Exhibit 10.1

EXECUTION VERSION

J.P. MORGAN SECURITIES LLC

PURCHASE AGREEMENT

CALLON PETROLEUM COMPANY

6.375% Senior Notes due 2026

Purchase Agreement

May 31, 2018

J.P. Morgan Securities LLC

As Representative of the

several Initial Purchasers

listed in Schedule I hereto

c/o J.P. Morgan Securities LLC

383 Madison Avenue

New York, New York 10179

Ladies and Gentlemen:

Callon Petroleum Company, a Delaware corporation (the “Company”), proposes to
issue and sell to the several initial purchasers listed in Schedule 1 hereto
(the “Initial Purchasers”), for whom you are acting as representative (the
“Representative”), $400,000,000 principal amount of its 6.375% Senior Notes due
2026 (the “Securities”). The Securities will be issued pursuant to an Indenture,
to be dated as of June 7, 2018 (the “Indenture”), among the Company, the
guarantors listed in Schedule 2 hereto (the “Guarantors”) and U.S. Bank National
Association, as trustee (the “Trustee”), and will be guaranteed on an unsecured
senior basis by the Guarantors (the “Guarantees”).

If one entity is listed on Schedule 2 hereto, all references to Guarantors shall
refer only to Callon Petroleum Operating Company, and all references to
Guarantees shall refer to a Guarantee by Callon Petroleum Operating Company.

The Securities will be sold to the Initial Purchasers without being registered
under the Securities Act of 1933, as amended (the “Securities Act”), in reliance
upon an exemption therefrom. The Company and the Guarantors have prepared a
preliminary offering memorandum dated May 31, 2018 (the “Preliminary Offering
Memorandum”) and will prepare an offering memorandum dated the date hereof (the
“Offering Memorandum”) setting forth information concerning the Company, the
Guarantors and the Securities. Copies of the Preliminary Offering Memorandum
have been, and copies of the Offering Memorandum will be, delivered by the
Company to the Initial Purchasers pursuant to the terms of this purchase
agreement (the “Agreement”). The Company hereby confirms that it has authorized
the use of the Preliminary Offering Memorandum, the other Time of Sale
Information (as defined below) and the Offering Memorandum in connection with
the offering and resale of the Securities by the

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Initial Purchasers in the manner contemplated by this Agreement. Capitalized
terms used but not defined herein shall have the meanings given to such terms in
the Preliminary Offering Memorandum. References herein to the Preliminary
Offering Memorandum, the Time of Sale Information and the Offering Memorandum
shall be deemed to refer to and include any document incorporated by reference
therein and any reference to “amend,” “amendment” or “supplement” with respect
to the Preliminary Offering Memorandum or the Offering Memorandum shall be
deemed to refer to and include any documents filed after such date and
incorporated by reference therein.

At or prior to the Time of Sale (as defined below), the Company had prepared the
following information (collectively, the “Time of Sale Information”): the
Preliminary Offering Memorandum, as supplemented and amended by the written
communications listed on Annex A hereto.

“Time of Sale” means 3:30 P.M., New York City time, on May 31, 2018.

On May 29, 2018, the Company entered into a consent and agreement (the “Credit
Agreement Consent”) in connection with its Sixth Amended and Restated Credit
Agreement, dated as of May 25, 2017, among the Company, the lenders party
thereto and JPMorgan Chase Bank, N.A., as administrative agent, as amended by
that certain Master Assignment, Borrowing Base Increase Agreement and Amendment
No. 1, dated as of April 5, 2018, and as further amended from time to time (the
“Credit Agreement”) to permit the offering of the Securities.

Holders of the Securities (including the Initial Purchasers and their direct and
indirect transferees) will be entitled to the benefits of a Registration Rights
Agreement, to be dated the Closing Date (as defined below) and in the form to be
agreed between the Company and the Representative (the “Registration Rights
Agreement”), pursuant to which the Company and the Guarantors will agree to file
one or more registration statements with the Securities and Exchange Commission
(the “Commission”) providing for the registration under the Securities Act of
the Securities or the Exchange Securities referred to (and as defined) in the
Registration Rights Agreement and the related Guarantees.

The Company and the Guarantors hereby confirm their agreement with the several
Initial Purchasers concerning the purchase and sale of the Securities, as
follows:

1. Purchase and Resale of the Securities.

(a) The Company agrees to issue and sell the Securities to the several Initial
Purchasers as provided in this Agreement, and each Initial Purchaser, on the
basis of the representations, warranties and agreements set forth herein and
subject to the conditions set forth herein, agrees, severally and not jointly,
to purchase from the Company the respective principal amount of Securities set
forth opposite such Initial Purchaser’s name in Schedule 1 hereto at a price
equal to 98.50% of the principal amount thereof plus accrued interest, if any,
from June 7, 2018 to the Closing Date. The Company will not be obligated to
deliver any of the Securities except upon payment for all the Securities to be
purchased as provided herein.

 

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

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

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

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

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

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

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

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

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

 

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Company or the Guarantors with respect thereto. Any review by the Representative
or any Initial Purchaser of the Company, the Guarantors, and the transactions
contemplated hereby or other matters relating to such transactions will be
performed solely for the benefit of the Representative or such Initial
Purchaser, as the case may be, and shall not be on behalf of the Company, the
Guarantors or any other person.

2. Payment and Delivery.

(a) Payment for and delivery of the Securities will be made at the offices of
Simpson Thacher & Bartlett LLP at 10:00 A.M., New York City time, on June 7,
2018, or at such other time or place on the same or such other date, not later
than the fifth business day thereafter, as the Representative and the Company
may agree upon in writing. The time and date of such payment and delivery is
referred to herein as the “Closing Date.”

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

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

(a) Preliminary Offering Memorandum, Time of Sale Information and Offering
Memorandum. The Preliminary Offering Memorandum, as of its date, did not, the
Time of Sale Information, at the Time of Sale, did not, and at the Closing Date,
will not, and the Offering Memorandum, in the form first used by the Initial
Purchasers to confirm sales of the Securities and as of the Closing Date, will
not, contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that the
Company and the Guarantors make no representation or warranty with respect to
any statements or omissions made in reliance upon and in conformity with
information relating to any Initial Purchaser furnished to the Company in
writing by such Initial Purchaser through the Representative expressly for use
in the Preliminary Offering Memorandum, the Time of Sale Information or the
Offering Memorandum.

(b) Additional Written Communications. The Company and the Guarantors (including
their agents and representatives, other than the Initial Purchasers in their
capacity as such) have not prepared, made, used, authorized, approved or
referred to and will not prepare, make, use, authorize, approve or refer to any
written communication that constitutes an offer to sell or solicitation of an
offer to buy the Securities (each such communication by the Company and the
Guarantors or their agents and representatives (other than a communication
referred to in clauses (i) and (ii) below) an “Issuer Written Communication”)
other than (i) the Preliminary

 

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Offering Memorandum, (ii) the Offering Memorandum, (iii) the documents listed on
Annex A hereto, including a term sheet substantially in the form of Annex B
hereto, which constitute part of the Time of Sale Information, and (iv) any
electronic road show or other written communications, in each case used in
accordance with Section 4(c). Each such Issuer Written Communication, when taken
together with the Time of Sale Information at the Time of Sale, did not, and at
the Closing Date will not, contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
provided that the Company and the Guarantors make no representation or warranty
with respect to any statements or omissions made in each such Issuer Written
Communication in reliance upon and in conformity with information relating to
any Initial Purchaser furnished to the Company in writing by such Initial
Purchaser through the Representative expressly for use in any Issuer Written
Communication.

(c) Incorporated Documents. The documents incorporated by reference in each of
the Time of Sale Information and the Offering Memorandum, when filed with the
Commission conformed in all material respects to the requirements of the
Exchange Act, and none of such documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and any further
documents so filed and incorporated by reference in each of the Time of Sale
Information and the Offering Memorandum, when such documents are filed with the
Commission, will conform in all material respects to the requirements of the
Exchange Act and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.

