Exhibit 10.1

 

Execution Version

 

COMMON UNIT PURCHASE AGREEMENT

 

by and between

 

SANCHEZ PRODUCTION PARTNERS LP

 

and

 

SN UR HOLDINGS, LLC

 

SN UR Holdings, LLC

1000 Main Street, Suite 3000

Houston, Texas, 77002

 

Attention: Antonio R. Sanchez, III

 

Sanchez Production Partners LP, a Delaware limited partnership (the
“Partnership”), proposes, subject to the terms and conditions stated in this
Common Unit Purchase Agreement (this “Agreement”), to issue and sell to SN UR
Holdings, LLC, a Delaware limited liability company (the “Investor”), an
aggregate of 2,272,727 common units (the “Investor Units”) representing limited
partner interests in the Partnership (the “Common Units”).

 

The Partnership has entered into that certain Underwriting Agreement (the
“Underwriting Agreement”), dated as of the date hereof, with Citigroup Global
Markets Inc. and RBC Capital Markets, LLC, as Representatives of the
underwriters named therein (the “Underwriters”), pursuant to which the
Underwriters have agreed to purchase and the Partnership has agreed to sell
6,550,802 Common Units at a price to the public of $11.00 per Common Unit (the
“Public Offering”).  On the Closing Date (as defined below), the Partnership and
the Investor will enter into a Registration Rights Agreement (the “Registration
Rights Agreement”), substantially in the form attached hereto as Annex I,
pursuant to which the Partnership will provide the Investor with certain
registration rights with respect to the Investor Units.

 

Sanchez Production Partners GP LLC, a Delaware limited liability company, is the
general partner of the Partnership (the “General Partner”).  The Significant
Subsidiaries (as defined below) of the Partnership are referred to collectively
herein as the “Operating Subsidiaries.”  The Partnership, the General Partner
and the Operating Subsidiaries are referred to collectively herein as the
“Partnership Entities.” The “Subject Documents” shall mean the Organizational
Agreements (as defined below), the Underwriting Agreement and the Registration
Rights Agreement.  For purposes of this Agreement, the Investor shall not be
deemed an affiliate of the Partnership Entities and the Partnership Entities
shall not be deemed affiliates of the Investor.

 

This is to confirm the agreement between the Partnership and the Investor
concerning the purchase of the Investor Units from the Partnership by the
Investor.

 

1.                                The Partnership represents and warrants to,
and agrees with, the Investor as follows:

 

(a)                                 No Material Misstatements or Omissions. All
SEC Reports (as defined below) when they became effective or were filed with the
Securities and Exchange Commission (the “Commission”),

 

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as the case may be, conformed in all material respects to the requirements of
the Securities Act of 1933, as amended (the “Securities Act”) or the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), as applicable, and the
rules and regulations of the Commission thereunder, and none of such documents
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
and any further documents so filed or any further amendment or supplement
thereto, when such documents become effective or are filed with the Commission,
as the case may be, will conform in all material respects to the requirements of
the Securities Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder and will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

 

(b)                                 Independent Accountants. KPMG LLP (“KPMG”),
who has certified financial statements and supporting schedules included or
incorporated by reference in reports and statements filed by the Partnership
since December 31, 2014 under the Exchange Act and registration statements filed
by the Partnership since December 31, 2014 under the Securities Act (in the form
that became effective), including all amendments, exhibits and schedules thereto
(the “SEC Reports”) are independent registered public accountants with respect
to the Partnership as required by the Securities Act, the rules and regulations
of the Commission thereunder and the Public Company Accounting Oversight Board.

 

(c)                                  Reserve Engineers. Netherland, Sewell &
Associates, Inc. (“NSAI”), whose reports are contained or incorporated by
reference in the SEC Reports, is, as of the date hereof, an independent reserve
engineer and acts as independent reserve engineer with respect to the
Partnership.  Ryder Scott Co. LP (“Ryder Scott”), whose reports are referenced
in the SEC Reports, was as of the date of such reports, and is, as of the date
hereof, an independent reserve engineer and acts as independent reserve engineer
with respect to the Partnership.

 

(d)                                 Reserve Information. The oil and natural gas
reserve estimates of the Partnership Entities as of December 31, 2015 and
December 31, 2014, contained or incorporated by reference in the SEC Reports are
derived from reports that have been prepared by NSAI and Ryder Scott, in
accordance with customary industry practices, and such estimates fairly reflect,
in all material respects, the oil and natural gas reserves of the Partnership
Entities at the dates indicated therein and are in accordance, in all material
respects, with Commission guidelines, including the applicable requirements of
Regulation S-X and Industry Guide 2 under the Securities Act, applied on a
consistent basis throughout the periods involved.

 

(e)                                  Financial Statements. The historical
financial statements included or incorporated by reference in the SEC Reports,
together with the related schedules (if any) and notes, present fairly in all
material respects the financial position of the Partnership (including Sanchez
Production Partners LLC (predecessor-in-interest by conversion)) and its
subsidiaries, at the dates indicated and the results of operations and changes
in capital and cash flows of the Partnership Entities for the periods specified;
and all such financial statements have been prepared in conformity with
generally accepted accounting principles in the United States (“GAAP”) applied
on a consistent basis throughout the periods involved and materially comply with
all applicable accounting requirements under the Securities Act and the
rules and regulations of the Commission thereunder. The supporting schedules, if
any, included or

 

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incorporated by reference in the SEC Reports present fairly in all material
respects, in accordance with GAAP, the information required to be stated
therein.  All other financial information of the Partnership, including
“non-GAAP financial measures” (as such term is defined in the rules and
regulations of the Commission), if any, contained or incorporated by reference
in the SEC Reports comply in all material respects with the requirements of the
Securities Act (including, without limitation, Regulation S-X under the
Securities Act) and the Exchange Act (including, without limitation, Regulation
G under the Exchange Act) and Item 10 under Regulation S-K, to the extent
applicable. The interactive data in eXtensible Business Reporting Language
contained or incorporated by reference in the SEC Reports fairly presents the
information called for in all material respects and has been prepared in
accordance with the Commission’s rules and guidelines applicable thereto in all
material respects. There are no financial statements (historical or pro forma)
that are required to be included in the SEC Reports that are not so included as
required.

 

(f)                                   Forward-Looking and Supporting
Information. Each of the statements made by the Partnership in the SEC Reports
and any other materials distributed to the Investor, including (but not limited
to) any statements with respect to projected results of operations, estimated
cash available for distributions and future cash distributions of the
Partnership, and any statements made in support thereof or related thereto, was
made or will be made with a reasonable basis and in good faith.

 

(g)                                  No Material Changes. Except as otherwise
disclosed in the SEC Reports, none of the Partnership Entities has sustained
since the date of the latest audited financial statements included or
incorporated by reference in the SEC Reports any material loss or interference
with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree; since the latest date as of which information is given in the
SEC Reports through the date of this Agreement, there has not been any change in
the equity interests or long term debt of any of the Partnership Entities or any
material adverse change, or any development involving a prospective material
adverse change, in or affecting the general affairs, management, financial
position, unitholders’ equity or results of operations of the Partnership
Entities; and, except as otherwise may be disclosed in the SEC Reports, none of
the Partnership Entities have (i) issued or granted any securities (other than
customary issuances or grants pursuant to employee benefit plans), (ii) incurred
any material liability or obligation, direct, indirect or contingent, other than
liabilities and obligations that were incurred in the ordinary course of
business, (iii) entered into any material transaction not in the ordinary course
of business or (iv) declared or paid any distribution.

