
THE OTHER PARTIES HERETO SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING
FOR ENFORCEMENT OF A JUDGMENT ENTERED BY A COURT PERMITTED BY THIS SECTION 11 IN
ANY OTHER COURT OR JURISDICTION.

Notwithstanding anything that may be otherwise expressed or implied in this
Agreement, the Company and each of the Guarantors, by its acceptance of the
benefits hereof, covenants, agrees and acknowledges for itself and its
affiliates that no person other than the Purchasers and their respective
permitted successors and assigns, including their respective applicable
Affiliated Purchasers, if any, who acquire Offered Securities from the Company
pursuant to this Agreement, shall have any obligation hereunder or in connection
with the Transactions and that no recourse hereunder or in respect of any oral
representations made or alleged to be made in connection herewith or therewith
shall be had against any former, current or future equity holder, controlling
person, director, officer, employee, agent, affiliate, member, manager, general
or limited partner, representative or successor or assignee of any Purchaser (or
any such applicable Affiliated Purchaser) or any former, current or future
equity holder, controlling person, director, officer, employee, agent,
affiliate, member, manager, general or limited partner, representative or
successor or assignee of any of the foregoing (such persons, collectively, the
“Non-Recourse Parties”), whether by the enforcement of any assessment or by any
legal or equitable proceedings, or by virtue of any statute, regulation or other
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 Non-Recourse Party, as such, for any obligations of any Purchaser under this
Agreement or any documents or instruments delivered in connection herewith or in
respect of any oral representations made or alleged to be made in connection
herewith or therewith or for any claim based on, in respect of, or by reason of,
such obligations or their creation.

SECTION 12.    Counterparts. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each Party and delivered to each other Party, it being understood that the
Parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a “.pdf” format
data file, such signature shall create a valid and binding obligation of the
Party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or “.pdf” signature page were an original
thereof.

SECTION 13.    Waivers and Amendments. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms and conditions of this
Agreement may be waived, only by a written instrument signed by all the Parties
or, in the case of a waiver, by the Party waiving compliance. No delay on the
part of any Party in exercising any right, power or privilege pursuant to this
Agreement will operate as a waiver thereof, nor will any waiver on the part of
any Party of any right, power or privilege pursuant to this Agreement, nor will
any single or partial exercise of any right, power or privilege pursuant to this
Agreement, preclude any other or further exercise thereof or the exercise of any
other right, power or privilege pursuant to this Agreement. The rights and
remedies provided pursuant to this Agreement are cumulative and are not
exclusive of any rights or remedies which any Party otherwise may have at law or
in equity.

SECTION 14.    Interpretation; Severability. When a reference is made in this
Agreement to “Sections,” “Schedules” or “Exhibits” such reference shall be to a
Section of, Schedule or Exhibit to, this Agreement

 

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unless otherwise indicated. The terms defined in the singular have a comparable
meaning when used in the plural, and vice versa. References to “herein,”
“hereof,” “hereunder” and the like refer to this Agreement as a whole and not to
any particular section or provision, unless the context requires otherwise. The
headings contained in this Agreement are for reference purposes only and are not
part of this Agreement. Whenever the words “include,” “includes” or “including”
are used in this Agreement, they shall be deemed followed by the words “without
limitation.” No rule of construction against the draftsperson shall be applied
in connection with the interpretation or enforcement of this Agreement, as this
Agreement is the product of negotiation between sophisticated parties advised by
counsel. Except as expressly stated in this Agreement, all references to any
statute, rule or regulation are to the statute, rule or regulation as amended,
modified, supplemented or replaced from time to time (and, in the case of
statutes, include any rules and regulations promulgated under the statute) and
to any section of any statute, rule or regulation include any successor to the
section.

It is the intent of the Parties that the provisions of this Agreement shall be
enforced to the fullest extent permissible under applicable law and public
policies applied in each jurisdiction in which enforcement is sought. If any
particular provision or portion of this Agreement shall be adjudicated to be
invalid or unenforceable, such provision or portion thereof shall be deemed
amended to the minimum extent necessary to render such provision or portion
valid and enforceable, and such amendment will apply only with respect to the
operation of such provision or portion in the particular jurisdiction in which
such adjudication is made.

SECTION 15.    Survival. The indemnities, representations, warranties and
agreements of the Company and the Guarantors contained in this Agreement or made
by or on behalf of the Company or the Guarantors pursuant to this Agreement or
any certificate delivered pursuant hereto shall survive the delivery of and
payment for the Offered Securities and shall remain in full force and effect,
regardless of any termination of this Agreement or any investigation made by or
on behalf of the Purchasers.