(d) Financial Statements. The financial statements (including the related notes
thereto) of the Company and its consolidated subsidiaries included or
incorporated by reference in each of the Time of Sale Information and the
Offering Memorandum comply in all material respects with the applicable
requirements of the Securities Act and the Exchange Act, as applicable, and
present fairly in all material respects the financial position of the Company
and its consolidated subsidiaries as of the dates indicated and the results of
their operations and the changes in their cash flows for the periods specified;
such financial statements have been prepared in conformity with generally
accepted accounting principles in the United States applied on a consistent
basis throughout the periods covered thereby, and any supporting schedules
included or incorporated by reference in each of the Time of Sale Information
and the Offering Memorandum present fairly in all material respects the
information required to be stated therein; and the other financial information
included or incorporated by reference in each of the Time of Sale Information
and the Offering Memorandum has been derived from the accounting records of the
Company and its consolidated subsidiaries and presents fairly in all material
respects the information shown thereby. The interactive data in eXtensible
Business Reporting Language included or incorporated by reference in each of the
Preliminary Offering Memorandum, the Time of Sale Information and the Offering
Memorandum fairly presents the information called for in all material respects
and is prepared in accordance with the Commission’s rules and guidelines
applicable thereto.

(e) [Reserved].

 

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(f) [Reserved].

(g) Cybersecurity. (i)(x) Except as disclosed in the Preliminary Offering
Memorandum, the Time of Sale Information and the Offering Memorandum, there has
been no security breach or other material compromise of or relating to any of
the Company’s or its subsidiaries’ information technology and computer systems,
networks, hardware, software, data (including the data of their respective
customers, employees, suppliers, vendors and any third-party data maintained by
or on behalf of them), equipment or technology (collectively, “IT Systems and
Data”) and (y) the Company and its subsidiaries have not been notified of, and
have no knowledge of any event or condition that would reasonably be expected to
result in, any security breach or other material compromise to their IT Systems
and Data, (ii) the Company and its subsidiaries are presently in compliance with
all applicable laws or statutes and all judgments, orders, rules and regulations
of any court or arbitrator or governmental or regulatory authority and internal
policies relating to the privacy and security of IT Systems and Data and to the
commercially reasonable protection of such IT Systems and Data from unauthorized
use, access, misappropriation or modification, except as would not, in the case
of clause (i) and (ii) above, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, and (iii) the Company and its
subsidiaries have implemented backup and disaster recovery technology reasonably
consistent with industry standards and practices.

(h) No Material Adverse Change. Except as described in the Time of Sale
Information or the Offering Memorandum, since the date of the most recent
financial statements of the Company included or incorporated by reference in
each of the Time of Sale Information and the Offering Memorandum, (i) there has
not been any change in the capital stock (other than the issuance of shares of
common stock upon exercise of stock options described as outstanding in, and the
grant of options and awards under existing equity incentive plans described in,
the Time of Sale Information and the Offering Memorandum) or material change in
short-term debt or long-term debt of the Company or any of its subsidiaries, or
any dividend or distribution of any kind declared, set aside for payment, paid
or made by the Company on any class of capital stock, or any material adverse
change, or any development involving a prospective material adverse change, in
or affecting the business, properties, management, financial position,
stockholders’ equity, or results of operations of the Company and its
subsidiaries taken as a whole; (ii) neither the Company nor any of its
subsidiaries has entered into any transaction or agreement (whether or not in
the ordinary course of business) that is material to the Company and its
subsidiaries taken as a whole or incurred any liability or obligation, direct or
contingent, that is material to the Company and its subsidiaries taken as a
whole; and (iii) neither the Company nor any of its subsidiaries has sustained
any loss or interference with its business that is material to the Company and
its subsidiaries taken as a whole and that is either from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any labor
disturbance or dispute or any action, order or decree of any court or arbitrator
or governmental or regulatory authority, except in each case as otherwise
disclosed in each of the Time of Sale Information and the Offering Memorandum.

(i) Organization and Good Standing. The Company, the Guarantors and each of
their respective subsidiaries have been duly organized and are validly existing
and in good standing under the laws of their respective jurisdictions of
organization, are duly qualified to do business and are in good standing in each
jurisdiction in which their respective ownership or

 

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lease of property or the conduct of their respective businesses requires such
qualification, and have all power and authority necessary to own or hold their
respective properties and to conduct the businesses in which they are engaged,
except where the failure to be so qualified or in good standing or have such
power or authority would not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the business, properties,
management, financial position, stockholders’ equity, results of operations or
prospects of the Company and its subsidiaries taken as a whole or on the
performance by the Company and the Guarantors of their obligations under this
Agreement, the Securities and the Guarantees, as applicable (a “Material Adverse
Effect”). The subsidiaries listed in Schedule 2 to this Agreement are the only
significant subsidiaries of the Company.

(j) Capitalization. The Company has an authorized capitalization as set forth in
each of the Time of Sale Information and the Offering Memorandum under the
heading “Capitalization”; and all the outstanding shares of capital stock of the
Company have been duly and validly authorized and issued and are fully paid and
non-assessable. All the outstanding shares of capital stock or other equity
interests of each subsidiary owned, directly or indirectly, by the Company 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 (collectively, “Liens”), except for Liens
pursuant to the Company’s Credit Agreement as described in each of the Time of
Sale Information and the Offering Memorandum.

(k) Due Authorization. The Company and each of the Guarantors have full right,
power and authority to execute and deliver this Agreement, the Securities, the
Indenture (including each Guarantee set forth therein), the Exchange Securities
(including the related Guarantees), the Registration Rights Agreement and the
Credit Agreement Consent (collectively, the “Transaction Documents”) and to
perform their respective obligations hereunder and thereunder; and all action
required to be taken for the due and proper authorization, execution and
delivery of each of the Transaction Documents and the consummation of the
transactions contemplated thereby has been duly and validly taken.

(l) The Exchange Securities. On the Closing Date, the Exchange Securities
(including the related Guarantees) will have been duly authorized by the Company
and each of the Guarantors and, when duly executed, authenticated, issued and
delivered as contemplated by the Registration Rights Agreement, will be duly and
validly issued and outstanding and will constitute valid and legally binding
obligations of the Company, as issuer, and each of the Guarantors, as guarantor,
enforceable against the Company and each of the Guarantors in accordance with
their terms, subject to the Enforceability Exceptions, and will be entitled to
the benefits of the Indenture.

(m) The Indenture. The Indenture has been duly authorized by the Company and
each of the Guarantors and on the Closing Date will be duly executed and
delivered 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, 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
(A) bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or
similar laws

 

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affecting the enforcement of creditors’ rights generally or by equitable
principles relating to enforceability and (B) by public policy, applicable law
relating to fiduciary duties and indemnification and implied covenant of good
faith and fair dealing (collectively, the “Enforceability Exceptions”). The
Indenture will conform in all material respects to the requirements of the Trust
Indenture Act of 1939, as amended (the “Trust Indenture Act”) (except that the
Indenture is not qualified thereunder), and the rules and regulations of the
Commission applicable to an indenture that is qualified thereunder.

(n) The Securities and the Guarantees. The Securities 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, assuming due
authorization of the Securities by the Trustee, will be duly and validly issued
and outstanding and 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 Securities 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.

(o) Purchase and Registration Rights Agreements. This Agreement has been duly
authorized, executed and delivered by the Company and each of the Guarantors;
and the Registration Rights Agreement has been duly authorized by the Company
and each of the Guarantors and on the Closing Date will be duly executed and
delivered 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, 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, subject to the Enforceability Exceptions, and except
that rights to indemnity and contribution thereunder may be limited by
applicable law and public policy.

(p) Credit Agreement Consent. The Credit Agreement Consent has been duly
authorized, executed and delivered by the Company and the Guarantors and
constitutes a valid and legally binding agreement of the Company and the
Guarantors enforceable against the Company and the Guarantors in accordance with
its terms, subject to the Enforceability Exceptions.

(q) [Reserved].

(r) Descriptions of the Transaction Documents. The Transaction Documents each
conform or will conform in all material respects to the respective descriptions
thereof contained in each of the Time of Sale Information and the Offering
Memorandum.

(s) No Violation or Default. None of the Company, the Guarantors or any of their
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 (including the Credit

 

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Agreement) or other agreement or instrument to which the Company, the Guarantors
or any of their respective subsidiaries is a party or by which the Company, the
Guarantors or any of their respective subsidiaries is bound or to which any of
the property or assets of the Company, the Guarantors or any of their respective
subsidiaries is subject; 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 would not, individually or in the
aggregate, have a Material Adverse Effect.