 

(h)                                 Formation and Good Standing of the
Partnership. The Partnership has been duly formed and is validly existing as a
limited partnership, and is in good standing under the laws of the State of
Delaware, with full partnership power and authority to own, lease and operate
its properties and conduct its business as described in the SEC Reports, and
(A) to execute and deliver this Agreement and the Subject Documents (other than
the Organizational Agreements) and consummate the transactions contemplated
hereby and thereby, and (B) to issue, sell and deliver the Investor Units.

 

(i)                                     Foreign Qualification and Registration
of the Partnership. The Partnership is duly qualified as a foreign limited
partnership to transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure to so
qualify or to be in good standing would not, individually or in the aggregate,
result in a material adverse change in (i) the financial condition, results of
operations, members’ equity or partners’ capital, business, properties,
management

 

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or prospects of the Partnership and the Operating Subsidiaries taken as a whole,
whether or not arising in the ordinary course of business, or (ii) the ability
of the Partnership and the Operating Subsidiaries to consummate the transactions
contemplated by this Agreement or the Subject Documents (other than the
Organizational Agreements) (in either case of clause (i) or (ii), a “Material
Adverse Effect”).

 

(j)                                    Formation and Good Standing of the
Partnership’s Subsidiaries. Each of the Operating Subsidiaries has been duly
formed and is validly existing, and is in good standing under the laws of the
state where such subsidiary is formed, with full power and authority to own,
lease and operate its properties and conduct its business as described in the
SEC Reports. Each of the Operating Subsidiaries is duly qualified as a foreign
entity, to transact business and is in good standing in the jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure to so
qualify or to be in good standing would not individually or in the aggregate,
result in a Material Adverse Effect.

 

(k)                                 Power and Authority of General Partner.  The
General Partner has, and after giving effect to the transactions contemplated
herein will have, full limited liability company power and authority to serve as
general partner of the Partnership in all material respects as disclosed in the
SEC Reports.

 

(l)                                     Ownership of the General Partner
Interest in the Partnership.  The General Partner is the sole general partner of
the Partnership, with a non-economic general partner interest in the
Partnership; such general partner interest has been duly authorized and validly
issued in accordance with the Second Amended and Restated Agreement of Limited
Partnership of the Partnership, dated as of October 14, 2015, and as in effect
on the date hereof (collectively and as may be further amended, restated or
otherwise modified from time to time, the “Partnership Agreement”); and the
General Partner is the record holder of such general partner interest free and
clear of any security interest, mortgage, pledge, lien, encumbrance, claim or
equity (“Liens”), other than those created or arising under the Partnership
Agreement, the Securities Act, the Delaware LP Act (as defined below) or other
applicable state securities laws.

 

(m)                             Ownership of Incentive Distribution Rights in
the Partnership. SP Holdings, LLC, a Delaware limited liability company
(“Holdings”) is the record holder of all of the incentive distribution rights in
the Partnership (the “Incentive Distribution Rights”) and such Incentive
Distribution Rights have been duly authorized and validly issued in accordance
with the Partnership Agreement, and are fully paid (to the extent required under
the Partnership Agreement) and non-assessable (except as such non-assessability
may be affected by matters described in Sections 17-303, 17-607 and 17-804 of
the Delaware Revised Uniform Limited Partnership Act (the “Delaware LP Act”));
and Holdings owns the Incentive Distribution Rights free and clear of all Liens,
other than those created or arising under the Partnership Agreement, the
Securities Act, the Delaware LP Act or other applicable state securities laws.

 

(n)                                 No Other Subsidiaries. The Partnership does
not own, directly or indirectly, an equity interest in, or long-term debt
securities of, any corporation, partnership, limited liability company, joint
venture, association or other entity that is a “significant subsidiary” (as
defined in Article 1-02(w) of Regulation S-X) other than those listed on
Schedule I attached hereto (the “Significant Subsidiaries”).

 

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(o)                                 Ownership of the General Partner.  Holdings
owns a 100% membership interest in the General Partner; such membership interest
has been duly authorized and validly issued in accordance with the limited
liability company agreement of the General Partner (such agreement, as may be
further amended, restated or otherwise modified from time to time, the “General
Partner LLC Agreement”) and are fully paid (to the extent required under the
General Partner LLC Agreement) and nonassessable (except as such
nonassessability may be affected by Sections 18-303, 18-607 and 18-804 of the
Delaware Limited Liability Company Act (the “Delaware LLC Act”)); and such
membership interest is owned free and clear of all Liens, except for Liens
arising under or in connection with the General Partner LLC Agreement, or
created or arising under the Delaware LLC Act or applicable securities laws.

 

(p)                                 Ownership of SEP Holdings IV, LLC.  The
Partnership owns a 100% membership interest in SEP Holdings IV, LLC, a Delaware
limited liability company (“SEP IV”); such membership interest has been duly
authorized and validly issued in accordance with the limited liability company
agreement of SEP IV (such agreement, as may be further amended, restated or
otherwise modified from time to time, the “SEP IV LLC Agreement”) and are fully
paid (to the extent required under the SEP IV LLC Agreement) and nonassessable
(except as such nonassessability may be affected by Sections 18-303, 18-607 and
18-804 of the Delaware LLC Act); and such membership interest is owned free and
clear of all Liens, except for (i) Liens arising under or in connection with the
SEP IV LLC Agreement, or created or arising under the Delaware LLC Act or
applicable securities laws and (ii) Liens permitted or arising under or in
connection with the Third Amended and Restated Credit Agreement, dated as of
March 31, 2015, as amended, among the Partnership, as borrower, the lenders
party thereto and Royal Bank of Canada, as administrative agent, collateral
agent and issuing bank (the “Credit Agreement”).

 

(q)                                 Ownership of CEP Mid-Continent LLC.  The
Partnership owns a 100% membership interest in CEP Mid-Continent LLC, a Delaware
limited liability company (“CEP Mid-Con”); such membership interest has been
duly authorized and validly issued in accordance with the limited liability
company agreement of CEP Mid-Con (such agreement, as may be further amended,
restated or otherwise modified from time to time, the “CEP Mid-Con LLC
Agreement”) and are fully paid (to the extent required under the CEP Mid-Con LLC
Agreement) and nonassessable (except as such nonassessability may be affected by
Sections 18-303, 18-607 and 18-804 of the Delaware LLC Act); and such membership
interest is owned free and clear of all Liens, except for (i) Liens arising
under or in connection with the CEP Mid-Con LLC Agreement, or created or arising
under the Delaware LLC Act or applicable securities laws and (ii) Liens
permitted or arising under or in connection with the Credit Agreement.

 

(r)                                    Ownership of Mid-Continent Oilfield
Supply, L.L.C.  CEP Mid-Con owns a 100% membership interest in Mid-Continent
Oilfield Supply, L.L.C., an Oklahoma limited liability company (“MCOS”); such
membership interest has been duly authorized and validly issued in accordance
with the limited liability company agreement of MCOS (such agreement, as may be
further amended, restated or otherwise modified from time to time, the “MCOS LLC
Agreement”) and are fully paid (to the extent required under the MCOS LLC
Agreement) and nonassessable (except as such nonassessability may be affected by
Sections 2030, 2031 and 2040 of the Oklahoma Limited Liability Company Act (the
“Oklahoma LLC Act”)); and such membership interest is owned free and clear of
all Liens, except for (i) Liens arising under or in connection with the MCOS LLC
Agreement, or created or arising under the Delaware LLC Act or applicable
securities laws and (ii) Liens permitted or arising under or in connection with
the Credit Agreement.