SECTION 16.    Public Announcement. No public release or announcement (for the
avoidance of doubt, excluding in respect of any Schedule 13D (or 13G), Form 4 or
similar SEC filing requirements of the Purchasers or their affiliates so long as
the Company is provided a reasonable opportunity to comment on such disclosure
in advance) concerning the Offering or the other Transactions, shall be issued
by any Party hereto without the prior consent of the other Parties (which
consent shall not be unreasonably withheld, conditioned or delayed), except as
such release or announcement may be required by law, regulation or stock
exchange rule, in which case the Party required to make the release or
announcement shall, to the extent reasonably practicable, allow the other
Parties reasonable time to comment on such release or announcement in advance of
such issuance; provided that in no event shall any such press release or
announcement name the Purchasers or any of their affiliates without their prior
written consent, except to the extent necessary to comply with law, regulation
or stock exchange rule. The provisions of this Section 16 shall not restrict the
ability of the Company to summarize or describe the Transactions in any
prospectus or similar offering document or other current or periodic report, in
each case to the extent required by law, regulation or stock exchange rule, so
long as the other Party is provided a reasonable opportunity to comment on such
disclosure in advance.

The remainder of this page left intentionally blank.

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be signed
by their respective officers thereunto duly authorized, all as of the date first
written above.

 

EXCO RESOURCES, INC.

/s/ Tyler Farquharson

Name:   Tyler Farquharson Title:   Vice President, Chief Financial Officer and
Treasurer EXCO SERVICES, INC.

/s/ Tyler Farquharson

Name:   Tyler Farquharson Title:   Vice President, Chief Financial Officer and
Treasurer EXCO PARTNERS GP, LLC

/s/ Tyler Farquharson

Name:   Tyler Farquharson Title:   Vice President, Chief Financial Officer and
Treasurer EXCO GP PARTNERS OLD, LP By: EXCO PARTNERS GP, LLC, its General
Partner

/s/ Tyler Farquharson

Name:   Tyler Farquharson Title:   Vice President, Chief Financial Officer and
Treasurer EXCO PARTNERS OLD GP, LLC

/s/ Tyler Farquharson

Name:   Tyler Farquharson Title:   Vice President, Chief Financial Officer and
Treasurer

 

[Signature Page to Purchase Agreement]

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EXCO OPERATING COMPANY, LP By: EXCO PARTNERS OLD GP, LLC, its general partner

/s/ Tyler Farquharson

Name:   Tyler Farquharson Title:   Vice President, Chief Financial Officer and
Treasurer EXCO MIDCONTINENT MLP, LLC

/s/ Tyler Farquharson

Name:   Tyler Farquharson Title:   Vice President, Chief Financial Officer and
Treasurer EXCO HOLDING (PA), INC.

/s/ Tyler Farquharson

Name:   Tyler Farquharson Title:   Vice President, Chief Financial Officer and
Treasurer EXCO PRODUCTION COMPANY (PA), LLC

/s/ Tyler Farquharson

Name:   Tyler Farquharson Title:   Vice President, Chief Financial Officer and
Treasurer EXCO PRODUCTION COMPANY (WV), LLC

/s/ Tyler Farquharson

Name:   Tyler Farquharson Title:   Vice President, Chief Financial Officer and
Treasurer

 

[Signature Page to Purchase Agreement]

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EXCO RESOURCES (XA), LLC

/s/ Tyler Farquharson

Name:   Tyler Farquharson Title:   Vice President, Chief Financial Officer and
Treasurer EXCO LAND COMPANY, LLC

/s/ Tyler Farquharson

Name:   Tyler Farquharson Title:   Vice President, Chief Financial Officer and
Treasurer EXCO HOLDING MLP, INC.

/s/ Tyler Farquharson

Name:   Tyler Farquharson Title:   Vice President, Chief Financial Officer and
Treasurer RAIDER MARKETING, LP By: RAIDER MARKETING GP, LLC, its General Partner

/s/ Tyler Farquharson

Name:   Tyler Farquharson Title:   Vice President, Chief Financial Officer and
Treasurer

 

[Signature Page to Purchase Agreement]

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ADVENT CAPITAL (NO 3) LTD BRIT INSURANCE (GIBRALTAR) PCC LIMITED BRIT SYNDICATES
LIMITED FEDERATED INSURANCE COMPANY OF CANADA NORTHBRIDGE GENERAL INSURANCE
CORPORATION CLEARWATER SELECT INSURANCE COMPANY NEWLINE CORPORATE NAME LIMITED
(SYNDICATE) ODYSSEY REINSURANCE COMPANY WENTWORTH INSURANCE COMPANY LTD. ZENITH
INSURANCE COMPANY FAIRFAX FINANCIAL HOLDINGS MASTER TRUST FUND By: Hamblin Watsa
Investment Counsel Ltd., its Investment Manager

/s/ Paul Rivett

Name:   Paul Rivett Title:   Chief Operating Officer

 

Subscription Amount:    $ 151,000,000   Aggregate Principal Amount of Notes:   
$ 151,000,000   Number of Warrants:      162,365,591  

See following page for allocation of Notes and Warrants

Hamblin Watsa Investment Counsel Ltd.