(t) No Conflicts. The execution, delivery and performance by the Company and
each of the Guarantors of each of the Transaction Documents to which each is a
party, the issuance and sale of the Securities and the issuance of the
Guarantees, the issuance of the Exchange Notes and the related Guarantees, and
compliance by the Company and each of the Guarantors with the terms thereof and
the consummation of the transactions contemplated by the Transaction Documents
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, 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 would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

(u) No Consents Required. No consent, approval, authorization, order,
registration or qualification of or with any court or arbitrator or governmental
or regulatory authority is required for the execution, delivery and performance
by the Company and each of the Guarantors of each of the Transaction Documents
to which each is a party, the issuance and sale of the Securities and the
issuance of the Guarantees, the issuance of the Exchange Notes and the related
Guarantees, and compliance by the Company and each of the Guarantors with the
terms thereof and the consummation of the transactions contemplated by the
Transaction Documents, except for such consents, approvals, authorizations,
orders and registrations or qualifications as may be required (i) under
applicable state securities laws in connection with the purchase and resale of
the Securities by the Initial Purchasers, (ii) with respect to the Exchange
Securities (including the related Guarantees) under the Securities Act, the
Trust Indenture Act and applicable state securities laws as contemplated by the
Registration Rights Agreement, and (iii) for such consents, approvals,
authorizations, orders, registrations or qualifications which if not obtained or
made would not, individually or in the aggregate, have a Material Adverse
Effect.

(v) Legal Proceedings. Except as described in each of the Time of Sale
Information and the Offering Memorandum, there are no legal, governmental or
regulatory investigations, actions, suits or proceedings pending to which the
Company, the Guarantors or any of their respective subsidiaries is a party or to
which any property of the Company, the Guarantors or any of their respective
subsidiaries is the subject that, individually or in the aggregate, if
determined

 

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adversely to the Company, the Guarantors or any of their respective
subsidiaries, could reasonably be expected to have a Material Adverse Effect; to
the knowledge of the Company, no such investigations, actions, suits or
proceedings are threatened or contemplated by any governmental or regulatory
authority or threatened by others.

(w) Independent Accountants. Ernst & Young LLP, who has certified certain
financial statements of the Company and its subsidiaries, is an independent
registered public accounting firm with respect to the Company and its
subsidiaries within the applicable rules and regulations adopted by the
Commission and the Public Company Accounting Oversight Board (United States) and
as required by the Securities Act.

(x) Independent Accountants. Grant Thornton LLP is an independent registered
public accounting firm with respect to the Company and its subsidiaries within
the applicable rules and regulations adopted by the Commission and the Public
Company Accounting Oversight Board (United States) and as required by the
Securities Act.

(y) [Reserved].

(z) [Reserved].

(aa) Title to Real and Personal Property. Except as otherwise set forth in each
of the Time of Sale Information and the Offering Memorandum or such as in the
aggregate does not now cause or will in the future cause a Material Adverse
Effect, the Company, the Guarantors and each of their respective subsidiaries
own their respective properties as follows: (i) with respect to wells (including
leasehold interests and appurtenant personal property) and non-producing oil and
natural gas properties (including undeveloped locations on leases held by
production and those leases not held by production), such title is good and free
and clear of all liens, security interests, pledges, charges, encumbrances,
mortgages and restrictions, (ii) with respect to non-producing properties in
exploration prospects, such title was investigated in accordance with customary
industry procedures prior to the acquisition thereof by the Company, the
Guarantors or their respective subsidiaries, (iii) with respect to real property
other than oil and gas interests, such title is good and marketable and free and
clear of all liens, security interests, pledges, charges, encumbrances,
mortgages and restrictions, and (iv) with respect to personal property other
than that appurtenant to oil and gas interests, such title is free and clear of
all liens, security interests, pledges, charges, encumbrances, mortgages and
restrictions. No real property owned, leased, licensed or used by the Company,
the Guarantors or their respective subsidiaries lies in an area which is, or to
the knowledge of the Company will be, subject to restrictions which would
prohibit, and no statements of facts relating to the actions or inaction of
another person or entity or his or its ownership, leasing, licensing or use of
any real or personal property exists or will exist which would prevent, the
continued effective ownership, leasing, licensing, exploration, development or
production or use of such real property in the business of the Company, the
Guarantors or their respective subsidiaries as presently conducted or as each of
the Time of Sale Information and the Offering Memorandum indicates they
contemplate conducting, except as may be described in the Time of Sale
Information and the Offering Memorandum or such as in the aggregate do not now
cause and will not in the future cause a Material Adverse Effect.

 

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(bb) Title to Intellectual Property. The Company, the Guarantors and each of
their respective 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 as currently conducted and as proposed to be
conducted, and the conduct of their respective businesses will not conflict in
any material respect with any such rights of others except as would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect. The Company, the Guarantors and each of their respective
subsidiaries have not received any notice of any claim of infringement,
misappropriation or conflict with any such rights of others in connection with
its patents, patent rights, licenses, inventions, trademarks, service marks,
trade names, copyrights and know-how, which could reasonably be expected to
result in a Material Adverse Effect.

(cc) No Undisclosed Relationships. No relationship, direct or indirect, exists
between or among the Company, the Guarantors and their respective subsidiaries,
on the one hand, and the directors, officers, stockholders, customers or
suppliers of the Company, the Guarantors or any of their respective
subsidiaries, on the other, that would be required by the Securities Act to be
described in a registration statement on Form S-1 to be filed with the
Commission and that is not so described in each of the Time of Sale Information
and the Offering Memorandum.

(dd) Investment Company Act. Neither the Company nor any of the Guarantors is
and, after giving effect to the offering and sale of the Securities and the
application of the proceeds thereof as described in each of the Time of Sale
Information and the Offering Memorandum, none of them will be required to
register as 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 Commission thereunder (collectively, the
“Investment Company Act”).

(ee) Taxes. The Company, the Guarantors and their respective 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 to the extent that
the failure to file such tax returns and/or pay such taxes would not,
individually and in the aggregate, have a Material Adverse Effect; and except as
otherwise disclosed in each of the Time of Sale Information and Offering
Memorandum, there is no tax deficiency that has been, or could reasonably be
expected to be, asserted against the Company, the Guarantors or any of their
respective subsidiaries or any of their respective properties or assets.

(ff) Licenses and Permits. The Company, the Guarantors and their respective
subsidiaries possess all licenses, certificates, permits and other
authorizations issued by, and have made all declarations and 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 as described in each of
the Time of Sale Information and Offering Memorandum, except where the failure
to possess or make the same would not, individually or in the aggregate, have a
Material Adverse Effect; and except as described in each of the Time of Sale
Information and Offering Memorandum, neither the Company, the Guarantors nor any
of their respective subsidiaries has received notice of any

 

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revocation or modification of any such license, certificate, permit or
authorization or has any reason to believe that any such license, certificate,
permit or authorization will not be renewed in the ordinary course.

(gg) No Labor Disputes. Except as would not reasonably be expected to result in
a Material Adverse Effect, no labor disturbance by or dispute with employees of
the Company, the Guarantors or any of their respective subsidiaries exists or,
to the knowledge of the Company or the Guarantors, is contemplated or
threatened, and neither the Company nor the Guarantors are aware of any existing
or imminent labor disturbance by, or dispute with, the employees of any of their
or their respective subsidiaries’ principal suppliers, contractors or customers.

(hh) Compliance with and Liability under Environmental Laws. (i) The Company,
the Guarantors and their respective subsidiaries (A) are in compliance with any
and all applicable federal, state, local and foreign laws, rules, regulations,
requirements, decisions, judgments, decrees, orders and the common law relating
to pollution or the protection of the environment, natural resources or human
health or safety, including those relating to the generation, storage,
treatment, use, handling, transportation, Release (as defined below) or threat
of Release of Hazardous Materials (as defined below) (collectively,
“Environmental Laws”), (B) 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,
(C) have not received notice of any actual or potential liability under or
relating to, or actual or potential violation of, any Environmental Laws,
including for the investigation or remediation of any Release or threat of
Release of Hazardous Materials, and have no knowledge of any event or condition
that would reasonably be expected to result in any such notice, (D) are not
conducting or paying for, in whole or in part, any investigation, remediation or
other corrective action pursuant to any Environmental Law at any location, and
(E) are not a party to any order, decree or agreement that imposes any
obligation or liability under any Environmental Law, 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 matter as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect; and (iii) except as described in
each of the Time of Sale Information and Offering Memorandum, (A) 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, (B) the Company and its subsidiaries are not aware of any facts or
issues regarding compliance with Environmental Laws, or liabilities or other
obligations under Environmental Laws, including the Release or threat of Release
of Hazardous Materials, that could reasonably be expected to have a material
effect on the capital expenditures, earnings or competitive position of the
Company and its subsidiaries, and (C) none of the Company and its subsidiaries
anticipates material capital expenditures relating to any Environmental Laws.