 

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(s)                                   Ownership of Catarina Midstream, LLC.  The
Partnership owns a 100% membership interest in Catarina Midstream, LLC
(“Catarina Midstream”); such membership interest has been duly authorized and
validly issued in accordance with the limited liability company agreement of
Catarina Midstream (such agreement, as may be further amended, restated or
otherwise modified from time to time, the “Catarina Midstream LLC Agreement”)
and are fully paid (to the extent required under the Catarina Midstream LLC
Agreement) and nonassessable (except as such nonassessability may be affected by
Sections 18-303, 18-607 and 18-804 of the Delaware LLC Act); and such membership
interest is owned free and clear of all Liens, except for (i) Liens arising
under or in connection with the Catarina Midstream LLC Agreement, or created or
arising under the Delaware LLC Act or applicable securities laws and (ii) Liens
permitted or arising under or in connection with the Credit Agreement.

 

(t)                                    Ownership of Carnero Gathering, LLC.  The
Partnership owns a 50% membership interest in Carnero Gathering, LLC (“Carnero
Gathering”); such membership interest has been duly authorized and validly
issued in accordance with the limited liability company agreement of Carnero
Gathering (such agreement, as may be further amended, restated or otherwise
modified from time to time, the “Carnero Gathering LLC Agreement”) and is fully
paid (to the extent required under the Carnero Gathering LLC Agreement) and
nonassessable (except as such nonassessability may be affected by Sections
18-303, 18-607 and 18-804 of the Delaware LLC Act); and such membership interest
is owned free and clear of all Liens, except for (i) Liens arising under or in
connection with the Carnero Gathering LLC Agreement, or created or arising under
the Delaware LLC Act or applicable securities laws and (ii) Liens permitted or
arising under or in connection with the Credit Agreement.

 

(u)                                 Ownership of Northeast Shelf Energy, L.L.C. 
CEP Mid-Con owns a 100% membership interest in Northeast Shelf Energy, L.L.C.,
an Oklahoma limited liability company (“Northeast”); such membership interest
has been duly authorized and validly issued in accordance with the limited
liability company agreement of Northeast (such agreement, as may be further
amended, restated or otherwise modified from time to time, the “Northeast LLC
Agreement”; collectively with the Partnership Agreement, the General Partner LLC
Agreement, the SEP IV LLC Agreement, the CEP Mid-Con LLC Agreement, the MCOS LLC
Agreement, the Catarina Midstream LLC Agreement and the Carnero Gathering LLC
Agreement, the “Organizational Agreements”) and are fully paid (to the extent
required under the Northeast LLC Agreement) and nonassessable (except as such
nonassessability may be affected by Sections 2030, 2031 and 2040 of the Oklahoma
LLC Act); and such membership interest is owned free and clear of all Liens,
except for (i) Liens arising under or in connection with the Northeast LLC
Agreement, or created or arising under the Oklahoma LLC Act or applicable
securities laws and (ii) Liens permitted or arising under or in connection with
the Credit Agreement.

 

(v)                                 Authorization, Execution and Delivery of
this Agreement.  This Agreement has been duly authorized, executed and delivered
by or on behalf of the Partnership and constitutes a valid and legally binding
agreement of the Partnership, enforceable against the Partnership in accordance
with its terms; provided that the enforceability thereof may be limited by
(A) applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or similar laws affecting the enforcement of creditors’ rights
generally or by equitable principles (whether considered in a proceeding at law
or in equity) relating to enforceability and (B) public policy, applicable law
relating to fiduciary duties and indemnification and an implied covenant of good
faith and fair dealing (collectively, the “Enforceability Exceptions”).

 

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(w)                               Authorization, Execution and Delivery of the
Registration Rights Agreement. On the Closing Date, the Registration Rights
Agreement will have been duly authorized and validly executed and delivered by
the Partnership and will be a valid and legally binding agreement of the
Partnership, enforceable against the Partnership in accordance with its terms,
provided that the enforceability thereof may be limited by the Enforceability
Exceptions.

 

(x)                                 Enforceability of the Subject Documents.
Each of the Subject Documents (other than the Registration Rights Agreement)
have been duly authorized, executed and delivered by or on behalf of the
Partnership Entities party thereto and, assuming due authorization by the other
parties thereto (other than a Partnership Entity), constitute a valid and
legally binding agreement of such parties, enforceable against such parties in
accordance with their respective terms; provided that the enforceability thereof
may be limited by the Enforceability Exceptions.

 

(y)                                 Authority and Authorization. The Investor
Units to be sold by the Partnership pursuant to this Agreement, and the limited
partner interests represented thereby, have been duly authorized in accordance
with the Partnership Agreement and, when issued and delivered by the Partnership
pursuant to this Agreement against payment thereof, will be validly issued,
fully paid (to the extent required under the Partnership Agreement) and
non-assessable (except as such non-assessability may be affected by Sections
17-303, 17-607 or 17-804 of the Delaware LP Act); and except as described in the
SEC Reports, the issuance and sale of the Investor Units to be sold by the
Partnership pursuant to this Agreement are not subject to any preemptive rights,
rights of first refusal or other similar rights of any securityholder of the
Partnership or any other person.  On the Closing Date, all corporate, limited
partnership and limited liability company action, as the case may be, required
to be taken by the Partnership Entities or any of their members, partners or
stockholders for the authorization, issuance and sale and delivery of the
Investor Units and the consummation of the transactions contemplated by this
Agreement to which they are a party shall have been validly taken.

 

(z)                                  Investor Units. The Investor Units to be
sold by the Partnership pursuant to this Agreement, when issued and delivered in
accordance with the terms of the Partnership Agreement and this Agreement
against payment thereof as provided therein and herein, will conform in all
material respects to the descriptions thereof contained in the SEC Reports, and
such statements conform in all material respects to the rights set forth in the
respective instruments and agreements defining the same.

 

(aa)                          Capitalization of the Partnership. As of the date
hereof, the issued and outstanding partnership interests of the Partnership
consisted of 4,429,915 Common Units, 19,444,445 Class B Preferred Units and the
Incentive Distribution Rights. All outstanding Common Units and Class B
Preferred Units and the limited partner interests represented thereby have been
duly authorized and validly issued in accordance with the Partnership Agreement,
and are fully paid (to the extent required under the Partnership Agreement) and
nonassessable (except as such non-assessability may be affected by matters
described in Sections 17-303, 17-607 and 17-804 of the Delaware LP Act).

 

(bb)                          Absence of Defaults. None of the Partnership
Entities is in (i) violation of its Organizational Agreements, charter,
certificate of limited partnership or formation or conversion or other governing
document of any of the Partnership Entities (collectively, the “Organizational
Documents”), (ii) in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any instruments, agreements and
documents filed as exhibits to the SEC Reports pursuant to Rule 601(b)(10) of
Regulation S-K of the Commission or any Form 8-K filed after

 

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January 1, 2016 (provided, that if any instrument, agreement or other document
filed as an exhibit to the Registration Statement as aforesaid has been redacted
or if any portion thereof has been deleted or is otherwise not included as part
of such exhibit (whether pursuant to a request for confidential treatment or
otherwise), such instrument, agreement or other document, as the case may be,
shall be in its entirety, including any portions thereof which shall have been
so redacted, deleted or otherwise not filed) (“Subject Instruments”) or (iii) in
default in the performance or observance of any obligation, agreement, covenant
or condition contained in any contracts, indentures, mortgages, deeds of trust,
loan or credit agreements, bonds, notes, debentures, evidences of indebtedness,
swap agreements, leases or other instruments or agreements to which any of the
Partnership Entities is a party or by which any of the Partnership Entities is
bound or to which any of the property or assets of any of the Partnership
Entities is subject that are material with respect to the Partnership Entities
taken as a whole (together with Subject Instruments, the “Partnership
Documents”); except in the case of clause (iii) for such defaults that would
not, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect.