95 Wellington Street West, Suite 802

Toronto, Ontario, Canada M5J 2N7

Facsimile: (416) 367-4946

Attention: Derek Bulas

With a copy (which shall not constitute notice) to:

Shearman & Sterling LLP

199 Bay Street, Suite 4405

Toronto, Ontario Canada M5L 1E8

Facsimile: (416) 360-2125

Attention: Kevin Roggow

 

[Signature Page to Purchase Agreement]

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Investor

   Principal
Amount of Notes      Number of
Warrants  

Advent Capital (No 3) Ltd

   $ 5,000,000        5,376,344  

Brit Insurance (Gibraltar) PCC Limited

     3,500,000        3,763,441  

Brit Syndicates Limited

     19,500,000        20,967,742  

Federated Insurance Company of Canada

     8,000,000        8,602,151  

Northbridge General Insurance Corporation

     27,000,000        29,032,258  

Clearwater Select Insurance Company

     5,000 000        5,376,344  

Newline Corporate Name Limited (Syndicate)

     5,000,000        5,376,344  

Odyssey Reinsurance Company

     40,000,000        43,010 ,753  

TIG Insurance Company

     14,000,000        15,053,763  

Wentworth Insurance Company Ltd.

     10,000,000        10,752,688  

Zenith Insurance Company

     4,000,000        4,301,075  

Fairfax Financial Holdings Master Trust Fund

     10,000,000        10,752,688     

 

 

    

 

 

 

Total

   $ 151,000,000        162,365,591     

 

 

    

 

 

 

 

[Signature Page to Purchase Agreement]

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Energy Strategic Advisory Services LLC

/s/ Jonathan Siegler

Name:   Jonathan Siegler Title:   Chief Financial Officer

 

Subscription Amount:    $ 70,000,000   Cash Election:    $ 2,100,000   Number of
Warrants:      75,268,818  

Energy Strategic Advisory Services LLC

200 Crescent Court, Suite 1900, Dallas, TX 75201

Email: jsiegler@bluescapepartners.com

Facsimile: 682-626-1335

Attention: Jonathan Siegler

With a copy (which shall not constitute notice) to:

Bracewell LLP

711 Louisiana Street Suite 2300, Houston, TX 77002-2770

Email: Emily.Leitch@bracewelllaw.com

Facsimile: 1.713.222.3249

Attention: Emily E. Leitch

 

[Signature Page to Purchase Agreement]

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OCM EXCO Holdings, LLC By: Oaktree Capital Management, L.P. Its: Manager

/s/ Rajath Shourie

Name:   Rajath Shourie Title:   Managing Director

/s/ Robert O’Leary

Name:   Robert O’Leary Title:   Managing Director

 

Subscription Amount:    $ 39,500,000   Aggregate Principal Amount of Notes:    $
39,500,000   Number of Warrants:      42,473,119  

OCM EXCO Holdings, LLC

[Purchaser]

333 S. Grand Avenue, 28th Floor

Los Angeles, CA 90071

[Address]

Email: rlaroche@oaktreecapital.com; rshourie@oaktreecapital.com

Facsimile: (213) 830-6499

Attention: Robert LaRoche

With a copy (which shall not constitute notice) to:

 

                                                                              
          [Name]                                           
                                                   
                                                                              
          [Address]       Email:                                   
                                                 

Facsimile:                                          
                                 

 

Attention:                                          
                                 

 

 

[Signature Page to Purchase Agreement]

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GEN IV INVESTMENT OPPORTUNITIES, LLC

/s/ Paul Segal

Name: Paul Segal Title:   President

 

Subscription Amount:    $ 30,000,000   Aggregate Principal Amount of Notes:    $
30,000,000   Number of Warrants:      32,258,065  

Gen IV Investment Opportunities LLC

1700 Broadway, 35th Floor

New York, NY 10019

Attention: Gen IV Investment Opportunities, LLC

Email: DL_Geniv@lspower.com

 

[Signature Page to Purchase Agreement]

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VEGA ASSET PARTNERS, LP

/s/ Paul Segal

Name:   Paul Segal Title:   Manager

 

Subscription Amount:    $ 9,500,000   Aggregate Principal Amount of Notes:    $
9,500,000   Number of Warrants:      10,215,054  

Vega Asset Partners, LP

1700 Broadway, 35th Floor

New York, NY 10019

Attention: Gen IV Investment Opportunities, LLC

Email: DL_Geniv@lspower.com

 

[Signature Page to Purchase Agreement]