(ii) Hazardous Materials. There has been no storage, generation, transportation,
use, handling, treatment, Release or threat of Release of Hazardous Materials by
or caused by the Company, the Guarantors or any of their respective subsidiaries
(or, to the knowledge of the Company, the Guarantors or any of their respective
subsidiaries, any other entity (including any predecessor) for whose acts or
omissions the Company, the Guarantors or any of their respective

 

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subsidiaries is or could reasonably be expected to be liable) at, on, under or
from any property or facility now or previously owned, operated or leased by the
Company, the Guarantors or any of their respective subsidiaries, or at, on,
under or from any other property or facility, in violation of any Environmental
Laws or in a manner or amount or to a location that could reasonably be expected
to result in any liability under any Environmental Law, except for any violation
or liability which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. “Hazardous Materials” means any
material, chemical, substance, waste, pollutant, contaminant, compound, mixture,
or constituent thereof, in any form or amount, including petroleum (including
crude oil or any fraction thereof) and petroleum products, natural gas liquids,
asbestos and asbestos containing materials, naturally occurring radioactive
materials, brine, and drilling mud, regulated or which can give rise to
liability under any Environmental Law. “Release” means any spilling, leaking,
seepage, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, disposing, depositing, dispersing, or migrating in, into or
through the environment, or in, into, from or through any building or structure.

(jj) 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
corporations within the meaning of Section 414 of the Code) would have any
liability (each, a “Plan”) has been maintained in compliance with its terms and
the requirements of any applicable statutes, orders, rules and regulations,
including but not limited to ERISA and the Code, except for noncompliance that
could not reasonably be expected to result in material liability to the Company,
the Guarantors or their respective subsidiaries; (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 that could reasonably be expected to
result in a material liability to the Company, the Guarantors or their
respective subsidiaries; (iii) for each Plan that is subject to the funding
rules of Section 412 of the Code or Section 302 of ERISA, the minimum funding
standard of Section 412 of the Code or Section 302 of ERISA, as applicable, has
been satisfied (without taking into account any waiver thereof or extension of
any amortization period) and is reasonably expected to be satisfied in the
future (without taking into account any waiver thereof or extension of any
amortization period); (iv) the fair market value of the assets of each Plan
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 that either has resulted, or could reasonably be expected to
result, in material liability to the Company, the Guarantors or their respective
subsidiaries; (vi) neither the Company nor any member of the 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
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); and (vii) there is no pending audit or
investigation by the Internal Revenue Service, the U.S. Department of Labor, the
Pension Benefit Guaranty Corporation or any other governmental agency or any
foreign regulatory agency with respect to any Plan that could reasonably be
expected to result in material liability to the Company, the Guarantors or their
respective subsidiaries. None of the following events has occurred or is
reasonably likely to occur: (x) a

 

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material increase in the aggregate amount of contributions required to be made
to all Plans by the Company, the Guarantors or their respective subsidiaries in
the current fiscal year of the Company, the Guarantors or their respective
subsidiaries compared to the amount of such contributions made in the Company
and its subsidiaries’ most recently completed fiscal year; or (y) a material
increase in the Company and its subsidiaries’ “accumulated post- retirement
benefit obligations” (within the meaning of Statement of Financial Accounting
Standards 106) compared to the amount of such obligations in the Company and its
subsidiaries’ most recently completed fiscal year.

(kk) Disclosure Controls. The Company and its subsidiaries maintain an effective
system of “disclosure controls and procedures” (as defined in Rule 13a-15(e) of
the Exchange Act) that complies with the requirements of the Exchange Act and
that has been designed to ensure that information required to be disclosed by
the Company in reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the Commission’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 and its subsidiaries have carried out evaluations of the
effectiveness of their disclosure controls and procedures as required by Rule
13a-15 of the Exchange Act.

(ll) 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 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
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; (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 and (v) interactive data in extensible
Business Reporting Language included or incorporated by reference in each of the
Preliminary Offering Memorandum, the Time of Sale Information and the Offering
Memorandum is prepared in accordance with the Commission’s rules and guidelines
applicable thereto. Based on the Company’s most recent evaluation of its
internal controls over financial reporting pursuant to Rule 13a-15(c) of the
Exchange Act, except as disclosed in each of the Time of Sale Information and
the Offering Memorandum, there are no material weaknesses in the Company’s
internal controls. The Company’s auditors and the Audit Committee of the Board
of Directors of the Company have been advised of: (i) all significant
deficiencies and material weaknesses in the design or operation of internal
controls over financial reporting which have adversely affected or are
reasonably likely to adversely affect the Company’s ability to record, process,
summarize and report financial information; and (ii) any fraud, whether or not
material, that involves management or other employees who have a significant
role in the Company’s internal controls over financial reporting.

 

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(mm) Insurance. The Company, the Guarantors and their respective subsidiaries
have insurance covering their respective properties, operations, personnel and
businesses, which insurance is in amounts and insures against such losses and
risks as are reasonably adequate to protect the Company, the Guarantors and
their respective subsidiaries and their respective businesses; and none of the
Company, the Guarantors or their respective 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.

(nn) No Unlawful Payments. Neither the Company, the Guarantors nor any of their
respective subsidiaries nor any director, officer or employee of the Company,
the Guarantors or any of their respective subsidiaries nor, to the knowledge of
the Company, any agent, affiliate or other person associated with or acting on
behalf of the Company, the Guarantors or any of their respective subsidiaries
has (i) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political activity;
(ii) made or taken an act in furtherance of an offer, promise or authorization
of any direct or indirect unlawful payment or benefit to any foreign or domestic
government official or employee, including of any government-owned or controlled
entity or of a public international organization, or any person acting in an
official capacity for or on behalf of any of the foregoing, or any political
party or party official or candidate for political office; (iii) violated or is
in violation of any provision of the Foreign Corrupt Practices Act of 1977, as
amended, or any applicable law or regulation implementing the OECD Convention on
Combating Bribery of Foreign Public Officials in International Business
Transactions, or committed an offence under the Bribery Act 2010 of the United
Kingdom or any other applicable anti-bribery or anti- corruption law; or
(iv) made, offered, agreed, requested or taken an act in furtherance of any
unlawful bribe or other unlawful benefit, including, without limitation, any
rebate, payoff, influence payment, kickback or other unlawful or improper
payment or benefit. The Company, the Guarantors and their respective
subsidiaries have instituted, maintain and enforce, and will continue to
maintain and enforce policies and procedures designed to promote and ensure
compliance with all applicable anti-bribery and anti-corruption laws.

(oo) Compliance with Anti-Money Laundering Laws. The operations of the Company,
the Guarantors and their respective subsidiaries are and 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, the Guarantors or any of their respective
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, the
Guarantors or any of their respective subsidiaries with respect to the
Anti-Money Laundering Laws is pending or, to the knowledge of the Company or any
of the Guarantors, threatened.

 

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(pp) No Conflicts with Sanctions Laws. None of the Company, the Guarantors or
any of their respective subsidiaries, directors, officers, or employees, nor, to
the knowledge of the Company or any of the Guarantors, any agent, affiliate or
other person associated with or acting on behalf of the Company, the Guarantors
or any of their respective subsidiaries is currently the subject or the target
of any sanctions administered or enforced by the U.S. government, (including,
without limitation, the Office of Foreign Assets Control of the U.S. Department
of the Treasury (“OFAC”) or the U.S. Department of State and including, without
limitation, the designation as a “specially designated national” or “blocked
person”), the United Nations Security Council (“UNSC”), the European Union, Her
Majesty’s Treasury (“HMT”) or other relevant sanctions authority (collectively,
“Sanctions”), nor are the Company, the Guarantors or any of their respective
subsidiaries located, organized or resident in a country or territory that is
the subject or target of Sanctions, including, without limitation, Cuba, Iran,
North Korea, Sudan, Syria and Crimea (each, a “Sanctioned Country”); and the
Company will not directly or indirectly use the proceeds of the offering of the
Securities hereunder, or lend, contribute or otherwise make available such
proceeds to any subsidiary, joint venture partner or other person or entity
(i) to fund or facilitate any activities of or business with any person that, at
the time of such funding or facilitation, is the subject or target of Sanctions,
(ii) to fund or facilitate any activities of or business in any Sanctioned
Country or (iii) in any other manner that will result in a violation by any
person (including any person participating in the transaction, whether as
Initial Purchaser, 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.