 

(cc)                            No Conflicts. Neither (i) the issue and sale of
the Investor Units and the compliance by the Partnership with this Agreement and
the consummation of the transactions herein contemplated nor (ii) the execution,
delivery and performance of the Subject Documents (other than the Organizational
Agreements) by the Partnership Entities party thereto and the consummation by
the Partnership Entities of the transactions contemplated by the Subject
Documents (other than the Organizational Agreements), and compliance by the
Partnership Entities with their obligations under the Subject Documents (other
than the Organizational Agreements) will conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which any of the Partnership Entities is a party or by which any
Partnership Entity is bound or to which any of the property or assets of the
Partnership Entities is subject, nor will such action result in any violation of
the provisions of the Organizational Documents or any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Partnership Entities or any of their properties.

 

(dd)                          Absence of Labor Dispute. No labor dispute with
the employees of any Partnership Entity exists or is imminent, and the
Partnership is not aware of any existing or imminent labor disturbance by the
employees of any of the principal suppliers, manufacturers, customers or
contractors of any of the Partnership Entities that would reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect.

 

(ee)                            Absence of Proceedings. There is no action,
suit, proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Partnership, threatened, against or affecting any Partnership
Entity that is required to be disclosed in the SEC Reports (other than as
indicated therein) or that would reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect or to materially and adversely
affect the consummation by the Partnership of the transactions contemplated in
this Agreement or the performance by the Partnership of its obligations under
this Agreement.

 

(ff)                              Absence of Further Requirements. (A) No filing
with, or authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency,
domestic or foreign, (B) no authorization, approval, vote or consent of any
unitholder, member or creditor of any of the Partnership Entities, (C) no
authorization, approval, waiver or consent under any Subject Instrument and
(D) no authorization, approval, vote or consent of any other person or

 

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entity, is necessary or required for (x) the execution and delivery of this
Agreement and the Subject Documents by the Partnership Entities party thereto
and the performance of their respective obligations hereunder and thereunder,
(y) the offering, issuance, sale or delivery by the Partnership of the Investor
Units to be sold by the Partnership hereunder, or (z) the consummation by the
Partnership Entities of any of the other transactions contemplated by this
Agreement and the Subject Documents (other than the Organizational Agreements),
except such as have already been obtained or will be obtained prior to the
Closing Date under the Securities Act, the Exchange Act, the rules and
regulations of the Commission thereunder, the rules and regulations of the
Financial Industry Regulatory Authority Inc. (“FINRA”) and with the NYSE MKT LLC
(the “Exchange”).

 

(gg)                            Possession of Licenses and Permits. Each of the
Partnership Entities possesses such permits, licenses, approvals, consents and
other authorizations (collectively, “Governmental Licenses”) issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct its business in the manner described in the SEC Reports,
except where the failure to possess such Governmental Licenses would not
reasonably be expected to result in a Material Adverse Effect; each of the
Partnership Entities is in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure to so comply would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect; all of the Governmental Licenses are valid and in full force and
effect, except when the invalidity of such Governmental Licenses or the failure
of such Governmental Licenses to be in full force and effect would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect; none of the Partnership Entities have received any notice of
proceedings relating to the revocation or modification of any such Governmental
Licenses which, if the subject of an unfavorable decision, ruling or finding,
would, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect.

 

(hh)                          Title to Property.  Each of the Partnership
Entities has (A) legal, valid and defensible title to the interests in the oil
and natural gas properties supporting the estimates of its net proved reserves
contained in the SEC Reports (the “Partnership Properties”), (B) good and
indefeasible title in fee simple to all real property owned by them, other than
the Partnership Properties covered by clause (A), and (C) good and marketable
title to all other property and assets owned by them, in each case free and
clear of all Liens, except Liens that do not, individually or in the aggregate,
materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the Partnership
Entities. All assets held under lease or sublease by the Partnership Entities,
including real property, buildings and other improvements, and equipment and
other property, except the Partnership Properties covered by clause (A) above,
are held by it under valid, subsisting and enforceable leases or subleases, as
the case may be, subject to exceptions that are not material and do not
interfere with the use made or proposed to be made of such assets, except the
Partnership Properties covered by clause (A) above, by the Partnership Entities,
and all such leases and subleases are in full force and effect. The Partnership
Entities have no notice of any claim that has been asserted by anyone adverse to
the rights of any of the Partnership Entities under any of the leases or
subleases mentioned above or affecting or questioning the rights of any of the
Partnership Entities to the continued possession of the leased or subleased
premises under any such lease or sublease except for such claims that, if
successfully asserted, would not, individually or in the aggregate, have a
Material Adverse Effect.

 

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(ii)                                  Rights of Way. Each of the Partnership
Entities has such consents, easements, permits, rights-of-way or licenses from
any person (collectively, “rights-of-way”) as are necessary to conduct its
business in the manner described in the SEC Reports, subject to such
qualifications as may be set forth in the SEC Reports, except for such
rights-of-way the failure of which to obtain, would not result in, individually
or in the aggregate, a Material Adverse Effect; and each of the Partnership
Entities has fulfilled and performed all of its obligations with respect to such
rights-of-way and no event has occurred that allows, or after notice or lapse of
time would allow, revocation or termination thereof or would result in any
impairment of the rights of the holder of any such rights-of-way, except for
such failures to perform, revocations, termination and impairments that would
not reasonably be expected to have a Material Adverse Effect, subject in each
case to such qualifications as may be set forth in the SEC Reports; and none of
such rights-of-way contains any restriction that would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.

 

(jj)                                Investment Company Act. The Partnership is
not, and after giving effect to the Public Offering and the issuance and sale of
the Investor Units as contemplated in this Agreement and the Underwriting
Agreement, the Partnership will not be, an “investment company” or an entity
“controlled” by an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.

 

(kk)                          Intellectual Property.  Each of the Partnership
Entities owns or possesses adequate rights to use all patents, patent
applications, trademarks, service marks, trade names, trademark registrations,
service mark registrations, copyrights, licenses, know-how, software, systems
and technology (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures) necessary for
the conduct of its businesses and has no reason to believe that the conduct of
its businesses conflicts with, and has not received any notice of any claim of
conflict with, any such rights of others, except in each case as would not
reasonably be expected to have a Material Adverse Effect.

 

(ll)                                  Environmental Laws. Except as disclosed in
the SEC Reports and except as would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect, (A) none of the
Partnership Entities is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of common law or
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment, relating to pollution or
protection of human health, the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata) or
wildlife, including, without limitation, laws and regulations relating to the
release or threatened release of chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous substances, petroleum or petroleum products
(collectively, “Hazardous Materials”) or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, “Environmental Laws”), (B) each Partnership
Entity has all permits, authorizations and approvals required under any
applicable Environmental Laws and are in compliance with their requirements,
(C) there are no pending or, to the knowledge of the Partnership, threatened
administrative, regulatory or judicial actions, suits, demands, demand letters,
claims, liens, notices of noncompliance or violation, investigation or
proceedings relating to any Environmental Law against any of the Partnership
Entities, (D) none of the Partnership Entities has received notice that it has
been identified as a potentially responsible party under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, or
any comparable state law and (E) there are no events or circumstances that

 

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might reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting any of the Partnership
Entities relating to Hazardous Materials or any Environmental Laws.