(qq) Solvency. On and immediately after the Closing Date, the Company and each
Guarantor (after giving effect to the issuance and sale of the Securities, the
issuance of the Guarantees and the other transactions related thereto as
described in each of the Time of Sale Information and the Offering Memorandum)
will be Solvent. As used in this paragraph, the term “Solvent” means, with
respect to a particular date and entity, that on such date (i) the fair value
(and present fair saleable value) of the assets of such entity is not less than
the total amount required to pay the probable liability of such entity on its
total existing debts and liabilities (including contingent liabilities) as they
become absolute and matured; (ii) such entity is able to realize upon its assets
and pay its debts and other liabilities, contingent obligations and commitments
as they mature and become due in the normal course of business; (iii) assuming
consummation of the issuance and sale of the Securities and the issuance of the
Guarantees as contemplated by this Agreement, the Time of Sale Information and
the Offering Memorandum, such entity does not have, intend to incur or believe
that it will incur debts or liabilities beyond its ability to pay as such debts
and liabilities mature; (iv) such entity is not engaged in any business or
transaction, and does not propose to engage in any business or transaction, for
which its property would constitute unreasonably small capital; and (v) such
entity is not a defendant in any civil action that would result in a judgment
that such entity is or would become unable to satisfy.

 

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(rr) Senior Indebtedness. The Securities constitute “senior indebtedness” as
such term is defined in any indenture or agreement governing any outstanding
subordinated indebtedness of the Company.

(ss) No Restrictions on Subsidiaries. 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 distribution on such subsidiary’s capital stock, from
repaying to the Company any loans or advances to such subsidiary from the
Company or from transferring any of such subsidiary’s properties or assets to
the Company or any other subsidiary of the Company, except for any such
restrictions (a) contained in the Credit Agreement, (b) contained in the
indenture, dated as of October 3, 2016, among the Company, the Guarantors and
the Trustee, as amended or supplemented from time to time, or (c) that will be
permitted by the Indenture.

(tt) No Broker’s Fees. Neither the Company nor any of its subsidiaries is a
party to any contract, agreement or understanding with any person (other than
this Agreement) that would give rise to a valid claim against the Company or any
of its subsidiaries or any Initial Purchaser for a brokerage commission,
finder’s fee or like payment in connection with the offering and sale of the
Securities.

(uu) Rule 144A Eligibility. On the Closing Date, the Securities will not be of
the same class as securities listed on a national securities exchange registered
under Section 6 of the Exchange Act or quoted in an automated inter-dealer
quotation system; and each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its respective date, contains or will contain all the
information that, if requested by a prospective purchaser of the Securities,
would be required to be provided to such prospective purchaser pursuant to Rule
144A(d)(4) under the Securities Act.

(vv) No Integration. None of the Company, the Guarantors nor any of their
respective affiliates (as defined in Rule 501(b) of Regulation D) has, directly
or through any agent, sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of, any security (as defined in the Securities
Act), that is or will be integrated with the sale of the Securities in a manner
that would require registration of the Securities under the Securities Act.

(ww) Margin Rules. The application of the proceeds received by the Company from
the issuance, sale and delivery of the Securities as described in each of the
Time of Sale Information and the Offering Memorandum will not violate Regulation
T, U or X of the Board of Governors of the Federal Reserve System or any other
regulation of such Board of Governors.

(xx) No General Solicitation or Directed Selling Efforts. None of the Company or
any of its affiliates or any other person acting on its or their behalf (other
than the Initial Purchasers, as to which no representation is made) has
(i) solicited offers for, or offered or sold, the Securities by means of any
form of general solicitation or general advertising within the meaning of Rule
502(c) of Regulation D or in any manner involving a public offering within the
meaning of Section 4(a)(2) of the Securities Act or (ii) engaged in any directed
selling efforts within the meaning of Regulation S under the Securities Act
(“Regulation S”), and all such persons have complied with the offering
restrictions requirement of Regulation S.

 

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(yy) Securities Law Exemptions. Assuming the accuracy of the representations and
warranties of the Initial Purchasers contained in Section 1(b) (including Annex
C hereto) and their compliance with their agreements set forth therein, it is
not necessary, in connection with the issuance and sale of the Securities to the
Initial Purchasers and the offer, resale and delivery of the Securities by the
Initial Purchasers in the manner contemplated by this Agreement, the Time of
Sale Information and the Offering Memorandum, to register the Securities under
the Securities Act or to qualify the Indenture under the Trust Indenture Act.

(zz) No Stabilization. Neither the Company nor any of the Guarantors has taken,
directly or indirectly, any action designed to or that could reasonably be
expected to cause or result in any stabilization or manipulation of the price of
the Securities.

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

(bbb) Statistical and Market Data. Nothing has come to the attention of the
Company or any Guarantor that has caused the Company or such Guarantor to
believe that the statistical and market-related data included or incorporated by
reference in each of the Time of Sale Information and the Offering Memorandum is
not based on or derived from sources that are reliable and accurate in all
material respects.

(ccc) Independent Petroleum Engineers. DeGolyer and MacNaughton, who has
prepared certain reserve information of the Company, the Guarantors and their
respective subsidiaries, has represented to the Company and the Guarantors that
they are, and to the knowledge of the Company and the Guarantors are,
independent petroleum engineers in accordance with guidelines established by the
Commission, respectively.

(ddd) Reserve Report Data. The oil and gas reserve estimates of the Company and
the Guarantors included or incorporated by reference in each of the Time of Sale
Information and the Offering Memorandum are derived from reports that have been
prepared by DeGolyer and MacNaughton as set forth and to the extent indicated
therein, and have been prepared in accordance with Commission guidelines in all
material respects, and the Company and the Guarantors have no reason to believe
that such estimates do not fairly reflect, in all material respects, the oil and
gas reserves of the Company and such Guarantors as of the dates indicated
therein. Other than production of the reserves in the ordinary course of
business, intervening product price fluctuations, fluctuations in demand for
such products, adverse weather conditions, unavailability or increased costs of
rigs, services, supplies or personnel, the timing of third party operations and
other facts, in each case in the ordinary course of business, and as described
in each of the Time of Sale Information and the Offering Memorandum, the Company
and the Guarantors are not aware of any facts or circumstances that would cause
a Material Adverse Effect in the reserves or the present value of future net
cash flows therefrom as described in each of the Time of Sale Information and
the Offering Memorandum.

 

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(eee) Sarbanes-Oxley Act. There is and has been no failure on the part of the
Company or, to the knowledge of the Company, any of the Company’s directors or
officers, in their capacities as such, to comply with any applicable provision
of the Sarbanes-Oxley Act of 2002, as amended, and any applicable rules and
regulations promulgated in connection therewith (the “Sarbanes-Oxley Act”),
including Section 402 related to loans and Sections 302 and 906 related to
certifications.

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

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

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

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

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

 

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

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

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

(h) Clear Market. During the period from the date hereof through and including
the date that is 30 days after the date hereof, the Company and each of the
Guarantors will not, without the prior written consent of the Representative,
offer, sell, contract to sell or otherwise dispose of any debt securities issued
or guaranteed by the Company or any of the Guarantors and having a tenor of more
than one year.

 

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

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

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

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

(m) No Integration. Neither the Company nor any of its affiliates (as defined in
Rule 501(b) of Regulation D) will, directly or through any agent, sell, offer
for sale, solicit offers to buy or otherwise negotiate in respect of, any
security (as defined in the Securities Act), that is or will be integrated with
the sale of the Securities in a manner that would require registration of the
Securities under the Securities Act.

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

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

(p) Reports. So long as the Securities are outstanding, the Company will furnish
to the Representative, as soon as they are available, copies of all reports or
other communications (financial or other) furnished to holders of the
Securities, and copies of any reports and financial statements furnished to or
filed with the Commission or any national securities exchange or automatic
quotation system; provided the Company will be deemed to have furnished such
reports and financial statements to the Representative to the extent they are
filed on the Commission’s Electronic Data Gathering, Analysis, and Retrieval
system.

 

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(q) Record Retention. The Company will, pursuant to reasonable procedures
developed in good faith, retain copies of each Issuer Written Communication that
is not filed with the Commission in accordance with Rule 433 under the
Securities Act.

(r) Credit Agreement Consent. Prior to the Closing Date, the Company and the
Guarantors shall have entered into the Credit Agreement Consent consistent in
all material respects with the terms described in the Time of Sale Information
and the Offering Memorandum and the Representative shall have received conformed
counterparts thereof.

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

6. Conditions of Initial Purchasers’ Obligations. The obligation of each Initial
Purchaser to purchase the Securities on the Closing Date as provided herein is
subject to the performance by the Company and each of the Guarantors of their
respective covenants and other obligations hereunder and to the following
additional conditions:

(a) Representations and Warranties. The representations and warranties of the
Company and the Guarantors contained herein shall be true and correct on the
date hereof and on and as of the Closing Date; and the statements of the
Company, the Guarantors and their respective officers made in any certificates
delivered pursuant to this Agreement shall be true and correct on and as of the
Closing Date.

(b) No Downgrade. Subsequent to the earlier of (A) the Time of Sale and (B) the
execution and delivery of this Agreement, if there are any debt securities or
preferred stock of, or guaranteed by, the Company, the Guarantors or any of
their respective subsidiaries that are rated by a “nationally recognized
statistical rating organization,” as such term is defined under Section 3(a)(62)
of the Exchange Act, (i) no downgrading shall have occurred in the rating
accorded any such debt securities or preferred stock and (ii) no such
organization shall have publicly announced that it has under surveillance or
review, or has changed its outlook with respect to, its rating of any such debt
securities or preferred stock (other than an announcement with positive
implications of a possible upgrading).

(c) No Material Adverse Change. No event or condition of a type described in
Section 3(h) hereof shall have occurred or shall exist, which event or condition
is not described

 

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in each of the Time of Sale Information (excluding any amendment or supplement
thereto) and the Offering Memorandum (excluding any amendment or supplement
thereto) and the effect of which in the judgment of the Representative makes it
impracticable or inadvisable to proceed with the offering, sale or delivery of
the Securities on the Closing Date on the terms and in the manner contemplated
by this Agreement, the Time of Sale Information and the Offering Memorandum.

(d) Officer’s Certificate. The Representative shall have received on and as of
the Closing Date a certificate of the chief financial officer or chief
accounting officer of the Company and of each Guarantor and one additional
senior executive officer of the Company and of each Guarantor who is
satisfactory to the Representative (i) confirming that such officers have
carefully reviewed the Time of Sale Information and the Offering Memorandum and,
to the knowledge of such officers, the representations set forth in Sections
3(a) and 3(b) hereof are true and correct, (ii) confirming that the other
representations and warranties of the Company and each of the Guarantors in this
Agreement are true and correct and that the Company and each Guarantor has
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to the Closing Date,
(iii) confirming that, to the knowledge of such officers, except as described in
each of the Time of Sale Information and the Offering Memorandum, (A) there are
no legal, governmental or regulatory investigations, actions, suits or
proceedings pending to which the Company, the Guarantors or any of their
respective subsidiaries is or may be a party or to which any property of the
Company, the Guarantors or any of their respective subsidiaries is or may be the
subject which, individually or in the aggregate, if determined adversely to the
Company, the Guarantors or any of their respective subsidiaries, could
reasonably be expected to have a Material Adverse Effect; (B) no such
investigations, actions, suits or proceedings are threatened or contemplated by
any governmental or regulatory authority or threatened by others; and (C) there
are no current or pending legal, governmental or regulatory actions, suits or
proceedings that would be required to be disclosed on a registration statement
on Form S-1 under the Securities Act and that are not so described in each of
the Time of Sale Information and the Offering Memorandum, and (iv) to the effect
set forth in paragraphs (b) and (c) above.

(e) Accountant’s Comfort Letters. On the date of this Agreement and on the
Closing Date, each of Ernst & Young LLP and Grant Thornton LLP shall have
furnished to the Representative, at the request of the Company, letters, dated
the respective dates of delivery thereof and addressed to the Initial
Purchasers, in form and substance reasonably satisfactory to the Representative,
containing statements and information of the type customarily included in
accountants’ “comfort letters” to Initial Purchasers with respect to the
financial statements and certain financial information contained or incorporated
by reference in each of the Time of Sale Information and the Offering
Memorandum; provided, that the letter delivered on the Closing Date shall use a
“cut-off” date no more than three business days prior to the Closing Date.

(f) Engineer’s Comfort Letter. On the date of this Agreement and on the Closing
Date, DeGolyer and MacNaughton shall have furnished to the Representative, at
the request of the Company, a letter, dated the respective date of delivery
thereof and addressed to the Initial Purchasers (i) confirming that it is an
independent petroleum engineering firm, (ii) confirming, as of such date, its
estimates contained in the reserve reports, as of its date, with respect to:
(A) the estimated quantities of the Company’s proved net reserves, (B) the
future net revenues

 

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from those reserves, (C) their present value as set forth in the Time of Sale
Information and the Offering Memorandum and (D) such related matters as the
Representative shall reasonably request.

(g) Chief Financial Officer’s Certificate. On the date of this Agreement and on
the Closing Date, the Representative shall have received from the chief
financial officer of the Company a certificate, dated as of the date of this
Agreement and the Closing Date, respectively, in the form attached as Exhibit A
hereto, relating to the accuracy of certain financial information contained in
each of the Time of Sale Information and the Offering Memorandum.

(h) Opinion and 10b-5 Statement of Counsel for the Company. Haynes and Boone,
LLP, counsel for the Company, shall have furnished to the Representative, at the
request of the Company, its written opinion and 10b-5 statement, dated the
Closing Date and addressed to the Initial Purchasers, in form and substance
reasonably satisfactory to the Representative, to the effect set forth in Annex
D hereto.

(i) Opinion and 10b-5 Statement of Counsel for the Initial Purchasers. The
Representative shall have received on and as of the Closing Date an opinion and
10b-5 statement of Simpson Thacher & Bartlett LLP, counsel for the Initial
Purchasers, with respect to such matters as the Representative may reasonably
request, and such counsel shall have received such documents and information as
they may reasonably request to enable them to pass upon such matters.

(j) No Legal Impediment to Issuance. 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 Securities or the
issuance of the Guarantees; 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 Securities or the issuance of the Guarantees.

(k) Good Standing. The Representative shall have received on and as of the
Closing Date satisfactory evidence of the good standing of the Company, the
Guarantors and their respective subsidiaries in their respective jurisdictions
of organization and their good standing as foreign entities in such other
jurisdictions as the Representative may reasonably request, in each case in
writing or any standard form of telecommunication from the appropriate
governmental authorities of such jurisdictions.

(l) Registration Rights Agreement. The Initial Purchasers shall have received a
counterpart of the Registration Rights Agreement that shall have been executed
and delivered by a duly authorized officer of the Company and each of the
Guarantors.

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

(n) Indenture and Securities. The Indenture shall have been duly executed and
delivered by a duly authorized officer of the Company, each of the Guarantors
and the Trustee, and the Securities shall have been duly executed and delivered
by a duly authorized officer of the Company and duly authenticated by the
Trustee.

 

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(o) Credit Agreement Consent. On or prior to the Closing Date the Credit
Agreement Consent shall have been entered into by the parties thereto in form
reasonably satisfactory to the Representative and the Initial Purchasers shall
have received an executed copy thereof.

(p) Additional Documents. On or prior to the Closing Date, the Company and the
Guarantors shall have furnished to the Representative such further certificates
and documents as the Representative may reasonably request.

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

7. Indemnification and Contribution.

(a) Indemnification of the Initial Purchasers. The Company and each of the
Guarantors jointly and severally agree to indemnify and hold harmless each
Initial Purchaser, their affiliates, directors and officers and each person, if
any, who controls such Initial Purchaser within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages and liabilities (including, without limitation,
reasonable legal fees and other expenses incurred in connection with any suit,
action or proceeding or any claim asserted, as such fees and expenses are
incurred), joint or several, that arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in the
Preliminary Offering Memorandum, any of the other Time of Sale Information, any
Issuer Written Communication or the Offering Memorandum (or any amendment or
supplement thereto), or any omission or alleged omission to state therein a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, in each case except
insofar as such losses, claims, damages or liabilities arise out of, or are
based upon, any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with any information relating
to any Initial Purchaser furnished to the Company in writing by such Initial
Purchaser through the Representative expressly for use therein, it being
understood and agreed that the only such information furnished by any Initial
Purchaser consists of the information described as such in subsection (b) below.