 

(mm)                  Review of Environmental Laws. The Partnership has reviewed
the effect of Environmental Laws in effect on the date hereof on the business,
operations and properties of the Partnership Entities, in the course of which it
identified and evaluated associated costs and liabilities (including, without
limitation, any capital or operating expenditures required for clean-up, closure
of properties or compliance with such Environmental Laws, or any permit, license
or approval, any related constraints on operating activities and any potential
liabilities to third parties). On the basis of such review, the Partnership has
reasonably concluded that such associated costs and liabilities would not,
individually or in the aggregate, have a Material Adverse Effect, except as set
forth in or contemplated in the SEC Reports.

 

(nn)                          Absence of Registration Rights. There are no
persons with registration rights or other similar rights to have any securities
(debt or equity) registered pursuant to a registration statement filed under the
Securities Act, and there are no persons with co-sale rights, tag-along rights
or other similar rights to have any securities (debt or equity) sold in
connection with the sale of the Investor Units, except in each case for such
rights contemplated by this Agreement, the Registration Rights Agreement and
that have been disclosed in the SEC Reports or the Registration Rights
Agreement.

 

(oo)                          Tax Returns. The Partnership Entities have filed
all foreign, federal, state and local tax returns that are required to be filed
or have requested extensions thereof, except where the failure to so file would
not, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect, and have paid all taxes (including, without limitation,
any estimated taxes) required to be paid by them and any other assessment,
interest, fine or penalty levied against any of them, to the extent that any of
the foregoing is due and payable, except for any such tax, assessment, interest,
fine or penalty that is currently being contested in good faith by appropriate
actions and except for such taxes, assessments, interest, fines or penalties the
nonpayment of which would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.

 

(pp)                          Insurance. The Partnership Entities are insured by
insurers of recognized financial responsibility, or entitled to the benefits of
such insurance, against such losses and risks and in such amounts as are prudent
and customary in the businesses in which they are engaged; all policies of
insurance and any fidelity or surety bonds insuring the Partnership Entities or
their respective business, assets, employees, properties, officers and directors
are in full force and effect; and the Partnership Entities are in compliance
with the terms of such policies and instruments in all material respects; there
are no claims by any of the Partnership Entities under any such policy or
instrument as to which any insurance company is denying liability or defending
under a reservation of rights clause; none of the Partnership Entities has been
refused any insurance coverage sought or applied for; and the Partnership has no
reason to believe that it will not be able to renew any existing coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as a cost that would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.

 

(qq)                          Accounting and Disclosure Controls. The
Partnership Entities maintain a system of internal accounting controls that has
been designated by the General Partner’s principal executive officer and
principal financial officer, or under their supervision sufficient to provide
reasonable

 

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assurances that (A) transactions are executed in accordance with management’s
general or specific authorizations; (B) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability; (C) access to assets is permitted only in
accordance with management’s general or specific authorization; (D) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences; and
(E) interactive data in eXtensible Business Reporting Language included or
incorporated by reference in the SEC Reports fairly presents the information
called for in all material respects and has been prepared in accordance with the
Commission’s rules and guidelines applicable thereto. Except as set forth in the
SEC Reports, the Partnership is not aware of (i) any significant deficiencies in
the design or operation of internal control over financial reporting that are
reasonably likely to adversely affect the ability of the Partnership Entities to
record, process, summarize and report financial information, or any material
weaknesses in internal controls over financial reporting of the Partnership
Entities or (ii) any fraud, whether or not material, involving management or
other employees who have a role in the Partnership’s internal control over
financial reporting. The Partnership maintains “disclosure controls and
procedures” (to the extent required by and as such term is defined in
Rule 13a-15(e) under the Exchange Act) that have been designed to ensure that
material information relating to the Partnership and its subsidiaries is made
known to the General Partner’s principal executive officer and principal
financial officer by others within those entities; such disclosure controls and
procedures are effective in all material respects to perform the functions for
which they are established to the extent required by Rule 13a-15 of the Exchange
Act.

 

(rr)                                Compliance with Sarbanes-Oxley Act. The
Partnership and, to the knowledge of the Partnership, the officers of the
General Partner of the Partnership, in their capacities as such, are in
compliance in all material respects with all applicable provisions of the
Sarbanes-Oxley Act and the rules and regulations promulgated in connection
therewith and with which any of them is required to comply, including
Section 402 related to loans.

 

(ss)                              Absence of Manipulation. The Partnership and
its controlled affiliates, and to the knowledge of the Partnership, the
Partnership’s other affiliates, have not taken and will not take, directly or
indirectly, any action designed to or that would constitute or that might
reasonably be expected to cause or result in the stabilization or manipulation
of the price of any security to facilitate the sale or resale of the Investor
Units.

 

(tt)                                Foreign Corrupt Practices Act. None of the
Partnership Entities, nor, to the knowledge of the Partnership, any director,
officer, agent, employee, affiliate or other person associated with or acting on
behalf of the Partnership Entities has (i) used any limited partnership funds
for any unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity; (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from limited
partnership funds; (iii) violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977; (iv) violated or is in violation of any
provision of the Bribery Act 2010 of the United Kingdom; or (v) made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment.

 

(uu)                          Money Laundering Laws. The operations of the
Partnership Entities are and have been conducted at all times in compliance with
applicable financial recordkeeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, the money laundering
statutes of all applicable jurisdictions, the rules and regulations thereunder
and any related

 

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or similar rules, regulations or guidelines, issued, administered or enforced by
any governmental agency (collectively, “Money Laundering Laws”), and no action,
suit or proceeding by or before any court or governmental agency, authority or
body or any arbitrator involving any of the Partnership Entities with respect to
the Money Laundering Laws is pending or, to the knowledge of the Partnership
Entities, threatened.

 

(vv)                          OFAC. (i) None of the Partnership Entities nor, to
the knowledge of the Partnership, any director, officer, agent, employee,
affiliate or other person acting on behalf of the Partnership is currently the
subject or the target of any U.S. sanctions including, without limitation, any
administered or enforced by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”), or other relevant sanctions authority
(collectively, “Sanctions” and such persons, “Sanctioned Persons”); (ii) the
Partnership will not directly or indirectly use any of the proceeds from the
sale of Investor Units by the Partnership contemplated by this Agreement, or
lend, contribute or otherwise make available any such proceeds to any
subsidiary, joint venture partner or other person or entity (A) to fund any
activities of or business with any Sanctioned Person or Sanctioned Countries (as
defined below) or (B) 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; (iii) none of the
Partnership Entities nor, to the knowledge of the Partnership, any director,
officer, agent, employee, affiliate or other person acting on behalf of the
Partnership is a person that is, or is 50% or more owned or otherwise controlled
by a person that is: (A) the subject of any Sanctions; or (B) located, organized
or resident in a country or territory that is, or whose government is, the
subject of Sanctions that broadly prohibit dealings with that country or
territory (currently, Cuba, Iran, North Korea, Sudan, and Syria) (collectively,
“Sanctioned Countries” and each, a “Sanctioned Country”); and (iv) except as has
been disclosed to the Investor or is not material to the analysis under any
Sanctions, none of the Partnership Entities have engaged in any dealings or
transactions with or for the benefit of a Sanctioned Person, or with or in a
Sanctioned Country, in the preceding 3 years, nor do the Partnership Entities
have any plans to increase its dealings or transactions with Sanctioned Persons,
or with or in Sanctioned Countries.