(b) Indemnification of the Company and the Guarantors. Each Initial Purchaser
agrees, severally and not jointly, to indemnify and hold harmless the Company,
each of the Guarantors, each of their respective directors and officers and each
person, if any, who controls the Company or any of the Guarantors within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the indemnity set forth in paragraph (a) above, but only with
respect to any losses, claims, damages or liabilities that arise out of, or are
based upon, any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with any information relating
to such Initial Purchaser furnished to the Company in writing by such Initial
Purchaser through the Representative expressly for use in the Preliminary
Offering Memorandum, any of the other Time of Sale Information, any Issuer
Written Communication or the Offering Memorandum (or any amendment or supplement
thereto), it being understood and agreed upon that the only such information
furnished by any Initial Purchaser consists of the following information in the
Preliminary Offering Memorandum

 

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and the Offering Memorandum: the information contained in the first and second
sentences of the thirteenth paragraph and in the fifteenth paragraph, in each
case under the caption “Plan of Distribution.”

(c) Notice and Procedures. If any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall be brought or
asserted against any person in respect of which indemnification may be sought
pursuant to either paragraph (a) or (b) above, such person (the “Indemnified
Person”) shall promptly notify the person against whom such indemnification may
be sought (the “Indemnifying Person”) in writing; provided that the failure to
notify the Indemnifying Person shall not relieve it from any liability that it
may have under paragraph (a) or (b) above except to the extent that it has been
materially prejudiced (through the forfeiture of substantive rights or defenses)
by such failure; and provided, further, that the failure to notify the
Indemnifying Person shall not relieve it from any liability that it may have to
an Indemnified Person otherwise than under paragraph (a) or (b) above. If any
such proceeding shall be brought or asserted against an Indemnified Person and
it shall have notified the Indemnifying Person thereof, the Indemnifying Person
shall retain counsel reasonably satisfactory to the Indemnified Person (who
shall not, without the consent of the Indemnified Person, be counsel to the
Indemnifying Person) to represent the Indemnified Person in such proceeding and
shall pay the fees and expenses of such counsel related to such proceeding, as
incurred. In any such proceeding, any Indemnified Person shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Person unless (i) the Indemnifying Person and
the Indemnified Person shall have mutually agreed to the contrary; (ii) the
Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person; (iii) the Indemnified Person
shall have reasonably concluded that there may be legal defenses available to it
that are different from or in addition to those available to the Indemnifying
Person; or (iv) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It is
understood and agreed that the Indemnifying Person shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be liable for
the fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and expenses shall
be paid or reimbursed as they are incurred. Any such separate firm for any
Initial Purchaser, its affiliates, directors and officers and any control
persons of such Initial Purchaser shall be designated in writing by the
Representative and any such separate firm for the Company, the Guarantors, their
respective directors and officers and any control persons of the Company and the
Guarantors shall be designated in writing by the Company. The Indemnifying
Person shall not be liable for any settlement of any proceeding effected without
its written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the Indemnifying Person agrees to indemnify each
Indemnified Person from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an Indemnified Person shall have requested that an Indemnifying Person reimburse
the Indemnified Person for fees and expenses of counsel as contemplated by this
paragraph, the Indemnifying Person shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by the Indemnifying Person of such
request and (ii) the Indemnifying Person shall not have reimbursed the
Indemnified Person in accordance with such request prior to the date of such
settlement. No

 

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Indemnifying Person shall, without the written consent of the Indemnified
Person, effect any settlement of any pending or threatened proceeding in respect
of which any Indemnified Person is or could have been a party and
indemnification could have been sought hereunder by such Indemnified Person,
unless such settlement (x) includes an unconditional release of such Indemnified
Person, in form and substance reasonably satisfactory to such Indemnified
Person, from all liability on claims that are the subject matter of such
proceeding and (y) 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.

(d) Contribution. If the indemnification provided for in paragraphs (a) or (b)
above is unavailable to an Indemnified Person or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Guarantors, on the one hand, and the
Initial Purchasers on the other, from the offering of the Securities or (ii) if
the allocation provided by clause (i) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) but also the relative fault of the Company and the
Guarantors, on the one hand, and the Initial Purchasers on the other, in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the
Guarantors, on the one hand, and the Initial Purchasers on the other, shall be
deemed to be in the same respective proportions as the net proceeds (before
deducting expenses) received by the Company from the sale of the Securities and
the total discounts and commissions received by the Initial Purchasers in
connection therewith, as provided in this Agreement, bear to the aggregate
offering price of the Securities. The relative fault of the Company and the
Guarantors, on the one hand, and the Initial Purchasers on the other, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or any Guarantor
or by the Initial Purchasers and the parties’ relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.

(e) Limitation on Liability. The Company, the Guarantors and the Initial
Purchasers agree that it would not be just and equitable if contribution
pursuant to paragraph (d) above were determined by pro rata allocation (even if
the Initial Purchasers were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in paragraph (d) above. The amount paid or payable by
an Indemnified Person as a result of the losses, claims, damages and liabilities
referred to in paragraph (d) above shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses incurred by such
Indemnified Person in connection with any such action or claim. Notwithstanding
the provisions of paragraph (d) above and this paragraph (e), in no event shall
an Initial Purchaser be required to contribute any amount in excess of the
amount by which the total discounts and commissions received by such Initial
Purchaser with respect to the offering of the Securities exceeds the amount of
any damages that such Initial Purchaser has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of

 

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Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The Initial
Purchasers’ obligations to contribute pursuant to paragraph (d) above and this
paragraph (e) are several in proportion to their respective purchase obligations
hereunder and not joint.

(f) Non-Exclusive Remedies. The remedies provided for in this Section 7
paragraphs (a) through (e) are not exclusive and shall not limit any rights or
remedies which may otherwise be available to any Indemnified Person at law or in
equity.

8. Effectiveness of Agreement. This Agreement shall become effective upon the
execution and delivery hereof by the parties hereto.

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

10. Defaulting Initial Purchaser.

(a) If, on the Closing Date, any Initial Purchaser defaults on its obligation to
purchase the Securities that it has agreed to purchase hereunder on such date,
the non-defaulting Initial Purchasers may in their discretion arrange for the
purchase of such Securities by other persons satisfactory to the Company on the
terms contained in this Agreement. If, within 36 hours after any such default by
any Initial Purchaser, the non-defaulting Initial Purchasers do not arrange for
the purchase of such Securities, then the Company shall be entitled to a further
period of 36 hours within which to procure other persons satisfactory to the
non-defaulting Initial Purchasers to purchase such Securities on such terms. If
other persons become obligated or agree to purchase the Securities of a
defaulting Initial Purchaser, either the non-defaulting Initial Purchasers or
the Company may postpone the Closing Date for up to five full business days in
order to effect any changes that in the opinion of counsel for the Company or
counsel for the Representative may be necessary in the Time of Sale Information,
the Offering Memorandum or in any other document or arrangement, and the Company
agrees to promptly prepare any amendment or supplement to the Time of Sale
Information or the Offering Memorandum that effects any such changes. As used in
this Agreement, the term “Initial Purchaser” includes, for all purposes of this
Agreement unless the context otherwise requires, any person not listed in
Schedule 1 hereto that, pursuant to this Section 10, purchases Securities that a
defaulting Initial Purchaser agreed but failed to purchase.

 

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

(c) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Initial Purchaser or Initial Purchasers by the
non-defaulting Initial Purchasers and the Company as provided in paragraph
(a) above, the aggregate principal amount of such Securities that remains
unpurchased on the Closing Date exceeds one-eleventh of the aggregate principal
amount of all the Securities to be purchased on such date, or if the Company
shall not exercise the right described in paragraph (b) above, then this
Agreement shall terminate without liability on the part of the non-defaulting
Initial Purchasers. Any termination of this Agreement pursuant to this
Section 10 shall be without liability on the part of the Company or the
Guarantors, except that the Company and each of the Guarantors will continue to
be liable for the payment of expenses as set forth in Section 11 hereof and
except that the provisions of Section 7 hereof shall not terminate and shall
remain in effect.

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

11. Payment of Expenses.

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

 

29

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(b) If (i) this Agreement is terminated pursuant to Section 9, (ii) the Company
for any reason fails to tender the Securities for delivery to the Initial
Purchasers or (iii) the Initial Purchasers decline to purchase the Securities
for any reason permitted under this Agreement, the Company and each of the
Guarantors jointly and severally agrees to reimburse the Initial Purchasers for
all out-of-pocket costs and expenses (including the reasonable fees and expenses
of their counsel) reasonably incurred by the Initial Purchasers in connection
with this Agreement and the offering contemplated hereby.