 

(ww)                      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 Partnership or any member of its “Controlled
Group” (defined as any organization which is a member of a controlled group of
corporations within the meaning of Section 414 of the Internal Revenue Code of
1986, as amended (the “Code”)) would have any liability (each a “Plan”) has been
maintained in material compliance with its terms and with the requirements of
all applicable statutes, rules and regulations including 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 or administrative exemption;
(iii) with respect to each Plan subject to Title IV of ERISA (A) no “reportable
event” (within the meaning of Section 4043(c) of ERISA) has occurred or is
reasonably expected to occur, excluding any reportable event for which a waiver
could apply, (B) no “accumulated funding deficiency” (within the meaning of
Section 302 of ERISA or Section 412 of the Code), whether or not waived, has
occurred or is reasonably expected to occur that will, individually or in the
aggregate, have a Material Adverse Effect and (C) neither the Partnership nor
any member of its Controlled Group has incurred, or reasonably expects to incur,
any liability under Title IV of ERISA (other than contributions to the Plan or
premiums to the Pension Benefit Guaranty 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) that will,

 

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individually or in the aggregate, have a Material Adverse Effect; and (iv) each
Plan that is intended to be qualified under Section 401(a) of the Code is so
qualified and nothing has occurred, to the knowledge of the Partnership or any
member of its Controlled Group, whether by action or by failure to act, which
would cause the loss of such qualification, except for any such actions or
failures to act that would not, individually or in the aggregate, have a
Material Adverse Effect.

 

(xx)                          Certain Relationships and Related Party
Transactions. No relationship, direct or indirect, exists between or among any
of the Partnership Entities, on the one hand, and any “affiliate,” equity
holder, director, manager, officer, customer or supplier of any of the
Partnership Entities, on the other hand, that is required by the Securities Act
to be disclosed in the SEC Reports that is not so disclosed. There are no
outstanding personal loans, advances (except normal advances for business
expenses in the ordinary course of business) or guarantees of indebtedness by
any Partnership Entity to or for the benefit of any of the executive officers,
directors or managers of any Partnership Entity or their respective family
members.

 

(yy)                          Brokers. There is not a broker, finder or other
party that is entitled to receive from any Partnership Entity any brokerage or
finder’s fee or other fee or commission as a result of any of the transactions
contemplated by this Agreement.

 

(zz)                            No Restrictions on Distributions. The
Partnership is not prohibited, directly or indirectly, from paying or making
distributions with respect to its equity securities, except as described in the
SEC Reports.

 

(aaa)                   Restrictions on Subsidiary Payments to the Partnership. 
No Operating Subsidiary is currently prohibited, directly or indirectly, from
paying any dividends to the Partnership, from making any other distribution on
such subsidiary’s capital units, from repaying to the Partnership any loans or
advances to such subsidiary from the Partnership or from transferring any of
such subsidiary’s property or assets to the Partnership or any Operating
Subsidiary, except as described in the SEC Reports.

 

(bbb)                   Other Sales. The Partnership has not offered, sold or
issued any securities that would be integrated with the offering, issuance and
sale of the Investor Units contemplated by this Agreement pursuant to the
Securities Act and the rules and regulations of the Commission thereunder or the
interpretations thereof by the Commission.

 

(ccc)                      No General Solicitation.  None of the Partnership
Entities or any of its controlled affiliates or any other person acting on its
or their behalf has solicited offers for, or offered or sold, the Investor Units
by means of any form of general solicitation or general advertising within the
meaning of Rule 502(c) of Regulation D or in any manner involving a public
offering within the meaning of Section 4(a)(2) of the Securities Act.

 

(ddd)                   Securities Law Exemptions.  Assuming the accuracy of the
representations and warranties of the Investor and its compliance with its
agreements set forth herein, it is not necessary, in connection with the offer,
issuance and sale of the Investor Units in the manner contemplated by this
Agreement to register the Investor Units under the Securities Act. The
Partnership agrees that neither it nor any of its controlled affiliates nor any
person acting on its behalf will, directly or indirectly, make offers or sales
of any security, or solicit offers to buy any security, under circumstances that
would require the registration of the issuance of the Investor Units under the
Securities Act.

 

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(eee)                      Securities Law Compliance.  The offer, issuance and
sale of the Investor Units, the execution, delivery and performance of the
Subject Documents (other than the Organizational Agreements) and all other
actions by the Partnership contemplated in this Agreement comply and will comply
in all material respects with all applicable requirements of the Securities Act,
the Exchange Act, applicable state securities or “blue sky” laws, and other
applicable laws, and all applicable rules and regulations of the Commission or
any other governmental authority.

 

2.                                The Investor represents and warrants to, and
agrees with, the Partnership as follows:

 

(a)                                 Existence. The Investor is duly organized
and validly existing and in good standing under Delaware law, with all requisite
power and authority to own, lease, use and operate its properties and to conduct
its business as currently conducted, except where the failure to have such power
or authority would not prevent the consummation of the transactions contemplated
by this Agreement and the Registration Rights Agreement.

 

(b)                                 Authorization, Enforceability. The Investor
has all necessary corporate power and authority to execute, deliver and perform
its obligations under this Agreement and the Registration Rights Agreement and
to consummate the transactions contemplated hereby and thereby, and the
execution, delivery and performance by the Investor of this Agreement and the
Registration Rights Agreement has been duly authorized by all necessary action
on the part of the Investor; and this Agreement and the Registration Rights
Agreement constitute the legal, valid and binding obligations of the Investor,
enforceable in accordance with their terms, subject to the Enforceability
Exceptions.

 

(c)                                  No Breach. The execution, delivery and
performance of this Agreement and the Registration Rights Agreement by the
Investor and the consummation by the Investor of the transactions contemplated
hereby and thereby will not (A) conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default under, any
material agreement to which the Investor is a party or by which the Investor is
bound or to which any of the property or assets of the Investor is subject,
(B) conflict with or result in any violation of the provisions of the
organizational documents of the Investor, or (C) violate any statute, order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Investor or the property or assets of the Investor, except
in the cases of clauses (A) and (C), for such conflicts, breaches, violations or
defaults as would not prevent the consummation of the transactions contemplated
by this Agreement and the Registration Rights Agreement.

 

(d)                                 Brokers. There is not a broker, finder or
other party that is entitled to receive from the Investor any brokerage or
finder’s fee or other fee or commission as a result of any of the transactions
contemplated by this Agreement.

 

(e)                                  Investment. The Investor Units are being
acquired for the Investor’s own account or the account of its affiliates, and
with no present intention of distributing the Investor Units or any part
thereof, and the Investor has no present intention of selling or granting any
participation in or otherwise distributing the same in any transaction in
violation of the securities laws of the United States of America or any state,
without prejudice, however, to the Investor’s right at all times to sell or
otherwise dispose of all or any part of the Investor Units under a registration
statement under the Securities Act and applicable state securities Laws or under
an exemption from such registration available thereunder (including, if
available, Rule 144 promulgated thereunder). If the Investor should in the
future decide to

 

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dispose of any of the Investor Units, the Investor understands and agrees
(A) that it may do so only (i) in compliance with the Securities Act and
applicable state securities laws, as then in effect, or pursuant to an exemption
therefrom or (ii) in the manner contemplated by any registration statement
pursuant to which such securities are being offered, and (B) that stop-transfer
instructions to that effect will be in effect with respect to such securities.

 

(f)                                   Accredited Investor. The Investor is an
“accredited investor,” as such term is defined in Rule 501(a) of Regulation D
promulgated under the Securities Act of 1933, as amended, and the investment by
the Investor in the Partnership is for its own account and not for the account
of others. The Investor Units are being acquired for investment and with no
intention of distributing or reselling such Investor Units or any portion
thereof or interest therein in any transaction which would be a violation of the
securities laws of the United States of America or any state or foreign country
or jurisdiction.