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

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

14. Certain Defined Terms. For purposes of this Agreement, (a) except where
otherwise expressly provided, the term “affiliate” has the meaning set forth in
Rule 405 under the Securities Act; (b) the term “business day” means any day
other than a day on which banks are permitted or required to be closed in New
York City; (c) the term “subsidiary” has the meaning set forth in Rule 405 under
the Securities Act; (d) the term “Exchange Act” means the Securities Exchange
Act of 1934, as amended; (e) the term “written communication” has the meaning
set forth in Rule 405 under the Securities Act; and (f) the term “significant
subsidiary” has the meaning set forth in Rule 1-02 of Regulation S-X under the
Exchange Act.

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

 

30

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16. Miscellaneous.

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

(b) Notices. All notices and other communications hereunder shall be in writing
and shall be deemed to have been duly given if mailed or transmitted and
confirmed by any standard form of telecommunication. Notices to the Initial
Purchasers shall be given to the Representative to c/o J.P. Morgan Securities
LLC, 383 Madison Avenue, New York, New York, 10179 (fax: 212-270-1063),
Attention: Jack Smith. Notices to the Company and the Guarantors shall be given
to them at Callon Petroleum Company, 200 North Canal St., Natchez, Mississippi
39120; Attention: Joseph C. Gatto, Jr.

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

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

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

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

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

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

 

31

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

 

Very truly yours, CALLON PETROLEUM COMPANY By:  

/s/ Joseph C. Gatto, Jr.

  Name: Joseph C. Gatto, Jr.   Title: President and Chief Executive Officer
CALLON PETROLEUM OPERATING COMPANY By:  

/s/ Joseph C. Gatto, Jr.

  Name: Joseph C. Gatto, Jr.   Title: President and Chief Executive Officer

 

[Signature Page to Purchase Agreement]

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Accepted: As of the date first written above

 

J.P. MORGAN SECURITIES LLC By:  

/s/ Jack D. Smith

For itself and on behalf of the several Initial Purchasers listed in Schedule 1
hereto.

 

[Signature Page to Purchase Agreement]

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Schedule 1

 

Initial Purchaser

   Principal Amount of
Securities  

J.P. Morgan Securities LLC

   $ 120,000,000  

Barclays Capital Inc.

   $ 36,000,000  

Citigroup Global Markets Inc.

   $ 36,000,000  

Credit Suisse Securities (USA) LLC

   $ 36,000,000  

Merrill Lynch, Pierce, Fenner & Smith

                      Incorporated

   $ 36,000,000  

Capital One Securities, Inc.

   $ 20,000,000  

RBC Capital Markets, LLC

   $ 20,000,000  

Scotia Capital (USA) Inc.

   $ 20,000,000  

KeyBanc Capital Markets Inc.

   $ 10,000,000  

SunTrust Robinson Humphrey, Inc.

   $ 10,000,000  

BBVA Securities Inc.

   $ 8,000,000  

BOK Financial Securities, Inc.

   $ 8,000,000  

CIBC World Markets Corp.

   $ 8,000,000  

CIT Capital Securities LLC

   $ 8,000,000  

Hancock Whitney Investment Services, Inc.

   $ 8,000,000  

IBERIA Capital Partners L.L.C

   $ 8,000,000  

Regions Securities LLC

   $ 8,000,000     

 

 

 

Total

   $ 400,000,000     

 

 

 

 

Schedule 1-1

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Schedule 2

Significant Subsidiaries

Callon Petroleum Operating Company

 

Schedule 2-1

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Annex A

Additional Time of Sale Information

 

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

 

Annex A-1

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Annex B

Callon Petroleum Company

$400,000,000 6.375% Senior Notes due 2026

May 31, 2018

The information in this pricing term sheet supplements the Preliminary Offering
Memorandum of Callon Petroleum Company, dated May 31, 2018 (the “Preliminary
Offering Memorandum”), and updates and supersedes the information in the
Preliminary Offering Memorandum to the extent it is inconsistent with the
information in the Preliminary Offering Memorandum. Terms used and not defined
herein have the meanings assigned in the Preliminary Offering Memorandum.

 

Issuer    Callon Petroleum Company Title of securities    6.375% Senior Notes
due 2026 (the “notes”) Size    $400,000,000 Gross proceeds    $400,000,000
Distribution    144A/Regulation S with Registration Rights Maturity date   
July 1, 2026 Issue Price    100.000% Coupon    6.375% Yield to maturity   
6.375% Benchmark treasury    UST 1.625% due May 15, 2026 Spread to benchmark
treasury    +356 basis points Interest payment dates    January 1 and July 1 of
each year, beginning on January 1, 2019 Record dates    December 15 and June 15
Trade date    May 31, 2018 Settlement date   

June 7, 2018 (T+5)

 

It is expected that delivery of the notes will be made against payment therefor
on or about June 7, 2018, which is the fifth business day following the date
hereof (such

 

Annex B-1

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

   settlement cycle being referred to as “T+5”). Under Rule 15c6-1 under the
Exchange Act, trades in the secondary market generally are required to settle in
two business days unless the parties to any such trade expressly agree
otherwise. Accordingly, purchasers who wish to trade the notes on any date prior
to the second business day before delivery will be required, by virtue of the
fact that the notes initially will settle in T+5, to specify an alternative
settlement cycle at the time of any such trade to prevent failed settlement.
Purchasers of the notes who wish to trade the notes on the date of pricing and
the next two succeeding business days should consult their own advisors.
Make-whole redemption    Make-whole redemption at Treasury Rate + 50 basis
points prior to July 1, 2021 Optional redemption    On or after July 1, 2021 at
the following redemption prices (expressed as a percentage of principal amount),
plus accrued and unpaid interest, if any, on the notes redeemed during the
twelve-month period indicated beginning on July 1 of the years indicated below:
    

Year

   Price   

 

2021

 

2022

 

2023

 

2024 and thereafter

  

 

103.188%

 

102.125%

 

101.063%

 

100.000%

Equity clawback    Up to 35% at 106.375% prior to July 1, 2021    Change of
control    101% plus accrued and unpaid interest    Joint book-running managers
  

J.P. Morgan Securities LLC

Barclays Capital Inc.

Citigroup Global Markets Inc.

Credit Suisse Securities (USA) LLC

Merrill Lynch, Pierce Fenner & Smith

                     Incorporated

   Senior co-managers   

Capital One Securities, Inc.

RBC Capital Markets, LLC

Scotia Capital (USA) Inc.

  

 

Annex B-2

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

Co-managers   

KeyBanc Capital Markets Inc.

SunTrust Robinson Humphrey, Inc.

BBVA Securities Inc.

BOK Financial Securities, Inc.

CIBC World Markets Corp.

CIT Capital Securities LLC

Hancock Whitney Investment Services, Inc.

IBERIA Capital Partners L.L.C.

Regions Securities LLC

CUSIP numbers   

Rule 144A: 13123XAX0

Regulation S: U1303XAE6

IAI: 13123X AY8

Registration Rights: 13123XAZ5

ISIN numbers   

Rule 144A: US13123XAX03

Regulation S: USU1303XAE68

IAI: US13123XAY85

Registration Rights: US13123XAZ50

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

 

Changes to Preliminary Offering Memorandum

The Preliminary Offering Memorandum is hereby revised to reflect the following,
as well as additional conforming changes consistent with the changes described
below.

The aggregate principal amount of the notes will be $400,000,000. The additional
net proceeds are expected to be used to repay amounts borrowed under the
Company’s senior secured revolving credit facility and the remaining proceeds,
if any, for general corporate purposes.

* Note: A securities rating is not a recommendation to buy, sell or hold
securities and may be subject to revision or withdrawal at any time. This
material is strictly confidential and has been prepared by the Issuer solely for
use in connection with the proposed offering of the securities described in the
Preliminary Offering Memorandum.

This material is personal to each offeree and does not constitute an offer to
any other person or the public generally to subscribe for or otherwise acquire
the securities. This information does not purport to be a complete description
of the notes or the offering. Please refer to the Preliminary Offering
Memorandum for a complete description.

The securities have not been registered under the Securities Act of 1933, as
amended (the “Securities Act”), or the securities laws of any other
jurisdiction. Unless they are registered, the securities may be offered only in
transactions that are exempt from or not

 

Annex B-3

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

subject to registration under the Securities Act and applicable state securities
laws. These securities are being offered only to (1) persons reasonably believed
to be “qualified institutional buyers” as defined in Rule 144A under the
Securities Act and (2) outside the United States to non-U.S. persons in
compliance with Regulation S under the Securities Act, and this communication is
only being distributed to such persons.

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

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

 

Annex B-4

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Annex C

Restrictions on Offers and Sales Outside the United States

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

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

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

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

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

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

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

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

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

 

Exhibit C-1