 

(g)                                  Reasonable Access. The Investor has been
given reasonable access to full and fair disclosure of all material information
regarding the Partnership and the Investor Units, including reasonable access to
the books and records of the Partnership. The Investor acknowledges and agrees
that it has been provided, to its full satisfaction, with the opportunity to ask
questions concerning the terms and conditions of an investment in the
Partnership and has knowingly and voluntarily elected instead to rely solely on
its own investigation.

 

(h)                                 Restricted Securities. The Investor
understands that the Investor Units are “restricted securities” and have not
been registered under the Securities Act or any applicable state securities
laws. The Investor acknowledges that the Investor Units will bear a restrictive
legend to that effect. The Investor acknowledges and agrees that the Investor
must bear the economic risk of this investment indefinitely, that the Investor
Units purchased by the Investor hereunder may not be sold or transferred or
offered for sale or transfer by it without registration under the Securities Act
and any applicable state securities or Blue Sky laws or the availability of
exemptions therefrom.

 

(i)                                     Independent Evaluation. The Investor has
such knowledge, sophistication and experience in business and financial matters
so as to be capable of evaluating the merits and risks of the prospective
investment in the Investor Units, and has so evaluated the merits and risks of
such investment. The Investor is able to bear the economic risk of an investment
in the Investor Units and, at the present time and in the foreseeable future, is
able to afford a complete loss of such investment.

 

(j)                                    Exemption from Registration. The Investor
understands that the Investor Units are being offered and sold to the Investor
in reliance upon specific exemptions from the registration requirements of
United States federal and state securities laws and that the Partnership is
relying upon the truth and accuracy of, and Investor’s compliance with, the
representations, warranties, agreements, acknowledgments and understandings,
which are true, correct and complete, of the Investor set forth herein in order
to determine the availability of such exemptions and the eligibility of the
Investor to acquire the Investor Units.

 

(k)                                 Pre-Existing Relationship. The Investor has
a substantive pre-existing relationship with the Partnership and was directly
contacted by the Partnership or its agents. The Investor was not identified or
contacted through any marketing by the Partnership.

 

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(l)                                     Short Selling. The Investor represents
that it has not entered into any “short sales” (as defined in Rule 200
promulgated under Regulation SHO under the Exchange Act), whether or not against
the box, nor any forward sale contracts, options, puts, calls, short sales, “put
equivalent positions” (as defined in Rule 16a-1(h) under the Exchange Act) nor
any other similar arrangements, or sales and other transactions through non-U.S.
broker dealers or foreign regulated brokers of the Common Units owned by it
since the time it first began discussions with the Partnership about the
transactions contemplated by this Agreement.

 

3.                                Subject to the terms and conditions herein set
forth, the Partnership agrees to issue and sell the Investor Units to the
Investor, and the Investor agrees to purchase the Investor Units from the
Partnership, at a purchase price per Common Unit of $11.00.

 

4.                                      (a)                                 The
Investor Units to be purchased by the Investor hereunder, shall be delivered by
the Partnership to the Investor against payment by or on behalf of the Investor
of the purchase price therefor by wire transfer of Federal (same-day) funds to
the account specified by the Partnership to the Investor at least forty-eight
hours in advance.  Settlement for the Investor Units shall be effected by free
delivery of such Investor Units by the Partnership or its transfer agent to the
Investor’s account, or to the account of the Investor’s designee, at The
Depository Trust Company through its Deposit and Withdrawal at Custodian System
or by such other means of delivery as may be mutually agreed upon by the parties
hereto.  The time and date of such delivery and payment shall be, 9:30 a.m., New
York City time, on November 22, 2016 or such other time and date as the Investor
and the Partnership may agree upon in writing. Such time and date for delivery
of the Investor Units is herein called the “Closing Date.”

 

(b)                                 The documents to be delivered on the Closing
Date by or on behalf of the parties hereto pursuant to Section 7 hereof,
including the cross receipt for the Investor Units and any additional documents
requested by the Investor pursuant to Section 7(e) hereof, will be delivered at
the offices of Andrews Kurth Kenyon LLP, 600 Travis Street, Suite 4200, Houston,
Texas 77002 (the “Closing Location”) on the Closing Date.  A meeting will be
held at the Closing Location at 5:00 p.m., New York City time, on the New York
Business Day next preceding the Closing Date, at which meeting the final drafts
of the documents to be delivered pursuant to the preceding sentence will be
available for review by the parties hereto.  For the purposes of this Section 4,
“New York Business Day” shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York are
generally authorized or obligated by law or executive order to close.

 

5.                                The Partnership agrees with the Investor to:

 

(a)                                 use the net proceeds received by it from the
sale of the Investor Units for repayment of indebtedness outstanding under the
Credit Agreement; and

 

(b)                                 use its best efforts to list, subject to
notice of issuance, the Investor Units on the Exchange.

 

6.                                      Each of the parties hereto shall use its
commercially reasonable efforts promptly to take or cause to be taken all action
and promptly to do or cause to be done all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement. Without limiting the foregoing, the
Partnership and the Investor shall each use its commercially reasonable efforts
to make all filings and obtain all Governmental Licenses that may be necessary
or, in the

 

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reasonable opinion of the other parties, as the case may be, advisable for the
consummation of the transactions contemplated herein. The Partnership shall
promptly and accurately respond, and shall use its commercially reasonable
efforts to cause its transfer agent to respond, to reasonable requests for
information (which is otherwise not publicly available) made by the Investor or
its auditors relating to the actual holdings of the Investor or its accounts;
provided, that the Partnership shall not be obligated to provide any such
information that could reasonably result in a violation of applicable laws or
conflict with the Partnership’s insider trading policy or a confidentiality
obligation of the Partnership. The Partnership shall use its commercially
reasonable efforts to cause its transfer agent to reasonably cooperate with the
Investor to ensure that the Investor Units are validly and effectively issued to
the Investor and that the Investor’s ownership of the Investor Units following
the Closing Date is accurately reflected on the appropriate books and records of
the Partnership’s transfer agent.

 

7.                                      The obligations of the Investor
hereunder, as to the Investor Units to be issued and sold on the Closing Date,
shall be subject, in its discretion, to the condition that all representations
and warranties and other statements of the Partnership herein are, as of the
date hereof and of the Closing Date, true and correct, the condition that the
Partnership shall have performed all of its obligations hereunder theretofore to
be performed by it, and the following additional conditions:

 

(a)                                 Andrews Kurth Kenyon LLP, counsel for the
Partnership, shall have furnished to the Investor their written opinion, dated
as of the Closing Date, in form and substance reasonably satisfactory to the
Investor;

 

(b)                                 None of the Partnership Entities shall have
sustained since the date of the latest audited financial statements included or
incorporated by reference in the SEC Reports any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth SEC Reports, the effect of which, is in
the Investor’s judgment so material and adverse as to make it impracticable or
inadvisable to proceed with the purchase of the Investor Units on the terms and
in the manner contemplated in this Agreement;

 

(c)                                  The Investor Units at the Closing Date
shall have been duly listed, subject to notice of issuance, on the Exchange;

 

(d)                                 The conditions to closing the Public
Offering under the Underwriting Agreement have been satisfied without the waiver
of any such conditions thereunder;

 

(e)                                  The Partnership shall have furnished or
caused to be furnished to the Investor, certificates of officers of the General
Partner, dated as of the Closing Date, reasonably satisfactory to the Investor
as to such matters as the Investor may reasonably request, including, without
limitation:

 

(i)                                     the accuracy of the representations and
warranties of the Partnership herein at the Closing Date;

 

(ii)                                  the performance by the Partnership of all
of its obligations hereunder to be performed at or prior the Closing Date; and

 

(iii)                               the matters set forth in subsection (b) of
this Section;

 

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(f)                                   The Partnership shall have executed and
delivered to the Investor the Registration Rights Agreement;

 

(g)                                  The Public Offering shall have been
consummated; and

 

(h)                                 The acquisitions contemplated by that
certain Purchase and Sale Agreement, dated October 6, 2016, by and among Sanchez
Energy Corporation, SN Midstream, LLC and the Partnership and that certain
Purchase and Sale Agreement, dated October 6, 2016, by and among SN Cotulla
Assets, LLC, SN Palmetto, LLC, SEP Holdings IV, LLC and the Partnership shall
have been consummated.

 

8.                                      (a)  The Partnership agrees to indemnify
and hold harmless the Investor, the directors, officers, employees, affiliates
and agents of the Investor and each person who controls the Investor within the
meaning of either the Securities Act or the Exchange Act (the “Investor Related
Parties”) against any and all losses, claims, damages or liabilities (or actions
in respect thereof), joint or several, to which they or any of them may become
subject that arise out of or are in any way related to the breach of any
representations, warranties or covenants of the Partnership contained herein;
provided, however, that such claim for indemnification relating to a breach of
the representations or warranties is made prior to the expiration of the
survival period for such representations or warranties; and provided, further,
that no Investor Related Party shall be entitled to recover special,
consequential (including lost profits) or punitive damages other than those of
third parties for which Investor is or may be liable. Notwithstanding anything
to the contrary, consequential damages shall not be deemed to include diminution
in value of the Investor Units, which is specifically included in damages
covered by Investor Related Parties’ indemnification above. This indemnity
agreement will be in addition to any liability which the Partnership may
otherwise have.

 

(b)                                 The Investor agrees to indemnify and hold
harmless the Partnership, the General Partner, each of their respective
directors, each of their respective officers, and each person who controls the
Partnership within the meaning of either the Securities Act or the Exchange Act
(the “Partnership Related Parties”), against any and all losses, claims, damages
or liabilities (or actions in respect thereof), joint or several, to which they
or any of them may become subject that arise out of or are in any way related to
the breach of any representations, warranties or covenants of the of the
Partnership contained herein; provided, however, such claim for indemnification
relating to a breach of the representations or warranties is made prior to the
expiration of the survival period for such representations or warranties; and
provided, further, that no Partnership Related Party shall be entitled to
recover special, consequential (including lost profits) or punitive damages
other than those of third parties for which the Partnership is or may be liable.

 

(c)                                  Promptly after receipt by an indemnified
party under this Section 8 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the commencement thereof; but the failure so to notify the
indemnifying party (i) will not relieve it from liability under
paragraph (a) or (b) above unless and to the extent it did not otherwise learn
of such action and such failure results in the forfeiture by the indemnifying
party of substantial rights and defenses and (ii) will not, in any event,
relieve the indemnifying party from any obligations to any indemnified party
other than the indemnification obligation provided in paragraph (a) or
(b) above.  The indemnifying party shall be entitled to appoint counsel of the
indemnifying party’s choice at the indemnifying party’s expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified

 

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party or parties except as set forth below); provided, however, that such
counsel shall be satisfactory to the indemnified party.  Notwithstanding the
indemnifying party’s election to appoint counsel to represent the indemnified
party in an action, the indemnified party shall have the right to employ
separate counsel (including local counsel), and the indemnifying party shall
bear the reasonable fees, costs and expenses of such separate counsel if (i) the
use of counsel chosen by the indemnifying party to represent the indemnified
party would present such counsel with a conflict of interest, (ii) the actual or
potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of
such action or (iv) the indemnifying party shall authorize the indemnified party
to employ separate counsel at the expense of the indemnifying party.  An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
(i) includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding and (ii) does
not include an admission of fault, culpability or a failure to act, by or on
behalf of any indemnified party.

 

9.                                      The respective indemnities, agreements,
representations, warranties and other statements of the Partnership and the
Investor, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of the Investor or any controlling person of the Investor,
or the Partnership, or any officer or director of the General Partner or
controlling person of the Partnership, and shall survive delivery of and payment
for the Investor Units.

 

10.                               If for any reason other than a breach of the
Investor of any of its representations, warranties and covenants hereunder, any
Investor Units are not delivered by or on behalf of the Partnership as provided
herein, the Partnership will reimburse the Investor for all out-of-pocket
expenses of the Investor, including fees and disbursements of counsel,
reasonably incurred by the Investor in making preparations for the purchase,
sale and delivery of the Investor Units not so delivered, but the Partnership
shall then be under no further liability to the Investor except as provided in
Section 8 hereof.

 

11.                               All statements, requests, notices and
agreements hereunder shall be in writing, and if to the Investor shall be
delivered or sent by mail, telex or facsimile transmission to SN UR Holdings,
LLC at 1000 Main Street, Suite 300, Houston, Texas 77002 Attention: President,
facsimile number (713) 756-2784; and if to the Partnership shall be delivered or
sent by mail, telex or facsimile transmission to Sanchez Production Partners LP
at 1000 Main Street, Suite 300, Houston, Texas 77002, Attention: Chief Financial
Officer, facsimile number (832) 742-3823.  Any such statements, requests,
notices or agreements shall take effect upon receipt thereof.

 

12.                               This Agreement shall be binding upon, and
inure solely to the benefit of, the Investor, the Partnership and, to the extent
provided in Section 8 hereof, the officers and directors of the General Partner
and each person who controls the Partnership or the Investor, and their
respective heirs, executors, administrators, successors and assigns, and no
other person shall acquire or have any right under or by virtue

 

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of this Agreement.  No purchaser of any of the Investor Units from the Investor
shall be deemed a successor or assign by reason merely of such purchase.

 

13.                               Time shall be of the essence of this
Agreement.  As used herein, the term “business day” shall mean any day when the
Commission’s office in Washington, D.C. is open for business.

 

14.                               This Agreement supersedes all prior agreements
and understandings (whether written or oral) between the Partnership and the
Investor, or any of them, with respect to the subject matter hereof.

 

15.                               THIS AGREEMENT AND ANY MATTERS RELATED TO THIS
TRANSACTION SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF TEXAS WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS THAT WOULD
RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAWS OF THE STATE OF TEXAS. 
The Partnership and the Investor agree that any suit or proceeding arising in
respect of this agreement or our engagement will be tried exclusively in the
U.S. District Court for the Southern District of Texas or, if that court does
not have subject matter jurisdiction, in any state court located in The City of
Houston, Harris County and the Partnership and the Investor agree to submit to
the jurisdiction of, and to venue in, such courts.

 

16.                               The Partnership and the Investor hereby
irrevocably waive, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby.

 

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If the foregoing is in accordance with the Investor’s understanding, please sign
and return to us counterparts hereof, and upon the acceptance hereof by the
Investor, this letter and such acceptance hereof shall constitute a binding
agreement between the Investor and the Partnership.

 

 

SANCHEZ PRODUCTION PARTNERS LP

 

 

 

By:

Sanchez Production Partners GP LLC,

 

 

its general partner

 

 

 

 

 

By:

/s/ Charles C. Ward

 

 

 

 

Name:

Charles C. Ward

 

 

 

 

Title:

Chief Financial Officer

 

Signature Page to Common Unit Purchase Agreement

 

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The foregoing Agreement is hereby

 

confirmed and accepted as of the

 

date first above written.

 

 

 

 

 

SN UR HOLDINGS, LLC

 

 

 

 

 

By:

/s/ Antonio R. Sanchez, III

 

 

Name: Antonio R. Sanchez, III

 

 

Title: Chief Executive Officer

 

 

Signature Page to Common Unit Purchase Agreement

 

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